Schlumberger profit falls short, shares slip

Fri Oct 21, 2011 10:12am EDT
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By Matt Daily and Braden Reddall

(Reuters) - Schlumberger Ltd (SLB.N: Quote), the world's largest oilfield services company, posted a lower-than-expected quarterly profit and acknowledged the impact of financial turmoil on its near-term prospects, sending its shares down 1 percent.

Oil prices are down from their second-quarter peak, raising concerns that energy companies could trim spending on new wells. But Schlumberger said offshore demand would help its business, which was also boosted by growth in Iraq, Saudi Arabia, Mexico and Brazil in the third quarter.

Paal Kibsgaard, Schlumberger's new chief executive, described the average Wall Street estimate for the fourth quarter as "somewhat on the optimistic side" on a call with analysts.

"While the financial turmoil introduces some uncertainty over near-term activity, we remain confident that any reductions will be short-lived," he said in a statement.

Schlumberger's profits were hurt by weaker-than-expected results from the Middle East, where its Western Geco business suffered, according to Angie Sedita, analyst at UBS.

Significant delays in start-ups on land-based seismic surveys, which clients use as a visual guide to drilling, were behind the Middle East weakness, Schlumberger said.

"Beyond that, its outlook for the service industry remains very positive," said Bill Conroy, head of research at Houston-based Pritchard Capital.

Schlumberger's North American profits topped expectations, driven by demand from oil companies drilling aggressively in U.S. shale fields. Kibsgaard said the main concerns there were around the potential for a decline in prices for pressure pumping, as more equipment is built to serve the shale boom.   Continued...