Schlumberger Announces Third-Quarter 2018 Results
- Revenue of
$8.5 billion increased 2% sequentially - Pretax operating income of
$1.2 billion increased 5% sequentially - EPS was
$0.46 - Cash flow from operations was
$1.8 billion - Free cash flow was
$1.0 billion
(Stated in millions, except per share amounts) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
Revenue | $8,504 | $8,303 | $7,905 | 2% | 8% | ||||||||||
Pretax operating income | $1,152 | $1,094 | $1,059 | 5% | 9% | ||||||||||
Pretax operating margin | 13.5% | 13.2% | 13.4% | 36 bps | 15 bps | ||||||||||
Net income - GAAP basis | $644 | $430 | $545 | 50% | 18% | ||||||||||
Net income, excluding charges & credits* | $644 | $594 | $581 | 8% | 11% | ||||||||||
Diluted EPS - GAAP basis | $0.46 | $0.31 | $0.39 | 48% | 18% | ||||||||||
Diluted EPS, excluding charges & credits* | $0.46 | $0.43 | $0.42 | 7% | 10% | ||||||||||
North America revenue | $3,189 | $3,139 | $2,602 | 2% | 23% | ||||||||||
International revenue | $5,215 | $5,065 | $5,147 | 3% | 1% | ||||||||||
North America revenue, excluding Cameron | $2,572 | $2,546 | $2,086 | 1% | 23% | ||||||||||
International revenue, excluding Cameron | $4,559 | $4,387 | $4,430 | 4% | 3% | ||||||||||
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details. |
Schlumberger Chairman and CEO
"In North America, third-quarter revenue of
"In the International Areas, third-quarter revenue of
"Turning to our technologies, our performance was led by Drilling with 9% sequential growth as we successfully mobilized an additional 19 drilling rigs for our integrated drilling projects where activity was strong, particularly in
"Looking at pricing and contracts, we continued to see improvements in terms and conditions and basic rates for selected contracts in the international markets. However, this has yet to make a significant impact on our results. Still, we expect to fully deploy our remaining excess international equipment capacity by the end of the year. As a result, we anticipate pricing discussions to accelerate in the coming quarters as the certainty of products and services supply will become more important for our customers.
"From a macro perspective, the oil market continued to tighten in the third quarter as seen by a further draw in global oil inventories and a significant increase in oil prices despite continued strong production from the US and increasing output from key
"With the outlook for global economic growth and oil demand remaining solid, we continue to see a need for a multiyear increase in international E&P investment, which is very good news for Schlumberger. Through the work we have done over the past four years to expand our external offering and modernize our internal execution platform, we are very well positioned to outgrow the market in the coming upcycle and to generate superior operating margins and cash returns for the benefit of our shareholders."
Other Events
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of
On
On
Consolidated Revenue by Area
|
|||||||||||||||
(Stated in millions) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
North America | $3,189 | $3,139 | $2,602 | 2% | 23% | ||||||||||
Latin America | 978 | 919 | 952 | 6% | 3% | ||||||||||
Europe/CIS/Africa | 1,820 | 1,784 | 1,843 | 2% | -1% | ||||||||||
Middle East & Asia | 2,417 | 2,362 | 2,352 | 2% | 3% | ||||||||||
Other | 100 | 99 | 156 | n/m | n/m | ||||||||||
$8,504 | $8,303 | $7,905 | 2% | 8% | |||||||||||
North America revenue | $3,189 | $3,139 | $2,602 | 2% | 23% | ||||||||||
International revenue | $5,215 | $5,065 | $5,147 | 3% | 1% | ||||||||||
North America revenue, excluding Cameron | $2,572 | $2,546 | $2,086 | 1% | 23% | ||||||||||
International revenue, excluding Cameron | $4,559 | $4,387 | $4,430 | 4% | 3% | ||||||||||
n/m = not meaningful | |||||||||||||||
Certain prior period items have been reclassified to conform to the current period presentation. |
Third-quarter consolidated revenue of
International
Consolidated revenue in the
Consolidated revenue in the
Reservoir Characterization
(Stated in millions) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
Revenue | $1,673 | $1,636 | $1,771 | 2% | -6% | ||||||||||
Pretax operating income | $373 | $350 | $311 | 6% | 20% | ||||||||||
Pretax operating margin | 22.3% | 21.4% | 17.6% | 88 bps | 470 bps |
Reservoir Characterization revenue of
Reservoir Characterization pretax operating margin of 22% was 88 basis points (bps) higher sequentially due to the recovery in higher-margin Wireline and Testing Services activity from the peak summer campaigns in
In the third quarter, Reservoir Characterization performance was strengthened by contract awards for ISM projects, seismic processing and interpretation, and virtual data room services. In addition, the application of technology and domain knowledge improved operational efficiency.
