Overview: Schlumberger’s Production group
Overview: Schlumberger’s 2Q14 earnings (Part 6 of 9)
Schlumberger’s Production group
Schlumberger’s (SLB) Production group consists of Well Services, Completions, Artificial Lift, Well Intervention, Water Services, Carbon Services, and Schlumberger Production Management field production projects.
It provides services for oil and gas well drilling and completion as well as electrical submersible pumps and gas lift equipment. The group develops coiled tubing equipment and services, provides water resources protection services, and storage site characterization for carbon dioxide.
Why revenues for the Production group increased
In 2Q14, revenues for the Production group increased by ~10% to $4.3 billion from $3.9 billion recorded in 2Q13. Revenues improved due to higher utilization of pressure pumping capacity in the U.S., higher demand for well servicing activity from SLB’s international operations, well intervention coiled tubing, and higher sales of the company’s well completion products in the international market.
However, the improvement in the group’s revenues was offset by a weak spring break in Canada. Drill activity typically goes down during spring break in Canada.
Why margins improved for the Production group
In 2Q14, the earnings before tax (or EBT) margin improved to 16.7% from 15.9% in 2Q13. EBT for the group increased 16% to $725 million in 2Q14 from $625 million in 2Q13.
SLB’s software and fracturing technology adopted in Mexico and Russia
During 2Q14, SLB’s Well Services operations deployed its BroadBand Sequence fracturing technique for Pemex—or Petroleos Mexicanos, a state owned petroleum company in Mexico—and also utilized special E&P software that improved horizontal well completion time leading to a reduction in treatment time.
The company used a similar technology in Russia to improve fracturing treatment of horizontal wells using its Hi Way flow-channel technology.
Key stocks and ETFs
Schlumberger Ltd. (SLB) is a component of the Market Vectors Oil Services ETF (OIH) and the Energy Select Sector SPDR (XLE). Other companies in this industry that are components of OIH include Halliburton Company (HAL) and Baker Hughes Inc. (BHI).
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