* Q1 revenue rises 5.7 pct to $6.89 bln
* Cost of revenue increases 11.3 pct to $6.08 bln
* Pre-tax operating margin 11 pct vs. 13.8 pct (Adds details, background)
April 21(Reuters) - Schlumberger NV said on Friday a ramp up in drilling activity in North America boosted pricing for its oilfield services, but the cost of reactivating equipment idled during the slump in crude oil prices gutted margins.
Oil stabilizing above $50 per barrel has encouraged oil producers to resume drilling after a more than two-year lull boosting demand for equipment and services provided by Schlumberger and its rivals.
The U.S. rig count rose more than 25 percent in the first three months of the year, according to data from Baker Hughes Inc.
“In the first quarter, the North America land market continued to strengthen in terms of both activity and pricing, leading us to begin accelerating deployment of idle capacity for multiple product lines,” Schlumberger’s Chief Executive Officer Paal Kibsgaard said.
The world’s No.1 oilfield services provider said revenue rose 5.7 percent to $6.89 billion in the quarter ended March 31, but its cost of revenue increased 11.3 percent to $6.08 billion.
The company’s pre-tax operating margin fell to 11 percent in the latest quarter, from 13.8 percent a year earlier.
Revenue from North America increased to $1.87 billion in the first quarter, up 6 percent from the preceding quarter and 27.8 percent from a year earlier.
However, international revenue fell 7 percent to $4.92 billion from the preceding quarter, hurt by “greater-than-expected seasonal decline in activity and sales, particularly in China, Russia land and the North Sea.”
Schlumberger said production constraints imposed on its project in Ecuador also impacted the results.
OPEC production cuts and economic woes are complicating The company’s efforts to collect $1.1 billion from Ecuador’s state-owned Petroamazonas.
Schlumberger has invested $3 billion in Ecuador to-date under contracts signed earlier this decade to expand production at two oilfields, out of a total investment that was to reach $4.9 billion over 20 years.
Net profit attributable to Schlumberger fell to $279 million, or 20 cents per share, in the first quarter, from $501 million, or 40 cents per share, a year earlier. (bit.ly/2ox4Wg5)
Excluding items, Schlumberger earned 25 cents per share in the latest quarter, in-line with analysts’ estimates, according to Thomson Reuters I/B/E/S.
Analysts on average had estimated revenue of $6.96 billion.
Schlumberger is the first major oilfield services provider to report earnings and is closely watched for comments on the industry.
Rivals Halliburton Co and Baker Hughes Inc are set to report results early next week.
Schlumberger’s shares were little changed at $76.15 in premarket trading. Up to Thursday’s close, they had fallen nearly 9 percent this year. (Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila)