A meaningful recovery in U.S. dry natural gas drilling is “some way out in the future,” Schlumberger Ltd. CEO Paal Kibsgaard said Friday. There’s also little optimism that the oversupplied pressure pumping market will see any relief through 2014.

However, activity in the deepwater Gulf of Mexico is helping to sustain strong earnings for the North American segment, he said during a conference call to discuss 4Q2013 earnings results.

The world’s largest oilfield services company reported net income in 4Q2013 of $1.66 billion ($1.26/share), versus $1.36 billion ($1.02) in the year-ago period. Full-year profits were $45.27 billion, up from $4.1.73 billion in 2012. Revenue for the quarter totaled about $11.9 billion from $11.08 billion a year earlier.

Oilfield services revenue in North America rose to $3.65 billion in 4Q2013 from $3.42 billion. For the year, North America oilfield services revenue increased to $13.89 billion from 2012’s $13.54 billion. North America margins were 19.7%, while international margins expanded by more than 200 basis points to 22.2%.

Although Schlumberger has less exposure to the North American land market than Baker Hughes Inc. and Halliburton Co., which are scheduled to release their quarterly results on Tuesday (Jan. 21), Kibsgaard said it’s apparent that the pressure pumping, i.e., hydraulic fracturing (fracking), market will continue to be oversupplied at least through this year.

Services for unconventional drilling, such as pressure pumping used in hydraulic fracturing, remain as questionable as they have been for the past two years, said the CEO.

“There is continued negative pricing pressure in North America,” Kibsgaard said. “I would say revenue per well is probably more challenged than revenue per rig.”

Land market activity in the United States was “solid,” but the 4Q2013 rig count remained flat sequentially and season activity recovery in Canada was in line with 2012 levels. However, the operator grew its North America business overall by about 3%, or $400 million, “aided by our strong position in the offshore market, particularly in the Gulf of Mexico,” said Kibsgaard.

Operating income jumped 15% in 2013 from a year earlier, while the international segment delivered a 24% increase.

“The main challenge in the North American land market is still pricing. And we saw further pricing pressure in most product lines in the fourth quarter, partly amplified by the renegotiation and rollover of several key contracts…”

Still, there are some optimistic signs for domestic onshore operations. Schlumberger gained market share in the final three months and took the opportunity to add another frack fleet to its operations, which came in addition to four that began working in the third quarter.

Another bright sign is that GOM activity in the deepwater “remained high in the fourth quarter and the offshore rig count is expected to show strong growth also in 2014.”

For Schlumberger, this year will be about capturing more business with new and better technologies, said the CEO. Not only are new chemicals set to be released to increase well productivity, but Kibsgaard indicated that there would be updated hardware as well.

Based on its third-party surveys, Schlumberger expects exploration and production spending overall to increase about 6% this year.

As North American producers this year move toward less exploration and more development, Schlumberger’s operations would be impacted. But not necessarily in a negative way, the CEO explained. Less exploration might impact the geophysical/seismic business, WesternGeco, but it wouldn’t impact well development.

“We have a very broad portfolio, so these shifts, they might have small impacts but overall I’m not overly worried about that going into 2014…In terms of the nature of the growth in exploration, we expect it to be more well-related…We are pretty clear that there’s a flattening of the exploration pricing spend is happening…

“The global operation is going to be more well-related than exploration-related. While that means it’s more challenging for the environment of WesternGeco, it still bodes well for our wireline, well testing and drilling product lines.”

Overall, the global economic outlook continues to be unchanged, but fundamentals continue to improve in the United States, with Europe set for stronger growth, said Kibsgaard. “These positive effects should overcome lower growth in some developing economies and support a continuing rebound in the world economy. Largely as a result, forecasts for oil demand in 2014 have been revised upwards to reach the highest demand growth in several years. Supply is expected to keep pace with demand, with the market, therefore, remaining well balanced.

“Natural gas prices internationally should be supported by demand in Asia and Europe. In the U.S., we see no change in fundamentals, with any meaningful recovery in dry gas drilling activity some way out in the future.”