Schlumberger Ltd., the world’s biggest oilfield servicer, said the global oil industry is set to improve in 2019, supported by a “solid demand outlook” as production cuts from OPEC and its partners take effect.
Exploration and production investments are “starting to normalize as the industry heads toward a more sustainable financial stewardship of the global resource base,” the company said in its first-quarter earnings release. Higher investments in international markets are required to keep production flat, while North America land is set for lower investments, Schlumberger said.
Chief Executive Officer Paal Kibsgaard is trying to rally investor enthusiasm after the drilling and fracking giant lost more than half its value amid the worst crude crash in a generation. Global oil prices have recovered some of their losses, but are still down more than a third from their June 2014 high. Schlumberger’s shares have slid 56 percent in that period. One of the biggest keys to Schlumberger’s success is cranking up its bread-and-butter international business, where the company generates most of its revenue. It’s prepared investors to expect single-digit growth this year outside the U.S. and Canada. The company said Thursday that it sees the recovery in international service and product pricing as a major business priority. However, Schlumberger balanced it optimistic commentary on international markets with more cautious language about spending in the U.S. It sees more moderate growth in U.S. shale production in coming years. After closing out 2018 as one of the worst performers in the Standard & Poor’s 500 Energy index, Schlumberger has rallied this year to sit among the best in the 29-member group. Investors in January cheered the company’s plans to slash its capital spending, in part to protect dividend payouts.Market Reaction
The shares were down 1.3 percent to $46.80 in pre-market trading in New York.