Schlumberger Announces First-Quarter 2020 Results
- Worldwide revenue of
$7.5 billion decreased 9% sequentially and 5% year-on-year - International revenue of
$5.1 billion decreased 10% sequentially, but increased 2% year-on-year North America revenue of$2.3 billion decreased 7% sequentially and 17% year-on-year- GAAP loss per share, including charges of
$5.57 per share, was$5.32 - EPS, excluding charges, was
$0.25 - Cash flow from operations was
$784 million and free cash flow was$179 million - Board approved quarterly cash dividend of
$0.125 per share
| First-Quarter Results | (Stated in millions, except per share amounts) | ||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Revenue |
|
|
|
-9% |
|
-5% |
|||
| Income (loss) before taxes - GAAP basis |
|
|
|
n/m |
|
n/m |
|||
| Pretax segment operating income* |
|
|
|
-23% |
|
-15% |
|||
| Pretax segment operating margin* |
10.4% |
12.2% |
11.5% |
-181 bps |
|
-112 bps |
|||
| Net income (loss) - GAAP basis |
|
|
|
n/m |
|
n/m |
|||
| Net income, excluding charges & credits* |
|
|
|
-36% |
|
-17% |
|||
| Diluted EPS (loss per share) - GAAP basis |
|
|
|
n/m |
|
n/m |
|||
| Diluted EPS, excluding charges & credits* |
|
|
|
-36% |
|
-17% |
|||
|
|
|
|
|||||||
|
|
|
|
-7% |
|
-17% |
||||
| International revenue |
|
|
|
-10% |
|
2% |
|||
|
|
|
|
|||||||
|
|
|
|
-7% |
|
-18% |
||||
| International revenue, excluding Cameron |
|
|
|
-10% |
|
- |
|||
|
*These are non-GAAP financial measures. See sections titled "Charges & Credits" and "Segments" for details. |
|||||||||
|
n/m = not meaningful |
|||||||||
Schlumberger CEO
“Customer spending and drilling activity in
“The sequential international revenue decline was led by lower winter activity in the
“Looking beyond the sequential results for the quarter, our international business showed some resilience with year-on-year growth of 2% against the backdrop of an increasingly difficult operating environment. Growth was driven by six GeoMarkets—Russia &
| First-Quarter Revenue by Segment | (Stated in millions) | ||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Reservoir Characterization |
|
|
|
-20% |
|
-10% |
|||
| Drilling |
2,291 |
2,442 |
2,387 |
-6% |
|
-4% |
|||
| Production |
2,703 |
2,867 |
2,890 |
-6% |
|
-6% |
|||
| Cameron |
1,254 |
1,387 |
1,259 |
-10% |
|
0% |
|||
| Other |
(104) |
( |
(116) |
n/m |
|
n/m |
|||
|
|
|
|
-9% |
|
-5% |
||||
|
n/m = not meaningful |
|||||||||
|
Certain prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||
“By business segment, first-quarter revenue for Reservoir Characterization fell 20% sequentially, due to seasonally lower sales of software and multiclient seismic licenses and reduced winter activity in the Northern Hemisphere. Customers began to cut both discretionary spending and activity toward the end of the quarter, significantly reducing exploration activity in several GeoMarkets. Drilling revenue declined 6% sequentially, mostly due to seasonal effects in the Northern Hemisphere. Production revenue also declined 6% sequentially, driven by lower Well Services activity and weaker Artificial Lift Solutions sales in the international markets, while OneStim® revenue grew 2% sequentially. Cameron revenue declined 10% sequentially, mostly due to lower revenue in Surface Systems and Valves & Process Systems from reduced
“The first quarter results include an
“The operating environment that has now emerged is characterized by simultaneous shocks to both supply and demand. The spread of COVID-19 has caused more than 50 countries to implement lockdown measures affecting three billion people. Worldwide economic activity is falling sharply, and oil demand destruction is leading to an unprecedented supply-demand imbalance in the range of 20–30 million bbl/d. This is translating to near term uncertainties in activity and budget projections.
