SLB’s Profit Rises Thanks to High Demand for International Drilling Services
The leading oilfield services giant SLB (formerly Schlumberger) reported a 14% increase in first-quarter profit on Friday, aligning with analysts’ projections. This uptick was buoyed by heightened demand for oil and gas drilling services in the Middle East and Africa, which offset the sluggish performance in North America.
SLB remains optimistic about its full-year prospects, reiterating its earlier mid-teens percentage profit growth guidance. Anticipating a seasonal uptick in activity across the Northern Hemisphere in the second quarter, alongside robust international operations, the company is poised for continued momentum.
CEO Olivier Le Peuch highlighted the potential for operators to ramp up investments in production and reservoir recovery to enhance efficiency and prolong the lifespan of their assets amid increasing oil demand.
International revenue experienced a notable 18% surge, reaching $7.06 billion compared to $5.99 billion in the same quarter last year. Conversely, North America witnessed a 6% decline in revenue, totaling $1.6 billion, falling short of analysts’ expectations due to weaker natural gas prices and industry consolidation.
While North America and international markets experienced a sequential revenue decline of 3%, which was attributed to seasonality, Le Peuch projected mid-single-digit percentage growth in global revenue and low-single-digit growth in North America for the second quarter.
Despite solid performance, SLB’s shares dipped 1.9% to $49.97 in morning trade. The company announced plans to return $7 billion to shareholders over the next two years, partially fueled by its recent acquisition of rival ChampionX for nearly $8 billion.
Looking ahead, SLB anticipates challenges in the Middle East due to constraints imposed by the Organization of the Petroleum Exporting Countries (OPEC) and escalating geopolitical tensions. However, Saudi Arabia’s strategy to prioritize gas development is not expected to hinder SLB’s ambitions for regional growth.
Overall, SLB reported earnings of $1.07 billion, or 74 cents per share, for the first quarter, up from $934 million, or 65 cents per share, in the previous year. Adjusted earnings per share stood at 75 cents, meeting analysts’ estimates, while revenue of $8.71 billion slightly exceeded expectations of $8.69 billion.
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