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Schlumberger Limited’s (SLB - Free Report) fourth-quarter 2016 earnings of 27 cents per share (excluding charges and credits) came in line with the Zacks Consensus Estimate. Higher activities in the U.S. land market, recovery of fracturing works in unconventional resources, and higher horizontal logging work in Qatar favored the result.
However, the bottom line decreased substantially from 65 cents per share earned in the year-earlier quarter. Slowdown of drilling works due to frigid winter in Russia and Norway resulted in the year-over-year deterioration.
Schlumberger is the first among the so-called Big Four oilfield service and equipment providers to come out with quarterly earnings. The other two players – Baker Hughes Inc. and Halliburton Company (HAL - Free Report) – will report fourth-quarter results next week. The remaining one – Weatherford International plc – is expected report earnings on Feb 1, 2017.
Schlumberger reported total revenue of $7,107 million. The top line deteriorated from the year-earlier level of $7,744 million but topped the Zacks Consensus Estimate of $7,096 million.
Segmental Performance
Each of the groups – Reservoir Characterization, Drilling Group and Production Group – registered year-over-year fall in revenues.
Drilling Group revenues decreased primarily due to slowdown in activities owing to severe winter conditions in Russia and Norway. However, the negatives were partially mitigated by the improvement in land market activities in the U.S.
Results of the Production Group were adversely impacted by reduced completion works in certain regions. Recovery of fracturing works in unconventional resources partially offset the negatives.
Reservoir Characterization segment was affected by seasonal decline in wireline operations in the Northern Hemisphere. However, higher horizontal logging work in Qatar along with increased software license and maintenance sales partially offset the negatives.
Reservoir Characterization: This group posted revenues of $1,699 million as against $2,193 million in the prior-year quarter. Pre-tax operating income was $316 million, down 39% year over year.
Drilling Group: Revenues of $2,013 million plunged 32% year over year. Pre-tax operating income was $234 million, down 53% year over year.
Production Group: Revenues recorded by this group declined 17% from the year-earlier quarter to $2,179 million. Pre-tax operating income was $132 million, down 56% year over year.
Financials
As of Dec 31, 2016, company had approximately $9,257 million in cash and short-term investments and $16,463 million in long-term debt, representing a debt-to-capitalization ratio of 32.1%. In the reported quarter, the company repurchased 1.5 million shares at an average price of $78.21 for a total purchase price of $116 million.
Schlumberger’s shares have underperformed the Zacks categorized Oil & Gas-Field Services industry in the last three months. During this period, the company gained 5% compared with 6.6% improvement for the broader industry.
Guidance
During 2017, the company will likely invest $2.2 billion. This is slightly higher than $2.1 billion invested during 2016.
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Schlumberger's (SLB) Q4 Earnings In-Line, Decrease Y/Y
Schlumberger Limited’s (SLB - Free Report) fourth-quarter 2016 earnings of 27 cents per share (excluding charges and credits) came in line with the Zacks Consensus Estimate. Higher activities in the U.S. land market, recovery of fracturing works in unconventional resources, and higher horizontal logging work in Qatar favored the result.
However, the bottom line decreased substantially from 65 cents per share earned in the year-earlier quarter. Slowdown of drilling works due to frigid winter in Russia and Norway resulted in the year-over-year deterioration.
Schlumberger is the first among the so-called Big Four oilfield service and equipment providers to come out with quarterly earnings. The other two players – Baker Hughes Inc. and Halliburton Company (HAL - Free Report) – will report fourth-quarter results next week. The remaining one – Weatherford International plc – is expected report earnings on Feb 1, 2017.
Schlumberger reported total revenue of $7,107 million. The top line deteriorated from the year-earlier level of $7,744 million but topped the Zacks Consensus Estimate of $7,096 million.
Segmental Performance
Each of the groups – Reservoir Characterization, Drilling Group and Production Group – registered year-over-year fall in revenues.
Drilling Group revenues decreased primarily due to slowdown in activities owing to severe winter conditions in Russia and Norway. However, the negatives were partially mitigated by the improvement in land market activities in the U.S.
Results of the Production Group were adversely impacted by reduced completion works in certain regions. Recovery of fracturing works in unconventional resources partially offset the negatives.
Reservoir Characterization segment was affected by seasonal decline in wireline operations in the Northern Hemisphere. However, higher horizontal logging work in Qatar along with increased software license and maintenance sales partially offset the negatives.
Reservoir Characterization: This group posted revenues of $1,699 million as against $2,193 million in the prior-year quarter. Pre-tax operating income was $316 million, down 39% year over year.
Drilling Group: Revenues of $2,013 million plunged 32% year over year. Pre-tax operating income was $234 million, down 53% year over year.
Production Group: Revenues recorded by this group declined 17% from the year-earlier quarter to $2,179 million. Pre-tax operating income was $132 million, down 56% year over year.
Financials
As of Dec 31, 2016, company had approximately $9,257 million in cash and short-term investments and $16,463 million in long-term debt, representing a debt-to-capitalization ratio of 32.1%. In the reported quarter, the company repurchased 1.5 million shares at an average price of $78.21 for a total purchase price of $116 million.
Schlumberger’s shares have underperformed the Zacks categorized Oil & Gas-Field Services industry in the last three months. During this period, the company gained 5% compared with 6.6% improvement for the broader industry.
Guidance
During 2017, the company will likely invest $2.2 billion. This is slightly higher than $2.1 billion invested during 2016.
Zacks Rank
Schlumberger currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>