International Operations In Focus As Schlumberger Reports Q1 Results
Schlumberger, the largest oilfield services provider, is expected to publish its Q1 2019 results on April 18. This note details Trefis’ forecasts for Schlumberger, as well as some of the key trends we will be watching when the company reports earnings
What To Expect From Schlumberger In Q1
- Consensus revenue of $7.81 billion, almost flat year-over-year but down sequentially due to seasonality
- Consensus EPS of $0.30 per share, marking a slight year-over-year decline
What Trends Will Drive The Company’s Performance?
- While international business is expected to grow, it could be offset by sluggish performance in the North American market
- Average North American rig count over quarter down 1% year-over-year, versus growth of 6% in international rig count
- While crude oil prices also saw a modest recovery, it is unlikely to have impacted results.
Why Is North America Expected To Underperform?
- In the on-shore U.S. market, operators are looking to align investments to their free cash flows, likely reducing oilfield services spending.
- Operators could be focusing on spending on the inventory of drilled but uncompleted wells, reducing drilling-related spends.
- The higher cost of capital and lower borrowing capacity in an increasing interest rate environment may also be hurting activity
- There has also been a meaningful decline in Canadian activity (average rig count down 30% year-over-year)
What Will Drive Performance In International markets?
- Projects spending in Africa, Asia, and Latin America will drive growth
- Schlumberger has guided for mid-single-digit international growth over the first half of the year
- Company’s high-end product lines and advanced technologies largely sold out for the year; this could enhance pricing power in some of these segments
You can view our interactive dashboard analysis on What’s Schlumberger’s fundamental value based on expected 2019 results? for more details on the key drivers of the company’s value. In addition, you can more of our data for Energy Companies here.
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