Schlumberger Limited (NYSE:SLB) today reported third-quarter 2005
operating revenue of $3.70 billion versus $3.43 billion in the
second quarter of 2005, and $2.91 billion in the third quarter of
last year. Income from continuing operations before charges and
credits was $523 million, or $0.86 per share-diluted, versus $0.78
in the previous quarter and $0.52 in the third quarter of last
year. Income from continuing operations, including charges and
credits, was $0.89 per share-diluted, versus $0.78 in the previous
quarter and $0.50 in the third quarter of last year. Net income was
$541 million or $0.89 per share-diluted, compared to $0.80 in the
previous quarter and $0.53 in the third quarter of last year, an
increase of 70%. Oilfield Services revenue of $3.26 billion
increased 7% sequentially and 25% compared to the same quarter of
last year. Pretax business segment operating income of $722 million
increased 7% sequentially and 64% year-on-year. WesternGeco revenue
of $436 million increased 14% sequentially and 45% year-on-year.
Pretax business segment operating income of $85 million increased
48% sequentially and 158% year-on-year. Schlumberger Chairman and
CEO Andrew Gould commented, "Third-quarter activity strengthened on
a global basis as exploration and production activity continued to
grow rapidly worldwide. The industry response to the current lack
of an oil supply cushion and the long-term need to increase
supplies of natural gas is underway but is still far from reaching
a peak. During the quarter, activity was severely disrupted in the
Gulf of Mexico with over twenty-five days of lost operating time
due to personnel being evacuated in advance of hurricanes. Damage
sustained by production platforms and mobile offshore drilling
units will mean reduced activity throughout the fourth quarter
though levels will improve compared to the third quarter. I am
pleased to report that no Schlumberger personnel were lost or
injured during this period, though employees suffered major
personal losses and are still operating from bases other than their
homes. Technology introduction accelerated during the quarter. The
next-generation Drilling & Measurements Scope
logging-while-drilling services, which offer improved drilling
efficiency and enhanced formation evaluation, met growing
acceptance as customers realized step changes in well-placement
accuracy in several geographical areas. Integrated Project
Management scored several successes in both existing projects as
well as in signing new contracts. Recent seismic, logging, and
well-testing contracts show a renewed interest in exploration in
new and existing areas. The success of our technology portfolio
will grow as this trend accelerates." Other Events: -- As part of
the 15 million-share buy-back program, Schlumberger repurchased
1.73 million shares during the quarter for a total amount of $145
million. Since the beginning of the program, Schlumberger has
repurchased 10.65 million shares for a total amount of $728
million. -- The overall impact of the hurricane season on
Schlumberger net income for the third quarter is estimated at $36
million or $0.06 per share. Without this effect, net income would
have been $0.95 per share. -- In the quarter, Schlumberger recorded
a pretax and after-tax gain of $18 million relating to the
resolution of a contingency associated with the Montrouge, France
facility, which was sold in the first quarter of 2005. -0- *T
Consolidated Statement of Income (Unaudited) (Stated in thousands
except per share amounts) Third Quarter Nine Months
------------------------------------------------ For Periods Ended
September 30 2005 2004(3) 2005 2004(3)
----------------------------------------------------------------------
Operating revenue $3,698,093 $2,905,927 $10,285,836 $8,412,495
Interest and other income(1)(4) 80,101 37,048 314,874 88,534
Expenses Cost of goods sold and services(4) 2,757,310 2,301,238
7,711,496 6,653,279 Research & engineering 128,266 118,413
371,121 350,923 Marketing 11,828 10,111 34,086 29,296 General &
administrative 89,850 88,633 266,167 246,754 Debt extinguishment
costs(4) - - - 114,894 Interest(4) 50,637 43,706 147,636 227,660
----------------------------------------------------------------------
Income from Continuing Operations before taxes and minority
interest 740,303 380,874 2,070,204 878,223 Taxes on income(4)
174,953 74,390 474,772 195,924
----------------------------------------------------------------------
Income from Continuing Operations before minority interest 565,350
306,484 1,595,432 682,299 Minority interest (24,547) (8,519)
(56,991) (19,645)
----------------------------------------------------------------------
Income from Continuing Operations 540,803 297,965 1,538,441 662,654
Income from Discontinued Operations - 20,240 7,972 231,444
----------------------------------------------------------------------
Net Income $540,803 $318,205 $1,546,413 $894,098
----------------------------------------------------------------------
Diluted Earnings Per Share Income from Continuing Operations $0.89
$0.50 $2.54 $1.12 Income from Discontinued Operations - 0.03 0.01
0.38 ----------- ----------- ------------ ----------- Net Income(5)
$0.89 $0.53 $2.55 $1.49 ----------- ----------- ------------
----------- ----------- ----------- ------------ -----------
Average shares outstanding 589,820 589,936 589,298 589,186 Average
shares outstanding assuming dilution 615,923 613,787 614,223
613,009 Depreciation & amortization included in expenses(2)
$337,107 $323,002 $992,088 $968,629
----------------------------------------------------------------------
1) Includes interest income of: a. Third quarter 2005 - $ 27
million (2004 - $15 million). b. Nine months 2005 - $ 70 million
(2004 - $40 million). 2) Including Multiclient seismic data costs.
