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Schlumberger Announces Full-Year and Fourth-Quarter 2015 Results
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Fourth-quarter revenue of
$7.7 billion decreased 9% sequentially -
Fourth-quarter EPS of
$0.65 , excluding charges and credits, declined 17% sequentially -
Fourth-quarter restructuring and asset impairment charges totaled
$1.46 per share -
Full-year free cash flow of
$5 billion represented 114% of earnings -
New share repurchase program of
$10 billion approved -
Quarterly cash dividend of
$0.50 per share approved
Full-Year Results |
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(Stated in millions, except per share amounts) | ||||||||||||||
Twelve Months Ended | Change | ||||||||||||||
Dec. 31, 2015 | Dec. 31, 2014 | Year-on-year | |||||||||||||
Revenue | $ | 35,475 | $ | 48,580 | -27 | % | |||||||||
Pretax operating income | 6,510 | 10,576 | -38 | % | |||||||||||
Income from continuing operations, excluding charges and credits* | 4,290 | 7,282 | -41 | % | |||||||||||
Diluted EPS from continuing operations, excluding charges and credits* | $ | 3.37 | $ | 5.57 | -39 | % | |||||||||
Pretax operating margin | 18.4 | % | 21.8 | % | -342 bps | ||||||||||
North America revenue | $ | 9,811 | $ | 16,151 | -39 | % | |||||||||
North America pretax operating income | 999 | 3,057 | -67 | % | |||||||||||
North America pretax operating margin | 10.2 | % | 18.9 | % | -874 bps | ||||||||||
International revenue | $ | 25,196 | $ | 32,089 | -21 | % | |||||||||
International pretax operating income | 5,955 | 7,677 | -22 | % | |||||||||||
International pretax operating margin | 23.6 | % | 23.9 | % | -29 bps | ||||||||||
*Income from continuing operations, including charges and credits, was
Schlumberger Chairman and CEO
"Full-year revenue for the International Areas declined 21% due to
customer budget cuts of more than 20%, as international and national oil
companies responded to lower commodity prices. This effect was
exacerbated by service company pricing concessions. More than one-third
of the revenue decline was the result of the fall of certain currencies
against the US dollar. Performance among the Areas was led by a 26%
decrease in
"Full-year Schlumberger pretax operating income declined 38%, with
pretax operating margin contracting 342 basis points to 18.4%.
"The strength of these results demonstrates the resiliency of our business portfolio in the face of the activity, pricing and foreign currency challenges of 2015. Our performance was driven by excellence in execution, prompt and proactive cost and resource management, and the growing impact of our transformation program.
Fourth-Quarter Results |
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(Stated in millions, except per share amounts) | |||||||||||||||||||
Three Months Ended | Change | ||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | Sequential | Year-on-year | |||||||||||||||
Revenue | $ | 7,744 | $ | 8,472 | $ | 12,641 | -9 | % | -39 | % | |||||||||
Pretax operating income | 1,288 | 1,521 | 2,781 | -15 | % | -54 | % | ||||||||||||
Income from continuing operations, excluding charges and credits* | 819 | 989 | 1,941 | -17 | % | -58 | % | ||||||||||||
Diluted EPS from continuing operations, excluding charges and credits* | $ | 0.65 | $ | 0.78 | $ | 1.50 | -17 | % | -57 | % | |||||||||
Pretax operating margin | 16.6 | % | 18.0 | % | 22.0 | % | -132 bps | -537 bps | |||||||||||
North America revenue | $ | 1,955 | $ | 2,273 | $ | 4,324 | -14 | % | -55 | % | |||||||||
North America pretax operating income | 139 | 202 | 849 | -31 | % | -84 | % | ||||||||||||
North America pretax operating margin | 7.1 | % | 8.9 | % | 19.6 | % | -175 bps | -1,250 bps | |||||||||||
International revenue | $ | 5,714 | $ | 6,068 | $ | 8,210 | -6 | % | -30 | % | |||||||||
International pretax operating income | 1,259 | 1,440 | 1,990 | -13 | % | -37 | % | ||||||||||||
International pretax operating margin | 22.0 | % | 23.7 | % | 24.2 | % | -170 bps | -220 bps | |||||||||||
*Loss from continuing operations, including charges and credits, was
"Fourth-quarter revenue decreased 9% sequentially driven by the
continuing decline in rig activity and persistent pricing pressure
throughout our global operations that also suffered from activity
disruptions and project delays and cancellations.
