- Schlumberger followed its rivals in reporting disappointing third quarter earnings results this week, as the world s biggest oilfield contractor failed to grow as fast as analysts expected.
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The company that helps explorers drill underground pockets of oil and map new wells reported sales of $5.85 billion in the three months through September, it said in a statement on Friday, missing the $5.94 billion average estimate of analysts in a Bloomberg survey. Schlumberger posted a profit before one-time items of 36 cents a share, merely matching estimates. The shares fell 0.3% in pre-market trading in New York.
The Houston - and Paris-based company is the final of the big three oil-services providers to report results in what has been a lackluster start to the earnings season. Baker Hughes Co. and Halliburton Co. left investors largely underwhelmed with profits and forecasts that did little to raise the bar from three months earlier, citing setbacks from Hurricane Ida.
The oil-services sector appears to be struggling and a full-fledged recovery may not be as close as some investors previously thought. The hired hands of the oil patch are facing rising costs of raw materials and clients who are locking in record cash flow while pushing back on higher service pricing. Plus, oilfield contractors are still trying to catch up to exploration companies that are sending juicier profits back to shareholders.
Among rivals, Schlumberger has the largest exposure to overseas activity, generating roughly 80% of sales outside the U.S. and Canada. As publicly traded U.S. oil explorers continue to show austerity through subdued output growth, the biggest oilfield contractors have been pivoting to more international work.
Revenue expanded similarly in its North American and International regions, each growing 4% compared to the second quarter. The biggest miss came in its largest individual region, the Middle East and Asia, where Schlumberger generated $2 billion in sales, lower than the expected $2.14 billion, according to Bloomberg data compiled.
Schlumberger announced a dividend of 12.5 cents a share, holding steady from previous levels. Halliburton posted lower-than-expected earnings on Wednesday, while smaller rival Baker Hughes met expectations.
Still, Schlumberger reaffirmed forecasts for growth, saying it is on track to achieve double-digit sales expansion for the second half of this year. Chief Executive Officer Olivier Le Peuch, who earlier this year called for the possibility of a super cycle in the industry, said he sees an exceptional growth cycle ahead.
The industry macro fundamentals have visibly strengthened this year, particularly in recent weeks - with demand recovery, oil and gas commodity prices at recent highs, low inventory levels and encouraging trends in pandemic containment efforts, Le Peuch said in a statement Friday. These favorable conditions are expected to materially drive investment over the next few years - particularly internationally - and result in exceptional multiyear capital spending growth globally, both on land and offshore. Schlumberger, which has 25 buy ratings from analysts, five holds and one sell, has boosted shares by more than 50% this year.
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