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Schlumberger expects double-digit 2014 earnings-per-share growth

Ingrid Pan, CFA

Must-know: What's in store for oilfield service stocks this year? (Part 7 of 8)

(Continued from Part 6)

Schlumberger 2014 guidance

Schlumberger stated that it expects 2014 capex to be $3.8 billion in 2014, compared to $3.9 billion in 2013. The effective tax rate for FY2014 is forecast to be in the low to mid 20s. SLB also commented that 2014 EPS (earnings per share) are expected to grow by double digits year-over-year. The company noted that it believes its ability to offer cutting-edge new technology will help it grow earnings faster than oilfield services revenue growth as a whole. Wall Street analysts predict 2014 EPS of roughly $5.70 per share in 2014.

Schlumberger didn’t give further explicit guidance, but it made the following general comments regarding the upcoming periods.

  • Strong growth is expected in North Iraq over 2014, with flat activity in the South in 1H14.
  • Upstream investing in Russia and Central Asia will continue with strong growth potential going forward
  • North Africa remains challenging due to ongoing security issues (like Libya’s geopolitical climate).
  • 2014 outlook for Europe and Africa will be driven by growth in sub-Saharan Africa and the North Sea, offset somewhat by ongoing challenges in North Africa and Continental Europe.
  • Gulf of Mexico Deepwater activity is forecast to grow in 2014, with additional deepwater rigs to arrive over 2014 (meanwhile, onshore activity is predicted to be flat).
  • The North American land market is still experiencing weak pricing, with further downward pressure as higher priced contracts are rolling over to new lower-price resets.
  • The strongest growth is expected to be posted during 2Q14 and 3Q14, with the first quarter seeing some weakness due to normal seasonal slowdowns.
  • The WesternGeco segment could see a more challenging environment, as the last few years have had a lot of seismic data gathering, and E&P spending might shift towards other segments.

Continue to Part 8

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