The North American onshore rig count may recover somewhat in 2013, but it likely will be lower than last year, Schlumberger Ltd. CEO Paal Kibsgaard said Friday.

In a conference call to discuss quarterly earnings, Kibsgaard said continued growth in Gulf of Mexico (GOM) operations helped to overcome a fall-off in natural gas and liquids production.

Schlumberger expects 100-150 rigs to be added to North America’s onshore through March, but they won’t be enough to boost the overall rig count above the 2012 average. However, the number of wells drilled should be “slightly up” from 2012, said the CEO.

In the United States in particular, “we do not see a significant recovery in dry gas-related drilling activity…We still face an oversupply of horsepower and that has created pricing pressure in many of the U.S. land operations.”

There has been “growth in key markets,” but “it’s been a difficult year in some areas. The margin points are up in the Gulf of Mexico…but lower than expected in Canada.” The operator also had an 8% sequential drop in U.S. land in 4Q2012 from 3Q2012, which impacted margins.

“With a drop in liquids activity, we also saw clear signs of a drop in drilling” in the United States, said the CEO. “We still see continuing weakness in North American land margins, but they are more than offset by drilling in the Gulf of Mexico, which has reached pre-Macondo levels as expected…

“Overall, strong operations…in the Gulf of Mexico are becoming increasingly accretive to North American margins.”

In North America Schlumberger sees “continued market uncertainty going forward,” said the CEO. “U.S. gas production is still strong and we don’t see a significant recovery in dry gas recovery in the coming year…There also is major uncertainty in land in pricing” for services. “The evolution is not clear. It’s a function of how quickly the rig count climbs back up. North America land will continue to be margin-challenged in the next two quarters.”

Driven by the drop in U.S. and Canadian onshore activity, Schlumberger is reducing its worldwide capital expenditures overall. The North American market for pressure pumping, i.e., hydraulic fracturing, services remains oversupplied and the company is “not ready to predict” when margins would return for all of the oilfield services sector.

Within its international operations, Schlumberger’s business for its unconventional gas drilling offerings is growing, said Kibsgaard. China has opened its onshore market to foreign services operators that previously were confined to the offshore, he noted.

Schlumberger earned $1.36 billion ($1.02/share) in 4Q2012, down from year-ago profits of $1.41 billion ($1.05). Revenue increased 8.5% to $11.17 billion.

Barclays Capital analyst James West said in a note Friday the operator had performed well in a “challenging” North American market. “The issues that negatively impacted…results were primarily transitory, and the outlook presented for 2013 is bullish in Schlumberger’s key international regions and for the Gulf of Mexico.”

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.