SLB Earnings Due As Baker Hughes Sees Middle East Revenue Increases 23%

Oil field services and equipment firm SLB (SLB), formerly known as Schlumberger, reports first-quarter financials Friday. This comes after Baker Hughes (BKR) topped Q1 targets Wednesday, following firms painting a rosy picture of the oil market at the end of 2022. Baker Hughes stock and SLB slipped early Thursday, with crude futures also sliding.

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Going into 2023, Baker Hughes, SLB and Halliburton (HAL) all projected strong oil demand and tight supplies for the foreseeable future. Each oilfield services leader also pointed to myriad international growth opportunities, especially in the Middle East.

U.S. crude oil futures dropped 1.5% Thursday to around $78 per barrel, extending losses from Wednesday. Earlier in April, U.S. oil futures hit a five-month high of $83.5 per barrel after OPEC+ announced a surprise oil production cut.

Halliburton earnings are due next week, following reports from SLB and Baker Hughes.

SLB Earnings Upcoming

Estimates: Analysts see SLB earnings growing 76% to 60 cents per share in Q1. Wall Street forecasts sales increasing 24% to $7.44 billion.

Results: Check Friday morning.

SLB dropped 1.4% to around 51.90 early Thursday during market trade. Shares are in consolidation with an official 56.54 buy point, according to MarketSmith analysis.

SLB topped fourth-quarter revenue and earnings views on Jan. 20. The company reported EPS grew 73% to 71 cents per share while revenue jumped 27% to $7.9 billion.

SLB relies on international markets for more than three quarters of company revenues. SLB expects a record level of upstream investment in the Middle East throughout 2023. The company said it already has a combination of oil and gas offshore development plans in place throughout the region.

“Despite concern for potential economic slowdown in certain regions, oil and gas demand growth remains resilient,” SLB CEO Olivier le Peuch told investors during the Q4 earnings.

In 2022, SLB earnings advanced 70% to $2.18 per share. Full-year revenue came in at $28.1 billon, up 23% compared to 2021. This was in-line with company expectations. In 2023, SLB is looking to grow at 15% compared to 2022.

“I really believe that the cycle that we have entered in internationally, that is characterized now by the Middle East joining the growth engine, if you like, is set to be very durable,” le Peuch said.

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Baker Hughes Stock: Earnings

Estimates: Wall Street expected Baker Hughes earnings per share of 26 cents, growing 73% compared to last year. Analysts also forecast revenue increasing 14% to $5.52 billion.

Results: Baker Hughes reported EPS jumped 86% to 28 cents while revenue increased 18% to $5.72 billion.

BKR reported $1.34 billion in revenue from operations in the Middle East and Asia, a 23% increase from last year. North America revenue was second with $992 million in Q1.

“We were pleased with our first quarter results and remain optimistic on the outlook for 2023,” CEO Lorenzo Simonelli said in a statement Wednesday.

Baker Hughes stock dropped 2.4% early Thursday. On Wednesday, Baker Hughes stock advanced 3.6% to 30.56.

Baker Hughes, on Jan. 23, missed fourth-quarter earnings and sales targets, with revenue growing 8% to $5.9 billion in Q4. Earnings increased 52% to 38 cents per share. However, BKR also painted a bright picture for the 2023 oil market.

Baker Hughes executives also reported a record backlog of $25 billion, aided by increased liquefied natural gas (LNG) equipment orders at the end of year.

CFRA analyst Jonnathan Handshoe on Wednesday maintained a “Hold” rating on BKR with an 31 price target.

“Despite today’s print suggesting potential upside in FY 2023, we still believe that BKR faces an uphill battle,” Handshoe wrote.

“The escalating Chip War’ between the U.S. and China, combined with rising layoffs in the semiconductor sub-sector, could disrupt global supply chains and, in our view, widen the bottleneck in BKR’s ability to convert its backlog and impact its margins for FY 2023,” Handshoe added.

In 2022, orders increased 24% to $26.7 billion. Full-year revenue edged up 3% to $21.16 billion— the first advance in three years for the company. Revenue from the company’s oilfield services segment increased 10% compared to 2021. Full-year EPS shot up 43% to 90 cents per share.

At the end of January, Baker Hughes forecast 2023 revenue between $24 billion-$26 billion and adjusted EBITDA between $3.6 billion and $3.8 billion.

BKR shares rank fourth in the Oil&Gas-Machinery/Equipment industry group. Baker Hughes has an 94 Composite Rating out of 99. The stock has an 75 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 86.

Baker Hughes Stock: One More Oil Field Giant

Fellow oil field service firm Halliburton reports earnings early Tuesday, April 25. The Street expects the company’s EPS skyrocketing 91% to 67 cents in Q1 with sales increasing 28% to $5.49 billion.

HAL saw Q4 earnings and revenue increase 100%, to 72 cents and $5.58 billion, respectively. It reported 2022 EPS of $2.15, up 99% compared to 2021. Full-year sales shot up 33% to $20.3 billion.

Analysts expect Halliburton 2023 earnings growing 40% to $3.00 per share, according to FactSet. Full-year revenue is predicted to increase 15% to $23.47 billion.

CEO Jeff Miller told investors everything points “toward continued oil and gas tightness in 2023.” Miller expects activity in the U.S. to remain strong and service intensity to increase through 2023. The reopening of China’s economy will likely factor strongly into the year’s global demand.

With Baker Hughes stock and SLB edging lower early Thursday, Halliburton stock also fell 1.5% in the morning.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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