Schlumberger shares rise on lower 2019 capex, international outlook
(Recasts with details from conference call, analyst comment)
By John Benny and Liz Hampton
Jan 18 (Reuters) - Oilfield services provider Schlumberger
NV said on Friday it would spend less in 2019 and
forecast single-digit growth in international markets this year,
sending its shares as much as 5 percent higher.
With the sharp drop in oil prices since 2014 many producers
have evaluated spending budgets for 2019, stoking concerns that
a slowdown in activity would hurt oilfield service companies,
which have struggled to boost their prices.
Schlumberger, a bellwether for the oilfield services sector,
expects full-year 2019 capital expenditure of between $1.5
billion and $1.7 billion, versus $2.2 billion in 2018, driven by
lower spending in North America, Chief Executive Officer Paal
Kibsgaard said on an earnings call.
Shares of Schlumberger rose more than 5 percent to $43.60 in
"The downward guidance for 2019 capital expenditures helped
solidify the dividend is safe," said Brian Youngberg, a senior
energy analyst for Edward Jones.
Schlumberger said recent volatility in crude prices has led
to even more uncertainty in the spending outlook for oil and gas
producers. Crude prices have tumbled roughly 30 percent since
"Future investments will likely be much closer to a level
that can be covered by free cash flow," Kibsgaard said about its
U.S. operator customers.
But he said that even as operators tighten their purse
strings, the company had built "significant flexibility" into
its 2019 operating plan. He also said supply cuts by OPEC and
Russia could lead to a gradual recovery in oil prices in 2019.
And after several years of underinvestment, the company
anticipates growth in international markets, driven by higher
activity in regions including Latin America, Africa and Asia.
Revenue from Schlumberger's North America business rose 0.3
percent year over year to $2.82 billion, while international
revenue rose nearly 1 percent to $5.28 billion.
Schlumberger warned in early December that fourth-quarter
North America revenue would take a hit due to
steeper-than-anticipated declines in the hydraulic fracturing
Revenue from its OneStim hydraulic fracturing businesses
slid 25 percent sequentially in the fourth quarter, prompting
the company to idle some of its fleets late in the fourth
quarter, it said.
While analysts called Schlumberger's results neutral to
positive, investment firm Tudor Pickering Holt & Co noted they
would not "do much to make investors feel a sense of urgency to
dive headlong into OFS (oilfield service) stocks."
Fourth-quarter net income was $538 million, or 39 cents per
share, compared with a loss of $2.26 billion, or $1.63 per
share, a year earlier when it took $2.7 billion in charges,
including a $938 million write-down on its Venezuelan holdings
and unpaid bills there.
Excluding one-time items, the company earned 36 cents per
share, in line with analysts' estimates, according to IBES data
Revenue was flat at $8.18 billion, compared with a year
earlier, but beat the average analyst estimate of $8.04 billion.
(Reporting by John Benny in Bengaluru; Editing by Arun Koyyur,
Jeffrey Benkoe and Susan Thomas)
First Published: 2019-01-18 14:04:18
Updated 2019-01-18 17:41:02
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