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Schlumberger lifts revenue forecast as oilfield activity picks up

FILE PHOTO: The exterior of a Schlumberger Corporation building is pictured in West Houston

By Rithika Krishna and Liz Hampton

(Reuters) -Schlumberger NV on Friday raised its annual revenue forecast after beating analysts' second-quarter earnings expectations, buoyed by higher demand for its oilfield services and equipment.

The company has benefited from a boost in activity driven by stronger oil and gas prices. Global crude prices hovered above $100 per barrel last quarter, fuelled by tight supplies following Western sanctions on Russia, a major producer, and as energy consumption returned to near pre-pandemic levels.

"Despite near-term concerns of a global economic slowdown, the combination of energy security, favorable breakeven price and the urgency to grow long-term oil and gas production capacity will continue to support strong upstream E&P spending growth, Chief Executive Officer Olivier Le Peuch said in a statement.

He pointed to an acceleration of investments in international markets, including what he called an "early cycle of growth in the Middle East" as well as an uptick in its offshore business.

On a per share basis, Schlumberger reported earnings of 50 cents, compared with analysts' average estimate of 40 cents, IBES data from Refinitiv showed, the highest level since 2015.

Core earnings are expected to grow by 25% this year versus 2021, the company said.

Schlumberger's shares were up more than 6% to $35.65 in early trading.

Schlumberger's upbeat outlook follows a mixed quarter from the world's largest oilfield service providers. Baker Hughes warned that the demand outlook for the next 12 to 18 months was "deteriorating" while Halliburton Co predicted "multiple years" of increased activity.

Schlumberger said it now expects a high-teens percentage rise in revenue for 2022, which would be at least $27 billion. It had previously anticipated mid-teens growth.

The company reported net income of $959 million, or 67 cents per share, for the three months ended June 30, compared with $431 million, or 30 cents per share, a year earlier.

Revenues of $6.8 billion also beat Wall Street forecasts of $6.28 billion, according to IBES data. International sales were up 12% from the previous quarter, while revenue in North America jumped 20%.

"Solid release all around, with results outpacing expectations," analysts for investment firm Tudor, Pickering, Holt & Co wrote in a note on Friday.

Schlumberger in the second quarter sold a large portion of its shares in Liberty Oilfield Services, bringing its holdings to 12%, down from a 37% stake in 2021. That sale generated $430 million in net proceeds, Schlumberger Chief Financial Officer Stephane Biguet said, adding that the company may continue to monetize that stake.

(Reporting by Rithika Krishna in Bengaluru; editing by Elaine Hardcastle, Jason Neely and Paul Simao)