Oil service "Big Three" exceeded its expectations in the first quarter
The first financial report season finally arrived in 2018. Schlumberger, Halliburton, and Baker Hughes, the three major oil service companies in the world, took the lead in publishing the first quarter earnings report. Although the public oil giants still kept their quarterly data closely, the performance of the oil service providers provided indirect material for the industry to assess the energy market prospects. Overall, the three major oil service companies performed well in the first quarter, and their performance exceeded the industry's general expectations.
Schlumberger net profit soared
On April 20th, Schlumberger released its first-quarter financial report showing that rising oil prices prompted North American oil and gas producers to increase their business expenditures, resulting in a sharp 88% increase in net profit.
Data show that Schlumberger’s revenue from North America increased substantially in the first quarter by nearly 52% to US$2.84 billion; net profit increased from US$279 million, or 20 cents per share, in the same period last year to US$525 million, or 38 cents per share The total revenue increased from $6.89 billion in the same period last year to $7.83 billion.
Reuters pointed out that Schlumberger, the world's largest oil service company, has been a benchmark in the oilfield service and drilling industry. The company’s first-quarter victory this year seems to mean that the oil and gas industry is picking up. In the current oil price environment, the oil and gas upstream sector and the oil service equipment sector are expected to accelerate overall recovery.
Bloomberg compiled data show that on April 23, Brent crude oil prices rose 0.65 US dollars to 74.71 US dollars / barrel; US WTI crude oil prices rose 0.24 US dollars to 68.64 US dollars / barrel.
Halliburton turns losses
On April 22, Halliburton’s first-quarter financial report was released. North American business growth prompted the company to turn a profit, from a loss of 32 million U.S. dollars in the same period last year to a profit of 46 million U.S. dollars, and an adjusted earnings per share of 41 cents.
According to statistics, Halliburton’s operating income rose by 34% in the first quarter, from US$4.28 billion in the same period last year to US$5.74 billion. Among them, the North American business achieved revenue of 3.52 billion U.S. dollars, an increase of 58% year-on-year; and international business growth of 9% year-on-year.
CNBC News Network pointed out that North American shale oil and gas production has driven Halliburton’s North American operations to continue to climb. CEO Jeff Miller said that the marginal profit margin of North American operations is expected to rebound to 20% by the end of this year, which is mainly benefited. In hydraulic fracturing technology.
However, Halliburton’s profit in the first quarter was still weighed down by the market in some regions. The "New York Times" reported on April 23 that Halliburton reduced the value of Venezuelan assets by 312 million U.S. dollars, including 151 million U.S. dollars in accounts receivable. Despite the worrisome prospects of the oil giant Venezuela, Halliburton still said that it will continue to maintain its business in the country.
Baker Hughes Revenue Growth
On April 23, Baker Hughes's first quarter financial report came late. Oilfield service revenue increased by 10.1% to US$2.64 billion, accounting for half of the company’s total sales.
Bloomberg noted that the company had won many contracts in the Permian Basin and the Gulf of Mexico in the first quarter, which added a lot of positive scores to its first quarter performance.
Data shows that Baker Hughes achieved a net profit of $70 million, or 17 cents per share, in the first quarter, after deducting special items per share of 9 cents, which is more than the 3 cents per share generally expected by Wall Street analysts. Operating income increased from US$5.32 billion on the basis of the merger with GE last year to US$5.4 billion.
Reuters pointed out that the US crude oil price per barrel rose by 7.5% in the first quarter, prompting oil and gas producers to increase their investment in exploration. Baker Hughes CEO Lorenzo Simonelli said that oil and gas producers whose investment has been hindered have reactivated in recent years. After the merger with GE, Baker Hughes achieved a synergistic effect of US$144 million in the first quarter of this year. It is expected that it will reach the expected level by the end of this year. 700 million U.S. dollars.
Did the oil service industry pick up a turning point?
Under the influence of OPEC's production cuts, US, British and French air strikes on Syria, international oil prices have been rising recently. The oil and gas companies that have long-term pressure on the supply and demand of crude oil have been “put in the panacea” and the industry is further optimistic about this year's oil and gas upstream activities. The first three quarters of the “big three” Schlumberger, Halliburton, and Baker Hughes’s “all-round red” oils added a lot of strength to the market. However, for the oil service industry, which is highly dependent on the activity of oil and gas exploration and development operations, has the turning point of warming really appeared?
A closer look at the "big three" financial report in the first quarter is not difficult to find, North American business is the main reason for the three profitability rise. Among them, Schlumberger’s North American revenue has increased by nearly 52%, and Halliburton has turned to profitability due to a 58% increase in North American operations. Baker Hughes has also won many contracts in the Permian Basin and the Gulf of Mexico. In contrast, in addition to the spurt of the North American shale market, other areas of the business did not have dazzling performance, Halliburton even reduced the value of assets in Venezuela.
According to data from Baker Hughes, as of April 20th, the number of US crude oil drilling rigs increased by 5 to 820, the highest level since March 2015. The U.S. Energy Information Administration (EIA) anticipates that, driven by the exploitation of shale oil, U.S. crude oil output will rise to a record high of 10.7 million barrels per day in 2018, and will further increase to 11.3 million barrels per day in 2019. In 2017, 9.3 million barrels per day.
From this point of view, the service providers serving the North American market, including the "Big Three", have maintained a reasonable level of equipment utilization and profitability at a relatively high level. Therefore, relying solely on the good performance of the “Big Three” in the first quarter indicates that the overall momentum of the oil and clothing industry has been biased.
In fact, the performance of the “Big Three” in the past year has underperformed the S&P 500 index. This is not an investor’s skepticism about the sustainability of the rising oil price. It is purely a three- There is no confidence in the business that is "unremarkable" in the region.
The McKinsey Energy Insights point out that the overall profitability and shareholder return of the oil service industry are not extremely outstanding. Therefore, the result of rising profits driven by North American operations cannot be a benchmark for the entire oil service industry, nor can it be used as a sign of the turning point in the industry.
According to a Wall Street Journal article, oil prices have risen above expectations, which is good news for the oilfield services and equipment industry. The slow recovery of the oil services industry is also expected. However, whether the overall operating environment has stabilized and whether the turning point of recovery is clear is still open to question.
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