Schlumberger Earnings Strong for Now -- Earnings Preview

   By Dan Molinksi 
 

Schlumberger Ltd., the world's largest oil-field service provider, is scheduled to announce its fourth-quarter and full-year 2014 earnings Thursday after the market closes. Here's what you need to know:

EARNINGS FORECAST: Net income of $1.46 a share for the fourth quarter is the consensus estimate of analysts surveyed by Thomson Reuters, up from $1.35 cents a share in the same period last year. Schlumberger hasn't provided earnings guidance for the quarter, but the company warned in December it expected to post a pretax write-down of $800 million for shrinking its fleet of seismic ships and an additional $200 million pretax charge related to job cuts.

REVENUE FORECAST: Revenue of $12.7 billion is forecast for the fourth quarter, up from $11.9 billion a year ago.

WHAT TO WATCH:

--CUTS: Oil-field service companies are under tremendous pressure to cut costs, pare back their workforce and slash the prices they charge oil-company customers. Analysts will be listening for any hint about layoffs and discounts on drilling and fracking services.

--CONSOLIDATION: Rivals Halliburton Co. and Baker Hughes Inc. are merging to better compete with Schlumberger. That could mean Schlumberger will look at buying smaller companies to bolster its services offered in the oil patch. Investors will want to know whether there's any potential for M&A activity.

--SHALE: Schlumberger's clients are the most prolific oil-pumping companies, so it's in a good position to forecast what sustained $40 oil could mean to U.S. energy producers. The company often offers a window into what its customers are planning -- how many wells could be drilled and fracked, how much oil output to expect and ways companies are making operations leaner.

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