Some still see brisk business for the oil services

Save for a severe global recession, industry experts also foresee brisk spending on exploration and production--which means big business for major service companies like Schlumberger Ltd., Halliburton Co. and Weatherford International Ltd.

During an investor conference in Houston on Tuesday, Schlumberger Chairman and Chief Executive Andrew Gould acknowledged it was impossible to predict how the ongoing financial crisis will affect energy demand, but he still sees robust business in the search for new supplies of hydrocarbons.

Oil companies hire service providers for a variety of well-site jobs that can include seismic tests, directional drilling and reservoir management.

"Even in such a reduced demand-growth scenario, the supply problem remains essentially the same, and a much deeper drop in demand will be necessary to materially impact exploration and production activity," Gould said.

The optimistic outlook has been given some support by a rash of new exploration in places like Greenland, North Africa and southeast Asia and a large number of offshore rig orders--many designed for intricate, deepwater drilling.

"The cost to bring in Schlumberger or Halliburton and run the gauntlet of their services doesn't cost a whole lot relative to the base cost of drilling this well to begin with," said David Purcell, an analyst at Tudor Pickering Holt & Co. Securities. "It's prudent for the operator to bring in the best technology they can."

As long as the price for a barrel of oil remains in the $80 range, oilfield service companies will have plenty of opportunities to thrive.

"Schlumberger doesn't need $150 (a barrel) oil for their business to be fantastic," he said. "In fact, they'd probably rather have oil stable at $100 than bouncing around like it's done."

Halliburton, Schlumberger and other oilfield services companies have posted hefty profits in recent quarters as customers scrambled to take advantage of high commodity prices. In the past week, however, some analysts have said falling natural gas prices could reduce drilling activity and, in turn, crimp earnings for some services companies.