3) Restated for discontinued operations. 4) Charges and credits:
Diluted Income EPS Statement Pretax Tax Net effect(5)
Classification -------- -------- -------- ----------
--------------- The third quarter of 2005 includes: Gain relating
to resolution of contingency - Montrouge Interest and facility
$17.8 $- $17.8 $0.03 other income -------- -------- --------
---------- The first quarter of 2005 includes: Gain on sale of
Montrouge Interest and facility $145.7 $- $145.7 $0.24 other income
Real estate Cost of goods related sold and charges (12.1) 0.8
(11.3) (0.02) services -------- -------- -------- ---------- $133.6
$0.8 $134.4 $0.22 -------- -------- -------- ---------- The third
quarter of 2004 includes: Restructuring Cost of goods program sold
and charges $(3.0) $- $(3.0) $- services Intellectual Property Cost
of goods settlement sold and charge (11.2) 1.3 (9.9) (0.02)
services -------- -------- -------- ---------- $(14.2) $1.3 $(12.9)
$(0.02) -------- -------- -------- ---------- The second quarter of
2004 includes: Loss on sale of Atos Interest and Origin shares
$(6.6) $- $(6.6) $(0.01) other income Vacated leased Cost of goods
facility sold and charge (11.0) - (11.0) (0.02) services
Restructuring Cost of goods program sold and charges (4.0) - (4.0)
(0.01) services Litigation Cost of goods reserve sold and release
5.0 - 5.0 0.01 services Debt Debt extinguishment extinguishment
costs (37.4) 14.0 (23.4) (0.04) costs US interest rate swap
Interest gain 9.6 (3.3) 6.3 0.01 expense -------- -------- --------
---------- $(44.4) $10.7 $(33.7) $(0.05) -------- -------- --------
---------- The first quarter of 2004 includes: Loss on sale of Atos
Interest & Origin shares $(14.3) $- $(14.3) $(0.02) other
income Restructuring Cost of goods program sold and charges (19.5)
5.5 (14.0) (0.02) services Debt Debt extinguishment extinguishment
costs (77.5) - (77.5) (0.13) costs Loss recognized on interest-rate
Interest swaps (73.5) 27.2 (46.3) (0.08) expense -------- --------
-------- ---------- $(184.8) $32.7 $(152.1) $(0.25) --------
-------- -------- ---------- 5) Amounts may not add due to
rounding. Condensed Balance Sheet (Unaudited) (Stated in thousands)
Assets Sept. 30, 2005 Dec. 31, 2004
---------------------------------------------------------------------
Current Assets Cash and short-term investments $3,002,992
$2,997,425 Other current assets 4,769,334 3,997,145 Assets held for
sale(1) - 65,179
---------------------------------------------------------------------
7,772,326 7,059,749 Fixed income investments, held to maturity
378,702 203,750 Fixed assets 4,020,664 3,761,729 Multiclient
seismic data 245,264 346,522 Goodwill 2,922,220 2,789,048 Other
assets 1,896,380 1,839,979
---------------------------------------------------------------------
$17,235,556 $16,000,777
---------------------------------------------------------------------
Liabilities and Stockholders' Equity
---------------------------------------------------------------------
Current Liabilities Accounts payable and accrued liabilities
$3,121,868 $2,980,790 Estimated liability for taxes on income
951,298 858,785 Bank loans and current portion of long-term debt
674,275 715,872 Dividend payable 124,737 111,136 Liabilities held
for sale(1) - 34,617
---------------------------------------------------------------------
4,872,178 4,701,200 Long-term debt 3,743,847 3,944,180
Postretirement benefits 710,088 670,765 Other liabilities 162,861
151,457
---------------------------------------------------------------------
9,488,974 9,467,602 Minority interest 470,465 416,438 Stockholders'
Equity 7,276,117 6,116,737
---------------------------------------------------------------------
$17,235,556 $16,000,777
---------------------------------------------------------------------
(1) Assets and liabilities held for sale at December 31, 2004
represent the gross assets and liabilities of the Essentis,
Payphones, and Global businesses. Net Debt (Unaudited) 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. Details of the net debt follow:
