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SLB Beats on Overseas Strength
Highlights include Schlumberger, Ltd. (SLB - Analyst Report), Halliburton Co. (HAL - Analyst Report) and Diamond Offshore Drilling, Inc. (DO - Analyst Report).
Oilfield service giant Schlumberger, Ltd. (SLB - Analyst Report) reported first-quarter earnings this morning that were inline with our above-consensus estimate and provided an overall outlook of continued weakness through the rest of 2009.
Margins help up better than expected, with international resilience offsetting North American softness. Given its benchmark status, Schlumberger's results and its dour outlook sets the stage for the rest of the oilfield service group. Contrary to Halliburton's (HAL - Analyst Report) view of a near-term stabilization in the onshore U.S. drilling scene, Schlumberger does not expect a recovery before the middle of 2010.
In the international markets, while the extent of declines has been limited, customers are reportedly seeking and getting price relief. They see deepwater market holding better than any other segment through this downturn. Schlumberger's favorable deepwater outlook was inline with what we saw in Diamond Offshore (DO - Analyst Report) results yesterday.
Schlumberger's first-quarter recurring EPS of $0.78 was down from $1.03 in the preceding quarter and $1.06 in the year-earlier quarter. Quarterly revenue of $6 billion, below our $6.18 billion estimate, was down 12.6% sequentially and 4.6% year over year. Oilfield service revenue dropped 13% sequentially and 3% from the year-earlier level.
The sharp North American rig count retrenchment, Russian weakness and the U.S. dollar's strength accelerated the revenue decline rate in the quarter. North American revenue dropped 23% sequentially and 16% year over year. Revenue at WesternGeco, Schlumberger's seismic unit, was down 8% sequentially and 18% year over year, highlighting the significantly weak exploration landscape. Backlog in this unit declined $319 million to $1.5 billion, partly reflecting delayed contract awards in many countries.
Oilfield pre-tax operating income declined 21% sequentially and 16% year over year, driven by the sharp deterioration in North America, which dropped 53% sequentially and 55% year over year.
Schlumberger's operating margins held much better than its peers', with international strength offsetting North American pressures. Oilfield pre-tax operating margin of 23.1% during the quarter was down 248 basis points sequentially and 370 basis points year over year.
Management cautioned that first-quarter margin levels will be hard to maintain through the rest of the year as pricing concessions roll through.
Oilfield service giant Schlumberger, Ltd. (SLB - Analyst Report) reported first-quarter earnings this morning that were inline with our above-consensus estimate and provided an overall outlook of continued weakness through the rest of 2009.
Margins help up better than expected, with international resilience offsetting North American softness. Given its benchmark status, Schlumberger's results and its dour outlook sets the stage for the rest of the oilfield service group. Contrary to Halliburton's (HAL - Analyst Report) view of a near-term stabilization in the onshore U.S. drilling scene, Schlumberger does not expect a recovery before the middle of 2010.
In the international markets, while the extent of declines has been limited, customers are reportedly seeking and getting price relief. They see deepwater market holding better than any other segment through this downturn. Schlumberger's favorable deepwater outlook was inline with what we saw in Diamond Offshore (DO - Analyst Report) results yesterday.
Schlumberger's first-quarter recurring EPS of $0.78 was down from $1.03 in the preceding quarter and $1.06 in the year-earlier quarter. Quarterly revenue of $6 billion, below our $6.18 billion estimate, was down 12.6% sequentially and 4.6% year over year. Oilfield service revenue dropped 13% sequentially and 3% from the year-earlier level.
The sharp North American rig count retrenchment, Russian weakness and the U.S. dollar's strength accelerated the revenue decline rate in the quarter. North American revenue dropped 23% sequentially and 16% year over year. Revenue at WesternGeco, Schlumberger's seismic unit, was down 8% sequentially and 18% year over year, highlighting the significantly weak exploration landscape. Backlog in this unit declined $319 million to $1.5 billion, partly reflecting delayed contract awards in many countries.
Oilfield pre-tax operating income declined 21% sequentially and 16% year over year, driven by the sharp deterioration in North America, which dropped 53% sequentially and 55% year over year.
Schlumberger's operating margins held much better than its peers', with international strength offsetting North American pressures. Oilfield pre-tax operating margin of 23.1% during the quarter was down 248 basis points sequentially and 370 basis points year over year.
Management cautioned that first-quarter margin levels will be hard to maintain through the rest of the year as pricing concessions roll through.