Schlumberger Fourth-Quarter Profit Rises as Drilling Booms

Schlumberger Ltd. (SLB), the world��slargest oilfield-services provider, said fourth-quarter profitrose 36 percent as higher crude prices pushed oil companies toboost exploration and production spending around the world.

Net income rose to $1.41 billion, or $1.05 a share, from$1.04 billion, or 76 cents, a year earlier, Houston- and Paris-based Schlumberger said today in a statement. Excluding chargesrelated to a write-off of Libya assets, the company earned $1.11a share, beating by 2 cents the average of 32 analyst estimatescompiled by Bloomberg. Sales climbed 21 percent to $11 billion.

Oil prices advanced 10 percent to average $94.06 a barrelon the New York Mercantile Exchange in the quarter, up from$85.24 a year earlier. The average number of active oil andnatural-gas rigs around the world rose 15 percent in the finalthree months of the year to 3,676, Baker Hughes Inc. data show.

Revenue in its North America region, which excludes Mexico,climbed 6 percent to $3.52 billion while the operating profitmargin was $947 million, or 27 percent.

��North America was really the good upside surprise,�� John Keller, an analyst at Stephens Inc. in Houston, who rates theshares at ��overweight�� and owns none, said in a telephoneinterview. ��The return of deepwater rigs in the Gulf certainlyadded a tailwind during the quarter.�� Keller had estimatedrevenue of $3.45 billion and a 25 percent margin.

Schlumberger reported its best North American marginperformance in more than four years, according to data compiledby Bloomberg.

2012 Outlook

��Uncertainty remains over the outlook for 2012 due to thecontinuing sovereign debt crisis in Europe which places downwardpressure on GDP and oil demand forecasts,�� Chief ExecutiveOfficer Paal Kibsgaard said in the statement. ��Against thisbackdrop, we are planning for growth in 2012, while building therequired flexibility into our resource plans.��

Kibsgaard��s comments were cautious, Bill Herbert, ananalyst at Simmons &! ; Co. in Houston, wrote today in a note toclients.

��Management made a reference to ��building the requiredflexibility into�� its ��resource plans�� in the event of industrydislocations,�� he wrote. ��This is code for throttling back onspending, at a minimum, if warranted.��

The company is expected to earn net income of $1.10 pershare in the first quarter, according to the average of 17analyst estimates compiled by Bloomberg. Kibsgaard toldinvestors on a conference call that consensus estimates are onthe ��high side.��

��Added Uncertainty��

��There is some added uncertainty going into Q1 now interms of the impact of the accelerating drop in North Americanshale-gas activity,�� Kibsgaard said on the call. ��Generally, Iwould say the current consensus is somewhat on the optimisticside.��

Explorers and producers around the world are expected toboost annual spending by 9 percent this year to a record $595billion, James Crandell and Omar Nokta, managing directors atinvestment bank Dahlman Rose & Co., wrote in a Jan. 3 note.

Schlumberger helps companies drill for oil and gas,including using hydraulic fracturing to free the fuel from shaleformations.

Gulf of Mexico

The average number of rigs active in the Gulf of Mexicoclimbed 68 percent to 37 in the fourth quarter, compared with 22a year earlier, according to Baker Hughes.

In the U.S. onshore market, the largest region in the worldfor hydraulic fracturing work, Stephens analysts project an 8percent growth in the number of drilling rigs working this yearcompared with 2011.

Schlumberger rose 1.3 percent to close at $73.80 in NewYork. The shares, which have 31 buy ratings from analysts, fiveholds and one sell, rose 14 percent during the quarter.