Schlumberger Announces Full-Year and Fourth-Quarter 2016 Results
- Fourth-quarter revenue of
$7.1 billion increased 1% sequentially - Fourth-quarter GAAP loss per share, including charges of
$0.42 per share, was$0.15 - Fourth-quarter earnings per share, excluding charges was
$0.27 - Fourth-quarter cash flow from operations was
$2.0 billion . Fourth-quarter free cash flow was$1.1 billion - Full-year cash flow from operations was
$6.3 billion . Full-year free cash flow was$2.5 billion - Quarterly cash dividend of
$0.50 per share approved
Full-Year Results
(Stated in millions, except per share amounts) | ||||||||||
Twelve Months Ended | Change | |||||||||
Dec. 31, 2016 | Dec. 31, 2015 | Year-on-year | ||||||||
Revenue | $ | 27,810 | $ | 35,475 | -22% | |||||
Pretax operating income | $ | 3,273 | $ | 6,510 | -50% | |||||
Pretax operating margin | 11.8 | % | 18.4 | % | -658 bps | |||||
Net income (loss) (GAAP basis) | $ | (1,687 | ) | $ | 2,072 | n/m | ||||
Net income, excluding charges and credits* | $ | 1,550 | $ | 4,290 | -64% | |||||
Diluted EPS (loss per share) (GAAP basis) | $ | (1.24 | ) | $ | 1.63 | n/m | ||||
Diluted EPS, excluding charges and credits* | $ | 1.14 | $ | 3.37 | -66% | |||||
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details. | ||||||||||
n/m = not meaningful |
Full-year 2016 revenue of
Full-year 2016 pretax operating income of
Fourth-Quarter Results
(Stated in millions, except per share amounts) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Sequential | Year-on-year | ||||||||||||
Revenue | $ | 7,107 | $ | 7,019 | $ | 7,744 | 1% | -8% | ||||||||
Pretax operating income | $ | 810 | $ | 815 | $ | 1,288 | -1% | -37% | ||||||||
Pretax operating margin | 11.4 | % | 11.6 | % | 16.6 | % | -21 bps | -523 bps | ||||||||
Net income (loss) (GAAP basis) | $ | (204 | ) | $ | 176 | $ | (1,016 | ) | n/m | -80% | ||||||
Net income, excluding charges and credits* | $ | 379 | $ | 353 | $ | 819 | 7% | -54% | ||||||||
Diluted EPS (loss per share) (GAAP basis) | $ | (0.15 | ) | $ | 0.13 | $ | (0.81 | ) | n/m | n/m | ||||||
Diluted EPS, excluding charges and credits* | $ | 0.27 | $ | 0.25 | $ | 0.65 | 8% | -58% | ||||||||
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details. | ||||||||||||||||
n/m = not meaningful |
Schlumberger Chairman and CEO
"Among the business segments, the fourth-quarter revenue increase was led by the
"Pretax operating margin was essentially flat sequentially at 11.4% as margin improvements in the Production and Drilling Groups were balanced by contractions in the Cameron and Reservoir Characterization Groups. In recent quarters, we have managed to stabilize our business from an activity and capacity standpoint, and this has subsequently allowed us to refine and reduce our support structure to reflect current activity and service pricing levels. This has led us to record a
"We maintain our constructive view of the oil markets, as the tightening of the supply and demand balance continued in the fourth quarter, as seen by a steady draw in OECD stocks. This trend was further strengthened by the December OPEC and non-
"We expect the growth in investments to initially be led by land operators in
"In the international markets, operators are more focused on full-cycle returns and E&P investments are generally governed by the operators' free cash flow generation. Based on this, we expect the 2017 recovery in the international markets to start off more slowly, driven by the economic reality facing the E&P industry. This will likely lead to a third successive year of underinvestment, with a continued low rate of new project approvals and an accelerating production decline in the aging production base. These factors together are increasing the likelihood of a significant supply deficit in the medium term, which can only be avoided by a broad-based global increase in E&P spending, which we expect will start unfolding in the later parts of 2017 and leading into 2018.
