Schlumberger Announces Full-Year and Fourth-Quarter 2018 Results
- Full-year revenue of
$32.8 billion increased 8% year-on-year - Full-year GAAP EPS, including charges & credits, was
$1.53 - Full-year EPS, excluding charges & credits, of
$1.62 increased 8% year-on-year - Full-year cash flow from operations and free cash flow were
$5.7 billion and$2.5 billion , respectively
- Fourth-quarter revenue of
$8.2 billion decreased 4% sequentially - Fourth-quarter GAAP EPS, including charges & credits, was
$0.39 - Fourth-quarter EPS, excluding charges & credits, of
$0.36 decreased 22% sequentially - Fourth-quarter cash flow from operations and free cash flow were
$2.3 billion and$1.4 billion , respectively - Quarterly cash dividend of
$0.50 per share was approved
(Stated in millions, except per share amounts) | |||||||
Full-Year Results | Twelve Months Ended | Change | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Year-on-year | |||||
Revenue | $32,815 | $30,440 | 8% | ||||
Pretax operating income | $4,187 | $3,921 | 7% | ||||
Pretax operating margin | 12.8% | 12.9% | -12 bps | ||||
Net income (loss) - GAAP basis | $2,138 | $(1,505) | n/m | ||||
Net income, excluding charges & credits* | $2,261 | $2,085 | 8% | ||||
Diluted EPS (loss per share) - GAAP basis | $1.53 | $(1.08) | n/m | ||||
Diluted EPS, excluding charges and credits* | $1.62 | $1.50 | 8% | ||||
Full-Year Consolidated Revenue by Area | |||||||
North America | $11,984 | $9,487 | 26% | ||||
Latin America | 3,745 | 3,976 | -6% | ||||
Europe/CIS/Africa | 7,158 | 7,072 | 1% | ||||
Middle East & Asia | 9,543 | 9,394 | 2% | ||||
Other | 385 | 511 | n/m | ||||
$32,815 | $30,440 | 8% | |||||
North America revenue | $11,984 | $9,487 | 26% | ||||
International revenue | $20,446 | $20,442 | - | ||||
North America revenue, excluding Cameron | $9,668 | $7,518 | 29% | ||||
International revenue, excluding Cameron | $17,675 | $17,423 | 1% | ||||
*These are non-GAAP financial measures. See section titled "Charges & Credits" for details. | |||||||
n/m = not meaningful |
Schlumberger Chairman and CEO
"Production revenue of
"Full-year 2018 pretax operating income of
Fourth-Quarter Results
(Stated in millions, except per share amounts) | ||||||||||
Three Months Ended | Change | |||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | ||||||
Revenue | $8,180 | $8,504 | $8,179 | -4% | - | |||||
Pretax operating income | $967 | $1,152 | $1,155 | -16% | -16% | |||||
Pretax operating margin | 11.8% | 13.5% | 14.1% | -172 bps | -230 bps | |||||
Net income (loss) - GAAP basis | $538 | $644 | $(2,255) | -16% | n/m | |||||
Net income, excluding charges & credits* | $498 | $644 | $668 | -23% | -25% | |||||
Diluted EPS (loss per share) - GAAP basis | $0.39 | $0.46 | $(1.63) | -15% | n/m | |||||
Diluted EPS, excluding charges & credits* | $0.36 | $0.46 | $0.48 | -22% | -25% | |||||
North America revenue | $2,820 | $3,189 | $2,811 | -12% | - | |||||
International revenue | $5,283 | $5,215 | $5,237 | 1% | 1% | |||||
North America revenue, excluding Cameron | $2,265 | $2,572 | $2,246 | -12% | 1% | |||||
International revenue, excluding Cameron | $4,581 | $4,559 | $4,446 | - | 3% | |||||
*These are non-GAAP financial measures. See section titled "Charges & Credits" for details. | ||||||||||
n/m = not meaningful | ||||||||||
"Fourth-quarter revenue of
"International activity remained resilient despite the oil price drop, with revenue increasing 1% sequentially. The seasonal slowdown in
"Sequential performance was heavily impacted by Production- and
"From a macro perspective, the dramatic fall in oil prices in the fourth quarter was largely driven by the US shale production surprising to the upside as a result of the surge in activity earlier in the year, and as geopolitics negatively impacted the global demand- and supply-balance sentiments. The combination of these factors, together with a large sell-off in the equity markets due to concerns around global growth and increasing US interest rates, created a near perfect storm to close out 2018.
