Oil field services leader Schlumberger increased its quarterly profit on brisk activity on land in North America, but its shares dropped nearly 5 per cent as analysts had hoped for more.
While uncertainty surrounds its seismic reservoir-mapping unit and there has been a sharp drop in oilfield spending in Mexico, the company’s outlook is broadly unchanged otherwise, giving investors few reasons to jump in to the stock.
The performance was particularly disappointing when set against Halliburton, the second-largest oil field services company, which blew away estimates with its results thanks to its greater US onshore drilling interests.
Halliburton impressed the market even though it said earnings will be cut by 5 to 8 cents per share for the next two quarters due to the Gulf of Mexico impact.
The April 20 blow-out at a BP well, on which Halliburton had performed cementing work, led to a regulatory crackdown as the US government froze deepwater activity in the Gulf through November while it crafts new safety rules.
Schlumberger is not as exposed to the Gulf, accounting for only about 5 per cent of its revenue, compared with about an eighth for Halliburton. Schlumberger’s second-quarter profit rose to $818 million, or 68 cents a share, from $613 million, or 51 cents, last year. That was in line with analysts’ estimates, according to Thomson Reuters I/B/E/S. evenue rose 7 per cent to $5.9 billion.
Chief executive Andrew Gould said the recovery in world oil demand was reasonably robust and he expected slowly increasing levels of exploration and production activity this year.
Pretax profit at Schlumberger’s oilfield service arm grew 5 per cent to $1.07 billion, with gains in Russia, Latin America and the North Sea as well the North American onshore growth.
“I have no doubt that US land margins will continue to improve provided the rig count holds up,” Gould said on a call with analysts, adding that he expected North American margins overall to end 2010 at about the level of the first half.
But the company’s WesternGeco seismic arm, which maps oil and gas reservoirs, saw pretax profit drop 52 per cent as activity fell off from a strong first quarter. Its outlook will be reliant on the uncertain Gulf of Mexico market, Gould said.
