Top oilfield firm Schlumberger reported third-quarter profit which beat Wall Street estimates and echoed a rival's forecast for a 20 per cent increase in North American spending next year, as producers capitalize on a rebound in crude prices.
Global oil prices have climbed nearly 64 per cent since the start of 2021 to over $85 a barrel on the back of a vaccine-fueled demand recovery. The worldwide rig count was 1,448 at the end of the third quarter, compared with 1,019 a year earlier, according to Baker Hughes data.
"The industry macro fundamentals have visibly strengthened this year, particularly in recent weeks - with demand recovery, oil and gas commodity prices at recent highs, low inventory levels, and encouraging trends in pandemic containment efforts," Schlumberger Chief Executive Officer Olivier Le Peuch said in a statement, adding he expects those conditions to materially drive investment over the coming years.
Le Peuch estimated North American capital spending would increase by roughly 20 per cent next year, in line with a recent forecast from peer Halliburton. He expects international spending to see mid-teen growth.
Schlumberger reported net income of $550 million, or 39 cents per share, for the quarter, edging past Wall Street estimates of 36 cents each, according to Refinitiv IBES. Revenue of $5.8 billion fell short of analysts' expectations of $5.9 billion, but was up 11 per cent year-over-year.
Schlumberger's shares fell at the market open but recovered slightly after and were down 0.85 per cent in early trading to $34.01. They are up 55 per cent year-to-date, outpacing gains over the same period by Baker Hughes and Halliburton.
Wall Street analysts said the results were positive, pointing to improved margins, which topped expectations and have expanded for five straight quarters.
"These results are a wonderful breath of fresh air," analysts for investment firm Tudor, Pickering, Holt & Co wrote in a note. They called the start to oilfield earnings season "rough," with Halliburton and Baker Hughes' results snagged by Hurricane Ida-related disruptions and supply chain problems. --Reuters