Schlumberger Sees Growth in Overseas Work

Schlumberger Sees Growth in Overseas Work
"A new growth cycle has finally commenced," said Schlumberger CEO Olivier Le Peuch.

(Bloomberg) -- Schlumberger is the latest oil-service giant to declare the worst is behind them in international markets after last year’s historic crude price collapse, forecasting strong demand in oilfield services into next year.

The world’s biggest oilfield contractor joined smaller rivals Halliburton Co. and Baker Hughes Co. this week in calling for expansion in overseas work and a more muted recovery in North America through the rest of 2021. The three service providers also beat analysts’ earnings expectations for the first three months of the year.

“A new growth cycle has finally commenced,” Chief Executive Officer Olivier Le Peuch said in a statement released on Friday. “There is an increasingly positive sentiment in the industry outlook as the recovery strengthens despite the lingering concerns regarding the COVID-19 crisis.”

The service sector that helps oil explorers detect and drill underground reserves is slowly returning to work after a global glut and pandemic-led lockdowns sapped energy demand last year, triggering job cuts and bankruptcies across the industry. The big three contractors are all pivoting away from the once booming North American shale patch and chasing work internationally instead.

Schlumberger said it expects North American activity to peak and then flatten out to “production maintenance levels” while international activity is poised to ramp up through the end of this year and beyond.

The shares, which have climbed more than 50% over the past year, rose 1.2% in pre-market trading on Friday.

Le Peuch has cut tens of thousands of workers, reshuffled the company’s business around the globe and sold off assets in North America in order to focus on overseas work. The service provider expects to generate about 80% of sales from international markets.

The first quarter results reflect Schlumberger’s shifting strategy, with its lowest North American sales output since the start of the shale boom roughly a decade ago. While a seasonal drop in international revenue from the fourth quarter to the first quarter is typical, Schlumberger said the 3% sequential drop during the quarter was its shallowest since 2008.

Meanwhile, Halliburton Chief Executive Officer Jeff Miller told investors on Wednesday that early signs of an international recovery are already showing up in orders for its completion tools.

“These signs give us greater conviction that the second half of this year will see a low double-digit increase in international activity year-on-year,” Miller said. “We believe the international markets will experience multiple years of growth.”

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