• International revenue of $5.5 billion increased 8% sequentially
• North America revenue of $2.8 billion increased 2% sequentially
• Pretax segment operating income of $968 million increased 7% sequentially
• EPS was $0.35
• Cash flow from operations and free cash flow were $1.1 billion and $0.5 billion, respectively
• Quarterly cash dividend of $0.50 per share was approved
PARIS-Wednesday 24 July 2019 [ AETOS Wire ]
(BUSINESS WIRE)-- Schlumberger Limited (NYSE: SLB) today reported results for the second quarter of 2019.
(Stated in millions, except per share amounts)
|
|||||||||||
Three Months Ended
|
Change
|
||||||||||
Jun. 30, 2019
|
Mar. 31, 2019
|
Jun. 30, 2018
|
Sequential
|
Year-on-year
|
|||||||
| Revenue |
$8,269
|
$7,879
|
$8,303
|
5%
|
0%
|
||||||
| Pretax segment operating income |
$968
|
$908
|
$1,094
|
7%
|
-12%
|
||||||
| Pretax segment operating margin |
11.7%
|
11.5%
|
13.2%
|
17 bps
|
-148 bps
|
||||||
| Net income - GAAP basis |
$492
|
$421
|
$430
|
17%
|
14%
|
||||||
| Net income, excluding charges & credits* |
$492
|
$421
|
$594
|
17%
|
-17%
|
||||||
| Diluted EPS - GAAP basis |
$0.35
|
$0.30
|
$0.31
|
17%
|
13%
|
||||||
| Diluted EPS, excluding charges & credits* |
$0.35
|
$0.30
|
$0.43
|
17%
|
-19%
|
||||||
| North America revenue |
$2,801
|
$2,738
|
$3,139
|
2%
|
-11%
|
||||||
| International revenue |
$5,463
|
$5,037
|
$5,065
|
8%
|
8%
|
||||||
| North America revenue, excluding Cameron |
$2,243
|
$2,178
|
$2,546
|
3%
|
-12%
|
||||||
| International revenue, excluding Cameron |
$4,761
|
$4,469
|
$4,387
|
7%
|
9%
|
||||||
*These are non-GAAP financial measures. See section titled "Charges & Credits" for details.
Schlumberger
Chairman and CEO Paal Kibsgaard commented, “Second-quarter revenue of
$8.3 billion increased 5% sequentially, driven by our international
business that grew 8% and showed continued signs of a broad upturn in
E&P investment and activity. International rig counts increased 6%
sequentially and 5% year-over-year. In contrast, North America land
revenue grew 1% sequentially while North America offshore revenue
increased 10%.
“During
the first half of 2019, excluding Cameron, international revenue
increased 8% year-over-year while North America land revenue declined
12% year-over-year. These results reflect the normalization in global
E&P spend that we were anticipating as international investment
increases in response to the accelerating decline in the mature
production base, and North America land investment decreases due to
E&P operator cash flow constraints. Double-digit year-over-year
growth during the first half of 2019 was posted in the Mexico &
Central America, Latin America North, Sub-Sahara Africa, and Far East
Asia & Australia GeoMarkets while high, single-digit growth was seen
in the United Kingdom & Continental Europe, Eastern Middle East,
and South & East Asia GeoMarkets. Our results, therefore, continue
to match our expectations of high, single-digit growth across our
international business in 2019.
“During
the second quarter, sequential international growth was led by the
Europe/CIS/Africa area, where revenue increased sequentially by 11%
driven by activity that strengthened beyond the seasonal recovery in the
Russia & Central Asia and United Kingdom & Continental Europe
GeoMarkets. Sequential international growth was also driven by a 19%
improvement in the Far East Asia & Australia GeoMarket and a 12%
increase in the Latin America area while revenue in the Middle East
region grew 3%.
“In North America land, despite the impact of the spring breakup in Canada, OneStim® activity
was higher, which was offset by weak hydraulic fracturing pricing and a
general decrease in drilling activity. Offshore North America revenue
increased from stronger exploration-led activity driven mainly by
WesternGeco®multiclient seismic license sales.
“By
business segment, sequential growth in the second quarter was led by a
7% increase in revenue in Reservoir Characterization followed by a 6%
increase in Production on higher international activity that exceeded
the strength of the seasonal rebounds following winter in the Northern
Hemisphere. The higher international activity benefited Wireline,
WesternGeco, Well Services, Completions, Schlumberger Production
Management (SPM), and Artificial Lift Solutions. Cameron revenue
increased 5% sequentially from higher OneSubsea® and Surface
Systems activity, primarily in the international markets. Drilling
revenue increased 1% sequentially as international growth was partially
offset by weakness in activity in North America land.
“From
a macro perspective, we expect oil market sentiments to remain
balanced. The oil demand forecast for 2019 has been reduced slightly on
trade war fears and current global geopolitical tensions, but we do not
anticipate a change in the structural demand outlook for the mid-term.
