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Schlumberger Announces Third-Quarter 2015 Results
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-
Revenue of
$8.5 billion decreased 6% sequentially -
EPS of
$0.78 declined 11% sequentially -
Free cash flow of
$1.7 billion represented 170% of earnings - Sequential and year-over-year decremental operating margins were 35% and 31%, respectively
-
6.9 million shares repurchased for
$545 million
(Stated in millions, except per share amounts) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | Sequential | Year-on-year | |||||||||||
Revenue | $8,472 | $9,010 |
$12,646 |
-6% | -33% | ||||||||||
Pretax operating income | 1,521 | 1,708 | 2,806 | -11% | -46% | ||||||||||
SLB income from continuing operations* | 989 | 1,124 | 1,949 | -12% | -49% | ||||||||||
Diluted EPS from continuing operations* | $0.78 | $0.88 | $1.49 | -11% | -48% | ||||||||||
Pretax operating margin | 18.0% | 19.0% | 22.2% | -101 bps | -424 bps | ||||||||||
North America revenue | $2,273 | $2,361 |
$4,255 |
-4% | -47% | ||||||||||
North America pretax operating income | 202 | 242 | 825 | -17% | -76% | ||||||||||
North America pretax operating margin | 8.9% | 10.2% | 19.4% | -136 bps | -1,051 bps | ||||||||||
International revenue | $6,068 | $6,525 |
$8,309 |
-7% | -27% | ||||||||||
International pretax operating income | 1,440 | 1,595 | 2,041 | -10% | -29% | ||||||||||
International pretax operating margin | 23.7% | 24.5% | 24.6% | -72 bps | -83 bps | ||||||||||
*There were no charges or credits recorded during the second and third quarters of 2015 or the third quarter of 2014. | |||||||||||||||
Schlumberger Chairman and CEO
“The business environment deteriorated further in the third quarter.
However, the cost reduction actions we took in previous quarters and the
acceleration of our transformation program enabled us to protect our
financial performance in what is shaping up to be the most severe
downturn in the industry for decades. As a result of our actions, we
have been able to deliver pretax operating margins well above those seen
in any previous downturn and we have continued to generate significant
liquidity with free cash flow of
“During the first nine months of 2015, our year-on-year revenue has
dropped by 34% in
“Among the business segments,
“As we enter the last quarter of the year, the oil market is still weighed down by fears of reduced growth in Chinese demand and the expectations regarding the timing and magnitude of additional Iranian supply. However, the fundamental balance of supply and demand continues to tighten, driven by both solid global macroeconomic growth and by weakening supply as the dramatic cuts in E&P investments are starting to take effect. We expect this trend to continue as the oil market further recognizes the magnitude of the industry’s annual production replacement challenge.
“However, for oilfield services, the market outlook for the coming quarters looks increasingly challenging with activity expected to be reduced further, as lack of available cash flow exhausts capital spending for a number of our customers, leading them to take a conservative view on 2016 E&P spending in spite of any gradual improvement in oil prices. In addition, the winter season will have the normal impact on activity in the fourth quarter, which this year is unlikely to be offset by the usual year-end sales of software, products and multiclient licenses.
“In light of conservative customer budgets for next year, we are
therefore entering another period during which we will continually
adjust resources in line with activity, as the recovery now appears to
be delayed. We remain focused on managing our cost base, and are further
accelerating our transformation program to help offset the impact of
lower service pricing. As we navigate the current commercial landscape,
we still look to strike a balance between market share and operating
margins, while continuing to seek opportunities to extend our portfolio
through targeted M&A, such as our transaction with
“At Schlumberger, we remain confident in our capability to weather this downturn significantly better than our surroundings. Through our global reach, the strength of our technology offering, and our transformation program we are creating the leverage to increase market share, post superior earnings, and continue to deliver unmatched levels of free cash flow while bringing value for our customers through improving production, increasing recovery, and lowering cost per barrel.”
Other Events
During the third quarter, Schlumberger repurchased 6.9 million shares of
its common stock at an average price of
On
On
On
On
On
During the first nine months of 2015, year-on-year revenue has declined
34% in
In the third quarter, the transformation program enabled an increase in
people productivity through the combination of multiskilling, remote
operations and innovative technology deployment. In
During the third quarter, new Schlumberger technologies helped increase
production and operational efficiency in
Well Services BroadBand* unconventional reservoir completion technology
revenue passed the
In
In US land, Wireline used StreamLINE* polymer-encapsulated wireline
monocable for
Also in US land, Smith polycrystalline diamond compact (PDC) bit with
ONYX 360* rolling PDC cutter technology was used for
In
International Areas
Revenue for the International Areas of
Revenue in the
International Area pretax operating margin of 23.7% decreased 72 bps
sequentially due to the effects of pricing concessions and as the
activity mix shifted from high-margin exploration to development and
completion work.