(Stated in millions) Nine Months 2005
---------------------------------------------------------------------
Net Debt, beginning of period $(1,459) Income from continuing
operations 1,538 Excess of equity income over dividends received
(52) Charges/credits, net (152) Depreciation and amortization 992
US pension contribution (171) Increase in working capital
requirements (405) Capital expenditures (1,135) Dividends paid
(358) Proceeds from employee stock plans 207 Proceeds from business
divestitures 22 Proceeds from the sale of the Montrouge facility
230 PetroAlliance acquisition (cash paid) (40) Other business
acquisitions (62) Stock repurchase program (408) Net debt acquired
(50) Other 181 Translation effect on net debt 86 -----------------
Net Debt, end of period $(1,036) -----------------
----------------- (Stated in millions) Components of Net Debt Sept.
30, 2005 Dec. 31, 2004
---------------------------------------------------------------------
Cash and short-term investments $3,003 $2,997 Fixed income
investments, held to maturity 379 204 Bank loans and current
portion of long-term debt (674) (716) Long-term debt (3,744)
(3,944) --------------- -------------- $(1,036) $(1,459)
--------------- -------------- --------------- -------------- In
addition to financial results determined in accordance with
generally accepted accounting principles (GAAP), this Third Quarter
Earnings 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 tax rates and per share
amounts) Third Quarter 2005
---------------------------------------- Pretax Tax Min Int Net
---------------------------------------- Income from Continuing
Operations per Consolidated Statement of Income $740.3 $175.0
$(24.5) $540.8 Add back Charges & Credits: - Resolution of
contingency - Montrouge facility (17.8) - - (17.8)
---------------------------------------- Income from Continuing
Operations before charges & credits $722.5 $175.0 $(24.5)
$523.0 ----------------------------------------
---------------------------------------- Before charges &
Continuing operations GAAP credits ---------------------
---------------------------------------- Effective tax rate 23.6%
24.2% Diluted Earnings per Share $0.89 $0.86 Third Quarter 2004
---------------------------------------- Pretax Tax Min Int Net
---------------------------------------- Income from Continuing
Operations per Consolidated Statement of Income $380.9 $74.4 $(8.5)
$298.0 Add back Charges & Credits: - Restructuring program
charges 3.0 - - 3.0 - Intellectual property settlement 11.2 1.3 -
9.9 ---------------------------------------- Continuing operations
before charges & credits $395.1 $75.7 $(8.5) $310.9
----------------------------------------
---------------------------------------- Before charges &
Continuing operations GAAP credits ---------------------
---------------------------------------- Effective tax rate 19.5%
19.1% Diluted Earnings per Share $0.50 $0.52 There were no charges
or credits recorded in the second quarter of 2005. Business Review
(Unaudited) (Stated in millions) Third Quarter Nine Months
--------------------- ---------------------- 2005 2004 % chg 2005
2004 % chg --------------------- ---------------------- Oilfield
Services ----------------- Operating Revenue $3,259 $2,606 25%
$9,082 $7,505 21% Pretax Operating Income $722 $440 64% $1,954
$1,317 48% WesternGeco ----------- Operating Revenue $436 $301 45%
$1,197 $905 32% Pretax Operating Income $85 $33 158% $207 $81 154%
Pretax operating income represents the segments' income before
taxes and minority interest. The pretax operating income excludes
corporate expenses (including $6 million relating to assets lost
and damaged during the third quarter 2005 hurricanes in the Gulf of
Mexico), interest income, interest expense, amortization of certain
intangibles, stock-based compensation costs, and the charges and
credits described on page 4, as these items are not allocated to
the segments. *T Oilfield Services Third-quarter revenue of $3.26
billion was 7% higher sequentially and increased 25% year-on-year.
Pretax operating income of $722 million increased 7% sequentially
and 64% year-on-year. Sequential revenue increases were recorded
across all geographic areas with Europe/CIS/Africa and Middle East
& Asia displaying the strongest growth rates. By technology,
Drilling & Measurements, Well Completions & Productivity,
and Well Services led sequential growth. Year-on-year, all four
geographic areas posted growth of at least 20%. All technologies
recorded significant increases driven by robust new technology
introduction, coupled with increased activity and favorable
pricing. Pretax operating income recorded strong sequential growth
with the exception of North America as a result of the hurricane
season in the Gulf of Mexico. Strengthening exploration and
production activity worldwide led to improved pricing across all
geographic areas. During the quarter, Schlumberger opened a
dedicated Well Services Client Support Laboratory on the campus of
Tyumen State University in Western Siberia. The laboratory is
equipped with advanced stimulation testing equipment and is
designed to support the expanding fracturing and matrix market in
Russia. The laboratory will focus on developing and adapting fluid
technologies to the specific needs of the local market, as well as
supporting regional product sourcing. In September, Schlumberger
commissioned the new Aberdeen Operation Support Center following
completion of a major capabilities upgrade. The state-of-the-art
facility enables real-time monitoring, modeling, and remote
operational control to optimize drilling while reducing risk. The
center is key to North Sea operations and the specific drilling
problems of mature fields. Schlumberger presently operates 27
drilling operation centers worldwide. North America Revenue of $946
million increased 4% sequentially and 20% year-on-year. Pretax
operating income of $219 million declined 6% sequentially but
increased 84% year-on-year. Canada recorded strong sequential
growth with the rapid recovery in rig count following spring
break-up, combined with sustained improved pricing. The growth in
US Land revenue resulted from the combination of positive trends in
activity and favorable pricing. Gulf Coast activity declined
substantially during the quarter with the suspension of operations
due to the severe hurricane season. The sequential decline in
operating income was the result of the severity of the hurricane
season, and includes the combined effects of reduced resource
utilization and business disruption costs. The total estimated
financial impact of hurricanes during the quarter for the Gulf
Coast and US Land GeoMarkets was $60 million in revenue and $44
million in operating income. The steep year-on-year operating
income growth was primarily due to double-digit price increases,
particularly for Well Services, Wireline, and Drilling &
Measurements technologies, together with continuing activity
growth. Working in the Barnett Shale formation for Devon Energy, a
second fracturing job using the newly introduced FiberFRAC(a)
technology was successfully completed -- reducing sand settling and
enhancing production from the shale. FiberFRAC has proven critical
for producers in unconventional gas reservoirs for both vertical
and horizontal applications where sand settling is known to hamper
optimal gas production from the shale. In the Gulf of Mexico, BHP
Billiton achieved significant time savings by conducting a complex
borehole seismic operation using the Schlumberger Wireline
industry-leading VSI-40(a) imager. Surveys were conducted in 24
operating hours, yielding eight hours of rig-time savings over
conventional 20-level technology. The seismic profile was used to
confirm proper depth registration of the seismic data. Latin
America Revenue of $569 million was 3% higher sequentially and 31%
higher year-on-year. Pretax operating income of $92 million
increased 9% sequentially and 104% year-on-year. Sequential revenue
improvement was due to an expanding customer base and an Integrated
Project Management (IPM) project that included a
performance-related incentive payment in the Peru/Colombia/Ecuador
GeoMarket. In Brazil, increasing activity was experienced with
strong deployment of Drilling & Measurements and Wireline
technology services. Revenue improvement was partially offset by
Mexico, which declined during the quarter, primarily due to a drop
in IPM third-party managed services revenue. Revenue in Venezuela
improved as a result of rising PDVSA drilling activity, partially
offset by a slowdown in international operator activity offshore
Venezuela. During the quarter, PRISA barge utilization activity in
Western Venezuela exceeded an average of 90%. Discussions regarding
the settlement of certain outstanding receivables for the PRISA
contract were progressing at quarter-end. Increasing operating
