Why Schlumberger Earnings Were So Great

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Schlumberger Ltd. (NYSE: SLB) released its fourth-quarter financial results before the markets opened on Friday. The company said that it had $0.39 in earnings per share (EPS) and $8.23 billion in revenue, compared with consensus estimates that called for $0.37 in EPS and revenue of $8.15 billion. The same period of last year reportedly had EPS of $0.36 on $8.18 in revenue.

In December, Schlumberger announced that Simon Ayat, executive vice president and chief financial officer, would step down effective January 22, 2020. Ayat will remain with Schlumberger as a senior strategic advisor to the chief executive for a period of two years. Stephane Biguet, the current Vice President of Finance and a 24-year Schlumberger veteran, will succeed Ayat as executive vice president and CFO.

The oilfield services giant said Reservoir Characterization revenue of $1.6 billion, 83% of which came from the international markets, decreased 1% sequentially following the end of the summer campaigns for wireline and testing activity in the North Sea and Russia, where the mild winter did not significantly disrupt activity.

Drilling revenue of $2.4 billion, 76% of which came from the international markets, decreased 1% sequentially due to the end of the summer drilling campaign in Russia and lower drilling activity in North America land largely affecting M-I SWACO and Bits & Drilling Tools.

Production revenue of $2.9 billion, of which 61% came from the international markets, declined 9% sequentially. This was driven by OneStim revenue, which dropped 33% sequentially as it continued to right-size the firm’s hydraulic fracturing capacity by stacking more fleets in the face of lower demand.

Cameron revenue of $1.4 billion, of which 60% came from international markets, increased 2% sequentially from higher OneSubsea, Surface Systems and Drilling Systems revenue, primarily in the international markets.

CEO Olivier Le Peuch commented:

This quarter delivered the first sequential growth in international margin in any fourth quarter since 2014. We are therefore confident we have turned the corner, particularly as we have now seen sequential international margin growth for the last three quarters as a result of our discipline and focus on execution performance. Meanwhile, in North America land, we minimized the margin dilution from lower activity by implementing our scale-to-fit strategy, acting decisively in reducing capacity, and restructuring our operations.

Shares of Schlumberger were last seen up about 2.5% at $39.75 on Friday, in a 52-week range of $30.65 to $48.88. The consensus price target is $42.60.


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