Oilfield Firms See Highest Profit in Nearly a Decade

Date: 27 January 2023 - 22:11

News ID: ۱۱۱۸۰۹

NEW YORK (Oil Price) - The world’s largest oilfield services providers saw last year their highest combined net profits since the shale boom of 2014, driven by a rebound in drilling activity amid soaring oil and gas prices.
SLB – formerly Schlumberger – Halliburton, and Baker Hughes reported this past week very strong earnings for 2022 and said they expected the upcycle that began last year to be a multi-year feature in the oilfield services sector, thanks to improving pricing and tight equipment and service capacity in certain markets.
SLB, the biggest oilfield services provider in the world, was the first to report earnings on Friday, and it beat analyst expectations with earnings per share (EPS) of $0.71 for the fourth quarter, compared to estimates of $0.62 EPS.
Full-year net income attributable to SLB jumped by 83% year on year to $3.4 billion in 2022. Revenues for the full year rose by 23% to $28.1 billion.
“The fourth quarter affirmed a distinctive new phase in the upcycle,” SLB’s chief executive Olivier Le Peuch said in a statement, noting increased activity in the Middle East, global offshore, and North America.
“Additionally, pricing continues to trend favorably, extending beyond North America and into the international regions, supported by new technology and very tight equipment and service capacity in certain markets,” Le Peuch added.
“Looking ahead, we believe the macro backdrop and market fundamentals that underpin a strong multi-year upcycle for energy remain very compelling in oil and gas and in low-carbon energy resources,” he said.
On the earnings call, SLB’s top executive said that “the combination of long-cycle oil capacity expansion projects, offshore deepwater resurgence and strong gas development activity will be a key driver for the multiyear duration of this cycle.”
This new cycle “has a lot of resilience because it’s multi-pronged, it’s multiple engines, short and long, oil and gas, offshore and onshore,” he added.
SLB also expects a return and acceleration of offshore exploration and appraisal drilling over the coming quarters.
North America onshore drilling still has room to grow, SLB’s Le Peuch said on the call, expecting the public companies, and much less the private, to drive the growth this year.
The second of the top three oilfield service providers to report Q4 and full-year 2022 earnings, Baker Hughes, booked lower income than analysts had expected. But Baker Hughes is equally optimistic about the multi-year growth opportunities for the sector.
Adjusted earnings per share for Q4 stood at $0.38, up by 45% from Q3 and 53% from Q4 2021, but below the analyst consensus estimate of $0.40 EPS in the Wall Street Journal. For the full year, Baker Hughes booked a loss of $601 million due to the discontinuation of its Russian operations and equipment shortages.
Yet, Baker Hughes booked record orders of $8.0 billion for the fourth quarter, up by 32% sequentially and up by 20% compared to the same quarter of 2021.
“Despite recessionary pressures in some of the world’s largest economies, we maintain a positive outlook for the energy sector. With years of under-investments now being amplified by recent geopolitical factors, global spare capacity for oil and gas has deteriorated and will likely require years of investment growth to meet forecasted future demand,” Chairman and CEO Lorenzo Simonelli said on the earnings call.
“For this reason, we continue to believe that we are in the early stages of a multiyear upturn in global activity and are poised to see a second consecutive year of solid double digit increases in global upstream spending in 2023.”
The positive outlook on oil and gas spending will also combine with a new impetus for clean energy expenditure, thanks to the Inflation Reduction Act in the U.S. and possible new legislation in the EU, Simonelli added.
These “will support significant growth opportunities in new energy in 2023 and beyond,” he said.
Finally, Halliburton, the largest fracking services provider, raised its dividend by 33% after reporting on Tuesday earnings beating analyst projections.
Full-year North America revenue jumped by 51% over 2021 with improved margins driven by activity and pricing gains, Halliburton’s chairman, president, and CEO Jeff Miller said on the earnings call. Total revenue for the full year rose by 33% to $20.3 billion.
In the U.S., “Given the increased spend required to grow and replace production, I expect activity to remain strong and service intensity to increase through 2023,” Miller said, adding that supply challenges are similar in the international markets.