October 15, 2015 / 8:39 PM / 2 years ago

UPDATE 2-Schlumberger: market recovery to take longer, hints at more cost cuts

* Warns E&P spending to remain weak in 2016

* Says weak cash flows would curtail E&P spending

* Company commentary suggests job cuts possible-analysts

* Company to continue to seek M&A opportunities

* Cost cuts help Q3 EPS beat analysts estimates (Adds details, graphic)

By Amrutha Gayathri

Oct 15 (Reuters) - Schlumberger Ltd, the world's No.1 oilfield services provider, suggested that it may have to reduce costs further and cut more jobs as it expects any rebound in drilling activity to now take longer than expected.

Even if crude prices improve next year, weak cash flows would curtail the ability of oil and gas companies to increase spending on exploration and production, Schlumberger Chief Executive Paal Kibsgaard said in a statement.

"In light of conservative customer budgets for next year, we are therefore entering another period during which we will continually adjust resources in line with activity," Kibsgaard said on Thursday.

Kibsgaard said the oil market is also weighed down by concerns of slowing Chinese demand and additional supply from Iran.

Schlumberger said spending cuts by companies have been "dramatic", but it did not say how much it expects oil and gas companies to cut spending in North America and internationally - a forecast it issued in the previous two quarters.

Its last forecast, issued in July, was for a drop in spending of more than 35 percent in North America and more than 15 percent outside the region.

"They know that the next two quarters are going to be very choppy and very tough so they want to make sure they are aligned for that," Evercore ISI analyst James West said.

"When they said they are going to manage their operations, it's a good indication that headcount reductions will continue."

Schlumberger kicks off the earnings for oilfield services providers and its comments are closely watched for a glimpse into industry trends.

Schlumberger has already cut 20,000 jobs this year and scaled back spending in response to weak crude prices, moves that helped its third-quarter profit marginally beat analysts' average estimate.

Net income attributable to Schlumberger nearly halved to $989 million, or 78 cents per share.

Total revenue fell 33 percent to $8.47 billion, including a 47 percent drop in North America and an about 27 percent decline outside.

Analysts were expecting a profit of 77 cents per share, according to Thomson Reuters I/B/E/S.

Schlumberger said in August it would buy equipment maker Cameron International Corp for $14.8 billion to bolster its pricing capability, and on Thursday said it would seek more acquisitions.

The $35-billion merger of its rivals Baker Hughes Inc and Halliburton Co is still awaiting regulatory clearance.

Schlumberger shares were down 0.9 percent at $75.50 in extended trading.

Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza

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