Oil field giant’s profits take a hit
Schlumberger’s first-quarter profits fell 15 percent from a year ago, in large part because it sold several North American businesses during the pandemic.
The oil field services giant, which has principal offices in Houston, said Friday that it earned $299 million in the first three months of the year, down from $351 million in the same period in 2020. Revenue fell 30 percent to $5.2 billion, down from $7.5 billion a year earlier.
The company attributed the decline in profits to the divestment last year of several North American businesses, which generated a combined $659 million in revenue during the first quarter of 2020.
Schlumberger’s first-quarter revenue in North America fell 17 percent from the fourth quarter to $972 million. The bulk of the decrease in revenues came of the sale at the end of last year of Schlumberger’s OneStim pressure pumping business and its low-flow artificial lift business in North America.
“Excluding the impact of these divestitures,” Schlumberger CEO Olivier Le Peuch said in a statement, “our global revenue was essentially flat.”
Oil field services companies are increasingly convinced that demand for crude and their services are starting to recover from the worst oil bust in decades caused by the COVID-19 pandemic. Schlumberger, Halliburton and Baker Hughes — three of the largest oil-field services giants — all beat Wall Street expectations for first quarter earnings as crude prices climbed above $60 and drilling acitivyt has rebounded.
It’s a welcome relief for the hard-hit sector, which lost more than 102,000 jobs, including 39,000 in Texas, during the pandemic last year. Oil field services companies slashed budgets and payrolls as coronavirus lockdowns crushed demand for
crude and petroleum products, causing drilling work to plummet in West Texas and elsewhere.
Outside of its divestments, Schlumberger said its North American revenue grew 10 percent in the first quarter of 2021 from the fourth quarter of 2020, driven by increased drilling activity in Texas.
The number of operating drilling rigs in the United States has increased by 87 since the beginning of the year, according to Baker Hughes. This week, the rig count fell by one, to 438, the first decline in six weeks.
Le Peuch said he expects North America drilling activity to level off as oil producers have pledged to maintain lower capital spending in an effort to woo investors back to the energy industry. The coronavirus vaccine rollout and gradual lifting of pandemic restrictions are likely to boost demand for crude, although the recovery remains tenuous as coronavirus variants start to emerge.
“There is an increasingly positive sentiment in the industry outlook as the recovery strengthens despite the lingering concerns regarding the COVID-19 crisis,” Le Peuch said.
Schlumberger’s stock rose 46 cents, or about 2 percent, to $25.71 a share.