UPDATE 2-Schlumberger beats on higher international drilling activity

(Adds market comments, shares, background)

NEW YORK, Jan 17 (Reuters) - Schlumberger NV reported a slightly better-than-expected quarterly profit on Friday as higher drilling activity in international markets boosted demand for its equipment and services, offsetting weakness in North America.

International markets have been a bright spot for oilfield service providers since 2018, as U.S. oil and gas producers have cut back on drilling wells to satisfy investors seeking more buybacks and dividends.

Chief Executive Officer Olivier Le Peuch said he expected OPEC+ output cuts would slow investments in Russia and the Middle East in coming months.

But added a slowdown in U.S. shale production growth should encourage international customers "to step up their investments in the second half of the year and beyond."

Schlumberger, an industry bellwether, forecast 2020 capital expenditure by oil and gas companies in the international markets to be in the mid-single-digit range. It estimated revenue in its international division to grow at the same pace or higher, excluding some deals.

The company, which gets about 57% of sales outside of North America, said international revenue rose 8% to $5.72 billion in the fourth quarter, while it fell 13% in North America.

Shares rose on the results and were up 2.6% at $39.80 in premarket trading on Friday.

Schlumberger has been cutting costs, restructuring operations and reducing capacity to minimize the hit on margins from lower activity in North America.

The company and its rivals, Halliburton Co and Baker Hughes Co, have put units up for sale, Reuters reported on Thursday. Schlumberger and Baker Hughes separately hired advisers to sell units that boost production from wells using so-called rod lift gear, according to people familiar with the matter.

Schlumberger's net income fell to $333 million, or 24 cents per share, in the three months ended Dec. 31, from $538 million, or 39 cents per share, a year earlier.

The year-ago quarter included a gain from an asset sale.

Excluding charges and credits, net income rose to $545 million, or 39 cents per share, from $498 million, or 36 cents per share.

Analysts on average had expected a profit of 37 cents per share, according to Refinitiv IBES. (Reporting by Arathy S Nair and Shariq Khan in Bengaluru; Editing by Sriraj Kalluvila)

01/17/2020 13:01

News, Photo and Web Search