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Schlumberger Posts Better-Than-Expected Profit

Schlumberger, the world's largest oilfield services company, posted better-than-expected quarterly profit on Friday, driven by energy companies' brisk spending on oil and gas exploration.

Schlumberger, whose shares rose 3 percent in premarket trading, and others in the sector have benefited from robust demand for their services as energy producers strive to boost output to take advantage of the prolonged rally in crude oil and natural gas prices.

Citing customer response to higher prices, Schlumberger Chief Executive Officer Andrew Gould repeated his longer-term view that the global exploration and production spending cycle would stay "stronger for longer." Gould also said uncertainty about the level of drilling for natural gas in North America has been removed as high prices prompted companies to expand their exploration budgets.

Schlumberger said second-quarter profit increased to $1.42 billion, or $1.16 a share, from $1.26 billion, or $1.02 per share, a year earlier. Revenue rose to $6.75 billion from $5.64 billion. The results topped analysts' forecasts for earnings of $1.13 per share on revenue of $6.5 billion, according to Reuters Estimates.

Mark Urness, oilfield services analyst with Calyon Securities, told clients in a note that the results were better than he expected and he continues to believe "that the current upcycle will be sustained well beyond the end of the decade."

Operating profit rose 13 percent to $1.7 billion at Schlumberger's oilfield services arm, but fell 9 percent to $196 million at the WesternGeco seismic unit. Profit in the seismic unit was hurt by seasonal vessel movement and transfers.

In North America, revenue rose 7 percent to $1.44 billion while pretax operating income climbed 18 percent to $344 million, helped by growth in onshore drilling.

Schlumberger's revenue from work in Europe, Africa and Russia soared 28 percent to $2.07 billion as pretax operating income climbed 26 percent to $583 million.

In the Middle East and Asia, revenue climbed 19 percent to $1.44 billion and pretax operating income jumped 23 percent to $525 million, boosted by activity in China, Korea and Australia.

At Thursday's close, Schlumberger shares had dipped 1.6 percent this year, lagging a 1.2 percent gain in the Philadelphia Oil Service index.