Schlumberger Announces Second-Quarter 2018 Results
- Revenue of
$8.3 billion increased 6% sequentially - Pretax operating income of
$1.1 billion increased 12% sequentially - Second-quarter GAAP EPS, including charges of
$0.12 per share, was$0.31 - Second-quarter EPS, excluding charges, was
$0.43 - Cash flow from operations was
$987 million
(Stated in millions, except per share amounts) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
Revenue | $8,303 | $7,829 | $7,462 | 6% | 11% | ||||||||||||
Pretax operating income | $1,094 | $974 | $950 | 12% | 15% | ||||||||||||
Pretax operating margin | 13.2% | 12.4% | 12.7% | 75 bps | 45 bps | ||||||||||||
Net income - GAAP basis | $430 | $525 | $(74) | -18% | n/m | ||||||||||||
Net income, excluding charges & credits* | $594 | $525 | $488 | 13% | 22% | ||||||||||||
Diluted EPS - GAAP basis | $0.31 | $0.38 | $(0.05) | -18% | n/m | ||||||||||||
Diluted EPS, excluding charges & credits* | $0.43 | $0.38 | $0.35 | 13% | 23% | ||||||||||||
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details. | |||||||||||||||||
n/m = not meaningful | |||||||||||||||||
Schlumberger Chairman and CEO
"Given the considerable number of new projects we are starting up throughout our international operations, our organization has responded well to both mobilization and project startup challenges. However, the associated costs together with some operational delays impacted our second-quarter pretax operating margins. This resulted in our sequential margin expansion being below our expectations.
"In North America, excluding Cameron, second-quarter revenue of
"Excluding Cameron, second-quarter revenue in the international markets of
"Growth in the second quarter was led by Production where revenue increased sequentially by 10%, driven by OneStimSM in
"The market fundamentals continue to evolve favorably for our international business as the global balance of crude oil supply and demand tightens further. Global GDP growth remains strong, with any impact of headwinds from the US-China trade dispute likely to become clearer in the next few quarters. Despite OPEC's recent decision to increase production, the global supply base continues to weaken from geopolitical pressure to remove Iranian production from the market, no apparent resolution to falling production in
"These views underpin the strong confidence we have in our business outlook. Although the last four years have been marked by the deepest downturn in generations, we have capitalized on a number of market opportunities while simultaneously transforming our company to be even more competitive in the broad-based recovery that is now emerging. The expansion of our portfolio has significantly increased our total addressable market by 50% and we have reached new levels of efficiency in all our activities. We are primed and ready to capture the growth opportunities coming from the positive market fundamentals, and we are excited by the activity and pricing opportunities that the new industry landscape presents."
Other Events
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of
On
Consolidated Revenue by Area
(Stated in millions) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
North America | $3,139 | $2,835 | $2,202 | 11% | 43% | ||||||||||||
Latin America | 919 | 870 | 1,039 | 6% | -12% | ||||||||||||
Europe/CIS/Africa | 1,778 | 1,704 | 1,750 | 4% | 2% | ||||||||||||
Middle East & Asia | 2,367 | 2,309 | 2,347 | 3% | 1% | ||||||||||||
Other | 99 | 111 | 124 | n/m | n/m | ||||||||||||
$8,303 | $7,829 | $7,462 | 6% | 11% | |||||||||||||
North America revenue | $3,139 | $2,835 | $2,202 | 11% | 43% | ||||||||||||
International revenue | $5,065 | $4,883 | $5,136 | 4% | -1% | ||||||||||||
North America revenue, excluding Cameron | $2,528 | $2,265 | $1,728 | 12% | 46% | ||||||||||||
International revenue, excluding Cameron | $4,358 | $4,129 | $4,348 | 6% | - | ||||||||||||
n/m = not meaningful | |||||||||||||||||
Second-quarter consolidated revenue of
International
Consolidated revenue in the
Consolidated revenue in the
Reservoir Characterization
(Stated in millions) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
Revenue | $1,636 | $1,556 | $1,759 | 5% | -7% | ||||||||||||
Pretax operating income | $350 | $307 | $299 | 14% | 17% | ||||||||||||
Pretax operating margin | 21.4% | 19.7% | 17.0% | 166 bps | 439 bps | ||||||||||||
Reservoir Characterization revenue of
Reservoir Characterization pretax operating margin of 21% was 166 basis points (bps) higher sequentially due to the recovery in higher-margin Wireline activity and stronger sales of SIS software licenses.
Reservoir Characterization benefited from Integrated Services Management (ISM), SIS, and WesternGeco contract awards as well as the application of technology and domain knowledge to strengthen operational performance.
