SCHLUMBERGER LIMITED 
By 
By Matt Daily and Braden Reddall
Schlumberger shares, having drastically underperformed peers so far in 2009, were up 7.3 percent around midday.
The company had warned last month that profit would fall short of estimates as sharp drops in energy prices since July led oil and gas producers to rein in spending on new projects.
Its WesternGeco unit, which measures prospective oil and gas reservoirs, had a particularly bad quarter, as expected.
But Longdley Zephirin, oil services analyst at Zephirin Group Inc, said the market welcomed Schlumberger's traditionally careful approach to the downturn. "Their general tone hasn't changed in recent quarters," he said.
Tudor Pickering Holt analysts said the results were not good, but not a disaster, and S&P kept a "buy" on the stock.
Energy analysts have forecast spending by oil and gas producers would drop by one-fifth or more in 2009 as companies move to conserve cash, and Schlumberger echoed that sentiment.
"We expect 2009 activity to weaken across the board with the most significant declines occurring in North American gas drilling, Russian oil production enhancement and in mature offshore basins," Chief Executive Andrew Gould said.
Gould told investors on a conference call that the company was cutting 5,000 jobs out of 87,000 worldwide, and did not rule out more cuts in the first half of 2009, if necessary.
Net profit fell to $1.15 billion, or 95 cents per share, down from $1.38 billion, or $1.12 per share, although revenue rose nearly 10 percent to $6.87 billion.
Excluding charges and credits, it earned $1.24 billion, or $1.03 per share, a penny short of the average analyst forecast, on revenue of $6.84 billion, according to Reuters Estimates.
Shares of rivals Halliburton Co
WAITING FOR COST INFLATION TO COOL
Developing most new oil and gas fields was uneconomical at current prices, and it would take time for inflation that has driven exploration and production costs to abate, Gould said
Still, despite heavy spending to develop new resources in recent years, the supply situation has not improved much and investment cuts now would "sow the seeds of a strong rebound."
Schlumberger took fourth-quarter charges of 8 cents a share due to workforce cuts and asset write-offs, including payments due from a unidentified client with liquidity problems.
Venezuelan state oil company PDVSA has built up debts with providers and skipped payments to partners.
Gould said Latin America would be flat in 2009, with two markets staying healthy and two others weakening dramatically, while Algeria and big players in West Africa offshore would hold up, only partially offsetting weakness elsewhere.
Pre-tax profit from oilfield services rose 4 percent to $1.6 billion, and revenue grew 15 percent. WesternGeco posted a 68 percent drop in profit to $88 million and a 25 percent drop in revenue, but saw its backlog reach a record $1.77 billion.
The company anticipates $3 billion in 2009 capital expenditure, including $800 million for WesternGeco, down from a total of nearly $4.1 billion in 2008. Gould said much of the capex was for deepwater and natural gas projects overseas.
Shares of Schlumberger rose $2.73 or 7.3 percent to $40 on the New York Stock Exchange, off their lowest level since mid-2005 hit before the opening of trade. The stock is still down 5 percent in 2009, versus a rise of 2 percent in the Philadelphia oil service index <.OSX> in the same period.
(Reporting by Matt Daily and Braden Reddall; Editing by Steve Orlofsky, Dave Zimmerman and Matthew Lewis)
