The biggest oilfield services providers are expected to report this week and analysts expect a strong set of results for the third quarter. In fact, expectations are for one of the strongest reports in years on the back of higher demand and pricing.
The three biggest oilfield services firms, Schlumberger, Halliburton, and Baker Hughes, are set to start the oil industry’s earnings season, and analysts expect better-than-forecast profits.
Baker Hughes will report Q3 earnings on October 19, Schlumberger on October 21, and Halliburton on October 25.
“Pricing is coming through,” James West, an oilfield services analyst at Evercore ISI, told Reuters.
During the first-quarter earnings releases in April, oilfield services providers said they were confident that a prolonged upcycle would keep them very busy in coming years as the U.S. shale patch returns to growth and international drilling activity struggles to compensate for barrels likely to be lost from Russia.
Pricing power is back in the hands of the OFS crew, as exploration and production companies are looking to pump more oil and gas amid energy security concerns and a supply tightness that was already present even before the Russian invasion of Ukraine. Moreover, emerging tightness in the global capacity to boost supply is “extremely favorable for pricing power” of the oilfield services firms, as Olivier Le Peuch, the CEO of the world’s biggest, Schlumberger, said on the Q1 earnings call.
For Q2, Schlumberger reported a higher-than-expected profit for the second quarter as drilling activity rebounded in all markets, prompting the company to raise its 2022 revenue and earnings outlook as “the multiyear upcycle continues to gain momentum.”
“The multiyear upcycle continues to gain momentum with upstream activity and service pricing steadily increasing both internationally and in North America, resulting in a strengthened outlook for Schlumberger,” Schlumberger’s Le Peuch said in July.
Last month, Moody’s issued a bullish report for OFS, saying that “Rising demand for oilfield services (OFS) amid some growth in drilling and completion activity will continue to boost pricing power and will support material growth in earnings for OFS companies.”