Schlumberger, the world's largest oilfield services company, posted a 22 percent rise in fourth-quarter profit on Friday but missed Wall Street forecasts because of weakness in the U.S. market.
North American oilfield services revenue decreased 7 percent to $1.33 billion, and earnings dropped 23 percent to $338 million as prices for the company's well-stimulation activities continued to drop and activity declined in Alaska.
Pretax margin in the region fell to 25.4 percent from about 30 percent a year ago.
"I'd call it a soft quarter. The overall outlook is relatively unchanged, but the near-term financial performance was a little disappointing," said Dan Pickering of Tudor, Pickering, Holt & Co Securities in Houston.
Profit and revenue at oilfield service companies have risen sharply in past three years as high energy prices prompted a wave of spending by oil and gas producers.
But some weak spots in North American gas markets and resistance from producers to rising costs has begun to chip away at the gains.
Schlumberger's profit rose to $1.38 billion, or $1.12 per share, from $1.13 billion, or 92 cents per share, a year earlier. Excluding special items, earnings were $1.11 per share, lagging the $1.13 that analysts had expected, according to Reuters Estimates.
Revenue climbed to $6.25 billion from $5.35 billion, beating the analysts' forecast of $6.1 billion.
Weakness in the onshore U.S. market came as the company also saw lower marine utilization because several of its vessels were placed in dry dock.
Higher start-up costs for 17 drilling rigs set to begin work on the Mezosoico and Alianza projects in Mexico under Schlumberger's integrated project management business also cut into margins.
Shares in Schlumberger fell 2.9 percent in premarket trade, extending the 16 percent decline the stock has suffered since the beginning of January through Thursday's close.
The broader Philadelphia Oilservice Index has dropped nearly 13 percent so far this year.
"I think the stock is getting pretty cheap, but disappointing earnings don't help. I think there's a risk (they) go lower, and the market right now is not very forgiving," Pickering said.
Seismic Shift
Profit at WesternGeco, the company's fast-growing seismic arm, which measures oil and gas reservoirs, rose 4 percent from a year earlier to $272 million as revenue rose 1 percent, the company said, hurt by the decline in marine revenue as vessels spent more time in transit between projects and in drydock.
That pulled pre-tax margins in that business down to 34.1 percent from 37.9 percent a year earlier.
Oilfield services revenue rose 18 percent to $5.44 billion, while earnings climbed 16 percent to $1.54 billion, bringing pretax margin to 28.2 percent, down from 28.4 a year ago.