By Alison Sider
Schlumberger Ltd. (SLB) Chief Executive Paal Kibsgaard told
analysts during an earnings conference call Friday that the recent
drop in oil prices is not yet worrisome, and prices are still high
enough to support drilling in North America and around the
world.
"I'm not overly concerned," Mr. Kibsgaard said. "International
activity and North American liquids activity is pretty solid at
these levels."
West Texas Intermediate, the U.S. benchmark crude, has dropped
by more than $10 a barrel from highs in early April, and
front-month Brent, the European benchmark, has fallen by about $12
a barrel this month.
Mr. Kibsgaard said he still expects Schlumberger, the world's
largest oilfield-services company, to grow international operations
by about 10% this year, with "strong and consistent growth" in
Sub-Saharan Africa, Russia, China and Australia.
Mr. Kibsgaard said a joint venture announced lasst week with
Forest Oil Corp. (FST) in Texas's Eagle Ford shale is a "one-off"
deal intended to serve as a showcase to demonstrate the company's
technological capabilities.
Under the deal, Schlumberger will get a 50% stake in Forest's
Eagle Ford acreage in exchange for paying $90 million in drilling
costs in the form of services it will provide.
Mr. Kibsgaard said the company has invested in technology aimed
at making shale wells more productive, but "uptake has been quite
slow in the U.S." The joint venture is aimed at changing that and
showing off technologies that he said the company is eager to bring
to the marketplace.
Mr. Kibsgaard said he expects conditions onshore in North
America to remain difficult. The company's margins there came in
ahead of analysts expectations and were relatively flat from last
quarter, and Mr. Kibsgaard said he hopes they'll remain steady next
quarter.
"In pressure pumping, we're not pursuing share, we're looking to
protect margins," he said.
During the quarter, growth in revenue in the U.S. Gulf of Mexico
helped offset declines onshore in North America, but Mr. Kibsgaard
said the need to change out faulty bolts on some rigs slowed work
down there.
He said exploration and production companies are reevaluating
plans in North Africa following the raid on the In Amenas natural
gas field in Algeria.
Schlumberger expects activity to "remain subdued" in the area
while companies re-evaluate their plans.
Write to Alison Sider at alison.sider@dowjones.com
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