Oil demand is at the beginning of a multi-year growth cycle and will reach pre-pandemic levels by the end of 2022, the chief executive of top oilfield services provider Schlumberger (SLB.N) said on Friday, a quicker recovery than the one he predicted just three months ago.
Rapid vaccination drives and a pick-up in travel have boosted oil prices, prompting producers to restart drilling and completion of wells, after the coronavirus pandemic plunged the industry into one of its worst downturns last year.
CEO Olivier Le Peuch said he was seeing indications that oil demand will recover to 2019’s level by or before the end of 2022. He said in January that the recovery would be “no later than 2023.”
Shares of the company reversed course to trade up 1.6% at $25.65 at mid-day.
International oilfield activity is set to ramp up through the year, while activity in North America is expected to be at levels to maintain existing production, Le Peuch added.
“In the international markets, our confidence in the second half outlook has been strengthening … Absent of a setback in a post-pandemic recovery, we foresee an upside for full-year growth internationally, resulting in a stronger footing as we enter 2022.”
Schlumberger is expected to benefit from the shift to more international drilling as it sharply cut its exposure to North America by selling its onshore hydraulic fracturing business to Liberty Oilfield Services (LBRT.N) in exchange for a stake in the company last year.
Worldwide, the rig count has risen about 11.5% to 1,231 for the quarter ended March, according to Baker Hughes data, while global oil prices traded around $66, compared with $16 when they traded at their lowest last year.
Schlumberger shares have risen 18% so far this year, outperforming those of peers Halliburton (HAL.N) and Baker Hughes (BKR.N), as investors bank on an international recovery.
While Wall Street analysts said the results were broadly positive, they cautioned that Schlumberger’s modest earnings beats could temper the stock given its outperformance relative to peers.
Revenue of $5.2 billion for the first quarter was down 30% year-over-year and 6% lower sequentially. Excluding the impact of divestitures, Schlumberger’s revenue was flat quarter-on-quarter.
The company posted earnings of 21 cents per share, beating analysts’ expectation of 19 cents per share, according to IBES data from Refinitiv.