“At this time, customer feedback and our analysis indicate global capex spend is expected to decline by about 20% in 2020, with the largest share of the reduction affecting
“In this environment—the duration of which remains uncertain—we have planned for a range of scenarios and have taken a number of actions. To protect our workforce in the wake of COVID-19, we have taken the steps necessary to keep our people safe by supporting those affected, mandating that as many employees and contractors as possible work from home, and monitoring those who cannot do so and are required to be present at work. To reinforce our cost control and cash discipline, we are reducing our structural and variable costs, and restructuring our organization to match activity where necessary, including furloughing personnel, cutting salaries, lowering headcount, and closing facilities. In addition, our Board of Directors and executive officers have voluntarily agreed to reductions in their cash compensation. We have reduced our capital investment program by more than 30% and will allocate resources to the more resilient markets while remaining focused on capital stewardship and maintaining our commitment to a strong balance sheet.
“We are also leveraging three factors of our market differentiation. In
“In view of the uncertainty of the depth and extent of the contraction in oil demand due to the COVID-19 pandemic combined with the weaker commodity price environment, we have turned our strategic focus to cash conservation and protecting our balance sheet. We have therefore taken the prudent decision to reduce our dividend by 75%. The revised dividend supports Schlumberger’s value proposition through a balanced approach of shareholder distributions and organic investment, while providing the flexibility to weather the uncertain environment. This decision reflects our focus on our capital stewardship program as well as our commitment to maintain both a strong liquidity position and a strong investment grade credit rating that provides privileged access to the financial markets.
“The enormity of the task ahead will require levels of response and depths of resilience that have yet to be fully realized. Our immediate actions have been focused on those things we can control in protecting our business in an uncertain industry and global environment. We will continue to take the steps necessary to protect the safety and health of our people and pursue our desire to be the performance partner of choice for our customers. The future of our industry poses difficult challenges—for people and for the environment—but in challenge lies opportunity. Backed by the resilience and performance of our people, technology leadership, and financial strength, we believe we are well-placed to succeed as the industry recovers from this unprecedented downturn.”
Other Events
In January, Schlumberger completed the sale of its 49% interest in the Bandurria Sur Block in
In February, Schlumberger issued
In April, Schlumberger’s Board of Directors determined that
In April, Schlumberger entered into a
On
Consolidated Revenue by Area
|
|
(Stated in millions) | ||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
|
|
|
|
-7% |
|
-17% |
||||
|
945 |
|
992 |
-8% |
|
-5% |
||||
|
1,751 |
|
1,707 |
-13% |
|
3% |
||||
|
2,426 |
|
2,338 |
-9% |
|
4% |
||||
| Other |
54 |
|
104 |
n/m |
|
n/m |
|||
|
|
|
|
-9% |
|
-5% |
||||
|
|
|
|
|||||||
|
|
|
|
-7% |
|
-17% |
||||
| International revenue |
|
|
|
-10% |
|
2% |
|||
|
|
|
|
|||||||
|
|
|
|
-7% |
|
-18% |
||||
| International revenue, excluding Cameron |
|
|
|
-10% |
|
- |
|||
|
n/m = not meaningful |
|||||||||
|
Certain prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||
First-quarter revenue of
International
Consolidated revenue in the
Consolidated revenue in the
Reservoir Characterization
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Revenue |
|
|
|
-20% |
|
-10% |
|||
| Pretax operating income |
|
|
|
-50% |
|
-35% |
|||
| Pretax operating margin |
14.0% |
22.4% |
19.3% |
-839 bps |
|
-525 bps |
|||
|
Certain prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||
Reservoir Characterization revenue of
Reservoir Characterization pretax operating margin of 14% fell 839 bps sequentially due to seasonally lower revenue from Wireline in the
Drilling
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Revenue |
|
|
|
-6% |
|
-4% |
|||
| Pretax operating income |
|
|
|
-6% |
|
-7% |
|||
| Pretax operating margin |
12.4% |
12.4% |
12.9% |
2 bps |
|
-42 bps |
|||
Drilling revenue of
Drilling pretax operating margin of 12% was resilient, as it remained flat with the previous quarter despite the sequential revenue decline. Although margins were seasonally lower in
Production
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Revenue |
|
|
|
-6% |
|
-6% |
|||
| Pretax operating income |
|
|
|
-16% |
|
-2% |
|||
| Pretax operating margin |
7.8% |
8.8% |
7.5% |
-98 bps |
|
32 bps |
|||
Production revenue of
Production pretax operating margin of 8% contracted by 98 bps sequentially due to reduced profitability in
Cameron
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Sequential | Year-on-year | ||||||||
| Revenue |
|
|
|
-10% |
|
0% |
|||
| Pretax operating income |
|
|
|
-4% |
|
-18% |
|||
| Pretax operating margin |
9.7% |
9.1% |
11.8% |
57 bps |
|
-209 bps |
|||
|
Certain prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||
Cameron revenue of
Cameron pretax operating margin of 10% improved by 57 bps sequentially, despite the 10% drop in revenue. This was driven by this quarter’s favorable mix in the OneSubsea portfolio, which was partially offset by reduced profitability in Drilling Systems and Surface Systems.
