--Schlumberger beats expectations on international growth, U.S.
Gulf of Mexico performance
--Doesn't see signs of slowdown in U.S. oil drilling yet, CEO
says
(Adds background, comments from analyst, executive, updated
share price, throughout.)
By Alison Sider
International revenue and a U.S. Gulf of Mexico boost helped to
drive Schlumberger Ltd.'s (SLB) earnings up 4.8% in the second
quarter, beating analyst expectations even as its North American
onshore business remains challenged by rising costs and wobbly
energy prices.
Schlumberger reported a profit of $1.4 billion, or $1.05 a
share, up from $1.34 billion, or 98 cents, a year earlier.
Excluding items such as merger and integration costs, earnings from
continuing operations rose to $1.03 from 81 cents. Revenue jumped
16% to $10.45 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of $1 a share on revenue of $10.41 billion.
Friday's results came as a pleasant surprise to analysts, who
had been bracing for less-than-stellar results from
oil-field-services companies, which faced a steep rise in cost and
inefficiencies as energy producers moved rigs and crews from
unprofitable natural-gas drilling to more rewarding, but complex,
shale oilfields. This migration is occurring at a time when there
is a market glut for hydraulic-fracturing services, which limits
oil-field-service providers' ability to pass on their higher costs
to their clients.
Tudor Pickering, Holt analysts John Lawrence and Jeff Tillery
wrote in a note that Schlumberger's better-than-expected
performance in North America was "a good thing after the series of
pre-announcements has most folks biased towards seeing
disappointments in the region."
Part of the reason North America performed so well was increased
activity in the U.S. Gulf of Mexico, said Argus Research analyst
Phil Weiss.
Nevertheless, oilfield-services revenue from North America, the
region which generates most of the company's top line, fell 1.7%
from the first quarter to $3.35 billion--due partially to the
expected seasonal factors, as well as falling prices and margins in
the U.S. market for hydraulic fracturing, or fracking.
Activity in North America remained stable because the growth in
the number of rigs drilling in oil regions offset the drop in
natural-gas-drilling rigs, Chief Executive Paal Kibsgaard said
during a conference call. A recent decline in oil prices has
threatened to put a stop to that phenomenon, but Mr. Kibsgaard said
there has been no sign of slowing oil-drilling activity yet.
Schlumberger's revenue in Europe, the former Soviet Union and
Africa grew 14% from the prior quarter while the Middle East and
Asia posted a 6.7% increase. Latin America revenue was up 5.1% from
the first quarter.
Mr. Kibsgaard also said the company expects international growth
to continue despite the shaky global economic condition.
"Absent a future setback to the world economy, [we maintain] our
stated view that international activity will grow in excess of 10%
this year," he said, highlighting Russia as the fastest-growing
market for the company.
Shares of Schlumberger were trading at $69.82 Friday morning, up
1.72%. The stock has fallen 22% in the past year.
--Melodie Warner contributed to this article.
Write to Alison Sider at alison.sider@dowjones.com.
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