Oil field outlook slightly brighter

Schlumberger posts first quarterly profit since end of 2019

Schlumberger on Friday reported its first profitable quarter in a year, a further sign that the industry is recovering from recent oil busts and the economic fallout from the ongoing global pandemic.

The Houston oil field services company made $374 million in the fourth quarter, compared with a $54 million loss in the third quarter of 2020. It marked the first profitable quarter since the fourth quarter of 2019, when the company posted profit of $333 million.

“Oil prices have risen, buoyed by recent supply-led OPEC+ policy, the ongoing COVID-19 vaccine rollout and multinational economic stimulus actions — driving optimism for an oil demand recovery throughout 2021,” Schlumberger CEO Olivier Le Peuch said in a statement. “We believe this sets the stage for oil demand to recover to 2019 levels no later than 2023, or earlier as per recent industry analysts’ reports, reinforcing a multiyear cycle recovery as the global economy strengthens.”

Oil field service companies, which have taken the brunt of the economic fallout from the oil crash last year, are more confident about the sector’s recovery with crude prices above $50 a barrel and the rising number of operating drilling rigs indicating that drillers are ramping up production. The number of rigs is up by more than 100 since August, according to the company’s weekly tally.

Schlumberger said its fourth quarter earnings were fed by growth in the company’s digital services as exploration and production companies increasingly focus on software and technological efficiencies as they tightened

capital budgets during the oil downturn. The company’s digital revenue in the fourth quarter grew 13 percent to $833 million from $740 million in the third quarter.

Overall fourth-quarter revenue rose 5 percent to $5.5 billion from nearly $5.3 billion in the third quarter, but was still down from $8.2 billion during the same period a year earlier. During the fourth quarter, Schlumberger also sold its onshore hydraulic fracturing business OneStim to Liberty Oilfield services in exchange for a 37 percent equity interest in the company.

For the full-year 2020, Schlumberger lost $10.5 billion after drilling work dried up as demand for crude tumbled during the pandemic. The staggering loss compared with a loss of $10.1 billion in 2019 and a profit of $2.1 billion in 2018.

Annual revenue in 2020 fell 28 percent to $23.6 billion, compared with $32.9 billion a year earlier.