In
Turkish Petroleum awarded Schlumberger an ISM contract valued at
In
In
Schlumberger and TGS announced a new multiclient nodal seismic project in the US Gulf of
Drilling
(Stated in millions) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
Revenue | $2,429 | $2,234 | $2,120 | 9% | 15% | ||||||||||
Pretax operating income | $339 | $289 | $301 | 17% | 13% | ||||||||||
Pretax operating margin | 14.0% | 12.9% | 14.2% | 103 bps | -22 bps |
Drilling revenue of
Drilling pretax operating margin of 14% increased 103 bps sequentially as profitability improved in several IDS projects that began in the previous quarter. The effect of this was partly offset by the increased cost of mobilizing additional resources as IDS activity scaled up across our international operations.
Drilling performance benefitted from IDS contract awards as well as the deployment of drilling technologies that help lower cost per barrel. This includes the latest addition to our 3D cutting element family, the HyperBlade* hyperbolic diamond element bit, which improves rate of penetration (ROP) in soft and plastic formations typically encountered in unconventional reservoirs.
In
In
In
In
In
Offshore
In the Marcellus Formation in
In
Production
(Stated in millions) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
Revenue | $3,252 | $3,257 | $2,876 | - | 13% | ||||||||||
Pretax operating income | $320 | $316 | $283 | 1% | 13% | ||||||||||
Pretax operating margin | 9.8% | 9.7% | 9.8% | 14 bps | - |
Production revenue of
Production pretax operating margin of 10% was essentially flat sequentially as revenue remained unchanged from the previous quarter.
Production performance was underpinned by contract awards and the deployment of stimulation and completions technologies that helped reduce operating costs and improve well productivity.
Eni México awarded Schlumberger a five-year contract with two optional six-month extensions for the provision of completions technologies in 31 offshore wells. The technologies include the QUANTUM* gravel-pack packer and FORTRESS* premium isolation valve. Operations are expected to begin in the first quarter of 2019.
Offshore
In
In
In
Cameron
(Stated in millions) | |||||||||||||||
Three Months Ended | Change | ||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | Sequential | Year-on-year | |||||||||||
Revenue | $1,298 | $1,295 | $1,297 | - | - | ||||||||||
Pretax operating income | $148 | $166 | $194 | -11% | -23% | ||||||||||
Pretax operating margin | 11.4% | 12.8% | 14.9% | -140 bps | -349 bps |
Cameron revenue of
Cameron pretax operating margin of 11% declined 140 bps sequentially from the impact of lower OneSubsea margins.