"Among the business segments,
"Negative market sentiments intensified in the fourth quarter, with oil
over-production continuing and extending the bearish trend in global
inventories. This led to a further drop in oil prices, which reached a
12-year low in
"In anticipation of an extended activity weakness in the first half of
2016, we implemented another significant adjustment to our cost and
resource base during the fourth quarter. This included a further
workforce reduction of 10,000 employees, as well as greater streamlining
of our overhead, infrastructure and asset base. This led us to recognize
in the fourth quarter
"In spite of the challenging business landscape, we generated
approximately
"As the pending
"In this uncertain environment, we continue to focus on what we can control. Throughout the year we took a number of actions to streamline and resize our organization as we continued to navigate the downturn. In continuing to accelerate the benefits of the transformation program across both our Technologies and GeoMarkets in 2016, we believe we will emerge as a stronger company relative to industry peers and competitors once the price of oil and the market conditions in our industry turnaround.
"We remain constructive in our view of the market outlook in the medium term, and continue to believe that the underlying balance of supply and demand will tighten, driven by growth in demand, weakening supply as E&P investment cuts take effect, and by the size of the annual supply replacement challenge."
Other Events
During the quarter, Schlumberger repurchased 5.4 million shares of its
common stock at an average price of
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Despite revenue declining sequentially by 14%, the decremental operating margin was only 20%. The strength of this performance was underpinned by prompt cost and resource management, effective supply chain processes, and strong operations management.
In the fourth quarter, integrated services and new Schlumberger
technologies helped increase production and operational efficiency in
In US Land, Well Services BroadBand* unconventional reservoir completion services have been deployed in 14% more wells and in 52% more stages as compared to 2014. BroadBand technology maximizes wellbore coverage and reservoir contact to increase production and recovery by stimulating and propping open every fracture from tip to wellbore. The Eagle Ford and Permian Basins reflected the highest activity in 2015 while total activity covered six basins and 32 operators.
In
Also in US Land, the Drilling & Measurements PowerDrive Orbit vorteX*
motorized rotary steerable system achieved repeated successes in the
Midland and Anadarko Basins. In the Midland Basin's Wolfcamp formation,
this technology established a record rate of penetration (ROP) by
drilling an average of 245 ft per hour to a total depth of more than
7,100 ft in 29 on-bottom hours. In the same formation, the PowerDrive
Orbit vorteX system drilled at an average ROP of 203 ft per hour to a
total depth of 12,600 ft in a record-breaking time of four days.
Drilling & Measurements also deployed PowerDrive vorteX technology for
the first time in the Anadarko Basin's
Elsewhere in US Land, M-I SWACO deployed SCREEN PULSE* fluid and
cuttings separator technology to enhance the performance of the solids
control process, to maximize recovery of high-quality reusable drilling
fluid, and to reduce the drill cuttings waste generated. Maintaining the
drilling fluid in optimum condition enhances drilling efficiency and
reduces the cost of waste handling and disposal, while improving safety
performance at the wellsite. Since its launch in
In
In another project offshore
International Areas
Revenue for the International Areas of
Revenue in the
International Area pretax operating margin of 22% decreased 170 bps
sequentially as pricing pressure across the Areas was partially offset
by streamlining the cost and resource base and by acceleration of the
transformation program. In addition, project cancellations, delayed
start-ups of new projects, and abrupt activity disruptions all
contributed to the sequential reduction in pretax operating margin,
particularly in the
Sequential decremental operating margin reached 51% as abrupt operational disruptions impeded prompt cost adjustments, and pricing pressure accounted for more than a third of the revenue decline.
In the fourth quarter, the transformation program increased workforce
productivity through a combination of multiskilling, optimized base
support, and asset utilization. For example in the
The creation of an Optimized Support Team in
A total of 19 M-I SWACO Drilling Solutions engineers were trained on how to perform key field operations, which included deployment of CLEANCUT* cuttings collection and containment systems and AUTOMATIC TANK CLEANING* units that can be operated by smaller number of crews. During the first four months after training, the multiskilled engineers delivered safe and high quality job performance, while the number of people on board was reduced by more than 350 man/days.
Wireline and Slickline crews cross-trained for operations on board Light Weight Intervention Vessels for three international oil companies. Through multiskilling initiatives, safety risks were reduced due to fewer people on board, and the three customers saved a combined total of 328 work days.
The fourth quarter also saw an expansion of integrated services in the International Areas as well as a number of new contract awards.
