The company closed the year with fourth-quarter revenue growing 3% sequentially while pretax operating income rose 9%. Sequential growth was driven by strong activity in North America, Saudi Arabia, and Latin America, while revenue in the Europe, CIS, and Africa Area seasonally declined. Earnings per share of $0.48, excluding charges, were 14% higher than the third quarter.
Among the business segments, the fourth-quarter revenue increase was led by the Production Group, which grew by 7%. Production Group performance was driven by strong international activity, with more than 20% sequential growth in Saudi Arabia, Russia, and Argentina. In North America land, revenue grew 6% following the redeployment of additional pressure pumping fleets, despite a slight sequential decline in market activity. Schlumberger repurchased 1.6 million shares of its common stock at an average price of $64.82.
Cameron Group revenue increased 9% sequentially with growth across all product lines led by OneSubsea, on higher project volume and increased service revenue. Drilling Group revenue had more modest sequential growth of 3%, driven by strong M-I SWACO sales in Mexico and North America and increased Integrated Drilling Services activity in Kuwait. Reservoir Characterization Group revenue decreased 8% sequentially, as the seasonal decline in Wireline activity in Russia and lower revenue on a long-term project in the Middle East were partially offset by year-end sales of SIS software and WesternGeco multiclient seismic licenses. "Pretax operating margin grew 73 bps sequentially to 14.1% driven by improved profitability in the Production, Drilling, and Reservoir Characterization Groups"
The company said, "Looking at the oil market, the strong growth in demand is projected to continue in 2018, on the back of a robust global economy. On the supply side, the extension of the OPEC- and Russia-led production cuts is already translating into higher-than-expected inventory draws. In North America, 2018 shale oil production is set for another year of strong growth, as the positive oil market sentiments will likely increase both investment appetite and availability of financing. At the same time, the production base in the rest of the world is showing fatigue after three years of unprecedented underinvestment. The underlying signs of weakness will likely become more evident in the coming year, as the production additions from investments made in the previous upcycle start to noticeably fall off. All together this means the oil market is now in balance and the previous oversupply discount is gradually being replaced by a market tightness premium, which makes us increasingly positive on the global outlook for our business."
"These positive oil market sentiments are reflected in the third-party E&P spend surveys, which predict 15-20% growth in North American investments in 2018, while the international market is expected to grow for the first time in four years, with a projected 5% increase in spend. So, as we enter the first year of growth in all parts of our global operations since 2014, there is renewed excitement and enthusiasm throughout our organization, and we remain committed to delivering market-leading products and services to our customers, and superior returns to our shareholders."
After three very tough years, it is now clear that the tide is clearly turning in favor of Schlumberger. Moving closer at the first quarter,this will be a transitory quarter; expect the sequential decline in EPS to be $0.02 to $0.03 more than the normal seasonal growth driven by the increased relative signs of businesses in Russia and the North Sea, the need to absorb exceptional cost-related through reactivation of ITS capacity due to recent contract wins as well as noticeable equipment repositioning cost as shift more of its international capacity; expect to absorb the majority of these exceptional costs in the first quarter.
Schlumberger reminds that the company doesn't generally give annual guidance, but.... did say it expects very strong earnings growth in the second quarter and third quarter. The company is focusing on returning money to shareholders through dividends and buyback.
However, currently, the company will continue to buyback shares. The dividend policy is reviewed every year and, this January, they decided to keep their dividend at the same level When conditions improve, the company will look to increase dividend at that point. Positive oil market sentiments are also reflected in the E&P spend outlook, where the third-party surveys predict another 15% to 20% increase in North America investments in 2018 while the international market is poised for growth for the first time in four years with a forecast of 5% increase in E&P spend.