What Should We Expect From Schlumberger’s 2Q’16 Results?

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  • Schlumberger (NYSE:SLB), the world’s largest oilfield contractor, is set to report its June quarter 2016 financial results on 22nd July 2016. [1]

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  • WTI crude oil prices improved more than 35% since 1Q’16, owing to the production disruptions due to wildfire in Alberta, Canada, and geo-political disturbances in Nigeria and Venezuela.
  • This led to a slight rise in the global rig count in the month of June. However, the overall rig count for 2Q’16 continued to remain weak both annually as well as sequentially.

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  • Despite the slow rebound in commodity prices, the global upstream capital expenditure is likely to remain low in 2016. As a result, Schlumberger’s 2Q’16 revenue is expected to drop notably.
  • However, the company’s exposure to the North American markets is lower compared to its peers such as Halliburton and Baker Hughes. Hence, its operating margins are expected to outperform its competitors in this quarter.
  • The oilfield services company has a strong track record of posting an earnings surprise in its quarterly earnings. On average, the company exceeded consensus adjusted EPS estimate by roughly 4% in the last 12 quarters [2]. Thus, given the slight improvement in oil prices, we forecast the company to report an earnings surprise in this quarter.
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Have more questions about Schlumberger (NYSE:SLB)? See the links below:

 

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Schlumberger Limited

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Notes:
  1. Schlumberger Announces Second Quarter 2016 Results Conference Call, 2nd May 2016, www.slb.com []
  2. What Do Analysts Expect From Schlumberger’s 2Q16 Earnings?, 5th July 2016, Market Realist []