Quarterly Highlights
Schlumberger is leading the development of Digital solutions to increase performance across the E&P value chain. Deploying these solutions in the current challenging industry environment can help customers maintain business continuity for their teams worldwide. Examples of this during the quarter included:
- The enterprise-wide deployment of the DELFI* cognitive E&P environment through a seven-year technology collaboration with Woodside Energy, announced in
August 2019 , has been accelerated to enable remote working during the COVID-19 pandemic. Deployment for a Woodside international asset team based in theUK that was scheduled for the end of 2020 was completedMarch 20th , taking less than a week to finalize via close collaboration between Woodside and Schlumberger teams.
- Schlumberger and the
Egyptian Ministry of Petroleum together introduced the Egypt Upstream Gateway, a unique and innovative national project for digitizing subsurface information and delivering a Digital platform to keepEgypt's subsurface data evergreen. The Egypt Upstream Gateway will leverage the GAIA* digital subsurface platform and provide additional value-added solutions—enabled by Digital technology and domain expertise—using the DELFI E&P cognitive environment capabilities and technologies.
Our commitment to environmental, social, and governance (ESG) considerations and the responsible management of resources—natural, human, and economic—is defined by the Schlumberger Global Stewardship program. This is supported by fit-for-basin technologies that can help customers achieve their own ESG goals, lowering their carbon footprint by reducing CO2 emissions. During the quarter, examples included:
- In
North America land, OneStim deployed StimCommander Pumps* automated and intelligent rate and pressure control in all major shale plays, totaling more than 69,000 stages and exceeding 140,000 pumping hours. Many customers have reduced pumping times due to more efficient operations, resulting in lower fuel consumption and a reduced carbon footprint. In 2019, the use of StimCommander Pumps control in all North American OneStim operations reduced diesel fuel consumption by more than 500,000 galUS, representing a CO2 reduction of at least 5,000 t.
- Schlumberger developed a fit-for-basin solution for BP Oman to achieve a significant reduction in CO2 emissions to clean up and produce gas from the Khazzan Field after fracturing. Modifications and design were performed through the Schlumberger RapidResponse* customer-driven product development process. In 2019, the solution was applied to 10 wells for flowback to clean up for production and reservoir testing. The result is a reduction in CO2 emissions of more than 80,000 t, equivalent to removing 18,000 cars from the road for one year.
The deployment of performance-based business models and fit-for-basin technologies further differentiate Schlumberger within the industry. A few examples of this included:
- In the US
Gulf of Mexico , WCS drilled and completed eight wells for Shell on the Vito project and reduced the average AFE by 15%. Key technologies deployed for this deepwater project included the PowerDrive Orbit* rotary steerable system, AxeBlade* ridged diamond element bit, and RheGuard* flat rheology drilling fluid system. These results are from an integrated performance-based contract that delivered the project ahead of schedule.
- In the Cygnus Field offshore
UK , Drilling & Measurements deployed the GeoSphere HD* high-definition reservoir mapping-while-drilling service and the PeriScope HD* multilayer bed boundary detection service for Neptune in a very low resistivity and thinly bedded environment that exhibited very little variation in resistivity. These fit-for-basin technologies helped Neptune understand the complexities of the reservoir in real time and place the horizontal well in the most productive intervals to maximize reservoir contact and recovery.