Fieldwood Energy awarded a contract to the Subsea Integration Alliance—a global partnership between
Cameron received an order from
Financial Tables |
||||||||||||
Condensed Consolidated Statement of Income | ||||||||||||
(Stated in millions, except per share amounts) | ||||||||||||
Third Quarter | Nine Months | |||||||||||
Periods Ended September 30, | 2018 | 2017 | 2018 | 2017 | ||||||||
Revenue | $8,504 | $7,905 | $24,636 | $22,261 | ||||||||
Interest and other income | 36 | 64 | 118 | 172 | ||||||||
Expenses | ||||||||||||
Cost of revenue | 7,324 | 6,797 | 21,306 | 19,343 | ||||||||
Research & engineering | 177 | 189 | 524 | 595 | ||||||||
General & administrative | 105 | 115 | 330 | 323 | ||||||||
Impairments & other (1) | - | - | 184 | 510 | ||||||||
Merger & integration (1) | - | 49 | - | 213 | ||||||||
Interest | 147 | 142 | 434 | 422 | ||||||||
Income before taxes | $787 | $677 | $1,976 | $1,027 | ||||||||
Tax expense (1) | 129 | 121 | 348 | 269 | ||||||||
Net income | $658 | $556 | $1,628 | $758 | ||||||||
Net income attributable to noncontrolling interests | 14 | 11 | 29 | 9 | ||||||||
Net income attributable to Schlumberger (1) | $644 | $545 | $1,599 | $749 | ||||||||
Diluted earnings per share of Schlumberger (1) | $0.46 | $0.39 | $1.15 | $0.54 | ||||||||
Average shares outstanding | 1,385 | 1,385 | 1,385 | 1,388 | ||||||||
Average shares outstanding assuming dilution | 1,392 | 1,392 | 1,393 | 1,395 | ||||||||
Depreciation & amortization included in expenses (2) | $887 | $956 | $2,637 | $2,931 | ||||||||
(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 | 2018 | 2017 | ||||
Current Assets | ||||||
Cash and short-term investments | $2,854 | $5,089 | ||||
Receivables | 8,409 | 8,084 | ||||
Other current assets | 5,220 | 5,324 | ||||
16,483 | 18,497 | |||||
Fixed assets | 11,739 | 11,576 | ||||
Multiclient seismic data | 639 | 727 | ||||
Goodwill | 25,134 | 25,118 | ||||
Intangible assets | 8,930 | 9,354 | ||||
Other assets | 7,121 | 6,715 | ||||
$70,046 | $71,987 | |||||
Liabilities and Equity | ||||||
Current Liabilities | ||||||
Accounts payable and accrued liabilities | $9,419 | $10,036 | ||||
Estimated liability for taxes on income | 1,265 | 1,223 | ||||
Short-term borrowings and current portion of long-term debt |
3,215 | 3,324 | ||||
Dividends payable | 701 | 699 | ||||
14,600 | 15,282 | |||||
Long-term debt | 14,159 | 14,875 | ||||
Deferred taxes | 1,529 | 1,650 | ||||
Postretirement benefits | 957 | 1,082 | ||||
Other liabilities | 1,853 | 1,837 | ||||
33,098 | 34,726 | |||||
Equity | 36,948 | 37,261 | ||||
$70,046 | $71,987 | |||||
Liquidity |
||||||||||||
(Stated in millions) | ||||||||||||
|
Sept. 30, | Jun. 30, | Dec. 31, | Sept. 30, | ||||||||
Components of Liquidity |
2018 | 2018 | 2017 | 2017 | ||||||||
Cash and short-term investments | $2,854 | $3,049 | $5,089 | $4,952 | ||||||||
Short-term borrowings and current portion of long-term debt | (3,215) | (3,736) | (3,324) | (1,289) | ||||||||
Long-term debt | (14,159) | (13,865) | (14,875) | (15,871) | ||||||||
Net Debt (1) | $(14,520) | $(14,552) | $(13,110) | $(12,208) | ||||||||
Details of changes in liquidity follow: | ||||||||||||
Nine | Third | Nine | ||||||||||
Months | Quarter | Months | ||||||||||
Periods Ended September 30, | 2018 | 2018 | 2017 | |||||||||
Net income before noncontrolling interests | $1,628 | $658 | $758 | |||||||||
Impairment and other charges, net of tax before noncontrolling interests | 164 | - | 679 | |||||||||
$1,792 | $658 | $1,437 | ||||||||||
Depreciation and amortization (2) | 2,637 | 887 | 2,931 | |||||||||
Stock-based compensation expense | 259 | 83 | 261 | |||||||||
Change in working capital | (1,147) | 191 | (1,473) | |||||||||
US federal tax refund | - | - | 685 | |||||||||
Other | (159) | 8 | (429) | |||||||||
Cash flow from operations (3) | $3,382 | $1,827 | $3,412 | |||||||||
Capital expenditures | (1,539) | (565) | (1,482) | |||||||||
SPM investments | (719) | (285) | (492) | |||||||||
Multiclient seismic data capitalized | (63) | (16) | (223) | |||||||||
Free cash flow (4) | 1,061 | 961 | 1,215 | |||||||||
