Schlumberger Sees Net Income Increase 8% in 3Q07

Schlumberger (NYSE:SLB) reported third-quarter revenue of $5.93 billion versus $5.64 billion in the second quarter of 2007, and $4.95 billion in the third quarter of 2006.

Net income reached $1.35 billion--an increase of 8% sequentially and 35% year-on-year. Diluted earnings-per-share were $1.09 versus $1.02 in the previous quarter, and $0.81 in the third quarter of 2006.

Oilfield Services revenue of $5.13 billion increased 3% sequentially and 19% year-on-year. Pretax business segment operating income of $1.51 billion was essentially flat sequentially but increased 23% year-on-year.

WesternGeco revenue of $794 million increased 19% sequentially and 20% year-on-year. Pretax business segment operating income of $306 million increased 42% sequentially and 32% year-on-year.

Schlumberger Chairman and CEO Andrew Gould commented, "Growth in the third quarter was driven by international markets particularly in Latin America, Russia, China and Indonesia. In North America, increased activity in Canada was offset by weaker pricing for pressure pumping in certain regions on land, and a sharp revenue drop in the Gulf of Mexico due to the departure of several rigs to overseas locations and the loss of approximately 15 operating days due to precautionary stand downs for approaching weather systems.

Technology growth was strongest at WesternGeco, as the segment recovered from the second-quarter dry docks and vessel transits. Marine acquisition revenue for the quarter was an all-time record as advanced Q-Technology acquisition techniques continued to be deployed. In other Technologies, growth was led by robust IPM activity and by demand for Wireline and Drilling & Measurements services, particularly in overseas markets.

In the immediate future, while there will be some recovery from low activity levels in the Gulf of Mexico, natural gas activity in both Canada and the US is likely to stabilize as production remains relatively strong and gas storage approaches winter at comfortable levels. As a result, pressure-pumping pricing deterioration will continue. The current situation does not however change our view that North American natural gas supply will require sustained activity to combat production decline, and technology to increase production rates from poorer quality reservoirs. Overseas, growth will continue at varying rates between regions due to the effects of winter weather and project delays in certain countries.

Global demand for oil remains strong while non-OPEC production continues to disappoint. Production decline rates in mature areas and continuing project delays will inhibit non-OPEC supply increases, while personnel and equipment shortages will restrict the industry's ability to respond."