In
Offshore
In 2015, Integrated Production Services (IPS) supported three multiwell
abandonment programs for an international oil and gas company by
providing a range of project management, plug and abandonment
engineering, and well services. The projects were both on land and
offshore in
In
In
In
Reservoir Characterization Group |
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(Stated in millions, except margin percentages) | ||||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | Sequential | Year-on-year | ||||||||||||||||
Revenue | $ | 2,154 | $ | 2,321 | $ | 3,265 | -7 | % | -34 | % | ||||||||||
Pretax operating income | 520 | 614 | 984 | -15 | % | -47 | % | |||||||||||||
Pretax operating margin | 24.2 | % | 26.4 | % | 30.1 | % | -230 bps | -600 bps | ||||||||||||
Decremental operating margin | 56 | % | 42 | % | ||||||||||||||||
Pretax operating margin of 24.2% declined 230 bps sequentially as the contribution of high-margin multiclient seismic sales was more than offset by a decline in high-margin Wireline services. Decremental operating margin was higher than the previous quarter at 56% as activities were affected by abrupt operational disruptions that offered limited prospects for prompt cost adjustments.
During the quarter, a number of Reservoir Characterization technologies helped characterize complex reservoirs, optimize well production and reservoir recovery, and improve operational efficiency.
In
Offshore
In the
In the
In
In
Offshore
In
Drilling Group |
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(Stated in millions, except margin percentages) | ||||||||||||||||||||
Three Months Ended | Change | |||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | Sequential | Year-on-year | ||||||||||||||||
Revenue | $ | 2,953 | $ | 3,219 | $ | 4,576 | -8 | % | -35 | % | ||||||||||
Pretax operating income | 494 | 594 | 947 | -17 | % | -48 | % | |||||||||||||
Pretax operating margin | 16.7 | % | 18.4 | % | 20.7 | % | -173 bps | -398 bps | ||||||||||||
Decremental operating margin | 38 | % | 28 | % | ||||||||||||||||
Drilling Group revenue of
Pretax operating margin of 16.7% contracted 173 bps sequentially as revenue declined on pricing weakness and abrupt operational disruptions that resulted in a decremental operating margin of 38%.
In
Offshore
In the Norwegian sector of the
In
In
In
In
In
Production Group |
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(Stated in millions, except margin percentages) | |||||||||||||||||||||||
Three Months Ended | Change | ||||||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | Sequential | Year-on-year | |||||||||||||||||||
Revenue | $ | 2,671 | $ | 2,974 | $ | 4,863 | -10 | % | -45 | % | |||||||||||||
Pretax operating income | 303 | 330 | 898 | -8 | % | -66 | % | ||||||||||||||||
Pretax operating margin | 11.3 | % | 11.1 | % | 18.5 | % | 24 bps | -713 bps | |||||||||||||||
Decremental operating margin | 9 | % | 27 | % | |||||||||||||||||||
Pretax operating margin of 11.3% increased 24 bps sequentially despite
lower activity and increasing pricing weakness in pressure pumping
services. Sequential decremental operating margin improved to 9% as the
decline in pressure pumping margin was largely offset by the combination
of accretive margin contributions from Schlumberger Production
Management projects in
In
In
In
Also in
Elsewhere in
Offshore
Financial Tables |
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Condensed Consolidated Statement of Income | ||||||||||||||||
(Stated in millions, except per share amounts) | ||||||||||||||||
Fourth Quarter | Twelve Months | |||||||||||||||
Periods Ended December 31, | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 7,744 | $ | 12,641 | $ | 35,475 | $ | 48,580 | ||||||||
Interest and other income | 81 | 71 | 236 | 291 | ||||||||||||
Expenses | ||||||||||||||||
Cost of revenue | 6,292 | 9,691 | 28,321 | 37,398 | ||||||||||||
Research & engineering | 276 | 324 | 1,094 | 1,217 | ||||||||||||
General & administrative | 132 | 122 | 494 | 475 | ||||||||||||
Impairments & other (1) | 2,136 | 1,773 | 2,575 | 1,773 | ||||||||||||
Interest | 91 | 87 | 346 | 369 | ||||||||||||
Income (loss) before taxes | $ | (1,102 | ) | $ | 715 | $ | 2,881 | $ | 7,639 | |||||||
Taxes on income (loss) (1) | (113 | ) | 398 | 746 | 1,928 | |||||||||||
Income (loss) from continuing operations | (989 | ) | 317 | 2,135 | 5,711 | |||||||||||
Loss from discontinued operations | - | - | - | (205 | ) | |||||||||||
Net income (loss) | (989 | ) | 317 | 2,135 | 5,506 | |||||||||||
Net income attributable to noncontrolling interests | 27 | 15 | 63 | 68 | ||||||||||||
Net income (loss) attributable to Schlumberger | $ | (1,016 | ) | $ | 302 | $ | 2,072 | $ | 5,438 | |||||||
Schlumberger amounts attributable to: | ||||||||||||||||
Income (loss) from continuing operations (1) | $ | (1,016 | ) | $ | 302 | $ | 2,072 | $ | 5,643 | |||||||
Loss from discontinued operations | - | - | - | (205 | ) | |||||||||||
Net income (loss) | $ | (1,016 | ) | $ | 302 | $ | 2,072 | $ | 5,438 | |||||||
Diluted earnings per share of Schlumberger | ||||||||||||||||
Income (loss) from continuing operations (1) | $ | (0.81 | ) | $ | 0.23 | $ | 1.63 | $ | 4.31 | |||||||
Loss from discontinued operations | - | - | - | (0.16 | ) | |||||||||||
Net income (loss) | $ | (0.81 | ) | $ | 0.23 | $ | 1.63 | $ | 4.16 | |||||||
Depreciation & amortization included in expenses (2) | $ | 963 | $ | 1,065 | $ | 4,078 | $ | 4,094 |
(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. | |
Refer to "Supplemental Information" for details regarding outstanding shares. |
Condensed Consolidated Balance Sheet | |||||||||
(Stated in millions) | |||||||||
Dec. 31, | Dec. 31, | ||||||||
Assets | 2015 | 2014 | |||||||
Current Assets | |||||||||
Cash and short-term investments | $ | 13,034 | $ | 7,501 | |||||
Receivables | 8,780 | 11,171 | |||||||
Other current assets | 5,098 | 6,022 | |||||||
26,912 | 24,694 | ||||||||
Fixed income investments, held to maturity | 418 | 442 | |||||||
Fixed assets | 13,415 | 15,396 | |||||||
Multiclient seismic data | 1,026 | 793 | |||||||
Goodwill | 15,605 | 15,487 | |||||||
Intangible assets | 4,569 | 4,654 | |||||||
Other assets | 6,060 | 5,438 | |||||||
$ | 68,005 | $ | 66,904 | ||||||
Liabilities and Equity | |||||||||
Current Liabilities | |||||||||
Accounts payable and accrued liabilities | $ | 7,727 | $ | 9,246 | |||||
Estimated liability for taxes on income | 1,203 | 1,647 | |||||||
Short-term borrowings and current portion | |||||||||
of long-term debt | 4,557 | 2,765 | |||||||
Dividend payable | 634 | 518 | |||||||
14,121 | 14,176 | ||||||||
Long-term debt | 14,442 | 10,565 | |||||||
Postretirement benefits | 1,434 | 1,501 | |||||||
Deferred taxes | 1,075 | 1,296 | |||||||
Other liabilities | 1,028 | 1,317 | |||||||
32,100 | 28,855 | ||||||||
Equity | 35,905 | 38,049 | |||||||
$ | 68,005 | $ | 66,904 |
Net Debt
"Net Debt" represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger's indebtedness by reflecting cash and investments that could be used to repay debt.
