Schlumberger Limited (NYSE:SLB) reported today 2005 operating
revenue of $14.31 billion versus $11.48 billion in 2004. Income
from continuing operations, before credits and charges, of $2.03
billion was 67% higher than last year, representing diluted
earnings per share of $3.34 versus $2.03 in 2004. Income from
continuing operations, including credits and charges, was $3.62 per
share-diluted in 2005 versus $1.70 in 2004. Net income was $2.21
billion in 2005, representing diluted earnings per share of $3.64
versus $2.04 in 2004, an increase of 78%. Fourth-Quarter Results
Fourth-quarter operating revenue of $4.02 billion was 9% above the
prior quarter and 31% higher than the fourth quarter of 2004.
Income from continuing operations, before credits and charges, was
$640 million, or $1.05 per share-diluted, an increase of 82%
year-on-year and 22% over the third quarter of 2005. Income from
continuing operations, including credits and charges, was $1.08 per
share-diluted versus $0.89 in the previous quarter and $0.59 in the
fourth quarter of last year. Net income was $661 million, or $1.08
per share-diluted, double the $330 million in the same quarter of
last year. Oilfield Services revenue of $3.57 billion increased 9%
sequentially and 30% compared to the same quarter of last year.
Pretax business segment operating income of $852 million increased
18% sequentially and 76% year-on-year. WesternGeco revenue of $464
million increased 6% sequentially and 39% year-on-year. Pretax
business segment operating income of $110 million increased 29%
sequentially and 156% year-on-year. Schlumberger Chairman and CEO
Andrew Gould commented, "The very strong activity that we have seen
in the fourth quarter resulted in new record levels of oilfield
revenue and net income for Schlumberger. At Oilfield Services,
sequential growth in the Eastern Hemisphere was greater than the
growth in the United States for the second quarter running,
confirming increased activity, improved equipment utilization and
stronger prices in those markets. WesternGeco also continued to
deliver excellent results. Demand for seismic acquisition as well
as multiclient data indicate a strong renewed interest in
exploration. The continued acceptance of Q technology resulted in
impressive growth, which is expected to continue in 2006. Looking
ahead, several trends will define activity in 2006. First, rig
count increases will be largely limited to onshore work as the
global offshore rig market will remain constrained until new builds
are mobilized beyond 2006. Second, shortages of people and
equipment across the industry are likely to result in cost
inflation and project delays, placing a high premium on reliable
suppliers of both technology and skilled personnel. Third, the
technology that can improve the productivity of the limited base of
skilled personnel will be in high demand. This is clearly
demonstrated both by the success of the Petrel
seismic-to-simulation software tools and by growing acceptance of
the remote monitoring of job execution to achieve superior
performance from technology. Fourth, exploration activity, where
Schlumberger has an unmatched portfolio of services, will show a
large increase in 2006, and this will continue for a number of
years. Overall, we expect our top line growth in 2006 to be similar
to that experienced in 2005. The industry has already recognized
the need for an unprecedented effort to increase secure hydrocarbon
supply. Plans are being put in place to achieve this, but it will
take several years of sustained activity to develop the new
production that can reliably replace today's supply, much of which
was developed during the up-cycle of the 1970s and 1980s. In
addition, this new supply will generally come from smaller
reservoirs and more hostile environments where Schlumberger is
uniquely placed to meet the challenge." Other Events: -- As part of
the 15 million-share buy-back program, Schlumberger repurchased
7.64 million shares during the year for a total amount of $612
million. Since the beginning of the program in July 2004,
Schlumberger has repurchased 12.79 million shares for a total
amount of $932 million. -- Schlumberger recorded a $21 million gain
on the sale of its investment in Hanover Compressor Company stock.