efficiency in the Latin America South and Peru/Colombia/Ecuador
GeoMarkets led partly to the sequential operating income
improvement. The marked year-on-year operating income improvement
was due to strengthening profitability in integrated projects
coupled with strong Drilling & Measurements technology results
throughout Latin America. In Trinidad and Tobago, BP successfully
completed a production logging gas well using an industry first 10
3/4" Quantum maX(a) gravel pack completion system, with an openhole
full-bore set down MudSOLV(a) service tool. The sandface completion
included the use of AllPAC(a) screens and an FIV(a) Formation
Isolation Valve. An MGLT (Memory Gravel Pack Logging Tool) was used
to confirm the 100% gravel pack of the producing interval. Offshore
Brazil, PeriScope 15(a) -- the newly introduced directional, deep
imaging-while-drilling service from the Scope(a) family of Drilling
& Measurements technologies -- was successfully launched for
Petrobras on two deepwater development fields. PeriScope 15
real-time data, combined with GVR(a) geoVISION resistivity images,
were simultaneously transmitted to the client's visualization
centers in different parts of the country via the InterACT(a) data
delivery system. The results were used in real time to update well
positioning and identify reservoir uncertainties to meet client
well-placement objectives. The azimuthal deep reading bed-boundary
detection capability of the unique technology enables clients to
steer a well in the most productive layers with exceptional
accuracy, resulting in higher net oil recovery, access to
additional reserves, higher production rates, and lower
well-construction costs. Europe/CIS/Africa Revenue of $944 million
increased 14% sequentially and 28% year-on-year. Pretax operating
income of $201 million increased 31% sequentially and 71%
year-on-year. Sequential revenue growth was partially due to
continued strong activity in Russia, particularly for Drilling
& Measurements and Well Completions & Productivity
technologies, combined with the first full quarter of financial
consolidation of PetroAlliance operations. West Africa experienced
strong activity improvement with continued deepwater activity
growth benefiting mainly Wireline and Drilling & Measurements
technologies. The North Sea GeoMarket also contributed to the
revenue growth with increased drilling activity and strong demand
for production technologies from Well Services and Wireline.
Sequentially, Drilling & Measurements, Well Services, and Well
Completions & Productivity technologies showed the strongest
rise in operating income from increased pricing and activity,
particularly in the North Sea, West Africa, and Russia GeoMarkets.
All seven Europe/CIS/Africa GeoMarkets delivered operating margin
improvements resulting in a sequential increase of 270 basis points
due to price increases in a tight supply environment. In Norway,
the first-ever intelligent multilateral well for the Troll field
was successfully installed for Hydro. The completion includes a
surface-controlled natural gas lift system comprising a
hydraulically operated Wireline Retrievable Flow Control gas lift
valve, integrated with sand control and side mounted guns to boost
production using the gas cap, and to bring wells to production. The
completion also incorporates two remotely controlled flow control
valves, operated by a single control line, to optimize and control
the flow from the two branches of the multilateral. Continuing its
worldwide introduction, the new Wireline PressureXpress(a) service
was deployed for Burren Energy Resources for the first time in
their Burun field in the Caspian. Providing accurate measurements
of formation pressure and fluid mobility, PressureXpress was run
successfully in a program of 89 pressure points in extremely
low-mobility formations. The tool's unique ability to acquire
pressure measurements in very tight formations identified a
non-depleted zone in the field and a candidate for future
development. Middle East & Asia Revenue of $774 million was 6%
higher sequentially and 25% higher year-on-year. Pretax operating
income of $226 million increased 9% sequentially and 36%
year-on-year. The sequential revenue growth was mainly due to the
increase in rig count in the Saudi Arabia/Bahrain/Kuwait GeoMarket,
as Saudi Aramco continues to increase activity in line with their
announced spending plans. In the Brunei/Malaysia/Philippines
GeoMarket, sequential revenue grew sharply due to higher customer
expenditures, improving pricing, and a move by operators into
increased deepwater exploration. This resulted in high levels of
activity in testing operations, as well as demand for Drilling
& Measurements technology services. The Gulf GeoMarket also
contributed to the sequential revenue growth through firm pricing.