- In the
Williston Basin , OneStim deployed fit-for-basin technologies during a multiwell campaign for Lime Rock Resources to mitigate negative well interference, which increased incremental oil production by 41% in the first five months compared with nearby existing parent wells. Optimizing the BroadBand Shield* fracture geometry control service and WellWatcher Stim* stimulation monitoring service confirmed the elimination of negative well interference, resulting in savings of more than$2.1 million in well cleanup costs.
This quarter’s contract awards reflect the diversity of our business models in different basins around the globe, including offshore subsea integration, multiclient seismic, digital enablement, and alignment with in-country value.
- Equinor awarded
Subsea Integration Alliance an exclusive contract for the front-end engineering design (FEED) on its Bacalhau (formerly Carcará) project offshoreBrazil . The contract is based on a two-step award. The FEED and preinvestment are starting now, with an option for the execution phase under a lump-sum turnkey setup that includes engineering, procurement, construction, and installation for the entire subsea umbilicals, risers, and flowlines and subsea production systems scope. Option for the contract is subject to Equinor’s planned investment decision for the Bacalhau project in late 2020. The field development will include 19 wells.
- Following the successful Amendment Phase 1 project acquired in
Mississippi Canyon in 2019, TGS and Schlumberger announced the second phase of their ultralong-offset node project in the USGulf of Mexico . The next phase will extend the footprint of ultralong-offset data to theNorthern Green Canyon protraction area and will be called Engagement. Acquisition of the project, which is supported by industry prefunding, is expected to commence in the second quarter of 2020 with final data available in 2021.
- OMV Upstream and Schlumberger signed a memorandum of understanding (MOU) via video conference for a strategic partnership to further support OMV’s digital program called DigitUP, by using the DELFI cognitive E&P environment. OMV seeks to reduce the planning time for production wells by 90% by the end of 2022 and reduce the development phase of projects to 25% of current practice by 2025. The MOU details the technical scope and timelines of 12 pilots to be executed during a due diligence phase from April to
November 2020 .
- Schlumberger opened a world-class manufacturing center in King Salman Energy Park that supports Saudi Aramco’s In-Kingdom Total Value Add (IKTVA) program to promote economic growth. The center will manufacture various technologies including liner hangers and packers, in addition to isolation valve technologies such as GROVE* valves and ORBIT* rising stem ball valves, to help improve the efficiency of oil and gas operations in
Saudi Arabia and neighboring countries.
International Maritime Industries—a joint venture between Saudi Aramco,
Financial Tables
| Condensed Consolidated Statement of Income (Loss) | ||||
|
(Stated in millions, except per share amounts) |
||||
|
Three Months |
||||
| Periods Ended |
2020 |
|
2019 |
|
| Revenue |
|
|
||
| Interest and other income |
39 |
14 |
||
| Expenses | ||||
| Cost of revenue |
6,624 |
6,952 |
||
| Research & engineering |
173 |
173 |
||
| General & administrative |
127 |
112 |
||
| Impairments & other (1) |
8,523 |
- |
||
| Interest |
136 |
147 |
||
| Income (loss) before taxes |
|
|
||
| Tax (benefit) expense (1) |
(721) |
79 |
||
| Net income (loss) (1) |
|
|
||
| Net income attributable to noncontrolling interests |
8 |
9 |
||
| Net income (loss) attributable to Schlumberger (1) |
|
|
||
| Diluted earnings (loss) per share of Schlumberger (1) |
|
|
||
| Average shares outstanding |
1,387 |
1,385 |
||
| Average shares outstanding assuming dilution |
1,387 |
1,397 |
||
| Depreciation & amortization included in expenses (2) |
|
|
||
|
(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 APS investments. |
Condensed Consolidated Balance Sheet