-0- *T Consolidated Statement of Income (Unaudited) (Stated in
thousands except per share amounts) Fourth Quarter Twelve Months
------------------------------------------------- For Periods Ended
December 31 2005 2004 2005 2004
----------------------------------------------------------------------
Operating revenue $4,023,346 $3,067,670 $14,309,182 $11,480,165
Interest and other income (1)(3) 92,895 40,164 407,769 128,698
Expenses Cost of goods sold and services (3) 2,911,600 2,388,693
10,623,096 9,041,972 Research & engineering 134,392 116,431
505,513 467,354 Marketing 12,938 11,014 47,024 40,310 General &
administrative 106,331 97,694 372,498 344,448 Debt extinguishment
costs (3) - - - 114,894 Interest (3) 49,454 44,788 197,090 272,448
----------------------------------------------------------------------
Income from Continuing Operations before taxes and minority
interest 901,526 449,214 2,971,730 1,327,437 Taxes on income (3)
207,155 81,025 681,927 276,949
----------------------------------------------------------------------
Income from Continuing Operations before minority interest 694,371
368,189 2,289,803 1,050,488 Minority interest (33,817) (16,791)
(90,808) (36,436)
----------------------------------------------------------------------
Income from Continuing Operations 660,554 351,398 2,198,995
1,014,052 Income from Discontinued Operations - (21,626) 7,972
209,818
----------------------------------------------------------------------
Net Income $660,554 $329,772 $2,206,967 $1,223,870
----------------------------------------------------------------------
Diluted Earnings Per Share Income from Continuing Operations $1.08
$0.59 $3.62 $1.70 Income from Discontinued Operations - (0.04) 0.01
0.34 ----------- ----------- ------------ ------------ Net Income
(4) $1.08 $0.55 $3.64 $2.04 ----------- ----------- ------------
------------ ----------- ----------- ------------ ------------
Average shares outstanding 589,258 588,799 589,288 589,089 Average
shares outstanding assuming dilution 616,760 612,462 614,858
612,872 Depreciation & amortization included in expenses (2)
$358,881 $339,302 $1,350,969 $1,307,931
----------------------------------------------------------------------
1) Includes interest income of: a. Fourth quarter 2005 - $30
million (2004 - $16 million). b. Twelve months 2005 - $100 million
(2004 - $56 million). 2) Including Multiclient seismic data costs.
3) Charges and credits: (Stated in millions except per share
amounts) Diluted Income EPS Statement Pretax Tax Net effect(4)
Classification -------- ------- -------- --------- ---------------
The fourth quarter of 2005 includes: Gain on sale of Hanover
Compressor Interest and stock $20.9 $- $20.9 $0.03 other income
-------- ------- -------- --------- 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
Origin Interest and 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 Interest rate swap 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 Origin Interest & 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- Interest rate swaps (73.5) 27.2 (46.3)
(0.08) expense -------- ------- -------- --------- $(184.8) $32.7
$(152.1) $(0.25) -------- ------- -------- --------- 4) Amounts may
not add due to rounding. Condensed Balance Sheet (Unaudited)
(Stated in thousands) Assets Dec. 31, 2005 Dec. 31, 2004
----------------------------------------------------------------------
Current Assets Cash and short-term investments $3,495,681
$2,997,425 Other current assets 5,058,232 3,997,145 Assets held for
sale(1) - 65,179
----------------------------------------------------------------------
8,553,913 7,059,749 Fixed income investments, held to maturity
359,750 203,750 Fixed assets 4,200,638 3,761,729 Multiclient
seismic data 222,106 346,522 Goodwill 2,922,465 2,789,048 Other
assets 1,818,620 1,839,979
----------------------------------------------------------------------
$18,077,492 $16,000,777
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Current Liabilities Accounts payable and accrued liabilities
$3,560,361 $2,980,790 Estimated liability for taxes on income
1,028,571 858,785 Bank loans and current portion of long-term debt
796,578 715,872 Dividend payable 124,733 111,136 Liabilities held
for sale(1) - 34,617
----------------------------------------------------------------------
5,510,243 4,701,200 Long-term debt 3,591,338 3,944,180
Postretirement benefits 719,985 670,765 Other liabilities 159,159
151,457
----------------------------------------------------------------------
9,980,725 9,467,602 Minority interest 505,182 416,438 Stockholders'
Equity 7,591,585 6,116,737
----------------------------------------------------------------------
$18,077,492 $16,000,777 (1) Assets and liabilities held for sale at
December 31, 2004 represented the gross assets and liabilities of
the Essentis, Payphones and Global businesses. *T 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 indebtedness. Details of the
net debt follow: -0- *T (Stated in millions) Twelve Months 2005
-------------------------------------------------------- Net Debt,
beginning of period $(1,459) Income from continuing operations
2,199 Excess of equity income over dividends received (86)
Charges/credits, net of tax (173) Depreciation and amortization
1,351 US pension contribution (171) Increase in working capital
requirements (292) Capital expenditures (1,652) Dividends paid
(482) Proceeds from employee stock plans 345 Proceeds from business
divestitures 22 Proceeds from the sale of the Montrouge facility
230 PetroAlliance acquisition (cash paid) (40) Other business
acquisitions (78) Stock repurchase program (612) Sale of Hanover
Compressor stock 110 Net debt acquired (50) Other 212 Translation
effect on net debt 94 ------- Net Debt, end of period $(532)
------- ------- (Stated in millions) Components of Net Debt Dec.
