World’s Top Oilfield Service Provider Raises Earnings Outlook

• Schlumberger reported higher-than-expected profits in its latest earnings report.
• The oilfield service giant is now raising 2022 revenue and earnings outlook as drilling activity rebounds.
• “The multiyear upcycle continues to gain momentum with upstream activity and service pricing steadily increasing,” said Schlumberger chief Olivier Le Peuch.

Schlumberger (NYSE: SLB) reported on Friday higher-than-expected profit for the second quarter as drilling activity rebounded in all markets, prompting the world’s largest oilfield service provider to raise its 2022 revenue and earnings outlook as “the multiyear upcycle continues to gain momentum.”    Schlumberger booked earnings per share (EPS), excluding charges and credits, of $0.50 for the second quarter, up by 47% sequentially and 67% year on year. This past quarter’s EPS were higher than the $0.40 EPS average analyst estimate compiled by The Wall Street Journal.

Schlumberger’s shares rose by 2.26% pre-market after the higher-than-expected earnings and revenue and the raised outlook for the full year. 

For Q2, Schlumberger reported revenues of $6.8 billion, up by 14% sequentially and 20% year on year. 

“As a result of this performance and based on our updated outlook for the remainder of the year, 2022 year-on-year revenue growth is now expected to be in the high-teens which translates to full-year revenue of at least $27 billion,” Schlumberger CEO Olivier Le Peuch said. 

“We expect this higher revenue to result in earnings that exceed our previous expectations, given our ambition to exit the year with adjusted EBITDA margins 200 basis points higher than in the fourth quarter of 2021,” Le Peuch added. 

“The multiyear upcycle continues to gain momentum with upstream activity and service pricing steadily increasing both internationally and in North America, resulting in a strengthened outlook for Schlumberger,” the executive said.

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Commenting on the oil market and drilling activity prospects, Le Peuch said, “Despite near-term concerns over a global economic slowdown, the combination of energy security, favorable break-even prices, and the urgency to grow oil and gas production capacity is expected to continue to support strong upstream E&P spending growth. Consequently, we are witnessing a decoupling of upstream spending from near-term demand volatility, resulting in resilient global oil and gas activity growth in 2022 and beyond.” 

Schlumberger was the last of the three biggest oilfield service providers reporting Q2 earnings. Earlier this week, Baker Hughes (NASDAQ: BKR) flagged “mixed results” due to supply-chain inflation and revenue losses from the suspension of its operations in Russia. Baker Hughes sees the oil market facing “an unusual set of circumstances and challenges” for the rest of this year and into next year, Baker Hughes chairman and CEO Lorenzo Simonelli said. 

Halliburton (NYSE: HAL) opened the oil and gas industry’s earnings season on Tuesday, reporting a 41-percent surge in its second-quarter adjusted net income amid growing drilling activity both in North America and in international markets, and saying it expects international markets to see “multiple years of growth.”   

By Tsvetana Paraskova for Oilprice.com

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