On the supply side, we continue to see US shale oil as the only near- to
medium-term source of global production growth, albeit at a slowing
growth rate, as E&P operators continue to transition from an
emphasis on growth to a focus on cash and returns, with consequent
restraining effects on investment levels. These effects, combined with
the decision by OPEC and Russia to extend production cuts through the
first quarter of 2020, are likely to keep oil prices range bound around
present levels. Although the markets are well supplied from production
added by projects that were sanctioned before 2015, this added supply
will begin to fall in 2020 and create risk for the future as the decline
rates in many mature production basins become an increasingly
significant challenge. In addition, while the number of new projects we
expect to receive final investment decision (FID) approval in 2019 is
likely to increase again for the fourth consecutive year, their size and
number account for supply additions far below the required global
annual production replacement rates. We therefore maintain our view that
international E&P investment will grow 7% to 8% in 2019, further
supported by the increase in international rig count. In contrast,
spending in North America land is tracking our expectations of a 10%
decline this year.
“The
increasing international market investment and a reduction in North
America land capex represent a positive market shift for Schlumberger
and the welcome return of a very familiar opportunity set. With our
unmatched global strength, our modernized execution platform, and our
expanded technology portfolio now ready for broad digital
implementation, we are well positioned to generate superior earnings
growth, margin expansion, and free cash flow in the emerging
international upcycle.”
Other Events
Schlumberger
announced today that its Board of Directors has appointed Olivier Le
Peuch as its Chief Executive Officer, and member of the Schlumberger
Board, effective August 1, 2019. Mr. Le Peuch succeeds Paal Kibsgaard,
who will retire as Chief Executive Officer effective that same date.
Also effective August 1, Mr. Kibsgaard will step down as Chairman of the
Board and retire as a member of the Board of Directors. Mr. Kibsgaard
will retire after more than 22 years of service to the Company,
including eight years as CEO and four years as Chairman. Effective the
same date, Mark G. Papa, a current non-independent director, will become
non-executive Chairman of the Board. Peter Currie will continue to
serve as the Board’s Lead Independent Director.
During
the quarter, Schlumberger repurchased 2.5 million shares of its common
stock at an average price of $40.12 per share, for a total purchase
price of $101 million.
On
April 28, 2019, Saudi Arabia’s Industrialization and Energy Services
Company (TAQA) announced that Arabian Drilling Company (ADC)—a joint
venture between TAQA and Schlumberger—agreed to acquire Schlumberger’s
Middle East onshore drilling rigs business in Kuwait, Oman, Iraq, and
Pakistan for $415 million. Schlumberger and TAQA formed the ADC joint
venture in 1964, with Schlumberger owning 49% while TAQA owns 51%. The
transaction is expected to close in the second half of 2019, subject to
regulatory approvals and other customary closing conditions.
On
May 14, 2019, Schlumberger and Wellbore Integrity Solutions (WIS), an
affiliate of Rhône Capital, announced that they had entered into an
agreement for WIS to acquire the Schlumberger businesses and associated
assets of DRILCO, Thomas Tools, and Fishing & Remedial services. The
transaction is valued at approximately $400 million and is expected to
close by year-end 2019, subject to regulatory approvals and other
customary closing conditions.
On
July 17, 2019, Schlumberger’s Board of Directors approved a quarterly
cash dividend of $0.50 per share of outstanding common stock, payable on
October 11, 2019 to stockholders of record on September 4, 2019.
Click here for the full press release.
Schlumberger
is the world’s leading provider of technology for reservoir
characterization, drilling, production, and processing to the oil and
gas industry. With product sales and services in more than 120 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.
Schlumberger
Limited has executive offices in Paris, Houston, London, and The Hague,
and reported revenues of $32.82 billion in 2018. For more information, visit www.slb.com.
*Mark of Schlumberger or Schlumberger companies.
Schlumberger
will hold a conference call to discuss the earnings press release and
business outlook on Friday, July 19, 2019. The call is scheduled to
begin at 8:30 a.m. US Eastern Time. To access the call, which is open to
the public, please contact the conference call operator at +1 (800)
288-8967 within North America, or +1 (612) 333-4911 outside North
America, approximately 10 minutes prior to the call’s scheduled start
time. Ask for the “Schlumberger Earnings Conference Call.” At the
conclusion of the conference call, an audio replay will be available
until August 19, 2019 by dialing +1 (800) 475-6701 within North America,
or +1 (320) 365-3844 outside North America, and providing the access
code 468337. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same web site until August 19, 2019.
This
second-quarter 2019 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; 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
second-quarter 2019 earnings release and our most recent Forms 10-K,
10-Q, and 8-K filed with or furnished to the Securities and Exchange
Commission. If one or more of these or other risks or uncertainties
materialize (or the consequences of any such development changes), or
should our underlying assumptions prove incorrect, actual outcomes may
vary materially from those reflected in our forward-looking statements.
Schlumberger disclaims any intention or obligation to update publicly or
revise such statements, whether as a result of new information, future
events or otherwise.
Contacts
Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
investor-relations@slb.com