During the first nine months of 2015, year-on-year revenue has dropped 18% in the International Areas, which is more severe than the 9% decline in the same period during the 2009 downturn. In spite of this, the decremental operating margin was only 23%, which represents a marked improvement over the 61% posted for the corresponding period in the previous downturn. Pretax operating margin for the first nine months of 2015 expanded 29 bps, compared to the 358 bps fall in margin reported for the same period in 2009. The strength of this performance was a result of proactive cost and resource management, robust sales of new technology, and the acceleration of the transformation program focused on workforce productivity, asset utilization, and reductions in unit support costs.
In the third quarter, the transformation program enabled an increase in workforce productivity through the combination of multiskilling, remote operations and innovative technology deployment. For example:
-
In
Oman , Completions reduced the high number of field specialist hours at the wellsite by training wireline operators in running Copperhead Extreme* drillable bridge and fracturing plug operations. As a result of this multiskilling approach, operational capacity was increased by 15%, enabling the reassignment of field specialists to other operations. -
In
Northern Mexico , the Drilling & Measurements wellsite crews were trained to run the full suite of directional drilling tools, allowing the directional drillers to move from the rig site to the command center in town. By combining multiskilling and remote operations, Drilling & Measurements decreased its rig crew by 35%, which reduced personnel and accommodation costs. -
Offshore in
the Philippines , advanced Drilling & Measurements technologies enabled the optimum drilling of a challenging deepwater well. To increase people productivity on the operation, an engineer was trained in both mudlogging and measurement-while-drilling services to provide workforce flexibility and reduce operational cost. This combination of Drilling & Measurements technologies and multiskilling enabled the saving of three days rig time, or approximately$1.8m , while reducing exposure to health and safety risk.
During the third quarter, the International Areas also saw a number of contract awards.
In
In
In
In the
Software Integrated Solutions (SIS) signed a global agreement with ENI for the provision of INTERSECT* high-resolution reservoir simulator, Petrel* E&P and Techlog* wellbore software platforms. The six-year multimillion contract includes a three-year extension option. Under this agreement, ENI seeks the most advanced technologies to achieve a high exploration success rate while also reducing cycle time from exploration to economical production phases.
In
Reservoir Characterization Group |
|||||||||||||||
(Stated in millions, except margin percentages) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | Sequential | Year-on-year | |||||||||||
Revenue | $2,301 | $2,425 | $3,322 | -5% | -31% | ||||||||||
Pretax operating income | 606 | 642 | 967 | -6% | -37% | ||||||||||
Pretax operating margin | 26.3% | 26.5% | 29.1% | -18 bps | -278 bps | ||||||||||
Decremental operating margin | 30% | 35% | |||||||||||||
Pretax operating margin of 26.3% was essentially flat sequentially. Despite the revenue mix shift from high-margin exploration activity, increased marine seismic activity and prompt action on cost management helped limit the decremental operating margin to 30%.
New Reservoir Characterization technologies helped characterize complex reservoirs, optimize well production and reservoir recovery, and improve operational efficiency.
In
In
In
In
WesternGeco is conducting a 1,085-km2 multiclient survey using
IsoMetrix* marine isometric seismic technology in the northern part of
the
In
Offshore
Drilling Group |
|||||||||||||||
(Stated in millions, except margin percentages) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | Sequential | Year-on-year | |||||||||||
Revenue | $3,256 | $3,511 | $4,821 | -7% | -32% | ||||||||||
Pretax operating income | 604 | 685 | 1,045 | -12% | -42% | ||||||||||
Pretax operating margin | 18.6% | 19.5% | 21.7% | -94 bps | -312 bps | ||||||||||
Decremental operating margin | 32% | 28% | |||||||||||||
Drilling Group revenue of
Pretax operating margin of 18.6% declined 94 bps sequentially. Despite the revenue decline, prompt action on cost management helped limit decremental operating margin to 32%.
