Schlumberger Limited (NYSE:SLB) today reported second-quarter
2010 revenue of $5.94 billion versus $5.60 billion in the first
quarter of 2010, and $5.53 billion in the second quarter of
2009.
Income from continuing operations attributable to Schlumberger
excluding charges was $818 million—an increase of 9% sequentially
and essentially flat year-on-year. Diluted earnings-per-share from
continuing operations attributable to Schlumberger excluding
charges was $0.68 versus $0.62 in the previous quarter, and $0.68
in the second quarter of 2009.
Schlumberger recorded charges of $75 million ($0.06 per share)
in the first quarter of 2010 and $207 million ($0.17 per share) in
the second quarter of 2009. There were no charges recorded in the
second quarter of 2010.
Oilfield Services revenue of $5.44 billion increased 7%
sequentially and 10% year-on-year. Pretax segment operating income
of $1.07 billion was up 11% sequentially and 5% year-on-year.
WesternGeco revenue of $476 million increased 1% sequentially
but decreased 15% year-on-year. Pretax segment operating income of
$47 million decreased 31% sequentially and 52% year-on-year.
Schlumberger Chairman and CEO Andrew Gould commented,
“Sequential revenue increases were recorded in all Areas as were
sequential margin improvements led by strong performances in North
America and Latin America.
In North America, high activity and improved pricing in the US
Land GeoMarket more than offset the revenue effects of the Canadian
spring break-up and the reduced offshore activity late in the
quarter following the start of the drilling moratorium in the US
Gulf of Mexico. In Latin America, Mexico and Brazil led the revenue
improvement.
In the other Areas, activity steadily improved as we had
forecast. In Europe/CIS/Africa, a strong rebound in Russia and the
North Sea was somewhat offset by slow activity in North Africa and
lower demand for exploration-related services in West & South
Africa.
At WesternGeco, flat revenues were accompanied by a significant
decrease in operating income as strong increases in Marine and Data
Processing could not offset the lower margin effect of reduced
Multiclient activity following the seasonally stronger
first-quarter sales.
Looking forward to the remainder of the year, we see a continued
slow build of activity in the second half in most parts of the
world. In particular, US Land, Brazil, North Sea and Russia will be
GeoMarkets of continued strength. Meanwhile, we see continued
growth across most of the Middle East & Asia GeoMarkets. This
will be partially offset by reductions in IPM activity in Mexico in
both Chicontepec and Burgos.
In the deepwater Gulf of Mexico, we are not planning for any
resumption of drilling activity this year. In deepwater activity
elsewhere we have not seen, nor do we expect to see, any
significant delays or program reductions as a result of the US Gulf
of Mexico drilling moratorium. Internationally, operators,
contractors and regulatory bodies have stepped up maintenance and
verification of key well control equipment and procedures, but have
not restricted actual drilling activity.
The outlook for WesternGeco will be governed by the evolution of
the Multiclient market in the US Gulf of Mexico, which remains
uncertain at this time.
At Schlumberger we began a program three years ago called
“Excellence in Execution.” This program was designed to create a
step change in the service quality and efficiency we provide and,
in deepwater, was aimed at enabling our clients to reduce the risk
and cost of deepwater operations. The program, in addition to
equipment and procedural improvements, provides for competency
certification of all personnel involved in deepwater operations. We
are encouraged by the results as well as by our customers’
acceptance of this multiyear initiative.
We believe that the contribution of deepwater discoveries has
been, and will remain, very significant to future hydrocarbon
production. We therefore welcome the current efforts to better
understand and control the risks associated with these types of
operations. While additional control and oversight will undoubtedly
add cost, we expect this will be offset in the long run by
improvements in operating procedures and technology.
The recovery in world demand for oil has been reasonably robust
and current forecasts for the coming year remain consistent with
slowly increasing levels of exploration and production activity.
Natural gas economics remain more challenging, as supply of both
LNG and unconventional gas in the US would appear to continue to
outstrip the demand recovery. Overall, therefore, we see the
current trend of a slow but sure recovery in activity as likely to
continue without change until we have a clearer view of the
sustainability of the recovery in the world economy.”
Other Events:
- On April 23, 2010, Schlumberger
completed the acquisition of Geoservices, a privately-owned French
oilfield services company specialized in mud logging, slickline and
production surveillance operations. The total value of the
transaction, including the assumption of net debt, was
approximately $1.0 billion.
