Liz Hampton and Arunima Kumar

(Reuters) – Schlumberger NV, the largest international oilfield service company reported a higher fourth quarter profit Friday than expected. This was due to increased demand and lower crude prices.

Due to tight supply and a COVID-19-fueled recovery in demand, oil prices rose by approximately 50% last year. They are currently trading at their highest level for seven years.

Olivier Le Peuch, Chief Executive Officer at Schlumberger said that if there is no further disruption by COVIDs oil demand will be expected to surpass pre-pandemic levels in the next year. It should also strengthen further in 2023.

North America saw strong offshore drilling and land drilling, as well as an increase in licensing of exploration data for the U.S. Gulf of Mexico. This drove a 13% jump in sequential revenue.

Schlumberger shares fell 1.58% to $36.46 in pre-market trade, while they were at $86.87 per barrel.

Wall Street analysts evaluated the results as positive. The company decided to retain its dividend flat.

The expectation was for a dividend hike. James West (a senior managing direct with Evercore ISI) stated that they believe they’ll raise the dividend when the leverage targets are achieved.

Schlumberger’s fourthquarter adjusted net profit rose to $587million, 41 cents each share. That is above Wall Street estimates which were 39 cents, according to Refinitiv IIBES. According to Refinitiv IBES, the fourth quarter earnings for Schlumberger were $29 million less than last year. This is 22 cents per share.

Analysts had predicted $6.09 billion in revenue for the fourth quarter. However, $6.23 billion was also more than what actually happened.

GRAPHIC- Schlumberger’s recovery mode revenue

https://graphics.reuters.com/SCHLUMBERGER-RESULTS/GRAPH/mypmnbejgvr/chart.png

According to Baker Hughes data, the worldwide rig count stood at 1,563 as of the fourth quarter. This compares with 1,104 for 2020.