Schlumberger 1Q tumbles 30 pct. as drilling drops

[April 24, 2009]  HOUSTON (AP) -- Schlumberger Ltd. said Friday its first-quarter earnings tumbled about 30 percent as oil and natural gas companies cut back on exploration and drilling due to lower prices and demand.

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. That compared with $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.

Energy companies have cut back on exploration and drilling, which means less work for Schlumberger and its smaller rival, Halliburton Co. 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 statement. "Overseas, while activity declines will be limited, customers are actively seeking and are obtaining price relief to improve the economics of current projects."

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.

[Associated Press; By JOHN PORRETTO]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.