Schlumberger says Russia isolation spurs drilling elsewhere

Schlumberger building Source: iStock/AdrianHancu

Schlumberger said Russia’s war on Ukraine is spurring an exploration boom as buyers search for alternative crude supplies.

The world’s biggest oilfield-services provider announced a surprise dividend increase and surpassed Wall Street profit forecasts on Friday. The 40 per cent dividend hike was Schlumberger’s first payout increase since 2015.

“The dislocation of supply flows from Russia will result in increased global investment across geographies and the entire energy value chain to ensure the diversification and security of the world’s energy supply,” chief executive officer Olivier Le Peuch said in a statement. 

First-quarter profit of 34 cents a share, excluding certain items, was a penny higher than the media of analysts’ estimates in a Bloomberg survey. 

Sales climbed the most since late 2017 to almost $6 billion as Schlumberger reaped the rewards of a sweeping, post-pandemic revival in energy consumption and production. The sales bonanza was driven by work in the U.S. and Canada, where the company saw revenue surge by almost one-third.

The shares rose 2.8 per cent in pre-market trading.

The world’s three biggest oilfield contractors pledged last month to halt future work in Russia, but only Halliburton Co. is winding down current activity there. Baker Hughes Co. warned investors this week that sales in one of the world’s biggest oil-producing nations would continue to erode amid sanctions placed on Russia.

The company, which is an industry bellwether because of its unmatched global footprint and extensive international order book, holds the biggest exposure among Western rivals in Russia, which represented about five per cent of sales before the war began in late February. 

Le Peuch warned investors last month that profits would be hurt by supply-chain snarls and ripple effects from Putin’s attack.

The hired hands of the oil patch are seeing a resurgence in business as crude demand rebounds from an historic global collapse. After thousands of layoffs, price cuts and efforts to pivot from the mercurial shale business to steadier overseas work, the big three service providers are on track to post their largest annual sales since pre-pandemic days, according to analysts.

However, Schlumberger’s smaller rivals disappointed shareholders in recent days, with Halliburton reporting in-line results and Baker Hughes posting lower-than-expected profit. 

© 2022 Bloomberg L.P.

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