"Looking forward to 2019, we expect a more positive supply- and demand-balance sentiment to lead to a gradual recovery in the price of oil over the course of the year, as the
"In the meantime, the recent oil price volatility has introduced more uncertainty around the E&P spending outlook for 2019, with customers generally taking a more conservative approach at the start of the year. This will once again push out in time the broad-based recovery in E&P spending that we expected only three months ago.
"However, based on our recent discussions with customers, we are seeing clear signs that E&P investments are starting to normalize and reflect a more sustainable financial stewardship of the global resource base. For the
"For Schlumberger, this means that even with the current oil prices, we expect solid, single-digit growth in the international markets while in
"In this environment, we have built significant flexibility into our operating plan for 2019, which gives us the means and confidence to address any investment and activity scenario. Furthermore, the foundation for our 2019 plans is a clear commitment to generate sufficient cash flow to cover all our business needs, without increasing net debt. After a very strong free cash flow performance in the second half of 2018, we are confident in our ability to further improve our liquidity position in 2019, through our focus on top-line growth, incremental margins, capital discipline, and careful management of working capital."
Other Events
During the quarter, Schlumberger repurchased 2.1 million shares of its common stock at an average price of
On
On
Consolidated Revenue by Area
(Stated in millions) | ||||||||||
Three Months Ended | Change | |||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | ||||||
North America |
$2,820 |
$3,189 |
$2,811 |
-12% | - | |||||
Latin America | 978 | 978 | 1,034 | - | -5% | |||||
Europe/CIS/Africa | 1,842 | 1,820 | 1,816 | 1% | 1% | |||||
Middle East & Asia | 2,464 | 2,417 | 2,387 | 2% | 3% | |||||
Other | 76 | 100 | 131 | n/m | n/m | |||||
$8,180 | $8,504 | $8,179 | -4% | - | ||||||
North America revenue | $2,820 | $3,189 | $2,811 | -12% | - | |||||
International revenue | $5,283 | $5,215 | $5,237 | 1% | 1% | |||||
North America revenue, excluding Cameron | $2,265 | $2,572 | $2,246 | -12% | 1% | |||||
International revenue, excluding Cameron | $4,581 | $4,559 | $4,446 | - | 3% | |||||
n/m = not meaningful | ||||||||||
Fourth-quarter consolidated revenue of
International
Consolidated revenue in the
Consolidated revenue in the
Reservoir Characterization
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | |||||
Revenue | $1,651 | $1,676 | $1,640 | -1% | 1% | ||||
Pretax operating income | $364 | $372 | $359 | -2% | 1% | ||||
Pretax operating margin | 22.0% | 22.2% | 21.9% | -16 bps | 17 bps | ||||
Reservoir Characterization revenue of
Reservoir Characterization pretax operating margin of 22% was essentially flat compared with the previous quarter as the effect of high-margin SIS software and WesternGeco multiclient seismic license sales was offset by a seasonal decline in higher-margin Wireline revenue.
In the fourth quarter, Reservoir Characterization performance benefited from multiple contract awards, new multiclient seismic surveys, and the application of technology and domain expertise to improve operational efficiency.
In
In
In
In
Dyas Norge AS awarded SIS a SaaS contract for use of the
Offshore
Drilling
(Stated in millions) | ||||||||||
Three Months Ended | Change | |||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | ||||||
Revenue | $2,461 | $2,429 | $2,180 | 1% | 13% | |||||
Pretax operating income | $318 | $339 | $319 | -6% | - | |||||
Pretax operating margin | 12.9% | 14.0% | 14.6% | -105 bps | -170 bps | |||||
Drilling revenue of
Drilling pretax operating margin of 13% decreased 105 bps sequentially due to the seasonal activity decline in
Drilling performance this quarter was underpinned by the deployment of several record-breaking drilling and drill bit technologies, GeoSphere* reservoir mapping-while-drilling service for optimizing recovery, and multiple contract awards.
