Top oilfield services firm SLB on Friday reported results that topped Wall Street estimates for fourth-quarter profit on strong global demand for its drilling services and equipment.
Formerly called Schlumberger, SLB has benefited from increased oil drilling and production and strong increases in its North America and Latin America businesses. Revenue from North America rose 27% to $1.63 billion in the quarter, while its larger international segment posted a 26% gain, to $6.2 billion.
Benchmark Brent oil prices are trading above $87 a barrel, and averaged around $86 during the fourth quarter, up from roughly $77 a year ago. The average international rig count for the quarter stood at 1,872, nearly 22% higher than the previous year, according to service provider Baker Hughes.
"Global upstream spending projections continue to trend positively. Activity growth is expected to be broad-based, marked by an acceleration in international basins," SLB Chief Executive Officer Olivier Le Peuch said in a statement.
The company this year aims to expand revenue 15% over 2022's $28.1 billion, supported by international and offshore momentum. In North America, it is anticipating a 20% revenue gain.
International revenues could rise at a high-teens percentage rate, excluding Russia, where it warned of market declines.
The company has been able to boost its business in Russia, as rivals have exited and oil prices have climbed, Reuters reported this week, citing company documents.
Shares were roughly flat in morning trading at $57.26 each. The stock has gained 55% in the 52-week period.
Le Peuch expects the oilfield market to benefit from higher service pricing as capacity remains tight. Its pretax margins rose to 24%, and pre-tax operating margins and per share earnings were the highest since 2015.
SLB expects to spend between $2.5 billion and $2.6 billion on capital expenses this year, up from $2.3 billion in 2022.
Net income excluding items was $1.03 billion, or 71 cents per share, for the three months ended Dec. 31, compared with analysts' estimate of 68 cents per share, according to Refinitiv data.
Wall Street analysts viewed the results positively.
"SLB has suffered from slow recovery internationally in recent years, but this may have finally turned the corner," wrote Peter McNally, an analyst for Third Bridge.
SLB's North America revenue becomes a shining spot - https://tmsnrt.rs/3iZqDrg
(Reuters - Reporting by Arunima Kumar in Bengaluru and Liz Hampton in Denver; Editing by Krishna Chandra Eluri and Mark Potter)