International Drilling Rebound Helps SLB Beat Earnings Estimates

Oilfield services giant SLB (NYSE: SLB) reported on Friday higher-than-expected earnings for the third quarter as global drilling demand further strengthened amid what the world’s biggest oilfield services provider described as an ongoing “multiyear growth cycle”.

SLB posted a net income of $1.12 billion for the third quarter, up by 9% sequentially and up by 24% year-on-year. Earnings per share excluding charges and credits came in at $0.78, slightly higher than the analyst consensus of $0.77 EPS compiled by The Wall Street Journal.

SLB, which is a leader in the global drilling market, reported stronger, double-digit, growth in its international revenues compared to a single-digit increase in North American revenues.

“Compared to the same quarter a year ago, international revenue grew 12%, outpacing North America, which increased 6%,” SLB’s chief executive officer Olivier Le Peuch said, commenting on the Q3 results.

Compared to the second quarter of this year, SLB’s global revenue rose by 3%, thanks to higher drilling activity in the Middle East and Asia.

“Our strong quarterly performance was propelled by broad-based growth across Saudi Arabia, the United Arab Emirates, Indonesia, China, Malaysia, Kuwait, and Oman,” Le Peuch said.

In North America, revenues for SLB declined in the third quarter compared to the second quarter, down by 6% to $1.64 billion, due to reduced drilling activity onshore and in the U.S. Gulf of Mexico. Offshore revenue declined as a result of lower subsea sales and decreased drilling activity.

Looking ahead, Le Peuch said that “The oil and gas industry continues to benefit from a multiyear growth cycle that has shifted to the international and offshore markets where we are the clear leader.”

Upstream spending is accelerating with operators investing in more gas production and long-cycle developments, production capacity expansions, and exploration and appraisal, he added.

“The long-term nature of these global investments underscores the breadth, durability, and resilience of this cycle, and we expect these market dynamics to continue to drive profitable growth in the years ahead.”

By Tsvetana Paraskova for Oilprice.com

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