The North American shale oil revival helped Schlumberger, the world’s largest oilfield services group, return to revenue growth for the first time in over two years. However the figure fell short of analyst expectations amid a sharp drop-off in demand for its services in Latin America.
The company, which generates most of its sales and earnings overseas, saw revenue for the first three months of the year rise 6 per cent to $6.89bn compared to the prior-year period as North American sales surged nearly 28 per cent to $1.87bn on a year-on-year basis.
However, the revenue figure was weaker than the $6.97bn the market was expecting as gains in North America were offset by a slump in demand from Latin America, where sales dropped 25 per cent year-on-year to $952m.
“In the first quarter, the North America land market continued to strengthen in terms of both activity and pricing, leading us to begin accelerating deployment of idle capacity for multiple product lines,” said chief executive Paal Kibsgaard.
Despite the rise in revenue, net income during the first quarter fell to $279m, or 20 cents a share, compared to the $501m, or 40 cents a share recorded in the year-ago quarter. Adjusted earnings, at 25 cents, were in line with analyst forecasts.
On a quarter-on-quarter basis, the company said international sales fell 7 per cent “driven by a greater than expected seasonal decline in activity and sales, particularly in China, Russia land, and the North Sea.” It also noted weaknesses in key parts of the Middle East where Opec countries have agreed to curb output.
Shares in Schlumberger, down nearly 9 per cent so far this year, fell 0.5 per cent in pre-market trading.