Worst may be over for oil market, Schlumberger says

HOUSTON, July 17 (UPI) -- Oil services company Schlumberger said it would be spending less on exploration and production in North America, but the sector may be recovering.

Lower crude oil prices means energy companies are forced to cut spending on exploration and production to endure. Weatherford, the No. 4 oil field services company in the world, in April followed its peers Halliburton, Baker Hughes and Schlumberger in trimming its payroll during a weak crude oil market.

Schlumberger Chairman and Chief Executive Officer Paal Kibsgaard said second quarter revenues dropped 12 percent because of what he described as a "dramatic" decline in North American exploration and production.

"Exploration and production investment in North America is now expected to fall by more than 35 percent in 2015, driven by lower land activity and increased pricing pressure," he said in a statement.

The latest monthly survey from oil services company Baker Hughes finds exploration and production activity increased only in the Middle East and Africa.

The upstream sector is nevertheless stabilizing, and short-term production levels are on the rise. The U.S. Energy Information Administration in a report said the 9.6 million barrels per day in production from U.S. basins for the week ending July 3 was 13.3 percent higher year-on-year.

"We believe that the North American rig count may now be touching the bottom, and that a slow increase in both land drilling and completion activity could occur in the second half of the year," Kibsgaard said.

The American Petroleum Institute this week said exploration and production, as well as demand for petroleum products, was recovering despite the duration of the slump in crude oil prices. Second quarter crude oil production was 12.9 percent higher year-on-year, the industry group reported.

Schlumberger reported second quarter profits at $1.12 billion, down about 7.4 percent year-on-year. Second quarter revenue in North America alone dropped 39 percent, with a 19 percent decline reported elsewhere.

Kibsgaard said that, despite a challenging market, the company was performing better than it had during previous downturns.