Schlumberger Announces Second-Quarter 2015 Results
- Revenue of
$9.0 billion decreased 12% sequentially - EPS of
$0.88 declined 17% sequentially, excluding charges and credits - Free cash flow of
$1.5 billion represented 132% of earnings - Sequential decremental operating margin was 23%
- 5.8 million shares repurchased for
$520 million during the quarter
(Stated in millions, except per share amounts) | ||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Sequential | Year-on-year | ||||||||||||||
Revenue | $ | 9,010 | $ | 10,248 | $ | 12,054 | -12 | % | -25 | % | ||||||||
Pretax operating income | 1,708 | 1,993 | 2,621 | -14 | % | -35 | % | |||||||||||
SLB income from continuing operations, excluding charges and credits* | 1,124 | 1,358 | 1,800 | -17 | % | -38 | % | |||||||||||
Diluted EPS from continuing operations, excluding charges and credits* | $ | 0.88 | $ | 1.06 | $ | 1.37 | -17 | % | -36 | % | ||||||||
Pretax operating margin | 19.0 | % | 19.4 | % | 21.7 | % | -49 bps | -278 bps | ||||||||||
North America revenue | $ | 2,361 | $ | 3,222 | $ | 3,888 | -27 | % | -39 | % | ||||||||
North America pretax operating income | 242 | 416 | 700 | -42 | % | -65 | % | |||||||||||
North America pretax operating margin | 10.2 | % | 12.9 | % | 18.0 | % | -268 bps | -777 bps | ||||||||||
International revenue | $ | 6,525 | $ | 6,889 | $ | 8,087 | -5 | % | -19 | % | ||||||||
International pretax operating income | 1,595 | 1,661 | 1,942 | -4 | % | -18 | % | |||||||||||
International pretax operating margin | 24.5 | % | 24.1 | % | 24.0 | % | +35 bps | +44 bps | ||||||||||
*Schlumberger income from continuing operations, including charges and credits, was $975 million in the first quarter of 2015 and $1.8 billion in the second quarter of 2014. Diluted EPS from continuing operations, including charges and credits, was $0.76 in the first quarter of 2015 and $1.37 in the second quarter of 2014. There were no charges or credits recorded during the second quarter of 2015 or the first six months of 2014. See section entitled "Charges & Credits" for details. |
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Schlumberger Chairman and CEO
“Despite the much more challenging market conditions, overall pretax operating margins were maintained at levels well above the previous downturns as we continued to proactively manage costs and resources, carefully navigate the commercial landscape, and further accelerate our transformation program. The success of our efforts can be seen in pretax operating margins of 10.2% in
“In the first half of 2015, year-on-year revenue dropped 26% in
“Among the business segments,
“As we enter the second half of the year, our visibility still remains limited. In terms of oil supply, the first signs of flattening
“E&P investment in
“In the international market, E&P spending is now expected to drop more than 15%. We do not expect any upward adjustment to existing 2015 budgets but see a continuation of first-half trends with low exploration activity, tight management of development-related spend, and continued pricing pressure.
“In this challenging market, we remain focused on the things we can control, which include our cost and resource base, the effective deployment of our technology and expertise, and the quality and integrity of the products and services we provide to our customers. The success of this approach can be seen in our strong international margins despite the drop in revenue and in our ability to maximize our performance in
“We remain very confident in our capacity to continue to weather the current downturn better than our surroundings, and better than in previous downturns. Our global strength, our technology differentiation, and our accelerated corporate transformation are creating a great platform for us to increase revenue market share, deliver lower reductions in earnings per share than our peers, and continue to reduce working capital and capex intensity while generating higher levels of free cash flow.”
Other Events
During the quarter, Schlumberger repurchased 5.8 million shares of its common stock at an average price of
On land, pricing has fallen to unsustainable levels in some basins, leading to pressure pumping equipment being stacked and crews reassigned. In other basins, hydraulic fracturing fleet deployment was maintained in pursuit of market share and new technology opportunities.
In the first half of 2015, year-on-year revenue dropped 26% in
During the second quarter, new Schlumberger technologies helped increase production and operational efficiency in
In
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In
In
In
In the US Gulf of
In
International Areas
Revenue for the International Areas of
Revenue in the
International Area pretax operating margin of 24.5% increased 35 bps sequentially.