In the
Also in
In the
In the
In
In the Schiehallion Field in the
Production
(Stated in millions) | ||||||||||
Three Months Ended | Change | |||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | ||||||
Revenue | $2,936 | $3,249 | $3,078 | -10% | -5% | |||||
Pretax operating income | $198 | $320 | $316 | -38% | -37% | |||||
Pretax operating margin | 6.8% | 9.9% | 10.3% | -310 bps | -351 bps | |||||
Production revenue of
Production pretax operating margin of 7% decreased 310 bps sequentially due to reduced pricing and activity in the OneStim business in
Production performance was supported by contract awards and the deployment of new cementing and hydraulic fracturing technologies that helped improve operational efficiency and well productivity. The Fulcrum* cement-conveyed frac performance technology provides superior well zonal isolation in hydraulically-fractured lateral sections. In addition, BroadBand Precision* integrated completion services ensure every fracture is stimulated and propped open from the tip of the fracture to the wellbore, and BroadBand Shield* fracture-geometry control services help limit the risk of communicating with neighboring wells (frac hits), which is particularly important for infill wells and multiwell pads.
Saudi Aramco awarded Schlumberger a three-year integrated production services contract for the provision of well stimulation and testing services for a conventional gas field in the South Area. The contract, which has an optional one-year extension, will include deployment of the BroadBand Sequence* fracturing and OpenPath* stimulation services.
In the
In
In
In the
(Stated in millions) | ||||||||||
Three Months Ended | Change | |||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | Sequential | Year-on-year | ||||||
Revenue | $1,265 | $1,298 | $1,414 | -3% | -11% | |||||
Pretax operating income | $127 | $148 | $203 | -14% | -37% | |||||
Pretax operating margin | 10.0% | 11.4% | 14.4% | -140 bps | -432 bps | |||||
In the fourth quarter,
Esso Australia Pty. Ltd. awarded the
Schlumberger subsea multiphase boosting system technology enabled the development of the longest tiebacks in the
Financial Tables |
||||||||
Condensed Consolidated Statement of Income (Loss) | ||||||||
(Stated in millions, except per share amounts) | ||||||||
Fourth Quarter | Twelve Months | |||||||
Periods Ended December 31, | 2018 | 2017 | 2018 | 2017 | ||||
Revenue | $8,180 | $8,179 | $32,815 | $30,440 | ||||
Interest and other income | 31 | 52 | 149 | 224 | ||||
Gain on sale of business (1) | 215 | - | 215 | - | ||||
Expenses | ||||||||
Cost of revenue | 7,172 | 7,201 | 28,478 | 26,543 | ||||
Research & engineering | 178 | 192 | 702 | 787 | ||||
General & administrative | 114 | 109 | 444 | 432 | ||||
Impairments & other (1) | 172 | 2,701 | 356 | 3,211 | ||||
Merger & integration (1) | - | 95 | - | 308 | ||||
Interest | 142 | 143 | 575 | 566 | ||||
Income (loss) before taxes | $648 | $(2,210) | $2,624 | $(1,183) | ||||
Tax expense (1) | 100 | 62 | 447 | 330 | ||||
Net income (loss) attributable to Schlumberger (1) | $548 | $(2,272) | $2,177 | $(1,513) | ||||
Net income (loss) attributable to noncontrolling interests | 10 | (17) | 39 | (8) | ||||
Net income (loss) attributable to Schlumberger (1) | $538 | $(2,255) | $2,138 | $(1,505) | ||||
