Schlumberger's (SLB) Q4 Earnings Beat Estimates, Up Y/Y

SchlumbergerLimited’s (NYSE:SLB) fourth-quarter 2017 earnings of 48 cents per share (eliminating charges and credits) surpassed the Zacks Consensus Estimate of 44 cents and the year-earlier figure of 27 cents.

Total revenues of $8,179 million improved from the year-earlier level of $7,107 million and beat the Zacks Consensus Estimate of $8,116 million.

Surge in SIS software sales, ramp up of drilling operations in Colombia and Argentina along with higher pricing in North America’s onshore market supported the strong fourth-quarter results.

Schlumberger is the first among the “Big Four” oilfield service and equipment providers to report fourth-quarter results. The other players — Halliburton Company (NYSE:HAL) , Baker Hughes, a GE company (NYSE:BHGE) and Weatherford International plc (NYSE:WFT) — will likely report results on Jan 22, Jan 24 and Feb 2, respectively.

Segmental Performance

Each of the groups — Reservoir Characterization, Drilling Group and Production Group — recorded a year-over-year rise in earnings.

Drilling Group revenues increased primarily on contributions from the international market. Ramp up of activities in Colombia and Argentina also drove revenues. On top of that, profits at the business unit were supported by the commencement of new projects in China and Qatar.

Results at the Production Group were mostly buoyed by solid activities in the international market. Increased operations in Russia, Argentina and Saudi Arabia drove the segment’s fourth-quarter numbers. Surge in pricing in North America’s onshore market also contributed to the outperformance.

The Reservoir Characterization segment was also supported by strong contributions from the international market. Jump in sales of SIS software led to increased profits.

Reservoir Characterization: Revenues totaled $1,638 million compared with $1,676 million in the prior-year quarter. However, pre-tax operating income totaled $360 million, up 13% year over year.

Drilling Group: Revenues of $2,180 million rose 8% year over year. Moreover, pre-tax operating income was $319 million, up 36% year over year.

Production Group: Revenues at this group increased 40% from the year-earlier quarter to $3,079 million. Pre-tax operating income skyrocketed 146% year over year to $315 million.

Cameron Group: This segment generated revenues of $1,414 million, up 5% year over year. Pre-tax operating income rose 8% from the prior-year comparable period to $203 million.

Financials

As of Dec 31, 2017, the company had approximately $5,089 million in cash and short-term investments and $14,875 million in long-term debt. This represents a debt-to-capitalization ratio of 32.8%. In the October-to-December quarter, the company bought back 1.6 million shares.

Price Performance

In the fourth quarter of 2017, Schlumberger lost 3.4% compared with the industry’s 1.8% decline.

Guidance

For 2018, the company projects investments of $2 billion, almost in line with the 2017 and 2016 figures.

Zacks Rank

Schlumberger has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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