“In North America, revenue was down 5% and operating income was down, driven mainly by pricing pressure in hydraulic fracturing, guar cost inflation, and activity disruptions due to Hurricane Isaac. We are also seeing activity reductions by some of our customers as they continue to moderate activity to operate within their stated 2012 budgets.
“The average U.S. land rig count declined 68 rigs, or approximately 4%, sequentially. Although the oil-directed rig count grew by 44 rigs, or 3%, this was not sufficient to offset the 18% drop in natural gas rigs. While the Canadian rig count increased 84% sequentially coming out of spring break-up, the increase was well below normal, averaging only 325 rigs in the third quarter. Relative to the third quarter of 2011, the U.S. rig count is down 38 rigs, or 2%, and Canada is down a disappointing 116 rigs, or 26%.
“We continue to be confident in the long-term fundamentals of our business, and our growth strategy going forward remains unchanged. We will continue to focus on maintaining our leadership position in North America, strengthening our international margins, and continuing to grow our market share in deepwater, global unconventionals, and underserved international markets,” concluded Lesar.
2012 Third Quarter ResultsCompletion and Production Completion and Production (C&P) revenue in the third quarter of 2012 was $4.3 billion, a decrease of $167 million, or 4%, from the second quarter of 2012. The decrease was driven by pricing pressure and reduced activity in the North America region. C&P operating income in the third quarter of 2012 was $591 million, a decrease of $323 million, or 35%, from the second quarter of 2012. Excluding the impact of the acquisition-related charge, C&P operating income decreased $275 million, or 30%, from the second quarter of 2012. North America C&P operating income, adjusted for the acquisition-related charge, decreased $268 million, or 39%, from the second quarter of 2012, primarily due to pricing pressure and increased costs for production enhancement services. Excluding the acquisition-related charge, Latin America C&P operating income decreased $6 million, or 11%, from the second quarter of 2012, driven by reduced profitability in Argentina and Venezuela. Europe/Africa/CIS C&P operating income decreased $7 million, or 7%, from the second quarter of 2012, as a result of lower activity in the North Sea and Angola. Middle East/Asia C&P operating income increased $6 million, or 8%, compared to the second quarter of 2012. This improvement was primarily attributable to higher production enhancement activity in Australia and completion tools sales in Malaysia.
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