| (Stated in millions) | ||||||
|
|
|
|
||||
| Assets |
2020 |
|
2019 |
|||
| Current Assets | ||||||
| Cash and short-term investments |
|
|
||||
| Receivables |
7,486 |
7,747 |
||||
| Other current assets |
5,436 |
5,616 |
||||
|
16,266 |
15,530 |
|||||
| Fixed assets |
8,550 |
9,270 |
||||
| Multiclient seismic data |
556 |
568 |
||||
|
12,924 |
16,042 |
|||||
| Intangible assets |
3,673 |
7,089 |
||||
| Deferred taxes |
155 |
- |
||||
| Other assets |
6,470 |
7,813 |
||||
|
|
|
|||||
| Liabilities and Equity | ||||||
| Current Liabilities | ||||||
| Accounts payable and accrued liabilities |
|
|
||||
| Estimated liability for taxes on income |
1,157 |
1,209 |
||||
| Short-term borrowings and current portion of long-term debt |
1,233 |
524 |
||||
| Dividends payable |
704 |
702 |
||||
|
13,262 |
13,098 |
|||||
| Long-term debt |
15,409 |
14,770 |
||||
| Deferred taxes |
- |
491 |
||||
| Postretirement benefits |
936 |
967 |
||||
| Other liabilities |
3,004 |
2,810 |
||||
|
32,611 |
32,136 |
|||||
| Equity |
15,983 |
24,176 |
||||
|
|
|
|||||
Liquidity
|
(Stated in millions) |
||||||||
| Components of Liquidity |
|
|
|
|
|
|||
| Cash and short-term investments |
|
|
|
|||||
| Short-term borrowings and current portion of long-term debt |
(1,233) |
(524) |
(99) |
|||||
| Long-term debt |
(15,409) |
(14,770) |
(16,449) |
|||||
| Net Debt (1) |
|
|
|
|||||
| Details of changes in liquidity follow: | ||||||||
|
Three |
|
Three |
||||||
|
Months |
|
Months |
||||||
| Periods Ended |
2020 |
|
2019 |
|||||
| Net income (loss) before noncontrolling interests |
|
|
||||||
| Impairment and other charges, net of tax |
7,727 |
- |
||||||
|
|
|
|||||||
| Depreciation and amortization (2) |
792 |
903 |
||||||
| Stock-based compensation expense |
108 |
108 |
||||||
| Change in working capital |
(482) |
(1,048) |
||||||
| Other |
7 |
(67) |
||||||
| Cash flow from operations (3) |
|
|
||||||
| Capital expenditures |
(407) |
(413) |
||||||
| APS investments |
(163) |
(151) |
||||||
| Multiclient seismic data capitalized |
(35) |
(45) |
||||||
| Free cash flow (4) |
179 |
(283) |
||||||
| Dividends paid |
(692) |
(692) |
||||||
| Stock repurchase program |
(26) |
(98) |
||||||
| Proceeds from employee stock plans |
74 |
106 |
||||||
| Net proceeds from asset divestitures |
298 |
- |
||||||
| Other |
(4) |
(152) |
||||||
| Increase in Net Debt |
(171) |
(1,119) |
||||||
| Net Debt, beginning of period |
(13,127) |
(13,274) |
||||||
| Net Debt, end of period |
|
|
||||||
| (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, amortization of intangible assets, multiclient seismic data costs, and APS investments. |
|
|
(3) |
Includes severance payments of |
|
|
(4) |
“Free cash flow” represents cash flow from operations less capital expenditures, APS 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 first-quarter 2020 earnings release also includes non-GAAP financial measures (as defined under the SEC’s Regulation G). In addition to the non-GAAP financial measures discussed under “Liquidity”, net income (loss), excluding charges & credits, as well as measures derived from it (including diluted EPS, excluding charges & credits; Schlumberger net income (loss), 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) | ||||||||||
| First Quarter 2020 | ||||||||||
| Pretax | Tax | Noncont. Interests | Net | Diluted EPS |
||||||
| Schlumberger net loss (GAAP basis) |
|
|
|
|
|
|||||
|
3,070 |
- |
- |
3,070 |
2.21 |
||||||
| Intangible assets |
3,321 |
815 |
- |
2,506 |
1.81 |
|||||
| APS investments |
1,264 |
(4) |
- |
1,268 |
0.91 |
|||||
|
587 |
133 |
- |
454 |
0.33 |
||||||
| Severance |
202 |
7 |
- |
195 |
0.14 |
|||||
| Other |
79 |
9 |
- |
70 |
0.05 |
|||||
| Valuation allowance |
- |
(164) |
- |
164 |
0.12 |
|||||
| Schlumberger net income, excluding charges & credits |
|
|
|
|
|
|||||
| Fourth Quarter 2019 | ||||||||||
| Pretax | Tax | Noncont. Interests | Net | Diluted EPS* |
||||||
| Schlumberger net income (GAAP basis) |
|
|
|
|
|
|||||
|
225 |
51 |
- |
174 |
0.12 |
||||||
| Other restructuring |
104 |
(33) |
- |
137 |
