HOUSTON — Oil field service company Schlumberger Ltd. saw its profits surge 26 percent in the first quarter, led by strong technology sales and growth in several markets worldwide including Saudi Arabia, Ecuador and the deep waters of Australia.
The company reported net income of $1.6 billion, or $1.21 per share, compared to $1.3 billion, or $0.94 per share the same period a year ago.
The company’s revenue was up 6.3 percent to $11.24 billion.
Schlumebrger is one of Houston’s larger employers, with 8,400 employees in the area.
Chief Executive Officer Paal Kibsgaard called the results “solid and fully in line with our expectations,” adding that the company remains “positive and optimistic with respect to the 2014 outlook as we continue to aim for solid, double-digit growth in earnings per share.”
Still, he noted international oil companies are cutting capital spending among cost concerns, and today they represent a declining portion of Schlumberger’s business.
“We’ve already seen a reduction in their spending,” Kibsgaard said.
It’s a trend that’s continuing to play out across the industry, as a slew of executives from big oil companies have warned of the need for more financial discipline and many have pulled back on capital spending.
Schlumberger’s growth is driven largely by national oil companies and independent producers, which represent about 70 percent of the company’s revenue. The activity of international oil companies, however, was “more or less flat,” he said.
He — as observers have speculated — believes spending by international oil companies on projects requiring extensive infrastructure will remain suppressed, but he said more straightforward well projects are unlikely to be affected.
“I think what’s going to happen, at least over the next couple of years, is the international oil companies will focus more of their spending on where the can drills wells and generate production from existing infrastructure or infrastructure that costs less,” Kibsgaard said. “The huge infrastructure projects I’d expect would be lower in frequency. Some of them may be postponed, as we’ve already seen.”
He said he expects to still see plenty of exploration in “frontier” areas, but development of those projects will be based on whether the economics make sense.
Kibsgaard added that service companies like his need to “drive up the technical performance,” and work more closely with producers on fully integrated projects, becoming more involved in upfront planning and design as a way to deliver more value to customers.
He said Schlumberger’s international business unit saw its revenue rise 5 percent this quarter, driven largely by growth in Asia and the Middle East, where revenue was up 19 percent. Revenue in Latin America was down, Kibsgaard said, but Venezuela and Ecuador are showing strong results. North American revenue was up 12 percent.
The company also highlighted the nearly $900 million it spent in the first quarter repurchasing almost 10 million shares of stock as part of a previously authorized buyback program. Schlumberger will accelerate that program, which it announced in July, to be complete in a total of 2.5 years instead of 5 years, company officials said.