Dividends paid | (2,077) | (692) | (2,086) | |||||||||
Stock repurchase program | (300) | (100) | (868) | |||||||||
Proceeds from employee stock plans | 256 | 125 | 261 | |||||||||
(1,060) | 294 | (1,478) | ||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (290) | (243) | (382) | |||||||||
Other | (60) | (19) | (227) | |||||||||
(Increase) decrease in Net Debt | (1,410) | 32 | (2,087) | |||||||||
Net Debt, beginning of period | (13,110) | (14,552) | (10,121) | |||||||||
Net Debt, end of period | $(14,520) | $(14,520) | $(12,208) |
(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 $265 million and $105 million during the nine months and third quarter ended September 30, 2018, respectively; and $347 million and $114 million during the nine months and third quarter ended September 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 third-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 | |||||||||||||||
Noncont. | Diluted | ||||||||||||||
Pretax | Tax | Interests | Net | 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 | ||||||||||
Third Quarter 2017 | |||||||||||||||
Noncont. | Diluted | ||||||||||||||
Pretax | Tax | Interests | Net | EPS | |||||||||||
Schlumberger net income (GAAP basis) | $677 | $121 | $11 | $545 | $0.39 | ||||||||||
Merger & integration | 49 | 13 | - | 36 | 0.03 | ||||||||||
Schlumberger net income, excluding charges & credits | $726 | $134 | $11 | $581 | $0.42 | ||||||||||
Nine Months 2018 | |||||||||||||||
Noncont. | Diluted | ||||||||||||||
Pretax | Tax | Interests | Net | EPS | |||||||||||
Schlumberger net income (GAAP basis) | $1,976 | $348 | $29 | $1,599 | $1.15 | ||||||||||
Workforce reductions | 184 | 20 | - | 164 | 0.12 | ||||||||||
Schlumberger net income, excluding charges & credits | $2,160 | $368 | $29 | $1,763 | $1.27 | ||||||||||
Nine Months 2017 | |||||||||||||||
Noncont. | Diluted | ||||||||||||||
Pretax | Tax | Interests | Net | EPS | |||||||||||
Schlumberger net income (GAAP basis) | $1,027 | $269 | $9 | $749 | $0.54 | ||||||||||
Promissory note fair value adjustment and other | 510 | - | 12 | 498 | 0.36 | ||||||||||
Merger & integration | 213 | 44 | - | 169 | 0.12 | ||||||||||
Schlumberger net income, excluding charges & credits |
$1,750 | $313 | $21 | $1,416 | $1.02 | ||||||||||
There were no charges or credits during the first and third quarters of 2018. |
|||||||||||||||
Segments |
||||||||||||||||||
(Stated in millions) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
Sept. 30, 2018 | Jun. 30, 2018 | Sept. 30, 2017 | ||||||||||||||||
Income |
Income |
Income | ||||||||||||||||
Before |
Before |
Before | ||||||||||||||||
Revenue | Taxes | Revenue | Taxes | Revenue | Taxes | |||||||||||||
Reservoir Characterization | $1,673 | $373 | $1,636 | $350 | $1,771 | $311 | ||||||||||||
Drilling | 2,429 | 339 | 2,234 | 289 | 2,120 | 301 | ||||||||||||
Production | 3,252 | 320 | 3,257 | 316 | 2,876 | 283 | ||||||||||||
Cameron | 1,298 | 148 | 1,295 | 166 | 1,297 | 194 | ||||||||||||
Eliminations & other | (148) | (28) | (119) | (27) | (159) | (30) | ||||||||||||
Pretax operating income | 1,152 | 1,094 | 1,059 | |||||||||||||||
Corporate & other | (234) | (239) | (234) | |||||||||||||||
Interest income(1) | 8 | 11 | 30 | |||||||||||||||
Interest expense(1) | (139) | (135) | (129) | |||||||||||||||
Charges & credits | - | (184) | (49) | |||||||||||||||
$8,504 | $787 | $8,303 | $547 | $7,905 | $677 | |||||||||||||
(Stated in millions) |
(Stated in millions) |
|||||||||||||||||
Nine Months Ended |
||||||||||||||||||
Sept. 30, 2018 |
Sept. 30, 2017 | |||||||||||||||||
Income |
Income | |||||||||||||||||
Before |
Before | |||||||||||||||||
Revenue |
Taxes |
Revenue | Taxes |
|
||||||||||||||
Reservoir Characterization |
$4,865 |
$1,030 |
$5,148 | $891 | ||||||||||||||
Drilling |
6,789 |
921 |
6,212 | 832 | ||||||||||||||
Production |
9,468 |
851 |
7,559 | 614 |
|
|||||||||||||
Cameron |
3,902 |
481 |
3,791 | 530 | ||||||||||||||
Eliminations & other |
(388) |
(63) |
(449) |
(101) |
|
|||||||||||||
Pretax operating income |
3,220 |