Diluted earnings (loss) per share of Schlumberger (1) | $0.39 | $(1.63) | $1.53 | $(1.08) | ||||
Average shares outstanding | 1,384 | 1,385 | 1,385 | 1,388 | ||||
Average shares outstanding assuming dilution | 1,392 | 1,385 | 1,393 | 1,388 | ||||
Depreciation & amortization included in expenses (2) | $919 | $906 | $3,556 | $3,837 |
(1) | See section titled "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 | 2018 | 2017 | ||
Current Assets | ||||
Cash and short-term investments | $2,777 | $5,089 | ||
Receivables | 7,881 | 8,084 | ||
Other current assets | 5,073 | 5,324 | ||
15,731 | 18,497 | |||
Fixed assets | 11,679 | 11,576 | ||
Multiclient seismic data | 601 | 727 | ||
Goodwill | 24,931 | 25,118 | ||
Intangible assets | 8,727 | 9,354 | ||
Other assets | 8,838 | 6,715 | ||
$70,507 | $71,987 | |||
Liabilities and Equity | ||||
Current Liabilities | ||||
Accounts payable and accrued liabilities | $10,223 | $10,036 | ||
Estimated liability for taxes on income | 1,155 | 1,223 | ||
Short-term borrowings and current portion of long-term debt |
1,407 | 3,324 | ||
Dividends payable | 701 | 699 | ||
13,486 | 15,282 | |||
Long-term debt | 14,644 | 14,875 | ||
Deferred taxes | 1,441 | 1,650 | ||
Postretirement benefits | 1,153 | 1,082 | ||
Other liabilities | 3,197 | 1,837 | ||
33,921 | 34,726 | |||
Equity | 36,586 | 37,261 | ||
$70,507 | $71,987 | |||
Liquidity |
||||||
(Stated in millions) | ||||||
Components of Liquidity |
Dec. 31, |
Sept. 30, |
Dec. 31, |
|||
Cash and short-term investments | $2,777 | $2,854 | $5,089 | |||
Short-term borrowings and current portion of long-term debt | (1,407) | (3,215) | (3,324) | |||
Long-term debt | (14,644) | (14,159) | (14,875) | |||
Net Debt (1) | $(13,274) | $(14,520) | $(13,110) | |||
Details of changes in liquidity follow: | ||||||
Twelve | Fourth | Twelve | ||||
Months | Quarter | Months | ||||
Periods Ended December 31, | 2018 | 2018 | 2017 | |||
Net income (loss) before noncontrolling interests | $2,177 | $548 | $(1,513) | |||
Impairment and other charges, net of tax before noncontrolling interests | 320 | 156 | 3,624 | |||
Gain on sale of WesternGeco marine seismic business, net of tax | (196) | (196) | - | |||
$2,301 | $508 | $2,111 | ||||
Depreciation and amortization (2) | 3,556 | 919 | 3,837 | |||
Stock-based compensation expense | 345 | 86 | 343 | |||
Change in working capital | (442) | 705 | (823) | |||
US federal tax refund | - | - | 685 | |||
Other | (47) | 113 | (490) | |||
Cash flow from operations (3) | $5,713 | $2,331 | $5,663 | |||
Capital expenditures | (2,160) | (621) | (2,107) | |||
SPM investments | (981) | (262) | (1,609) | |||
Multiclient seismic data capitalized | (100) | (37) | (276) | |||
Free cash flow (4) | 2,472 | 1,411 | 1,671 | |||
Dividends paid | (2,770) | (693) | (2,778) | |||
Stock repurchase program | (400) | (100) | (969) | |||
Proceeds from employee stock plans | 261 | 5 | 297 | |||
(437) | 623 | (1,779) | ||||
Proceeds from sale of WesternGeco marine seismic business, net of cash divested | 579 | 579 | - | |||
Business acquisitions and investments, net of cash acquired plus debt assumed | (292) | (2) | (847) | |||
Other | (14) | 46 | (363) | |||
(Increase) decrease in Net Debt | (164) | 1,246 | (2,989) | |||
Net Debt, beginning of period | (13,110) | (14,520) | (10,121) | |||
Net Debt, end of period | $(13,274) | $(13,274) | $(13,110) | |||
