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Schlumberger profit beats WS forecast, despite quarter loss and $938 million write-down of its Venezuelan assests



By Liz Hampton and Nivedita Bhattacharjee

Petroleumworld 01 22 2018

Schlumberger on Friday posted a fourth quarter loss on charges but beat Wall Street forecasts and gave an upbeat outlook, predicting its international operations would grow in 2018 for the first time in four years.

Schlumberger, the largest energy company so far to report results, is a bellwether for oilfield services and drilling. Its forecast for broad improvements this year on higher oil prices signals a stronger recovery for producers and service companies.

“Looking at the oil market, the strong growth in demand is projected to continue in 2018, on the back of a robust global economy,” said Chief Executive Paal Kibsgaard. Producers predict between 15 and 20 percent growth in North American energy investments, he said.

The world's largest oilfield services company reported $2.7 billion in fourth quarter charges including a $938 million write-down of its Venezuelan holdings and unpaid bills due to economic turmoil there. Schlumberger said it would remain in the South American country and continue to seek payment for its past work there.

It also took more than $1.1 billion in restructuring expenses tied to its WesternGeco seismic business, citing poor returns. That unit will focus on selling its seismic data and no longer provide land and marine seismic acquisition. The business has suffered as drilling has focused on well-defined U.S. shale fields rather than new areas.

The charges widened Schlumberger's fourth quarter net loss to $2.26 billion, from $204 million a year earlier. Revenue rose 15 percent to $8.18 billion.

Its shares were roughly flat at $76.33 in afternoon trade.

Excluding the writedowns, profit benefited from the year's recovery in crude prices, rising to 48 cents a share, above the average analyst estimate of 44 cents, according to Thomson Reuters I/B/E/S.

Schlumberger said quarterly results included an additional $76 million in taxes due to U.S. tax reform.

The company saw international growth underpinned by recent contract wins in Saudi Arabia, Kuwait, India and elsewhere.

“The international market will return to growth for the first time since 2014,” Patrick Schorn, executive vice president for new ventures, said during an earnings call. “Projected activity growth is leading us to start the reactivation of equipment,” he added.

Growth in the international market has been supported by a nearly 24 percent climb in the global Brent futures contract in the past three months. In North America, where fourth quarter revenue rose 59 percent over a year earlier, Schlumberger said it expected to deploy new hydraulic fracturing fleets due to strong demand for pressure pumping services. The company in January acquired Weatherford International's hydraulic fracturing business, scrapping plans for a joint venture.

The recovery of global oil prices to almost $70 a barrel has given fresh legs to shale drilling in North America, positioning the United States to push oil output past 10 million barrels per day - toppling a record set in 1970.

Schlumberger also said it would move into “execution” mode to focus on generating positive cash flow for its Schlumberger Production Management (SPM) business, which invests in major oilfield projects alongside customers.

“I would characterize this as very disciplined growth going forward,” said Schorn, regarding the company's strategy for the business, which has drawn investor attention because of heavy investments.

For the full year, Schlumberger reported a net loss of $1.51 billion, down from $1.69 billion in 2016. Revenue rose 9.5 percent to $30.44 billion.

Story by Liz Hampton and Nivedita Bhattacharjee ; Editing by Patrick Graham and Andrew Hayrom Reuters. 01 19 2017

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