Schlumberger 2Q Profit Up

Oilfield services company Schlumberger Ltd. said Friday its profit increased 47 percent in the second quarter as strong demand internationally more than offset weakness in Canadian operations.

Its shares rose nearly 3 percent in morning trading.

Net income rose to $1.26 billion, or $1.02 per share, compared with $856.9 million, or 69 cents per share, in the year-earlier period. Revenue rose to $5.64 billion from $4.69 billion a year earlier.

Analysts polled by Thomson Financial on average expected earnings per share of 95 cents on revenue of $5.53 billion.

The company's shares rose $2.56, or 2.7 percent, to $96.01 in morning trading after rising to a 52-week high of $96.75 earlier in the session.

Schlumberger (nyse: SLB - news - people ), whose net income rose 68 percent in 2006, kicked off the oilpatch industry's earnings season. Next week, competitor Halliburton Co. (nyse: HAL - news - people ) is scheduled to release April-June results, as are oil majors Exxon Mobil Corp. (nyse: XOM - news - people ) and ConocoPhillips (nyse: COP - news - people ), among others.

Schlumberger said business was particularly strong in the Middle East and Asia but struck a more cautious note on domestic demand.

In particular, chairman and chief executive Andrew Gould said natural gas activity in North America remains uncertain because record imports of liquefied natural gas, a backlog of new wells and other factors have led to a rapid rise in gas storage levels.

Gould said global demand for oil remains robust, though he noted the shortage of people and equipment have impeded investment in new oilfield projects.

Still, he said, "we remain convinced that international activity will continue to increase as operators combat production shortfalls and continue to increase exploration budgets to renew reserves."

Schlumberger said its oilfield services revenue rose 21 percent to $4.97 billion in the second quarter versus a year ago. Activity rose in all regions except North America, where increased business on land and along the Gulf Coast failed to offset a downturn in Canada.

The company's seismic arm, WesternGeco, posted revenue of $665 million, an increase of 18 percent over last year. The ongoing rush to explore for new sources of oil and gas in deeper waters and more rugged terrain has been a boon for companies like Schlumberger that provide seismic services.

As part of an ongoing program to repurchase 40 million shares of its stock, Schlumberger said it bought back 2.2 million shares in the second quarter at an average price of $78.23 a share. The company said its buyback total to date is about 21 million shares.

For the first six months of 2007, Schlumberger said its net income was $2.4 billion, or $1.98 a share, up from $1.6 billion, or $1.28 a share, for the same period a year ago. Sales rose to $11.1 billion from $8.9 billion.

Associated Press.