Schlumberger Beats EPS, Grows YoY - Analyst Blog
19 Outubro 2012 - 7:10AM
Zacks
The world’s largest oilfield
services provider Schlumberger Ltd. (SLB) reported
third quarter 2012 earnings of $1.08 per share (excluding special
items), beating the Zacks Consensus Estimate of $1.06.
The quarter’s results improved 12.5% from 96 cents per share earned
in the year-earlier quarter and 2.9% from $1.05 earned in the prior
quarter. The increase was aided by the strength in global
exploration and deepwater activity as well as efficiency in
operations.
Income from continuing operations, excluding charges, was $1,424
million, up almost 10% year over year and 3% sequentially.
Total revenue of $10,608.0 million in the quarter was up 11.1% from
the year-earlier level of $9,546.0 million and approximately 2%
sequentially. However, it missed the Zacks Consensus Estimate of
$10,683 million.
Segmental Highlights
Oilfield Services: Segmental revenues
were up approximately 11% year over year and 2% sequentially at
$10,608.0 million in the third quarter. Pre-tax operating income of
$2,142 million jumped 11% year over year and 2% sequentially.
All groups - Reservoir Characterization, Drilling Group and
Production Group - registered sequential growth based on increased
exploration, both on land and offshore as well as and strong
deepwater activities.
Further, robust sales Artificial Lift and Completions products
together with improved Schlumberger Production Management (SPM)
project activity aided the Production Group to record a sequential
growth, which was partly offset by lower Well Services revenue in
North America.
Reservoir Characterization: This group
posted revenue of $2,910 million in the third quarter, up 17%
year-on-year and 5% sequentially. Pre-tax operating income was $838
million, which increased 38% from the prior-year quarter and 7%
sequentially.
Drilling Group: Third quarter revenues
recorded by this group was $4,048 million, which improved 13%
annually and 1% sequentially. Pre-tax operating income was $733
million, up 21% year-on-year but down 1% sequentially.
Production Group: The revenue for the
third quarter recorded by this group was $3,675 million, which
climbed 6% annually but dipped 2% sequentially. Pre-tax operating
income was $548 million, down 24% year-on-year and 11%
sequentially.
Capital Expenditure, Balance Sheet & Share
Repurchase
As of September 30, 2012, the company had approximately $4,760
million in cash and short-term investments and $9,397 million in
long-term debt, representing a debt-to-capitalization ratio of
21.5% (versus 19.4% as reported in the previous quarter).
During the quarter, Schlumberger purchased 2.2 million shares for
approximately $149 million, averaging $68.19 a share.
Company Outlook
Schlumberger remains upbeat about 2012, based on the positive
outlook for the international markets. The company expects an
increase of more than 10% in its rig count in 2012 with robust
exploration and deepwater activity. Schlumberger’s strength also
lies in effective implementation, strong contracts and new
technologies.
The oilfield services behemoth believes that balanced land
portfolio and strong leverage to the deepwater segment will help it
perform well over the coming years. While the company makes most of
its money outside North America, it suffers from the industry-wide
weakness in U.S. hydraulic fracturing services as well as weakness
in the land coiled-tubing business.
Our Take
We maintain our long-term Neutral recommendation on the stock.
We like Schlumberger’s leading position in the global oilfield
services market, along with its technologically complex products
and service offerings and robust financial profile. Importantly,
Schlumberger expects a boost in technological innovation throughout
the balance of 2012, a rise in pricing of seismic and high seismic
vessel utilization and a continuous shift toward performance-based
contracts.
However, Schlumberger's financial and operational performances face
a number of headwinds, including changes in exploration and
production spending patterns, commodity price fluctuations,
geopolitical risks, regional spending trends, competition, new
technology and changes in economic conditions. Additionally,
foreign currency fluctuation is also a threat to the company's
profitability.
The company’s main competitor, Halliburton Co.
(HAL) − the second-largest member of the oilfield services
contingent − has reported in-line third quarter 2012 results, as
robust results from its international business was offset by cost
inflation. Earnings per share from continuing operations (excluding
special items) came in at 67 cents, matching the Zacks Consensus
Estimate.
We see Schlumberger performing in line with the broader market and
prefer to remain on the sidelines.
Schlumberger shares currently retain a Zacks #3 Rank, which
translates into a short-term Hold rating.
HALLIBURTON CO (HAL): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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