DOW JONES NEWSWIRES
HOUSTON -(Dow Jones)- Prices for Schlumberger Ltd.'s (SLB) pressure-pumping services in North America are continuing to weaken as drilling rigs move from natural-gas fields to oil areas, Chief Executive Paal Kibsgaard said Friday.
Oil-rich onshore basins require more work than do natural-gas fields, but at lower pressures and with less horsepower. That dynamic is "going to contribute to oversupply of horsepower," Kibsgaard said during a conference call to discuss the company's earnings. This, he said, will add "considerable uncertainty" to the outlook for pressure-pumping prices.
"The fact that it's coming down" in the second quarter "is a given," Kibsgaard said, about pressure-pumping prices.
The effect of the drop of margins is being offset by higher margins in the U.S. Gulf of Mexico, which have returned to pre-drilling-moratorium levels, Kibsgaard said.
In Argentina, where the government has moved to seize YPF S.A. (YPF, YPFD.BA), Schlumberger hasn't seen any effect on its operations, although there is "short-term uncertainty," Kibsgaard said. "We are still positive in the medium [and] long term in Argentina," he said. "There's going to be a strong need for our expertise."
Schlumberger's first-quarter earnings rose 38% as the shift of rigs and services to liquids-rich basins continued to drive revenue growth.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;angel.gonzalez@dowjones.com
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(END) Dow Jones Newswires
April 20, 2012 10:35 ET (14:35 GMT)
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