For the first half of 2015, year-on-year revenue dropped 14% in the International Areas, which is more severe than the 5% decline in the same period during the 2009 downturn. In spite of this, the decremental margin was 18%, which represents a marked improvement over the 73% posted for the corresponding period in the previous downturn. Pretax operating margin for the first half of 2015 expanded 85 bps compared to the 269 bps fall in margin reported for the same period in 2009. The strength of this performance was a result of proactive cost and resource management, robust sales of new technology, and the acceleration of the transformation program focused on workforce productivity, asset utilization and reduction in unit support costs.
During the quarter, the International Areas saw a number of contract awards and integration-related highlights.
Saudi Aramco awarded Schlumberger a two-year multiservice contract, including stimulation and testing technologies, for unconventional gas projects within the Kingdom. The project involves new unconventional reservoir technologies under trial in the country to optimize stimulation performance.
In the
Schlumberger signed a performance-based contract worth approximately
In
In
In
(Stated in millions, except margin percentages) | ||||||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Sequential | Year-on-year | ||||||||||||||||||
Revenue | $ | 2,425 | $ | 2,552 | $ | 3,231 | -5 | % | -25 | % | ||||||||||||
Pretax operating income | 642 | 655 | 933 | -2 | % | -31 | % | |||||||||||||||
Pretax operating margin | 26.5 | % | 25.6 | % | 28.9 | % | 84 bps | -239 bps | ||||||||||||||
Decremental operating margin | 10 | % | 36 | % | ||||||||||||||||||
Pretax operating margin of 26.5% was 84 bps higher sequentially on 10% decrementals as an unfavorable revenue mix was offset by the contribution of increased higher-margin software license sales.
In addition to contract awards during the quarter, new Reservoir Characterization technologies helped characterize complex reservoirs, optimize well production and reservoir recovery, and improve operational efficiency.
In
Offshore
Offshore
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In
Also in
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In the
Drilling Group
(Stated in millions, except margin percentages) | ||||||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Sequential | Year-on-year | ||||||||||||||||||
Revenue | $ | 3,511 | $ | 3,963 | $ | 4,653 | -11 | % | -25 | % | ||||||||||||
Pretax operating income | 685 | 790 | 981 | -13 | % | -30 | % | |||||||||||||||
Pretax operating margin | 19.5 | % | 19.9 | % | 21.1 | % | -44 bps | -157 bps | ||||||||||||||
Decremental operating margin | 23 | % | 26 | % | ||||||||||||||||||
Drilling Group revenue of
Pretax operating margin of 19.5% declined 44 bps sequentially. Despite the revenue decline, prompt action on cost management helped limit the decremental operating margin to 23%.
In the
Offshore
Offshore
In
In
In
In
(Stated in millions, except margin percentages) | ||||||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Sequential | Year-on-year | ||||||||||||||||||
Revenue | $ | 3,103 | $ | 3,767 | $ | 4,208 | -18 | % | -26 | % | ||||||||||||
Pretax operating income | 397 | 549 | 710 | -28 | % | -44 | % | |||||||||||||||
Pretax operating margin | 12.8 | % | 14.6 | % | 16.9 | % | -179 bps | -406 bps | ||||||||||||||
Decremental operating margin | 23 | % | 28 | % | ||||||||||||||||||
Pretax operating margin of 12.8% declined 179 bps sequentially as lower activity and increasing pricing pressure continued during the quarter with pricing falling to unsustainable levels in some basins leading to pressure pumping equipment being stacked and crews reassigned. In other basins, hydraulic fracturing fleet deployment was maintained. Despite the severe revenue decline, prompt action on cost management and alignment of resources with activity limited the decremental operating margin to 23%.
In
Mangrove* reservoir-centric stimulation design based on the Petrel E&P software platform has now been used by Schlumberger technology integration groups (TIG) to engineer more than 1,000 wells for over 100 customers in 19 countries since initial deployment in 2012. In addition, more than 20 customers across four continents have adopted this unique Schlumberger end-to-end workflow for unconventional plays by acquiring licenses for Mangrove software since sales began in 2014.
