Schlumberger first-quarter profits fell 15 percent from a year ago, in large part because it sold several North American businesses during the pandemic.
The Houston oil-field services giant on Friday reported first-quarter earnings of $299 million, down from earnings of $351 million in the same period a year earlier. Revenue fell 30 percent to $5.2 billion, from revenue of $7.5 billion a year earlier.
The company said it saw lower first-quarter earnings because it divested several North American businesses during the pandemic last year that generated $659 million in revenue during the first quarter of 2020. Schlumberger’s first-quarter revenue in North America fell 17 percent from the fourth quarter to $972 million. The bulk of the first quarter revenue decline came from Schlumberger’s OneStim pressure pumping business and its low-flow artificial lift business in North America, which were both sold in the fourth quarter of 2020.
“First-quarter revenue declined 6% sequentially, reflecting the expected reduction in North America following divestitures during the fourth quarter of last year that were focused on the high-grading and rationalizing of our business portfolio to expand our margins, minimize earnings volatility, and focus on less capital-intensive businesses,” Schlumberger CEO Olivier Le Peuch said in a statement. “Excluding the impact of these divestitures, our global revenue was essentially flat sequentially as the impact of seasonally lower activity in the Northern Hemisphere was fully offset by growth in multiple countries.”
Oil-field services companies are increasingly convinced that demand for crude and their services are starting to recover from the worst oil bust in decades caused by the global pandemic. Schlumberger, Halliburton and Baker Hughes — three of the largest oil-field services giants — all beat Wall Street expectations for first quarter earnings.
It’s a welcome relief for the hard-hit sector, which lost more than 102,000 jobs including 39,000 in Texas during the pandemic last year. Oil-field services companies slashed budgets and laid off thousands of workers as coronavirus lockdowns crushed demand for crude and petroleum products, causing drilling work to plummet in West Texas.
As crude prices have climbed above $60 however, drilling activity has been on the rebound. Outside of its divestments, Schlumberger said its North American revenue grew 10 percent between the fourth quarter of 2020 and the first quarter of 2021, driven by higher drilling activity despite the February freeze in Texas. Offshore revenue, however, declined 10 percent during the same period.
Peuch said he expects North America drilling activity to level off as oil producers have pledged to maintain lower capital spending in an effort to woo back investors to the energy industry. The coronavirus vaccine rollout and gradual lifting of pandemic restrictions are likely to boost demand for crude, although the recovery still remains tenuous as coronavirus variants start to emerge.
“There is an increasingly positive sentiment in the industry outlook as the recovery strengthens despite the lingering concerns regarding the COVID-19 crisis,” Peuch said.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.