Schlumberger issues optimistic forecast for the rest of the year


Earlier today, oilfield services giant Schlumberger NV issued an optimistic forecast for the remaining months of 2021. In fact, this action comes as second-quarter profit topped estimates due to surging margins. Particularly, recent weeks have come with a rebound in oil prices, thus boosting demand for the company’s software and equipment.

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An optimistic forecast

As Reuters notes in a report today, energy services firms are significantly benefiting from a resumption of drilling. Accordingly, this trend could be attributed to rising crude prices, which are up 18% in the latest quarter and 42% since the start of 2021.

Indeed, Schlumberger reported a net income of $431 million, or 30 cents per share, for the three months to June 30. This represents a considerable increase compared with $299 million, or 21 cents per share, in the first quarter. Accordingly, and after Schlumberger’s announcement, Wall Street analysts anticipated 26 cents per share (Refinitiv IBES).

Operating margins nearly doubled to 14.3%, the highest since 2018, led by significant gains in its software and reservoir performance units. Those gains, which marked the fourth consecutive quarter of margin expansion, reflected past cost-cutting and significant year-over-year software revenue increases.

However, oilfield activity levels still remain far below pre-pandemic levels, the media website notes. Besides, and oil demand could face a threat as a resurgence of infections from coronavirus variants prompts some restrictions in different parts of the world.

Although there is some skepticism, Schlumberger officials today offered an optimistic outlook for the rest of the year. Additionally, they expect further growth and margin expansion in the company’s North American and international operations.

Comments from Schlumberger

Therefore, international revenue could rise at a double-digit percentage rate compared with year-ago levels, officials said. For instance, Schlumberger’s North American business, which fell 1% versus a year ago, could “surprise to the upside.” Particularly, this could result from the recent spending by private operators, Chief Executive Olivier Le Peuch said.

In fact, “industry projections of oil demand reflect the anticipation of a wider vaccine-enabled recovery; thus, improving road mobility, and the impact of various economic stimulus programs,” Le Peuch said. Besides, he cautioned the COVID-19 pandemic continues to threaten the demand recovery.

According to Schlumberger’s CEO, U.S. oil output may not reach pre-pandemic levels until after 2022. Mainly because international supply and demand conditions would push oil and gas activity beyond 2019 levels in the next two to three years.

Like Schlumberger, oil and gas giant and rival Halliburton, this week also delivered a bullish outlook for the oil industry recovery. On the other hand, Baker Hughes missed earnings expectations.  

Lastly, and as Reuters reports, some analysts said the results were strong; but also lamented that Schlumberger’s stock still underperformed.

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