What Drove Schlumberger in 1Q17

From 4Q16 to 1Q17, Schlumberger (SLB) witnessed 6% revenue growth in North America, while it saw a steep revenue decline of ~10% in the Europe/CIS[1.Commonwealth of Independent States]/West Africa region. Schlumberger’s revenue from Latin America was resilient in 1Q17, remaining unchanged from 4Q16. Schlumberger accounts for 6.5% of the ProShares Ultra Oil & Gas ETF (DIG). From December 30, 2016, to March 31, 2017, DIG fell 14%, whereas Schlumberger fell 7%.

• strong fracking and a higher stage count leading to higher North American onshore drilling activity
• higher artificial lift products sales in Canada
• strong drilling and project activity in Colombia, Peru, and Ecuador
• higher revenue from Egypt following strong unconventional onshore activity and perforating activity

• low pricing environment for oilfield services and equipment (or OFS) companies
• lower activity in Schlumberger’s Reservoir Characterization and Cameron groups
• rig count decline in Mexico and Central America due to upstream companies’ budget constraints
• India saw lower equipment sales in 1Q17
• Russia saw seasonal activity decline in 1Q17

Schlumberger’s reported net income was ~$279 million in 1Q17. In comparison, Halliburton (HAL) reported a net income of -$32 million, McDermott International’s (MDR) net income was $28.1 million, and Flotek Industries’ (FTK) net income was -$1 million.