Mexico



Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

Oilfield service companies miss earnings forecasts despite soaring U.S. production

 

 

 

By Liz Hampton and John Benny

MIDLAND, Texas /BENGALURU
Petroleumworld 07 23 2018

Oilfield service giants Schlumberger and General Electric Co's Baker Hughes missed second quarter revenue forecasts on Friday as slow international growth offset record production in the United States that boosted domestic demand for their services.

The Houston-based companies were the first among their peers to report earnings, putting them under scrutiny from analysts seeking clues about the health of the industry. Schlumberger, the world's largest oilfield services firm, is viewed a as bellwether for the global oil and gas industry due to its heavy international exposure.

Schlumberger's overall revenue rose 11 percent in the quarter to $8.30 billion, missing analysts' estimate of $8.36 billion, according to Thomson Reuters I/B/E/S. Revenue from Schlumberger's international business dragged the overall performance down: it grew 4 percent in the quarter to $5.07 billion, but remained 1.4 percent below a year ago.

GE's Baker Hughes reported total revenue of $5.55 billion, versus analysts' forecasts of $5.57 billion, according to I/B/E/S. Baker Hughes' revenues were hurt by its oilfield equipment and turbomachinery businesses.

The performances reflect how a relatively slow recovery in international markets, where oil projects are often more costly, continues to drag down earnings for large integrated service firms, even as surging U.S. production helps.

U.S. oil production last week hit a record 11 million barrels per day, marking a dramatic comeback in an industry that had been hard hit by the 2014 oil price crash.

Wall Street analysts were not fazed by the missed estimates, and instead focused their attention on stronger-than-expected sequential growth in international markets and upbeat comments from executives.

“Both companies were much more optimistic about the global land and offshore recovery than in previous conference calls,” said James West, a senior managing director for investment banking firm Evercore ISI.

Shares of Schlumberger were trading at $66.86 in afternoon trade, off a fraction of a percent. Baker Hughes was up about 0.8 percent at $32.04.

Brent crude futures, the global benchmark, topped $80 a barrel in the second quarter, its strongest level in roughly three and a half years amid an effort by major oil producers to cut production and stabilize prices and supply disruptions.

UPBEAT FORECASTS

Schlumberger said it expected to fully utilize its international equipment in the fourth quarter of this year and forecasted double digit growth in that segment next year.

“The broader-based recovery has finally started,” Chief Executive Officer Paal Kibsgaard said on the company's conference call.

Baker Hughes CEO Lorenzo Simonelli said his firm was seeing positive indications from a number of international markets and that longer-cycle activity should drive growth in its oilfield equipment and turbomachinery businesses going forward.

“This is what people have been looking for - the inflection in the international business. It is starting to materialize now,” said Societe Generale analyst Edward Muztafago, referencing the firm's sequential growth.

Revenue from Schlumberger's North America operations jumped about 43 percent to $3.14 billion.

Both companies said they have yet to see the impacts of pipeline constraints in the Permian, where growing production is quickly outpacing available takeaway capacity.

Schlumberger warned the constraints could slow growth in the coming months, but said it plans to continue deploying hydraulic fracturing fleets.

The bottlenecks have sent the price of local crude down to an almost $15 a barrel discount to benchmark prices at Cushing, Oklahoma WTC-WTM.

Revenues in GE's Baker Hughes' oilfield services unit, which accounts for more than half of its overall sales, rose 14 percent year over year to approximately $2.9 billion, driven by stronger activity in North America.

Last month conglomerate General Electric said it would divest its stake in Baker Hughes in a bid to simplify its business and boost shareholder returns, less than a year after merging with the services firm.

_________________________

Story by John Benny in Bengaluru and Liz Hampton in Midland, Texas Editing by Phil Berlowitz from Reuters.

reuters.com 07 20 2018

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


November 13 - 15, 2018.

Gubkin University, Moscow
SPE Student Chapter

 

 

 

 

 

 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.