In
In
In
Lundin awarded WesternGeco the data processing and imaging of a 70-km2 ocean-bottom seismic (OBS) 4D reservoir monitoring survey over the Edvard Grieg Field in the Norwegian sector of the
WesternGeco received a direct award from
Drilling
(Stated in millions) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
Revenue | $2,234 | $2,126 | $2,107 | 5% | 6% | ||||||||||||
Pretax operating income | $289 | $293 | $302 | -1% | -4% | ||||||||||||
Pretax operating margin | 12.9% | 13.8% | 14.3% | -83 bps | -139 bps | ||||||||||||
Drilling revenue of
Drilling pretax operating margin of 13% declined 83 bps sequentially as the mobilization of resources for new projects across our international operations resulted in additional costs.
Drilling performance in the second quarter was underpinned by IDS contract awards and project mobilizations that deployed drilling technologies to help lower the cost per barrel.
- In the
UK , a letter of intent was issued for integrated drilling and well services in the Mariner Field in theUK sector of theNorth Sea . - In
Brazil , a contract was awarded for integrated drilling services for Phase I and Phase II development of the Peregrino Field located in theCampos Basin . - In
Tanzania , a contract was awarded for an offshore exploration well. The integrated services contract includes the provision of multiple product lines as well as project management services.
In
In
In
In
In
In
Production
(Stated in millions) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
Revenue | $3,257 | $2,959 | $2,496 | 10% | 30% | ||||||||||||
Pretax operating income | $316 | $216 | $221 | 46% | 43% | ||||||||||||
Pretax operating margin | 9.7% | 7.3% | 8.9% | 239 bps | 84 bps | ||||||||||||
Production revenue of
Production pretax operating margin of 10% increased 239 bps sequentially due to the increased activity and operational efficiency improvements of OneStim hydraulic fracturing operations in the North America Land GeoMarket. Margin also improved due to the benefits from the vertical integration of the pressure pumping business.
Production benefited from increased OneStim operations as well as new contract awards and the deployment of advanced stimulation and completions technologies.
In
In
In
In
In
In Sakhalin, Schlumberger Completions installed the Manara* production and reservoir management system to enhance production in the Odoptu Field for the
Cameron
(Stated in millions) | |||||||||||||||||
Three Months Ended | Change | ||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Sequential | Year-on-year | |||||||||||||
Revenue | $1,295 | $1,310 | $1,265 | -1% | 2% | ||||||||||||
Pretax operating income | $166 | $166 | $174 | - | -5% | ||||||||||||
Pretax operating margin | 12.8% | 12.7% | 13.8% | 17 bps | -94 bps | ||||||||||||
Cameron revenue of
Cameron pretax operating margin of 13% was essentially flat sequentially, as increased sales in Surface Systems and Valves & Measurement, combined with improved project execution in OneSubsea, offset the impact of falling margin in Drilling Systems from the declining backlog.
Cameron won new contracts during the quarter for managed pressure drilling (MPD) systems and integrated drilling packages as well as integrated services contracts for pressure control equipment management and production enhancement.
In
In
Financial Tables |
||||||||||||||
Condensed Consolidated Statement of Income (Loss) | ||||||||||||||
(Stated in millions, except per share amounts) | ||||||||||||||
Second Quarter | Six Months | |||||||||||||
Periods Ended June 30, | 2018 | 2017 | 2018 | 2017 | ||||||||||
Revenue | $8,303 | $7,462 | $16,131 | $14,356 | ||||||||||
Interest and other income | 40 | 62 | 82 | 108 | ||||||||||
Expenses | ||||||||||||||
Cost of revenue | 7,179 | 6,468 | 13,980 | 12,544 | ||||||||||
Research & engineering | 175 | 196 | 347 | 406 | ||||||||||
General & administrative | 114 | 110 | 225 | 208 | ||||||||||
Impairments & other (1) | 184 | 510 | 184 | 510 | ||||||||||
Merger & integration (1) | - | 81 | - | 164 | ||||||||||
Interest | 144 | 142 | 287 | 281 | ||||||||||
Income before taxes | $547 | $17 | $1,190 | $351 | ||||||||||
Tax expense (1) | 106 | 98 | 219 | 148 | ||||||||||
Net income (loss) | $441 | $(81) | $971 | $203 | ||||||||||
Net income (loss) attributable to noncontrolling interests | 11 | (7) | 16 | (2) | ||||||||||
Net income (loss) attributable to Schlumberger (1) | $430 | $(74) | $955 | $205 | ||||||||||
Diluted earnings (loss) per share of Schlumberger (1) | $0.31 | $(0.05) | $0.69 | $0.15 | ||||||||||
Average shares outstanding | 1,384 | 1,387 | 1,385 | 1,390 | ||||||||||
Average shares outstanding assuming dilution | 1,392 | 1,387 | 1,393 | 1,397 | ||||||||||
Depreciation & amortization included in expenses (2) | $876 | $986 | $1,750 | $1,975 | ||||||||||
(1) | See section entitled "Charges & Credits" for details. | ||
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. |
Condensed Consolidated Balance Sheet |
|||||||||
(Stated in millions) |
|||||||||
Jun. 30, | Dec. 31, | ||||||||
Assets | 2018 | 2017 | |||||||
Current Assets | |||||||||
Cash and short-term investments | $3,049 | $5,089 | |||||||
Receivables | 8,606 | 8,084 | |||||||
Other current assets | 5,245 | 5,324 | |||||||
16,900 | 18,497 | ||||||||
Fixed assets | 11,504 | 11,576 | |||||||
Multiclient seismic data | 686 | 727 | |||||||
Goodwill | 25,121 | 25,118 | |||||||
Intangible assets | 9,092 | 9,354 | |||||||
Other assets | 6,853 | 6,715 | |||||||
$70,156 | $71,987 | ||||||||
Liabilities and Equity | |||||||||
Current Liabilities | |||||||||
Accounts payable and accrued liabilities | $9,367 | $10,036 | |||||||
Estimated liability for taxes on income | 1,264 | 1,223 | |||||||
Short-term borrowings and current portion | |||||||||
of long-term debt | 3,736 | 3,324 | |||||||
Dividends payable | 699 | 699 | |||||||
15,066 | 15,282 | ||||||||
Long-term debt | 13,865 | 14,875 | |||||||
Deferred taxes | 1,541 | 1,650 | |||||||
Postretirement benefits | 971 | 1,082 | |||||||
Other liabilities | 1,816 | 1,837 | |||||||
33,259 | 34,726 | ||||||||
Equity | 36,897 | 37,261 | |||||||
$70,156 | $71,987 | ||||||||
Liquidity |
|||||||||||||||||
(Stated in millions) | |||||||||||||||||
Components of Liquidity |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|||||||||||||
Cash and short-term investments | $3,049 | $4,165 | $5,089 | $6,218 | |||||||||||||
Fixed income investments, held to maturity | - | - | - | 13 | |||||||||||||
Short-term borrowings and current portion of long-term debt | (3,736) | (4,586) | (3,324) | (2,224) | |||||||||||||
Long-term debt | (13,865) | (13,526) | (14,875) | (16,600) | |||||||||||||
Net Debt (1) | $(14,552) | $(13,947) | $(13,110) | $(12,593) | |||||||||||||
Details of changes in liquidity follow: | |||||||||||||||||
Six | Second | Six | |||||||||||||||
Months | Quarter | Months | |||||||||||||||
Periods Ended June 30, | 2018 | 2018 | 2017 | ||||||||||||||
Net income before noncontrolling interests | $971 | $441 | $203 | ||||||||||||||
Impairment and other charges, net of tax before noncontrolling interests | 164 | 164 | 643 | ||||||||||||||
$1,135 | $605 | $846 | |||||||||||||||
Depreciation and amortization (2) | 1,750 | 876 | 1,975 | ||||||||||||||
Stock-based compensation expense | 176 | 86 | 180 | ||||||||||||||
Pension and other postretirement benefits funding | (74) | (35) | (74) | ||||||||||||||
Change in working capital | (1,338) | (502) | (1,339) | ||||||||||||||
Other | (94) | (43) | (74) | ||||||||||||||
Cash flow from operations (3) | $1,555 | $987 | $1,514 | ||||||||||||||
Capital expenditures | (974) | (520) | (884) | ||||||||||||||
SPM investments | (434) | (194) | (328) | ||||||||||||||
Multiclient seismic data capitalized | (47) | (21) | (190) | ||||||||||||||
Free cash flow (4) | 100 | 252 | 112 | ||||||||||||||
Dividends paid | (1,385) | (693) | (1,393) | ||||||||||||||
Stock repurchase program | (200) | (103) | (770) | ||||||||||||||
Proceeds from employee stock plans | 131 | 4 | 143 | ||||||||||||||
(1,354) | (540) | (1,908) | |||||||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (47) | (34) | (364) | ||||||||||||||
Other | (41) | (31) | (200) | ||||||||||||||
Increase in Net Debt | (1,442) | (605) | (2,472) | ||||||||||||||
Net Debt, beginning of period | (13,110) | (13,947) | (10,121) | ||||||||||||||
Net Debt, end of period | $(14,552) | $(14,552) | $(12,593) | ||||||||||||||
(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 $160 million and $84 million during the six months and second quarter ended June 30, 2018, respectively; and $230 million and $90 million during the six months and second quarter ended June 30, 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 second-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) | |||||||||||||||||
Second Quarter 2018 | |||||||||||||||||
Pretax | Tax |
Noncont. Interests |
Net | Diluted
EPS |
|||||||||||||
Schlumberger net income (GAAP basis) | $547 | $106 | $11 | $430 | $0.31 | ||||||||||||
Workforce reductions | 184 | 20 | - | 164 | 0.12 | ||||||||||||
Schlumberger net income, excluding charges & credits | $731 | $126 | $11 | $594 | $0.43 | ||||||||||||
Six Months 2018 | |||||||||||||||||
Pretax | Tax |
Noncont. Interests |
Net | Diluted
EPS * |
|||||||||||||
Schlumberger net income (GAAP basis) | $1,190 | $219 | $16 | $955 | $0.69 | ||||||||||||
Workforce reductions | 184 | 20 | - | 164 | 0.12 | ||||||||||||
Schlumberger net income, excluding charges & credits | $1,374 | $239 | $16 | $1,119 | $0.80 | ||||||||||||
Second Quarter 2017 | |||||||||||||||||
Pretax | Tax |
Noncont. Interests |
Net | Diluted
EPS * |
|||||||||||||
Schlumberger net loss (GAAP basis) | $17 | $98 | $(7) | $(74) | $(0.05) | ||||||||||||
Promissory note fair value adjustment and other | 510 | - | 12 | 498 | 0.36 | ||||||||||||
Merger & integration | 81 | 17 | - | 64 | 0.05 | ||||||||||||
Schlumberger net income, excluding charges & credits | $608 | $115 | $5 | $488 | $0.35 | ||||||||||||
Six Months 2017 | |||||||||||||||||
Pretax | Tax |
Noncont. Interests |
Net | Diluted
EPS * |
|||||||||||||
Schlumberger net income (GAAP basis) | $351 | $148 | ($2) | $205 | $0.15 | ||||||||||||
Promissory note fair value adjustment and other | 510 | - | 12 | 498 | 0.36 | ||||||||||||
Merger & integration | 164 | 31 | - | 133 | 0.10 | ||||||||||||
Schlumberger net income, excluding charges & credits | $1,025 | $179 | $10 | $836 | $0.60 | ||||||||||||
* Does not add due to rounding |
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There were no charges or credits during the first quarter of 2018. |
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Segments |
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(Stated in millions) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | ||||||||||||||||||
Revenue |
Income Before Taxes |
Revenue |
Income Before Taxes |
Revenue |
Income Before Taxes |
|||||||||||||||
Reservoir Characterization | $1,636 | $350 | $1,556 | $307 | $1,759 | $299 | ||||||||||||||
Drilling | 2,234 | 289 | 2,126 | 293 | 2,107 | 302 | ||||||||||||||
Production | 3,257 | 316 | 2,959 | 216 | 2,496 | 221 | ||||||||||||||
Cameron | 1,295 | 166 | 1,310 | 166 | 1,265 | 174 | ||||||||||||||
Eliminations & other | (119) | (27) | (122) | (8) | (165) | (46) | ||||||||||||||
Pretax operating income | 1,094 | 974 | 950 | |||||||||||||||||
Corporate & other | (239) | (225) | (242) | |||||||||||||||||
Interest income(1) | 11 | 25 | 28 | |||||||||||||||||
Interest expense(1) | (135) | (131) | (128) | |||||||||||||||||
Charges & credits | (184) | - | (591) | |||||||||||||||||
$8,303 | $547 | $7,829 | $643 | $7,462 | $17 | |||||||||||||||
(Stated in millions) | ||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||
Jun. 30, 2018 | Jun. 30, 2017 | |||||||||||||||||||
Revenue |
Income Before Taxes |
Revenue |
Income Before Taxes |
|||||||||||||||||
Reservoir Characterization | $3,192 | $657 | $3,377 | $580 | ||||||||||||||||
Drilling | 4,360 | 582 | 4,092 | 531 | ||||||||||||||||
Production | 6,216 | 532 | 4,683 | 331 | ||||||||||||||||
Cameron | 2,605 | 332 | 2,494 | 336 | ||||||||||||||||
Eliminations & other | (242) | (35) | (290) | (71) | ||||||||||||||||
Pretax operating income | 2,068 | 1,707 | ||||||||||||||||||
Corporate & other | (464) | (480) | ||||||||||||||||||
Interest income(1) | 36 | 52 | ||||||||||||||||||
Interest expense(1) | (266) | (254) | ||||||||||||||||||
Charges & credits | (184) | (674) | ||||||||||||||||||
$16,131 | $1,190 | $14,356 | $351 | |||||||||||||||||
(1) Excludes interest included in the Segments results. |
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Supplemental Information |
||
1) |
What is the capex guidance for the full year 2018? |
|
Capex (excluding multiclient and SPM investments) for the full year 2018 is expected to be approximately $2 billion, which is similar to the levels of 2017 and 2016. | ||
2) |
What was the cash flow from operations for the second quarter of 2018? |
|
Cash flow from operations for the second quarter of 2018 was $987 million and included $84 million of severance payments. | ||
3) |
What was the cash flow from operations for the first half of 2018? |
|
Cash flow from operations for the first half of 2018 was $1.6 billion and included approximately $160 million of severance payments. | ||
4) |
What was included in "Interest and other income" for the second quarter of 2018? |
|
"Interest and other income" for the second quarter of 2018 was $40 million. This amount consisted of earnings of equity method investments of $28 million and interest income of $12 million. | ||
5) |
How did interest income and interest expense change during the second quarter of 2018? |
|
Interest income of $12 million declined $16 million sequentially. Interest expense of $144 million was essentially flat 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 second quarter of 2018? |
|
The ETR for the second quarter of 2018, calculated in accordance with GAAP, was 19.3% as compared to 17.6% for the first quarter of 2018. Excluding charges and credits, the ETR for the second quarter of 2018 was 17.2%. There were no charges and credits in the first quarter of 2018. | ||
8) |
How many shares of common stock were outstanding as of June 30, 2018 and how did this change from the end of the previous quarter? |
|
There were 1.384 billion shares of common stock outstanding as of June 30, 2018. The following table shows the change in the number of shares outstanding from March 31, 2018 to June 30, 2018. | ||
(Stated in millions) | ||||||
Shares outstanding at March 31, 2018 | 1,385 | |||||
Shares issued to optionees, less shares exchanged | - | |||||
Vesting of restricted stock | - | |||||
Shares issued under employee stock purchase plan | - | |||||
Stock repurchase program | (1) | |||||
Shares outstanding at June 30, 2018 | 1,384 | |||||
9) |
What was the weighted average number of shares outstanding during the second quarter of 2018 and first 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? |
|
The weighted average number of shares outstanding was 1.384 billion during the second quarter of 2018 and 1.385 billion during the first 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) | |||||||||
Second Quarter 2018 |
First Quarter 2018 |
||||||||
Weighted average shares outstanding | 1,384 |
|
1,385 | ||||||
Assumed exercise of stock options | 1 |
|
2 | ||||||
Unvested restricted stock | 7 |
|
7 | ||||||
Average shares outstanding, assuming dilution | 1,392 |
|
1,394 | ||||||
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. |
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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 Production. |
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12) |
What was the unamortized balance of Schlumberger's investment in SPM projects at June 30, 2018 and how did it change in terms of investment and amortization when compared to March 31, 2018? |
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The unamortized balance of Schlumberger's investments in SPM projects was approximately $4.1 billion at both June 30, 2018 and March 31, 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: |
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(Stated in millions) | |||||
Balance at March 31, 2018 | $4,112 | ||||
SPM investments | 194 | ||||
Amortization of SPM investment | (135) | ||||
Translation & other | (95) | ||||
Balance at June 30, 2018 | $4,076 | ||||
13) |
What was the amount of WesternGeco multiclient sales in the second quarter of 2018? |
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Multiclient sales, including transfer fees, were $117 million in the second quarter of 2018 and $119 million in the first quarter of 2018. | ||
14) |
What was the WesternGeco backlog at the end of the second quarter of 2018? |
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The WesternGeco backlog, which is based on signed contracts with customers, was $317 million at the end of the second quarter of 2018. It was $358 million at the end of the first quarter of 2018. | ||
15) |
What were the orders and backlog for the Cameron OneSubsea and Drilling Systems businesses? |
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The OneSubsea and Drilling Systems orders and backlog were as follows: | ||
(Stated in millions) | ||||||||
Orders |
Second Quarter 2018 |
First Quarter 2018 |
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OneSubsea | $312 | $329 | ||||||
Drilling Systems | $288 | $218
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Backlog (at the end of period) | ||||||||
OneSubsea | $1,654 | $2,002 | ||||||
Drilling Systems |
$482 | $398
|
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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.
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Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on
This second-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; the success of Schlumberger's SPM projects, and 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 second-quarter 2018 earnings release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the
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Source:
Schlumberger Limited
Simon Farrant – 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