HOUSTON-Monday 22 October 2018 [ AETOS Wire ]
(BUSINESS WIRE) -- Schlumberger Limited (NYSE: SLB) today reported results for the third quarter of 2018.
(Stated in millions, except per share amounts)
Three Months Ended Change
Sept. 30, 2018 Jun. 30, 2018 Sept. 30, 2017 Sequential Year-on-year
Revenue $8,504 $8,303 $7,905 2% 8%
Pretax operating income $1,152 $1,094 $1,059 5% 9%
Pretax operating margin 13.5% 13.2% 13.4% 36 bps 15 bps
Net income - GAAP basis $644 $430 $545 50% 18%
Net income, excluding charges & credits*$644 $594 $581 8% 11%
Diluted EPS - GAAP basis $0.46 $0.31 $0.39 48% 18%
Diluted EPS, excluding charges & credits*$0.46 $0.43 $0.42 7% 10%
North America revenue $3,189 $3,139 $2,602 2% 23%
International revenue $5,215 $5,065 $5,147 3% 1%
North America revenue, excluding Cameron$2,572 $2,546 $2,086 1% 23%
International revenue, excluding Cameron $4,559 $4,387 $4,430 4% 3%
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details.
Schlumberger Chairman and CEO Paal Kibsgaard commented, “Our third-quarter revenue of $8.5 billion grew 2% sequentially, driven by the International Areas where the broad-based activity recovery continued and where sequential revenue growth outpaced that of North America for the first time since the second quarter of 2014. In North America, sequential growth remained positive but slowed from the rates of previous quarters as takeaway constraints in the Permian impacted hydraulic fracturing activity.
“In North America, third-quarter revenue of $2.6 billion, excluding Cameron, increased 1% sequentially driven by Artificial Lift and Drilling as we continued to gain market share on the back of our leading technology portfolio. Service revenue from our OneStimSM hydraulic fracturing business was increasingly impacted by softening activity and pricing over the course of the quarter. This was offset, however, by robust performance from our vertically integrated sand business, which in addition to serving OneStim now also competes in the third-party market. Offshore North America, drilling activity was impacted by scheduled platform maintenance and planned workover operations, the combination of which led to a less favorable activity mix for Schlumberger.
“In the International Areas, third-quarter revenue of $4.6 billion, excluding Cameron, grew 4% sequentially as we continued to see solid growth in all operating regions. Sequential performance, excluding Cameron, was driven by 7% growth in Latin America and 3% growth in the Middle East & Asia due to higher activity for both national oil companies and independents throughout both Areas. This resulted from the continued ramp-up of our lump-sum turnkey (LSTK) projects in Saudi Arabia and strong Integrated Drilling Services (IDS) activity in Iraq, India, and Mexico. However, this performance was partly offset by lower hydraulic fracturing activity as we completed and demobilized a major contract in the Middle East. In Europe, CIS, and Africa, our sequential growth was a solid 4% as strong activity in Russia and Sub-Saharan Africa more than offset the impact of labor disputes and scheduled summer maintenance in the North Sea.
“Turning to our technologies, our performance was led by Drilling with 9% sequential growth as we successfully mobilized an additional 19 drilling rigs for our integrated drilling projects where activity was strong, particularly in Russia, Mexico, Saudi Arabia, Iraq, and India. This supported solid sequential growth for our IDS, Drilling & Measurements, and M-I SWACO product lines. Reservoir Characterization grew 2% sequentially, driven by strong activity for our Wireline and Testing Services product lines in the international markets. Revenue from Production was largely unchanged from the previous quarter due to the softening hydraulic fracturing activity in North America land. Cameron revenue was flat sequentially as increased sales in Surface Systems and Drilling Systems were offset by lower revenue from our OneSubseaTM and Valves & Measurement product lines.
“Looking at pricing and contracts, we continued to see improvements in terms and conditions and basic rates for selected contracts in the international markets. However, this has yet to make a significant impact on our results. Still, we expect to fully deploy our remaining excess international equipment capacity by the end of the year. As a result, we anticipate pricing discussions to accelerate in the coming quarters as the certainty of products and services supply will become more important for our customers.
“From a macro perspective, the oil market continued to tighten in the third quarter as seen by a further draw in global oil inventories and a significant increase in oil prices despite continued strong production from the US and increasing output from key OPEC countries. Global spare capacity is now less than 2%. The tightening supply and demand balance is driven by accelerating decline rates in the international production base and is further exacerbated by the ongoing reduction in Venezuelan and Iranian exports. Geopolitical events and their impact on supply are also becoming an increasing oil market consideration as the challenging security situation in several key countries could affect activity and production going forward. And while the current Permian takeaway constraints in North America should be addressed within the next 12 to 18 months, a series of reservoir- and production-related challenges is emerging in the US shale basins that could dampen the most optimistic production growth projections.
“With the outlook for global economic growth and oil demand remaining solid, we continue to see a need for a multiyear increase in international E&P investment, which is very good news for Schlumberger. Through the work we have done over the past four years to expand our external offering and modernize our internal execution platform, we are very well positioned to outgrow the market in the coming upcycle and to generate superior operating margins and cash returns for the benefit of our shareholders.”
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of $64.98 per share, for a total purchase price of $100 million.
On August 22, 2018, Schlumberger and Shearwater GeoServices Holding AS announced that they have entered into a definitive agreement for Shearwater to acquire the marine seismic acquisition assets and operations of WesternGeco, the geophysical services product line of Schlumberger. The transaction is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2018.
On October 18, 2018, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.50 per share of outstanding common stock, payable on January 11, 2019 to stockholders of record on December 5, 2018.
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Schlumberger is the world's leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. Working in more than 85 countries and employing approximately 100,000 people who represent over 140 nationalities, Schlumberger supplies the industry's most comprehensive range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance.
Schlumberger Limited has principal offices in Paris, Houston, London, and The Hague, and reported revenues of $30.44 billion in 2017. For more information, visit www.slb.com.
*Mark of Schlumberger or Schlumberger companies.
†Japan Oil, Gas and Metals National Corporation (JOGMEC), formerly Japan National Oil Corporation (JNOC), and Schlumberger collaborated on a research project to develop logging while drilling (LWD) technology that reduces the need for traditional chemical sources. Designed around the pulsed neutron generator (PNG), EcoScope service uses technology that resulted from this collaboration. The PNG and the comprehensive suite of measurements in a single collar are key components of the EcoScope service that deliver game-changing LWD technology.
‡Mark of ExxonMobil Corporation.; technology licensed exclusively to Schlumberger.
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on Friday, October 19, 2018. The call is scheduled to begin at 8:30 a.m. US Eastern Time. To access the call, which is open to the public, please contact the conference call operator at +1 (800) 288-8967 within North America, or +1 (612) 333-4911 outside North America, approximately 10 minutes prior to the call’s scheduled start time. Ask for the “Schlumberger Earnings Conference Call.” At the conclusion of the conference call, an audio replay will be available until November 19, 2018 by dialing +1 (800) 475-6701 within North America, or +1 (320) 365-3844 outside North America, and providing the access code 453092. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same web site until November 30, 2018.
This third-quarter 2018 earnings release, as well as other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; the effects of U.S. tax reform; our effective tax rate; Schlumberger’s SPM projects, joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; foreign currency risk; pricing pressure; weather and seasonal factors; operational modifications, delays or cancellations; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; and other risks and uncertainties detailed in this third-quarter 2018 earnings release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Manager of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
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