In
Offshore
In
Well Intervention also used the ACTive* family of live downhole coiled tubing services offshore
Financial Tables |
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Condensed Consolidated Statement of Income | ||||||||||||||
(Stated in millions, except per share amounts) | ||||||||||||||
Second Quarter | Six Months | |||||||||||||
Periods Ended June 30, | 2015 | 2014 | 2015 | 2014 | ||||||||||
Revenue | $ | 9,010 | $ | 12,054 | $ | 19,258 | $ | 23,294 | ||||||
Interest and other income | 47 | 64 | 96 | 141 | ||||||||||
Expenses | ||||||||||||||
Cost of revenue | 7,136 | 9,269 | 15,231 | 18,017 | ||||||||||
Research & engineering | 279 | 309 | 546 | 593 | ||||||||||
General & administrative | 120 | 123 | 239 | 228 | ||||||||||
Restructuring & other (1) | - | - | 439 | - | ||||||||||
Interest | 86 | 90 | 169 | 193 | ||||||||||
Income before taxes | $ | 1,436 | $ | 2,327 | $ | 2,730 | $ | 4,404 | ||||||
Taxes on income (1) | 302 | 506 | 608 | 975 | ||||||||||
Income from continuing operations | 1,134 | 1,821 | 2,122 | 3,429 | ||||||||||
Loss from discontinued operations | - | (205 | ) | - | (205 | ) | ||||||||
Net income | 1,134 | 1,616 | 2,122 | 3,224 | ||||||||||
Net income attributable to noncontrolling interests | 10 | 21 | 23 | 37 | ||||||||||
Net income attributable to Schlumberger | $ | 1,124 | $ | 1,595 | $ | 2,099 | $ | 3,187 | ||||||
Schlumberger amounts attributable to: | ||||||||||||||
Income from continuing operations (1) | $ | 1,124 | $ | 1,800 | $ | 2,099 | $ | 3,392 | ||||||
Loss from discontinued operations | - | (205 | ) |
- |
(205 | ) | ||||||||
Net Income | $ | 1,124 | $ | 1,595 | $ | 2,099 | $ | 3,187 | ||||||
Diluted earnings per share of Schlumberger | ||||||||||||||
Income from continuing operations (1) | $ | 0.88 | $ | 1.37 | $ | 1.64 | $ | 2.58 | ||||||
Loss from discontinued operations | - | (0.16 | ) | - | (0.16 | ) | ||||||||
Net Income | $ | 0.88 | $ | 1.21 | $ | 1.64 | $ | 2.42 | ||||||
Average shares outstanding | 1,269 | 1,300 | 1,273 | 1,303 | ||||||||||
Average shares outstanding assuming dilution | 1,280 | 1,315 | 1,282 | 1,316 | ||||||||||
Depreciation & amortization included in expenses (2) | $ | 1,047 | $ | 996 | $ | 2,089 | $ | 1,997 |
(1) | See section entitled “Charges & Credits” for details. | |
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. |
Condensed Consolidated Balance Sheet | |||||||
(Stated in millions) | |||||||
Jun. 30, | Dec. 31, | ||||||
Assets | 2015 | 2014 | |||||
Current Assets | |||||||
Cash and short-term investments | $ | 7,274 | $ | 7,501 | |||
Receivables | 9,569 | 11,171 | |||||
Other current assets | 6,018 | 6,022 | |||||
22,861 | 24,694 | ||||||
Fixed income investments, held to maturity | 469 | 442 | |||||
Fixed assets | 14,848 | 15,396 | |||||
Multiclient seismic data | 913 | 793 | |||||
Goodwill | 15,525 | 15,487 | |||||
Other intangible assets | 4,525 | 4,654 | |||||
Other assets | 5,612 | 5,438 | |||||
$ | 64,753 | $ | 66,904 | ||||
Liabilities and Equity | |||||||
Current Liabilities | |||||||
Accounts payable and accrued liabilities | $ | 7,479 | $ | 9,246 | |||
Estimated liability for taxes on income | 1,424 | 1,647 | |||||
Short-term borrowings and current portion of long-term debt |
4,231 | 2,765 | |||||
Dividend payable | 640 | 518 | |||||
13,774 | 14,176 | ||||||
Long-term debt | 9,110 | 10,565 | |||||
Postretirement benefits | 1,348 | 1,501 | |||||
Deferred taxes | 1,333 | 1,296 | |||||
Other liabilities | 1,003 | 1,317 | |||||
26,568 | 28,855 | ||||||
Equity | 38,185 | 38,049 | |||||
$ | 64,753 | $ | 66,904 | ||||
Net Debt
“Net Debt” represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt.
