Oilfield services provider Schlumberger (NYSE:SLB) will announce its 2011 Q4 results on the 20th. Overall, high energy prices are expected to support drilling activity in all major geographic markets for the company. Oilfield services players have performed well in North America over the last year with renewed onshore activity from shale exploration. International rig count has seen a slight decline in the month of December. The recent foreign investments in American shale plays are expected to help the company maintain momentum in the coming year. Competitors Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) will be posting their Q4 results later this month.
We have a $101 price estimate for Schlumberger, which is at a 40% premium to its current market price.
North American activity to continue
Rig count in North America has continued to grow over the past year, and low gas prices have directed drilling efforts towards liquid rich plays as the number of rigs drilling for gas declined over the past quarter. 
However, this has not deterred new players from entering into shale exploration. Over the last few weeks, French major Total and a couple of Chinese and Japanese firms announced plans to buy billions of dollars worth of shale acreage in the U.S. in bids to understand the emerging technology. The entrance of new players will strengthen demand for services such as drilling and fracturing and help improve of cash position of players who held the acreage. (See: Mild Winter Hurts Natural Gas Demand As Shale Exploration Continues Unabated)
Renewed deepwater activity in the Gulf of Mexico will also help Schlumberger improve its revenues from North America. Federal government agencies recently concluded a successful sale of leases in the Gulf, and we expect exploration activity to pick up in Alaska as well over the coming months. (See: Conoco Adds to Alaska Assets as State Opens Up for New Exploration)
Rig count in geographies outside North America decreased slightly from November to December last year. ((ref:1)0 International rig count from Baker Hughes declined by 5 rigs in this period. However, higher complexity of the resources being exploited should help Schlumberger to increase its revenue per rig figure, pushing up revenues and profits up overall.Notes: