Oct. 23--Schlumberger CEO Andrew Gould said if crude prices remain at current high levels in coming months, oil and gas companies could boost capital spending next year after slashing budgets this year in response to the global recession.

"Obviously, $80 oil will eventually -- if it stays at $80 -- lead them to increase their budgets," he said during a conference call this morning to discuss the oil field services giant's third quarter financial results.

However, "I don't think they're ready to make that call yet," he said, noting that oil companies are likely crafting 2010 budgets with the assumption oil prices will be slightly below $70-$75 next year.

"Don't forget, it's not the spot price of oil that encourages my customers to change their spending. It's the notion that the price has reached some level of stability," he said.

Oil prices topped $80 a barrel this week for the first time in a year on signs the global economy is improving and as investors continued to seek a hedge against a weak U.S. dollar.

Yet Schlumberger, the world's biggest oil field services company, said fell 48 percent in the third quarter as a downturn in oil and gas activity in North America and other regions continued to weigh on the bottom line.

In the quarter, net income fell to $787 million, or 65 cents a share, from $1.53 billion, or $1.25, in the third quarter a year ago, the company said today in a statement. Revenue slipped 25 percent to $5.43 billion.

Analysts had on average expected Schlumberger to earn 63 cents per share on $5.48 billion in revenue, according to a survey by Thomson One.

Schlumberger, with principal offices in Paris, Houston and The Hague, works on a contract basis with oil and gas companies to provide everything from seismic surveys and drilling fluids to turnkey management of exploration and production projects.

While Gould characterized the recovery in North America as "fragile" and said natural gas markets remain "oversupplied," he cautiously expressed optimism that conditions were improving.

"The worst, provided the economy continues to show signs of recovery, is behind us," he said.

Despite the better-than-expected results, Weeden Co. analyst Geoff Kieburtz said investor reaction would likely be "tepid" given the cautious outlook.

Schlumberger shares were down $1.93 to $66.67 in morning trading on the New York Stock Exchange.

Last week, Halliburton Co., the second-biggest oil field services firm, reported better-than-expected earnings on improving business outside North America, though profits were still down 61 percent.

On Monday, Weatherford International, the fourth-largest services firm, reported an 80 percent drop in third quarter earnings, chiefly on declines in North America.

Houston-based Baker Hughes, the no. 3 oil field services company, is scheduled to report quarterly earnings on Nov. 4.

On Thursday, Schlumberger's board of directors declared a quarterly dividend of $0.21 per share of outstanding common stock.

brett.clanton@chron.com

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