Details of changes in Net Debt follow:
(Stated in millions) | |||||||||||||||||||
Periods Ended June 30, |
Six |
Second |
Six |
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Income from continuing operations before noncontrolling interests | $ | 2,122 | $ | 1,134 | $ | 3,429 | |||||||||||||
Restructuring and other charges, net of tax | 383 | - | - | ||||||||||||||||
Income from continuing operations before noncontrolling interests, excluding charges & credits |
2,505 | 1,134 | 3,429 | ||||||||||||||||
Depreciation and amortization (1) | 2,089 | 1,047 | 1,997 | ||||||||||||||||
Pension and other postretirement benefits expense | 217 | 103 | 190 | ||||||||||||||||
Stock-based compensation expense | 167 | 87 | 162 | ||||||||||||||||
Pension and other postretirement benefits funding | (214 | ) | (94 | ) | (127 | ) | |||||||||||||
Increase in working capital (2) | (837 | ) | (67 | ) | (1,090 | ) | |||||||||||||
Other | 157 | 104 | (342 | ) | |||||||||||||||
Cash flow from operations | 4,084 | 2,314 | 4,219 | ||||||||||||||||
Capital expenditures | (1,193 | ) | (587 | ) | (1,786 | ) | |||||||||||||
SPM investments | (222 | ) | (113 | ) | (377 | ) | |||||||||||||
Multiclient seismic data capitalized | (221 | ) | (120 | ) | (154 | ) | |||||||||||||
Free cash flow (3) | 2,448 | 1,494 | 1,902 | ||||||||||||||||
Stock repurchase program | (1,239 | ) | (520 | ) | (2,074 | ) | |||||||||||||
Dividends paid | (1,151 | ) | (639 | ) | (932 | ) | |||||||||||||
Proceeds from employee stock plans | 256 | 74 | 492 | ||||||||||||||||
314 | 409 | (612 | ) | ||||||||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (206 | ) | (127 | ) | (964 | ) | |||||||||||||
Discontinued operations - settlement with U.S. Department of Justice | (233 | ) | (233 | ) | - | ||||||||||||||
Other | (86 | ) | (160 | ) | (47 | ) | |||||||||||||
Increase in Net Debt | (211 | ) | (111 | ) | (1,623 | ) | |||||||||||||
Net Debt, Beginning of period | (5,387 | ) | (5,487 | ) | (4,443 | ) | |||||||||||||
Net Debt | $ | (5,598 | ) | $ | (5,598 | ) | $ | (6,066 | ) | ||||||||||
Components of Net Debt |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Jun. 30, |
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Cash and short-term investments | $ | 7,274 | $ | 6,803 | $ | 7,501 | $ | 6,699 | |||||||||||
Fixed income investments, held to maturity | 469 | 436 | 442 | 480 | |||||||||||||||
Short-term borrowings and current portion of long-term debt | (4,231 | ) | (3,828 | ) | (2,765 | ) | (1,505 | ) | |||||||||||
Long-term debt | (9,110 | ) | (8,898 | ) | (10,565 | ) | (11,740 | ) | |||||||||||
$ | (5,598 | ) | $ | (5,487 | ) | $ | (5,387 | ) | $ | (6,066 | ) |
(1) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. | |
(2) | Includes severance payments of approximately $455 million during the six months ended June 30, 2015 and $210 million during the second quarter of 2015. | |
(3) | "Free cash flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data capitalized. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value such as making acquisitions, and returning cash to shareholders through stock repurchases and dividends. | |
Charges & Credits
In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this Second-Quarter Press Release also includes non-GAAP financial measures (as defined under the SEC’s Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:
(Stated in millions, except per share amounts) | |||||||||||||||||||||||
First Quarter 2015 | |||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 1,733 | $ | 362 | $ | 13 | $ | 1,358 | $ | 1.06 | |||||||||||||
Workforce reduction | (390 | ) | (56 | ) | - | (334 | ) | (0.26 | ) | ||||||||||||||
Currency devaluation loss in Venezuela | (49 | ) | - | - | (49 | ) | (0.04 | ) | |||||||||||||||
Schlumberger income from continuing operations, as reported | $ | 1,294 | $ | 306 | $ | 13 | $ | 975 | $ | 0.76 | |||||||||||||
Six Months 2015 | |||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
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Schlumberger income from continuing operations, excluding charges & credits | $ | 3,169 | $ | 664 | $ | 23 | $ | 2,482 | $ | 1.94 | |||||||||||||
