Schlumberger Ltd. (NYSE: SLB) has found itself unable to ignore and escape the trends of that have hurt the oil services industry. After all, $50 or so per barrel oil leaves many fewer projects and a lot less financial wiggle room in them. A new report from Credit Suisse calls Schlumberger as still the best in class of the oil and gas services providers.

Still, the current climate also forced Credit Suisse to lower the company’s earnings expectations for the second quarter and for all of 2015 and 2016.

Credit Suisse noted that it is time to be out with the old estimates and to reassess earnings expectations:

Our second quarter estimates from April are stale, with the US rig count down 35%, more than expected, and with 6 companies preannouncing, it is no surprise our NAM estimates were high. Gulf of Mexico continues to be a much better market than onshore US, but is likely to see some margin decline on mix of higher workovers and completions in a flat activity market. As a result, we would expect NAM margins to decline by 300 to 400 basis points sequentially.

The international picture was said to be mixed. Credit Suisse sees that price concessions have been given, but at a rate that saved money for the customers rather than via flat price reductions. They noted:

The Middle East is the best market, as expected, with some pricing concessions given. Mexico and Brazil are proving to be worse than had been expected, with Brazil’s corruption scandal slowing all activity and non-uniform capital spending reductions in Mexico hitting some projects harder in which Schlumberger is involved.

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Challenges are coming from Western Africa and the North Sea — specifically, a lack of exploration success in Africa and a dramatic slowdown and layoff effort in the North Sea. Credit Suisse said:

There will be no Arctic drilling in Russia this year due to sanctions, negatively affecting annual comparables, but overall activity in Russia is flat. The Schlumberger acquisition of Eurasia Drilling is pending, with Russian concerns about operating in a sanctioned environment slowing the process.

Credit Suisse cut its second-quarter 2015 estimate to $0.78 per share from $0.87. The firm’s 2015 annual earnings estimate was moved down to $3.50 per share from $3.90, and the 2016 earnings estimate was lowered to $3.51 per share from $3.88. The firm concluded:

We continue with an Outperform rating. While we realize the stock is not cheap and our target price is limited, Schlumberger is one of the two companies best able to not only weather the cyclical storm but also to change how the industry works and benefit from those changes.

Maybe the good news here is that the shares were not formally downgraded. It was hard to not notice though that the price target of $86 per share was against an $86.67 closing price. Schlumberger shares were down 17 cents at $86.50 in mid-morning trading on Monday.

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