Details of changes in Net Debt follow:
(Stated in millions) | |||||||||||||||
Periods Ended December 31, |
Twelve
Months 2015 |
Fourth
Quarter 2015 |
Twelve
Months 2014 |
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Income (loss) from continuing operations before noncontrolling interests | $ | 2,135 | $ | (989 | ) | $ | 5,711 | ||||||||
Impairments and other charges, net of tax | 2,218 | 1,835 | 1,639 | ||||||||||||
Income from continuing operations before noncontrolling | |||||||||||||||
interests, excluding charges & credits | 4,353 | 846 | 7,350 | ||||||||||||
Depreciation and amortization (1) | 4,078 | 963 | 4,094 | ||||||||||||
Pension and other postretirement benefits expense | 438 | 112 | 355 | ||||||||||||
Stock-based compensation expense | 326 | 76 | 329 | ||||||||||||
Pension and other postretirement benefits funding | (346 | ) | (54 | ) | (390 | ) | |||||||||
(Increase) decrease in working capital (2) | (478 | ) | 31 | (36 | ) | ||||||||||
Other | 434 | 204 | (507 | ) | |||||||||||
Cash flow from operations | 8,805 | 2,178 | 11,195 | ||||||||||||
Capital expenditures | (2,410 | ) | (627 | ) | (3,976 | ) | |||||||||
SPM investments | (953 | ) | (603 | ) | (740 | ) | |||||||||
Multiclient seismic data costs capitalized | (486 | ) | (150 | ) | (321 | ) | |||||||||
Free cash flow (3) | 4,956 | 798 | 6,158 | ||||||||||||
Stock repurchase program | (2,182 | ) | (398 | ) | (4,678 | ) | |||||||||
Dividends paid | (2,419 | ) | (633 | ) | (1,968 | ) | |||||||||
Proceeds from employee stock plans | 448 | 25 | 825 | ||||||||||||
803 | (208 | ) | 337 | ||||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (478 | ) | (154 | ) | (1,501 | ) | |||||||||
Discountinued operations - settlement with U.S. Department of Justice | (233 | ) | - | - | |||||||||||
Other | (252 | ) | 19 | 220 | |||||||||||
Increase in Net Debt | (160 | ) | (343 | ) | (944 | ) | |||||||||
Net Debt, Beginning of period | (5,387 | ) | (5,204 | ) | (4,443 | ) | |||||||||
Net Debt | $ | (5,547 | ) | $ | (5,547 | ) | $ | (5,387 | ) | ||||||
Components of Net Debt |
Dec. 31, |
Sept. 30, |
Dec. 31, |
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Cash and short-term investments | $ | 13,034 | $ | 6,605 | $ | 7,501 | |||||||||
Fixed income investments, held to maturity | 418 | 439 | 442 | ||||||||||||
Short-term borrowings and current portion of long-term debt | (4,557 | ) | (4,761 | ) | (2,765 | ) | |||||||||
Long-term debt | (14,442 | ) | (7,487 | ) | (10,565 | ) | |||||||||
$ | (5,547 | ) | $ | (5,204 | ) | $ | (5,387 | ) |
(1) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. | ||
(2) | Includes severance payments of approximately $810 million during the twelve months ended December 31, 2015 and $205 million during the fourth quarter of 2015. | ||
(3) | "Free cash flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data costs capitalized. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value such as acquisitions, and returning cash to shareholders through stock repurchases and dividends. |
Charges & Credits
In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this Full-Year and Fourth-Quarter 2015 Press Release also includes non-GAAP financial measures (as defined under the SEC's Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:
(Stated in millions, except per share amounts) | ||||||||||||||||||||||||
Fourth Quarter 2015 | ||||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted
EPS |
||||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 1,034 | $ | 188 | $ | 27 | $ | 819 | $ | 0.65 | ||||||||||||||
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 terminations | (41 | ) | (2 | ) | - | (39 | ) | |||||||||||||||||
Other | (84 | ) | (7 | ) | - | (77 | ) | |||||||||||||||||
Schlumberger loss from continuing operations, as reported |
$ | (1,102 | ) | $ | (113 | ) | $ | 27 | $ | (1,016 | ) | $ | (0.81 | ) | ||||||||||
Twelve Months 2015 | ||||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted
EPS |
||||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 5,456 | $ | 1,103 | $ | 63 | $ | 4,290 | $ | 3.37 | ||||||||||||||
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 terminations | (41 | ) | (2 | ) | - | (39 | ) | |||||||||||||||||
Other | (84 | ) | (7 | ) | - | (77 | ) | |||||||||||||||||
Schlumberger income from continuing operations, as reported | $ | 2,881 | $ | 746 | $ | 63 | $ | 2,072 | $ | 1.63 |
(Stated in millions, except per share amounts) | |||||||||||||||||||||||
Fourth Quarter 2014 | |||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted
EPS |
|||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 2,488 | $ | 532 | $ | 15 | $ | 1,941 | $ | 1.50 | |||||||||||||
WesternGeco restructuring | (806 | ) | (25 | ) | - | (781 | ) | ||||||||||||||||
