Schlumberger Ltd. (NYSE: SLB) reported second quarter 2015 results after markets closed on Thursday. The oil field services firm reported adjusted diluted quarterly earnings per share (EPS) of $0.88 on revenues of $9.01 billion. In the same period a year ago, Schlumberger reported EPS of $1.37 on revenues of $12.05 billion. Second-quarter results compare to the consensus estimates for EPS of $0.79 on revenues of $8.97 billion.

Revenue dropped 25% year-over-year in the second quarter driven by the continuing decline in North American onshore activity and associated pricing pressure.

The company is expecting the largest drop in E&P investment to occur in North America, where 2015 spend is expected to be down by more than 35%. Schlumberger believes the North American Rig count may be bottoming and “that a slow increase in both land drilling and completion activity could occur in the second half of the year.

Internationally, Schlumberger now expects 2015 E&P spending to fall by more than 15%, which will create challenges in terms of both activity, low pricing levels, and tight management of development-related spending.

The company’s CEO said:

Despite the much more challenging market conditions, overall pretax operating margins were maintained at levels well above the previous downturns as we continued to proactively manage costs and resources, carefully navigate the commercial landscape, and further accelerate our transformation program. The success of our efforts can be seen in pretax operating margins of 10.2% in North America and 24.5% internationally while generating $1.5 billion in free cash flow, representing 132% of earnings. … As we enter the second half of the year, our visibility still remains limited. In terms of oil supply, the first signs of flattening North America production have appeared while OPEC marketed supply has been increased once again. Non-NAM, non-OPEC production weakened in the first half of the year driven by falls in Brazil and Mexico, with further softening expected as lower investment levels start to take full effect. The latest supply data together with a strong outlook for global oil demand point to a tightening of the global supply-demand balance even with additional supply from Iran.

Schlumberger announced a layoff of 11,000 workers in the first quarter, and recorded a pre-tax charge of $390 million in the first quarter associated with the reduction and an incentivized leave of absence program. The company cut its cost of revenue by nearly $2 billion in the second quarter and by nearly $3 billion in the first half of 2015. That’s where the profits are coming from.

Schlumberger continues to expect capex in 2015 to total about $2.5 billion.

The company did not provide guidance in its press release, saying it would provide information in a conference call Friday morning. The consensus estimates for the third quarter call for EPS of $0.77 on revenues of $8.94 billion. For the full year, EPS is pegged at $3.45 on revenues of $37.48 billion.

Shares traded up about 1.8% in after-hours trading at $85.35 after closing at $83.89. The stock’s 52-week range is $75.60 to $115.65. Thomson Reuters had a consensus analyst price target of $101.06 before today’s results were announced.

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