- During the quarter, Schlumberger
repurchased 8.4 million shares of its common stock at an average
price of $63.33 for a total purchase price of $535 million under
the stock repurchase program approved by the Schlumberger Board of
Directors on April 17, 2008.
Consolidated Statement of
Income (Stated in millions, except per share amounts)
Second Quarter Six Months Periods Ended June 30
2010 2009
2010 2009
Revenue
$ 5,937 $ 5,528
$ 11,534
$ 11,528 Interest and other income, net (1)
51 60
115
137 Expenses Cost of revenue
4,576 4,432
8,918 8,942
Research & engineering
216 197
423 386 General
& administrative
145 131
289 261 Merger &
integration (2)
4 -
39 - Interest
53 61
98
116 Income before taxes
994 767
1,882 1,960 Taxes on income (2)
177 152
391
404 Net Income
817 615
1,491
1,556 Net Income attributable to the noncontrolling interests
1 (2 )
(1 ) (4 ) Net Income attributable to
Schlumberger (2)
$ 818 $ 613
$ 1,490 $ 1,552
Diluted Earnings Per Share of Schlumberger
$ 0.68 $ 0.51
$
1.23 $ 1.28 Average shares
outstanding
1,192 1,197
1,194 1,197 Average shares
outstanding assuming dilution
1,208
1,214
1,211
1,212 Depreciation & amortization included
in expenses (3)
$ 638 $ 626
$ 1,258 $ 1,235
1) Includes interest income of: Second
Quarter 2010 - $15 million (2009 - $17 million) Six months 2010 -
$31 million (2009 - $36 million) 2) See page 7 for details
of charges. 3) Including multiclient seismic data cost.
Condensed Consolidated Balance
Sheet (Stated in millions)
Jun. 30, Dec.
31, Assets
2010 2009 Current
Assets Cash and short-term investments
$ 3,078 $
4,616 Other current assets
9,152
9,034
12,230 13,650 Fixed income investments,
held to maturity
652 738 Fixed assets
9,657 9,660
Multiclient seismic data
369 288 Goodwill
5,854 5,305
Other assets
4,255
3,824
$ 33,017
$ 33,465 Liabilities and Equity
Current Liabilities Accounts payable
and accrued liabilities
$ 4,852 $ 5,003 Estimated
liability for taxes on income
908 878 Short-term borrowings
and current portion of long-term debt
767 804 Convertible
debentures
- 321 Dividend payable
249 253
6,776 7,259 Other
long-term debt
3,729 4,355 Postretirement benefits
1,581 1,660 Other liabilities
1,047 962
13,133 14,236 Equity
19,884 19,229
$ 33,017 $ 33,465
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’s indebtedness by reflecting
cash and investments that could be used to repay debt. Details of
Net Debt follow:
(Stated in millions) Six Months 2010 Net Debt,
January 1, 2010 $ (126 ) Net income 1,491 Depreciation and
amortization 1,258 Pension and other postretirement benefits
expense 149 Excess of equity income over dividends received (83 )
Stock-based compensation expense 95 Increase in working capital
(209 ) Capital expenditure (1,083 ) Multiclient seismic data
capitalized (172 ) Dividends paid (505 ) Proceeds from employee
stock plans 164 Stock repurchase program (872 ) Geoservices
acquisition, net of debt acquired (1,033 ) Other business
acquisitions (145 ) Conversion of debentures 320 Pension and other
postretirement benefits funding (130 ) Other 53 Translation effect
on net debt 62 Net Debt, June 30, 2010 $ (766 )
Components of Net Debt
Jun. 30,2010
Dec. 31,2009
Cash and short-term investments $ 3,078 $ 4,616 Fixed income
investments, held to maturity 652 738 Short-term borrowings and
current portion of long-term debt (767 ) (804 ) Convertible
debentures - (321 ) Other long-term debt (3,729 )
(4,355 ) $ (766 ) $ (126 )
Business Review
(Stated in millions) Second Quarter Six Months
2010 2009 % chg 2010 2009
% chg
Oilfield Services
Revenue $ 5,436 $ 4,956 10 % $ 10,533 $ 10,395 1 % Pretax Operating
Income $ 1,074 $ 1,022 5 % $ 2,042 $ 2,278 (10 )%
WesternGeco
Revenue $ 476 $ 559 (15 )% $ 948 $ 1,110 (15 )% Pretax Operating
Income $ 47 $ 97 (52 )% $ 114 $ 151 (25 )%
Pretax operating income represents the segments’ income before
taxes and noncontrolling interests. The pretax operating income
excludes such items as corporate expenses and interest income and
interest expense not allocated to the segments as well as the
charges described on page 7, interest on postretirement medical
benefits and stock-based compensation costs.
