Schlumberger oil field services company Chief Executive Olivier Le Peuch said a super-cycle may be underway for natural gas and oil markets as the firm reported fourth-quarter revenue of $6.22 billion, an increase of 6 percent sequentially and 13 percent year-on-year.
The Houston, Texas-based company, listed on the New York Stock Exchange, said fourth-quarter cash flow from operations was $1.93Bln and full-year revenue was $22.9Bln.
The company reported net income of $587 million, an increase of 90 percent from the $309M reported in the same three months of 2020.
“The macro environment is increasingly supportive of a potential super-cycle with both onshore and offshore market growth well beyond 2022,” Le Peuch told analysts during a conference call on the earnings statement.
He stated that Schlumberger expected oil demand to exceed pre-pandemic levels by the end of 2022, with growth in 2023 and beyond.
“Some characteristics of the cycle have accelerated and some have been accentuated in the recent months,” added the CEO.
Energy intensity
He explained that the first sign is the outlook of economic GDP growth and that concerning the oil intensity and energy intensity that will drive the oil demand beyond the previous peak.
“So the first is the macro demand situation is set to be favorable for the next few years. Secondly, I think the supply demand imbalance and the supply, I would almost call it tardiness that we are facing, is pointing not only to an uplift on to the commodity price, but also is pointing to the return to investment across the broad portfolio of our customers,” said Le Peuch.
The CEO added that North America was still and would remain structurally smaller than in the previous cycle due to the capital discipline but also due to the crunch of supply, including on the services side.
“Secondly, I think the international underinvestment for the last few years, actually, the last down cycle, combined with the dip in the last two years is creating conditions for unnecessary injection of short-cycle capital and then long cycle capital investment to respond to the supply,” stated Le Peuch.
“So we are seeing growth in North America, we are seeing a rebound - a visible rebound in short and long cycle investments, internationally,” he explained.
Market share
“And I will insist on the long cycle because I believe that both oil capacity is being looked upon and by some OPEC member to secure future supply market share, but also the international and majors are investing into their advantaged offshore basins and we are seeing not only infill-drilling, but we are seeing FIDs for offshore that are accelerating going forward,” added Le Peuch.
“So it's a mix of offshore rebound, solid including deepwater, international short cycle and oil capacity in land. And finally, solid growth in North America. So these are unique conditions that are tightening the capacity and that are creating the underlying pricing improvement condition,” declared the CEO.
Le Peuch said Schlumberger was well placed to benefit from the coming surge.
“Strengthening activity, accelerating digital sales, and outstanding free cash flow performance combined to deliver another quarter of remarkable financial results to close the year with great momentum,” he added.
“These financial results conclude an exceptional year of financial performance for Schlumberger, at a pivotal time for the company and in our industry at large,” he said.
“We restored our North America pre-tax operating margin to double-digits and expanded our international margin, both exceeding pre-pandemic 2019 levels,” said Le Peuch.
