The world’s two largest oilfield service providers shrugged off a yearlong crude market crash with better-than-expected quarterly results in North America, helped by aggressive cost cuts from downsizing.

Halliburton Co., the second-largest provider of services such as drilling and completion work to oil producers, earned 44 cents a share in the second quarter, excluding certain items, beating the 29-cent average estimate of analysts, according to a statement Monday. Schlumberger Ltd., the world’s No. 1, beat the 79-cent average estimate with results reported July 17.

Schlumberger, which has cut about 20,000 workers globally during the downturn, announced last week an end to its layoffs. Halliburton added more layoffs in the second quarter, bringing its total reduction to nearly 14,000 since peak headcount last year, Emily Mir, a company spokeswoman, said in an e-mail.

“They both beat on controlling costs,” said Rob Desai, an analyst at Edward Jones in St. Louis, who rates both companies a buy and does not own shares in either. “They’re one of the first to really have the workforce reductions.”

Halliburton, which generates nearly half of its sales in the U.S. and Canada, saw its operating profit margin in North America tumble to 4.9 percent, while Schlumberger’s fell to 10 percent. Both were higher than analysts expected in a region that has been hit the worst compared to international markets.

North American customer spending is expected to fall by more than 35 percent this year, while international customers will cut more than 15 percent from their budgets, Schlumberger Chief Executive Officer Paal Kibsgaard said July 17 on a conference call.

Scraping Bottom

Halliburton executives told analysts and investors on a Monday conference call that the North American onshore market is scraping along the bottom and may not see a meaningful increase in activity until next year.

“This is a damn tough market, one of the toughest ones that I ever been through,” Halliburton Chief Executive Officer Dave Lesar, a 62-year-old accountant who’s run the world’s largest fracking service provider since 2000, said on the call. “I don’t believe anyone on the call can accurately predict when commodity prices will rebound and rig counts will recover in the U.S. or the international markets, and neither can I.”

Source: www.bloomberg.com

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