April 21, 2011 – By Braden Reddall and Anna Driver
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SAN FRANCISCO/HOUSTON (Reuters) - Schlumberger Ltd <SLB.N> and Weatherford International Ltd <WFT.VX> <WFT.N> said on Thursday the outlook is promising for the oilfield service industry as energy companies speed exploration in a time of high oil prices and growing demand.
The outlook came as those global companies and others including Diamond Offshore Drilling Inc <DO.N> reported first-quarter earnings that were nicked by unrest in the Middle East and North Africa, a slow restart to offshore drilling in the Gulf of Mexico and bad weather in Australia.
Oil prices have climbed above $110 a barrel, prompting producers including Saudi Arabia to ramp up spending on new fields to increase their output capacity and make up for supplies that have been cut off from Libya.
"The absence of Libyan production worries the oil producers," said Schlumberger Chief Executive Officer Andrew Gould, adding that this along with increased oil and gas demand from Japan would drive more activity globally.
"I think that I'm much more confident that the international stream will come back faster," the executive said on a conference call with investors.
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Shares of Schlumberger were up 1.6 percent at $89.33 on the New York Stock Exchange at midday.
Bernard Duroc Danner, the CEO of Schlumberger's smaller rival Weatherford, told analysts his company will raise capital expenditures to take advantage of improving international and North American markets for his company's services.
Schlumberger, the world's largest oilfield services company, posted a lower-than-expected quarterly profit on Thursday, but its outlook for improved customer demand pushed its shares higher.
Bill Herbert, oilfield services analyst at Houston-based investment bank Simmons & Co, described the company's outlook as "quite constructive."
Schlumberger's first-quarter profit rose 40 percent to $944 million or 69 cents per share. Excluding one-time items, Schlumberger earned 71 cents per share, compared with the 76 cents that analysts expected, according to the average on Thomson Reuters I/B/E/S.
Weatherford, the world's fourth-largest oilfield services company, reported a first-quarter profit compared with a loss a year earlier, helped by higher revenue in the company's North America segment.
Still, Weatherford's results fell short of Wall Street estimates, sending its stock down 3.3 percent in New York trading.
Companies that provide offshore drilling rigs have been hit hard by fallout from BP Plc's <BP.N> <BP.L> Gulf of Mexico well blow-out disaster one year ago. Many rigs were idled by the U.S. government's drilling moratorium in the Gulf and day rates to hire those vessels fell, but some recovery is expected this year.
Diamond Offshore reported a 14 percent drop in quarterly profit as the rates paid for its oil and gas drilling rigs declined. Its rival Noble Corp <NE.N> reported an 85 percent drop in quarterly profit after the market close on Wednesday.
Diamond shares were up 2.3 percent, while Noble's shares were down about 2 percent at midday.
(Additional reporting by Matt Daily in New York, writing by Anna Driver in Houston, editing by Matthew Lewis)