SLB rises on strong earnings, rising outlook for oil and gas

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SLB (SLB), formerly known as Schlumberger, topped the Q4 revenue and earnings charts. SLB shares rose early Friday as the oilfield services giant gave an optimistic outlook for 2023 and beyond based on strong demand for oil while supply remains tight.




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Revenue

estimates: Analysts predicted earnings growth of 66% to 68 cents per share. Wall Street expects sales to rise 25% to $7.81 billion.

merits: SLB reported that earnings per share grew 73% to 71 cents per share, while revenue increased 27% to $7.9 billion. For the full year, earnings were up 70% to $2.18 per share. Annual revenue was $28.1 billion, an increase of 23% over 2021. This was in line with the company’s expectations.

SLB CEO Olivier Le Peuch said in the income statement that sales grew in all business divisions and geographies. Le Peuch added that there were “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 bow as capacity expansion projects were mobilized,” Le Peuch said.

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

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“Looking forward, we believe the macroeconomic backdrop and market fundamentals underlying a strong multi-year energy upcycle remain very attractive in oil and gas,” said Le Peuch.

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 beat estimates in the third quarter. The company saw earnings grow 75% to 63 cents per share, while sales grew 10% to $7.5 billion. In the second quarter, sales increased 20% to $6.8 billion. Schlumberger’s profit rose 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 its quarterly cash dividend to 25 cents per share.

SLB stock

SLB shares rose about 1.7% in market trading on Friday. Shares were up 0.4% on Thursday to 57.38, slightly extended from a buy point of 53.97.

SLB stock ranks third in the Oil & Gas-Field Services group, which is number 1 of the 197 industries tracked by IBD. Schlumberger has a 99 Composite Rating of 99. The stock has a 96 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for price movements. The EPS score is 80.

SLB stock: the oil and gas market

SLB revenues stem from optimistic oil demand forecasts from both the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC).

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On Wednesday, the IEA estimated that China’s recent easing of Covid restrictions will push global oil demand to record highs in 2023. The news pushed US benchmark oil and UK 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 vulnerability elsewhere, Bloomberg reported. He also said there could be 500,000 barrels per day growth in China by 2023.

According to estimates by the Paris, France-based International Energy Agency, China’s reopening will push global oil demand to a record high of 101.7 million barrels per day (bpd) in 2023, up 1.9 million bpd from of 2022. US oil prices rose about 2% On Wednesday, West Texas Intermediate (WTI) futures placed at their highest level since early December.

Meanwhile, US crude oil prices hovered around $81 a barrel on Friday. US crude oil futures have regained support above their 50-day moving average after falling above that line for the first time since mid-November on Tuesday. Between January 3 and Jan. On October 5, West Texas Intermediate prices fell 9% to $73.52 a barrel.

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Natural gas prices in the US fell 1% to $3.28 per million British thermal units, the lowest since June 2021.

SLB Stock: More oilfield companies available

Fellow oil field service company Baker Hughes (BKR) reports Q4 earnings on January 23. Analysts predict EPS will grow 60% to 40 cents, while revenue is expected to increase 10% to $6.06 billion.

The Texas-based company provides oilfield services, products, technology and systems to the global oil and natural gas industry. The company is active in several segments and provides products and services for onshore and offshore activities.

Following SLB and Baker Hughes, Halliburton (HAL) will report fourth quarter earnings on Jan. 24. Wall Street forecasts an 86% increase in earnings to 67 cents per share. Revenue is expected to grow 27% to reach $5.58 billion.

HAL and BKR shares rose slightly in premarket trading.

Follow Kit Norton on Twitter @KitNorton for more coverage.

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