Schlumberger Second-Quarter Profit Up, Tops Street View
Schlumberger, the world's largest oil service company, said Friday its second-quarter profit rose 47%, topping Wall Street expectations, driven by strength in its international markets.

Still, Schlumberger cautioned that the short-term outlook for its North American business was uncertain due to record imports of liquefied natural gas and continued weakness in Canada.

Net profit for the Houston-based company, which provides technology and services to help energy companies drill for oil and gas, rose to $1.26 billion, or $1.02 cents per diluted share, from $857 million, or 69 cents per share, a year earlier.

Analysts on average had expected earnings of 96 cents a share, according to Reuters Estimates.

"Second-quarter results were driven by the increasing pace of international activity," said Schlumberger Chairman and CEO Andrew Gould.

"Sequential revenue growth for Oilfield Services accelerated in all areas except North America, where higher activity on land and in the Gulf Coast was not sufficient to completely offset a significant downturn in Canada."

The company had an "exceptional" performance in the Middle East and Asia, citing a favorable revenue mix from exploration services, Gould noted. He said global oil demand remains robust.

Schlumberger, the first big oil service company to report its second-quarter earnings, has set the bar high for peers like Baker Hughes, which recently warned that deterioration of its Canadian business would hurt profitability in the second quarter.

By contrast, Schlumberger had beat Wall Street expectations by an average of about 9% for 10 consecutive quarters, according to Pickering Energy Partners. The 2007 second-quarter results make it 11 quarters in a row.

"Even though North America is a little bit volatile, it is going to be more than offset by international growth," said Poe Fratt, analyst at A.G. Edwards. He added that investors would be encouraged by Schlumberger's margin expansion in its oil services business.

Total revenue climbed to $5.64 billion from $4.69 billion in the same quarter a year earlier. Analysts had expected revenue of $5.58 billion.

Oilfield Services revenue climbed 21% to $4.97 billion, while pretax operating income rose 33% from a year earlier to $1.51 billion.

Schlumberger's seismic unit WesternGeco recorded revenue of $665 million, an increase of 18 year-on-year. Pretax business operating income for the unit rose 28% to $216 million.

So far this year, shares of Schlumberger have risen about 48%, outperforming the Philadelphia Oil Service Index, which is up about 40%.