Schlumberger Second-Quarter Profit Rises on Global Oil
Schlumberger Ltd. (SLB), the world’s largest oilfield-services provider, said second-quarter profit rose as customers increased their quest for crude outside the U.S. and Canada onshore market.
Net income increased to $1.4 billion, or $1.03 a share, from $1.1 billion, or 81 cents, a year earlier, Houston-and Paris-based Schlumberger said in a statement today. Excluding a $21 million after-tax charge related to merger costs, the company beat by 5 cents the average of 29 analysts’ estimates compiled by Bloomberg. Sales rose 16 percent to $10.4 billion.
Schlumberger discontinued its distribution with the sale of its Wilson unit and its stake in CE Franklin Ltd. (CFT), and earlier quarters have been restated, the company said.
The number of active oil rigs globally climbed 6.6 percent to an average of 3,372 during the quarter. Oil drilling increased even as prices fell 8.8 percent to average $93.35 a barrel on the New York Mercantile Exchange in the second quarter, down from $102.34 a year earlier.
“It was a very good quarter given an environment of uncertainty and lower oil and natural-gas prices,” Brian Youngberg, an analyst at Edward Jones in St. Louis, said today in an e-mail. The company’s “real strength” came from international activity, he said.
International activity is expected to climb about 10 percent this year from 2011, Chief Executive Officer Paal Kibsgaard told analysts and investors today on a conference call.
Schlumberger got 67 percent of its sales beyond North America in the second quarter, more than its three biggest competitors.
The region that includes Europe, Africa and Russia reported sales of $2.97 billion.
“Sounds like Russia and the North Sea are coming back pretty nicely,” John Lawrence, an analyst at Tudor Pickering Holt & Co., who rates the shares a buy and owns none, said today in a telephone interview. “I think they’re well-positioned there. It’s a fairly good market.”
Europe, Africa and Russia had an operating profit margin of 20 percent. Lawrence said he was expecting 18 percent for the quarter.
“North America held up better than expected, although margins were down, thus continuing the recent industry trend,” Youngberg said.
Operating profit margin in North America fell to 21 percent, from 23 percent in the first quarter, according to the statement.
Schlumberger helps companies drill for oil and gas, including using hydraulic fracturing, or fracking, to free the fuel from shale formations.
Falling prices for fracking work spread to more liquids basins in North America in the second quarter, Kibsgaard told analysts and investors today on a conference call. Operating profit margins for fracking will continue to fall in the third quarter due to lower prices and more expensive materials, he said.
Prices that Schlumberger is bidding for fracking jobs are down about 20 percent from the peak, Kibsgaard said.
The shares rose 1 percent to $69.33 at the close in New York. Schlumberger has climbed 1.5 percent this year.
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