Author: Arathy Somasekhar and Seher Dareen
(Reuters) - Oilfield company SLB on Friday raised its quarterly dividend and accelerated share buybacks as its fourth-quarter profit topped expectations, while also warning revenue would be flat in 2025 due to an oil glut.
The world's largest oilfield services company raised its quarterly dividend by 3.6% and said it would "accelerate" stock buybacks of $2.3 billion.
SLB (formerly known as Schlumberger) shares rose 7.4% to $44.13 at midday.
The company said first-quarter and full-year revenue will be about the same as a year ago as an oil supply glut constrains field activity.
Adjusted EBITDA in 2025 is expected to be at or above 2024 levels, while profit in the current quarter will be similar to the same period last year.
Olivier Le Peuch, CEO of SLB, said: "Customers have adopted a more cautious approach to recent activity and discretionary spending, mainly due to concerns about oversupply in the market."
Le Peuch added that global upstream investment will remain broadly stable this year compared with 2024, as growth in the United Arab Emirates, Kuwait, Iraq, China and India is offset by declines in Saudi Arabia, Egypt and Mexico.
Le Peuch said economic activity will rebound in the second quarter, especially in international markets, and he expects "oil supply imbalances to gradually ease."
SLB has been focusing on international operations to offset slower revenue growth in North America, and the company's quarterly revenue from overseas markets rose 3%, the smallest since the COVID-19 pandemic slashed demand in the first quarter of 2021 increase.
The company said revenue in Latin America fell 5% year over year, primarily due to lower drilling activity in Mexico. This decline was offset by 7% growth in the Middle East and Asia.
International business accounts for approximately 80% of SLB's total revenue.
North America revenue rose 7%, the largest increase since the second quarter of 2023, driven by digital sales and increased activity offshore in the U.S. Gulf of Mexico. U.S. land drilling activity declines.
Revenue from SLB's Russian operations was also down, accounting for 4% of its total revenue, down from 5% the previous year, the company said.
The company said it believed the voluntary measures it had taken in 2023, such as halting product and technology shipments to Russia from all SLB facilities around the world, were consistent with U.S. sanctions on Russia this month.
The U.S. Treasury Department adjusted an executive order that cut off Russia's access to U.S. services related to the extraction and production of crude oil and other petroleum products, effective February 27.
Peter McNally, an analyst at research firm Third Bridge, said that while the company is striking a confident tone about its balance sheet and outlook through share buybacks and dividend plans, investor concerns are likely to focus on international sharp decline in income.
Total revenue was $9.28 billion, beating analysts' average estimate of $9.18 billion, data compiled by LSEG showed.
SLB reported earnings per share (excluding charges and credits) of 92 cents for the quarter, compared with analysts' average estimate of 90 cents. These charges include $223 million in restructuring-related costs.
(Reporting by Arathy Somasekhar in Houston and Seher Dareen in Bengaluru; Editing by Chizu Nomiyama, Mark Potter and Richard Chang)