Schlumberger 2Q tumbles 57 pct as drilling drops

[July 24, 2009]  HOUSTON (AP) -- Schlumberger said Friday its second-quarter earnings tumbled 57 percent as oil and natural gas companies cut back on exploration and drilling, particularly in North America.

The world's largest oilfield services company said Friday net income for the April-June period fell to $613 million, or 51 cents per share, from $1.42 billion, or $1.16 per share, a year earlier.

One-time items aside, Schlumberger said income from continuing operations amounted to 68 cents a share.

Wall Street analysts polled by Thomson Reuters expected earnings of 63 cents a share.

Revenue fell 18 percent to $5.53 billion from $6.75 billion in the year-ago quarter. Analysts expected revenue of $5.46 billion.

Lower oil and gas prices have prompted energy companies around the world to scale back oilfield activity, which means less work for Schlumberger and smaller rivals like Halliburton Co. Service companies help producers with drilling, seismic surveys, reservoir management and other oilfield tasks.

Like Halliburton earlier this week, Schlumberger said a significant decline in natural-gas drilling in North America weighed heavily on second-quarter results.

In a statement, Schlumberger chairman and CEO Andrew Gould said the rate of declining revenue slowed in the second quarter from the start of the year as improving business in other parts of the world somewhat offset the drag from North America.

One of the biggest obstacles has been natural gas prices, which have tumbled from double-digit levels a year ago to well below $4 per 1,000 cubic feet of late.

Gould said natural-gas drilling in the U.S. and Canada reached a five-year low in recent months because of weak demand and large inventories. He said he doesn't expect a significant rebound in drilling this year.

The number of rigs at work in the U.S. oil patch is off roughly 55 percent from last summer.

"Our outlook for the remainder of 2009 assumes some stability but no major increase in the North America natural gas rig count and, as a result, ... pricing will remain depressed," Gould said.

[Associated Press; By JOHN PORRETTO]

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