Schlumberger’s still sees revenue declines with marginal balance sheet improvements

Following the release of Schlumberger’s Q3 2020 earnings call;

Effuah Alleyne, Senior Oil & Gas Analyst at GlobalData, a leading data and analytics company, offers her view:

“With the focus of returning EBITDA to 2019 levels of US$6.6bn by 2021, Schlumberger leans into division and basin specific innovations to align solutions, maximizing production recovery and streamlining capital spending. Additionally, as discussed in September’s Barclays CEO Energy-Power Conference and reinforced in this earning’s release, Schlumberger’s decarbonization mandate with a transition to gas at the helm, is positioned as a key area of medium-to-long term growth.

“Along with continued depressed demand, a variable transportation sector and an increase in new COVID-19 cases, uncertainty still remains. Schlumberger has only seen an uptick in its production segment and has Q4 remaining to complete its cost cuts. It is unclear if that, along with its other short-term strategies, is enough to reach its 2021 EBITDA target. Additionally, the company’s medium-to-long term growth plans, among which decarbonization is key, needs to remain adaptable.

“According to GlobalData’s valuations on global upcoming natural gas related projects, projects with a start date by 2024 are expected to recover 59.95 billion barrels of oil equivalent (boe), while those starting between 2025 and 2029 are anticipated to recover 66.11 billion boe.  It’s noteworthy that 44% or pre-2024 start-ups and 80% of the latter projects are in early stages and yet to take final investment decision. This drives home the magnitude of uncertainty in the outlook of capital spending projects where impacts of reduced operations, delayed start-ups and stalled developments have been seen and are likely to continue.”

More Media