Schlumberger said last month that its profit would fall short of Wall Street estimates as the sharp declines in energy prices since July prompted producers to rein in spending on new projects, but the figures still disappointed.

"While a weak quarter had been telegraphed, the mix of earnings was quite negative," James Crandell, analyst with Barclays Capital, said in a note to investors, noting that profits from its WesternGeco arm were especially weak.

Energy analysts have forecast spending by oil and gas producers would drop by one-fifth or more in 2009 as companies move to conserve cash, and Schlumberger echoed that sentiment.

"We expect 2009 activity to weaken across the board with the most significant declines occurring in North American gas drilling, Russian oil production enhancement and in mature offshore basins," Chairman and Chief Executive Andrew Gould said in a statement.

The company reported net profit of $1.15 billion, or 95 cents per share, down from $1.38 billion, or $1.12 per share, although revenue rose nearly 10 percent to $6.87 billion.

Excluding charges and credits, the Houston-based company earned $1.24 billion, or $1.03 per share, slightly below analysts' forecasts for $1.04 per share on revenue of $6.84 billion, according to Reuters Estimates.

Gould said most new oil and gas fields were not economical to develop at current low prices, and it would take time for inflation that has driven up exploration and production costs in recent years to abate.

Still, he said, despite heavy spending by producers to develop new resources in recent years, the supply situation has not improved much and the cuts in investments hitting the industry now would "sow the seeds of strong rebound."

Schlumberger reiterated that it was taking actions to cut its workforce, and said it had written off assets, including payments it was due from a client suffering from liquidity issues. It did not name the client.

Those charges cut fourth-quarter earnings by 8 cents per share.

Its WesternGeco seismic business, which measures prospective oil and gas reservoirs, posted a 68 percent drop in profit to $88 million and 25 percent drop in revenue to $599 million, but saw is backlog of work reach a record $1.77 billion.

The oilfield services business saw its pretax profit rise 4 percent to $1.6 billion in the quarter from a year ago, while revenue climbed 15 percent.

Shares in Schlumberger fell 2.7 percent to $36.25 in premarket trade, its lowest level since mid-2005.

(Reporting by Matt Daily and Braden Reddall; Editing by Steve Orlofsky, Dave Zimmerman)