Schlumberger CEO Sees Tight Oil, Gas Supply Continuing
DOW JONES NEWSWIRES
July 22, 2005 6:07 p.m.
HOUSTON -- In a bullish appraisal of commodity prices, Schlumberger Ltd. (SLB) Chief Executive Andrew Gould Friday faulted the market for giving too much weight to falling Chinese oil demand and not enough to the weakness of non-OPEC oil supply.
Gould, responding to a question on a conference call with analysts, said the demand drop in China is of comparatively little concern next to the wanting performance of non-OPEC supply, which lags the among projected by the International Energy Agency, the energy watchdog for the U.S. and other industrialized countries.
"No one seems to have focused on the supplier and what is really interesting is if you look at the supply numbers for the first half-year, the non-OPEC supply is about 1.2 million barrels a day below what the IEA currently has in their forecasts," Gould said.
"I do not think there is a significant elasticity being developed in supply-demand for it to significantly affect the price," Gould said.
Gould's comments came as Schlumberger bested earnings estimates for the second quarter, with $473 million in profits on $3.4 billion in revenue, or 78 cents per share, compared with $356 million in the equivalent quarter of 2004. Schlumberger shares soared Friday to $82.28, up $4.32, or nearly 6%.
Gould described strong business conditions in most regions globally and predicted an increase in large capital projects in the coming years. He said a moderate drop in oil prices would not be worrisome.
"I think that we will get really worried if it started dropping towards $30 but I do not think that it dropping from $58 to $40 would make any difference at all," Gould said.
Gould also took exception with market watchers who have seen rising natural gas storage in the U.S. as a bearish indicator.
"Given the productability of gas these days, and the difficulty maintaining production, I am not particularly worried that storage is a bit higher than usual," Gould said. |
