Schlumberger, Baker top estimates with global drilling


* Offshore drilling strong in North America

* Middle East and Asia drive international demand

* Schlumberger shares up 2.6 pct, Baker shares up 8 pct

By Braden Reddall

Oct 18 (Reuters) - Increased oilfield activity in U.S.offshore waters and overseas gave a bigger-than-expected lift toprofits at Schlumberger Ltd and Baker Hughes Inc, marking a clear divide with struggling smaller U.S. oilservices firms.

Shares of Baker Hughes jumped 8 percent to their highestlevel since 2011 in early trading on Friday while Schlumberger climbed 2.6 percent after both companies reported third-quarterresults.

Schlumberger and Baker Hughes executives cited healthydemand from the Middle East and Asia as well as work off thecoast of North America, where prices for onshore services remainsuppressed by a natural gas glut.

Schlumberger Chief Executive Paal Kibsgaard said he expectsdouble-digit growth in earnings per share in 2014. "Ourcustomers are in their planning process, but at this stage weforesee a continuation of the overall trend seen in 2013, whichrevealed another year of steady activity growth," he said on aconference call.

In the third quarter, Schlumberger topped analysts' profitestimates for the eighth consecutive quarter with a 20 percentrise, helped by unexpected positives out of the United States.

"Schlumberger highlighted solid performance despite aflattish U.S. land rig count, driven by improved efficiency inits pressure pumping operations, new technology penetration andmarket share gains," Barclays analyst James West wrote.

A seasonal rebound in Canadian drilling also contributed torecord-high quarterly revenue; about two-thirds of total revenuewas generated outside North America. The company citedimprovement in Saudi Arabia and Iraq.

Net income rose to $1.71 billion, or $1.29 per share,whereas analysts expected $1.24 per share, according to ThomsonReuters I/B/E/S. Revenue grew 11 percent to $11.61 billion.

UBS analyst Angie Sedita said earnings would only risefurther with the efficiency drive outlined by Kibsgaard lastmonth.

Baker Hughes reported third-quarter net income growth of 22percent to $341 million, or 77 cents per share. Excluding items related to restructuring in Latin America, itearned 81 cents per share, while analysts had expected 78 cents.

The Houston-based company has ramped up operations outsideNorth America, where the industry bellwether rig count itcompiles is at three-decade highs.

Smaller U.S.-focused players, exemplified by Superior EnergyServices and its profit warning earlier this week, are facing a tougher time as drillers becomemore efficient at well sites.

Baker Hughes said it expects the U.S. rig count to average1,750 rigs for 2013, down 9 percent from 2012, though theindustry was drilling about 6 percent more wells per rig. Theinternational count was expected to average 1,300 rigs in 2013,up 5 percent from last year.

Shares of Schlumberger and Halliburton Co have risenabout 17 percent in the past three months, while Baker Hugheshas gained 6 percent.

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