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Schlumberger Ltd (SLB.N) and Baker Hughes Inc (BHI.N), the world's No. 1 and No. 3 oilfield services companies, posted higher-than-expected profits on Friday as revenue piled up outside North America, and Baker's shares leaped 10 percent.
Investment cycles outside the volatile U.S. and Canadian oilfield markets are generally smoother, and analysts said Schlumberger got a particularly big lift from Europe and Africa.
The Baker Hughes-compiled U.S. rig count has been steady as natural gas reductions have been offset by more oil drilling. But the count outside North America hit 1,285 in June, its highest level since 1985, lifted by the inclusion of some 80 rigs in Iraq that expanded the Middle East count by a quarter.
Baker Hughes stuck with its forecast for 8 percent growth in the international count this year, excluding the Iraqi rigs, while Schlumberger expects more than 10 percent growth.
Both companies were also encouraged by the return of Gulf of Mexico drilling to levels seen before the disastrous oil spill there two years ago. Baker expects five deepwater rigs to join the 24 already there this year.
"We are also realizing price improvements as activity ramps up," Baker Hughes Chief Executive Martin Craighead said of the Gulf on a conference call on Friday.
Schlumberger's second-quarter net profit rose to $1.40 billion, or $1.05 per share, from $1.34 billion, or 98 cents per share, a year earlier. Analysts' average forecast was $1.00 per share, according to Thomson Reuters I/B/E/S.
Revenue increased 16 percent to $10.45 billion, above the $10.41 billion analysts expected. Two-thirds of the revenue for Schlumberger, with its major offices in Paris, Houston and The Hague, was earned in markets outside North America.
Profit growth for Houston-based Baker Hughes was also driven by Europe, as well as better-than-expected earnings in its home market. Overall, it earned a profit of $439 million, or $1 per share. Analysts expected 77 cents a share.
Brokerage Tudor Pickering Holt described the results as "very good, especially against low expectations."
Like other U.S. hydraulic fracturing players, Baker was hit by a leap in the price of guar, a key ingredient in fracking fluid, as well as the massive shift to U.S. oil basins in response to decade-low natural gas prices.
Halliburton Co (HAL.N), the U.S. fracking leader, which reports earnings on Monday, warned in June that its North American profit margins were hit particularly hard by the guar shortage.
Craighead said guar prices, after peaking at $12 per pound in the second quarter, had come down to about $5 per pound in the last few weeks. But Baker Hughes said that would not help much this quarter as it must still use up pricier inventory.
Shares of Baker Hughes jumped 10.4 percent to $46.10 in early trading, while Schlumberger rose 1.3 percent. Halliburton climbed 1.6 percent.
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Investment cycles outside the volatile U.S. and Canadian oilfield markets are generally smoother, and analysts said Schlumberger got a particularly big lift from Europe and Africa.
The Baker Hughes-compiled U.S. rig count has been steady as natural gas reductions have been offset by more oil drilling. But the count outside North America hit 1,285 in June, its highest level since 1985, lifted by the inclusion of some 80 rigs in Iraq that expanded the Middle East count by a quarter.
Baker Hughes stuck with its forecast for 8 percent growth in the international count this year, excluding the Iraqi rigs, while Schlumberger expects more than 10 percent growth.
Both companies were also encouraged by the return of Gulf of Mexico drilling to levels seen before the disastrous oil spill there two years ago. Baker expects five deepwater rigs to join the 24 already there this year.
"We are also realizing price improvements as activity ramps up," Baker Hughes Chief Executive Martin Craighead said of the Gulf on a conference call on Friday.
Schlumberger's second-quarter net profit rose to $1.40 billion, or $1.05 per share, from $1.34 billion, or 98 cents per share, a year earlier. Analysts' average forecast was $1.00 per share, according to Thomson Reuters I/B/E/S.
Revenue increased 16 percent to $10.45 billion, above the $10.41 billion analysts expected. Two-thirds of the revenue for Schlumberger, with its major offices in Paris, Houston and The Hague, was earned in markets outside North America.
Profit growth for Houston-based Baker Hughes was also driven by Europe, as well as better-than-expected earnings in its home market. Overall, it earned a profit of $439 million, or $1 per share. Analysts expected 77 cents a share.
Brokerage Tudor Pickering Holt described the results as "very good, especially against low expectations."
Like other U.S. hydraulic fracturing players, Baker was hit by a leap in the price of guar, a key ingredient in fracking fluid, as well as the massive shift to U.S. oil basins in response to decade-low natural gas prices.
Halliburton Co (HAL.N), the U.S. fracking leader, which reports earnings on Monday, warned in June that its North American profit margins were hit particularly hard by the guar shortage.
Craighead said guar prices, after peaking at $12 per pound in the second quarter, had come down to about $5 per pound in the last few weeks. But Baker Hughes said that would not help much this quarter as it must still use up pricier inventory.
Shares of Baker Hughes jumped 10.4 percent to $46.10 in early trading, while Schlumberger rose 1.3 percent. Halliburton climbed 1.6 percent.
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