SLB Schlumberger Ltd

By Colin Kellaher and Christopher M. Matthews 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 20, 2019).

Schlumberger Ltd. named Olivier Le Peuch its next chief executive, as the Houston oil-field-services company also said it continues to suffer from a slowdown in spending by U.S. shale drillers.

Mr. Le Peuch replaces the retiring Paal Kibsgaard, effective Aug. 1. Schlumberger announced the change with its second-quarter results, in which the company reported an 11% decrease in North American revenue.

Schlumberger's North American business has been hurt in recent quarters by the cutback in spending by U.S. shale drillers. The company estimates U.S. producers have cut spending in 2019 by about 10%, but that has been offset by efficiency gains enabling drillers to get more oil with less spending.

"North America land remains a challenging environment," Mr. Le Peuch said Friday. Schlumberger continues to see U.S. shale oil production growing at a slowing rate and expects prices to stay around the present levels.

Globally, Schlumberger expects exploration spending to fall in North America, but rise overseas. "The oil demand forecast for 2019 has been reduced slightly on trade war fears and current global geopolitical tensions, but we do not anticipate a change in the structural demand outlook for the midterm," Mr. Kibsgaard said.

In the second quarter, Schlumberger's North American revenue fell to $2.8 billion, while international revenue rose 8% to $5.46 billion.

Shares of Schlumberger, down 42% over the past year, slipped 7 cents Friday to $38.71.

Schlumberger said Mark Papa, one of the pioneers of the U.S. shale boom who joined the board as a nonindependent director in October, will become nonexecutive chairman, while Peter Currie will continue to serve as lead independent director.

Mr. Papa, the former chief executive of shale-industry bellwether EOG Resources Inc., is chairman and chief executive of smaller independent shale company Centennial Resource Development Inc.

Schlumberger management was asked if the addition of Mr. Papa indicated an increased focus on the U.S. shale market, but Mr. Kibsgaard said not to read to much into it.

Mr. Le Peuch, who has spent 32 years with Schlumberger, was named chief operating officer in February, a signal that he was in line to succeed Mr. Kibsgaard. Both Mr. Kibsgaard and his predecessor, Andrew Gould, each served as chief operating officer for just over a year before moving into the top post.

Mr. Le Peuch said shale companies are increasingly focused on avoiding parent-child well problems, which is when wells are drilled too closely, and one siphons production off the other. This is leading to increased demand for Schlumberger's products that help mitigate the issue, seen as a primary reason shale wells aren't producing as much as forecast.

Mr. Kibsgaard, who joined Schlumberger in 1997, has been chief executive since August 2011 and chairman since April 2015. He also is retiring from the board, the company said.

For the second quarter, the Houston company reported a profit of $492 million, or 35 cents a share, up from $430 million, or 31 cents a share, a year earlier. Adjusted earnings were 35 cents a share, in-line with the average analyst estimate on FactSet.

Total sales fell 0.4% year-over-year to $8.27 billion, but still finished above the consensus forecast of $8.11 billion.

Aisha Al-Muslim contributed to this article.

Write to Colin Kellaher at colin.kellaher@wsj.com and Christopher M. Matthews at christopher.matthews@wsj.com

(END) Dow Jones Newswires

July 20, 2019 02:47 ET (06:47 GMT)

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