Schlumberger NV is betting on an uptick in demand for oilfield services in North America, a market that has been battered by a steep drop in oil prices.

The world's No.1 oilfield services company would carry "slightly more" costs in the current quarter to "be ready for growth in activity", CEO Paal Kibsgaard said on a post-earnings call on Friday.

"We believe we are getting close to bottom," he said, but warned he couldn't be a "100 percent certain" of higher activity in the fourth quarter, or even the first quarter of 2016.

Swift cost cuts have helped Schlumberger offset revenue declines caused by a 50 percent fall in global crude prices since June 2014. The cuts helped the company report a better-than-expected second-quarter profit on Thursday.

"(The cost cuts give) them a little room to play the 'wait-and-see' game to see if these North American markets actually can gather some steam," said Tigress Financial Partners analyst Philip Van Deusen.

Schlumberger said it expects a "slow increase" in land drilling and completion activity in North America in the second half of the year, but it does not expect pricing to pick up any time soon.

The company has cut 20,000 jobs, or 15 percent of its workforce this year. Schlumberger said on Friday it did not plan to lay off more people.

"If they didn't think that there would be some recovery, they probably would let some people go," said Griffin Securities analyst Kevin Simpson.

However, analysts warned that higher labor and other costs would eat into third-quarter margins.

"If the rebound doesn't come as expected, that naturally would lead to an eroding of bottom line for SLB," said Raymond James analyst Praveen Narra.

Evercore ISI analyst James West said he expects margins in North America to fall by 22.5 percent in the third quarter, steeper than the 20 percent fall recorded in the second quarter ended June 30.

Job cuts, combined with new technology sales and efficient supply chain management, have helped Schlumberger fare better in the latest oil price downturn than in the 2009 oil shock, analysts said.

Schlumberger's North American margins fell 37 percent in the first half of the year, compared with as much as 72 percent in the first half of 2009. International margins have slipped about 18 percent so far this year, compared with a 73 percent slump in the first half of 2009.

Source: www.reuters.com

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