31, 2005 Dec. 31, 2004
----------------------------------------------------------------------
Cash and short-term investments $3,496 $2,997 Fixed income
investments, held to maturity 360 204 Bank loans and current
portion of long- term debt (797) (716) Long-term debt (3,591)
(3,944) --------- ---------- $(532) $(1,459) --------- ----------
--------- ---------- *T In addition to financial results determined
in accordance with generally accepted accounting principles (GAAP)
this Fourth-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: -0- *T (Stated in millions except per
share amounts) Fourth Quarter 2005
---------------------------------- Pretax Tax Min Int Net
---------------------------------- Income from Continuing
Operations per Consolidated Statement of Income $901.5 $207.1
$(33.8) $660.6 Add back Charges & Credits: --Gain on sale of
Hanover Compressor stock (20.9) - - (20.9)
---------------------------------- Income from Continuing
Operations before charges & credits $880.6 $207.1 $(33.8)
$639.7 ----------------------------------
---------------------------------- Before charges Continuing
operations GAAP & credits ---------------------
---------------------------------- Effective tax rate 23.0% 23.5%
Diluted Earnings per Share $1.08 $1.05 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 Twelve Months 2005
---------------------------------- Pretax Tax Min Int Net
---------------------------------- Income from Continuing
Operations per Consolidated Statement of Income $2,971.7 $681.9
$(90.8)$2,199.0 Add back Charges & Credits: --Gain on sale of
Hanover Compressor stock (20.9) - - (20.9) --Resolution of
contingency- Montrouge facility (17.8) - - (17.8) --Gain on sale of
Montrouge facility (145.7) - - (145.7) --Real estate related
charges 12.1 0.8 - 11.3 ---------------------------------- Income
from Continuing Operations before charges & credits $2,799.4
$682.7 $(90.8)$2,025.9 ----------------------------------
---------------------------------- Before charges Continuing
operations GAAP & credits ---------------------
---------------------------------- Effective tax rate 22.9% 24.4%
Diluted Earnings per Share $3.62 $3.34 Twelve Months 2004
---------------------------------- Pretax Tax Min Int Net
---------------------------------- Income from Continuing
Operations per Consolidated Statement of Income $1,327.4 $276.9
$(36.4)$1,014.1 Add back Charges & Credits: --Restructuring
program charges 22.5 5.5 - 17.0 --Intellectual property settlement
11.2 1.3 - 9.9 --Debt extinguishment costs 114.9 14.0 - 100.9
--Gain on Interest Rate Swap extinguishment (9.6) (3.3) - (6.3)
--Loss on sale of Atos Origin shares 20.9 - - 20.9 --Vacated leased
facility reserve 11.0 - - 11.0 --Litigation reserve release (5.0) -
- (5.0) --Reorganization reserve 4.0 - - 4.0 --Loss recognized on
interest rate swaps 73.6 27.2 - 46.4
---------------------------------- Income from Continuing
Operations before charges & credits $1,570.9 $321.6
$(36.4)$1,212.9 ----------------------------------
---------------------------------- Before charges Continuing
operations GAAP & credits ---------------------
---------------------------------- Effective tax rate 20.9% 20.5%
Diluted Earnings per Share $1.70 $2.03 Business Review (Unaudited)
(Stated in millions) Fourth Quarter Twelve Months
-------------------- ---------------------- 2005 2004 % chg 2005
2004 % chg -------------------- ---------------------- Oilfield
Services ----------------- Operating Revenue $3,566 $2,734 30%
$12,648 $10,239 24% Pretax Operating Income $852 $483 76% $2,805
$1,801 56% WesternGeco ----------- Operating Revenue $464 $333 39%
$1,662 $1,238 34% Pretax Operating Income $110 $43 156% $317 $124
155% *T Pretax operating income represents the segments' income
