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Schlumberger (SLB) Beats on Q2 Earnings, Ups Sales Outlook

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Schlumberger Limited (SLB - Free Report) reported second-quarter 2022 earnings of 50 cents per share (excluding charges and credits), beating the Zacks Consensus Estimate of 40 cents. The bottom line significantly increased from the year-ago quarter’s earnings of 30 cents.

The oilfield service giant recorded total quarterly revenues of $6,773 million, outpacing the Zacks Consensus Estimate of $6,283 million. The top line also improved from the year-ago quarter’s $5,634 million.

The strong quarterly results were primarily driven by higher sales of exploration data licensing and strong drilling activities in land and offshore resources in North America and the international market.

Schlumberger Limited Price, Consensus and EPS Surprise

Schlumberger Limited Price, Consensus and EPS Surprise

Schlumberger Limited price-consensus-eps-surprise-chart | Schlumberger Limited Quote

Segmental Performance

Revenues in the Digital & Integration unit totaled $955 million, up 17% from the year-ago quarter’s levels. Pre-tax operating income of $379 million was up 39%. The outperformance resulted from higher sales of exploration data licensing.

Revenues in the Reservoir Performance unit increased 19% year over year to $1,333 million. Pre-tax operating income was $195 million, rising 25%. The upside in profit was led by higher land and offshore activities.

Revenues in the Well Construction segment rose 27% from the year-earlier quarter’s level to $2,686 million. Pre-tax operating income improved 73% to $470 million. Strong drilling activities in land and offshore resources in North America and the international market aided the segment.

Revenues in the Production Systems segment amounted to $1,893 million, up 13% from the year-ago quarter’s numbers. Pre-tax operating income was flat year over year. The segment was aided by increased sales of well, surface and subsea production systems.

Cash Flow & Financials

Schlumberger generated a negative free cash flow of $119 million.

Capital expenditure of Schlumberger in the quarter was $360 million. As of Jun 30, 2022, the company had approximately $2,816 million in cash and short-term investments. It had long-term debt of $12,946 million at the end of the second quarter.

Outlook

SLB has revised its 2022 revenue outlook upward to at least $27 billion. This reflects that it expects year-over-year revenue growth in the high-teens compared with the prior projection of mid-teens. Increased participation in growth of drilling and completion activities across the world brightened the company’s outlook.

Zacks Rank & Other Stocks to Consider

Schlumberger currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks that investors could look into include Antero Resources (AR - Free Report) , BP plc (BP - Free Report) andContinental Resources, Inc. (CLR - Free Report) . While Antero and Continental Resources carry a Zacks Rank #2, BP sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is a leading upstream energy player with a strong presence in the gas-rich prolific Appalachian Basin in West Virginia and Ohio. In the past 60 days, Antero Resources has witnessed upward earnings estimate revisions for 2022 and 2023.

The substantial exposure to improving commodity price is a huge positive for Antero Resources.

High oil prices are aiding BP’s upstream operations. The sizable refining and marketing operations of BP will protect it if the crude pricing scenario turns unfavorable again.  In 2022, BP is likely to witness earnings growth of almost 77%. Over the past few quarters, it has successfully reduced long-term debt.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of the company are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. It has gained 88.5% in the past year, outpacing the 52.2% rise of the composite stocks belonging to the sector.