Mubasher: Schlumberger on Friday reported its results for the first three months of 2018, indicating a pretax operating income of $974 million, down 16% from $1.155 billion achieved in the same period of 2017.
Net income, on a GAAP basis, registered $525 million versus $2.255 billion in losses in Q1-17, the oil services company said in a statement.
Meanwhile, revenues amounted to $7.83 billion in the three-month period ended March, registering a year-on-year decline of 4% from $8.179 billion.
"The underlying international businesses started the year well, as business units in the Middle East, the North Sea, and Russia were all in line with our first-quarter activity expectations, while activity upsides in Asia were offset by continued weakness in Latin America and Africa," commented Schlumberger chairman and CEO Paal Kibsgaard.
Schlumberger's earnings per share (EPS) amounted to $0.38 between January and March versus a loss per share (LPS) of $1.63 in Q1-17.
The top official further noted that Q1-18 data had reflected transitory factors including seasonal reductions in activity in the Northern Hemisphere added to planned project startup costs including the equipment mobilisation, reactivation, and redeployment associated with recent contract wins.
In North America, Schlumberger's drilling services expanded on the back of strong demand for horizontal drilling technologies, while revenues grew backed by the ramp-up of activity in Canada.
Commenting on the global oil market, the firm's CEO said that the absence of crude stockpiles on the back of the output trim decision taken by members and non-members of the Organization of Petroleum Exporting Countries (OPEC) have confirmed that the oil market was "in balance."
"After three consecutive years of dramatic underinvestment in global [exploration and production (E&P)] spending, the worldwide production base has started to show the anticipated signs of weakness with noticeable year-over-year production declines appearing in several countries such as Angola, Norway, Mexico, Malaysia, China, and Indonesia," Kibsgaard noted.
He added that with Libya and Nigeria producing at near-full capacity, Venezuelan production in free fall, possible new sanctions against Iran, and rising geopolitical risks, "the only major sources of short-term supply growth to address global production decline and strong worldwide demand are Saudi Arabia, Kuwait, the UAE, Russia, and the US shale oil industry."
He cited production challenges in US shale linked to infill drilling well-to-well interference, along with "the potential lower production of step-out drilling from Tier 1 acreage, and significant infrastructure constraints. It is, therefore, becoming increasingly likely that the industry will face growing supply challenges over the coming year and a significant increase in global E&P investment will be required to minimize the impending deficit."
"The US land pressure pumping business, however, was impacted by weaker than expected activity as well as by softer pricing, inefficiency, rising supply chain costs, and rail logistical challenges. In spite of this, we continued to deploy available fracturing assets, including equipment from our newly acquired capacity," Kibsgaard stated.
He said that the US company expects its land hydraulic fracturing market in the US to improve in Q2-18 in terms of pricing and in operational efficiency.
Despite the challenges both locally and globally, Schlumberger's Kibsgaard said he was optimistic about the outlook for sustainable activity growth in the company's global business over the course of 2018 and into 2019, citing higher customer activity and ability to capture a major share of the emerging opportunities.
