Page 5 - NorthAmOil Week 04 2023

NorthAmOil COMMENTARY NorthAmOil

customers, which it could do because of an totalled $663mn, compared with $574mn a year
equipment shortage and despite customers’ earlier.
tight budgets. The company reported a loss of $682mn in
restructuring and impairment costs. In Septem-
Also outperforming ber it announced a restructuring, establishing
SLB recorded $3.4bn in profits for the full year, two reporting business segments – oilfield ser-
with nearly 33% of this in the final quarter of vices and equipment and industrial and energy
2022. The full-year profit was up 83% y/y. In technology.
the fourth quarter, the company’s North Amer- On a positive note, Baker Hughes saw record
ican revenue reached $1.6bn, up 27%. Its total orders of $8.0bn posted for the fourth quarter,
fourth-quarter revenue totalled $7.9bn, up 5% up 32% sequentially and up 20% compared with
sequentially and also 27% y/y. the previous year.
SLB’s net income for the fourth quarter, Baker Hughes executives noted what they
excluding special items, amounted to $1.0bn, described as a macro backdrop. “With years
or $0.71 per share, representing an increase of of under-investment now being amplified by
13% sequentially and 73% y/y. This was higher recent geopolitical factors, global spare capacity
than analysts’ average estimates of $0.68 per for oil and gas has deteriorated and will likely
share, according to Refinitiv data cited by require years of investment growth to meet
Reuters. forecasted future demand,” said Baker Hughes’ Customers of the
“Overall, 2022 was transformative for SLB as CEO, Lorenzo Simonelli. “For this reason, we
we set new safety, operational and performance continue to believe that we are in the early stages oilfield services
benchmarks for our customers and strength- of a multiyear upturn in global activity.” companies have
ened our market position both internationally
and in North America,” commented SLB’s CEO, Upcycle hopes been sticking to
Olivier Le Peuch. “We launched our bold new “Rising profitability paired with constrained
brand identity, reinforcing our leadership posi- capital expenditures is allowing these companies tight spending
tion in energy technology, digital and sustain- to generate strong free cash flows,” Raymond
ability, and demonstrated our ability to deliver James’ head of oilfield services equity research, plans.
superior earnings in this early phase of a struc- Jim Rollyson, told the Financial Times.
tural upcycle in energy.” In 2023, customers’ disciplined budgets are
still likely to be standard in North America, so
Weaker performance these oilfield services firms will be looking else-
Baker Hughes reported a 2022 loss of $601mn, where for business and are hoping for a positive
but later in the year its financials picked up and it change in the global market.
reported revenue of $5.9bn for the fourth quar- “The oil and gas industry is entering a new
ter, up 10% sequentially and up 8% y/y. phase in the upcycle marked by the inflection
The company’s adjusted net income was in the Middle East and the strengthening of
$381mn for the fourth quarter, or $0.38 per offshore activity,” SLB’s Le Peuch told analysts.
share, lower than the average estimate of $0.40 “Taken together, this signals the onset of a new
per share by analysts. Its operating income growth pattern internationally.”™

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