Charges
In addition to financial results determined in accordance with
generally accepted accounting principles (GAAP) this Second-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 per share amounts ) First Quarter 2010
Pretax Tax
Noncont.Interest
Net Diluted
EPS
Income Statement
Classification
Net Income attributable to Schlumberger $ 888 $ 214 $ (2 ) $ 672 $
0.56 Add back charges:
- Merger-related transaction
costs
35 - - 35 0.03 Merger & integration
- Impact of elimination of tax
deduction related to Medicare Part D subsidy
- (40 ) - 40 0.03 Taxes
on income
Net Income attributable to
Schlumberger, excluding charges
$ 923 $ 174 $ (2 ) $ 747 $ 0.62 Second Quarter
2009 Pretax Tax
Noncont.Interest
Net Diluted
EPS
Income Statement
Classification
Net Income attributable to Schlumberger $ 767 $ 152 $ (2 ) $ 613 $
0.51 Add back charges: - - Postretirement benefits curtailment 136
14 - 122 0.10 Cost of revenue - Workforce reduction 102
17 - 85 0.07 Cost of
revenue
Net Income attributable to
Schlumberger, excluding charges
$ 1,005 $ 183 $ (2 ) $ 820 $ 0.68
There were no charges in the second quarter of 2010.
Oilfield Services
Second-quarter revenue of $5.44 billion was 7% higher
sequentially and 10% higher year-on-year. Sequentially, revenue
increased in all Areas. In Europe/CIS/Africa, revenue grew
primarily due to the seasonal rebound in activity in Russia and
improved activity in the North Sea GeoMarket, the effects of which
were partially offset by reduced activity in the North Africa and
West & South Africa GeoMarkets. Latin America Area revenue
increased mostly in the Mexico/Central America GeoMarket on higher
activity as well as on a strong performance in Integrated Project
Management (IPM) service delivery, and in the Brazil GeoMarket on
the continued build-up of offshore exploration activity. In North
America, revenue grew on a surge in US Land from a combination of
increased activity and pricing that was partially offset by the
impact of the spring break-up in Canada and the early effects of
the deepwater drilling moratorium in the US Gulf of Mexico. Middle
East & Asia Area revenue was higher mainly due to increased
activity and Well Services product sales. The acquisition of
Geoservices during the quarter also contributed to the overall
sequential increase in revenue.
Among the Technologies, sequential revenue growth was strongest
in Well Services primarily due to stronger US Land activity and
pricing, increased product sales in the Middle Eastern GeoMarkets,
and the seasonal rebound in Russia. Artificial Lift recorded strong
growth on equipment sales in Russia and the Middle Eastern
GeoMarkets.
Second-quarter pretax operating income of $1.07 billion
increased 11% sequentially and 5% year-on-year. Pretax operating
margin improved 75 basis points (bps) sequentially to 19.8%
primarily due to the significantly stronger performance in the US
Land GeoMarket resulting from the increased activity and pricing
combined with the seasonal rebound in Russia and a more favorable
revenue mix in the North Sea GeoMarket. These increases were
partially offset by the impact of lower activity in the North
Africa and West & South Africa GeoMarkets, the effects of the
deepwater drilling moratorium in the US Gulf of Mexico, and the
spring break-up in Canada.
North America
Second-quarter revenue of $1.11 billion was 8% higher
sequentially and 36% higher year-on-year. Pretax operating income
of $116 million was 40% higher sequentially and 1,375% higher
year-on-year.
Sequentially, US Land GeoMarket revenue surged 35% driven by a
13% increase in rig count, high service intensity in unconventional
oil and gas reservoirs, and continued pricing improvements for Well
Services technologies. This increase was partially offset by lower
revenue in the Canada GeoMarket due to the seasonal spring break-up
and the decrease in the US Gulf of Mexico GeoMarket revenue as a
consequence of the moratorium on deepwater drilling.