"Against this backdrop and following nine consecutive quarters of relentless workforce reductions, cost cutting, and restructuring efforts, we are excited to restore focus on the pursuit of growth and improving returns. As we navigated this downturn, we have streamlined our cost and support structure, continued to drive the underlying efficiency and quality of our business workflows, expanded our offering through maintaining investments in R&E, and made a series of strategic acquisitions. The combination of these actions has enabled us to further strengthen our global market position during the downturn, which will enable us to maintain and extend our well established margin and earnings leadership in both
"While earnings growth continues to be a very important financial driver for us, full-cycle cash generation is even more critical, and here, we remain unique in the industry. Over the past two years of this downturn, we have generated
Other Events
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of
On
On
Consolidated Revenue by Geography
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Sequential | |||||||
North America | $ | 1,765 | $ | 1,699 | 4% | ||||
Latin America | 952 | 992 | -4% | ||||||
Europe/CIS/Africa | 1,834 | 1,872 | -2% | ||||||
Middle East & Asia | 2,494 | 2,385 | 5% | ||||||
Eliminations & other | 62 | 71 | -13% | ||||||
$ | 7,107 | $ | 7,019 | 1% | |||||
North America revenue | $ | 1,765 | $ | 1,699 | 4% | ||||
International revenue | $ | 5,280 | $ | 5,249 | 1% |
Fourth-quarter revenue of
In
International Areas
International revenue increased 1% sequentially led by strong growth in the
Revenue in the
(Stated in millions, except margin percentages) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Sequential | Year-on-year | ||||||||||||
Revenue | $ | 1,699 | $ | 1,689 | $ | 2,193 | 1% | -23% | ||||||||
Pretax operating income | $ | 316 | $ | 322 | $ | 521 | -2% | -39% | ||||||||
Pretax operating margin | 18.6 | % | 19.1 | % | 23.8 | % | -49 bps | -519 bps |
Pretax operating margin of 19% decreased 49 bps sequentially as the increased contribution from software and maintenance sales was more than offset by the decline in high-margin Wireline exploration activities.
In
In
In
Offshore Norway, Wireline introduced a combination of technologies for
Offshore the
The transformation program enabled reductions in equipment numbers and tool reliability repair costs for Schlumberger by using Technology Lifecycle Management (TLM). In
Drilling Group
(Stated in millions, except margin percentages) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Sequential | Year-on-year | ||||||||||||
Revenue | $ | 2,013 | $ | 2,021 | $ | 2,953 | - | -32% | ||||||||
Pretax operating income | $ | 234 | $ | 218 | $ | 494 | 7% | -53% | ||||||||
Pretax operating margin | 11.6 | % | 10.8 | % | 16.7 | % | 81 bps | -511 bps |
Drilling Group revenue of
Pretax operating margin of 12% expanded 81 bps sequentially despite revenue being flat. This was due to pricing improvements from greater uptake of drilling technologies on increasing activity on land in the US which mainly affected Drilling & Measurements and Bits & Drilling Tools. Margin also expanded as a result of operational execution in IDS, M-I SWACO, and Bits & Drilling Tools and through continuing transformation-related benefits as resources were aligned to match the shape of the recovery.
A combination of IDS projects, contract awards, new technology deployments, and transformation efficiencies contributed to
In the
In Norway,
In the Norwegian sector of the
In
In
In
In
In the Neuquén basin in
The transformation program enabled an increase in reliability and efficiency as well as product and service delivery. Design, engineering, and maintenance teams in Drilling & Measurements at the Middle East CRE in Dhahran,
(Stated in millions, except margin percentages) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Sequential | Year-on-year | ||||||||||||
Revenue | $ | 2,179 | $ | 2,083 | $ | 2,632 | 5% | -17% | ||||||||
Pretax operating income | $ | 132 | $ | 98 | $ | 302 | 34% | -56% | ||||||||
Pretax operating margin | 6.0 | % | 4.7 | % | 11.5 | % | 134 bps | -542 bps |
Pretax operating margin of 6% increased 134 bps sequentially on increased activity, which drove efficiency and better operational execution in the
In
In the
In
Offshore
In
In
(Stated in millions, except margin percentages) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015* | Sequential | Year-on-year | ||||||||||||
Revenue | $ | 1,346 | $ | 1,341 | $ | 2,088 | - | -36% | ||||||||
Pretax operating income | $ | 188 | $ | 215 | $ | 354 | -13% | -47% | ||||||||
Pretax operating margin | 14.0 | % | 16.0 | % | 17.0 | % | -207 bps | -298 bps | ||||||||
*Fourth-quarter 2015 is presented on a pro forma basis for comparative purposes. |
Pretax operating margin of 14% declined 207 bps sequentially due to the drop in high-margin Drilling Systems project volume.