2,766 | ||||||||||||||||
Corporate & other |
(699) |
(715) |
||||||||||||||||
Interest income(1) |
44 |
82 | ||||||||||||||||
Interest expense(1) |
(405) |
(383) |
||||||||||||||||
Charges & credits |
(184) |
(723) |
||||||||||||||||
$24,636 |
$1,976 |
$22,261 | $1,027 | |||||||||||||||
(1) | Excludes interest included in the Product Groups results. |
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 $2.0 billion, which is similar to the levels of 2017 and 2016. | ||
2) |
What was the cash flow from operations for the third quarter of 2018? |
|
Cash flow from operations for the third quarter of 2018 was $1.8 billion and included $105 million of severance payments. | ||
3) |
What was the cash flow from operations for the first nine months of 2018? |
|
Cash flow from operations for the first nine months of 2018 was $3.4 billion and included approximately $265 million of severance payments. | ||
4) |
What was included in "Interest and other income" for the third quarter of 2018? |
|
"Interest and other income" for the third quarter of 2018 was $36 million. This amount consisted of earnings of equity method investments of $26 million and interest income of $10 million. | ||
5) |
How did interest income and interest expense change during the third quarter of 2018? |
|
Interest income of $10 million declined $2 million sequentially. Interest expense of $147 million increased $3 million sequentially. | ||
6) |
What is the difference between pretax operating income and Schlumberger's consolidated income before taxes? |
|
The difference principally consists of corporate items, charges and credits, and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets, certain centrally managed initiatives, and other nonoperating items. | ||
7) |
What was the effective tax rate (ETR) for the third quarter of 2018? |
|
The ETR for the third quarter of 2018, calculated in accordance with GAAP, was 16.4% as compared to 19.3% for the second 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 third quarter of 2018. | ||
8) |
How many shares of common stock were outstanding as of September 30, 2018 and how did this change from the end of the previous quarter? |
|
There were 1.385 billion shares of common stock outstanding as of September 30, 2018. The following table shows the change in the number of shares outstanding from June 30, 2018 to September 30, 2018. | ||
(Stated in millions) | |||
Shares outstanding at June 30, 2018 | 1,384 | ||
Shares issued to optionees, less shares exchanged | - | ||
Vesting of restricted stock | - | ||
Shares issued under employee stock purchase plan | 3 | ||
Stock repurchase program | (2) | ||
Shares outstanding at September 30, 2018 | 1,385 | ||
9) |
What was the weighted average number of shares outstanding during the third quarter of 2018 and second 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 1.385 billion during the third quarter of 2018 and 1.384 billion during the second 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) | ||||||
Third Quarter | Second Quarter | |||||
2018 | 2018 | |||||
Weighted average shares outstanding |
1,385 |
1,384 | ||||
Assumed exercise of stock options |
- |
1 |
||||
Unvested restricted stock |
7 |
7 | ||||
Average shares outstanding, assuming dilution |
1,392 |
1,392 | ||||
10) |
What are Schlumberger Production Management (SPM) projects and how does Schlumberger recognize revenue from these projects? |
|
SPM projects are focused on developing and comanaging production on behalf of Schlumberger customers under long-term agreements. Schlumberger will invest its own services, products, and in some cases, cash, into the field development activities and operations. Although in certain arrangements Schlumberger recognizes revenue and is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger recognizes revenue and is compensated based upon cash flow generated or on a fee-per-barrel basis. This may include certain arrangements whereby Schlumberger is only compensated based upon incremental production it helps deliver above a mutually agreed baseline. | ||
11) |
