By Ernest Scheyder and Swetha Gopinath
Jan 17 Schlumberger Ltd, the world's
largest oilfield services company, posted a better-than-expected
fourth-quarter profit on Friday as robust international activity
offset stiff competition in North America.
Fracking, drilling seismic studies and other lucrative
services for oil producers across most of the Middle East, Asia
and Latin America helped the company's profit top analysts'
estimates for the ninth straight quarter.
Intense competition with Halliburton Co and Baker
Hughes Inc for work in North America's vast shale
fields, though, combined with weak natural gas prices, eroded
Without strong sales from the U.S. Gulf of Mexico, North
American revenue would have dipped.
"The main challenge in the North America land market is
still pricing," Chief Executive Paal Kibsgaard said on a
conference call with investors.
Negotiations for new contracts with several key North
American customers should further dent results, with pricing
falling, he said. Statoil and other international
energy firms are Schlumberger's largest North American customers
and have used the oversupply of oilfield services to their
Despite tepid North American growth, Schlumberger expects
the global economy to improve in 2014 and oil demand to rise,
with double-digit earnings growth across the company for the
year, Kibsgaard said.
Schlumberger has the lowest exposure to North America among
the big four oilfield service providers. International markets
brought in about two-thirds of Schlumberger's 2013 revenue of
Middle Eastern revenue jumped 5 percent in the quarter,
helped by activity in Saudi Arabia and the United Arab Emirates,
but a temporary shutdown of operations in southern Iraq in
November, following a protest, slightly dented fourth-quarter
results, the company said.
Schlumberger suspended activity in Iraq in November after
dozens of Shi'ite Muslim workers and tribesmen, accusing a
foreign security adviser of insulting their religion, stormed
the Schlumberger camp in North Rumaila and wrecked offices.
Seasonal slowdowns in North America, the North Sea, Russia
and China also weighed on results.
The company expects oil producers' exploration and
production spending, the lion's share of its business, to
increase this year for international markets and the U.S. Gulf
Barclays expects oil and gas companies to spend
about $723 billion on exploration and production this year, an
increase of 6.1 percent from 2013, according to report released
Schlumberger's net income rose to $1.66 billion, or $1.26
per share, in the fourth quarter ended Dec.31, from $1.36
billion, or $1.02 per share, a year earlier.
Excluding items, profit from continuing operations was $1.35
Revenue rose about 7 percent to $11.91 billion.
Analysts on average had expected earnings of $1.32 per share
on revenue of $12.01 billion, according to Thomson Reuters
The results come the day after Schlumberger boosted its
quarterly dividend by 28 percent to 40 cents.
The company, which reviews its dividend every January, has
no set level for future dividend payouts, Kibsgaard said.
"There is no target number," he said.
Baker Hughes and Halliburton are scheduled to report their
fourth-quarter results on Jan. 21.
Baker Hughes, considered the smallest of the "big three" oil
service providers, earlier this month estimated a
smaller-than-expected quarterly profit, citing the suspension of
its operations in Iraq.
Schlumberger shares rose 1.1 percent to $89.61 in morning
trading on Friday.
Schlumberger shares have risen 21 percent in the past year,
compared with a 17 percent rise in the Philadelphia oil service