Murphy Exploration & Production Company–USA, a subsidiary of
In
Financial Tables |
|||||||||||||||
Condensed Consolidated Statement of Income | |||||||||||||||
(Stated in millions, except per share amounts) | |||||||||||||||
Fourth Quarter | Twelve Months | ||||||||||||||
Periods Ended December 31, | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenue | $ | 7,107 | $ | 7,744 | $ | 27,810 | $ | 35,475 | |||||||
Interest and other income | 47 | 81 | 200 | 236 | |||||||||||
Expenses | |||||||||||||||
Cost of revenue | 6,193 | 6,292 | 24,110 | 28,321 | |||||||||||
Research & engineering | 261 | 276 | 1,012 | 1,094 | |||||||||||
General & administrative | 99 | 132 | 403 | 494 | |||||||||||
Impairments & other (1) | 599 | 2,136 | 3,172 | 2,575 | |||||||||||
Merger & integration (1) | 76 | - | 648 | - | |||||||||||
Interest | 139 | 91 | 570 | 346 | |||||||||||
Income (loss) before taxes | $ | (213 | ) | ($1,102 | ) | $ | (1,905 | ) | $ | 2,881 | |||||
Taxes on income (loss) (1) | (19 | ) | (113 | ) | (278 | ) | 746 | ||||||||
Net income (loss) | $ | (194 | ) | ($989 | ) | $ | (1,627 | ) | $ | 2,135 | |||||
Net income attributable to noncontrolling interests | 10 | 27 | 60 | 63 | |||||||||||
Net income (loss) attributable to Schlumberger (1) | $ | (204 | ) | ($1,016 | ) | $ | (1,687 | ) | $ | 2,072 | |||||
Diluted earnings (loss) per share of Schlumberger (1) | $ | (0.15 | ) | ($0.81 | ) | $ | (1.24 | ) | $ | 1.63 | |||||
Average shares outstanding | 1,391 | 1,259 | 1,357 | 1,267 | |||||||||||
Average shares outstanding assuming dilution | 1,391 | 1,259 | 1,357 | 1,275 | |||||||||||
Depreciation & amortization included in expenses (2) | $ | 1,016 | $ | 963 | $ | 4,094 | $ | 4,078 |
(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) | ||||||
Dec. 31, | Dec. 31, | |||||
Assets | 2016 | 2015 | ||||
Current Assets | ||||||
Cash and short-term investments | $ | 9,257 | $ | 13,034 | ||
Receivables | 9,387 | 8,780 | ||||
Other current assets | 5,283 | 5,098 | ||||
23,927 | 26,912 | |||||
Fixed income investments, held to maturity | 238 | 418 | ||||
Fixed assets | 12,821 | 13,415 | ||||
Multiclient seismic data | 1,073 | 1,026 | ||||
Goodwill | 24,990 | 15,605 | ||||
Intangible assets | 9,855 | 4,569 | ||||
Other assets | 5,052 | 6,060 | ||||
$ | 77,956 | $ | 68,005 | |||
Liabilities and Equity | ||||||
Current Liabilities | ||||||
Accounts payable and accrued liabilities | $ | 10,016 | $ | 7,727 | ||
Estimated liability for taxes on income | 1,188 | 1,203 | ||||
Short-term borrowings and current portion of long-term debt |
3,153 | 4,557 | ||||
Dividends payable | 702 | 634 | ||||
15,059 | 14,121 | |||||
Long-term debt | 16,463 | 14,442 | ||||
Deferred taxes | 1,880 | 1,075 | ||||
Postretirement benefits | 1,495 | 1,434 | ||||
Other liabilities | 1,530 | 1,028 | ||||
36,427 | 32,100 | |||||
Equity | 41,529 | 35,905 | ||||
$ | 77,956 | $ | 68,005 |
Liquidity |
|||||||
(Stated in millions) | |||||||
Components of Liquidity |
Dec. 31, |
Sept. 30, |
Dec. 31, |
||||
Cash and short-term investments | $9,257 | $10,756 | $13,034 | ||||
Fixed income investments, held to maturity | 238 | 354 | 418 | ||||
Short-term borrowings and current portion of long-term debt | (3,153) | (3,739) | (4,557) | ||||
Long-term debt | (16,463) | (17,538) | (14,442) | ||||
Net debt (1) | $(10,121) | $(10,167) | $(5,547) | ||||
Details of changes in liquidity follow: | |||||||
Periods Ended December 31, |
Twelve |
Fourth |
Twelve |
||||
Net income (loss) before noncontrolling interests | $(1,627) | $(194) | $2,135 | ||||
Impairment and other charges, net of tax | 3,236 | 583 | 2,218 | ||||
$1,609 | $389 | $4,353 | |||||
Depreciation and amortization (2) | 4,094 | 1,016 | 4,078 | ||||
Pension and other postretirement benefits expense | 187 | 48 | 438 | ||||
Stock-based compensation expense | 267 | 57 | 326 | ||||
Pension and other postretirement benefits funding | (174) | (47) | (346) | ||||
Change in working capital | 416 | 639 | (478) | ||||
Other | (138) | (89) | 434 | ||||
Cash flow from operations (3) | $6,261 | $2,013 | $8,805 | ||||
Capital expenditures | (2,055) | (654) | (2,410) | ||||
SPM investments | (1,031) | (162) | (953) | ||||
Multiclient seismic data capitalized | (630) | (133) | (486) | ||||
Free cash flow (4) | 2,545 | 1,064 | 4,956 | ||||
Stock repurchase program | (778) | (116) | (2,182) | ||||
Dividends paid | (2,647) | (696) | (2,419) | ||||
Proceeds from employee stock plans | 415 | 71 | 448 | ||||
(465) | 323 | 803 | |||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (4,022) | (156) | (478) | ||||
Discontinued operations - settlement with US Department of Justice | - | - | (233) | ||||
Other | (87) | (121) | (252) | ||||
(Increase) decrease in Net Debt | (4,574) | 46 | (160) | ||||
Net Debt, beginning of period | (5,547) | (10,167) | (5,387) | ||||
Net Debt, end of period | $(10,121) | $(10,121) | $(5,547) |
(1) | "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. Net Debt is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, or superior to, total debt. | ||
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. | ||
(3) | Includes severance payments of approximately $850 million and $810 million during the twelve months ended December 31, 2016 and 2015, respectively, and $150 million during the fourth quarter of 2016. Also includes approximately $100 million of transaction-related payments associated with the acquisition of Cameron during the twelve months ended December 31, 2016. | ||
(4) | "Free cash flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data costs capitalized. Management believes that free cash flow is an important liquidity measure for the Company and that it is useful to investors and management as a measure of the ability of our business to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the Company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as substitute for, or superior to, cash flow from operations. |
Charges & Credits
In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this Full-Year and Fourth-Quarter 2016 Earnings Release also includes non-GAAP financial measures (as defined under the SEC's Regulation G). Net income, excluding charges & credits, as well as measures derived from it (including diluted EPS, excluding charges & credits; net income before noncontrolling interests and charges & credits; and effective tax rate, excluding charges & credits) are non-GAAP financial measures. Management believes that the exclusion of charges & credits from these financial measures enables it to evaluate more effectively Schlumberger's operations period over period and to identify operating trends that could otherwise be masked by the excluded items. These measures are also used by management as performance measures in determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures.
