Tags: Schlumberger | fortune | energy | SLB

Schlumberger Fortune Tied to Energy Exploration

By    |   Wednesday, 22 February 2012 08:19 AM

Oilfield services giant Schlumberger (SLB) ties its fortunes to spiking oil and gas exploration. But it’s also a play on rising drilling costs in oilfields worldwide as fields mature and new exploration in harsh climates requires high technology.

Schlumberger is a major global oilfield player. North American services comprised just a third of 2011 revenues. The company also works in South America, Europe/West Africa and the Middle East/Asia.

Schlumberger’s ace in the hole is technology that boosts production. For fourth quarter 2011, Schlumberger reported sales of $10.9 billion, up 21 percent. Net income for the quarter rose to $1.11 per share, up from 85 cents.

For full-year 2011, Schlumberger’s sales were $39.54 billion, up 44 percent. Net income for the year was $3.66 per share, up from $2.86 in 2010.

Schlumberger CEO Paul Kibsgaard noted that fourth-quarter growth was driven by “stronger activity both on land and offshore for most technologies.”

Regularly beating analysts’ earnings estimates is another Schlumberger forte. For 2012, Wall Street’s consensus estimate has risen to $4.70 per share. For 2013, the consensus estimate is $5.72.

Double-digit returns

The shareholder-friendly company recently increased its dividend 10 percent to $1.10 per share. Return on equity, which measures the rate of return on stock ownership, has averaged 13.9 percent since 1992. Medium term, S&P analysts figure that Schlumberger’s ROE will grow 17 percent annually and dividends 20 percent.

Analysts like Schlumberger’s prospects too. Of the 35 analysts followed by Thomson/First Call, 11 have strong buy recommendations and 19 have buys, with only six holds.

S&P analysts have a strong buy rating, adding that Schlumberger will benefit as exploration activity picks up in 2012. The price target is $97 per share.

The company next reports on April 20.

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Wednesday, 22 February 2012 08:19 AM
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