Schlumberger reports increased earnings in 3Q

Houston-based Schlumberger Limited reports a 2% increase in third quarter earnings of $8.5 billion.  The company said its pretax operating income was $1.2 billion which was a 5% increase sequentially.

But operations in Oklahoma and Texas didn’t produce the realized revenue that the company was anticipating.

Cash flow from operations totaled $1.8 billion leading Paal Kibsgaard, Chairman and CEO to explain the increases were driven by the International Areas.  He said the international growth outpaced that of North America for the first time since the second quarter of 2014.

“In North America, sequential growth remained positive but slowed from the rates of previous quarters as takeaway constraints in the Permian impacted hydraulic fracturing activity,” said Kibsgaard.

Third-quarter revenue in North American came to $2.6 billion which was a 1% increase over the previous quarter.

The company’s performance in technologies was led by Drilling which saw a 9% sequential growth as the company mobilized another 19 drilling rigs for projects in Russia, Mexico, Saudi Arabia, Iraq and India.

Revenue from Production was largely unchanged from the previous quarter due to the softening hydraulic fracturing activity in North America land.

“From a macro perspective, the oil market continued to tighten in the third quarter as seen by a further draw in global oil inventories and a significant increase in oil prices despite continued strong production from the US and increasing output from key OPEC countries. Global spare capacity is now less than 2%,” added CEO Kibsgaard. “The tightening supply and demand balance is driven by accelerating decline rates in the international production base and is further exacerbated by the ongoing reduction in Venezuelan and Iranian exports.”

He said geopolitical events are continuing to have an impact on the oil and gas markets.

” And while the current Permian takeaway constraints in North America should be addressed within the next 12 to 18 months, a series of reservoir- and production-related challenges is emerging in the US shale basins that could dampen the most optimistic production growth projections.”

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