before taxes and minority interest. The pretax operating income
excludes corporate expenses, interest income, interest expense,
amortization of certain intangible assets, interest on
post-retirement benefits, stock-based compensation costs and the
charges and credits described on page 4, as these items are not
allocated to the segments. Oilfield Services Full-year 2005 revenue
of $12.65 billion increased 24% versus 2004. Europe/CIS/Africa and
Latin America each increased revenue by 27%, Middle East & Asia
by 22%, and North America by 21%. Pretax operating income of $2.81
billion in 2005 was 56% higher than 2004. Operating margins
improved 460 basis points (bps) in 2005 versus 2004, demonstrating
high demand for oilfield services with strong pricing and
accelerating technology delivery. Fourth-quarter revenue of $3.57
billion increased 9% sequentially and 30% year-on-year. Sequential
revenue increases were recorded in all four Areas, led by Middle
East & Asia and North America with double-digit increases. All
Technologies contributed to the growth with significant
contributions from Wireline and Well Services. Pretax operating
income of $852 million increased 18% sequentially and 76%
year-on-year. All Areas except Latin America recorded sequential
double-digit growth. Operating margins improved 180 bps
sequentially to reach 23.9% in the quarter. During the quarter,
Schlumberger launched the Scanner Family(a) of wireline logging
services, a revolutionary suite of downhole rock and fluid
characterization measurements. Scanner technology enables customers
to evaluate formations more confidently and assess reserves more
accurately. With better understanding, operators can reduce risk
and optimize the productive life of their fields. The first three
members of the Scanner Family are the Rt Scanner(a) multiarray
triaxial induction tool; the Sonic Scanner(a) acoustic scanning
tool; and the MR Scanner(a) new-generation nuclear magnetic
resonance tool. North America Revenue of $1.04 billion increased
10% sequentially and 23% year-on-year. Pretax operating income of
$278 million increased 27% sequentially and 77% year-on-year. The
Gulf Coast GeoMarket recorded strong sequential revenue growth with
activity improving significantly after the hurricane season in the
prior quarter. Canada also contributed to the growth with strong
demand in Western Canada, coupled with significant pricing
improvement throughout. Wireline and Well Services recorded the
strongest advances across the Area. The steep growth in sequential
operating income was driven by stronger land activity in Well
Services and Wireline, robust pricing in Canada, and improved
utilization of resources in the Gulf of Mexico. This improvement
was offset by $8 million, the residual effect of the third-quarter
hurricane season. In the Gulf of Mexico, BHP Billiton deployed the
Quicksilver Probe(a) on the MDT(a) Modular Formation Dynamics
Tester fluid-sampling tool to successfully acquire clean oil
samples--greatly reducing a major source of uncertainty in the
reservoir model. The customer utilized the new technique in various
sampling programs throughout their reservoir, resulting in
significantly reduced acquisition times. In Alaska, working for
ConocoPhillips on the Western North Slope, Schlumberger used
PeriScope 15(a) technology to successfully steer a 6,800 ft
horizontal lateral well in a thin, 8-ft thick reservoir. Imaging
the reservoir boundaries in real time up to 15 ft away from the
tool, the deep-reading electromagnetic service enabled the client
to keep an exceptional 93% of the well in the most productive part
of the reservoir. As a result of this success, the customer has
planned to drill several subsequent wells using this technology.
