Schlumberger Ltd. (SLB:US), the largest oilfield-services provider, will buyback $10 billion in shares as quarterly profit rose and it forecast “double-digit” customer spending increases on crude exploration.
Second-quarter net income climbed 49 percent to $2.1 billion, or $1.57 a share, from $1.4 billion, or $1.05, a year earlier, Houston- and Paris-based Schlumberger said in a statement today. Excluding one-time items, earnings per share exceeded the $1.10 average of 33 analysts’ estimates (SLB:US) compiled by Bloomberg. Sales climbed 8.1 percent to $11.2 billion.
The quarterly average price for Brent oil, an international benchmark, has remained more than $100 a barrel since the start of 2011, according to data compiled by Bloomberg. Customers are spending more to get access to harder to reach oil and gas reserves around the world, including deep-water fields, and the company said it expects those increases to continue.
“They beat in every region,” Stephen Gengaro, an analyst at Sterne Agee & Leach Inc. in New York who rates the shares a buy and owns none, said in a phone interview today. “International revenue growth and margins were stronger than expected.”
Sales in its international services segments climbed 8 percent from the first quarter, compared with a 2 percent increase in the U.S. and Canada unit.
Schlumberger gained 5.4 percent to $82.74 at the close in New York, the most since Nov. 30, 2011.
Schlumberger’s board yesterday approved a $10 billion share repurchase program to be completed by June 2018. The company said it will finish an $8 billion buyback program in the third quarter that was approved in April 2008.
While the market for oil and gas remains stable, demand for exploration and production “has been revised upwards making this year the fourth consecutive year of double-digit spending increases and pointing to the long-term nature of oil and gas developments,” Chief Executive Officer Paal Kibsgaard said in the statement.
Schlumberger generates about two-thirds of sales (SLB:US) outside of North America, the highest ratio among the biggest service providers, including Halliburton Co. (HAL:US) and Baker Hughes Inc. (BHI:US)
Baker Hughes, the third-largest provider of services to drill and complete wells, today reported second-quarter net income fell 45 percent to $240 million, missing the average of 14 analysts’ estimates compiled by Bloomberg.
Results were hurt by less activity and higher costs in Brazil and Mexico, the company said in a statement today. Baker Hughes dropped 2.6 percent to $47.80, the biggest decline in more than three months.
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