Deep-Sea Woes Eclipse Shale Upturn in Schlumberger’s Dimmer View


(Bloomberg) — Schlumberger Ltd. is expecting the situation to get worse for its drilling business in the third quarter as further deterioration in deepwater work around the world overshadows an uptick in U.S. shale plays.

The Drilling Group, Schlumberger’s second-largest business unit, generated $2.03 billion in the second quarter. Third-quarter results are expected to be “slightly lower” as West Africa, Brazil and Asia see further declines in deepwater drilling, according to prepared remarks from Patrick Schorn, president of operations at Schlumberger, delivered to investors Tuesday at the Simmons European Energy Conference.

“International activity is not yet recovering, creating a headwind for the third quarter, although work in the Middle East and Russia has been increasing,” Schorn said. “We have, however, started to focus on recovery of the temporary pricing concessions made during the depth of the downturn.”

The world’s largest oil services provider fell 0.6 percent to $80.64 in New York, paring an earlier gain of as much as 0.9 percent. The 15-member Philadelphia Oil Services Index fell 1.1 percent after earlier climbing as much as 1.2 percent.

While Schlumberger has seen more work thanks to an increase in the U.S. rig count, “there has yet to be any material change in pricing” for the service work, he said.

Schlumberger’s largest business unit, the Production Group, will have “flattish” results in the third quarter as compared to its $2.1 billion in second-quarter sales, Schorn said.

Its Reservoir Characterization group will be “almost flat,” while revenue and margins for the recently acquired Cameron Group will be lower, Schorn said.

By David Wethe.

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