Schlumberger 4th quarter net falls 3.7% on charges, lower Europe revenue
HOUSTON -- Schlumberger's fourth-quarter earnings fell 3.7% amid lower revenue from its international operations and a slowdown in North American onshore activity. However, a strong offshore performance helped soften the blow.
The world's largest oilfield-services company earns more than two thirds of its revenue internationally, which had insulated it from a downturn in North American activity during the first part of 2012. But the company warned last month its fourth-quarter earnings would take a hit from weaker-than-expected North America activity and delays in Europe, the former Soviet republics and Africa.
Schlumberger reported a fourth-quarter profit of $1.36 billion, or $1.02 a share, down from $1.41 billion, or $1.05 a share, in the same period a year earlier. But excluding items such as merger and integration costs, the company beat analysts' expectations with per-share earnings from continuing operations of $1.08, down from $1.10. Revenue jumped 8.5% to $11.17 billion.
Analysts polled by Thomson Reuters had most recently forecast per-share earnings of $1.07 on revenue of $10.82 billion. Barclays analyst James West wrote in a research note Friday that Schlumberger performed well in a "challenging" North American market. "The issues that negatively impacted [fourth-quarter] results were primarily transitory, and the outlook presented for 2013 is bullish in Schlumberger's key international regions and for the Gulf of Mexico," Mr. West wrote.
Several exploration and production companies found themselves on track to outspend capital budgets going into the fourth quarter, and many pulled back on drilling activity in the U.S., which translated into lower prices and margins.
But the Gulf of Mexico was a bright spot for the company, more than offsetting declining onshore revenue in North America. Oil-field services revenue from North America, the region which generates most of the top line, rose 3.6% from the third quarter to $3.41 billion.
Chief Executive Paal Kibsgaard told analysts on a conference call that he does not have high expectations for a recovery in dry natural gas drilling in the U.S. this year, and expects that the rig count in North America will be slightly lower this year than in 2012. But Mr. Kibsgaard added that he expects some recovery during the first quarter, with 100 to 150 rigs added.
Schlumberger said it expects income growth in 2013 to come from abroad, with exploration and production companies expected to increase spending by 10% this year.
In the fourth quarter, Schlumberger's revenue from Europe, the ex-Soviet republics and Africa declined 1% from the prior quarter while the Middle East and Asia posted a 9.6% increase. Latin America revenue was up 11%, sequentially.
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