Oil and gas services provider Schlumberger has recorded an increase in revenue in the fourth quarter of 2016 upon release of its full year results.
The company cited a one per cent revenue increase in the fourth quarter, which chairman and CEO Paal Kibsgaard attributed to high hydraulic fracturing activity.
“Among the business segments, the fourth-quarter revenue increase was led by the production group, which grew five per cent due to increased hydraulic fracturing activity in the Middle East and in North America,” Kibsgaard said.
However, the company noted a 22 per cent year-on-year decrease in revenue for the year, down from $35.5 billion in 2015, to $27.8 billion in 2016.
Revenue in the Latin American region dropped four per cent, while the European and African regions, declined two per cent.
The Organisation of the Petroleum Exporting Countries’ (OPEC) decision to cut production from January this year – in a bid to end global oil oversupply – was also seen as a good sign for the company as it could lead to further exploration and production (E&P) investments.
“We maintain our constructive view of the oil markets, as the tightening of the supply and demand balance continued in the fourth quarter, as seen by a steady draw in OECD stocks,” Kibsgaard said.
“This trend was further strengthened by the December OPEC and non-OPEC agreements to cut production, which should, with a certain lag, accelerate inventory draws, support a further increase in oil prices, and lead to increased E&P investments.”
The company expects these increased investments to mainly come from North America.
Schlumberger is now focused on growth, cash generation and improving returns.
“We have streamlined our cost and support structure, continued to drive the underlying efficiency and quality of our business workflows, expanded our offering through maintaining investments in research and evaluation (R&E), and made a series of strategic acquisitions,” Kibsgaard said.
Earlier this year, the company acquired Peak Well Systems, which develops advanced downhole tools for flow control and well integrity.
“The combination of these actions has enabled us to further strengthen our global market position during the downturn, which will enable us to maintain and extend our well established margin and earnings leadership in both North America and in all parts of the international markets going forward,” Kibsgaard said.
Schlumberger’s capex for 2017 is $2.2 billion, up from last year’s $2.1 billion.