(Bloomberg) -- Schlumberger (NYSE:SLB) Ltd., the world’s biggest oilfield servicer, said the global oil industry is set to improve in 2019, supported by a “solid demand outlook” as production cuts from OPEC and its partners take effect.
Exploration and production investments are “starting to normalize as the industry heads toward a more sustainable financial stewardship of the global resource base,” the company said in its first-quarter earnings release. Higher investments in international markets are required to keep production flat, while North America land is set for lower investments, Schlumberger said.
Key Takeaways
- Chief Executive Officer Paal Kibsgaard is trying to rally investor enthusiasm after the drilling and fracking giant lost more than half its value amid the worst crude crash in a generation. Global oil prices have recovered some of their losses, but are still down more than a third from their June 2014 high. Schlumberger’s shares have slid 56 percent in that period.
- One of the biggest keys to Schlumberger’s success is cranking up its bread-and-butter international business, where the company generates most of its revenue. It’s prepared investors to expect single-digit growth this year outside the U.S. and Canada. The company said Thursday that it sees the recovery in international service and product pricing as a major business priority.
- However, Schlumberger balanced it optimistic commentary on international markets with more cautious language about spending in the U.S. It sees more moderate growth in U.S. shale production in coming years.
- After closing out 2018 as one of the worst performers in the Standard & Poor’s 500 Energy index, Schlumberger has rallied this year to sit among the best in the 29-member group. Investors in January cheered the company’s plans to slash its capital spending, in part to protect dividend payouts.
Market Reaction
- The shares were down 1.3 percent to $46.80 in pre-market trading in New York.
Get More
- For more details of the earnings, click here.