Currency devaluation loss in Venezuela | (472 | ) | - | - | (472 | ) | |||||||||||||||||
Workforce reduction | (296 | ) | (37 | ) | - | (259 | ) | ||||||||||||||||
Impairment of SPM project | (199 | ) | (72 | ) | - | (127 | ) | ||||||||||||||||
Schlumberger income from continuing operations, as reported | $ | 715 | $ | 398 | $ | 15 | $ | 302 | $ | 0.23 | |||||||||||||
Twelve Months 2014 | |||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted
EPS |
|||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 9,412 | $ | 2,062 | $ | 68 | $ | 7,282 | $ | 5.57 | |||||||||||||
WesternGeco restructuring | (806 | ) | (25 | ) | - | (781 | ) | ||||||||||||||||
Currency devaluation loss in Venezuela | (472 | ) | - | - | (472 | ) | |||||||||||||||||
Workforce reduction | (296 | ) | (37 | ) | - | (259 | ) | ||||||||||||||||
Impairment of SPM project | (199 | ) | (72 | ) | - | (127 | ) | ||||||||||||||||
Schlumberger income from continuing operations, as reported | $ | 7,639 | $ | 1,928 | $ | 68 | $ | 5,643 | $ | 4.31 |
Product Groups | ||||||||||||||||||||||||||
(Stated in millions) | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | ||||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||||
Reservoir Characterization | $ | 2,154 | $ | 520 | $ | 2,321 | $ | 614 | $ | 3,265 | $ | 984 | ||||||||||||||
Drilling | 2,953 | 494 | 3,219 | 594 | 4,576 | 947 | ||||||||||||||||||||
Production | 2,671 | 303 | 2,974 | 330 | 4,863 | 898 | ||||||||||||||||||||
Eliminations & other | (34 | ) | (29 | ) | (42 | ) | (17 | ) | (63 | ) | (48 | ) | ||||||||||||||
Pretax operating income | 1,288 | 1,521 | 2,781 | |||||||||||||||||||||||
Corporate & other | - | (179 | ) | - | (198 | ) | - | (221 | ) | |||||||||||||||||
Interest income(1) | - | 8 | - | 8 | - | 8 | ||||||||||||||||||||
Interest expense(1) | - | (83 | ) | - | (78 | ) | - | (80 | ) | |||||||||||||||||
Charges & credits | - | (2,136 | ) | - | - | - | (1,773 | ) | ||||||||||||||||||
$ | 7,744 | $ | (1,102 | ) | $ | 8,472 | $ | 1,253 | $ | 12,641 | $ | 715 |
Geographic Areas | |||||||||||||||||||||||
(Stated in millions) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
Dec. 31, 2015 | Sept. 30, 2015 | Dec. 31, 2014 | |||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
||||||||||||||||||
North America | $ | 1,955 | $ | 139 | $ | 2,273 | $ | 202 | $ | 4,324 | $ | 849 | |||||||||||
Latin America | 1,407 | 324 | 1,422 | 295 | 2,053 | 429 | |||||||||||||||||
Europe/CIS/Africa | 2,059 | 428 | 2,274 | 505 | 3,063 | 683 | |||||||||||||||||
Middle East & Asia | 2,248 | 507 | 2,372 | 641 | 3,094 | 877 | |||||||||||||||||
Eliminations & other | 75 | (110 | ) | 131 | (122 | ) | 107 | (57 | ) | ||||||||||||||
Pretax operating income | 1,288 | 1,521 | 2,781 | ||||||||||||||||||||
Corporate & other | - | (179 | ) | - | (198 | ) | - | (221 | ) | ||||||||||||||
Interest income(1) | - | 8 | - | 8 | - | 8 | |||||||||||||||||
Interest expense(1) | - | (83 | ) | - | (78 | ) | - | (80 | ) | ||||||||||||||
Charges & credits | - | (2,136 | ) | - | - | - | (1,773 | ) | |||||||||||||||
$ | 7,744 | $ | (1,102 | ) | $ | 8,472 | $ | 1,253 | $ | 12,641 | $ | 715 | |||||||||||
(1) Excludes interest included in the Product Groups and Geographic Areas results. |
Product Groups | ||||||||||||||||||
(Stated in millions) | ||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||
Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Revenue |
Income |
Revenue |
Income |
|||||||||||||||
Reservoir Characterization | $ | 9,501 | $ | 2,450 | $ | 12,905 | $ | 3,708 | ||||||||||
Drilling | 13,563 | 2,538 | 18,128 | 3,805 | ||||||||||||||
Production | 12,548 | 1,585 | 17,763 | 3,193 | ||||||||||||||
Eliminations & other | (137 | ) | (63 | ) | (216 | ) | (130 | ) | ||||||||||
Pretax operating income | 6,510 | 10,576 | ||||||||||||||||
Corporate & other | - | (768 | ) | - | (848 | ) | ||||||||||||
Interest income(1) | - | 30 | - | 31 | ||||||||||||||
Interest expense(1) | - | (316 | ) | - | (347 | ) | ||||||||||||
Charges & credits | - | (2,575 | ) | - | (1,773 | ) | ||||||||||||
$ | 35,475 | $ | 2,881 | $ | 48,580 | $ | 7,639 | |||||||||||
Geographic Areas | ||||||||||||||||||
(Stated in millions) | ||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||
Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Revenue |
Income |
Revenue |
Income |
|||||||||||||||
North America | $ | 9,811 | $ | 999 | $ | 16,151 | $ | 3,057 | ||||||||||
Latin America | 6,014 | 1,315 | 7,699 | 1,639 | ||||||||||||||
Europe/CIS/Africa | 9,284 | 1,979 | 12,515 | 2,765 | ||||||||||||||
Middle East & Asia | 9,898 | 2,661 | 11,875 | 3,273 | ||||||||||||||
Eliminations & other | 468 | (444 | ) | 340 | (158 | ) | ||||||||||||
Pretax operating income | 6,510 | 10,576 | ||||||||||||||||