Sustained activity, rising pricing, and improved market share gain
resulted in operating margins approaching 30% in the quarter. The
strong sequential operating income growth was driven by Drilling
& Measurements and Wireline technology services that benefited
from an increasing rig count and a strengthening pricing
environment. During the quarter, redevelopment of the Bokor field
in Malaysia reached a milestone with the completion of the first
phase of work. This 10-year IPM mature field production
optimization project for PETRONAS/Carigali began in late 2003 with
a detailed Data & Consulting Services engineering study to
assess viability. In addition to optimizing production from
existing wells, the first phase included the drilling of three new
wells to further exploit reservoir potential and enhance recovery.
At quarter-end, all three new wells were on production at rates
close to the engineering study estimations that were based on data
analysis and appropriate technology deployment. In Indonesia,
Schlumberger successfully finished the world's two longest
PERFPAC(a) sand control well completions for ConocoPhillips, nearly
doubling the previous record. PERFPAC integrated perforating and
gravel packing is the only single-trip, multi-zone service that
cuts fluid loss, saves rig time, and ensures optimal productivity.
On well HIU A-02, the perforated interval was 705 feet gross and
370 feet net. Well HIU A-01 was completed as two stacked StimPAC(a)
fracturing and gravel-packing jobs, with a gross perforated
interval of 640 feet. Subsequent well tests confirmed successful
completions. Highlights -- In Mexico, PEMEX awarded a $48 million,
multi-year cementing contract in their Marine region, and a $76
million cementing and stimulation contract for work in their South
region. -- In Russia, Taas-Yuriakh Neftegazodobycha awarded a
multi-year, $40 million IPM contract for re-entering 13 suspended
wells and drilling horizontal sidetracks from the existing vertical
wellbores in Eastern Siberia-Yakutia. The work scope includes
project management, rig management, and services from multiple
Schlumberger technology groups. -- In Indonesia, INPEX awarded an
IPM project for a remote three- to four-well deepwater appraisal
campaign in the Masela block. Together, INPEX and IPM will design
the drilling program and tender/contract packages for all services
required for the work, supervise the execution of the work, and
perform the post-drilling wrap-up. -- In the UK, Tullow Oil
selected Petrel(a) software as its primary seismic interpretation
and reservoir modeling workflow tool, enabling asset teams to
develop and refine workflows across multiple technical disciplines.
Petrel Windows(R)-based workflow tools will interface directly with
Tullow's existing software. -- CNOOC Ltd. signed a multi-year, $7.9
million agreement to purchase the GeoFrame(a) reservoir
characterization system and ECLIPSE(a) simulator software as their
corporate standard applications for all their China subsidiaries.
-- In Canada, Suncor Energy Inc. awarded a Well Completions &
Productivity contract for ten Hotline(a) electrical submersible
pump artificial lift systems for deployment in their heavy oil SAGD
(Steam-Assisted Gravity Drainage) operations. WesternGeco
Third-quarter revenue of $436 million increased 14% sequentially
and 45% compared to the same period last year. Pretax operating
income of $85 million improved 48% sequentially and $52 million
year-on-year. Sequentially, Marine revenue increased sharply as
overall vessel utilization improved to 92% and Q-vessel utilization
reached 100% in the quarter. In Europe, three Q(a) vessels and the
Q-Seabed(a) crew were active throughout the quarter. In addition,
one new project began in Sakhalin and higher activity was
experienced in West Africa. These results were partly mitigated by
lower revenue in South America, Mexico, and the Middle East
following the transfer of vessels to other regions. The sharp
revenue growth also reflected much improved contractual terms and
conditions, including mobilization, demobilization, and weather
downtime provisions. However, Land, Data Processing, and
Multiclient revenues experienced seasonal declines during the
quarter. In Land, the start of a new project in Algeria was
insufficient to overcome the results of the standby of two crews in
Africa due to the rainy season. In Data Processing, higher revenues
in South America and Russia were unable to compensate for lower
activity in Mexico. Multiclient sales were $95 million, which
declined due to office closures in New Orleans and Houston as a
result of hurricane activity. The year-on-year revenue increase was
led by Marine due to better vessel utilization combined with a 74%
year-on-year price improvement and favorable terms and conditions
on most contracts. Sequential improvement in operating income was
mainly due to Marine, driven by higher vessel utilization and
strong pricing. The overall impact of Hurricanes Katrina and Rita
led to estimated lost operating revenue of $13 million and lost
operating income of $9 million for the quarter. Backlog reached
$656 million versus $595 million at the end of the second quarter.
