UPDATE 4-Schlumberger sees modest hit from Africa, Mideast

Mon Mar 28, 2011 6:11pm EDT

Related Topics

* Sees impact of 8-10 cents/share from political turmoil

* CEO expects more disruptions in Yemen, Libya

* Shares up 4 pct, clawing back losses since mid-Feb (Adds analyst comment; updates shares)

By Braden Reddall

NEW ORLEANS, March 28 (Reuters) - The prospect of a wave of new work in Saudi Arabia drove up the shares of Schlumberger Ltd (SLB.N), the world's largest oilfield services company, on Monday, although the company said turmoil in the Middle East and Africa would trim short-term profits.

Saudi Arabian state oil company Aramco "issued the clarion call to increase its productive capacity given the tightness in the global energy markets," Simmons & Co International analyst Bill Herbert said in a note to investors. [ID:nN28213196]

That appeared to boost shares across the sector, including those of Schlumberger rivals Halliburton Co (HAL.N) and Baker Hughes Inc (BHI.N).

"This is a step-change increase in rig count and a step-change improvement in international outlook," Herbert wrote.

In a speech to the Howard Weil Energy Conference, Schlumberger Chief Executive Andrew Gould said disruptions in the Middle East and Africa would likely knock 8 cents to 10 cents per share off first-quarter profit.

Halliburton, said in a release after the market close that, while it expected more activity in its Manifa project in Saudi Arabia, disruptions in other parts of the Middle East and in North Africa would cut first-quarter profit by 3 cents to 4 cents per share. [ID:n28215511]. That pulled its share price down by 1.3 percent, trimming gains made during the regular session.

Schlumberger has not given specific guidance for the quarter, but analysts are forecasting per share earnings of 82 cents, according to Thomson Reuters I/B/E/S, and it was not clear how much of the effect of the turmoil that included.

There were "significant" revenue disruptions in Egypt, Tunisia and Libya, Gould told the conference in New Orleans. Minor disruptions were felt in Ivory Coast, Yemen, Bahrain and Oman, and in Algeria due to logistics from Tunisia.

"While activity has returned to normal in Egypt and Tunisia, we expect continued disruptions in Yemen, no short-term return of activity in Libya and uncertainty at the current time over activity in Bahrain," the closely watched CEO said in his final keynote speech at the meeting before his retirement later this year.

Schlumberger is the sector's biggest player in Libya and its comments appeared to calm fears about the company's potential financial damage from the region.

"To the extent that they have quantified it, that may be a relief to investors," said Roger Read, an analyst with Morgan Keegan in Houston.

In a private session with analysts after the speech, Gould repeated his bullish view on the growing international demand for services and in particular of Saudi Arabia's commitment to expand spare capacity regardless of any pullback in oil prices, one analyst told Reuters.

Gould also said the seasonal fluctuation in seismic mapping activity had been particularly pronounced after a fourth quarter boost of 3 cents per share on a year-end surge.

Baker Hughes Inc (BHI.N), the third-largest company in the sector, warned earlier this month its first-quarter profit would decline 4 cents to 7 cents per share due to upheaval in North Africa, as well as cold weather in North America. [ID:nN03220627]

Schlumberger's shares closed 4.1 percent higher at $90.43 on the New York Stock Exchange, having fallen from above $95 in mid-February. The Philadelphia Stock Exchange oil service index .OSX was 0.7 percent higher, but Baker Hughes and Halliburton were both up about 4 percent. (Reporting by Braden Reddall; additional reporting by Matt Daily in New York; editing by Gerald E. McCormick, Maureen Bavdek, Tim Dobbyn and Andre Grenon)

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