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Which Oilfield Service Major Achieved Net Income Progress in 1Q17?

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SLB’s earnings slipped

In 1Q17, Schlumberger (SLB) reported $284 million in net income, a 44% decline compared to its 1Q16 net income of ~$501 million. SLB’s earnings in 1Q17 were reduced by:

  • declining offshore drilling activity
  • lower multiclient license sales
  • pricing pressure
  • lower fracturing activity in the Middle East
  • continuing pricing pressure on SLB’s new tender awards

Compared to 4Q16, when SLB recorded a $195 million net loss, 1Q17 was indeed an improvement.

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Halliburton’s significant progress in reducing net loss

Halliburton (HAL) recorded a net loss of ~$32 million in 1Q17, a sharp improvement compared to its $2.4 billion net loss in 1Q16. HAL recorded $104 million in costs related to early extinguishment of debt in 1Q17. However, these costs were much lower than its ~$2.8 billion in impairment charges and $538 million in costs related to the Baker Hughes (BHI) merger termination recorded during 1Q16.

Compared to 4Q16, HAL’s 1Q17 net earnings improved. HAL comprises 9.9% of the iShares US Oil Equipment & Services ETF (IEZ). You can read more about HAL’s 1Q17 earnings in Market Realist’s Halliburton Releases 1Q17 Earnings: Revenues and Earnings Rise.

Baker Hughes’ woes ease

In 1Q17, Baker Hughes (BHI) reported a $130 million net loss compared to its $981 million net loss in 1Q16. The factors that led to BHI’s 1Q17 reported earnings improvement included an 83% higher North America rig count in 1Q17 compared to 1Q16, higher drill bits and rotary steerable systems sales, and bad debt recovery in Ecuador.

NOV’s income little changed in 1Q17

In 1Q17, National Oilwell Varco’s (NOV) reported net loss was $122 million, a marginal change from its $120 million net loss in 1Q16. NOV’s 1Q17 net earnings were affected primarily by a $27 million severance, inventory charges, facility closures, and other charges. Compared to 4Q16, however, National Oilwell Varco’s net loss improved significantly.

Next, we’ll analyze the US rig count and these companies’ revenues from the US.

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