Schlumberger Says Russia Isolation Spurs Drilling Elsewhere

“The energy landscape has evolved significantly over the past few months,” Chief Executive Officer Olivier Le Peuch told analysts and investors Friday on a conference call. “Recent events have, on one hand, resulted in a change in the pace of demand recovery, while energy security and supply diversification have also emerged as preeminent global drivers that will shape the future of our industry.”

The world’s three biggest oilfield contractors pledged last month to halt future work in Russia, but only Halliburton Co. is winding down current activity there. Baker Hughes Co. warned investors this week that sales in one of the world’s biggest oil-producing nations would continue to erode amid sanctions placed on Russia.

The company based in Houston and Paris announced a surprise dividend increase and surpassed Wall Street profit forecasts on Friday. The 40% dividend hike was Schlumberger’s first payout increase since 2015. First-quarter profit of 34 cents a share, excluding certain items, was a penny higher than the media of analysts’ estimates in a Bloomberg survey.

The shares pared earlier losses and rose 2.8% to $41.79 in New York trading.

Sales climbed the most since late 2017 to almost $6 billion as Schlumberger reaped the rewards of a sweeping, post-pandemic revival in energy consumption and production. The sales bonanza was driven by work in the U.S. and Canada, where the company saw revenue surge by almost one-third.

“The dislocation of supply flows from Russia will result in increased global investment across geographies and the entire energy value chain to ensure the diversification and security of the world’s energy supply,”  Le Peuch said earlier in a statement.

The company, which is an industry bellwether because of its unmatched global footprint and extensive international order book, holds the biggest exposure among Western rivals in Russia, which represented about 5% of sales before the war began in late February. It’s smaller rival Halliburton Co. warned today that the sanctions might cause it to take charges related to $340 million of assets.

Le Peuch warned investors last month that profits would be hurt by supply-chain snarls and ripple effects from Putin’s attack.

The hired hands of the oil patch are seeing a resurgence in business as crude demand rebounds from an historic global collapse. After thousands of layoffs, price cuts and efforts to pivot from the mercurial shale business to steadier overseas work, the big three service providers are on track to post their largest annual sales since pre-pandemic days, according to analysts.

However, Schlumberger’s peers disappointed shareholders in recent days, with Halliburton reporting in-line results and Baker Hughes posting lower-than-expected profit.