Schlumberger profit surges 28pc to $1bn
New York, January 23, 2011
Schlumberger, the world's largest oilfield services company, posted higher-than-expected fourth-quarter profit of $1.04 billion, or 76 cents per share, up 28 per cent compared to $817 million a year earlier.
The company saw a good year ahead, but its stock fell as it began looking expensive compared with peers.
Schlumberger boosted its dividend for the first time in three years, and its shares rose to within $1 of a 28-month peak before they retreated along with oil prices.
"The stock's had an awfully good run. There's going to be some digestion, that's just normal," said John Parry, analyst at IHS Herold, pointing to Schlumberger's "generous" multiple of more than 20 times forecast 2011 earnings.
Schlumberger shares had risen 60 per cent in less than five months as investors geared up for international growth. Rival Halliburton Co is up by 40 per cent in that time, and trades at just 14 times estimated 2011 earnings.
Parry sees a 30 per cent upside for the Philadelphia Stock Exchange oil service index, yet he noted that does not mean all the companies in the index have so much room to grow.
The fourth-quarter profits grew by 28 per cent for Schlumberger. Because of its global reach and insights into drillers' plans, analysts watch just as carefully for the views of Schlumberger's chief executive, Andrew Gould.
With another healthy increase in oil demand expected in 2011, Gould, who is due to retire later this year, said strong oil prices would boost spending on exploration -- the "swing factor" in operators' budgets.-Reuters