Workforce reduction | (390 | ) | (56 | ) | - | (334 | ) | (0.26 | ) | ||||||||||||||
Currency devaluation loss in Venezuela | (49 | ) | - | - | (49 | ) | (0.04 | ) | |||||||||||||||
Schlumberger income from continuing operations, as reported | $ | 2,730 | $ | 608 | $ | 23 | $ | 2,099 | $ | 1.64 | |||||||||||||
There were no charges or credits recorded during the second quarter of 2015 or the first six months of 2014. | |||||||||||||||||||||||
Refer to Supplemental Information for further details of these charges. | |||||||||||||||||||||||
Product Groups | |||||||||||||||||||||||||||||
(Stated in millions) | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | |||||||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
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Reservoir Characterization | $ | 2,425 | $ | 642 | $ | 2,552 | $ | 655 | $ | 3,231 | $ | 933 | |||||||||||||||||
Drilling | 3,511 | 685 | 3,963 | 790 | 4,653 | 981 | |||||||||||||||||||||||
Production | 3,103 | 397 | 3,767 | 549 | 4,208 | 710 | |||||||||||||||||||||||
Eliminations & other | (29 | ) | (16 | ) | (34 | ) | (1 | ) | (38 | ) | (3 | ) | |||||||||||||||||
Pretax operating income | 1,708 | 1,993 | 2,621 | ||||||||||||||||||||||||||
Corporate & other | - | (199 | ) | - | (192 | ) | - | (216 | ) | ||||||||||||||||||||
Interest income(1) | - | 6 | - | 8 | - | 8 | |||||||||||||||||||||||
Interest expense(1) | - | (79 | ) | - | (76 | ) | - | (86 | ) | ||||||||||||||||||||
Charges & credits | - | - | - | (439 | ) | - | - | ||||||||||||||||||||||
$ | 9,010 | $ | 1,436 | $ | 10,248 | $ | 1,294 | $ | 12,054 | $ | 2,327 | ||||||||||||||||||
Geographic Areas | |||||||||||||||||||||||||||||
(Stated in millions) | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | |||||||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
||||||||||||||||||||||||
North America | $ | 2,361 | $ | 242 | $ | 3,222 | $ | 416 | $ | 3,888 | $ | 700 | |||||||||||||||||
Latin America | 1,537 | 343 | 1,648 | 354 | 1,852 | 393 | |||||||||||||||||||||||
Europe/CIS/Africa | 2,413 | 513 | 2,538 | 532 | 3,268 | 723 | |||||||||||||||||||||||
Middle East & Asia | 2,575 | 740 | 2,703 | 774 | 2,966 | 826 | |||||||||||||||||||||||
Eliminations & other | 124 | (130 | ) | 137 | (83 | ) | 80 | (21 | ) | ||||||||||||||||||||
Pretax operating income | 1,708 | 1,993 | 2,621 | ||||||||||||||||||||||||||
Corporate & other | - | (199 | ) | - | (192 | ) | - | (216 | ) | ||||||||||||||||||||
Interest income(1) | - | 6 | - | 8 | - | 8 | |||||||||||||||||||||||
Interest expense(1) | - | (79 | ) | - | (76 | ) | - | (86 | ) | ||||||||||||||||||||
Charges & credits | - | - | - | (439 | ) | - | - | ||||||||||||||||||||||
$ | 9,010 | $ | 1,436 | $ | 10,248 | $ | 1,294 | $ | 12,054 | $ | 2,327 |
(1) | Excludes interest included in the Product Groups and Geographic Areas results. |
Product Groups | |||||||||||||||||||
(Stated in millions) | |||||||||||||||||||
Six Months Ended | |||||||||||||||||||
Jun. 30, 2015 | Jun. 30, 2014 | ||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
||||||||||||||||
Reservoir Characterization | $ | 4,977 | $ | 1,297 | $ | 6,214 | $ | 1,726 | |||||||||||
Drilling | 7,474 | 1,475 | 8,984 | 1,862 | |||||||||||||||
Production | 6,870 | 946 | 8,193 | 1,433 | |||||||||||||||
Eliminations & other | (63 | ) | (17 | ) | (97 | ) | (32 | ) | |||||||||||
Pretax operating income | 3,701 | 4,989 | |||||||||||||||||
Corporate & other | - | (390 | ) | - | (417 | ) | |||||||||||||
Interest income(1) | - | 14 | - | 15 | |||||||||||||||
Interest expense(1) | - | (156 | ) | - | (183 | ) | |||||||||||||
Charges & credits | - | (439 | ) | - | - | ||||||||||||||
$ | 19,258 | $ | 2,730 | $ | 23,294 | $ | 4,404 | ||||||||||||
Geographic Areas | |||||||||||||||||||
(Stated in millions) | |||||||||||||||||||
Six Months Ended | |||||||||||||||||||
Jun. 30, 2015 | Jun. 30, 2014 | ||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
||||||||||||||||
North America | $ | 5,584 | $ | 658 | $ | 7,572 | $ | 1,383 | |||||||||||
Latin America | 3,184 | 697 | 3,610 | 764 | |||||||||||||||
