Oilfield services giant Schlumberger (SLB - Get Report) may issue worse first quarter earnings than the Wall Street research community generally thinks but is still better positioned than its peers for a recovery next year, according to report Monday by RBC Capital Markets.

Analyst Kurt Hallead wrote in the note that he is looking for earnings per share of 35 cents in the first quarter versus the consensus of 40 cents. He said his estimates are below the Street across all geographies for both sales and margins and he expects overall decreasing margins of 23% in the quarter.

The Houston-based company--which is led by chairman and CEO Paal Kibsgaard--is scheduled to report first quarter earnings after the markets close on Thursday and management will hold a conference call discussing them on Friday morning.

Schlumberger has been one of the few service companies still generating positive margins in North America in the fourth quarter, but Hallead expects it to be break-even in the first quarter and head into negative territory in the second and third quarters of this year.

"The question for us is how much the company chooses to reduce its cost structure to help stem margin degradation vs. maintaining its capability to respond quickly to a potential recovery in activity," he said.

As for international, Hallead expects Schlumberger's land activity in the Middle East and Russia to remain relatively stable this year despite the drop in oil prices and anticipates pricing pressure in all regions.

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Hallead said he'll be interested in what management has to say about international pricing trends and the outlook for the rest of the year, including if the company expects the demand and supply lines to converge in the second half. He's also interested in the company's priorities for the use of cash in this environment and an update on its integration of Cameron International, a $14.8 billion acquisition it closed April 1.