Schlumberger in the field. Photo credit: Flickr/Nestor Galina 

Despite a rough winter, the North American energy sector warmed up just enough to fuel earnings beats at both Schlumberger (NYSE:SLB) and Baker Hughes (NYSE:BHI) this past quarter. Let's take a closer look to see which company turned in the better quarter.

Drilling down into Schlumberger's first quarter
Schlumberger reported quarterly earnings of $1.21 per share, which beat estimates by a penny. This was actually down by $0.14 from last quarter, though up $0.24 from the first quarter of 2013. Revenue, meanwhile, hit $11.24 billion, which like earnings was lower sequentially but higher year over year. Overall on the quarter Schlumberger generated about $1.6 billion in cash flow from operations, which after $864 million in capital spending resulted in $688 million in free cash flow.

That free cash flow was much higher than the $127 million the company produced in the first quarter of last year. It helped fuel the company's stock buyback plan, which saw Schlumberger repurchase $899 million in stock on the quarter at an average price of $90.31 per share. Given that the stock is now over $100 per share, the company did a good job buying back shares. Furthermore, the company's strong cash flow is enabling it to accelerate its $10 billion stock buyback program: Schlumberger now expects to complete the effort in two and a half years instead of the original five-year target.

Photo credit: Flickr/Katie Haughland.

Schlumberger overcame severe winter weather activity in North America, Russia, and China to deliver these strong results . It also overcame operational difficulties in the Gulf of Mexico and weakness in Latin America. Driving its results was the fact that the company is taking market share thanks to technology while pushing operational excellence and efficiency to improve profits. The company's results were particularly strong in North America, which again was impressive considering the weather.

Drilling down into Baker Hughes' first quarter
Baker Hughes reported a quarterly profit of $0.84 per share, which was well above the $0.78 per share that analysts expected. Earnings were up 29% year over year and 35% sequentially, while revenue of $5.7 billion was up 10% over last year but slightly lower sequentially.

Strong revenue and earnings growth enabled Baker Hughes to repurchase $200 million in stock on the quarter. It now has $1.45 billion left in its repurchase program.

Photo credit: Flickr/Nestor Galina.

Baker Hughes' strength in the quarter was worldwide as both North American and international operations were strong. The company said both segments added $0.09 per share to its earnings. North America delivered strong results across the board, thanks to improved profitability in the U.S., a favorable mix in the Gulf of Mexico, and a seasonal activity increase in Canada. Meanwhile, international activity was strong due to the resumption of activity in Iraq. 

Investor takeaway
Not only did Baker Hughes deliver a bigger earnings beat, but it showed strength in the Gulf of Mexico, an area in which Schlumberger struggled. That makes Baker Hughes the clear winner for the quarter. Baker Hughes looks poised to continue that success, which should enable it to keep outperforming Schlumberger in 2014.