(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 $340 million and $75 million during the twelve months and fourth quarter ended December 31, 2018, respectively; and $455 million and $108 million during the twelve months and fourth quarter ended December 31, 2017, respectively. | |
(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 Schlumberger's ability 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 2018 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; Schlumberger net income, excluding 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 2018 | ||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
||||||
Schlumberger net income (GAAP basis) | $648 | $100 | $10 | $538 | $0.39 | |||||
Gain on sale of marine seismic acquisition business | (215) | (19) | - | (196) | (0.14) | |||||
Asset impairments (1) | 172 | 16 | - | 156 | 0.11 | |||||
Schlumberger net income, excluding charges & credits | $605 | $97 | $10 | $498 | $0.36 | |||||
Fourth Quarter 2017 | ||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
||||||
Schlumberger net loss (GAAP basis) | $(2,210) | $62 | $(17) | $(2,255) | $(1.63) | |||||
Impairments & other: | ||||||||||
WesternGeco seismic restructuring | 1,114 | 20 | - | 1,094 | 0.79 | |||||
Venezuela investment write-down | 938 | - | - | 938 | 0.67 | |||||
Workforce reductions | 247 | 13 | - | 234 | 0.17 | |||||
Multiclient seismic data impairment | 246 | 81 | - | 165 | 0.12 | |||||
Other restructuring charges | 156 | 10 | 22 | 124 | 0.09 | |||||
Merger & integration | 95 | 26 | - | 69 | 0.05 | |||||
Provision for loss on long-term construction project (2) | 245 | 22 | - | 223 | 0.16 | |||||
US tax reform (3) | - | (76) | - | 76 | 0.05 | |||||
Schlumberger net income, excluding charges & credits | $831 | $158 | $5 | $668 | $0.48 | |||||
Twelve Months 2018 | ||||||||||
Pretax | Tax |
Noncont. |
Net* |
Diluted |
||||||
Schlumberger net income (GAAP basis) | $2,624 | $447 | $39 | $2,138 | $1.53 | |||||
Gain on sale of marine seismic acquisition business | (215) | (19) | - | (196) | (0.14) | |||||
Impairments & other: | ||||||||||
Workforce reductions | 184 | 20 | - | 164 | 0.12 | |||||
Asset impairments | 172 | 16 | - | 156 | 0.11 | |||||
Schlumberger net income, excluding charges & credits | $2,765 | $464 | $39 | $2,261 | $1.62 |
(Stated in millions, except per share amounts) | |||||||||
Twelve Months 2017 | |||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted |
|||||
Schlumberger net loss (GAAP basis) | $(1,183) | $330 | $(8) | $(1,505) | $(1.08) | ||||
Impairments & other: | |||||||||
WesternGeco seismic restructuring | 1,114 | 20 | - | 1,094 | 0.79 | ||||
Venezuela investment write-down | 938 | - | - | 938 | 0.67 | ||||
Promissory note fair value adjustment and other | 510 | - | 12 | 498 | 0.36 | ||||
Workforce reductions | 247 | 13 | - | 234 | 0.17 | ||||
Multiclient seismic data impairment | 246 | 81 | - | 165 | 0.12 | ||||
Other restructuring charges | 156 | 10 | 22 | 124 | 0.09 | ||||
Merger & integration | 308 | 70 | - | 238 | 0.17 | ||||
Provision for loss on long-term construction project (2) | 245 | 22 | - | 223 | 0.16 | ||||
US tax reform (3) | - | (76) | - | 76 | 0.05 | ||||
Schlumberger net income, excluding charges & credits | $2,581 | $470 | $26 | $2,085 | $1.50 | ||||
There were no charges or credits during the third quarter of 2018.
