Schlumberger, Baker Hughes results point to improvement
Oilfield services companies Schlumberger and Baker Hughes reported better-than-expected quarterly profits and signaled an improvement in the North American market, driven by increased drilling in the Gulf of Mexico.
Schlumberger, the world’s largest oilfield services company, gets a third of its revenue from North America.
Both companies play a large role in North Dakota’s growing Bakken energy play and have offices in Dickinson.
The companies provide drilling technology and equipment, well construction services and seismic surveys to oil and gas companies such as Exxon Mobil.
Three years after the worst offshore oil spill in U.S. history, large oil and gas companies are ramping up operations in the Gulf, which is poised to deliver more than 700,000 barrels per day of crude.
While Schlumberger’s revenue from deepwater drilling in the region fell in the first quarter due to operational delays, the company expects the situation to normalize in the current quarter.
“The outlook for deepwater drilling activity in the Gulf of Mexico remains strong for the full year,” Chief Executive Paal Kibsgaard said on a conference call with analysts.
Baker Hughes, which said it had a good first quarter in the Gulf, expects business to continue to improve in the region and boost margins, particularly in the second half of the year.
Barclays analysts were upbeat on both stocks, saying the companies had done well in North America despite a colder-than-usual winter.
“The industry bellwether posted a solid earnings number in a tough quarter (and) signaled a ‘robust’ North American market ...,” they said in a research note, referring to Schlumberger.
The company’s North American revenue rose 12 percent to $3.68 billion in the first quarter. Baker Hughes posted a 7 percent rise in revenue to $2.78 billion from the region.
Baker Hughes’ shares rose as much as 5 percent to $69.43 on the New York Stock Exchange — their highest since 2011.
Schlumberger’s shares, which rose less than 1 percent in morning trade to their highest in nearly six years, were marginally down at $100.34 in morning trading.
The stock has risen about 12 percent in the past month, outperforming shares of Halliburton Co and Baker Hughes.