SLB Rises On Strong Earnings, Bullish Outlook For Oil And Gas


SLB (SLB), formerly known as Schlumberger, topped fourth-quarter revenue and earnings views. SLB stock rose early Friday as the oilfield service giant gave an optimistic outlook for 2023 and beyond based on strong oil demand while supply remains tight.




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Earnings

Estimates: Analysts predicted earnings growing 66% to 68 cents per share. Wall Street forecast revenue increasing 25% to $7.81 billion.

Earnings: SLB reported EPS grew 73% to 71 cents per share while revenue jumped 27% to $7.9 billion. For the full year, earnings advanced 70% to $2.18 per share. Full-year revenue came in at $28.1 billon, up 23% compared to 2021. This was in-line with company expectations.

SLB CEO Olivier Le Peuch said in the earnings statement revenue grew across all its business divisions and geographical areas. Le Peuch added there was “robust” year-end sales in SLB’s digital services.

There was also “particularly strong service activity offshore and in the Middle East where we witnessed a significant inflection as capacity expansion projects mobilized,” Le Peuch said.

Outlook: SLB seems optimistic about 2023 and beyond. The company reported that with increased activity and improving costs of business SLB has a “very strong foundation for outperformance in 2023.” SLB stressed that commercial success in the Middle East, with offshore projects and in North American markets are the reasons for this optimism.

“Looking ahead, we believe the macro backdrop and market fundamentals that underpin a strong multi-year upcycle for energy remain very compelling in oil and gas,” Le Peuch said.

The company is one of the world’s largest providers of offshore drilling services. It also provides technology for well drilling, production, and oil and gas processing.

SLB previously topped estimates in the third quarter. The company saw earnings grow 75% to 63 cents per share while revenue increased 10% to $7.5 billion. In Q2, Sales increased 20% to $6.8 billion. Schlumberger earnings increased 66% to 50 cents. In July, SLB updated its forecast for the remainder of 2022.

The SLB board announced Friday that it had approved a 43% increase in quarterly cash dividend t0 25 cents per share.

SLB Stock

SLB stock rose around 1.7% Friday during market trade . Shares had advanced 0.4% to 57.38 Thursday, slightly extended from a 53.97 handle buy point.

SLB stock ranks third in the Oil&Gas-Field Services group, which ranks No. 1 out of 197 industries tracked by IBD. Schlumberger has a 99 Composite Rating out of 99. The stock has a 96 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 80.

SLB Stock: The Oil And Gas Market

SLB earnings come on the back of optimistic oil demand forecasts from both the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC).

On Wednesday, the IEA estimated the recent easing of Covid restrictions in China will boost 2023 global oil demand to record highs. The news sent U.S. benchmark oil and U.K. benchmark Brent crude to their highest levels since early December.

On Tuesday, OPEC Secretary-General Haithan Al-Ghais said he is “cautiously optimistic” about the outlook for the global economy, as a recovery in oil demand in China is tempered by signs of fragility elsewhere, Bloomberg reported. He also said there could be 500,000 barrels per day growth in China in 2023.

Estimates from the Paris, France-based International Energy Agency sees China’s reopening will drive global oil demand to a record high of 101.7 million barrels per day (bpd) in 2023, up by 1.9 million bpd from 2022. U.S. oil prices gained around 2% Wednesday, placing West Texas Intermediate (WTI) futures at the highest level since early December.

Meanwhile, U.S. crude oil prices on Friday hovered near $81 per barrel. U.S. crude oil futures have regained support above their 50-day moving average line, after settling above that line on Tuesday for the first time since mid-November. Between Jan. 3-Jan. 5, West Texas Intermediate prices dropped 9%, to $73.52 per barrel.

U.S. natural gas prices dropped 1% to $3.28 per million British thermal units, the lowest since June 2021.

SLB Stock: More Oilfield Firms On Tap

Fellow oilfield service firm Baker Hughes (BKR) reports Q4 earnings on Jan. 23. Analysts predict EPS growing 60% to 40 cents while revenue is expected to edge up 10% to $6.06 billion.

The Texas-based company supplies oilfield services, products, technology and systems to the global oil and natural gas industry. The firm operates through multiple segments and provides products and services for on- and offshore operations.

Following SLB and Baker Hughes, Halliburton (HAL)  reports fourth-quarter earnings on Jan. 24. Wall Street forecasts earnings ballooning to 86% to 67 cents per share. Sales are expected to gain 27% coming in at $5.58 billion.

HAL and BKR stock rose slightly in premarket trade.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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