Corporate & other | - | (768 | ) | - | (848 | ) | ||||||||||||
Interest income(1) | - | 30 | - | 31 | ||||||||||||||
Interest expense(1) | - | (316 | ) | - | (347 | ) | ||||||||||||
Charges & credits | - | (2,575 | ) | - | (1,773 | ) | ||||||||||||
$ | 35,475 | $ | 2,881 | $ | 48,580 | $ | 7,639 | |||||||||||
(1) Excludes interest included in the Product Groups and Geographic Areas results. |
Supplemental Information |
||
1) |
What is the definition of decremental operating margin? |
|
Decremental operating margin is equal to the ratio of the change in pretax operating income over the change in revenue. | ||
2) |
What were the pretax operating income margin and decremental operating margin for the fourth quarter of 2015? |
|
For the fourth quarter of 2015, the pretax operating income margin was 16.6%. The year-over-year decremental operating margin was 31% and the sequential decremental operating margin was 32%. | ||
3) |
What were the pretax operating income margin and decremental operating margin for the full year 2015? |
|
For the full year 2015, the pretax operating income margin was 18.4%. The year-over-year decremental operating margin was 31%. |
||
4) |
What was the free cash flow as a percentage of income from continuing operations before noncontrolling interests and charges and credits, for the fourth quarter of 2015? |
|
Free cash flow, which was $798 million and included approximately $205 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 94% for the fourth quarter of 2015. | ||
5) |
What was the free cash flow as a percentage of income from continuing operations before noncontrolling interests and charges and credits, for the full year 2015? |
|
Free cash flow, which was $4.96 billion and included approximately $810 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 114% for the full year 2015. | ||
6) |
What is the capex guidance for the full year 2016? |
|
Capex (excluding multiclient and SPM investments) is expected to be $2.4 billion for 2016. Capex for the full year 2015 was $2.4 billion. | ||
7) |
What was included in "Interest and other income" for the fourth quarter of 2015? |
|
"Interest and other income" for the fourth quarter of 2015 was $81 million. This amount consisted of earnings of equity method investments of $67 million and interest income of $14 million. | ||
8) |
How did interest income and interest expense change during the fourth quarter of 2015? |
|
Interest income of $14 million increased $1 million sequentially. Interest expense of $91 million increased $5 million sequentially. | ||
9) |
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, certain centrally managed initiatives and other nonoperating items. | ||
10) |
What was the effective tax rate (ETR), excluding charges and credits, for the fourth quarter of 2015? |
|
The ETR for the fourth quarter of 2015, excluding charges and credits, was 18.2% as compared to 20.0% for the third quarter of 2015. |
||
|
The ETR for the fourth quarter of 2015, including charges and credits, was 10.2%. |
|
11) |
How many shares of common stock were outstanding as of December 31, 2015 and how did this change from the end of the previous quarter? |
|
There were 1.256 billion shares of common stock outstanding as of December 31, 2015. The following table shows the change in the number of shares outstanding from September 30, 2015 to December 31, 2015. |
(Stated in millions) | ||||||||||
Shares outstanding at September 30, 2015 | 1,261 | |||||||||
Shares sold to optionees, less shares exchanged | - | |||||||||
Vesting of restricted stock | - | |||||||||
Shares issued under employee stock purchase plan | - | |||||||||
Stock repurchase program | (5 | ) | ||||||||
Shares outstanding at December 31, 2015 | 1,256 |
12) |
What was the weighted average number of shares outstanding during the fourth quarter of 2015 and third quarter of 2015 and how does this reconcile to the average number of shares outstanding, assuming dilution used in the calculation of diluted earnings per share from continuing operations, excluding charges and credits? |
|
The weighted average number of shares outstanding during the fourth quarter of 2015 and third quarter of 2015 was 1.259 billion and 1.265 billion, respectively. The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution. |
(Stated in millions) | ||||||||||||
Fourth Quarter |
Third Quarter |
|||||||||||
Weighted average shares outstanding | 1,259 | 1,265 | ||||||||||
Assumed exercise of stock options | 2 | 3 | ||||||||||
Unvested restricted stock | 3 | 4 | ||||||||||
Average shares outstanding, assuming dilution | 1,264 | 1,272 |
13) |
What were multiclient sales in the fourth quarter of 2015? |
|
