Page 4 - NorthAmOil Week 43 2022

NorthAmOil COMMENTARY NorthAmOil

Services giants beat third-

quarter profit forecasts

Oilfield services giants SLB, Halliburton and Baker Hughes beat

analyst forecasts with their third-quarter profits, buoyed by a

pick-up in drilling activity

GLOBAL THE world’s leading oilfield services companies
continue to benefit from higher crude prices
WHAT: and the resulting uptick in drilling activity. SLB
SLB, Halliburton and – newly rebranded from Schlumberger – Halli-
Baker Hughes has beaten burton and Baker Hughes all beat analyst expec-
analyst expectations tations with their third-quarter profits. Looking
for their third-quarter ahead, the companies are confident that oilfield
profits. activity will remain strong for some time yet.
The firms’ performance illustrates how the
WHY: current operating environment continues to
Oilfield activity has be favourable despite significant oil price vol-
picked up in recent atility in recent months and ongoing restraint
months, bolstered by by upstream players. Many exploration and
higher oil and gas prices. production (E&P) companies had been strug-
gling with losses in recent years and came under
WHAT NEXT: growing pressure to return cash to shareholders
The companies are rather than investing in new drilling. And even
confident that oilfield as oil prices rebounded to multi-year highs,
activity will remain those E&P players were hesitant to return to
strong. high spending on new drilling, preferring
instead to continue acting with caution.
Despite this, though, oilfield activity is boom-
ing. In the week up to October 21, the US’ active revenue of $5.9bn, which was up 13% sequen-
oil and gas rig counts hit 771 – the highest level tially and 26% y/y, and North American revenue
since early 2020 – while globally, not including of $1.5bn, which was flat sequentially and up
the US and Canada, there were 879 active oil and 37% y/y.
gas rigs by September 22. This also represented SLB CEO Olivier Le Peuch said in a statement
the highest level since early 2020, at the onset of that the pace of growth in the company’s inter-
the coronavirus (COVID-19) pandemic. national business had increased “significantly”,
These levels translate into more business for with this “complementing already robust levels
the oilfield services sector, and the top three of activity” in North America.
companies’ third-quarter results are a reflection “Energy industry fundamentals continue to
of that. be very constructive,” Le Peuch said, but added
that more investment is required to address the
SLB current energy supply crunch and the limits on
Newly rebranded SLB posted net income of oil production capacity.
$907mn, or $0.63 per share, for the third quarter The company anticipates that its revenue for
of 2021, up from income of $550mn, or $0.39 per the fourth quarter will grow by more than 20%
share, in the same quarter of 2021. According to and Le Peuch said he expected activity in the
Refinitiv IBES, analysts had expected the com- Middle East to drive growth, with the region
pany to post earnings of $0.55 per share. benefiting from the “largest investment cycle
SLB said that its adjusted earnings and pre-tax we have ever seen”.
segment operating margin had reached 18.7%, SLB also raised its capital expenditure budget
representing the highest level since 2015. Its total for 2022 by 10% to $2.2bn. A Third Bridge ana-
revenue rose 28% year on year and 10% sequen- lyst, Peter McNally, said this represented a “sig-
tially to $7.5bn. This included international nal of confidence in a more sustained recovery

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