Schlumberger's LatAm Revenues Rise 20% in Q4

Oilfield services company Schlumberger (NYSE: SLB) increased its fourth quarter 2004 Latin American revenues by 20% to US$491mn compared to the same period of 2003, the US company said in its 4Q04 earnings statement Tuesday.

Revenues rose 13% sequentially from third quarter 2004, the statement said. Revenue increases were strongest in Mexico and Venezuela due to drilling projects with Mexico's state oil company Pemex and the implementation of drilling and measurement technologies in Venezuela, the statement said.

However, the company's pre-tax operating income fell 21% year-on-year to US$53mn, which was "mainly attributable to higher project costs in Mexico and reduced levels of Integrated Project Management (IPM) activity in Venezuela," the statement said.


Schlumberger predicts sustained activity in Argentina and Brazil this year, at similar levels to 2004. "We won't see huge increases and, in Brazil, that is to a large extent due to rig availability," the company's chairman and CEO Andrew Gould said in a conference call to discuss fourth quarter results.

"We will have a good year in seismic in Latin America, particularly with some of the contracts we have in offshore Brazil," he said.

"Overall I think we will see another activity increase for Venezuela particularly from [state oil company] PDVSA," Gould said, adding Mexico is expected to "stabilize around the level where it is today [4Q04]."

Schlumberger anticipates some reduction in its exploration budget in Mexico but development and production budgets will remain unchanged, he said. "In Mexico, I think you should be tempering [revenue expectations] a bit just for the volume of third party services that we have to rebuild," Gould said.

In Peru, Ecuador and Colombia, the company expects "modest increases in activity," he added. Schlumberger reported fourth quarter earnings of US$330mn, up 86% year-on-year, on operating revenues of US$3.07bn.

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