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After banning one-time items, Schlumberger posted earnings per share of 22 cents, ahead of expectations for 17 cents.
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Schlumberger
the issue of employment expectations for the fourth quarter, but its stock was falling in early trading amid a broader decline for energy stocks.
Schlumberger stock (ticker: SLB) fell 0.9%, at $ 23.97, in recent trading. The
S&P 500
down 0.3%.
Investors may accept the oil services company’s lead, which meant they could raise their capital cost in 2021. Overall, Wall Street has hoped that stop energy companies spending capital spending to make sure they don’t make too much money as they pass.
After banning one-time items, Schlumberger posted earnings per share of 22 cents, ahead of expectations for 17 cents. Its $ 5.5 billion revenue – down 33% year-over-year – surpassed estimates of $ 5.2 billion. There were a number of important things, including a much better-than-expected free cash flow, which came in at $ 554 million against Wall Street’s expectation of $ 347 million.
Analysts were generally optimistic about the report. “Schlumberger is our top choice in oilfield services as they benefit from overseas recovery, margin expansion prospects and a free cash flow generation business model,” wrote Scott Gruber from Citigroup.
Schlumberger, like other oil companies, has been declining sharply, even before the outbreak, to better compete in a world where companies have been spending less on drilling. They sold a majority stake in the U.S. coal shale drilling unit last year to focus more on higher-yield industries.
Nevertheless, analysts have raised questions about their capital expenditure budget for 2021, which appears to be slightly higher than some expected. Schlumberger said it planned to spend $ 1.5 billion to $ 1.7 billion, which could reflect an increase from the $ 1.5 billion it spent in 2020. Officials on the company’s conference call said they intend to stop spending, but “would not want to miss the opportunity” from higher activity.
Schlumberger is optimistic about a global recovery from the pandemic, arguing that the reversal is underway. In the fourth quarter, the company posted continued revenue growth in its four segments.
“We are starting 2021 from a position of strength,” said President Olivier Le Peuch on the conference call.
Oil demand could return to full capacity in two years or less.
“We believe this sets the level for oil demand to return to 2019 levels no later than 2023, or earlier as recent industry analyst reports have stated, confirming re- multifaceted cycling as the global economy strengthens, ”said Le Peuch in a statement.
Write to Avi Salzman at [email protected]