Offshore
Offshore
In
Also in
In
Offshore
In
Offshore
Production Group |
|||||||||||||||
(Stated in millions, except margin percentages) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | Sequential | Year-on-year | |||||||||||
Revenue | $2,957 | $3,103 | $4,558 | -5% | -35% | ||||||||||
Pretax operating income | 327 | 397 | 844 | -18% | -61% | ||||||||||
Pretax operating margin | 11.1% | 12.8% | 18.5% | -173 bps | -744 bps | ||||||||||
Decremental operating margin | 48% | 32% | |||||||||||||
Pretax operating margin of 11.1% declined 173 bps sequentially as lower activity and increasing pricing pressure continued during the quarter, with pricing declines in some basins leading to more pressure pumping equipment being stacked and crews reassigned. In other basins, however, hydraulic fracturing fleet deployment was maintained.
Offshore
In the Norwegian sector of the
In
In
In
Also in
Offshore
In
Financial Tables |
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Condensed Consolidated Statement of Income | |||||||||||||||
(Stated in millions, except per share amounts) | |||||||||||||||
Third Quarter | Nine Months | ||||||||||||||
Periods Ended September 30, | 2015 | 2014 | 2015 | 2014 | |||||||||||
Revenue | $ | 8,472 | $ | 12,646 | $ | 27,731 | $ | 35,939 | |||||||
Interest and other income | 60 | 79 | 155 | 220 | |||||||||||
Expenses | |||||||||||||||
Cost of revenue | 6,798 | 9,689 | 22,028 | 27,708 | |||||||||||
Research & engineering | 273 | 301 | 819 | 893 | |||||||||||
General & administrative | 122 | 125 | 362 | 353 | |||||||||||
Restructuring & other (1) |
- |
- |
439 |
- |
|||||||||||
Interest | 86 | 90 | 254 | 282 | |||||||||||
Income before taxes | $ | 1,253 | $ | 2,520 | $ | 3,984 | $ | 6,923 | |||||||
Taxes on income (1) | 250 | 556 | 859 | 1,530 | |||||||||||
Income from continuing operations | 1,003 | 1,964 | 3,125 | 5,393 | |||||||||||
Loss from discontinued operations |
- |
- |
- |
(205 | ) | ||||||||||
Net income | 1,003 | 1,964 | 3,125 | 5,188 | |||||||||||
Net income attributable to noncontrolling interests | 14 | 15 | 37 | 52 | |||||||||||
Net income attributable to Schlumberger | $ | 989 | $ | 1,949 | $ | 3,088 | $ | 5,136 | |||||||
Schlumberger amounts attributable to: | |||||||||||||||
Income from continuing operations (1) | $ | 989 | $ | 1,949 | $ | 3,088 | $ | 5,341 | |||||||
Loss from discontinuing operations |
- |
- |
- |
(205 | ) | ||||||||||
Net Income | $ | 989 | $ | 1,949 | $ | 3,088 | $ | 5,136 | |||||||
Diluted earnings per share of Schlumberger | |||||||||||||||
Income from continuing operations (1) | $ | 0.78 | $ | 1.49 | $ | 2.42 | $ | 4.07 | |||||||
Loss from discontinuing operations |
- |
- |
- |
(0.16 | ) | ||||||||||
Net Income | $ | 0.78 | $ | 1.49 | $ | 2.42 | $ | 3.91 | |||||||
Average shares outstanding | 1,265 | 1,294 | 1,270 | 1,300 | |||||||||||
Average shares outstanding assuming dilution | 1,272 | 1,310 | 1,278 | 1,314 | |||||||||||
Depreciation & amortization included in expenses (2) | $ | 1,026 | $ | 1,032 | $ | 3,115 | $ | 3,029 | |||||||
(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) | |||||||||||
Sept. 30, | Dec. 31, | ||||||||||
Assets | 2015 | 2014 | |||||||||
Current Assets | |||||||||||
Cash and short-term investments | $ | 6,605 | $ | 7,501 | |||||||
Receivables | 9,372 | 11,171 | |||||||||
Other current assets | 5,555 | 6,022 | |||||||||
21,532 | 24,694 | ||||||||||
Fixed income investments, held to maturity | 439 | 442 | |||||||||
Fixed assets | 14,554 | 15,396 | |||||||||
Multiclient seismic data | 966 | 793 | |||||||||
Goodwill | 15,610 | 15,487 | |||||||||
Other intangible assets | 4,524 | 4,654 | |||||||||
Other assets | 5,717 | 5,438 | |||||||||
$ | 63,342 | $ | 66,904 | ||||||||
Liabilities and Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | 7,186 | $ | 9,246 | |||||||
Estimated liability for taxes on income | 1,425 | 1,647 | |||||||||
Short-term borrowings and current portion | |||||||||||
of long-term debt | 4,761 | 2,765 | |||||||||
Dividend payable | 638 | 518 | |||||||||
14,010 | 14,176 | ||||||||||
