Schlumberger’s geographic revenue growth in 4Q14
In the previous parts of this series, we discussed Schlumberger’s (SLB) performance across its various product groups. In this article, we’ll discuss the company’s performance across geographic segments during 4Q14.
Schlumberger (SLB) is a component of the VanEck Vectors Oil Services ETF (OIH), constituting 19.7% of the ETF. SLB is also a component of the Energy Select Sector SPDR (XLE). Other companies in this industry that are components of OIH include Halliburton (HAL) and Baker Hughes (BHI).
In 4Q14, Schlumberger’s (SLB) revenues from its international operations, or operations outside the US, remained nearly unchanged at $8.21 billion from $8.15 billion from 4Q13. In comparison, revenues from the Middle East & Asia and Latin America increased 5.8% and 2.5%, respectively, over the year-ago quarter. During the same period, Europe/CIS/Africa declined 5%.
North American growth engine in 4Q14
2014 saw robust drilling activity in North America, particularly in the US. Schlumberger recorded topline and bottom-line growth in the US due to continued efficiency improvements and new technology uptake in pressure pumping in the onshore market. In the offshore market, the US Gulf of Mexico also exhibited recovery in 4Q14 after tepid growth in the previous quarter following adverse weather.
Schlumberger’s revenue split
In 4Q14, North America gained market share in Schlumberger’s total revenue portfolio. It increased to 34.5% from 30.9% in 4Q13. In contrast, the Europe/CIS/Africa region lost market share, decreasing to 24.4% in 4Q14 from 27.7% in 4Q13. CIS, or Commonwealth of Independent States, is a regional organization of countries.
However, investors should note that due to a depressed crude oil price and sliding oil rig counts, Schlumberger should start to look beyond its North American onshore market. Its current focus on the US market can be a recipe for trouble going forward.
How did the change in revenue split affect Schlumberger’s income split? Read the following section to find out.