Schlumberger Ltd. (SLB:US), the world’s largest oilfield-services provider, said first-quarter profit fell on lower hydraulic fracturing prices in North America.
Net income declined to $1.26 billion, or 94 cents a share, from $1.3 billion, or 97 cents, a year earlier, Houston- and Paris-based Schlumberger said in a statement on Business Wire today. Excluding one-time items, the company exceeded the 98- cent average of 32 analysts’ estimates (SLB:US) compiled by Bloomberg.
“The outlook for North America remains uncertain, with lower-than-expected rig activity and continuing pricing weakness,” Chief Executive Officer Paal Kibsgaard said in the statement.
Prices charged for U.S. fracking services are expected to fall another 6 percent this year after dropping 15 percent in 2012, according to PacWest Consulting Partners LLC, a Houston- based industry adviser. Fracking equipment in the first quarter, measured by the amount of horsepower available, was estimated to exceeded demand by an estimated 32 percent. About 15.4 million horsepower was competing to meet demand for 11.7 million, the consultant said.
“This past year has been more challenging for the oilfield service subsector than the market originally anticipated,” Brian Youngberg, an analyst at Edward Jones in St. Louis who rates the shares a buy and owns none, said in a phone interview before the results were announced. “I really expected to see better earnings improvement. That’s been delayed now until at least later this year into 2014.”
Schlumberger generates about two-thirds of sales (SLB:US) outside of North America, the highest ratio among the largest service providers, including Halliburton Co. (HAL:US) and Baker Hughes Inc. (BHI:US)
The company said last month collections in Venezuela had improved and all revenue from first-quarter work would be recognized. The March 31 statement came two weeks after Schlumberger said it would temporarily cut activity in the country due to unpaid bills.
Schlumberger reported a $92 million pretax charge for currency value loss in Venezuela.
The earnings statement was released before the start of regular trading on U.S. markets. Schlumberger, which has 32 buy, one sell and six hold recommendations from analysts, rose 3 cents to $71 yesterday in New York.
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