Helped by growing production in the Gulf of Mexico, Schlumberger (NYSE:SLB) reported a stronger-than-expected improvement in fourth-quarter profit on Friday, but warned financial turmoil in Europe could weigh on demand there.
The Houston-based supplier of equipment and technology to the oil and gas industry benefited from growth in deepwater drilling in the Gulf of Mexico, which has started to ramp up again after a moratorium following the Gulf oil spill.
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However, the nation's largest oilfield services provider warned uncertainty remains in 2012 because of the ongoing debt crisis in the eurozone, which places downward pressure on GDP and oil demand forecasts.
The International Energy Agency cut its forecast on oil demand earlier this week, saying the possibility of a credit crunch in Europe could cause a recession that would greatly impede on energy consumption.
Still, Schlumberger CEO Paal Kibsgaard said the company remains confident that any potential reduction in activity will be short-lived and that Schlumberger’s competitive position remains strong, helped by its presence in international markets and the Gulf.
Kibsgaard highlighted the robust natural gas market that has been well supplied in North America with gas storage at five-year highs. With the thin excess oil-supply cushion, oil prices are expected to stay close to current levels.
Last quarter, the company earned $1.41 billion, or $1.05 a share, compared with a year-earlier $1.04 billion, or 76 cents. Excluding one-time items, it earned $1.11 a share, which is two cents better than analysts on average predicted in a Thomson Reuters poll.
Revenue for the three-month period was $10.97 billion, up from $9.07 billion a year ago, just beating the Street’s view of $10.78 billion. The gains were partially attributed by the company to a 21% year-over-year growth to $10.30 billion in oilfield services revenue and a 19% improvement in distribution revenue.
"Fourth-quarter results showed solid sequential growth driven by stronger activity both on land and offshore for most technologies, and stronger product sales for completion, software and multiclient seismic," Kibsgaard said in a statement.
International growth was driven by deepwater and exploration activity, particularly in East and West Africa, as well as strong land activity in the Middle East and North Africa.