(Stated in millions, except per share amounts) | |||||||||||||||||||
Fourth Quarter 2016 | |||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||
Schlumberger net loss (GAAP basis) | $ | (213 | ) | $ | (19 | ) | $ | 10 | $ | (204 | ) | $ | (0.15 | ) | |||||
Workforce reduction | 234 | 6 | - | 228 | |||||||||||||||
Facility closure costs | 165 | 40 | - | 125 | |||||||||||||||
Costs associated with exiting certain activities | 98 | 23 | - | 75 | |||||||||||||||
Merger & integration | 76 | 14 | - | 62 | |||||||||||||||
Currency devaluation loss in Egypt | 63 | - | - | 63 | |||||||||||||||
Contract termination costs | 39 | 9 | - | 30 | |||||||||||||||
Schlumberger net income, excluding charges & credits | $ | 462 | $ | 73 | $ | 10 | $ | 379 | $ | 0.27 | |||||||||
Third Quarter 2016 | |||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||
Schlumberger net income (GAAP basis) | $ | 200 | $ | 10 | $ | 14 | $ | 176 | $ | 0.13 | |||||||||
Amortization of purchase accounting inventory fair value adjustment | 149 | 45 | - | 104 | |||||||||||||||
Merger-related employee benefits and professional fees | 46 | 10 | - | 36 | |||||||||||||||
Other merger and integration-related | 42 | 5 | - | 37 | |||||||||||||||
Schlumberger net income, excluding charges & credits | $ | 437 | $ | 70 | $ | 14 | $ | 353 | $ | 0.25 | |||||||||
Fourth Quarter 2015 | |||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||
Schlumberger net loss (GAAP basis) | $ | (1,102 | ) | $ | (113 | ) | $ | 27 | $ | (1,016 | ) | $ | (0.81 | ) | |||||
Fixed asset impairments | 776 | 141 | - | 635 | |||||||||||||||
Workforce reduction | 530 | 51 | - | 479 | |||||||||||||||
Inventory write-downs | 269 | 27 | - | 242 | |||||||||||||||
Impairment of SPM project in Colombia | 182 | 36 | - | 146 | |||||||||||||||
Facility closures | 177 | 37 | - | 140 | |||||||||||||||
Geopolitical events | 77 | - | - | 77 | |||||||||||||||
Contract termination costs | 41 | 2 | - | 39 | |||||||||||||||
Other | 84 | 7 | - | 77 | |||||||||||||||
Schlumberger net income, excluding charges & credits | $ | 1,034 | $ | 188 | $ | 27 | $ | 819 | $ | 0.65 |
(Stated in millions, except per share amounts) | |||||||||||||||||||
Twelve Months 2016 | |||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||
Schlumberger net loss (GAAP basis) | $ | (1,905 | ) | $ | (278 | ) | $ | 60 | $ | (1,687 | ) | $ | (1.24 | ) | |||||
Fixed asset impairments | 1,058 | 177 | - | 881 | |||||||||||||||
Workforce reduction | 880 | 69 | - | 811 | |||||||||||||||
Inventory write-downs | 616 | 49 | - | 567 | |||||||||||||||
Amortization of purchase accounting inventory fair value adjustment | 299 | 90 | - | 209 | |||||||||||||||
Other merger and integration-related | 211 | 37 | - | 174 | |||||||||||||||
Multiclient seismic data impairment | 198 | 62 | - | 136 | |||||||||||||||
Facility closure costs | 165 | 40 | - | 125 | |||||||||||||||
Merger-related employee benefits and professional fees | 138 | 27 | 111 | ||||||||||||||||
Costs associated with exiting certain activities | 98 | 23 | - | 75 | |||||||||||||||
Currency devaluation loss in Egypt | 63 | - | - | 63 | |||||||||||||||
Other restructuring charges | 55 | - | - | 55 | |||||||||||||||
Contract termination costs | 39 | 9 | - | 30 | |||||||||||||||
Schlumberger net income, excluding charges & credits | $ | 1,915 | $ | 305 | $ | 60 | $ | 1,550 | $ | 1.14 | |||||||||
Twelve Months 2015 | |||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||||||||||||
Schlumberger net income (GAAP basis) | $ | 2,881 | $ | 746 | $ | 63 | $ | 2,072 | $ | 1.63 | |||||||||
Workforce reduction | 920 | 107 | - | 813 | |||||||||||||||
Fixed asset impairments | 776 | 141 | - | 635 | |||||||||||||||
Inventory write-downs | 269 | 27 | - | 242 | |||||||||||||||
Impairment of SPM project in Colombia | 182 | 36 | - | 146 | |||||||||||||||
Facility closures | 177 | 37 | - | 140 | |||||||||||||||
Geopolitical events | 77 | - | - | 77 | |||||||||||||||
Currency devaluation loss in Venezuela | 49 | - | - | 49 | |||||||||||||||
Contract termination costs | 41 | 2 | - | 39 | |||||||||||||||
Other | 84 | 7 | - | 77 | |||||||||||||||
Schlumberger net income, excluding charges & credits | $ | 5,456 | $ | 1,103 | $ | 63 | $ | 4,290 | $ | 3.37 |
Product Groups |