Europe/CIS/Africa | 4,951 | 1,046 | 6,149 | 1,308 | |||||||||||||||
Middle East & Asia | 5,278 | 1,514 | 5,811 | 1,575 | |||||||||||||||
Eliminations & other | 261 | (214 | ) | 152 | (41 | ) | |||||||||||||
Pretax operating income | 3,701 | 4,989 | |||||||||||||||||
Corporate & other | - | (390 | ) | - | (417 | ) | |||||||||||||
Interest income(1) | - | 14 | - | 15 | |||||||||||||||
Interest expense(1) | - | (156 | ) | - | (183 | ) | |||||||||||||
Charges & credits | - | (439 | ) | - | - | ||||||||||||||
$ | 19,258 | $ | 2,730 | $ | 23,294 | $ | 4,404 |
(1) | Excludes interest included in the Product Groups and Geographic Areas results. |
Supplemental Information |
||
1) |
What is the definition of decremental operating margin? |
|
Decremental operating margin is equal to the ratio of the change in pretax operating income over the change in revenue. | ||
2) |
What were the pretax operating income margin and decremental operating margin for the second quarter of 2015? |
|
The pretax operating income margin was 19.0% and the year-over-year decremental operating margin was 30%. The sequential decremental operating margin was 23%. | ||
3) |
What were the pretax operating income margin and decremental operating margin for the first half of 2015? |
|
The pretax operating income margin was 19.2% and the year-over-year decremental operating margin was 32%. | ||
4) |
What was the free cash flow as a percentage of income from continuing operations before noncontrolling interests and charges and credits, for the second quarter of 2015? |
|
Free cash flow, which includes approximately $210 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 132% for the second quarter of 2015. | ||
5) |
What was the free cash flow as a percentage of income from continuing operations before noncontrolling interests and charges and credits, for the first half of 2015? |
|
Free cash flow, which includes approximately $455 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 98% for the first half of 2015. | ||
6) |
What is the capex guidance for the full year 2015? |
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Capex (excluding multiclient and SPM investments) is still expected to be approximately $2.5 billion for 2015. | ||
7) |
What was included in “Interest and other income” for the second quarter of 2015? |
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“Interest and other income” for the second quarter of 2015 was $47 million. This amount consisted of earnings of equity method investments of $35 million and interest income of $12 million. | ||
8) |
How did interest income and interest expense change during the second quarter of 2015? |
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Interest income of $12 million decreased $1 million sequentially. Interest expense of $86 million increased $4 million sequentially. |
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9) |
What is the difference between the “Pretax operating income” and Schlumberger’s consolidated income before taxes? |
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The difference consists of such items as corporate items (including charges and credits) and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets and certain centrally managed initiatives. | ||
10) |
What was the effective tax rate (ETR), excluding charges and credits, for the second quarter of 2015? |
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The ETR for the second quarter of 2015, excluding charges and credits, was 21.1% as compared to 20.9% for the first quarter of 2015, excluding charges and credits. There were no charges and credits recorded during the second quarter of 2015. |
||
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The ETR for the first quarter of 2015, including charges and credits, was 23.6%. |
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11) |
How many shares of common stock were outstanding as of June 30, 2015 and how did this change from the end of the previous quarter? |
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There were 1.265 billion shares of common stock outstanding as of June 30, 2015. The following table shows the change in the number of shares outstanding from March 31, 2015 to June 30, 2015. |
