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slb-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2020

Commission file No.: 1-4601

SCHLUMBERGER N.V.

(SCHLUMBERGER LIMITED)

(Exact name of registrant as specified in its charter)

Curaçao		52-0684746
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

42 RUE SAINT-DOMINIQUE
PARIS, FRANCE		75007

5599 SAN FELIPE
HOUSTON, Texas, U.S.A.		77056

62 BUCKINGHAM GATE
LONDON, UNITED KINGDOM		SW1E 6AJ

PARKSTRAAT 83 THE HAGUE,
THE NETHERLANDS		2514 JG
(Addresses of principal executive offices)		(Zip Codes)

Registrant’s telephone number in the United States, including area code, is: (713) 513-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
common stock, par value $0.01 per share	SLB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at June 30, 2020

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,388,101,743

SCHLUMBERGER LIMITED

Second Quarter 2020 Form 10-Q

Table of Contents

		Page
PART I	Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	29

PART II	Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (LOSS)

(Unaudited)

	(Stated in millions, except per share amounts)

	Second Quarter					Six Months
	2020			2019		2020			2019
Revenue
Services	$	3,721		$	6,153	$	9,147		$	12,059
Product sales		1,635			2,116		3,664			4,090
Total Revenue		5,356			8,269		12,811			16,149
Interest & other income		33			25		72			39
Expenses
Cost of services		3,383			5,308		8,109			10,422
Cost of sales		1,542			1,944		3,439			3,787
Research & engineering		142			179		315			351
General & administrative		81			114		208			225
Impairments & other		3,724			-		12,247			-
Interest		144			156		281			302
Income (loss) before taxes		(3,627	)		593		(11,716	)		1,101
Tax expense (benefit)		(199	)		99		(920	)		178
Net income (loss)		(3,428	)		494		(10,796	)		923
Net income attributable to noncontrolling interests		6			2		14			10
Net income (loss) attributable to Schlumberger	$	(3,434	)	$	492	$	(10,810	)	$	913

Basic earnings (loss) per share of Schlumberger	$	(2.47	)	$	0.36	$	(7.79	)	$	0.66

Diluted earnings (loss) per share of Schlumberger	$	(2.47	)	$	0.35	$	(7.79	)	$	0.65

Average shares outstanding:
Basic		1,388			1,384		1,388			1,385
Assuming dilution		1,388			1,395		1,388			1,396

See Notes to Consolidated Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Stated in millions)

	Second Quarter						Six Months
	2020			2019			2020			2019
Net income (loss)	$	(3,428	)	$	494		$	(10,796	)	$	923
Currency translation adjustments
Unrealized net change arising during the period		19			(37	)		(106	)		39
Cash flow hedges
Net (loss) gain on cash flow hedges		(28	)		1			(231	)		(4	)
Reclassification to net income (loss) of net realized loss		4			1			5			4
Pension and other postretirement benefit plans
Amortization to net income (loss) of net actuarial loss		37			23			88			47
Amortization to net income (loss) of net prior service credit		8			(3	)		3			(6	)
Impact of curtailment		(69	)		-			(69	)		-
Income taxes on pension and other postretirement benefit plans		14			(2	)		10			(2	)
Comprehensive income (loss)		(3,443	)		477			(11,096	)		1,001
Comprehensive income attributable to noncontrolling interests		6			2			14			10
Comprehensive income (loss) attributable to Schlumberger	$	(3,449	)	$	475		$	(11,110	)	$	991

See Notes to Consolidated Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Stated in millions)

	Jun. 30,
	2020			Dec. 31,
	(Unaudited)			2019
ASSETS
Current Assets
Cash	$	1,462		$	1,137
Short-term investments		2,127			1,030
Receivables less allowance for doubtful accounts (2020 - $312; 2019 - $255)		5,808			7,747
Inventories		3,601			4,130
Other current assets		1,381			1,486
		14,379			15,530
Investments in Affiliated Companies		1,484			1,565
Fixed Assets less accumulated depreciation		7,729			9,270
Multiclient Seismic Data		356			568
Goodwill		12,954			16,042
Intangible Assets		3,622			7,089
Other Assets		4,143			6,248
	$	44,667		$	56,312
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	9,824		$	10,663
Estimated liability for taxes on income		1,054			1,209
Short-term borrowings and current portion of long-term debt		603			524
Dividends payable		184			702
		11,665			13,098
Long-term Debt		16,763			14,770
Postretirement Benefits		905			967
Deferred Taxes		42			491
Other Liabilities		2,836			2,810
		32,211			32,136
Equity
Common stock		13,044			13,078
Treasury stock		(3,339	)		(3,631	)
Retained earnings		7,073			18,751
Accumulated other comprehensive loss		(4,738	)		(4,438	)
Schlumberger stockholders' equity		12,040			23,760
Noncontrolling interests		416			416
		12,456			24,176
	$	44,667		$	56,312

See Notes to Consolidated Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(Stated in millions)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	(10,796	)	$	923
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Impairments and other charges		12,247			-
Depreciation and amortization ⁽¹⁾		1,396			1,841
Deferred taxes		(1,050	)		(101	)
Stock-based compensation expense		213			194
Earnings of equity method investments, less dividends received		(26	)		-
Change in assets and liabilities: ⁽²⁾
Decrease (increase) in receivables		1,910			(581	)
Increase in inventories		(74	)		(332	)
Decrease (increase) in other current assets		129			(57	)
Decrease (increase) in other assets		16			(16	)
Decrease in accounts payable and accrued liabilities		(2,204	)		(422	)
Decrease in estimated liability for taxes on income		(184	)		(68	)
Decrease in other liabilities		(42	)		(39	)
Other		52			92
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,587			1,434
Cash flows from investing activities:
Capital expenditures		(658	)		(817	)
APS investments		(224	)		(332	)
Multiclient seismic data costs capitalized		(61	)		(109	)
Business acquisitions and investments, net of cash acquired		(30	)		(17	)
(Purchase) sale of investments, net		(1,099	)		464
Net proceeds from asset divestitures		298			-
Other		(85	)		(63	)
NET CASH USED IN INVESTING ACTIVITIES		(1,859	)		(874	)
Cash flows from financing activities:
Dividends paid		(1,386	)		(1,385	)
Proceeds from employee stock purchase plan		85			85
Proceeds from exercise of stock options		-			21
Stock repurchase program		(26	)		(199	)
Proceeds from issuance of long-term debt		4,985			2,350
Repayment of long-term debt		(3,070	)		(1,413	)
Net increase (decrease) in short-term borrowings		73			(22	)
Other		(51	)		32
NET CASH PROVIDED BY (USED) IN FINANCING ACTIVITIES		610			(531	)
Net increase in cash before translation effect		338			29
Translation effect on cash		(13	)		4
Cash, beginning of period		1,137			1,433
Cash, end of period	$	1,462		$	1,466

⁽¹⁾	Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs, and APS investments.

⁽²⁾	Net of the effect of business acquisitions and divestitures.

See Notes to Consolidated Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

	(Stated in millions, except per share amounts)

									Accumulated
									Other
	Common Stock					Retained			Comprehensive			Noncontrolling
January 1, 2020 – June 30, 2020	Issued		In Treasury			Earnings			Loss			Interests			Total
Balance, January 1, 2020	$	13,078	$	(3,631	)	$	18,751		$	(4,438	)	$	416		$	24,176
Net loss							(10,810	)					14			(10,796	)
Currency translation adjustments										(106	)		(2	)		(108	)
Changes in fair value of cash flow hedges										(226	)					(226	)
Pension and other postretirement benefit plans										32