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(Stated in millions) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | ||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||
Reservoir Characterization | $ | 1,699 | $ | 316 | $ | 1,689 | $ | 322 | $ | 2,193 | $ | 521 | ||||||||||||
Drilling | 2,013 | 234 | 2,021 | 218 | 2,953 | 494 | ||||||||||||||||||
Production | 2,179 | 132 | 2,083 | 98 | 2,632 | 302 | ||||||||||||||||||
Cameron | 1,346 | 188 | 1,341 | 215 | - | - | ||||||||||||||||||
Eliminations & other | (130 | ) | (60 | ) | (115 | ) | (38 | ) | (34 | ) | (29 | ) | ||||||||||||
Pretax operating income | 810 | 815 | 1,288 | |||||||||||||||||||||
Corporate & other | (245 | ) | (267 | ) | (179 | ) | ||||||||||||||||||
Interest income(1) | 23 | 24 | 8 | |||||||||||||||||||||
Interest expense(1) | (126 | ) | (135 | ) | (83 | ) | ||||||||||||||||||
Charges & credits | (675 | ) | (237 | ) | (2,136 | ) | ||||||||||||||||||
$ | 7,107 | $ | (213 | ) | $ | 7,019 | $ | 200 | $ | 7,744 | $ | (1,102 | ) |
(Stated in millions) | ||||||||||||||||
Twelve Months Ended | ||||||||||||||||
Dec. 31, 2016 | Dec. 31, 2015 | |||||||||||||||
Revenue |
Income |
Revenue |
Income |
|||||||||||||
Reservoir Characterization | $ | 6,743 | $ | 1,228 | $ | 9,738 | $ | 2,465 | ||||||||
Drilling | 8,561 | 994 | 13,563 | 2,538 | ||||||||||||
Production | 8,709 | 528 | 12,311 | 1,570 | ||||||||||||
Cameron | 4,211 | 653 | - | - | ||||||||||||
Eliminations & other | (414 | ) | (130 | ) | (137 | ) | (63 | ) | ||||||||
Pretax operating income | 3,273 | 6,510 | ||||||||||||||
Corporate & other | (925 | ) | (768 | ) | ||||||||||||
Interest income(1) | 84 | 30 | ||||||||||||||
Interest expense(1) | (517 | ) |
(316 |
) |
||||||||||||
Charges & credits | (3,820 | ) | (2,575 | ) | ||||||||||||
$ | 27,810 | $ | (1,905 | ) | $ | 35,475 | $ | 2,881 | ||||||||
(1) Excludes interest included in the Product Groups results. |
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Supplemental Information
1) |
What is the capex guidance for the full year 2017? |
|
|
|
Capex (excluding multiclient and SPM investments) is expected to be $2.2 billion for 2017. Capex for the full year 2016 was $2.1 billion. |
2) |
What was the free cash flow as a percentage of net income before noncontrolling interests and charges and credits, for the fourth quarter of 2016? |
|
Free cash flow, which was $1.1 billion and included approximately $150 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 274% for the fourth quarter of 2016. | ||
3) |
What was the free cash flow as a percentage of net income from continuing operations before noncontrolling interests and charges and credits, for the full year 2016? |
|
Free cash flow, which was $2.5 billion and included approximately $850 million of payments associated with workforce reductions and $100 million of transaction-related payments associated with the Cameron acquisition, as a percentage of net income before noncontrolling interests and charges and credits was 158% for the full year 2016. | ||
4) |
What was included in "Interest and other income" for the fourth quarter of 2016? |
|
"Interest and other income" for the fourth quarter of 2016 was $47 million. This amount consisted of earnings of equity method investments of $18 million and interest income of $29 million. | ||
5) |
How did interest income and interest expense change during the fourth quarter of 2016? |
|
Interest income of $29 million decreased $1 million sequentially. Interest expense of $139 million decreased $10 million sequentially. | ||
6) |
What is the difference between pretax operating income and Schlumberger's consolidated income before taxes? |
|
The difference principally consists of 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 (including intangible asset amortization expense resulting from the acquisition of Cameron), certain centrally managed initiatives, and other nonoperating items. | ||
7) |
What was the effective tax rate (ETR) for the fourth quarter of 2016? |
|
The ETR for the fourth quarter of 2016 calculated in accordance with GAAP was 8.8% as compared to 5.1% for the third quarter of 2016. The ETR for the fourth quarter of 2016, excluding charges and credits, was 15.8% as compared to 16.0% for the third quarter of 2016. | ||
8) |
How many shares of common stock were outstanding as of December 31, 2016 and how did this change from the end of the previous quarter? |
