Oil service, drillers earnings climb
NEW YORK (Reuters) - U.S. oilfield services and drilling contractors continued to post higher quarterly profits on strong oil and gas prices, offsetting costs from the active hurricane season.
National Oilwell Varco (NOV.N), Diamond Offshore Drilling (DO.N) and ENSCO International (ESV.N) all reported earnings gains on Thursday. The companies benefited from oil prices that reached a peak in July and averaged more than $118 a barrel in the third quarter, about 57 percent higher than a year earlier.
Those high prices have prodded oil and gas companies to pour billions of dollars toward increasing their output and fattened the coffers of the oil service and drilling companies they rely on to help them with production.
But the 50 percent slide in both oil and gas prices since July, as well as the global credit market crisis, has raised fears that companies will rein in spending on new projects.
National Oilwell Varco's strong balance sheet will allow the oilfield equipment provider to "withstand near-term weakness and prepare for the inevitable improvement in demand." Chief Executive Pete Miller said.
The Houston-based company's earnings climbed 30 percent to $547.7 million, or $1.31 per share, helped by the acquisition of peer Grant Prideco Inc earlier this year. But NOV said it took $55 million in charges related to Hurricane Ike.
Hurricanes Ike and and Gustav swept through the Gulf of Mexico and onto the coast during the quarter, temporarily shutting down many of the oil and gas operations in the region.
NOV said backlog for its rig technology segment rose by $1 billion from the end of June to $11.8 billion at the end of September as $2.4 billion in new orders came in.
Diamond Offshore Drilling reported a 51 percent jump in earnings to $310.7 million, or $2.23 per share, matching Wall Street forecasts, as dayrates for its drilling rigs surged from a year earlier. The company said Hurricane Ike cost it $6.3 million, mostly in damage to its Ocean Tower rig.
ENSCO International posted a 5.5 percent increase in net income to $282.3 million, or $1.99 per share, hurt by a $18.9 million charge from a jack-up rig in the Gulf of Mexico that is believed to have sunk in the aftermath of Hurricane Ike.
Last week, oilfield services sector leader Schlumberger Ltd (SLB.N) said the growth in spending by oil and gas producers in recent years would slow in 2009.
Diamond Offshore shares rose 11.6 percent to $71.84 on the New York Stock Exchange, while National Oilwell Varco was up 5 percent at $25.50 and ENSCO rose 10 cents to $34.01.
(Reporting by Matt Daily; Editing by Lisa Von Ahn)