Long-term debt | 7,487 | 10,565 | |||||||||
Postretirement benefits | 1,282 | 1,501 | |||||||||
Deferred taxes | 1,276 | 1,296 | |||||||||
Other liabilities | 1,108 | 1,317 | |||||||||
25,163 | 28,855 | ||||||||||
Equity | 38,179 | 38,049 | |||||||||
$ | 63,342 | $ | 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 September 30, |
Nine
Months 2015 |
Third
Quarter 2015 |
Nine
Months 2014 |
||||||||
Income from continuing operations before noncontrolling interests | $3,125 | $1,003 | $5,393 | ||||||||
Restructuring and other charges, net of tax | 383 |
- |
- |
||||||||
Income from continuing operations before noncontrolling | |||||||||||
interests, excluding charges & credits | 3,508 | 1,003 | 5,393 | ||||||||
Depreciation and amortization (1) | 3,115 | 1,026 | 3,029 | ||||||||
Pension and other postretirement benefits expense | 326 | 109 | 266 | ||||||||
Stock-based compensation expense | 250 | 83 | 246 | ||||||||
Pension and other postretirement benefits funding | (292) | (78) | (318) | ||||||||
(Increase) decrease in working capital (2) | (509) | 328 | (991) | ||||||||
Other | 229 | 72 | (343) | ||||||||
Cash flow from operations | 6,627 | 2,543 | 7,282 | ||||||||
Capital expenditures | (1,783) | (590) | (2,766) | ||||||||
SPM investments | (350) | (128) | (569) | ||||||||
Multiclient seismic data capitalized | (336) | (115) | (212) | ||||||||
Free cash flow (3) | 4,158 | 1,710 | 3,735 | ||||||||
Stock repurchase program | (1,784) | (545) | (3,582) | ||||||||
Dividends paid | (1,786) | (635) | (1,451) | ||||||||
Proceeds from employee stock plans | 423 | 167 | 795 | ||||||||
1,011 | 697 | (503) | |||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (324) | (118) | (1,049) | ||||||||
Discountinued operations - settlement with U.S. Department of Justice | (233) |
- |
- |
||||||||
Other | (271) | (185) | 150 | ||||||||
Decrease (Increase) in Net Debt | 183 | 394 | (1,402) | ||||||||
Net Debt, Beginning of period | (5,387) | (5,598) | (4,443) | ||||||||
Net Debt | $(5,204) | $(5,204) | $(5,845) | ||||||||
Components of Net Debt |
Sept. 30, |
Jun. 30, |
Dec. 31, |
Sept. 30, |
|||||||
Cash and short-term investments | $6,605 | $7,274 | $7,501 | $6,759 | |||||||
Fixed income investments, held to maturity | 439 | 469 | 442 | 473 | |||||||
Short-term borrowings and current portion of long-term debt | (4,761) | (4,231) | (2,765) | (1,451) | |||||||
Long-term debt | (7,487) | (9,110) | (10,565) | (11,626) | |||||||
$(5,204) | $(5,598) | $(5,387) | $(5,845) | ||||||||
(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 $605 million during the nine months ended September 30, 2015 and $150 million during the third quarter of 2015. | |
(3) |
"Free cash flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data 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 making 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 Third-Quarter 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) | ||||||||||||||||||||||
Nine Months 2015 | ||||||||||||||||||||||
Pretax | Tax |
Noncont. |
Net |
Diluted
EPS |
||||||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $4,423 | $915 | $37 | $3,471 | $2.72 | |||||||||||||||||
Workforce reduction | (390 | ) | (56 | ) | - | (334 | ) | (0.26 | ) | |||||||||||||
Currency devaluation loss in Venezuela | (49 | ) | - | - | (49 | ) | (0.04 | ) | ||||||||||||||
Schlumberger income from continuing operations, as reported | $3,984 | $859 | $37 | $3,088 | $2.42 | |||||||||||||||||
There were no charges or credits recorded during the second and third quarters of 2015 or the first nine months of 2014. |
Product Groups | ||||||||||||||||||||||||||||||||||||
(Stated in millions) | ||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | ||||||||||||||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||||||||||||||
Reservoir Characterization | $ | 2,301 | $ | 606 | $ | 2,425 | $ | 642 | $ | 3,322 | $ | 967 | ||||||||||||||||||||||||
Drilling | 3,256 | 604 | 3,511 | 685 | 4,821 | 1,045 | ||||||||||||||||||||||||||||||
Production | 2,957 | 327 | 3,103 | 397 | 4,558 | 844 | ||||||||||||||||||||||||||||||
