Schlumberger Beats Estimates as Gulf Drilling Increases

Schlumberger Ltd., the world’s largest oilfield-services provider, reported fourth-quarter earnings that beat analysts’ estimates as drilling in the U.S. Gulf of Mexico increased.

Excluding merger and job cut costs, per-share profit was $1.08, a penny more than the average of 32 analysts’ estimates compiled by Bloomberg. Sales climbed 8.5 percent to $11.2 billion, also beating estimates.

“This quarter should potentially help calm some fears on how much the onshore weakness should impact Schlumberger,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, who rates the shares a buy and owns none. “They seem to be able to increasingly offset that with the Gulf of Mexico.”

Customers are expected to boost spending on exploration and production 10 percent outside the U.S. and Canada in 2013 and more drilling is expected in the Gulf of Mexico, Schlumberger said. Earnings per share should increase by double digits this year as global oil demand gains at a rate similar to last year, Chief Executive Officer Paal Kibsgaard said.

Schlumberger rose 4.3 percent to $76.50 at the close in New York. The shares have 34 buy ratings from analysts, five sells and one hold.

Schlumberger generates about two-thirds of sales outside of North America, the highest ratio among the largest service providers, including Halliburton Co. and Baker Hughes Inc. Yesterday, it raised its quarterly dividend 14 percent to 31.25 cents a share.

Contractual Delays

The company said last month that earnings per share would be 5 to 7 cents lower in the fourth quarter because of contractual delays in Europe, Africa and the former Soviet Union countries and weaker-than-expected onshore drilling in the U.S. and western Canada.

Quarterly net income dropped 3.5 percent to $1.36 billion, or $1.02 a share, from $1.41 billion, or $1.05, a year earlier, the Houston- and Paris-based company said in a statement today

The average number of active rigs around the world dropped 6.5 percent to 3,436 during the fourth quarter from 3,676 a year earlier, according to Baker Hughes. Brent oil prices, an international benchmark, rose 1 percent to average $110.13 in the quarter.

The hostage situation at an Algerian natural gas facility operated by BP Plc has prompted Schlumberger to take another look at security measures for its workers in North Africa, Kibsgaard told analysts and investors on a conference call today.

“It’s too early to say exactly what the impact of this is going to be,” he said. “In these regions with higher risk, we already have very stringent security measures in place.”

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