Oil field services and equipment firm SLB (SLB), formerly known as Schlumberger, reported above-forecast Q1 financials Friday. That followed Wednesday’s target-topping reporting from Baker Hughes (BKR). Baker Hughes stock and SLB were mixed early Friday.
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Going into 2023, Baker Hughes, SLB and Halliburton (HAL) all projected strong oil demand and tight supplies for the foreseeable future. The companies all provide a broad array of oilfield support services and technologies. Each oilfield services leader also pointed to myriad international growth opportunities, especially in the Middle East.
U.S. crude oil futures held steady Friday near $77.30 per barrel. Oil had dipped as low as $66.74 in March. Earlier in April, U.S. oil futures hit a five-month high of $83.5 per barrel after OPEC+ announced a surprise oil production cut.
Halliburton earnings are due Tuesday.
SLB Earnings Upcoming
Estimates: Analysts projected SLB earnings would grow 76% to 60 cents per share in Q1. Wall Street forecast sales increasing 24% to $7.44 billion.
Results: Diluted EPS soared 85% to 63 cents. Revenue ramped up 30% to $7.74 billion. Well construction and production systems revenue increased 36% and 38%, respectively. Pretax income for those units surged 73% and 80%.
International revenue, which is 77% of SLB’s total, increased 29%. North American revenue gained 32%.
“Revenue growth surpassed rig count growth both in North America and internationally,” said SLB CEO Olivier le Peuch in a statement, “representing the highest year-on-year quarterly growth in more than a decade.”
Le Puech said pricing trends were positive as customers worked to adjust contracts in order to offset inflation, and as service capacity continues to tighten across international markets.
SLB dropped a fraction in premarket trade Friday, after closing down 1.3% at 51.97 on Thursday. Shares are consolidating, with an official 56.54 buy point, according to MarketSmith analysis.
SLB topped fourth-quarter revenue and earnings views on Jan. 20. The company reported EPS grew 73% to 71 cents per share while revenue jumped 27% to $7.9 billion.
SLB expects a record level of upstream investment in the Middle East throughout 2023. The company said it already has a combination of oil and gas offshore development plans in place throughout the region.
In 2022, SLB earnings advanced 70% to $2.18 per share. Full-year revenue came in at $28.1 billon, up 23% compared to 2021. This was in-line with company expectations. In 2023, SLB is looking to grow at 15% compared to 2022.
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Baker Hughes Stock: Earnings
Estimates: Wall Street expected Baker Hughes earnings per share of 26 cents, growing 73% compared to last year. Analysts also forecast revenue increasing 14% to $5.52 billion.
Results: Baker Hughes reported EPS jumped 86% to 28 cents while revenue increased 18% to $5.72 billion.
BKR reported $1.34 billion in revenue from operations in the Middle East and Asia, a 23% increase from last year. North America revenue was second with $992 million in Q1.
“We were pleased with our first quarter results and remain optimistic on the outlook for 2023,” CEO Lorenzo Simonelli said in a statement Wednesday.
Baker Hughes stock dropped 1.5% to 30.09 Thursday. On Friday, shares dipped 0.4% in early action.
Baker Hughes, on Jan. 23, missed fourth-quarter earnings and sales targets, with revenue growing 8% to $5.9 billion in Q4. Earnings increased 52% to 38 cents per share. However, BKR also painted a bright picture for the 2023 oil market.
Baker Hughes executives also reported a record backlog of $25 billion, aided by increased liquefied natural gas (LNG) equipment orders at the end of year.
CFRA analyst Jonnathan Handshoe on Wednesday maintained a “Hold” rating on BKR with an 31 price target.
“Despite today’s print suggesting potential upside in FY 2023, we still believe that BKR faces an uphill battle,” Handshoe wrote.
“The escalating Chip War’ between the U.S. and China, combined with rising layoffs in the semiconductor sub-sector, could disrupt global supply chains and, in our view, widen the bottleneck in BKR’s ability to convert its backlog and impact its margins for FY 2023,” Handshoe added.
In 2022, orders increased 24% to $26.7 billion. Full-year revenue edged up 3% to $21.16 billion— the first advance in three years for the company. Revenue from the company’s oilfield services segment increased 10% compared to 2021. Full-year EPS shot up 43% to 90 cents per share.
At the end of January, Baker Hughes forecast 2023 revenue between $24 billion-$26 billion and adjusted EBITDA between $3.6 billion and $3.8 billion.
BKR shares rank fourth in the Oil&Gas-Machinery/Equipment industry group. Baker Hughes has an 79 Composite Rating out of 99. The stock has an 75 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 86.
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Baker Hughes Stock: One More Oil Field Giant
Fellow oil field service firm Halliburton reports earnings early Tuesday, April 25. The Street expects the company’s EPS skyrocketing 91% to 67 cents in Q1 with sales increasing 28% to $5.49 billion.
HAL saw Q4 earnings and revenue increase 100%, to 72 cents and $5.58 billion, respectively. It reported 2022 EPS of $2.15, up 99% compared to 2021. Full-year sales shot up 33% to $20.3 billion.
Analysts expect Halliburton 2023 earnings growing 40% to $3.00 per share, according to FactSet. Full-year revenue is predicted to increase 15% to $23.47 billion.
CEO Jeff Miller told investors everything points “toward continued oil and gas tightness in 2023.” Miller expects activity in the U.S. to remain strong and service intensity to increase through 2023. The reopening of China’s economy will likely factor strongly into the year’s global demand.
Halliburton stock slipped 0.4% early Friday.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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