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US Rig Count Impacted SLB and HAL in 1Q18

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Dec. 4 2020, Updated 10:53 a.m. ET

Schlumberger’s North America revenues

Schlumberger (SLB) and Halliburton (HAL), the two OFS (oilfield equipment and services) companies that we’re discussing in this series, saw higher revenues from North America in 1Q18—compared to the previous year. Schlumberger’s North America revenues increased 52% in 1Q18—compared to 1Q17. In 1Q18, Schlumberger’s North America revenues accounted for 37% of its total revenues.

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Halliburton’s North America revenues

Halliburton’s (HAL) North America revenues increased 58% in 1Q18 from a year ago. Halliburton’s North America revenue share increased in 1Q18—compared to 1Q17. Halliburton generated ~61% of its total revenues from North America in 1Q18—compared to 52% in 1Q17. Halliburton accounts for 3.3% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES provides exposure to the OFS segment. XES decreased 1% in the past year—compared to a 16% rise in Halliburton’s stock price during the same period.

Why revenues increased in North America

Higher pressure pumping activity and drilling and artificial lift activity in North America resulted in remarkably higher North America revenues for Halliburton. For Schlumberger, increased sales of drilling and measurement products and services boosted its North America business. There was high demand for rotary steerable systems required to drill longer laterals in the shale oil production.

US rig count

As of the week ending March 29, the US rig count increased 21%—compared to the previous year. From March 29 to the week ending April 27, the US rig count trend rose ~3%. The higher rig count could boost these OFS companies’ revenues and earnings going forward.

Next, we’ll discuss how the international rig count impacted these companies’ revenues from international geographies.

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