Pretax operating margin for the Area improved 237 bps
sequentially to 10.4%. Among the GeoMarkets, US Land pretax
operating margin increased 14.9 percentage points sequentially due
to increased Well Services activity and pricing, but this increase
was tempered by lower pretax operating margins in the US Gulf of
Mexico and Canada as a result of the lower activity.
In Alaska, Drilling & Measurements PeriScope* bed boundary
mapper technology successfully steered a 2,400-ft horizontal
lateral on the ConocoPhillips Alpine project keeping the well
entirely within a 15-ft thick zone in the reservoir. The well has
now been completed and is producing at rates in excess of the
original plan.
Also in Alaska, Schlumberger Drilling & Measurements
EcoScope*, StethoScope* and ProVISION* advanced
logging-while-drilling and reservoir steering services helped
Brooks Range Petroleum generate savings of $700,000 in rig costs
due to drilling performance, plus an additional $500,000 in pipe
costs by eliminating a casing string on an exploration well. The
combination of the measurements and their interpretation provided
sufficient information to characterize the target zone.
In West Texas, the Wireline FloScan Imager* horizontal and
deviated well production logging system was deployed on
coiled-tubing for Apache in a well in the North McElroy Unit. The
low-pressure well would not flow naturally and liquid nitrogen was
required to lift the fluid column of water and oil. The FloScan
Imager service was then run to successfully determine the
contribution of each zone of the well in order to optimally
position the artificial lift system.
In Canada, Schlumberger Testing Services was awarded a
three-year multiphase flow metering contract for Suncor, including
a purchase order for 17 PhaseWatcher* fixed well production
monitoring equipment sets equipped with Vx* multiphase well testing
technology. The agreement follows a successful field trial, in
which the flowmeters improved accuracy of production flow
measurements and optimized production parameters in real time. This
is the first application of Vx technology in steam-assisted gravity
drainage (SAGD) operations.
Statoil Canada awarded an exclusive contract to Schlumberger to
provide REDA Hotline550* high-temperature electric submersible pump
systems for their first oil sands project. The Hotline550 pump was
selected for its durability in the high temperature environments of
steam-flood production.
Latin America
Second-quarter revenue of $1.14 billion was 8% higher
sequentially and 15% higher year-on-year. Pretax operating income
of $205 million increased 10% sequentially and 17%
year-on-year.
Sequentially, revenue in the Mexico/Central America GeoMarket
grew primarily through higher activity and improved IPM drilling
performance; increased offshore activity on better weather
conditions; and the finalization of Schlumberger Information
Solutions (SIS) contracts. Revenue in the Brazil GeoMarket
increased as the result of the continued expansion of offshore
activity while the Argentina/Bolivia/Chile GeoMarket recorded
growth that was driven by drilling activity in unconventional gas
projects. These increases, however, were partially offset by lower
revenue in the Venezuela/Trinidad & Tobago GeoMarket primarily
for SIS services, and in the Peru/Colombia/Ecuador GeoMarket on
decreased Testing Services equipment sales and reduced gain share
in IPM projects.
Pretax operating margin was up 35 bps sequentially to 17.9%
primarily driven by the increased activity in the Mexico/Central
America and Argentina/Bolivia/Chile GeoMarkets.
In Brazil, Petrobras has awarded Schlumberger a contract for two
new stimulation vessels, with an initial term of five years and an
option to renew for an additional five years. The award represents
the reentry of Schlumberger into the Brazilian vessel stimulation
marketplace after a long absence. As a result of this award,
Schlumberger stimulation technology will be available to contribute
to the performance optimization of Petrobras reservoirs, including
those in pre-salt areas. The new vessels, DeepSTIM Brasil I and II,
will be custom-designed, state-of-the-art, and will be built to new
clean design standards that reduce environmental impact from air
emissions, sea discharges and accidental damage to the ship's
hull.
In Mexico, PEMEX awarded Schlumberger a contract for the supply
of a stimulation vessel with matrix acidizing, hydraulic fracturing
and nitrogen pumping services for offshore operations. The
three-year contract provides for a further three-year extension and
gives Schlumberger a presence in the offshore stimulation market in
Mexico.
On a deepwater well in Mexico for PEMEX, two innovative
Schlumberger services were deployed to help optimize deepwater
programs and identify new productive zones. As a result, pressure
transient analysis using MDT* modular formation dynamics tester
technology added value to the well testing program, while MSCT*
rotary sidewall coring technology helped optimize the well coring
program by recovering high quality core samples for geological
uncertainty analysis.