How are Schlumberger products and services that are invested in SPM projects accounted for? |
|
Revenue and the related costs are recorded within the respective Schlumberger Group for services and products that each Group provides to Schlumberger's SPM projects. This revenue (which is based on arms-length pricing) and the related profit is then eliminated through an intercompany adjustment that is included within the "Eliminations & other" line (Note that the "Eliminations & other" line includes other items in addition to the SPM eliminations). The direct cost associated with providing Schlumberger services or products to SPM projects is then capitalized on the balance sheet. | ||
These capitalized investments, which may be in the form of cash as well as the previously mentioned direct costs, are expensed in the income statement as the related production is achieved and associated revenue is recognized. This amortization expense is based on the units of production method, whereby each unit is assigned a pro-rata portion of the unamortized costs based on total estimated production. | ||
SPM revenue along with the amortization of the capitalized investments and other operating costs incurred in the period are reflected within the Production Group. | ||
12) |
What was the unamortized balance of Schlumberger's investment in SPM projects at September 30, 2018 and how did it change in terms of investment and amortization when compared to June 30, 2018? |
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The unamortized balance of Schlumberger's investments in SPM projects was approximately $4.2 billion at September 30, 2018 and $4.1 billion at June 30, 2018. These amounts are included within Other Assets in Schlumberger's Condensed Consolidated Balance Sheet. The change in the unamortized balance of Schlumberger's investment in SPM projects was as follows: | ||
(Stated in millions) | |||
Balance at June 30, 2018 | $4,076 | ||
SPM investments | 285 | ||
Amortization of SPM investment | (141) | ||
Translation & other | 28 | ||
Balance at September 30, 2018 | $4,248 | ||
13) |
What was the amount of WesternGeco multiclient sales in the third quarter of 2018? |
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Multiclient sales, including transfer fees, were $139 million in the third quarter of 2018 and $117 million in the second quarter of 2018. | ||
14) |
What was the WesternGeco backlog at the end of the third quarter of 2018? |
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The WesternGeco backlog, which is based on signed contracts with customers, was $322 million at the end of the third quarter of 2018. It was $317 million at the end of the second quarter of 2018. | ||
15) |
What were the orders and backlog for the Cameron Group's OneSubsea and Drilling Systems businesses? |
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The OneSubsea and Drilling Systems orders and backlog were as follows: | ||
(Stated in millions) | ||||||
Third Quarter | Second Quarter | |||||
Orders | 2018 | 2018 | ||||
OneSubsea | $425 | $312 | ||||
Drilling Systems | $193 | $288 | ||||
Backlog (at the end of period) | ||||||
OneSubsea | $1,654 | $1,654 | ||||
Drilling Systems | $523 | $482 | ||||
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.
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Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on
This third-quarter 2018 earnings release, as well as other statements we make, contain "forward-looking statements" within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger's customers; the effects of U.S. tax reform; our effective tax rate; Schlumberger's SPM projects, joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger's customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; foreign currency risk; pricing pressure; weather and seasonal factors; operational modifications, delays or cancellations; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; and other risks and uncertainties detailed in this third-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