Earnings reports and commentary from oil service companies indicate that North American activity is still sluggish, although there are indications of stabilization on pricing. There is also strength reported in the international segments of the oil services companies, helping to keep up earnings during the recession.

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Weatherford International
(NYSE:WFT) reported earnings of $41.981 million and $0.06 per share on a GAAP basis, or $69 million in operating income, and $0.10 per share. This was below analyst consensus of $0.16, and the company missed on revenues as well.

If you drill down into the business segments at Weatherford International, the weakness was in North America, which saw revenue drop of 44% year over year. The Latin America segment and the Middle East/North Africa/Asia segment both saw revenue increases, while revenues in Europe/West Africa/FSU fell by 6%.

During the conference call, Andrew Becnel, the CFO of Weatherford International elaborated further on the North American segment, and said that he believed the second quarter was the "trough" quarter for the company this cycle. Bernard Duroc-Danner, the CEO said that the international segment held up well, and that the U.S. market was "weak but stabilizing, leaving the way for an end in pricing and volume erosion."

Halliburton (NYSE:HAL) saw a similar bifurcation of results between its domestic and international segments, with U.S. revenues down 25% sequentially and international flat. David Lesar, the CEO of Halliburton Company, attributed the strength in international to "strengthening commodity prices, deflationary cost environment and stabilizing financial markets" making its customers' projects more economical.

This is an interesting comment because these same three conditions were present in North America, and yet there was no strength in that segment. There was some positive news for North America, however, as Lesar said, "pricing declines, however, appear to be decelerating."

BJ Services (NYSE:BJS) also reported its second-quarter results, and has a surprise net loss of $32.3 million, or ($0.11) per share. Like its two competitors, BJ Services saw a 34% sequential decline in revenue in its U.S./Mexico division, while international decreased only 4%. Business in the Middle East and Asia Pacific was up sequentially as well.

Schlumberger Limited (NYSE:SLB), the largest oil service company, holds its conference call on the morning of July 24, 2009, and they will no doubt make similar comments to those of these three smaller competitors.

Many smaller oil service companies are not diversified internationally. Basic Energy Services (NYSE:BAS) is exclusively domestic and reported a well servicing rig utilization rate of only 37% in May 2009.

More diversified oil service names are protected somewhat from the energy bear market by the international revenue streams that these companies have. This buffer will help get them through the trough of the cycle, and into the recovery. (To learn more, see The Industry Handbook: The Oil Services Industry.)

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Tickers in this Article: BJS, HAL, WFT, SLB, BAS

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