Oil and natural gas services giant Schlumberger ( SLB) is feeling the ripples of the drop in commodity prices since last year, as service price cuts, dropping drilling demand and slowed production activities marred its second-quarter results.

On Friday, Houston-based Schlumberger reported net income at $613 million, or 51 cents a share. The results represent a drop of 57% from a year-earlier quarter, when the company reported net income of $1.42 billion, or $1.16 a share. Excluding certain items related to job cuts would have brought income from continuing operations to 68 cents per share.

Still, analysts surveyed by Thomson Reuters anticipated earnings to come to 63 cents per share.

Revenues slid to $5.53 billion in the quarter from $6.75 billion in the year-ago period, led largely by declines in the North American sector.

"North American gas drilling in both the U.S. and Canada reached a five-year low as demand remained weak and storage remained at levels way above seasonal averages," CEO Andrew Gould said in a press release. "Whilst production has begun to show some decline and summer demand has been strong, it will still require a further substantial increase in demand to stimulate and sustain higher levels of drilling. We do not anticipate this will happen before 2010."

In the press release, Gould forecasted some stability in 2009, but North American natural gas rig count wouldn't increase much, keeping service pricing down. He also said that pricing concessions made during the first half of the year in overseas markets would probably hit revenues during the latter half of the year.

"The current volatility in the oil price makes it unlikely that our customers will sanction any major increases in expenditures," Gould said of 2009.
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