Schlumberger: International, N. American Drilling Solid at Current Prices
Schlumberger Ltd. Chief Executive Paal Kibsgaard told analysts during an earnings conference call Friday that the recent drop in oil prices is not yet worrisome, and prices are still high enough to support drilling in North America and around the world.
"I'm not overly concerned," Mr. Kibsgaard said. "International activity and North American liquids activity is pretty solid at these levels."
West Texas Intermediate, the U.S. benchmark crude, has dropped by more than $10 a barrel from highs in early April, and front-month Brent, the European benchmark, has fallen by about $12 a barrel this month.
Mr. Kibsgaard said he still expects Schlumberger, the world's largest oilfield-services company, to grow international operations by about 10% this year, with "strong and consistent growth" in Sub-Saharan Africa, Russia, China and Australia.
Mr. Kibsgaard said a joint venture announced lasst week with Forest Oil Corp. (FST) in Texas's Eagle Ford shale is a "one-off" deal intended to serve as a showcase to demonstrate the company's technological capabilities.
Under the deal, Schlumberger will get a 50% stake in Forest's Eagle Ford acreage in exchange for paying $90 million in drilling costs in the form of services it will provide.
Mr. Kibsgaard said the company has invested in technology aimed at making shale wells more productive, but "uptake has been quite slow in the U.S." The joint venture is aimed at changing that and showing off technologies that he said the company is eager to bring to the marketplace.
Mr. Kibsgaard said he expects conditions onshore in North America to remain difficult. The company's margins there came in ahead of analysts expectations and were relatively flat from last quarter, and Mr. Kibsgaard said he hopes they'll remain steady next quarter.
"In pressure pumping, we're not pursuing share, we're looking to protect margins," he said.
During the quarter, growth in revenue in the U.S. Gulf of Mexico helped offset declines onshore in North America, but Mr. Kibsgaard said the need to change out faulty bolts on some rigs slowed work down there.
He said exploration and production companies are reevaluating plans in North Africa following the raid on the In Amenas natural gas field in Algeria.
Schlumberger expects activity to "remain subdued" in the area while companies re-evaluate their plans.
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