Schlumberger (SLB) Q2 Earnings Fall Y/Y On Weak Activity

The world’s largest oilfield services provider Schlumberger Ltd. (NYSE:SLB) reported adjusted second-quarter 2016 earnings of 23 cents per share (excluding special items), which came above the Zacks Consensus Estimate of 22 cents. However, the quarter’s results plunged from 88 cents per share earned in the year-earlier quarter.

Total revenue of $7,164 million was down from the year-earlier level of $9,010 million. This, however, came above the Zacks Consensus Estimate of $7,126 million.

Segmental Performance

Each of the groups – Reservoir Characterization, Drilling Group and Production Group – registered year-over-year fall in revenues. Reservoir Characterization and Drilling Group revenues fell primarily due to the scaling back of operations in Venezuela and project cancellations that impacted Wireline activity internationally. Drilling Group fell mainly due to a sharp drop in drilling activity from a combination of the spring break-up in Canada, a lower rig count on land in the U.S. and Latin America, and the scaling back of operations in Venezuela. Production Group revenues fell due to a decline in North America from the Canadian spring break-up and increased pricing pressure.

Reservoir Characterization: This group posted revenues of $1,593 million, down from $2,510 million in the prior-year quarter. Pre-tax operating income was $266 million, which decreased 59% year over year.

Drilling Group: This group recorded revenues of $2,034 million, which fell 41% from the year-ago quarter. Pre-tax operating income was $171 million, down 75% year over year.

Production Group: Revenues recorded by this group were $2,099 million, which declined 31% from the year-earlier quarter. Pre-tax operating income was $90 million, down 77% year over year.

Financials

As of Jun 30, 2016, the company had approximately $11,192 million in cash and short-term investments and $18, 252 million in long-term debt. In the reported quarter, Schlumberger repurchased 0.4 million shares of its common stock at an average price of $72.77 for a total purchase price of $31 million.

SCHLUMBERGER LT Price, Consensus and EPS Surprise

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Zacks Rank

Schlumberger currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Sasol Ltd. (NYSE:SSL) , ReneSola Ltd. (NYSE:SOL) and Dril-Quip, Inc. (NYSE:DRQ) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).