Eliminations & other | (42 | ) | (16 | ) | (29 | ) | (16 | ) | (55 | ) | (50 | ) | ||||||||||||||||||||||||
Pretax operating income | 1,521 | 1,708 | 2,806 | |||||||||||||||||||||||||||||||||
Corporate & other | - | (198 | ) | - | (199 | ) | - | (210 | ) | |||||||||||||||||||||||||||
Interest income(1) | - | 8 | - | 6 | - | 8 | ||||||||||||||||||||||||||||||
Interest expense(1) | - | (78 | ) | - | (79 | ) | - | (84 | ) | |||||||||||||||||||||||||||
$ | 8,472 | $ | 1,253 | $ | 9,010 | $ | 1,436 | $ | 12,646 | $ | 2,520 | |||||||||||||||||||||||||
Geographic Areas | ||||||||||||||||||||||||||||||||||||
(Stated in millions) | ||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
Sept. 30, 2015 | Jun. 30, 2015 | Sept. 30, 2014 | ||||||||||||||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||||||||||||||
North America | $ | 2,273 | $ | 202 | $ | 2,361 | $ | 242 | $ | 4,255 | $ | 825 | ||||||||||||||||||||||||
Latin America | 1,422 | 295 | 1,537 | 343 | 2,036 | 446 | ||||||||||||||||||||||||||||||
Europe/CIS/Africa | 2,274 | 505 | 2,413 | 513 | 3,303 | 774 | ||||||||||||||||||||||||||||||
Middle East & Asia | 2,372 | 641 | 2,575 | 740 | 2,970 | 820 | ||||||||||||||||||||||||||||||
Eliminations & other | 131 | (122 | ) | 124 | (130 | ) | 82 | (59 | ) | |||||||||||||||||||||||||||
Pretax operating income | 1,521 | 1,708 | 2,806 | |||||||||||||||||||||||||||||||||
Corporate & other | - | (198 | ) | - | (199 | ) | - | (210 | ) | |||||||||||||||||||||||||||
Interest income(1) | - | 8 | - | 6 | - | 8 | ||||||||||||||||||||||||||||||
Interest expense(1) | - | (78 | ) | - | (79 | ) | - | (84 | ) | |||||||||||||||||||||||||||
$ | 8,472 | $ | 1,253 | $ | 9,010 | $ | 1,436 | $ | 12,646 | $ | 2,520 | |||||||||||||||||||||||||
(1) Excludes interest included in the Product Groups and Geographic Areas results. |
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Product Groups | ||||||||||||||||||||||||
(Stated in millions) | ||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
Sept. 30, 2015 | Sept. 30, 2014 | |||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||||
Reservoir Characterization | $ | 7,278 | $ | 1,903 | $ | 9,536 | $ | 2,693 | ||||||||||||||||
Drilling | 10,729 | 2,080 | 13,804 | 2,907 | ||||||||||||||||||||
Production | 9,827 | 1,274 | 12,752 | 2,276 | ||||||||||||||||||||
Eliminations & other | (103 | ) | (35 | ) | (153 | ) | (81 | ) | ||||||||||||||||
Pretax operating income | 5,222 | 7,795 | ||||||||||||||||||||||
Corporate & other | - | (587 | ) | - | (628 | ) | ||||||||||||||||||
Interest income(1) | - | 22 | - | 23 | ||||||||||||||||||||
Interest expense(1) | - | (234 | ) | - | (267 | ) | ||||||||||||||||||
Charges & credits | - | (439 | ) | - | - | |||||||||||||||||||
$ | 27,731 | $ | 3,984 | $ | 35,939 | $ | 6,923 | |||||||||||||||||
Geographic Areas | ||||||||||||||||||||||||
(Stated in millions) | ||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
Sept. 30, 2015 | Sept. 30, 2014 | |||||||||||||||||||||||
Revenue |
Income |
Revenue |
Income |
|||||||||||||||||||||
North America | $ | 7,856 | $ | 860 | $ | 11,827 | $ | 2,208 | ||||||||||||||||
Latin America | 4,606 | 992 | 5,646 | 1,210 | ||||||||||||||||||||
Europe/CIS/Africa | 7,225 | 1,550 | 9,452 | 2,082 | ||||||||||||||||||||
Middle East & Asia | 7,650 | 2,154 | 8,781 | 2,396 | ||||||||||||||||||||
Eliminations & other | 394 | (334 | ) | 233 | (101 | ) | ||||||||||||||||||
Pretax operating income | 5,222 | 7,795 | ||||||||||||||||||||||
Corporate & other | - | (587 | ) | - | (628 | ) | ||||||||||||||||||
Interest income(1) | - | 22 | - | 23 | ||||||||||||||||||||
Interest expense(1) | - | (234 | ) | - | (267 | ) | ||||||||||||||||||
Charges & credits | - | (439 | ) | - | - | |||||||||||||||||||
$ | 27,731 | $ | 3,984 | $ | 35,939 | $ | 6,923 | |||||||||||||||||
(1) Excludes interest included in the Product Groups and Geographic Areas results. |
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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 third quarter of 2015? |
|
