Schlumberger reported a fourth-quarter loss as oil’s slump continued to weigh on demand for drilling services.
The world’s largest oilfield service provider posted a net loss of $204 million, or 15 cents a share, after a loss of $1.02 billion, or 81 cents, a year earlier, according to a statement Friday. Excluding certain items, the profit was 27 cents, more than the 26-cent average of 38 analysts’ estimates compiled by Bloomberg. Sales fell 8.2 percent to $7.1 billion.
The service companies that help explorers map pockets of underground oil, drill the wells and boost output were the first to feel the effects of the 2 1/2-year downturn. They’ve also been hit the hardest, contributing more than three-quarters of the 440,000 jobs slashed around the world during the oil industry’s worst financial crisis in a generation.
“They’re a little bit less exposed to onshore North America than others,” Rob Desai, an analyst at Edward Jones in St. Louis who rates the shares a buy and owns none, said Friday in a phone interview. “There will be a little bit slower international recovery, and given Schlumberger is more international, they’ll benefit a little less near term.”
Schlumberger, which generates most of its sales outside the U.S. and Canada, expects a global increase in exploration and production spending to come in the second half of the year, leading into 2018, Chief Executive Officer Paal Kibsgaard said in the statement. Customer spending growth is expected to come in North America first, where surveys call for a boost of about 30 percent in investments, he said.
“We expect the 2017 recovery in the international markets to start off more slowly, driven by the economic reality facing the E&P industry,” Kibsgaard said. “This will likely lead to a third successive year of under investment, with a continued low rate of new project approvals and an accelerating production decline in the aging production base.”
Brent, the global oil benchmark, marked its first annual advance in four years in 2016 as the Organization of Petroleum Exporting Countries and 11 other nations push ahead with a plan to cut output. While the cuts buoyed sentiment and lifted prices from below $30 a barrel early in 2016, the possibility of members not sticking to output targets and the increasing number of rigs at work in the U.S. threaten to limit gains.
Shares fell 1.1 percent to $86.22 before the start of regular trading in New York.