Shares of Schlumberger (SLB) jumped nearly 5% after the oilfield services giant turned in first quarter results that were better than expected on many fronts.
Schlumberger stock rose to near $73, up $3.20, or 4.6% in mid-morning trading.
The company reported diluted first-quarter net income, excluding charges and credits, of$1.31 billion or 98 cents per share, better than the consensus despite higher corporate expenses. Profits were up 35% year over year; earnings came in at 71 cents per share in the first quarter of 2011 and $1.11 in fourth quarter of 2011.
International, deepwater and seismic businesses showed strength. And international margins were flat to up in the quarter for the first time since the first quarter of 2009, despite exceedingly inclement weather in Northern Europe and Eurasia, note Simmons & Co. analysts.
Revenue of $10.61 billion was well ahead of $8.72 billion for the first quarter of 2011, but below the $10.97 billion in the fourth quarter of 2011.
Schlumberger kept its capital spending budget unchanged, a negative. Still, pricing sentiment should be on the mend, say Simmons analysts, because Âlarge contracts have now been re-bid and service capacity is tightening. In addition, says Simmons:
ÂThe seismic commentary was brimming with vigor. What little spare capacity is available in the marine contract segment is Âfilling fast and backlog is trending higher (up ~30% y/y and 16% q/q) as is pricing. Thus, at long last we are beginning to see the fruits of SLBÂs differentiated business model bearing fruit.Â
The company said in its earnings release that it is positive on international markets and expects the rig count to:
Âgrow by more than 10% in 2012 through strength in exploration and deepwater activity as well as in key land markets. Strong execution, solid contracts and rich new technologies provide the foundation upon which we will capitalize. In North America, we remain more cautious until the uncertainties around the dry gas drilling and pressure pumping pricing outlook become clearer. However, with a balanced land portfolio and strong deepwater leverage, we remain favorably positioned to outperform even in this market.Â
Schlumberger CEO Paal Kibsgaard added:
ÂWhile revenue fell as a result of the normal seasonal slowdown in product, software and multi-client sales, our first-quarter results showed good progress driven by global exploration and deepwater activity.Â
