The exterior of a Schlumberger Corporation building is pictured in West Houston January 16, 2015. Schlumberger, the world's No.1 oilfield services provider, said it will cut 9,000 jobs, or about 7 percent of its workforce, as it focuses on controlling costs amid plummeting oil prices.   REUTERS/Richard Carson  (UNITED STATES - Tags: BUSINESS ENERGY EMPLOYMENT) - RTR4LQO3

The exterior of a Schlumberger Corporation building is pictured in West Houston January 16, 2015. Schlumberger, the world's No.1 oilfield services provider, said it will cut 9,000 jobs, or about 7 percent of its workforce, as it focuses on ... controlling costs amid plummeting oil prices. REUTERS/Richard Carson (UNITED STATES - Tags: BUSINESS ENERGY EMPLOYMENT) - RTR4LQO3 (Reuters)

Schlumberger: Oil Market Nearing Bottom

By Oil FOXBusiness

Schlumberger (SLB) topped Wall Street’s estimates for second-quarter earnings, as executives pointed toward signs that oil production is poised to rebound.

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The world’s largest oilfield services company posted net income of $1.12 billion, down 30% versus a year-ago profit of $1.6 billion. On a per-share basis, Schlumberger earned 88 cents to beat the 79 cents projected by analysts.

Revenue fell 25% to $9.01 billion, better than the consensus estimate of $8.97 billion.

During a conference call with analysts Friday, CEO Paal Kibsgaard said pricing will likely be under pressure through the rest of 2015.

However, Schlumberger believes oil supply and demand will “tighten” starting in the second half. Kibsgaard reiterated that the oil industry’s large cuts to exploration and production investments “are going to show up” in crude inventories.

“We’re not far from the bottom,” Kibsgaard added in response to a question about production spending. “There’s not much left to cut.”

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From highs of over $100 a barrel early last year, U.S. oil prices have tumbled to their current mark of $50.38 a barrel. Brent crude, the international benchmark, was trading at $56.70.

WTI Crude Oil Spot Price - 1 Year | FindTheData

Drillers responded by slowing production and reducing their budgets for 2015, leading to weaker demand for Schlumberger’s services.

Schlumberger, along with its chief rivals Halliburton (HAL) and Baker Hughes (BHI), turned to cost cuts. Since the end of the third quarter of 2014, Schlumberger has eliminated 20,000 jobs.

Schlumberger noted that North America has shown the most significant drop in production activity, based on drilling investments. The company anticipates a 35% decline in spending by North American oil firms, up from a prior forecast of 30%. Internationally, spending is expected to fall more than 15%.

Kibsgaard said exploration and production levels should be higher in 2016. Rig counts in North America appear to be hitting a bottom, signaling that drilling activity should begin to increase slowly in the second half of this year.

He concluded that Schlumberger’s performance is sustainable, saying the second quarter “was not a fluke.”

Schlumberger shares were down a penny at $83.88 in recent trading. The stock has lost about 1.9% year-to-date.

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