0.10 |
|||||
| Workforce reductions |
68 |
8 |
- |
60 |
0.04 |
|||||
| Pension settlement |
37 |
8 |
- |
29 |
0.02 |
|||||
| Repurchase of Notes |
22 |
5 |
- |
17 |
0.01 |
|||||
| Gain on formation of Sensia |
(247) |
(42) |
- |
(205) |
(0.15) |
|||||
| Schlumberger net income, excluding charges & credits |
|
|
|
|
|
|||||
|
There were no charges or credits during the first quarter of 2019. |
|
* Does not add due to rounding. |
Segments
| (Stated in millions) | ||||||||||||
| Three Months Ended | ||||||||||||
| Revenue | Income (Loss) Before Taxes |
Revenue | Income Before Taxes |
Revenue | Income Before Taxes |
|||||||
| Reservoir Characterization |
|
|
|
|
|
|
||||||
| Drilling |
2,291 |
285 |
2,442 |
303 |
2,387 |
307 |
||||||
| Production |
2,703 |
212 |
2,867 |
253 |
2,890 |
217 |
||||||
| Cameron |
1,254 |
121 |
1,387 |
126 |
1,259 |
148 |
||||||
| Eliminations & other |
(104) |
(26) |
(111) |
(44) |
(116) |
(45) |
||||||
| Pretax segment operating income |
776 |
1,006 |
908 |
|||||||||
| Corporate & other |
(228) |
(215) |
(273) |
|||||||||
| Interest income(1) |
15 |
8 |
10 |
|||||||||
| Interest expense(1) |
(129) |
(138) |
(136) |
|||||||||
| Charges & credits(2) |
(8,523) |
(209) |
- |
|||||||||
|
|
|
|
|
|
|
|||||||
|
(1) |
Excludes interest included in the segment results. |
|
|
(2) |
See section entitled “Charges & Credits” for details. |
Prior period amounts have been reclassified to the current period presentation.
Supplemental Information
|
1) |
What is the capital investment guidance for the full year 2020? |
|
|
|
Capital investment (comprised of capex, multiclient, and APS investments) for the full year 2020 is expected to be approximately |
|
|
2) |
What were the cash flow from operations and free cash flow for the first quarter of 2020? |
|
|
|
Cash flow from operations for the first quarter of 2020 was |
|
|
3) |
What was included in “Interest and other income” for the first quarter of 2020? |
|
|
|
“Interest and other income” for the first quarter of 2020 was |
|
|
4) |
How did interest income and interest expense change during the first quarter of 2020? |
|
|
|
Interest income of |
|
|
5) |
What is the difference between Schlumberger’s consolidated income (loss) before taxes and pretax segment operating income? |
|
|
|
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. |
|
|
6) |
What was the effective tax rate (ETR) for the first quarter of 2020 and what is the guidance on the ETR going forward? |
|
|
|
The ETR for the first quarter of 2020, calculated in accordance with GAAP, was 8.9% as compared to 24.0% for the fourth quarter of 2019. Excluding charges and credits, the ETR for the first quarter of 2020 was 17.2% as compared to 16.0% for the fourth quarter of 2019. |
|
|
|
|
|
|
|
Going forward, it is very challenging to provide guidance regarding our effective tax rate. This is because relatively small changes in our geographic mix of earnings will have a disproportionate impact on the effective tax rate as our pretax income decreases. As a result, our second quarter 2020 effective tax rate will likely increase around 5 to 10 percentage points as compared to the first quarter. However, each percentage point change will have a significantly smaller impact on our tax expense line and, consequently net income, as compared to our recent past. |
|
|
7) |
How many shares of common stock were outstanding as of |
|
|
|
There were 1.388 billion shares of common stock outstanding as of |
| (Stated in millions) | ||
| Shares outstanding at |
1,385 |
|
| Shares issued under employee stock purchase plan |
2 |
|
| Vesting of restricted stock |
2 |
|
| Stock repurchase program |
(1) |
|
| Shares outstanding at |
1,388 |
|
|
8) |
What was the weighted average number of shares outstanding during the first quarter of 2020 and fourth quarter of 2019? 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 was 1.387 billion during the first quarter of 2020 and 1.384 billion during the fourth quarter of 2019. |
|
|
|
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) | ||||
|
