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Bri-Chem's N. America drilling outlook clouded

Keywords: Tags  Bri-Chem, quarterly earnings, steel, pipe, distribution, Thorsten Schier

NEW YORK — Bri-Chem Corp. says it is hard to predict how the rest of the year will shape up for the North American drilling market, although it does expect a second-quarter decline in Canadian activity due to the snow melt.

"Looking beyond (the second quarter), it is difficult to determine if demand for oilfield activity will increase as economic concerns are still impacting the stability of commodity prices," the company said May 13.

Edmonton, Alberta-based Bri-Chem’s first-quarter net income of Canadian $1.8 million ($1.77 million) fell 36.6 percent from C$2.9 million a year earlier on sales that dropped 5.7 percent to C$49.7 million ($48.9 million).

The company saw some pullback from customers in its steel pipe distribution segment.

The unit "experienced a decrease in demand for seamless pipe in November 2012 and it continues to be negatively affected by reduced demand from steel pipe service suppliers into (the first quarter of) 2013," the company said.

Bri-Chem also expects challenges in its steel pipe making unit, even as it more than doubled its sales year on year.

"The company continues to be challenged by volatile crude oil prices, increasing crude oil price differentials, and distribution and pipeline constraints. These factors are contributing to exploration and production companies deferring or curtailing 2013 capital spending programs, which has deferred demand for large-diameter steel in (the first quarter of) 2013," it said.

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