The pretax operating income margin was 18.0%. The year-over-year decremental operating margin was 31% and the sequential decremental operating margin was 35%. | ||
3) |
What were the pretax operating income margin and decremental operating margin for the first nine months of 2015? |
|
The pretax operating income margin was 18.8% and 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 third quarter of 2015? |
|
Free cash flow, which amounts to $1.7 billion and includes approximately $150 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 170% for the third 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 first nine months of 2015? |
|
Free cash flow, which amounts to $4.2 billion and includes approximately $605 million of severance payments, as a percentage of income from continuing operations before noncontrolling interests and charges and credits was 119% for the first nine months of 2015. |
||
6) |
What is the capex guidance for the full year 2015? |
|
Capex (excluding multiclient and SPM investments) is still expected to be approximately $2.5 billion for 2015. | ||
7) |
What was included in “Interest and other income” for the third quarter of 2015? |
|
“Interest and other income” for the third quarter of 2015 was $60 million. This amount consisted of earnings of equity method investments of $47 million and interest income of $13 million. | ||
8) |
How did interest income and interest expense change during the third quarter of 2015? |
|
Interest income of $13 million increased $1 million sequentially. Interest expense of $86 million was flat sequentially. |
||
9) |
What is the difference between the “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 third quarter of 2015? |
|
The ETR for the third quarter of 2015 was 20.0% as compared to 21.1% for the second quarter of 2015. |
||
11) |
How many shares of common stock were outstanding as of September 30, 2015 and how did this change from the end of the previous quarter? |
|
There were 1.261 billion shares of common stock outstanding as of September 30, 2015. The following table shows the change in the number of shares outstanding from June 30, 2015 to September 30, 2015. |
|
(Stated in millions) |
||
Shares outstanding at June 30, 2015 | 1,265 | ||
Shares sold to optionees, less shares exchanged | - | ||
Vesting of restricted stock | - | ||
Shares issued under employee stock purchase plan | 2 | ||
Stock repurchase program | (7 | ) | |
Shares outstanding at September 30, 2015 | 1,261 | ||
12) |
What was the weighted average number of shares outstanding during the third quarter of 2015 and second quarter of 2015 and how does this reconcile to the average number of shares outstanding, assuming dilution? |
|
The weighted average number of shares outstanding during the third quarter of 2015 and second quarter of 2015 was 1.272 billion and 1.280 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) | |||||||||
Third Quarter |
Second Quarter |
||||||||
Weighted average shares outstanding | 1,265 |
|
1,269 | ||||||
Assumed exercise of stock options | 3 |
|
7 | ||||||
Unvested restricted stock | 4 |
|
4 | ||||||
Average shares outstanding, assuming dilution | 1,272 |
|
1,280 | ||||||
13) |
What were multiclient sales in the third quarter of 2015? |
|
Multiclient sales, including transfer fees, were $60 million in the third quarter of 2015 and $84 million in the second quarter of 2015. | ||
14) |
What was the WesternGeco backlog at the end of the third quarter of 2015? |
|
WesternGeco backlog, which is based on signed contracts with customers, was $910 million at the end of the third quarter of 2015. It was $514 million at the end of the second quarter of 2015. | ||
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 approximately 105,000 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.
Notes
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This third-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
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Source: Schlumberger
Schlumberger
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