Schlumberger echoes rivals' oil recovery predictions after results beat

By Shariq Khan

(Reuters) - Schlumberger NV on Friday joined rivals in predicting a steady recovery in the oil industry this year after the world's top oilfield services provider's fourth-quarter results beat estimates, aided partly by growing demand for drilling.

Easing of COVID-19 related restrictions has propelled oil demand and prices, which remain stable since a late-2020 rebound from historic lows. Brent crude, which averaged at $45 per barrel in the last quarter of 2020, hovered around $55 on Friday.

Schlumberger Chief Executive Officer Olivier Le Peuch said he was optimistic about demand recovery through this year, as rivals Halliburton Co and Baker Hughes Co have noted, giving investors hope the oil downturn was nearing an end.

However, Le Peuch's timeline for a full recovery to 2019 level no later than 2023 was behind Halliburton's view of a rebalancing next year. Baker Hughes also sees strong investment growth in 2022.

Still, Le Peuch said the reset could happen sooner, as some analysts have noted in recent weeks, with international recovery accelerating from second quarter this year and North America activity continuing to build upwards after a strong start to the year.

"Our hypothesis going forward is that the market supply share will rebalance slightly, will favor international and will, as a consequence, pull international activity to 100% or more in the next 2 or 3 years," he told analysts on a post earnings call.

Schlumberger's shares were down 1.4% at $24.86in early trading, outperforming rivals and other energy stocks that fell more on latest COVID-19 related restrictions in China.

Total revenue of $5.53 billion in the fourth quarter beat analysts' estimates of $5.25 billion. It's the first quarter-over-quarter increase in revenue for Schlumberger since the third quarter of 2019.

Since taking over in July 2019, Le Peuch has focused on reshaping Schlumberger through thousands of job cuts, other steep cost cuts and divesting unprofitable businesses, actions that have been received well by Wall Street.

"Schlumberger ripped the cover off the ball with these results," Tudor, Pickering, Holt and Co analysts wrote in a note on Friday, saying the strong performance wasn't a big surprise due to the yeoman's work around cost cuts and improving margins and incremental fee cash flow.

Aided by cost cuts, Schlumberger's net income excluding charges and credits came in at 22 cents per share in the quarter ended Dec. 31, which also beat estimates of 17 cents, according to Refinitiv IBES data.

In light of the anticipated demand recovery, Schlumberger forecast capital investments this year of between $1.5 billion and $1.7 billion, a slight improvement at the midpoint of the range from last year's $1.5 billion.

(Reporting by Shariq Khan in Bengaluru; Editing by Shinjini Ganguli)