The world's largest oilfield services provider
) reported adjusted first quarter 2013 earnings of $1.01 per
share (excluding special items), beating the Zacks Consensus
Estimate of 99 cents with ease.
Also, the quarter's results increased from 96 cents per share
earned in the year-earlier quarter. The results were boosted by
the company's strong international exposure, focus on execution
and integration capabilities.
Income from continuing operations, excluding charges, was $1.35
billion, up approximately 4% year over year.
Total revenue of $10.7 billion was up 7.6% from the year-earlier
level of $9.9 billion and was in line with the Zacks Consensus
First Quarter Highlights
Oilfield Services: Segmental revenues were up approximately 8%
year over year at $10.7 billion in the first quarter. Pre-tax
operating income of more than $2.0 billion increased 4% year over
All groups - Reservoir Characterization, Drilling Group and
Production Group - registered a sequential fall or remained flat.
The sequential downfall was due to the strong year-end product,
software and multiclient sales experienced in the fourth quarter
of 2012. Seasonal activity slowdowns in the North Sea, Russia and
China, weather-related work delays in the Brunei, Malaysia &
Philippines and Australasia GeoMarkets, and lower pricing as a
result of excess capacity in US land also contributed to the
sequential decline. However, these sequential effects were
partially offset by strong exploration and drilling activity in
Angola, and strong winter project activity in Western Canada
Reservoir Characterization: This group posted revenue of $2.8
billion in the first quarter, up 9% year over year. Pre-tax
operating income was $758 million, which increased 13% from the
Drilling Group: First quarter revenues recorded by this group was
$4.1 billion, which improved 9% annually. Pre-tax operating
income was $741 million, up 13% year over year.
Production Group: The revenue for the quarter recorded by this
group was $3.8 billion, which climbed 7% annually. Pre-tax
operating income was $573 million, down 8% year-over-year.
As of Mar 31, 2013, the company had approximately $5.6 billion in
cash and short-term investments and $8.1 billion in long-term
debt, representing a debt-to-capitalization ratio of 23.7%. In
the reported quarter, Schlumberger repurchased 2.5 million shares
of its common stock at an average price of $77.63 for a total
purchase price of $193 million.
Looking forward, Schlumberger's overall outlook for 2013 remains
largely unchanged from its earlier projections. The company
remains unperturbed despite the main economies including China,
the U.S. and the Eurozone witnessing mixed fortunes in the first
quarter. Schlumberger expects its international spending on
exploration and production to climb 10% this year and activity to
increase in the U.S. Gulf of Mexico. The company also expects
steady growth in key regions that include Sub-Sahara Africa,
Russia, the Middle East, China and Australia. On the flipside,
lower-than-expected rig activity and continuing pricing weakness
is keeping the management apprehensive about its North American
Schlumberger generates about two-thirds of its revenues
internationally, marking the highest ratio among the biggest
oilfield service providers, which include
Baker Hughes Inc.
). Schlumberger's strength also lies in effective implementation,
strong contracts and new technologies.
The oilfield services behemoth believes that strong leverage to
the deepwater segment will help it perform well over the coming
years. While the company makes most of its money outside North
America, it suffers from the industry-wide weakness in U.S.
hydraulic fracturing services as well as softness in the land
Schlumberger currently holds a Zacks Rank #3 (Hold) and is
expected to perform in line with the broader market over the next
few months. However, there are other better performing sector
stocks, like Zacks Ranked #1
Range Resources Corporation
), that are likely to outperform the market.
BAKER-HUGHES (BHI): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
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