Net income rose to $999.8 million, or 81 cents a share, from $540.8 million, or 44 cents, a year earlier, Schlumberger said today in a statement. It was the fifth-straight quarterly record for the company, which tests oil wells, maps reservoirs and overseas drilling projects. Revenue climbed 34 percent to $4.95 billion from $3.7 billion.
Oil companies seeking to replenish reserves increased exploration from the Gulf of Mexico to eastern Siberia, placing a premium on Schlumberger's technology. Chief Executive Officer Andrew Gould on Sept. 26 forecast double-digit growth for the company through the end of the decade.
``The improvement in profitability was twice what we were looking for,'' said Ole Slorer, an analyst at Morgan Stanley who rates Schlumberger shares ``overweight-attractive'' and owns none. Slorer expected third-quarter profit of 74 cents a share.
With operations extending throughout the world, Schlumberger is likely to weather any reduction in drilling following a decline in oil prices from a record in July, some analysts said.
``Schlumberger as a general proposition makes higher margins and more money outside of the U.S.,'' John Parry, senior equity analyst at oil research company John S. Herold Inc. in Norwalk, Connecticut, said before the statement was issued.
Energy Prices
Crude-oil futures traded on the New York Mercantile Exchange averaged $70.60 a barrel in the third quarter, up 12 percent from a year earlier. Prices touched a record $78.40 a barrel on July 14. Gas futures were down 36 percent at an average of $6.18 per million British thermal units after plunging from a record $15.78 in December.
The drop in gas prices followed a mild winter in North America that left abundant supplies of the fuel in storage at the end of that peak season for demand. In the U.S., inventories rose to a record 3.44 trillion cubic feet last week, a report from the Energy Department showed.
Winter Gas Demand
``This has not yet materially impacted our activity, however if the coming winter fails to stimulate strong natural-gas demand there is a growing likelihood of excess equipment capacity in the pressure-pumping business at some point in 2007,'' Gould, 59, said in the statement. ``Activity growth elsewhere for both oil and gas will remain strong as our customers continue to fight decline curves and bring in new fields.''
Revenue in North America rose 43 percent to $1.35 billion. Falling gas prices and anecdotal evidence of a softening rig market in the U.S. had led some analysts to predict Schlumberger's sales in the region might be hurt. About 30 percent of Schlumberger's business is in North America.
The statement was issued before the start of regular trading on U.S. stock markets. Shares of Schlumberger rose $2.54, or 4.2 percent, to $62.70 yesterday in New York Stock Exchange composite trading. The stock fell 4.7 percent in the third quarter, the best performance among the seven members of the Standard & Poor's 500 Oil & Gas Equipment & Services Index, which dropped 13 percent.
Schlumberger's third-quarter revenue from oilfield services rose 32 percent to $4.3 billion. Revenue from the WesternGeco unit, which uses 3-D seismic imaging to map oil fields, was up 51 percent at $659 million. Schlumberger bought out Baker Hughes Inc.'s 30 percent stake in the joint venture for $2.4 billion in the second quarter.
``WesternGeco was also substantially better than what we were looking for,'' Morgan Stanley's Slorer said. ``The seismic market is a very strong market.''
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