Latin America Revenue of $617 million increased 8% sequentially and
26% year-on-year. Pretax operating income of $90 million declined
1% sequentially but increased 71% year-on-year. The sequential
revenue growth was mainly attributable to higher levels of
third-party managed services on integrated projects in Mexico. The
Latin America South GeoMarket contributed to the growth with
increased Integrated Project Management (IPM) activity, as did the
Peru/Colombia/Ecuador GeoMarket with the start of several new
Drilling & Measurements contracts. During the quarter, the
PRISA barges operating for PDVSA in Western Venezuela exceeded an
average of 90% utilization. Discussions regarding the settlement of
certain outstanding receivables for the PRISA contract were ongoing
at year-end. The slight sequential operating income decline,
despite the revenue increase, was due largely to an unfavorable
revenue mix in the Area resulting from the higher level of
low-margin third-party managed services in Mexico, fewer Petrel(a)
software sales in Venezuela, and reduced profitability in Latin
America South. In Trinidad and Tobago, PETROTRIN-Trinmar awarded
contracts valued at $25 million for Well Services and Drilling
& Measurements services. The contracts include pumping,
directional drilling, measurements-while-drilling (MWD), and
logging-while-drilling (LWD) technology services. In Mexico, PEMEX
awarded contracts valued at $44 million for work in their South and
Marine regions. The service agreements include work from Wireline,
Well Completions & Productivity, Well Services, Data &
Consulting Services, and Schlumberger Information Solutions
Technologies. Europe/CIS/Africa Revenue of $1.01 billion increased
7% sequentially and 45% year-on-year. Pretax operating income of
$226 million increased 12% sequentially and 111% year-on-year.
Sequential revenue growth was due to strong activity in North
Africa and Russia; strong deepwater completion sales combined with
the rapid market acceptance of Drilling & Measurements Scope(a)
technology in West Africa; the start of a drilling campaign in
Azerbaijan; and price increases on completion products in the
Caspian. High levels of activity were maintained in the North Sea
despite the seasonal winter impact. The improved sequential
operating income was principally due to higher efficiency in
Russia, growing international oil company presence in North Africa,
and accelerated technology deployment in West Africa, together with
stronger pricing across the Area. In the quarter several key
technologies were used across the Area. In the North Sea, Hydro
used the new advanced wireline Sonic Scanner acoustic scanning tool
to provide good quality data in a very slow formation where no
other technology could have achieved results. Hydro is using Sonic
Scanner to improve geomechanical understanding in many
difficult-to-drill formations. In Algeria, Sonatrach awarded
Schlumberger a multi-year, $125 million contract for wireline,
drill-stem testing, and data-processing services. The award was
based on availability of differentiating technology and improved
operational efficiency through optimized deployment of resources.
In Norway, Schlumberger successfully completed the industry's first
fully remote drilling optimization and well-placement operation for
Statoil's Asgard field in the North Sea. Working onsite at the
client's Stjordal facility, and from the Schlumberger Operations
Support Center in Aberdeen, a joint team of Data & Consulting
Services and Drilling & Measurements engineers provided key
geomechanical and well-placement support. Working in the Sakhalin
region of Russia for Exxon Neftegas Limited--as operator under the
Sakhalin 1 Production Sharing Agreement--Schlumberger set a world
record for logging in an extended-reach drilling well when a
combined MaxTRAC(a) well tractor and FloScan Imager(a) production
logging system was conveyed down 9,772 m including tractoring more
than 7,800 m. High-quality flow-regime images from the FloScan
Imager verified the completion effectiveness. Middle East &
Asia Revenue of $860 million was 11% higher sequentially and 29%
year-on-year. Pretax operating income of $264 million increased 17%
sequentially and 45% year-on-year. The strong improvement in
sequential revenue was led by the Middle East GeoMarkets, which all
contributed significantly to the record revenue level. Growth in
the East Africa & East Mediterranean GeoMarket was due to
expanded market for Drilling & Measurements and the start of a
