Schlumberger Beats Expectations
Schlumberger, Ltd. (NYSE: SLB – $66.53) the world’s largest oilfield services provider, reported better-than-expected quarterly profit and revenue, as strong demand in North America helped offset weakness in Europe and the Middle East. Schlumberger’s revenue rose 4.2% to $7.46 billion in the second quarter, beating the average analysts’ estimate of $7.23 billion. Revenue from North America surged nearly 27% to $2.20 billion. Excluding items, the company earned $0.35 per share, above expectation of $0.30 and nicely higher than last year’s depressed results of $0.23. Schlumberger says it expects to see a steady increase in activity, both in third and fourth quarters of the year in U.S. shale business and likely that we will continue in to 2018, which will partly offset weak sales in international markets, despite a late stage pickup over seas. Schlumberger also said it has agreed to buy a 51 percent stake in Russia’s biggest oilfield services firm Eurasia Drilling Co. This extends the successful long-term relationship the company has enjoyed with EDC through the strategic alliance that was signed in 2011.
This good-quality stock offers sizable long-term promise. Assuming stable-to-higher oil prices, the shares have the potential to deliver strong total returns out to 2020-2022 and can be retained by patient conservative investors wiling to wait out a turnaround in energy. The shares also yield 3% at current levels.