Schlumberger, the world's number one oilfield services provider, reported a smaller-than-expected fall in first-quarter margins as it continued to execute tight cost controls to combat a decline in drilling activity.

"Market pricing for certain products and services (in North America) has already reached unsustainable levels," chief executive Paal Kibsgaard said on a conference call with analysts yesterday.

"However, we are being selective in the pursuit of market share and very disciplined in the avoidance of loss-making contracts."

Resilience in its international business, which accounts for more than two-thirds of Schlumberger's total revenue, helped drive profit.

"I think the overall resilience in our well-balanced international business is underestimated," Kibsgaard said.

Schlumberger's cost of revenue fell seven per cent in the quarter ended March 31.

Operating margins shrunk to 17.6 per cent from 19.3 per cent a year earlier, but were higher than the estimates of some analysts.

Analysts, who had predicted margins of 14.5 per cent, said the company had "exceeded our expectations in its ability to swiftly reduce its cost structure to correspond to industry realities."

"Schlumberger was likely the most proactive company in the group preparing for the downturn, swiftly adjusting to changing market conditions," they said.