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Service firms on the rise Schlumberger’s 2004 profit jumps 87%, Baker Hughes up 90% Ray Tyson Petroleum News Houston Correspondent
Rig oilfield service companies Schlumberger, Baker Hughes, BJ Services and Smith International checked in with strong to superlative earnings for the 2004 first quarter, another encouraging sign for an industry that has struggled for much of the past few years.
“The first quarter’s results provide us with a significant amount of momentum which should carryover into the rest of the year,” said Loren Carroll, Smith’s executive vice president. “We believe we’ll continue to see a strengthening global business environment for our products and services.”
Smith’s profit for the 2004 first quarter more than doubled compared to the same period last year, while Schlumberger’s rocketed 87 percent, Baker Hughes’ 90 percent, and BJ Services’ 61 percent.
Baker Hughes was so comfortable with its earnings that it raised its performance guidance for the remainder of the year.
“We expect strong activity in the North American land market to continue, as well as growth in international markets, including Russia, the Caspian, the Middle East and Latin America,” Mike Wiley, Baker Hughes’ chief executive officer, said April 27. “As a result of activity and pricing improvements, margins are expected to improve throughout the year.”
Bill Stewart, BJ Services’ chief executive officer, said that improvement in market conditions, together with inflationary pressures, caused BJ to increase its prices on average 7 percent compared to a year ago.
“U.S. rig activity increased throughout the (first) quarter and our forecast assumes U.S. activity will continue increasing for the balance of fiscal year 2004,” he said, adding during the June quarter, the company estimates rig activity in the U.S. will average 3-4 percent higher compared to the March quarter. Schlumberger: fundamentals strong Andrew Gould, Schlumberger’s chief executive officer, said oilfield service activity during the first quarter confirmed its belief that exploration and production spending will remain robust in the face of increased demand from China and the United States.
However, he cautioned, while fundamentals for the remainder of the year remain strong, “geopolitical and local industry conditions continue to restrict investment and activity in some parts of the world, moderating short-term growth.”
Schlumberger said first quarter activity was particularly strong in Canada, India, Indonesia, West Africa, and on land in the United States, which offset slow activity in Venezuela, the U.S. Gulf Coast, and the Caspian.
Schlumberger reported 2004 first-quarter net income of $279 million or 47 cents per share. Including after-tax charges of $152 million, income was $127 million or 22 cents per share. Revenues were $3.02 billion versus $2.65 billion in the year-ago quarter.
Revenue from the company’s oilfield services sector in the 2004 first quarter increased 2 percent to $2.36 billion compared to the prior quarter, and was up 15 percent versus the same quarter last year. Pretax operating income of $423 million increased 1 percent sequentially and 31 percent year-on-year.
Schlumberger also saw improvement in struggling seismic business, WesternGeco, due largely to recovery in multi-client sales in the Gulf of Mexico. Revenue for the 2004 first quarter of $313 million was 2 percent higher sequentially and year-on-year. Pretax operating income of $34 million improved $1 million from the prior quarter and compared to break-even in the first quarter of 2003. Smith has record profit for the quarter Meanwhile, Smith reported a record profit of $44.9 million or 44 cents per share for the first quarter of 2004, up 9 percent from the previous quarter and more than twice last year’s first quarter earnings of $21.7 million. Revenue for the 2004 first quarter was $1 billion, 3 percent above the previous quarter and 26 percent higher than the year-ago period.
The company said much of the earnings growth between the 2003 fourth quarter and 2004 first quarter was generated in Canada, which it attributed to a seasonal increase in drilling activity.
More than 80 percent of the sequential revenue growth was reported in the Western Hemisphere, as higher North American land-based drilling activity was partially offset by continued weakness in the offshore markets, Smith said.
Eastern Hemisphere revenues in the 2004 first quarter grew 2 percent over the previous quarter despite relatively flat activity levels influenced, in part, by the inclusion of several, large export orders, Smith said. Revenue growth over the first quarter of 2003 benefited from a 20 percent increase in North American land-based drilling activity and improved business volumes in the Europe-Africa region, including the Norwegian sector of the North Sea and the Former Soviet Union, the company said.
“Although it’s not a near-term event, we’re encouraged by some of the spending plans of our larger customers scheduled to occur later this year,” Smith’s Carroll said. Baker Hughes revenue up in all divisions Baker Hughes saw its net income for the 2004 first quarter jump to $94.6 million or 28 cents per share compared to $44.5 million or 13 cents per share for the first quarter of 2003. Revenue was $1.4 billion, up 17 percent compared to $1.2 billion for the prior year’s quarter of 2003. The company said revenues from all of its divisions in the 2004 first quarter increased compared to the same period last year.
“Revenues from the North America land market, Latin America, China, Africa, and Russia were strong in the first quarter, more than offsetting disappointing activity in the Gulf of Mexico,” Wiley said. Baker Hughes increased its guidance for 2004, expecting profits to be up 6 percent to 8 percent compared to last year. Revenues in the second quarter of this year are expected to be up 7 percent to 9 percent versus the second quarter of 2003 and up 1 percent to 3 percent compared to the first quarter 2004, the company said. BJ Services has record revenue quarter in Canada BJ Services reported net income of $73.3 million or 45 cents per share on revenue of $647.1 million for its second fiscal quarter ending March 31, 2004, up from net income of $44.8 million or 28 cents per share on revenues of $534.6 million for the same period a year ago, and up from the prior quarter’s net income of $61 million or 38 cents per share on revenue of $600.8 million.
The company said well stimulation activity in its North American markets was up significantly during the recent quarter, contributing to both its sequential and year-over-year earnings improvement.
Compared to the previous quarter alone, BJ’s consolidated revenue increased 8 percent, with U.S.-Mexico Pressure Pumping Services up 5 percent, International Pressure Pumping Services up 12 percent and other oilfield services up 6 percent.
The company said it had a record revenue quarter in Canada, up 31 percent from the prior quarter on the strength of a 29 percent increase in rig activity. Year-over-year, Canadian revenue increased 39 percent with drilling activity up 7 percent.
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