The world’s largest oil service provider, Schlumberger NV (NYSE: SLB – $69.07) reported first-quarter profit that barely past estimates. The company said global oil supply and demand were in balance and that investments in exploration and production were expected to rise about 5% internationally. Revenue from North America soared nearly 52% to $2.84 billion. However, the total cost of manufacturing products and delivering services rose nearly 12% to $6.80 billion. Revenue from international operations, the company’s biggest segment, fell 0.8%. Latin America’s revenue slump due to delays on a project in Ecuador and decreased activity in Argentina and operations in Venezuela continued to decline. Total revenue rose to $7.83 billion from $6.89 billion. Overcapacity in the pressure pumping market, especially at the company’s Cameron tool and supply segment, dampened earnings. Despite ongoing energy headwinds, Schlumberger’s adjusted profit rose to $525 million, or $0.38 per share, in the quarter from $0.20 a year earlier and a penny ahead of Street views. Schlumberger expects to see growth in the North American pressure pumping market, but warned that its ability to raise prices would be constrained amid capacity additions.
The stock as struggled throughout the decline in world-wide energy prices. And in a sign that the oil market recovery is still in its early stages, no dividend hike is in the offing this year, but share repurchases are a distinct possibility. Full-year earnings are tentative at $2.24 per share vs. $1.46 in 2017 and $3.15 is possible next year if energy prices continue to stabilize. Positions in good-quality Schlumberger, yielding 2.85%, can be held for recovery.