Oilfield service leader Schlumberger's fourth-quarter earnings beat analyst expectations Friday, following Thursday's mixed report from Baker Hughes. Both BKR stock and SLB stock traded traded just below buy points.
Schlumberger reported an 86% jumping earnings to 41 cents per share with revenue up 13% to $6.22 billion. Analysts were expecting EPS of 39 cents with revenue of $6.08 billion. International revenue of rose 5% quarter-over-quarter to $4.9 billion on stronger activity while North American revenue climbed 13% on the quarter to $1.28 billion, outpacing rig count growth.
"Looking ahead into 2022, the industry macro fundamentals are very favorable, due to the combination of projected steady demand recovery, an increasingly tight supply market, and supportive oil prices," said CEO Olivier Le Peuch in the earnings release. "We believe this will result in a material step up in industry capital spending with simultaneous double-digit growth in international and North American markets."
Also, the company sees oil demand exceeding pre-pandemic levels before the end of the year, barring any Covid-19 related disruptions.
Oilfield Service Outlook: Capital Spending Expected To Rise
Capital spending has been a major topic in the oil and gas industry over the last two years.
Publicly held energy companies, from the oil majors to U.S. independent producers, have said they will remain capital disciplined in 2022. That means keeping spending focused on their balance sheets and on returning value to shareholders, rather than on increasing production. Meanwhile, private producers appear to be hustling to increase output.
During its earnings call, Le Peuch said that Schlumberger sees a "substantial step up in capital spending" amid shrinking spare capacity and declining inventory this year. It expects at least a 20% increase in capital spending in North America where it sees the completion of more DUCs, drilled but uncompleted wells.
It sees 2022 total capital investments to be $1.9 vs. $1.7 billion in 2021. That points to at least a modest improvement for oilfield service providers.
Output out of the prolific Permian basin soared to a record 4.92 million barrels per day in December, according to the Energy Information Administration. In addition, total U.S. rig counts are up by 228 year over year, to 601, according to data from Baker Hughes released on Jan. 14.
Schlumberger shares fell 1.9% to 36.36 on the stock market today. SLB stock closed Thursday at 37.05, above its 36.97 buy point from a long consolidation.
SLB stock ranks third in IBD's Oil & Gas-Field Services group.
Baker Hughes Earnings
On Thursday, Baker Hughes reported revenue of $5.5 billion, meeting analyst expectations. Adjusted diluted earnings came in at 25 cents per share — a big year-over-year jump, but below analysts' targets of 28 cents.
In the earnings release, CEO Lorenzo Simonelli projected that the pace of global economic growth to remain strong in 2022, "although slightly moderate compared to 2021. We believe the broader macro recovery should translate into rising energy demand for 2022 and relatively tight supplies for oil and natural gas," a positive environment for Baker Hughes' oilfield service markets.
Stock: Shares rose 2% to 27.24 Friday. BKR stock had briefly moved above its 27.76 buy point in Thursday's trading.
Halliburton will announce Q4 results before the market opens on Jan. 24.
Follow Gillian Rich on Twitter for energy news and more.
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