Oilfield services giant Schlumberger reported pre-tax profits of $638 million for the first quarter of 2022, as it hailed “one of the strongest outlooks for the energy services industry in recent times.”
Revenue at the Houston-headquartered multinational (NYSE:SLB) reached just under $6 billion for the quarter ended March 31, 2022 – up 14% year on year – according to quarterly results released on Friday.
Pre-tax profits were also up 65% on the same period last year, while adjusted EBITDA rose 19% on last year to $1.25bn.
Schlumberger CEO Olivier Le Peuch said the results set the company “firmly on the path” to delivering full-year revenue growth “in the mid-teens” and on track for a significant increase in earnings.
Divisional revenue growth was led by its Well Construction and Reservoir Performance units, both of which grew more than 20%, outperforming global rig count growth for the quarter.
International growth was led by Latin America, on the back of higher drilling activity in Mexico, Ecuador, Argentina, and Brazil.
The Europe/CIS/Africa region saw increases in production systems sales in Turkey and increased exploration drilling in offshore Africa, particularly in Angola, Namibia, Gabon, and Kenya.
Yet these were partially offset by revenue decline in Russia and Central Asia.
Commenting on the invasion of Ukraine, Mr Le Peuch said the situation was “of grave concern.”
“In addition to ensuring that our operations are compliant with developing sanctions, we took the step in the quarter to suspend new investment and technology deployment to our Russia operations.” he added.
Elsewhere, the Middle East and Asia saw higher drilling, stimulation, and intervention activity in Qatar, Iraq, the United Arab Emirates, Egypt, Australia, and across Southeast Asia, Schlumberger said.
However, it noted that its production systems division was “temporarily hampered” by ongoing supply chain and logistics constraints, resulting in lower-than-expected product deliveries.
In the North Sea, the company pointed to the deployment of its new GeoSphere 360 3D service with Equinor, which it said led to the delivery of nearly 100 metres of extra net pay interval at an unspecified project. The results prompted Equinor to extend the well in the reservoir pay zone, improving project economics.
Looking to rest of the year, Mr Le Peuch said the outlook was “shaping up very well”, following the approval of a number of final investment decisions (FIDs) for long-cycle development projects, and the award of new contracts.
“Offshore exploration drilling is resuming, and several customers have announced a significant step-up in their spending plans,” he added.
“Concurrently, a shift in focus is emerging in the energy landscape, exacerbating an already tightly supplied oil and gas market. The dislocation of supply flows from Russia will result in increased global investment across geographies and the entire energy value chain to ensure the diversification and security of the world’s energy supply.”
The result is “one of the strongest outlooks for the energy services industry in recent times,” which he said pointed to a “stronger and longer” multiyear upcycle.
On Thursday the company’s board approved a 40% increase in its quarterly cash dividend, from $0.125 per share to $0.175.
This will begin with a dividend payable on July 14, 2022, to stockholders of record on June 1, 2022.