(1) | Recorded in Impairments & other in the Condensed Consolidated Statement of Income (Loss). | |
(2) | Recorded in Cost of revenue in the Condensed Consolidated Statement of Income (Loss). | |
(3) | Recorded in Tax expense (benefit) in the Condensed Consolidated Statement of Income (Loss). | |
*Does not add due to rounding |
Segments |
||||||||||||
(Stated in millions) | ||||||||||||
Three Months Ended | ||||||||||||
Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | ||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
|||||||
Reservoir Characterization | $1,651 | $364 | $1,676 | $372 | $1,640 | $359 | ||||||
Drilling | 2,461 | 318 | 2,429 | 339 | 2,180 | 319 | ||||||
Production | 2,936 | 198 | 3,249 | 320 | 3,078 | 316 | ||||||
Cameron | 1,265 | 127 | 1,298 | 148 | 1,414 | 203 | ||||||
Eliminations & other | (133) | (40) | (148) | (27) | (133) | (42) | ||||||
Pretax operating income | 967 | 1,152 | 1,155 | |||||||||
Corporate & other | (238) | (234) | (219) | |||||||||
Interest income(1) | 8 | 8 | 25 | |||||||||
Interest expense(1) | (132) | (139) | (130) | |||||||||
Charges & credits | 43 | - | (3,041) | |||||||||
$8,180 | $648 | $8,504 | $787 | $8,179 | $(2,210) | |||||||
(Stated in millions) | ||||||||
Twelve Months Ended | ||||||||
Dec. 31, 2018 | Dec. 31, 2017 | |||||||
Revenue |
Income |
Revenue |
Income |
|||||
Reservoir Characterization | $6,526 | $1,392 | $6,795 | $1,244 | ||||
Drilling | 9,250 | 1,239 | 8,392 | 1,151 | ||||
Production | 12,394 | 1,052 | 10,630 | 936 | ||||
Cameron | 5,167 | 608 | 5,205 | 733 | ||||
Eliminations & other | (522) | (104) | (582) | (143) | ||||
Pretax operating income | 4,187 | 3,921 | ||||||
Corporate & other | (937) | (934) | ||||||
Interest income(1) | 52 | 107 | ||||||
Interest expense(1) | (537) | (513) | ||||||
Charges & credits | (141) | (3,764) | ||||||
$32,815 | $2,624 | $30,440 | $(1,183) | |||||
(1) Excludes interest included in the segment results. |
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Supplemental Information |
||
1) |
What is the capex guidance for the full year 2019? |
|
Capex (excluding multiclient and SPM investments) for the full year 2019 is expected to be approximately $1.5 to $1.7 billion, which is lower than the $2.2 billion that was spent in 2018. | ||
2) |
What were the cash flow from operations and free cash flow for the fourth quarter of 2018? |
|
Cash flow from operations for the fourth quarter of 2018 was $2.3 billion. Free cash flow for the fourth quarter of 2018 was $1.4 billion, including $75 million of severance payments but excluding $600 million of cash proceeds that were received from the sale of the WesternGeco marine seismic business. |
||
3) |
What were the cash flow from operations and free cash flow for the full year of 2018? |
|
Cash flow from operations for the full year of 2018 was $5.7 billion. Free cash flow for the full year of 2018 was $2.5 billion, including $340 million of severance payments but excluding $600 million of cash proceeds that were received from the sale of the WesternGeco marine seismic business. | ||
4) |
What was included in "Interest and other income" for the fourth quarter of 2018? |
|
"Interest and other income" for the fourth quarter of 2018 was $31 million. This amount consisted of earnings of equity method investments of $21 million and interest income of $10 million. | ||
5) |
How did interest income and interest expense change during the fourth quarter of 2018? |
|
Interest income of $10 million for the fourth quarter of 2018 was flat sequentially. Interest expense of $142 million decreased $5 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, 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, certain centrally managed initiatives, and other nonoperating items. | ||
7) |
What was the effective tax rate (ETR) for the fourth quarter of 2018? |
|
The ETR for the fourth quarter of 2018, calculated in accordance with GAAP, was 15.4% as compared to 16.4% for the third quarter of 2018. Excluding charges and credits, the ETR for the fourth quarter of 2018 was 16.0%. There were no charges and credits in the third quarter of 2018. | ||
8) |
How many shares of common stock were outstanding as of December 31, 2018 and how did this change from the end of the previous quarter? |
|
There were 1.383 billion shares of common stock outstanding as of December 31, 2018. The following table shows the change in the number of shares outstanding from September 30, 2018 to December 31, 2018. |
(Stated in millions) | ||
Shares outstanding at September 30, 2018 | 1,385 | |
Shares issued to optionees, less shares exchanged | - | |
Vesting of restricted stock | - | |
Shares issued under employee stock purchase plan | - | |
Stock repurchase program | (2) | |
Shares outstanding at December 31, 2018 | 1,383 | |
9) |
What was the weighted average number of shares outstanding during the fourth quarter of 2018 and third quarter of 2018, 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? |
