Schlumberger (SLB 60.72 +2.29, +3.92%), the largest oilfield
services company in the world, reported third quarter earnings results this
morning of $0.46/share, which came in slightly ahead of expectations.
On the top line, revenues rose 7.6% year/year to $8.5 bln, which fell a little short of expectations.
For this quarter, its International segment was the bigger story versus North America. More specifically, the company's third quarter sales mark of $8.5 bln was up 2% sequentially, which was driven by the International areas where broad-based activity recovery continued and where sequential revenue growth outpaced that of North America for the first time since the second quarter of 2014.
Sequentially, North American revenue growth rose 2% to $3.19 bln, while International revenue growth rose 3% to $5.22 bln in the quarter.
North American sequential revenue growth did remain positive in the quarter but did, however, slow from previous rates as takeaway constraints in the Permian Basin impacted hydraulic fracturing activity.
Given the outlook for global economic growth and oil demand remaining solid, the company continues to see a need for a multi-year increase in international E&P investment, which is very good news for Schlumberger.
Looking at offshore drilling, the company is seeing a pick-up in drilling activity and believes that shallow water drilling will come back before deep water drilling does.
A leading indicator to how companies in the oil and gas equipment and services space will do is determined by how oil and gas producers (i.e. XOM, CVX, EOG, PXD, etc.) adjust their capital spending budgets going forward. So, since earnings season is here, we will get an update from most of these related companies and will have a decent spending forecast going forward.
In early trade, shares of SLB moved up 4%.
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