Schlumberger earnings drops about 30%

The world's largest oilfield services company said net income in the January-to-March period fell to $938.5 million, or 78 cents per share, versus $1.34 billion, or $1.09 per share, a year earlier.

The result topped the average estimate of Wall Street analysts polled by Thomson Reuters, who expected earnings of 73 cents a share.

Revenue fell about 5 percent to $6 billion from $6.29 billion in the year-ago quarter. Analysts expected revenue of $6.04 billion.

Houston-based Schlumberger shares rose more than 8 percent, or $4.11 a share, to $50.72 in late-morning trading. Their 52-week range is $35.05 to $111.95.

Energy companies have cut back on exploration and drilling, which means less work for Schlumberger and its smaller crosstown rival, Halliburton Co., among others in the sector. Service companies help producers with drilling, seismic surveys, reservoir management and other oilfield tasks.

Schlumberger chairman and chief executive Andrew Gould said the rate of declining revenue at the company's oilfield services arm accelerated considerably in the first three months of the year, due largely to a steep drop off in natural-gas drilling in North America.

Outside North America, sluggish activity in Russia and a decline in many currencies against the dollar also hurt results.

Looking ahead, Schlumberger maintained its rather gloomy outlook for the industry for the rest of 2009 and into 2010.

"We do not see any significant recovery in North American gas drilling before 2010," Gould said in a conference call with analysts. "Overseas, while activity declines will be limited, customers are actively seeking and are obtaining price relief to improve the economics of current projects."

Gould said those pursuing price reductions for services include oil majors, independents and state-run national oil companies.

Indeed, major producers ConocoPhillips and Occidental Petroleum Corp. said Thursday they had finally begun to see a drop in drilling and other operating costs -- expenses that had lagged the steep decline in commodity prices. Both, however, still reported 80 percent year-over-year profit declines for the first three months of 2009.

Gould said some companies were deferring exploration work in favor of projects that produce immediate cash flow. Revenue at Schlumberger's seismic arm decreased 18 percent in the first quarter from a year ago.

"However, we're encouraged to see offshore deepwater activity resisting fairly well to the current budget cuts," he said.

The price of crude has fallen nearly 70 percent since its peak near $150 a barrel in July, and natural gas prices have dipped even further. As such, U.S. drilling for oil and natural gas in the first three months of 2009 dipped to the lowest level in five years, industry statistics show.

Schlumberger already had signaled how badly crude's collapse was rattling the oil sector, announcing in January it was cutting 5,000 jobs worldwide. Halliburton said earlier this week it eliminated 2,000 jobs in the first three months of the year and reported a 35 percent drop in first-quarter earnings.

Halliburton's chief executive, Dave Lesar, said there are no clear signs when the downturn will end.