Schlumberger’s revenues and net income in Q2 2018

Schlumberger (SLB) released its second-quarter results on July 20. You can read more about SLB’s second-quarter earnings in Market Realist’s Schlumberger Reports Q2 2018 Earnings, Beats Estimates. In the second quarter, Schlumberger recorded total revenues of ~$8.3 billion, up 11.3% from $7.46 billion recorded in the second quarter of 2017.

In the second quarter, SLB reported net income of $430.0 million. This was an improvement over the second quarter of 2017 when SLB reported a net loss of $74.0 million.

Analyzing Schlumberger’s Drivers in Q2 2018

Positive factors affecting SLB’s Q2 results

  • Schlumberger’s deployment of additional hydraulic fracturing and directional drilling capacity in North America
  • the start of new projects in Angola, Nigeria, Ghana, Ivory Coast, and Cameroon following the recovery in crude oil price
  • strong growth in integrated drilling projects in Latin America led by project wins and backlog increase
  • ramp up in activity for shale gas and tight oil plays in China

Negative factors affecting SLB’s Q2 results

  • flat pricing in Schlumberger’s hydraulic fracturing fleet in North America as industry capacity matched additional demand
  • higher startup costs and operational delays in SLB’s international operations due to the commissioning of the newbuild rigs and the reactivation of stacked equipment
  • delays and logistical challenges in a turnkey project in Saudi Arabia’s Ghawar Field
  • lower OneSubsea project volume, affecting SLB’s Cameron Group’s results negatively

Challenges after Q2 2018

In the company’s second-quarter earnings conference call, Schlumberger’s (SLB) CEO, Paal Kibsgaard, commented that pipeline capacity constraints and well interference from infill drilling are among the major challenges for the upstream producers going forward. Oilfield services companies like Schlumberger can also be negatively affected if crude oil production is affected.

The issue of capacity constraints and production challenges in the upstream industry can negatively affect oilfield equipment and services providers that have an operational focus in North America. These companies include Nabors Industries (NBR) and Patterson-UTI Energy (PTEN).

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