DOW JONES NEWSWIRES
Schlumberger Ltd.'s (SLB) third-quarter earnings fell 48% as demand and pricing remained weak, though the oil-drilling company saw more signs of stabilization and results that exceeded Wall Street estimates.
Chairman and Chief Executive Andrew Gould said, "The worst, provided the economy continues to show signs of recovery, is behind us."
The company's outlook for the rest of the year assumes a modest recovery in North American drilling, but no significant improvement in pricing, he said. While overseas rig activity is stabilizing, seasonal factors and price concession being made in the first half and still being implemented could result in more revenue drops. The North American recovery in drilling is slight and fragile, and not likely to improve demand or prices until late next year.
The first glimmers of hope for the oil-services sector emerged in the second quarter, as the pace of declines slowed internationally and oil prices gained some stability. Low natural-gas prices continue to weigh on the North American market, though industry rig counts have shown signs of stabilizing. The backlog of uncompleted natural-gas wells could be a potential boon for the industry.
Halliburton Co. (HAL) last week offered more hope for the industry as it reported that its revenue increased 3% sequentially, the first such gain in nearly a year, though earnings and revenue were below year-earlier levels.
For the third quarter, Schlumberger reported a profit of $787 million, or 65 cents a share, down from $1.53 billion, or $1.25 a share, a year earlier.
Revenue decreased 25% to $5.43 billion. Oilfield-services revenue fell 22% but was flat sequentially as increases in North and South America offset a further decline in the Middle East and Asia.
Analysts polled by Thomson Reuters most recently forecast earnings of 63 cents on revenue of $5.48 billion.
Shares closed Thursday at $68.60 and didn't trade premarket. The stock is up 62% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com