Schlumberger boosts 1Q revenues as profit falls

Schlumberger, the world’s largest oilfield services provider, increased its revenues by almost 6 pct during the first quarter of 2017 while its profit fell, compared to the year-before period. 

In the quarterly report on Friday, the company posted a $6.89 billion in revenues for the first quarter 2017, an increase compared to $6.52 billion in the same period of 2016.

According to Reuters, this increase is the company’s first after eight quarters.

At the end of fourth quarter 2016, the company’s revenues were $7.1 billion.

The increase in revenues in 1Q 2017 was led by hydraulic fracturing and drilling services and was also helped by Artificial Lift, Surface Systems and Valves & Measurement.

Shchlumberger’s net income on GAAP basis for 1Q 2017 dropped to $279 million, when compared to $501 million net income in the corresponding period of 2016.

The company’s cash flow from operations for the first quarter of 2017 was $656 million, despite the consumption of working capital that is typically experienced in the first quarter, the company said.

In the report, the oilfield services provider confirmed it bought a minority interest in Borr Drilling, a Norwegian rig contractor, for $221 million. The company said that this transaction will enable it to offer integrated, performance-based drilling contracts in the offshore jack-up market.

To remind, Borr Drilling in March bought Transocean’s entire jack-up fleet, including ten rigs already in the fleet and five newbuilds under construction at Keppel FELS.

Four areas ‘critical’ for recovery 

Schlumberger Chairman and CEO, Paal Kibsgaard, commented on Friday, “As we begin the recovery from one of the deepest downturns on record, we see four areas as critical for the industry to restore its strength and advance its capabilities. They are—the need for higher E&P spending to meet growing hydrocarbon demand over the coming years; the need to protect and encourage investments in R&E throughout the entire oil and gas value chain; the need for new business models that foster closer technical collaboration and commercial alignment between operators and suppliers; and the need for broader and more integrated technology platforms that combine hardware, software, data, and expertise.

“While our view of the fundamentals of supply and demand in the oil markets remains constructive, the continuing underinvestment in new supply is increasing the likelihood of a medium-term supply deficit as reservoirs are produced but reserves are not replaced in sufficient volume. In particular, the market continues to focus on headline decline numbers, suggesting that production is holding up well. However, a closer examination of the underlying data clearly shows that the rate of depletion of proven developed reserves is rapidly accelerating in several key non-OPEC countries.”

Kibsgaard further added: “As the recovery builds momentum, industry cash flow and productivity remain under pressure and limit the industry’s ability to increase present levels of E&P investment. At the same time, the value chain remains focused on trying to capture the limited value that is created, rather than seeking new ways to collectively create more value. This approach is not sustainable, either from addressing the underlying industry challenges or from ensuring that the future supply of hydrocarbons can meet the projected growth in demand.”

Offshore Energy Today Staff