Schlumberger (NYSE:SLB) will release its quarterly report on Friday, and the stock has climbed to its best level in more than two years as investors anticipate positive results. So far, Schlumberger has been able to outpace oil-services rival Halliburton (NYSE:HAL) and smaller competitor Weatherford International (NYSE:WFT). But the bigger question facing Schlumberger is whether changing dynamics in the oil and gas industry will support future earnings growth at the pace that shareholders have come to expect.

The growth in the oil and gas industry has been truly phenomenal, and there's been more than enough opportunities for Schlumberger, Halliburton, and Weatherford International all to reap their share of business. But as the giant in the industry, Schlumberger has used its worldwide scope to capture opportunities wherever they arise, choosing to be available across the globe rather than focusing too closely on particular hotspots in energy. Let's take an early look at what's been happening with Schlumberger over the past quarter and what we're likely to see in its report.

Stats on Schlumberger

Analyst EPS Estimate

$1.24

Change From Year-Ago EPS

14.8%

Revenue Estimate

$11.58 billion

Change From Year-Ago Revenue

9.2%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

How high can Schlumberger earnings gush this quarter?
Analysts have gotten even more enthusiastic about the prospects for Schlumberger earnings in recent months, boosting their third-quarter estimates by $0.03 per share and their full year 2013 and 2014 projections by about 2.5% each. The stock has responded favorably, rising more than 20% since mid-July.

A good part of Schlumberger's gains came early in the quarter, with the company reporting favorable second-quarter results. Revenue rose 8%, and even though its massive 50% jump in net income was due largely to a onetime item, earnings still beat expectations. The company saw much better margins in Asia and the Middle East, with Saudi Arabia and Iraq joining China and Australia in helping to drive profits. By contrast, North American results were less impressive, validating Schlumberger's geographical advantage over Halliburton, Weatherford International, and many other competing firms that focus more exclusively on U.S. domestic production services.

That onetime item involved the formation of Schlumberger's new OneSubsea joint venture with Cameron International (NYSE:CAM), which generated a gain of more than $1 billion upon its formal creation on June 30. With the dramatic rise in undersea drilling activity, the joint venture will combine Cameron's expertise in subsea operations with Schlumberger's related services businesses, including flow assurance, surveillance, and power and controls. Schlumberger will only take a 40% stake, but the partnership should help it unlock even more opportunities and keep pace with Halliburton's deepwater business.

But Schlumberger recently found itself the target of a lawsuit alleging that it colluded with Halliburton and Baker Hughes (NYSE:BHI) to raise prices for hydraulic-fracturing services to ward off other competitors. The class action lawsuit was filed on behalf of customers of the three companies between May 2011 and July 2013. At this point, the suit is only in its beginning stages, and it's unclear whether the potential liability is enough to raise major concerns for investors. Still, the suit shows the potential legal and regulatory dangers from fracking, which has attracted controversy on many fronts.

In the Schlumberger earnings report, watch closely to see where in the world the oil-services giant is reaping the bulk of its rewards. If it can use its geographical diversity to its advantage, Schlumberger should be able to maintain its advantage over Weatherford and Halliburton.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Halliburton. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.