First Quarter 2020 |
Fourth Quarter 2019 |
|||
| Weighted average shares outstanding |
1,387 |
1,384 |
||
| Assumed exercise of stock options |
- |
- |
||
| Unvested restricted stock |
16 |
12 |
||
| Average shares outstanding, assuming dilution |
1,403 |
1,396 |
||
|
9) |
What was the unamortized balance of Schlumberger’s investment in APS projects at |
|
|
|
The unamortized balance of Schlumberger’s investments in APS projects was approximately |
|
|
10) |
What are the components of depreciation and amortization expense for the first quarter of 2020 and the fourth quarter of 2019? |
|
|
|
The components of depreciation and amortization expense for the first quarter of 2020 and fourth quarter of 2019 were as follows: |
| (Stated in millions) | ||||
|
First Quarter 2020 |
Fourth Quarter 2019 |
|||
| Depreciation of fixed assets |
|
|
||
| Amortization of intangible assets |
133 |
138 |
||
| Amortization of multiclient seismic data costs capitalized |
47 |
75 |
||
| Amortization of APS investments |
163 |
184 |
||
|
|
|
|||
|
11) |
What was the amount of |
|
|
|
Multiclient sales, including transfer fees, were |
|
|
12) |
What was the |
|
|
|
The |
|
|
13) |
What was the book-to-bill ratio for Cameron’s long-cycle businesses? What were the orders and backlog for Cameron’s OneSubsea and Drilling Systems businesses? |
|
|
|
The book-to-bill ratio for the Cameron long-cycle businesses was 1.2. The OneSubsea and Drilling Systems orders and backlog were as follows: |
| (Stated in millions) | ||||
| Orders |
First Quarter 2020 |
Fourth Quarter 2019 |
||
| OneSubsea |
|
|
||
| Drilling Systems |
|
|
||
| Backlog (at the end of period) | ||||
| OneSubsea |
|
|
||
| Drilling Systems |
|
|
||
|
14) |
What are the components of the |
|
|
|
|
|
|
|
The components of the |
|
|
||||
| Intangible assets(b) |
3,321 |
|||
| APS investments(c) |
1,264 |
|||
|
587 |
||||
| Severance(e) |
202 |
|||
| Other(f) |
79 |
|||
|
|
||||
|
(a) |
As a result of market valuations, Schlumberger determined that the carrying value of certain of its reporting units were in excess of their fair values resulting in a |
|
|
(b) |
|
|
|
(c) |
Relates to the carrying value of certain APS projects in |
|
|
(d) |
Consists of fixed assets associated with the pressure pumping business in |
|
|
(e) |
The vast majority of this severance is expected to be paid during the second quarter of 2020. Additionally, Schlumberger expects to record significant charges relating to severance during the second quarter of 2020. However, at this time the amount cannot be reasonably estimated. |
|
|
(f) |
Primarily relates to an equity method investment that was determined to be other-than-temporarily impaired. |
About Schlumberger
Schlumberger is the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. With product sales and services in more than 120 countries and employing approximately 103,000 people who represent over 170 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 sustainably.
*Mark of Schlumberger or Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on
This first-quarter 2020 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 and Schlumberger’s customers; our effective tax rate; Schlumberger’s APS projects, joint ventures and alliances; Schlumberger’s greenhouse gas emissions targets and progress against those targets; future global economic and geopolitical conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, changing global economic conditions; public health crises, such as the COVID-19 pandemic, and any related actions taken by businesses and governments; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of Schlumberger’s customers and suppliers, particularly during extended periods of low prices for crude oil and natural gas; 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 competitiveness of alternate-energy sources or product substitutes; and other risks and uncertainties detailed in this first-quarter 2019 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/20200417005208/en/
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