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Services suffer as oil firms cut back

THE world's largest oilfield services company said yesterday that its second-quarter earnings tumbled 57 percent as oil and natural gas companies cut back on exploration and drilling, particularly in North America.

Schlumberger said net income for April to June fell to US$613 million, or 51 cents per share, from US$1.42 billion, or US$1.16 per share, a year earlier.

One-time items aside, Schlumberger said income from continuing operations amounted to 68 cents a share.

Revenue fell 18 percent to US$5.53 billion from US$6.75 billion in the year-ago quarter.

Lower oil and gas prices have prompted energy companies around the world to scale back oilfield activity, which means less work for Schlumberger and smaller rivals such as Halliburton Co. Service companies help producers with drilling, seismic surveys, reservoir management and other oilfield tasks.

Like Halliburton earlier this week, Schlumberger said a significant decline in natural-gas drilling in North America weighed heavily on second-quarter results.

Schlumberger Chairman and CEO Andrew Gould said the rate of declining revenue slowed in the second quarter from the start of the year as business improved in other parts of the world.

One of the biggest obstacles has been natural gas prices, which have tumbled from double-digit levels a year ago to well below US$4 per 1,000 cubic feet of late.

Gould said natural-gas drilling in the United States and Canada reached a five-year low in recent months because of weak demand and large inventories.


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