Multiclient sales, including transfer fees, were $117 million in the fourth quarter of 2015 and $60 million in the third quarter of 2015. | ||
14) |
What was the WesternGeco backlog at the end of the fourth quarter of 2015? |
|
WesternGeco backlog, which is based on signed contracts with customers, was $1.13 billion at the end of the fourth quarter of 2015. It was $910 million at the end of the third quarter of 2015. | ||
15) |
What are the interest rates and maturities of the Senior Notes issued in December 2015 in connection with financing part of Schlumberger's pending acquisition of Cameron International Corporation? |
|
Schlumberger Holdings Corporation (SHC), an indirect, wholly-owned U.S. subsidiary of Schlumberger Limited, issued five tranches of senior notes in December 2015 totaling $6 billion with the following interest rates and maturities: $500 million of 1.900% Senior Notes due 2017, $1.3 billion of 2.350% Senior Notes due 2018, $1.6 billion of 3.000% Senior Notes due 2020, $850 million of 3.625% Senior Notes due 2022 and $1.75 billion of Senior Notes due 2025. | ||
16) |
What do the various charges Schlumberger recorded during the fourth quarter of 2015 relate to? |
|
Workforce reduction and Incentivized Leave of Absence Program: |
||
Based on the activity outlook for 2016, as well as to further streamline its support structure, Schlumberger decided to further reduce its headcount and expand its incentivized leave of absence (ILOA) program during the fourth quarter of 2015. As a result, Schlumberger recorded a $530 million charge during the fourth quarter associated with these headcount reductions and the ILOA program. | ||
Asset impairments and restructuring charges: |
||
As a result of oil and gas industry market conditions that have continued to deteriorate and its impact on the activity outlook, Schlumberger determined that carrying values of certain assets were no longer recoverable and also took certain decisions that resulted in the following impairment and restructuring charges during the fourth quarter of 2015: |
-- | $776 million of fixed asset impairments primarily relating to underutilized pressure pumping and other equipment in North America, as well as certain lower-tier drilling rigs. | ||||
-- | $269 million to write-down the carrying value of certain inventory, primarily in North America. | ||||
-- | $182 million to reduce the carrying value of the remaining investment in an SPM project in Colombia, as a result of the recent decline in commodity prices. Considering also that the project is approaching the end of its contractual term and its revenue stream is directly linked to oil prices. | ||||
-- | $177 million associated with facilities, including the expected sale of certain properties and the termination of certain leases. | ||||
-- | $77 million relating to assets that are no longer recoverable as a result of geopolitical issues in certain countries in the Middle East. | ||||
-- | $41 million relating to contract termination costs. | ||||
-- | $84 million of other charges associated with the current market conditions, including $40 million relating to an other-than-temporary impairment of marketable securities and $15 million relating to the impairment of an equity-method investment. | ||||
Schlumberger does not expect to incur any significant cash expenditures as a result of these asset impairment and restructuring charges. | |||||
About Schlumberger
Schlumberger is the world's leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry worldwide. Employing more than 95,000 people representing over 140 nationalities and working in more than 85 countries, Schlumberger provides the industry's widest range of products and services from exploration through production.
*Mark of Schlumberger or of Schlumberger companies.
†Japan Oil, Gas and
Notes
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This full-year and fourth-quarter 2015 earnings release and Supplemental
Information, as well as other statements we make, contain
"forward-looking statements" within the meaning of the federal
securities laws, which include any statements that are not historical
facts, such as our forecasts or expectations regarding business outlook;
growth for Schlumberger as a whole and for each of its segments (and for
specified products or geographic areas within each segment); oil and
natural gas demand and production growth; oil and natural gas prices;
improvements in operating procedures and technology; capital
expenditures by Schlumberger and the oil and gas industry; the business
strategies of Schlumberger's customers; the integration of
View source version on businesswire.com: http://www.businesswire.com/news/home/20160121006393/en/
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