Oilfield services giant Schlumberger NV issued a bullish forecast for 2021 on Friday as second-quarter profit topped estimates due to surging margins, with a rebound in oil prices boosting demand for its software and equipment.

Global crude prices rose 18% in the quarter that ended in June and have climbed 42% since the start of 2021 on the back of a vaccine-fueled demand recovery and output cuts by producer group OPEC+.

Still, oilfield activity levels remain far below pre-pandemic levels and oil demand could face a threat as a resurgence of infections from coronavirus variants prompts fresh restrictions in some parts of the world.

The company gave an optimistic outlook for the rest of the year.

It forecast international revenue would rise at a double-digit percentage rate compared with year-ago levels. Its North American business, which fell 1% versus a year ago, could “surprise to the upside” due to spending by private operators, Chief Executive Olivier Le Peuch said.

“Industry projections of oil demand reflect the anticipation of a wider vaccine-enabled recovery, improving road mobility, and the impact of various economic stimulus programs,” Le Peuch said, cautioning the COVID-19 pandemic continues to threaten the demand recovery.

Schlumberger reported net income of $431 million, or 30 cents per share, for the three months to June 30, compared with $299 million, or 21 cents per share, in the first quarter. Wall Street analysts had anticipated earnings of 26 cents per share, according to Refinitiv IBES.

Operating margins nearly doubled to 14.3%, the highest since 2018, led by big gains in its software and reservoir performance units. Gains reflected past cost-cutting and big year-over-year software revenue increases.

Analysts for investment firm Tudor Pickering Holt & Co said the results were strong, but lamented that Schlumberger’s stock – along with other oilfield companies – had continued to underperform.

Shares gained 2.2% in pre-market trading to reach $28.62. They are up about 28% year-to-date, trailing the jump in oil prices.

In terms of global oilfield activity, there are 1,325 active rigs, up 63 from the start of the year, but far below the 2073 that were working at the start of 2020, according to data from Baker Hughes.

(Reporting by Arunima Kumar in Bengaluru and Liz Hampton in Denver; Editing by Sriraj Kalluvila and Pravin Char)

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