By Liz Hampton and Shariq Khan
(Reuters) -Oil demand was at the beginning of a multi-year growth cycle and will reach pre-pandemic levels by 2022-end, top oilfield service provider Schlumberger’s chief executive Olivier Le Peuch said on Friday, a quicker recovery than the one he predicted just three months ago.
Rapid vaccination drives and a pick up in travel has boosted oil prices, prompting producers to go out and restart drilling and completion of wells, after the coronavirus pandemic plunged the industry into one of its worst downturns last year.
Le Peuch said he was seeing indications that oil demand will recover to 2019 level by or before the end of 2022, compared with a comment he made in January that the recovery would be “no later than 2023.”
Shares of the company reversed course to trade up 2% at $25.75.
“I believe that we are seeing the beginning of this multiyear growth,” Le Peuch said, offering relief to investors who have more recently been unnerved by rising COVID-19 cases in countries including India and Japan.
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 after it sold its onshore hydraulic fracturing business to Liberty Oilfield Services 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 to $16 it traded at its lowest last year.
Schlumberger shares have risen 18% so far this year, outperforming its peers Halliburton and Baker Hughes, 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 quarter was down 30% year-over-year and 6% lower sequentially. Excluding the impact of divestitures, its 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.
(Reporting by Arathy S Nair and Shariq Khan in Bengaluru; Liz Hampton in Denver; Editing by Kirsten Donovan and Emelia Sithole-Matarise)