Sanctions hard on energy firms

Russia sanctions on oilfield technology including fracking and deep-water drilling may shave 3 cents a share off Schlumberger Ltd.’s third quarter earnings, the company said.

Sanctions by the U.S. and European Union are “placing some restrictions” on people and equipment in Russia, the Houston and Paris-based company said in a statement today. The sanctions are lowering efficiency and raising costs.

The world’s largest oilfield services provider is expected to earn $1.51 a share this quarter excluding some items, based on the average of 28 analysts’ estimates compiled by Bloomberg. The range is $1.45 to $1.55 a share. Oilfield service companies Halliburton, Baker Hughes Inc. and Weatherford International Plc each generate 4% to 5% of their global sales from Russia, while Schlumberger gets 5% to 6%, according to RBC Capital Markets.

The European Union and the U.S. decided late last month to tighten sanctions against Russia over its support of separatists in eastern Ukraine. The new measures target the banking, energy and defense industries, threatening business in Russia for companies from Schlumberger and Halliburton Co. to Siemens AG and Renault SA.

Schlumberger rose 4 cents to $109.25 at 8:15 a.m. in New York. As of yesterday, the shares had risen 21% this year.
 

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Representatives for Halliburton, Weatherford and Baker Hughes Inc., the world’s three largest oil services companies behind Schlumberger, did not return phone and e-mail messages seeking comment.

Schlumberger Chief Executive Officer Paal Kibsgaard saw no impact from Russia sanctions last month.

“In Russia so far this year, activity has been as planned or slightly stronger,” Kibsgaard told analysts and investors on a July 18 conference call.

Russia relies on companies including Exxon Mobil Corp., BP Plc, Halliburton and Schlumberger for the latest technology and expertise it needs to develop an estimated $7.58 trillion in oil (NYMEX:CLQ14) and natural gas (NYMEX:RBQ14) resources that sprawl across nine time zones.

Exploration and production companies such as Exxon were expected to spend $51.7 billion in Russia this year, according to estimates from Barclays Capital Inc. -- much of which would go to service and equipment companies such as Schlumberger and Halliburton.

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