|
There were 1.391 billion shares of common stock outstanding as of December 31, 2016. The following table shows the change in the number of shares outstanding from September 30, 2016 to December 31, 2016. |
(Stated in millions) | |||||||
Shares outstanding at September 30, 2016 | 1,391 | ||||||
Shares sold to optionees, less shares exchanged | 1 | ||||||
Vesting of restricted stock | - | ||||||
Shares issued under employee stock purchase plan | - | ||||||
Stock repurchase program | (1 | ) | |||||
Shares outstanding at December 31, 2016 | 1,391 |
9) |
What was the weighted average number of shares outstanding during the fourth quarter of 2016 and third quarter of 2016 and how does this reconcile to the average number of shares outstanding, assuming dilution used in the calculation of diluted earnings per share, excluding charges and credits? |
|
The weighted average number of shares outstanding during the fourth quarter of 2016 was 1.391 billion and 1.392 billion during the third quarter of 2016. | ||
The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution, used in the calculation of diluted earnings per share, excluding charges and credits. |
(Stated in millions) | ||||||||
Fourth Quarter |
Third Quarter |
|||||||
Weighted average shares outstanding |
1,391 |
1,392 | ||||||
Assumed exercise of stock options |
5 |
4 | ||||||
Unvested restricted stock |
5 |
5 | ||||||
Average shares outstanding, assuming dilution |
1,401 |
1,401 |
10) |
What was the amount of WesternGeco multiclient sales in the fourth quarter of 2016? |
|
Multiclient sales, including transfer fees, were $143 million in the fourth quarter of 2016 and $144 million in the third quarter of 2016. | ||
11) |
What was the WesternGeco backlog at the end of the fourth quarter of 2016? |
|
WesternGeco backlog, which is based on signed contracts with customers, was $759 million at the end of the fourth quarter of 2016. It was $845 million at the end of the third quarter of 2016. | ||
12) |
What were the orders and backlogs for Cameron Group's OneSubsea and Drilling Systems businesses? |
|
OneSubsea and Drilling Systems orders and backlogs were as follows: |
(Stated in millions) | ||||||
Orders |
Fourth Quarter |
Third Quarter |
||||
OneSubsea | $ | 523 | $ | 434 | ||
Drilling Systems | $ | 132 |
|
$ | 179 | |
Backlog (at the end of period) | ||||||
OneSubsea | $ | 2,526 | $ | 2,527 | ||
Drilling Systems | $ | 607 |
|
$ | 865 |
13) |
What do the various charges Schlumberger recorded during the fourth quarter of 2016 relate to? |
|
We are making further adjustments to our global support structure and facilities footprint to align our resources to the shape of the recovery. This has led us to record $536 million in restructuring charges. We have also recorded $139 million of pretax charges relating to the Cameron acquisition and a currency devaluation loss in Egypt. These $675 million of pretax charges consist of the following: |
||
-- $234 million of workforce reduction costs | ||
-- $165 million of facility closure costs | ||
-- $98 million of costs associated with exiting certain activities | ||
-- $76 million of merger and integration costs relating to the Cameron acquisition | ||
-- $63 million of currency devaluation loss in Egypt | ||
-- $39 million of contract termination costs |
About Schlumberger
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.
*Mark of Schlumberger or of Schlumberger companies
Notes
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This full-year and fourth-quarter 2016 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 anticipated benefits of the Cameron transaction; 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; 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; the inability to integrate the Cameron business and to realize expected synergies; the inability to retain key employees; and other risks and uncertainties detailed in this full-year and fourth-quarter 2016 earnings release and Supplemental Information and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the
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Source:
Schlumberger Limited
Simon Farrant – Schlumberger Limited, Vice President of Investor Relations
Joy V. Domingo – Schlumberger Limited, Manager of Investor Relations
Office +1 (713) 375-3535
investor-relations@slb.com