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The weighted average number of shares outstanding was 1.384 billion during the fourth quarter of 2018 and 1.385 billion during the third quarter of 2018. | ||
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 | 1,384 |
|
1,385 | |
Assumed exercise of stock options | - |
|
- | |
Unvested restricted stock | 8 |
|
7 | |
Average shares outstanding, assuming dilution | 1,392 |
|
1,392 | |
10) |
What are Schlumberger Production Management (SPM) projects and how does Schlumberger recognize revenue from these projects? |
|
SPM projects are focused on developing and comanaging production on behalf of Schlumberger customers under long-term agreements. Schlumberger will invest its own services, products, and in some cases, cash, into the field development activities and operations. Although in certain arrangements, Schlumberger recognizes revenue and is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger recognizes revenue and is compensated based upon cash flow generated or on a fee-per-barrel basis. This may include certain arrangements whereby Schlumberger is only compensated based upon incremental production it helps deliver above a mutually agreed baseline. |
||
11) |
How are Schlumberger products and services that are invested in SPM projects accounted for? |
|
Revenue and the related costs are recorded within the respective Schlumberger segment for services and products that each segment provides to Schlumberger's SPM projects. This revenue (which is based on arms-length pricing) and the related profit is then eliminated through an intercompany adjustment that is included within the "Eliminations & other" line (Note that the "Eliminations & other" line includes other items in addition to the SPM eliminations). The direct cost associated with providing Schlumberger services or products to SPM projects is then capitalized on the balance sheet. | ||
These capitalized investments, which may be in the form of cash as well as the previously mentioned direct costs, are expensed in the income statement as the related production is achieved and associated revenue is recognized. This amortization expense is based on the units of production method, whereby each unit is assigned a pro-rata portion of the unamortized costs based on total estimated production. | ||
SPM revenue along with the amortization of the capitalized investments and other operating costs incurred in the period are reflected within the Production segment. | ||
12) |
What was the unamortized balance of Schlumberger's investment in SPM projects at December 31, 2018 and how did it change in terms of investment and amortization when compared to September 30, 2018? |
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The unamortized balance of Schlumberger's investments in SPM projects was approximately $4.2 billion at both December 31, 2018 and September 30, 2018. These amounts are included within Other Assets in Schlumberger's Condensed Consolidated Balance Sheet. The change in the unamortized balance of Schlumberger's investment in SPM projects was as follows: | ||
(Stated in millions) | ||||||
Balance at September 30, 2018 | $4,248 | |||||
SPM investments | 262 | |||||
Amortization of SPM investment | (152) | |||||
Other | (157) | |||||
Balance at December 31, 2018 | $4,201 | |||||
13) |
What was the amount of WesternGeco multiclient sales in the fourth quarter of 2018? |
|
Multiclient sales, including transfer fees, were $176 million in the fourth quarter of 2018 and $139 million in the third quarter of 2018. | ||
14) |
What was the WesternGeco backlog at the end of the fourth quarter of 2018? |
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The WesternGeco backlog, which is based on signed contracts with customers, was $343 million at the end of the fourth quarter of 2018. It was $322 million at the end of the third quarter of 2018. | ||
15) |
What were the orders and backlog for Cameron's OneSubsea and Drilling Systems businesses? |
|
|
The OneSubsea and Drilling Systems orders and backlog were as follows: |
(Stated in millions) | ||||
Orders |
Fourth Quarter |
Third Quarter |
||
OneSubsea | $611 | $425 | ||
Drilling Systems | $196 |
$193 |
||
Backlog (at the end of period) | ||||
OneSubsea | $1,903 | $1,654 | ||
Drilling Systems |
$495 |
$523 |
||
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 Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on
This full-year and fourth-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 full-year and fourth-quarter 2018 earnings release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the
View source version on businesswire.com: https://www.businesswire.com/news/home/20190118005170/en/
Source:
Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Manager of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
investor-relations@slb.com