Smith Posts $15.5-Million Loss for Second Quarter

Smith International Inc., an Irvine-based oil service company in the midst of a bankruptcy reorganization, posted a $15.5-million second-quarter loss, less than half the $39.8-million loss it sustained in the second quarter of 1985.

Second-quarter revenues dropped a staggering 43% to $99.5 million from $174.6 million for the same period a year ago.

For the first six months of 1986, Smith lost $40.3 million, which was 19.6% less than the $50.1 million it lost in the first half of 1985. Revenues for the first six months of the current year were $240.9 million, down 31% from $349.5 million a year ago.

The company’s financial results for the first half of 1986 include a $11.7-million provision for employee layoff and relocation costs, while results for the first half of 1985 included $27.8 million set aside in a legal fund to respond to Hughes Tool’s patent infringement lawsuit against the company.

Herbert Hart, an oil industry analyst with Rowe & Pitman in San Francisco, said there was “no surprise” in the Smith results, which he said reflect the severe drop in the domestic oil rig count in response to lower crude oil prices. “It is just an impossible situation for everybody in the industry,” Hart said.

If the 10-day-old OPEC pact to reduce oil production stays in effect, Hart said, he believes that oil prices may rise enough to improve Smith’s revenues in the last quarter of 1986, but he doesn’t expect the company to move into the black until at least next year. “If the OPEC agreement falls apart, Hart added, Smith might not see profits for “two or three years.”