new Wireline campaign. Revenue improvement in the Gulf GeoMarket
was mainly attributable to Wireline and Well Completions &
Productivity services. Continued rig and activity increases in
Saudi Arabia resulted in significant growth for Well Services,
Drilling & Measurements and Wireline technologies. In Asia, the
Brunei/Malaysia/Philippines GeoMarket contributed to the increase
through higher activity and improved pricing in Well Services. The
robust growth in sequential operating income was due mainly to
increased activity and pricing improvements across all Middle East
GeoMarkets and across all Technologies. Improved results of the
Bokor integrated project in the Brunei/Malaysia/Philippines
GeoMarket also contributed to this growth. Area pretax operating
margins showed continued improvement during the quarter, reaching
30.7%--an overall increase of 150 bps. In the Middle East, the
Arabian, the Gulf and East Africa & East Mediterranean
GeoMarkets recorded full-year revenue increases of more than
30%--and operating income growth of more than 40%--in 2005 versus
2004. Similar growth rates in Asia were achieved in the
Brunei/Malaysia/Philippines, Thailand/Vietnam and Australasian
GeoMarkets. In Kuwait, Schlumberger successfully drilled the first
ever geosteered multilateral well for Kuwait Oil Company when
conventional technology proved ineffective in the region's
geologically complex reservoirs. Using a unique bottom hole
assembly that combined the PowerDrive Xceed(a) rotary steerable
system with GVR(a) resistivity, PeriScope 15(a) well placement,
PowerPulse(a), and proVISION(a) reservoir steering services, three
lateral wells were placed in the most productive part of the
reservoir. In Malaysia, Murphy Oil Corporation and Schlumberger
developed a local solution to conduct borehole seismic surveys in
deepwater exploration areas where gas clouds render conventional
surveys ambiguous. In Japan, the Wireline CHDT(a) Cased Hole
Dynamics Tester tool, part of the ABC(a) Analysis Behind Casing
technology suite, was run in a fiberglass-cased well drilled as
part of the client's experimental carbon dioxide sequestration
project. Formation-pressure measurements and multiple fluid samples
were taken, and the fiberglass casing plugged successfully.
Highlights -- Acceptance of Schlumberger Information Solutions
Petrel workflow tools continued to gain momentum in the quarter as
TNK-BP selected the software as its primary application for
subsurface reservoir characterization to equip its multifunctional
teams with a PC-based seismic-to-simulation workflow. The award
followed a long-term technical evaluation. -- During the quarter,
Shell awarded Schlumberger Information Solutions a three-year,
multi-million dollar contract to manage seismic data in an effort
to harmonize their European regional operations. Services will be
supported by onsite Schlumberger presence at Shell in Stavanger,
Aberdeen and Assen. -- In India, renewed focus on deepwater
exploration and production activity in the Krishna Godavari basin
led to a three-year contract extension from ONGC for integrated
services. The work scope includes use of a number of new
technologies from directional drilling, MWD, LWD, wireline logging
and perforating, cementing, drill-stem testing, and surface testing
service lines. -- In Indonesia, Chevron awarded Schlumberger a
multi-year, $166 million contract for well-construction services.
In addition to providing MWD and LWD services, Schlumberger will
supply cementing, stimulation, gravel pack, and coiled tubing
services in Chevron's central Sumatra area of operations. -- During
the quarter, Schlumberger signed a multi-year integrated services
project with LUKSAR in Saudi Arabia. The scope of work includes
services from Wireline, Well Completions & Productivity, Well
Services, Data & Consulting Services, and Drilling &
Measurements technologies, in addition to six sub-contractors. IPM
will manage the scope of work, which involves nine or more deep
vertical gas exploration wells in Rub El Khali. -- Working on their
North Sea Asgard Smorbuk Sor Q-3AH well, Statoil successfully
deployed a unique bottom-hole-assembly that included the PeriScope
15(a) well placement, StethoScope(a) formation pressure,
EcoScope(a) multifunction LWD, TeleScope(a) high-speed telemetry,
and PowerDriveX5(a) rotary-steerable tools. The deployment of this
assembly resulted in optimized well placement, better drilling
performance and enabled a thorough evaluation of the reservoir.
