Revenue for the world’s largest oil services provider Schlumberger, Ltd. (NYSE: SLB – $46.69) increased 1% to $7.9 billion from a year ago and in line with consensus. International revenue of $5 billion increased 3% year-on-year thanks to a strong showing in Latin America. North American revenue decreased 3% compared to last year’s first period. Operating income of $908 million decreased 7% year-on-year and earnings per share came in along Street estimates of $0.30 compared to $0.36 last year.
By business segment, revenue for Reservoir Characterization fell 1% from year ago due to seasonally lower sales of software and multi-client seismic licenses. Drilling revenue increased 12% from last year on strong growth from integrated drilling services projects in several markets. Production revenue was 2% lower year-on-year driven by decreased revenue in North America and reduced artificial lift sales in the international markets. Cameron revenue declined 10% from a year ago, mostly due to lower project deliveries from the long-cycle businesses of OneSubsea and Drilling Systems following strong year-end sales of the previous quarter.
Schlumberger predicted a stronger energy picture for the rest of the year. On the global oil front, management expects sentiment to steadily improve supported by a solid demand outlook combined with foreign production cuts taking full effect; slowing shale oil production growth in North America; and a further weakening of the international production base as the impact of four years of under investment becomes increasingly clear. The company also continues to see clear signs that exploration and production investments by energy companies are starting to normalize. Full-year earnings have a Street estimate of $1.60, three cents below 2018 results. These good-yielding (4.2%) shares, however, offer sizable comeback potential. Pumping restraint by OPEC should support oil prices in 2019 and positions in high-quality SLB can be retained for long-term recovery and total returns.