Houston’s Schlumberger, Ltd. (NYSE: SLB – $38.33) reported second-quarter revenue that was ahead of analysts’ expectations, driven by gains in its international business as the world’s largest oil-field services provider said there were more signs of an upturn in exploration and production. Revenue was almost flat year-on-year at $8.27 billion compared with $8.3 billion a year earlier, while the consensus was for $8.11 billion. Reservoir Characterization, Production and Cameron Equipment revenue topped expectations while the Drilling segment came up a bit shy. International revenue rose 8% to $5.46 billion while North American revenue fell 11% to $2.8 billion. Adjusted earnings, which excludes charges and credits, fell to $0.35 a share from $0.43 a year ago, but that was in line with Street’s views. The company went on to say that it is expecting sentiment in oil markets to remain balanced, even as the demand forecast for this year was lowered because of trade-war worries and geopolitical tensions. On the supply side, management continues to see US shale oil as the only near- to medium-term source of global production growth, albeit at a slowing growth rate.
Schlumberger maintained a projection for international exploration and production investment to grow 7% to 8% this year, supported by the increase in international rig count. In contrast, spending in North America is tracking expectations of a 10% decline this year. Full-year earnings per share should approach $1.54, down from $1.63 in 2018. Next year’s consensus stands at $2.09 per share. The company maintained it $0.50 quarterly dividend yielding 5.2% and investors willing to be patient should see a turnaround in these high-quality shares in the years to come.