Schlumberger Ltd. (SLB) Chief Executive Andrew Gould said Monday that it may take a year and a half for oilfield service costs to fully adjust to lower energy prices.

Schlumberger, the largest oilfield services company, and its peers are reducing costs that climbed steadily over the last few years as the rise in oil and natural gas prices spurred demand for their services. However, the cost cuts haven't come fast enough for many energy producers that are scrambling to rein in spending as energy commodity prices have plunged since last summer as the recession curbed demand.

Although crude oil has risen over the past few days, the front-month contract on the New York Mercantile Exchange remains more than 60% below its peak last year above $145 a barrel. Natural gas is trading about 70% off its July peak, with a glut of gas from new U.S. production further pressuring the market smarting from poor industrial demand.

"We are equally trying hard to reverse some of the cost increases we have incurred from our suppliers over the same period," Gould told attendees at the Howard Weil Energy Conference in New Orleans. "The whole process of cost and price re-adjustment will take from 12 to 18 months."

Gould's comments come as energy companies are feverishly trying to cut costs. Energy producers like Anadarko Petroleum Corp. (APC), Chesapeake Energy Corp. (CHK) and Devon Energy Corp. (DVN) have pulled back on drilling activity and trimmed production outlooks to cope with the lower prices. Oilfield services companies are cutting jobs, too.

Overall, the U.S. rig count has declined by more than 45% since hitting a peak last fall, according to data from oilfield services company Baker Hughes (BHI).

Earlier this month, Baker Hughes cut 4% of its workforce in its second round of cuts this year. Schlumberger is considering another round of layoffs.

"We have already announced a headcount reduction of 5%, which will largely be completed by the end of the first quarter, and a further reduction of a similar amount is likely over the coming months," Gould said.

Devon Energy has cut its number of rigs from a high last fall of 112 rigs and expects to have 32 rigs running at the end of March.

John Richels, president of Devon, said during a presentation that the Oklahoma City-based oil and gas company is concentrating its efforts on long-term projects and scaling back short-term ones.

"We really see no reason to accelerate natural gas production into a really low price environment," Richels said, noting that the company will fund projects that will begin producing oil and natural gas after 2009.

Richels said if commodity prices continue to deteriorate, Devon could sell assets or enter into joint ventures.

Hans Helmerich, CEO of drilling contractor Helmerich & Payne (HP), said during the conference that the pullback in drilling has been dramatic.

"We have certainly been impacted much more than we expected by the downturn," Helmerich said during a conference speech.

-By Jason Womack, Dow Jones Newswires; 1-713-547-9201; jason.womack@dowjones.com