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Tags: US | Earns | Schlumberger

Schlumberger Profit Falls 28 Percent But Rebound Seen

Friday, 23 April 2010 10:50 AM EDT

Schlumberger Ltd. on Friday posted another drop in earnings while saying it continues to see signs of improving demand for its services.

First-quarter profit fell 28 percent at the world's biggest oilfield services provider. Revenue declined almost 7 percent and Schlumberger incurred charges related to health care reform.

But the company said evidence is mounting that higher oil prices will lead to increased drilling activity by its international customers. Slumping demand for oil and a plunge in prices in late 2008 and early 2009 had curtailed oil exploration and production around the globe.

The company, which has main offices in Paris, Houston and The Hague, Netherlands, earned $672 million, or 56 cents per share, compared with $938 million, or 78 cents per share, a year earlier. Results in the latest quarter include charges totaling 6 cents per share.

Excluding special charges, the company's adjusted income from continuing operations came to 62 cents per share.

Revenue fell 6.7 percent to $5.6 billion, as oilfield services revenue slipped 6 percent. However, that's an improvement over the double-digit declines seen in the second through fourth quarters of 2009.

Wall Street expected earnings per share of 61 cents and revenue of $5.69 billion, according to a survey of analysts by Thomson Reuters. Analysts typically exclude one-time items.

Berstein Research analyst Scott Gruber said Schlumberger's results are "unlikely to inspire investors as expectations were high following Haliburton's beat." Halliburton said Monday its first-quarter earnings, which slumped nearly 46 percent, were propped up by a resurgence in the U.S., where crews have been working around the clock to tap natural gas deposits in underground layers of shale.

Even though Schlumberger expressed optimism for the future and appears positioned to gain from growing international markets, Gruber believes its premium to its peers is diminishing. He rates the company "Market Perform" with an $80 price target.

Schlumberger posted merger and acquisition-related charges of $35 million and a charge of $40 million for the reduction in future tax deductions for retiree medical benefits due to changes related to recently enacted health care reform legislation. Under the new law, businesses will no longer be able to write off a federal subsidy that covers part of the cost of retiree prescription drug coverage.

In a statement, Schlumberger Chairman and CEO Andrew Gould said, the company continued to see a strong performance in North America because of active drilling for natural gas. This was offset by a "sharp drop in the North Sea and Russia due to drilling efficiency and adverse weather."

In morning trading, shares of Schlumberger rose $3.61, or 5.3 percent, to $71.79. Earlier the stock traded at a 52-week high of $72.40.

© Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Schlumberger Ltd. on Friday posted another drop in earnings while saying it continues to see signs of improving demand for its services.First-quarter profit fell 28 percent at the world's biggest oilfield services provider. Revenue declined almost 7 percent and Schlumberger...
US,Earns,Schlumberger
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2010-50-23
Friday, 23 April 2010 10:50 AM
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