(Source: Business Wire)
Schlumberger Limited (NYSE:SLB) today reported third-quarter revenue of
$5.43 billion versus $5.53 billion in the second quarter of 2009, and
$7.26 billion in the third quarter of 2008.
Income from continuing operations attributable to Schlumberger was $787
million”a decrease of 4% sequentially, excluding $207 million of charges
in the second quarter of 2009, and 48% lower year-on-year. Diluted
earnings-per-share from continuing operations was $0.65 versus $0.68,
excluding charges of $0.17 per share in the previous quarter, and $1.25
in the third quarter of 2008.
Oilfield Services revenue of $4.95 billion was flat sequentially but
down 22% year-on-year. Pretax segment operating income of $1.04 billion
was up 2% sequentially but down 39% year-on-year.
WesternGeco revenue of $463 million was down 17% sequentially and 48%
year-on-year. Pretax segment operating income of $61 million was down
37% sequentially and 83% year-on-year.
Schlumberger Chairman and CEO Andrew Gould commented, "Oilfield Services
revenue was flat with the second quarter as increases in both North and
South America offset a further decline in the Middle East and Asia. As a
result of this, coupled with the implementation of cost-cutting programs
earlier in the year, overall margins slightly increased.
At WesternGeco, sequential revenue declines were due to lower
Multiclient revenues in the quarter and the rollover of Marine contracts
from higher-priced legacy backlog into new lower-priced activity. These
factors resulted in lower margins.
Our outlook for the remainder of 2009 assumes a continued modest
recovery in North American gas drilling but no significant improvement
in service pricing. Overseas, while rig activity is stabilizing,
seasonal factors and pricing concessions made in the first half year
that are still being implemented leave some risk of further small
revenue declines. At WesternGeco, improvement will depend on the level
of fourth-quarter multiclient sales.
Looking further ahead, we said in our second-quarter outlook that the
shape of the economic recovery beyond 2009 and the subsequent recovery
in oil and gas demand remained the determining factors for future
activity increases. Since then, indications of inventory rebuilding
across many industries together with help from government stimuli have
helped to strengthen demand for both oil and gas. While uncertainties
remain, notably the transition from current stimuli to industrial and
consumer demand and the extent to which the recovery will be limited by
high unemployment, the demand for oil and gas will increase somewhat
over the coming months.
As a result, we see continuing stabilization of activity around the
world. However, this will not be uniform across either geographies or
for services by commodity type.
We consider that world gas markets are oversupplied and will remain so
for some time absent any strong recovery in industrial demand. Both new
LNG capacity coming on stream, as well as ample storage and pent-up
supply in North America, will serve to keep prices and activity low. In
North America we feel the current slight recovery in drilling is fragile
and not likely to significantly improve service activity and pricing
until late 2010.
For oil, the current robust price will lead to operators maintaining
their spending levels, and this, coupled with the lowering of their cost
structures, may produce some modest increases in activity. We see
continued strength in deepwater areas and some increases in selected
land markets. We also feel that a more robust commodity price will lead
to some increase in seismic activity, although new marine capacity will
continue to depress pricing.
The worst, provided the economy continues to show signs of recovery, is
behind us."
Other Event:
On September 8, 2009, Schlumberger issued $450 million of Guaranteed
Notes due 2013 at an interest rate of 3.0%. The proceeds from this
issuance were used to refinance existing debt obligations.
Consolidated Statement of Income
(Stated in millions, except per share amounts)
Third Quarter Nine Months
For Periods Ended September 30 2009 2008 2009 2008
Revenue $ 5,430 $ 7,259 $ 16,958 $ 20,295
Interest and other income, net ((1)) 74 107 211 306
Expenses
Cost of revenue ((2)) 4,122 4,967 13,019 13,934
Research & engineering 198 208 585 597
Marketing 22 23 67 71
General & administrative 128 150 390 434
Interest 54 61 169 189
Income from Continuing Operations before taxes 980 1,957 2,939 5,376
Taxes on income( (2)) 191 418 595 1,104
Income from Continuing Operations 789 1,539 2,344 4,272
Discontinued Operations - - - 38
Net Income 789 1,539 2,344 4,310
Net Income attributable to noncontrolling interests (2 ) (13 ) (6 ) (25 )
Net Income attributable to Schlumberger (2) $ 787 $ 1,526 $ 2,338 $ 4,285
Schlumberger amounts attributable to:
Income from Continuing Operations $ 787 $ 1,526 $ 2,338 $ 4,247
Discontinued Operations - - - 38
Net Income $ 787 $ 1,526 $ 2,338 $ 4,285
Diluted Earnings Per Share of Schlumberger:
Income from Continuing Operations $ 0.65 $ 1.25 $ 1.93 $ 3.46
Discontinued Operations - - - 0.03
Net Income ((3)) $ 0.65 $ 1.25 $ 1.93 $ 3.50
Average shares outstanding 1,200 1,199 1,198 1,197
Average shares outstanding assuming dilution 1,218 1,225 1,214 1,229
Depreciation & amortization included in expenses ((4)) $ 613 $ 583 $ 1,848 $ 1,656
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1) Includes interest income of:
Third Quarter 2009 - $15 million (2008 - $31 million)
Nine Months 2009 - $51 million (2008 - $93 million)
2) See page 7 for details of charges.
3) Amounts may not add due to rounding.
4) Including Multiclient seismic data cost.
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Condensed Consolidated Balance Sheet
(Stated in millions)
Sept. 30, Dec. 31,
Assets 2009 2008
Current Assets
Cash and short-term investments $ 4,228 $ 3,692
Other current assets 9,154 9,294
13,382 12,986
Fixed income investments, held to maturity 625 470
Fixed assets 9,610 9,690
Multiclient seismic data 285 287
Goodwill 5,296 5,189
Other assets 3,877 3,472
$ 33,075 $ 32,094
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities $ 4,734 $ 5,319
Estimated liability for taxes on income 929 1,007
Bank loans and current portion of long-term debt 879 1,597
Convertible debentures 321 -
Dividend payable 250 252
7,113 8,175
Convertible debentures - 321
Other long-term debt 4,313 3,372
Postretirement benefits 1,293 2,369
Other liabilities 892 923
13,611 15,160
Equity 19,464 16,934
$ 33,075 $ 32,094
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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
indebtedness by reflecting cash and investments that could be used to
repay debt. Details of Net Debt follow:
(Stated in millions)
Nine Months 2009
Net Debt, January 1, 2009 $ (1,129 )
Net income 2,344
Depreciation and amortization 1,848
Non-cash postretirement benefits curtailment charge 135
Excess of equity income over dividends received (54 )
Stock-based compensation expense 139
Increase in working capital requirements (552 )
Capital expenditure (1,719 )
Multiclient seismic data capitalized (150 )
Dividends paid (758 )
Proceeds from employee stock plans 156
Business acquisitions (475 )
Pension plan funding (865 )
Other 486
Translation effect on net debt (66 )
Net Debt, September 30, 2009 $ (660 )
Components of Net Debt Sept. 30,2009 Dec.