By Arunima Kumar and Liz Hampton
(Reuters) -SLB, the world’s largest oilfield services firm, beat Wall Street estimates for fourth-quarter profit on Friday, driven by strong demand for drilling services and equipment as oil and gas prices remained elevated amid tight supplies.
SLB, formerly called Schlumberger, has benefited from increased oil drilling and production in North America and elsewhere. Revenue from North America rose 27% to $1.63 billion in the reported quarter, while international revenue jumped 26% to $6.2 billion.
Brent oil prices are currently around $86.24 a barrel, and averaged around $84 a barrel during the fourth quarter, up from close to $79 a barrel a year ago. The average international rig count for the quarter stood at 1,872, nearly 22% higher than the previous year, according to Baker Hughes.
“Global upstream spending projections continue to trend positively. Activity growth is expected to be broad-based, marked by an acceleration in international basins,” SLB Chief Executive Officer Olivier Le Peuch said in a statement, adding that a loosening of COVID-19 restrictions in China would be supportive this year.
The company has been able to boost its business in Russia, as rivals have exited and oil prices have climbed, Reuters reported this week.
Shares were up 1.4% in pre-market trading at $58.18 each. They’re up 55% from a year ago.
Le Peuch expects the oilfield market to see higher service pricing as capacity remains tight. In the reported quarter, SLB saw its pretax EBITDA margins grow to 24.4% year over year.
The company’s fourth-quarter pre-tax operating margins and per share earnings were the highest since 2015.
Though SLB has been able to increase prices for customers, it has felt the effects of higher inflation. For 2022, SLB’s capital investments totaled $2.3 billion, up from an expected $2.2 billion. It expects to spend between $2.5 billion and $2.6 billion in 2023.
The company’s net income excluding items was $1.03 billion, or 71 cents per share, for the three months ended Dec. 31, compared with analysts’ estimate of 68 cents per share, according to Refinitiv data.
Wall Street analysts said the results were positive, even though the beat was narrower than expectations, with many applauding the better performance in its Digital & Integration Unit, which passed $1 billion in quarterly revenue for the first time, and strong international results.
“SLB has suffered from slow recovery internationally in recent years, but this may have finally turned the corner,” wrote Peter McNally, an analyst for Third Bridge.
(Reporting by Arunima Kumar in Bengaluru and Liz Hampton in Denver; Editing by Krishna Chandra Eluri, Mark Potter and Mark Porter)
