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Investors look to tech whiz to set a new course at Schlumberger

By Liz Hampton

By Liz Hampton

(Reuters) - Oilfield services bellwether Schlumberger NV <SLB.N> on Friday is forecast to post modestly higher profits for its second quarter, but investors will be listening closely to what tech expert Olivier Le Peuch has to say about its future direction.

The 55-year-old Frenchman, appointed as Schlumberger's <SLB.N> chief operating officer in February and seen as its CEO- in-waiting, is being watched for signs he plans to return the top oil services provider by revenue to its roots in high-tech equipment and services.

Since current CEO Paal Kibsgaard took charge in August 2011, the company has overspent on costly program-management ventures, paid $430 million for pressure pumping gear as the market became oversaturated, and seen its share price tumble about 58%. Its stock is rated "buy" by just 63% of analysts, below rival Halliburton at 82%, and Baker Hughes GE at 79%.

Le Peuch, an electrical engineer by training with more than three decades at the company, is expected to take over this year from Kibsgaard. Last quarter, Le Peuch outlined results in the company's global operations and offered its forecast for second-quarter profit of 35 cents a share, up 13% from a year ago.

Schlumberger declined to make Le Peuch available for an interview.

Analysts said Le Peuch's deep background in technology will be critical at a time when digitalization is changing the oil industry. He has run Schlumberger's software units as well as its well-completions and offshore businesses.


TECH DOMINANCE

"They've always been a leader in oilfield technology, with the one exception being (hydraulic) fracturing. Several competitors have made incremental improvements that have gained market share," said Paul Mecray III, a managing director for investment firm Tower Bridge Advisors who has followed Schlumberger for more than 50 years.

"They have to maintain it," he said.

Unlike Kibsgaard, who joined the firm from Exxon Mobil <XOM.N> in the 1990s and quickly rose through the ranks, Le Peuch started in custom software development for Schlumberger's wireline measurement businesses and got his first big break as a president of its Information Solutions unit in 2004.

Le Peuch also was part of the teams that drove Schlumberger's purchase of software maker Technoguide in 2002, according to former colleagues, and later acquisitions of two well-completions businesses, and pursued a joint venture with offshore firm Subsea 7 <SUBC.OL>.

Technoguide developed the highly profitable Petrel E&P software, which allows geologists to visualise oil reservoirs and drilling engineers to plan production systems.

That deal to buy Technoguide helped propel Le Peuch to president of Schlumberger's Information Solutions, a role that former colleagues said will help him steer the company as the industry becomes more digital technology focussed.

"In the early 2000s to 2010, he was right in the thick of the forefront of Schlumberger's big advance in expanding the range and profitability of software offerings," according to Ram Shenoy, a former Schlumberger executive who spent two decades at the company, most recently as its vice president of research.


GROOMED FOR TOP JOB

Le Peuch has been groomed for the top job through a series of key assignments. He was vice president of engineering and manufacturing, a job earlier held by Kibsgaard, and later ran Schlumberger's offshore unit Cameron, which it bought in 2016.

Analysts are counting on Le Peuch to move away from the all-encompassing projects championed by Kibsgaard. He sought to buck the industry's capital spending decline by taking equity stakes in big oil and gas projects, which were criticized as competing with customers.

But after investing billions on such projects, and writing down investments, the firm has said it would halt such investments and seek to sell some of those stakes.

"While Olivier has been part of the senior management team for a while and was a part of the decisions, you will see a return to Schlumberger's roots as a pure oilfield service and equipment company," said James West, an analyst for Evercore ISI.

"He'll put more emphasis on digitalization, technologies, and machine learning," West added.


(Reporting by Liz Hampton; editing by Bernadette Baum)