The world's largest oilfield services provider
) reported adjusted third quarter 2013 earnings of $1.29 per
share (excluding special items), beating the Zacks Consensus
Estimate of $1.24 with ease.
BAKER-HUGHES (BHI): Free Stock Analysis
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Also, the quarter's results increased from $1.04 per share earned
a year ago. The results were boosted by the company's strong
international exposure, focus on execution and integration
Income from continuing operations, excluding charges, was $1.71
billion, up approximately 24% year over year.
Total revenue of $11.61 billion increased 11% from the
year-earlier level of $10.50 billion and in line with the Zacks
Consensus Estimate. Pre-tax operating income of more than $2.50
billion increased 20% year over year.
Third Quarter Highlights
Of the total revenue, International Area revenues were $7.91
billion while North America Area revenues were $3.60 billion.
All the three business segments - Reservoir Characterization
Group, Drilling Group and Production Group - registered growth.
Reservoir Characterization Group: This segment posted revenues of
$3.23 billion, up 7% year over year. Pre-tax operating income was
$983 million, which increased 23% from the prior-year quarter.
Drilling Group: Revenues recorded by this group were $4.41
billion, which improved 3% annually. Pre-tax operating income was
$894 million, up 23% year over year.
Production Group: The revenues for this group climbed 3% year
over year to $4.02 billion. Pre-tax operating income was $707
million, up 32% year over year.
As of Sep 30, 2013, the company had approximately $6.44 billion
in cash and short-term investments and $9.92 billion in long-term
debt. In the reported quarter, Schlumberger repurchased 10.1
million shares of its common stock at an average price of $82.61
for a total purchase price of $833.3 million.
Schlumberger's overall outlook for 2013 remains largely unchanged
from its earlier projections. The company remains unperturbed
despite some of the major emerging economies witnessing mixed
fortunes in the third quarter. Demand for oil in 2013-14 is
expected to remain strong while international natural gas prices
Looking forward, Schlumberger's optimism on rising rig count and
customer activity will likely lead to its 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 key regions of Sub-Sahara Africa, Russia, the
Middle East, China and Australia.
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 to perform well over the
coming years. While the company makes most of its money outside
North America, it bears the brunt of industry-wide weakness in
U.S. hydraulic fracturing services as well as softness in the
land coiled-tubing business.
Schlumberger currently holds a Zacks Rank #2 (Buy). There are
other better-placed oil field service providers such as Zacks
Ranked #1 (Strong Buy)
Gulfmark Offshore, Inc.