HOUSTON — Schlumberger, the world’s largest oil field services company, said Tuesday that Western sanctions against Russia could affect its operations in the country and hurt its third-quarter profit.
New, stepped-up sanctions against the country are “are placing some restrictions on the engagement of certain people and equipment in our Russian operations, which in the short term will have an impact on operational efficiency and costs in Russia,” the company said in a news release and Securities and Exchange Commission filing Tuesday morning.
New sanctions announced by the the European Union in the past week build on previous measures by the United States, including some specifically targeting the energy sector. They’re aimed at pressuring Russia over its annexation of Crimea and other interventions in Ukraine.
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Schlumberger, with headquarters in Houston, Paris and the Hague, Netherlands, said the impact of the sanctions in the third quarter is “limited,” about 3 cents in earnings per share.
Because the company reported it had 1.3 billion shares outstanding in its last SEC report, the overall impact could amount to roughly $39 million.
“Schlumberger remains confident that we can support our clients in Russia without material disruption, and operations are therefore being adjusted as necessary in response to the U.S. and EU measures, while we continue to work closely with our Russian customers,” the company said.
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Just a few weeks ago, Schlumberger leaders didn’t seem overly concerned about earlier sanctions against Russia.
On a July 18 phone call with analysts, CEO Paal Kibsgaard said sanctions hadn’t affected Schlumberger in Russia at that point, said it was “business as usual for us” in the country. He did acknowledge, however, that the situation could change.
It was the second Houston-based services company to warn that the sanctions could hit the bottom line.
National Oilwell Varco, which had $100 million in sales to Russian customers in the first half of 2014, said in its quarterly SEC filing last week that “some or all such sales may be restricted in the future by these sanctions.”
The company said it has a $140 million investment in Russia overall.
“The severity of delayed or lost future revenue and any possible impairment of our net investment, will depend on the duration of the sanctions and other government actions,” NOV wrote.
The head of a third services giant, Halliburton, voiced similar concerns in a conference call with analysts last month. CEO Dave Lesar said that escalating sanctions in Russia could affect the company’s business in the second half of the year.
Halliburton’s Russia business represents only a “low single-digits” percentage of the company’s total revenue, added Mark McCollum, the company’s executive vice president an chief financial officer.