Schlumberger Profit Rises as Global Drilling Demand ExpandsDavid Wethe
Schlumberger Ltd., the largest oilfield-services provider, said third-quarter profit rose as higher crude prices led to more drilling around the globe.
Net income advanced to $1.7 billion, or $1.29 a share, from $1.4 billion, or $1.07, a year earlier, Houston- and Paris-based Schlumberger said in a statement today. Excluding one-time items, earnings per share exceeded the $1.24 average of 31 analysts’ estimates compiled by Bloomberg. Sales increased 11 percent to $11.6 billion.
The quarterly average price for Brent oil, an international benchmark, has remained above $100 a barrel since the start of 2011, according to data compiled by Bloomberg. The average number of rigs active around the world rose 0.9 percent to 3,403 in the quarter from 3,372 a year earlier, according to Baker Hughes Inc.
“They did really have a pretty solid performance everywhere in the world,” Stephen Gengaro, an analyst at Sterne Agee & Leach Inc. in New York, who rates Schlumberger shares a buy and owns none, said in a phone interview today. “Their operating income was above our estimate in every region.”
Schlumberger, which has 31 buy, four hold and one sell recommendation from analysts, rose 2.8 percent to $93.99 at the close in New York. The shares earlier climbed as much as 3.8 percent to $94.88, the highest in more than two years. Baker Hughes surged 7 percent after also reporting profit that beat analysts’ estimates.
Schlumberger’s North American operations, fueled by growth in the U.S. Gulf of Mexico and Western Canada, posted a 7 percent increase in revenue from the second quarter to $3.6 billion. The company recorded operating profit margins of at least 20 percent from all of its regions, the statement showed.
While a seasonal slowdown in Russia and China is expected to affect fourth-quarter results, consensus estimates for the period are “about right,” Chief Executive Office Paal Kibsgaard told analysts and investors today on a conference call. Excluding items, the company is expected to earn $1.35 a share in the final quarter of 2013, according to the average of 29 analysts’ estimates compiled by Bloomberg.
Kibsgaard previously said that 2013 would mark the fourth straight year of “double-digit” spending increases by customers for exploration and production work around the world.
“The upward E&P spend revision made in June continues to be confirmed by rig count improvement and increased customer activity,” the CEO said today. “Within this landscape, we remain positive on the outlook for the industry.”
Schlumberger generates about two-thirds of sales outside of North America, the highest ratio among the largest service providers, including Halliburton Co. and Baker Hughes. Its services include completing wells with hydraulic fracturing work, which blasts water, sand and chemicals underground to free trapped hydrocarbons.
Baker Hughes, the world’s third-largest oilfield services provider, reported profit excluding charges that beat the 78 cent per-share average of 30 analysts’ estimates compiled by Bloomberg. The stock climbed 7.7 percent to $55.75 after earlier rising as much as 11 percent, the biggest intraday increase since July 20, 2012.
“Profit margins beat in every segment around the world,” said Scott Gruber, an analyst at Sanford C. Bernstein in New York who rates Baker Hughes the equivalent of a buy and owns none, said in a phone interview.