Oilfield service leader Schlumberger’s (SLB) fourth-quarter earnings beat analyst expectations Friday, following a mixed report from Baker Hughes (BKR) Thursday. BKR stock briefly cleared a buy point.
Publicly held energy companies, from the oil majors to U.S. independent producers, have said they will remain capital disciplined in 2022 — focusing on their balance sheets and on returning value to shareholders, rather than spending to increase production. Meanwhile, private producers appear to be hustling to increase output.
Higher levels of production means more business for oilfield service providers such as Baker Hughes and Schlumberger.
Output out of the prolific Permian basin soared to a record 4.92 million barrels per day in December, according to the Energy Information Administration. In addition, total U.S. rig counts are up by 228 year over year, to 601, according to data from Baker Hughes released on Jan. 14.
Crude oil futures have surged to multiyear highs, adding more pressure to increase production.
Here’s how oilfield service providers’ earnings fared this week.
Schlumberger: Oilfield Service Outlook “Favorable”
Estimates: Analysts forecast Schlumberger earnings per share would soar 77% to 39 cents with revenue up 10% to $6.08 billion.
Results: Earnings jumped 86% to 41 cents per share with revenue up 13% to $6.22 billion. Furthermore, international revenue of rose 5% quarter-over-quarter to $4.9 billion on stronger activity. North American revenue rose 13% on the quarter to $1.28 billion, outpacing rig count growth.
“Looking ahead into 2022, the industry macro fundamentals are very favorable, due to the combination of projected steady demand recovery, an increasingly tight supply market, and supportive oil prices,” said CEO Olivier Le Peuch in the earnings release. “We believe this will result in a material step up in industry capital spending with simultaneous double-digit growth in international and North American markets.”
Also, the company sees oil demand exceeding pre-pandemic levels before the end of the year, barring any Covid-19 related disruptions.
Stock: SLB stock fell 0.9% to 36.70 in pre-market trading on the stock market today. SLB stock closed Thursday at 37.05, above its 36.97 buy point from a long consolidation.
SLB stock is ranked third in IBD’s Oil & Gas-Field Services group.
Baker Hughes Earnings
Estimates: Analysts polled by FactSet projected Baker Hughes swinging to a profit of 28 cents per share from a loss of seven cents in the year-earlier quarter. The oilfield service and equipment provider’s revenue was expected to be flat, at $5.49 billion.
Results: Revenue of $5.5 billion met expectations, while adjusted diluted earnings came in at 25 cents per share — a big year-over-year jump, but below analysts’ targets.
In addition, a statement from CEO Lorenzo Simonelli projected the pace of global economic growth to remain strong in 2022, “although slightly moderate compared to 2021. We believe the broader macro recovery should translate into rising energy demand for 2022 and relatively tight supplies for oil and natural gas,” a positive environment for Baker Hughes’ markets.
Stock: Shares flattened at 26.71 early Friday. BKR stock had briefly moved above its 27.76 buy point in Thursday’s trading.
Halliburton (HAL) will announce Q4 results before the market opens on Jan. 24.
Follow Gillian Rich on Twitter for energy news and more.
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