PeriScope was used to maintain the borehole within the reservoir
sands throughout the entire 1,600-m interval, resulting in the best
producing well in the field. WesternGeco Operating revenue for 2005
was $1.66 billion versus $1.24 billion in 2004. Pretax operating
income in 2005 was $317 million versus $124 million in 2004. This
strong performance was mainly attributable to the continued market
acceptance of Q(a) technology, a higher level of Multiclient sales
and improved operating leverage in Marine acquisition.
Fourth-quarter revenue of $464 million was 6% higher sequentially
and grew 39% compared to the same period of last year.
Sequentially, revenue from Multiclient sales grew significantly,
primarily in North America due to a larger number of blocks in the
Gulf of Mexico coming up for renewal and the pending first quarter
lease sale. Multiclient sales also increased in West Africa, the
Caspian and Asia--indicating a worldwide interest in exploration.
Marine revenue declined in the North Sea, Canada and Russia as a
result of the winter season in the Northern Hemisphere affecting
activity. This resulted in a number of vessels transiting to other
areas, with transit revenues deferred and recognized over the term
of the contract. The seasonal decline was partly offset by strong
activity in Asia with three conventional vessels and three
Q-vessels operating in the region at improved pricing and
utilization levels. As a result of the transits, vessel utilization
decreased slightly to 88% from 92% in the previous quarter. Data
Processing was consistent with higher acquisition activity. Land
acquisition activity was flat from the previous quarter. Revenue
backlog reached an all-time high of $790 million versus $656
million at the end of the previous quarter, reflecting increasing
exploration and production budgets in 2006. Pretax operating income
of $110 million improved 29% sequentially and grew by $67 million
year-on-year. The strong sequential growth resulted from higher
Multiclient sales and transfer fees. This improvement was partly
offset by higher transit days. Q technology revenues reached $399
million in 2005, more than doubling the $162 million achieved in
2004. A growth rate higher than 80% is expected in 2006. Highlights
-- ONGC awarded WesternGeco a multi-year contract for the provision
of Q-Marine(a) technology including acquisition, integrated data
processing and reservoir consulting services for a two-year minimum
period. Two vessels began data acquisition during the fourth
quarter. A new WesternGeco processing and reservoir products center
is currently being constructed in Mumbai which will provide support
to ONGC and other clients within India to plan, design, process,
and interpret seismic data. -- WesternGeco was awarded two large
wide-azimuth marine surveys which will use the superior steering
and signal-to-noise characteristics of Q-Technology(a) to provide
better illumination and imaging beneath complex salt structures. --
WesternGeco was awarded a contract to undertake the first Q-Marine
project in Thailand, conducting a survey that will cover
approximately 386 km2. The work scope includes accurate mapping of
the reservoirs and stratigraphic features, and to improve the fault
imaging. The Q-Marine system will be used to increase the
signal-to-noise response and the amplitude accuracy to allow
reservoir characterization based on seismic attributes and direct
hydrocarbon indicators. The vessel Geco Topaz will conduct the
high-resolution survey--towing eight 4,000-m cables with a
separation of 37.5 m. 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 60,000 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 2005, Schlumberger operating
revenue was $14.31 billion. For more information, visit
www.SLB.com. (a) Mark of Schlumberger Notes: -- Schlumberger will
hold a conference call to discuss the above announcement on Friday,
January 20, 2006 at 9:00 a.m. New York City time (2:00 p.m. London
time/3:00 p.m. Paris time). To access the call, which is open to
the public, please contact the conference call operator at
+1-800-230-1074 (toll free) for North America, or +1-612-234-9960
outside of North America, approximately 10 minutes prior to the
scheduled start time. Ask for the "Schlumberger Earnings Conference
Call." A replay will be available through February 3, 2006 by
dialing +1-800-475-6701 in North America, or +1-320-365-3844
outside North America, and providing the access code 812340. -- The
conference call will be webcast simultaneously at
www.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
February 3, 2006 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 www.SLB.com/ir.
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