), the world's largest oilfield services provider, posted adjusted
second-quarter 2014 earnings of $1.21 per share (excluding special
items), lagging the Zacks Consensus Estimate of $1.35. The reported
figure also fell from $1.57 per share earned in the year-earlier
Income from continuing operations, excluding charges, was $1.80
billion, down approximately 19% year over year.
Total revenue of $12.1 billion was up 7.8% from the year-earlier
level of $11.2 billion and beat the Zacks Consensus Estimate of
$11.9 billion. The results were attributable to the company's
increased activity both offshore and in key land markets. The
growth was strongest internationally, as activities gained momentum
in a number of regions. This was partially offset by Canadian
: Segmental revenues were up approximately 8% year over year at
$12.1 billion. Pre-tax operating income of more than $2.6 billion
increased 15% year over year.
All groups - Reservoir Characterization, Drilling Group and
Production Group - registered a sequential rise. All areas and all
groups recorded growth, aided by the successful implementation and
penetration of the company's new technology. Geographical results
were driven by Europe/CIS/Africa, since Russia recovered noticeably
from the effects of a harsh winter and Norway gained from an active
start to the summer seismic season.
: This group posted revenues of $3.1 billion in, up 1% year over
year. Pre-tax operating income was $918 million, which increased
0.7% from the prior-year quarter.
: Revenues recorded by this group were $4.7 billion, which improved
9.8% from the year-ago quarter. Pre-tax operating income was $981
million, up 22.6% year over year.
: Revenues recorded by this group were $4.3 billion, which climbed
10.6% from the year-ago quarter. Pre-tax operating income was $725
million, up 16% year over year.
As of Jun 30, 2014, the company had approximately $6.7 billion in
cash and short-term investments and $11.7 billion of long-term
debt. In the reported quarter, Schlumberger repurchased 11.53
million shares of its common stock at an average price of $101.85
for a total purchase price of $1.17 billion.
Looking forward, Schlumberger's overall outlook for 2014 remains
largely unchanged from its earlier projections. The bullishness of
the company stems from higher market share and an improving cost
structure. Notably, the company targeted state-owned and
independent energy companies that are spending significantly to
develop shale and other resources around the world, rather than
multinational energy companies, most of which are cutting on
Schlumberger is optimistic about rising rig count activity, which
will likely lead to increased international spending on
exploration, higher production and stepped-up activity in the U.S.
Gulf of Mexico. The company also expects steady growth in the key
regions of Sub-Sahara Africa, Russia, the Middle East, China and
This oilfield services behemoth believes that strong leverage to
the deepwater segment will help it to perform well over the coming
years. While the company derives most of its revenues outside North
America, it has to cope with industry-wide weakness in U.S.
hydraulic fracturing services and softness in the land
Schlumberger generates about two-thirds of its revenues
internationally, marking the highest ratio among the biggest
oilfield service providers, which include
) and Baker Hughes Inc. Schlumberger's strength also lies in
effective implementation, strong contracts and new technologies.
At present, Schlumberger has a Zacks Rank #3 (Hold) and is expected
to perform in line with the broader market over the next few
months. Meanwhile, one could consider
BPZ Resources Inc
), which sport a Zacks Rank #1 (Strong Buy).
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