October 21, 2011 / 10:24 AM / in 6 years

Schlumberger profit falls short, shares slip

(Reuters) - Schlumberger Ltd (SLB.N), 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.

Schlumberger’s third-quarter net profit fell to $1.3 billion, or 96 cents a share, from $1.7 billion, or $1.38 a share, a year earlier, when it recorded a gain of nearly $1 per share due to the increased value of M-I Swaco after buying Smith, its partner in the joint venture.

Excluding one-time items, Schlumberger earned 98 cents per share, compared with the analysts’ average forecast of $1.01, according to Thomson Reuters I/B/E/S. Revenue rose 49 percent to $10.23 billion, in line with analysts’ forecasts.

The quarter also included a handover of the chief executive mantle to 44-year-old Kibsgaard from Andrew Gould, a closely followed industry figure who is still Schlumberger’s chairman.

On Monday, Schlumberger’s rival Halliburton Co (HAL.N) posted a better-than-expected quarterly profit, but its less assured view of North American prospects led investors to hammer down its shares.

Schlumberger shares were down 25 cents at $67.74 in early trading, while higher oil prices on Friday lifted the sector 2 percent, as measured by the Philadelphia oil service index. .OSX

As of Thursday’s close, Schlumberger’s shares were down 23 percent in the past six months, while Halliburton tumbled 31 percent, both tracking the sector in response to weaker oil.

Reporting by Matt Daily and Braden Reddall; Editing by Lisa Von Ahn and Derek Caney

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