(Stated in millions) | |||||||
Shares outstanding at March 31, 2015 | 1,270 | ||||||
Shares sold to optionees, less shares exchanged | 1 | ||||||
Vesting of restricted stock | - | ||||||
Shares issued under employee stock purchase plan | - | ||||||
Stock repurchase program | (6 | ) | |||||
Shares outstanding at June 30, 2015 | 1,265 |
12) |
What was the weighted average number of shares outstanding during the second quarter of 2015 and first quarter of 2015 and how does this reconcile to the average number of shares outstanding, assuming dilution? |
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The weighted average number of shares outstanding during the second quarter of 2015 and first quarter of 2015 was 1.280 billion and 1.285 billion, respectively. The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution. |
(Stated in millions) | |||||||||
Second Quarter |
First Quarter |
||||||||
Weighted average shares outstanding | 1,269 | 1,276 | |||||||
Assumed exercise of stock options | 7 | 5 | |||||||
Unvested restricted stock | 4 | 4 | |||||||
Average shares outstanding, assuming dilution | 1,280 | 1,285 |
13) |
What were multiclient sales in the second quarter of 2015? |
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Multiclient sales, including transfer fees, were $84 million in the second quarter of 2015 and $53 million in the first quarter of 2015. |
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14) |
What was the WesternGeco backlog at the end of the second quarter of 2015? |
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WesternGeco backlog, which is based on signed contracts with customers, was $514 million at the end of the second quarter of 2015. It was $604 million at the end of the first quarter of 2015. |
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15) |
What do the various charges Schlumberger recorded during the first quarter of 2015 relate to? |
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Workforce reduction: |
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As a result of the severe reduction in activity in North America combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, Schlumberger reduced its headcount by approximately 11,000 employees in the first quarter. Schlumberger recorded a $390 million pretax charge during the first quarter of 2015 as a result of this headcount reduction as well as an incentivized leave of absence program. | ||
Venezuela currency exchange rate charge: |
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Although the financial currency of Schlumberger operations in Venezuela is the US dollar, a portion of the transactions are denominated in local currency. Effective December 31, 2014, Schlumberger began applying the SICAD II exchange rate of 50 Venezuelan Bolivares per US dollar to remeasure local currency transactions and balances into US dollars. During the first quarter of 2015, the Venezuelan government replaced the SICAD II auction process with a new foreign exchange market system known as SIMADI. The SIMADI exchange rate was approximately 192 Venezuelan Bolivares to the US dollar as of March 31, 2015. As a result, Schlumberger recorded a $49 million pretax devaluation charge during the first quarter of 2015. | ||
About Schlumberger
Schlumberger is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry worldwide. Employing approximately 108,000 people representing over 140 nationalities and working in more than 85 countries, Schlumberger provides the industry’s widest range of products and services from exploration through production.
*Mark of Schlumberger or of Schlumberger companies.
Notes
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This second-quarter 2015 earnings release and Supplemental Information, 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; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; the success of Schlumberger’s 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, including in
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