Oilfield services provider Schlumberger (NYSE: SLB) on Oct. 19 reported a slight profit beat but said that the pace of growth in North America had slowed due to transportation bottlenecks in the largest U.S. shale basin.
Although profits rose year-over-year, the company has been hit by slower-than-anticipated growth in the Permian basin, where production has outpaced available pipeline takeaway capacity and is driving prices lower. Schlumberger said it expects those bottlenecks to be resolved within the next 12 to 18 months.
“In North America, sequential growth remained positive but slowed from rates of previous quarters as takeaway constraints in the Permian impacted hydraulic fracturing activity,” CEO Paal Kibsgaard said on Oct. 19.
Schlumberger, the largest oilfield service provider and first to report earnings, is seen as a bellwether for the industry. The company last month warned investors that slowing activity in North America was impacting its business.
The company reported a profit of $644 million, or 46 cents per share, up about 18% from a year ago. Analysts had anticipated earnings of 45 cents per share, excluding items, according to Refinitiv data.
Benchmark U.S. crude prices are up about 40% from a year ago but service companies, which help operators drill and finish wells, have seen demand for their work cool as producers clamp down on spending and delay completions due to pipeline bottlenecks.
Shares of Schlumberger were up about 1.3% in pre-market trading on Oct. 19 at $59.2. The company’s stock has fallen by about 27% from a peak this year in late January.
Analysts from investment firm Tudor Pickering Holt & Co. said on Oct. 19 the results were within expectations but “unlikely to bring investors rushing off sidelines” and back into the oilfield services sector.
The company’s international revenue rose 1.3% to $5.22 billion, while revenue from its North America business rose about 23% to $3.20 billion.
Sequential revenue growth in the international business outpaced that of North America for the first time since the second quarter of 2014, Kibsgaard said.
The Houston-based company’s revenue rose to $8.5 billion from $7.91 billion. Analysts had anticipated revenues of $8.58 billion, according to Refinitiv data.
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