Schlumberger Says Higher Oil Demand In 2015 To prompt Oil, Gas Spend
Oct 17 (Reuters) - Schlumberger Ltd, the world's largest oilfield services company, said oil and gas spending would increase in 2015 as global oil demand is poised to rise, downplaying fears of an investment slowdown due to weak crude prices.
Schlumberger shares were up 7 percent at $97.10 in early morning trading.
The company reported a better-than-expected quarterly profit after markets closed on Thursday, helped by strong drilling activity in North America.
Oil prices have slid nearly 20 percent since June due to oversupply, signs of weak demand growth and indications that key oil producers, particularly Saudi Arabia, have limited appetite to intervene in prices.
The steep fall has sparked fears that oilfield earnings would be hurt with oil and gas customers reigning in spending.
"The key to the overall oil market is still that the global oil demand is currently set to increase by 1.1 million barrels per day in 2015, which will require growth in exploration and production investments," Schlumberger Chief Executive Paal Kibsgaard said on a post-earnings call on Friday.
The International Energy Agency earlier this week cut its 2015 estimate for oil demand growth by 300,000 barrels per day (bpd) to 1.1 million bpd, citing weak global economies.
Oil demand was "largely unchanged", while supply was relatively "well balanced," Kibsgaard said on the call.
"WTI oil at $80 a barrel for a short time is unlikely to have an impact on growth and margins for the services companies, but $80 oil for more than a month or two certainly will," William Blair & Co analysts wrote in a note.
They expect the company to "wait and see" how $80 WTI would impact producers' spending plans.
West Texas Intermediate crude was at about $83 per barrel on Friday, while Brent crude was over $87.
Baker Hughes Inc, the world's No.3 oilfield services provider, said on Thursday that drilling activity was unlikely to slow unless crude fell to and remained at $75 for a few months.
Still, Schlumberger expects 2014 exploration spending to fall by 4-5 percent from a year ago, largely due to a 20 percent fall in seismic expenditure.
Oil and gas companies are spending more on maximizing production from existing wells, than on searching for new reserves as they face increasing investor pressure to raise shareholder returns.
Up to Thursday's close, Schlumberger shares had fallen more than 20 percent over the last three months due to the sharp slide in crude prices.
(Reporting by Swetha Gopinath and Anannya Pramanick in Bangalore)
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