Tesco Cuts Outlook as Falling Oil Prices Slow Drilling

By Chelsey Dulaney 

Tesco Corp. slashed its outlook for its current quarter on Monday, saying the rapid decline in energy prices is hampering demand for its drilling equipment.

Houston-based Tesco, which develops and commercializes drilling technology, said some of its customers have asked to defer shipments of drilling equipment until next year, while others have canceled orders altogether.

The company has also seen tubular activity slow down in North America, while activity in Russia remains weak. The Russian ruble has hit record lows in recent weeks as the price of oil, a critical export, has plunged.

Tesco said it now expects per-share earnings of 10 to 15 cents a share in its fourth quarter, compared with the 32 cents a share analysts polled by Thomson Reuters had been expecting. The guidance excludes eight to 10 cents a share in charges Tesco expects to book related to Russian currency devaluations and executive retirement costs.

Tesco also said it no longer expects its revenue to improve sequentially in the quarter. Analysts had expected Tesco to post $154.2 million in revenue in the December quarter, compared with $141.9 in revenue in its most recently-ended quarter.

Shares of Tesco have fallen about 31.2% this year.

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