Schlumberger Ltd’s profit nearly halved in the first quarter, but the fall was slightly less than analysts estimated, as cost cuts helped cushion the impact of the continued decline in drilling and completion activity.

The world’s No.1 oilfield services provider said its costs to do business in North America exceeded the revenue it earned there in the quarter, the first time it had negative margins in the region since oil prices started falling in mid-2014.

“North America was the biggest surprise to the downside, with negative margins, which did not occur during 2008-2009 oil drop,” Edward Jones analyst Rob Desai said.

The slump in global drilling activity reached unprecedented levels in the latest quarter and is expected to continue deteriorating, Schlumberger Chief Executive Paal Kibsgaard said in a statement on Thursday.

“Our overall outlook for the oil markets remains unchanged, with the tightening of the supply-demand balance expected to continue during the rest of the year,” Kibsgaard said.

Schlumberger, whose shares were off 0.96 percent in trading after the bell, kicks off the earnings season for oilfield services providers and its comments are closely watched for trends in the oil industry.

Like its peers, Schlumberger has cuts costs and headcount and juggled resources to try and bolster margins, moves that have helped its profit top Wall Street’s expectations every quarter for nearly five years now, or since Kibsgaard became CEO.

The company on Thursday lowered its 2016 capital spending budget to $2 billion from $2.4 billion, and hinted at further cost cuts. Its employee count has fallen to about 93,000, down 2,000 from December and 36,000 from its peak in November 2014.

Schlumberger said pretax operating margin was negative 0.7 percent in North America, meaning the cost of goods sold and operating expenses exceeded the revenue it earned in the region. Pretax operating margin 12.9 percent in the year-ago quarter.

Total net profit attributable to Schlumberger nearly halved to $501 million, or 40 cents per share, in the quarter ended March 31.

Revenue fell 36 percent to $6.52 billion. Revenue slumped 55 percent in North American and 28 percent internationally.

Analysts on average were expecting earnings of 39 cents per share and revenue of $6.51 billion, according to Thomson Reuters I/B/E/S.

Total pretax operating margin fell to 13.8 percent from 19.4 percent.