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Schlumberger profit beats as North America activity ramps up


Net profit attributable to Schlumberger fell to $176 million in Q3. Reuters photo by Richard Carson.

Schlumberger looks for more activity in 2017

Oct 20(Reuters) – Schlumberger Ltd, the world’s No.1 oilfield services provider, reported a quarterly profit that topped analysts’ expectations as more oil producers put rigs back to work in North America.

The company expects improved activity in onshore North American, Middle Eastern and Russian markets next year, Chief Executive Paal Kibsgaard said on Thursday, although he warned of limited visibility into customers’ investment plans for 2017.

Halliburton Co, the No.2 oilfield services provider, said on Wednesday that oil prices would have to stabilize at above $50 per barrel for producers to meaningfully increase oilfield activity.

Schlumberger is already seeing gains from the North American rig count, which has risen for 15 of the last 16 weeks.

Excluding results from Cameron International Corp, which Schlumberger acquired earlier this year, Schlumberger’s third-quarter land revenue in North America rose 14 per cent from the second quarter.

Higher drilling and fracturing drove the increase, Schlumberger said, adding that pricing improvements were limited as much of the increase in activity was driven by small companies.

Schlumberger, which was historically tilted toward the big oil companies, has been moving “downmarket” to smaller producers, said Edward Jones analyst Rob Desai.

The company is also gaining from a contract rider that ties service pricing to oil prices, Desai said.

Global crude oil prices have risen nearly 40 per cent this year and Kibsgaard said on Thursday that global crude oil supply and demand were “now more or less balanced.”

Strict cost control has helped Schlumberger offset revenue declines caused by a steep fall in exploration and production spending that eroded demand for its services.

The company’s pro forma revenue had slumped more than 50 per cent in the previous seven quarters, Kibsgaard said, adding that the company had cut $6 billion of costs over the period.

“After calling the bottom of the cycle in the second quarter of this year, our business stabilized in the third quarter.”

Net profit attributable to Schlumberger fell to $176 million, or $13 cents per share, in the third quarter ended Sept. 30 from $989 million, or 78 cents per share, a year earlier.

Excluding charges related to the Cameron merger and integration, Schlumberger earned 25 cents per share, above the analysts’ average estimate of 22 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 17 per cent to $7.02 billion, shy of analysts’ estimate of 7.08 billion.

Schlumberger’s shares have gained nearly a fifth of their value this year up to Thursday’s close of $82.99.

(Reporting by Swetha Gopinath and Arathy S Nair in Bengaluru; Editing by Don Sebastian)

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