Schlumberger Impresses With Cost Cuts, Resilient Margins

Schlumberger Impresses With Cost Cuts, Resilient Margins
Schlumberger reports a smaller-than-expected fall in 1Q margins as it continues to execute tight cost controls to combat a decline in drilling activity.

Reuters

April 17 (Reuters) - Schlumberger Ltd, the world's No.1 oilfield services provider, reported a smaller-than-expected fall in first-quarter margins as it continued to execute tight cost controls to combat a decline in drilling activity.

Schlumberger shares rose as much as 3.3 percent to a near-five-month high of $94.89 on Friday, a day after the company reported a profit well ahead of analysts' expectations despite a 9 percent drop in quarterly revenue.

"Market pricing for certain products and services (in North America) has already reached unsustainable levels," Chief Executive Paal Kibsgaard said on a conference call with analysts on Friday.

"However, we are being selective in the pursuit of market share and very disciplined in the avoidance of loss-making contracts."

Resilience in its international business, which accounts for more than two-thirds of Schlumberger's total revenue, helped drive profit.

"I think the overall resilience in our well-balanced international business is underestimated," Kibsgaard said.

Schlumberger's cost of revenue fell 7 percent in the quarter ended Mar. 31. Operating margins shrunk to 17.6 percent from 19.3 percent a year earlier, but were higher than the estimates of some analysts tracked by Reuters.


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