Schlumberger’s third-quarter profit tops forecasts on increased drilling

By Liz Hampton and Ruhi Soni

(Reuters) -Top oilfield services provider Schlumberger (NYSE:) Ltd reported its strongest adjusted profit since 2015 on Friday, with third-quarter earnings that topped Wall Street expectations as a surge in oil and gas prices led to more drilling activity.

Oil and gas producers are looking to increase production as crude prices stay near eight-year highs, boosting demand for Schlumberger’s equipment, services and technology. prices averaged $98.96 a barrel during the quarter, up 33% from the third quarter of 2021.

Net income was $907 million, or 63 cents a share, in the three months ended Sept. 30, compared with $550 million, or 39 cents per share, a year ago. Analysts had expected Schlumberger to report earnings of 55 cents per share, according to Refinitiv IBES.

The company said its adjusted earnings and pre-tax segment operating margin of 18.7% were the highest since 2015.

“The pace of growth in our international business stepped up significantly, complementing already robust levels of activity in North America,” Schlumberger Chief Executive Officer Olivier Le Peuch said in a statement.

The average U.S. oil rig count at the end of September had climbed to 762 from 508 during the same period last year. The total international rig count was 28% higher at 1,853, according to Baker Hughes.

“While concerns remain over the broader economic climate, the energy industry fundamentals continue to be very constructive,” Le Peuch added, calling for more investment to rebalance markets in the face of an energy supply crunch and limited additional capacity.

He anticipates Schlumberger will see continued revenue growth and margin expansion in the fourth quarter of this year.

Schlumberger increased its capital spending plans for 2022 by 10% to $2.2 billion. The bump is likely a “signal of confidence in a more sustained recovery for the world’s largest oilfield services company,” said Peter McNally, an analyst at Third Bridge.

Shares of Schlumberger were up more than 2% in pre-market trading.

“Schlumberger continues to capitalize on the strengthening business dynamics with strong performance from scale internationally,” Jefferies analysts wrote in a note.

Total revenue rose 28% to $7.48 billion, with Schlumberger’s international operations bringing in $5.88 billion. Wall Street had expected revenue of $7.1 billion for the quarter.

International revenue was up 13% sequentially and 26% from a year ago, while revenue in North America was flat compared to the prior quarter but up 37% from last year.

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