The world’s largest oilfield-services company, Schlumberger (NYSE:SLB), reported on Friday a weaker-than-expected third-quarter profit, citing a degrading economy that has stifled demand.
However, the company has seen growth in North America and certain international markets as it continues to expand its presence in the Gulf of Mexico and grow in emerging markets despite political turmoil.
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The Houston-based supplier of technology, project management and information solutions to the oil and gas exportation industries booked net income of $1.3 billion, or 96 cents a share, compared with $1.7 billion, or $1.38 a share, in the same quarter last year.
Excluding special items, the company earned 98 cents a share, short of average analyst estimates polled by Thomson Reuters of $1.01 a share.
Revenue for the three months ended Sept. 30 was $10.23 billion, up from $6.8 billion a year ago, virtually matching the Street’s view. Oilfield services revenue was up 6% to $9.55 billion, and its distribution segment saw sales climb 10% to $698 million.
Falling oil prices have heightened worries that energy companies would have to tighten spending. However, Schlumberger said offshore demand will help stabilize its business.
In the third quarter, the company's offshore activities in Iraq, Saudi Arabia, Mexico and Brazil continued to improve, partially offset by softer-than-expected demand in the Middle East.
In North America, Schlumberger’s performance was driven by strong growth on land in Canada and in liquids-rich shale basins in the U.S.
“While the financial turmoil introduces some uncertainty over near-term activity, we remain confident that any reductions will be short-lived, and that the outlook for the service industry remains very positive,” the company’s chief executive Paal Kibsgaard said in a statement.
Global economic uncertainty has already resulted in lower oil demand growth in 2012, but demand is still expected to exceed growth seen in 2011. Kibsgaard said there is a “tight cushion of excess oil supply” that will continue to support activity.