Schlumberger profit beats estimates

Schlumberger Ltd, the world's No 1 oilfield services provider, reported a bigger-than-expected quarterly profit as its cost-cutting efforts helped soften the impact of reduced global drilling activity. Schlumberger, which provides drilling technology and equipment to oil and gas companies, now expects exploration and production investment in North America to fall by more than 35 percent.
The company in April forecast North American E&P spending to drop more than 30 percent. "We believe that the North American rig count may now be touching the bottom, and that a slow increase in both land drilling and completion activity could occur in the second half of the year," Chief Executive Paal Kibsgaard said in a statement.
According to weekly data published by Baker Hughes Inc last week, US energy firms added five oil rigs, the second straight week of increases and a sign drillers were ready to return to the well pad. "We do see some activity improvement (in North America) although we do think that activity improvement will be limited," Evercore ISI analyst James West said.
"I think if we saw oil prices at $65-$70 per barrel brent, then we would see some type of improvement in activity particularly in North America and likely some stabilisation in the international markets, which should lead to an improvement in activity next year," West said. Brent oil closed at $57.50 per barrel on Thursday. Schlumberger, which is less exposed to North America than rivals Baker Hughes and Halliburton Co, said revenue from the region fell nearly 39 percent in the second quarter.
Revenue from the international business, which accounts for two-thirds of total revenue, fell 19 percent. Cost of revenue fell 23 percent to $7.12 billion in the quarter ended June 30, from a year earlier. The company earned 88 cents per share, handily beating the average analyst estimate of 79 cents per share, according to Thomson Reuters I/B/E/S. Schlumberger under CEO Kibsgaard has cut 20,000 jobs in 2015 and scaled back spending in response to weak crude prices. Shares of Schlumberger rose 1.3 percent to $85 in extended trading. Through Thursday's close of $83.89, Schlumberger's shares had fallen 1.7 percent this year, compared with a nearly 8 percent fall in the Dow Jones US oil equipment and services companies index.