Highlights -- ConocoPhillips Canada awarded a contract for two 3D
Q-Marine(a) seismic surveys over their Laurentian Sub-Basin
exploration blocks. The two projects, totaling approximately 2,000
square kilometers, are the first Q-Marine surveys in Canada. Data
acquisition for the two surveys commenced in mid-June and was
completed in September. The Western Neptune acquired the surveys,
towing ten 6,000-meter cables with 100-meter separation. The
93-meter, 8,000-ton Neptune is one of the largest seismic vessels
ever to work off Canada's East Coast. -- Apache Egypt Company
awarded a contract for Q-Land(a) 3D seismic surveys that will cover
approximately 2,000 square kilometers in the Egyptian Western
Desert. The surveys commenced in September 2005. Apache requires
the surveys to help explore its new West Kanayes, North Tarek,
Shushan, and West Kalabsha concessions. -- Joint Operations, which
operates in the onshore Partitioned Neutral Zone between Kuwait and
Saudi Arabia, awarded a contract for the integrated acquisition and
processing of 224 square kilometers of 3D Q-Land seismic. Field
operations commenced in mid-July 2005, with the primary objectives
being improved structural imaging and the use of seismic attributes
to predict reservoir quality and distribution in areas not
previously drilled. -- WesternGeco opened its 4D Center of
Excellence in Stavanger on September 20, 2005. The center provides
business services to customers in addition to training, workflow
development, and technology management to support the growing
business of 4D or time-lapse seismic reservoir monitoring. The
center also will coordinate support for university consortia,
industry research, and alliance partners. About Schlumberger
Schlumberger is the world's leading oilfield services company
supplying technology, project management, and information solutions
that optimize performance for customers working in the oil and gas
industry. The company employs more than 58,000 people of over 140
nationalities working in more than 80 countries, and comprises two
business segments. Schlumberger supplies a wide range of products
and services from formation evaluation through directional
drilling, well cementing and stimulation, well completions and
productivity to consulting, software, information management, and
IT infrastructure services that support core industry operational
processes. WesternGeco, jointly owned with Baker Hughes, is the
world's largest seismic company and provides advanced acquisition
and data processing services. In 2004, Schlumberger operating
revenue was $11.48 billion. For more information, visit SLB.com.
(a) Mark of Schlumberger Notes: -- Schlumberger will hold a
conference call to discuss the above announcement on Friday,
October 21, 2005 at 9:00am New York City time (2:00pm London
time/3:00pm Paris time). To access the call, which is open to the
public, please contact the conference call operator at
+1-888-428-4478 (toll free) for North America, or +1-612-288-0329
outside North America, approximately 15 minutes prior to the
scheduled start time. Ask for the "Schlumberger Earnings Conference
Call." A replay will be available through November 4, 2005 by
dialing +1-800-475-6701 in North America, or +1-320-365-3844
outside North America, and providing the access code 794181. -- The
conference call will be webcast simultaneously at SLB.com/irwebcast
on a listen-only basis. Please log in 15 minutes ahead of time to
test your browser and register for the call. A replay of the
webcast will also be available through November 4, 2005 at the
above Web site. -- Supplemental information in the form of a
question and answer document on this press release and financial
schedules are available at SLB.com/ir.
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