In the PEMEX Mexico North Region, Schlumberger Wireline Sonic
Scanner* acoustic scanning platform and FMI* fullbore formation
microimager technologies enabled the characterization of natural
fracture systems in high resistivity gas-bearing carbonates where
oriented perforating was required for optimum production. The
solution became necessary following a change from water-based to
oil-based drilling mud in order to improve drilling efficiency.
In Peru, Drilling & Measurements EcoScope
logging-while-drilling technology successfully identified
previously bypassed low resistivity pay zones in the BPZ Energy
Corvina Field. In addition, Data & Consulting Services
real-time monitoring and petrophysics interpretation helped BPZ
Energy plan for future development in the area.
Also in Peru, Schlumberger Testing Services PhaseWatcher
multiphase production monitoring equipment has been selected by
Pluspetrol Corporation to monitor gas and condensate production on
two wells in the Peruvian jungle. The award followed client
evaluation of a unique integrated Schlumberger technology solution
using PhaseSampler* multiphase sampling equipment combined with
PhaseWatcher multiphase measurements to reduce uncertainty on fluid
behavior.
In Colombia, Schlumberger Wireline successfully performed a
walkaway seismic survey for Cepcolsa in the Llanos basin using 20
downhole sensors and 80 vibrator positions. The high resolution
results eliminated previous uncertainties in the structural
geological model and led to the repositioning of a future offset
well to avoid a geological fault.
Also in Colombia, based on evaluation of a range of cement
slurry mechanical properties, Ecopetrol selected Schlumberger
FlexSTONE* advanced flexible cement technology for wells assigned
by contract that are candidates for hydraulic fracturing and
stimulation treatment as well as for any other wells expected to be
subjected to dynamic stress.
Elsewhere in Colombia, on the Casabe Field management production
alliance with Ecopetrol, Well Services EasyBLOK* solid gas
migration control and CemNET* advanced fiber technology are helping
overcome formation fluid migration challenges during cementing
operations on exploration wells close to the border of the field.
These advanced cement technologies are being deployed in line with
technical risk simulations developed by Schlumberger CemCADE*
cementing design, WELLCLEAN* mud removal, and GasMigrationAdvisor*
software services.
In Venezuela, Schlumberger Wireline successfully introduced the
Rt Scanner* triaxial induction and the ECS* elemental capture
spectroscopy services for the PDVSA offshore asset team in a well
on the Dragon Field, off the northeast coast of the Paria
peninsula. The new measurements, especially designed for evaluating
anisotropic laminated formations, are helping PDVSA construct a
more accurate reservoir model to optimize gas production in the
field. Based on the results, PDVSA have already requested the same
services on future wells.
Elsewhere in Venezuela, Drilling & Measurements technologies
set world drilling records for PDVSA Oriental Norte on the Travis
Norte Field while drilling the 17½-in. hole. The downhole motor,
measurement-while-drilling tools and bicenter drillbit recorded an
outstanding 509½ hours of circulating time. This record was due to
a strong Schlumberger-wide integrated effort with good drilling
practices and support from the IPM team on rig SDS-97.
Europe/CIS/Africa
Second-quarter revenue of $1.74 billion was 7% higher
sequentially but 2% lower year-on-year. Pretax operating income of
$319 million was 9% higher sequentially but 26% lower
year-on-year.
Sequentially, Russia revenue increased on the post-winter
seasonal rebound in activity and higher Artificial Lift systems
sales while the North Sea GeoMarket recorded growth on higher
exploration and appraisal activity in the UK sector as well as on
increased drilling activity in the Norwegian sector. These
increases were partially offset by a decrease in the North Africa
GeoMarket due to completion of two IPM projects and to lower
Testing Services, Completions and Artificial Lift equipment sales.
The West & South Africa GeoMarket also recorded a sequential
decrease in revenue from reduced exploration-related services and
from lower drilling activity that reduced demand for Drilling &
Measurements technologies.
Pretax operating margin improved 29 bps to 18.4% as the positive
impact of the increased activity in Russia and the more favorable
revenue mix in the North Sea GeoMarket more than offset the effect
of the reduced revenue in the West & South Africa and North
Africa GeoMarkets.
In the UK Sector of the North Sea, Well Services StageFRAC*
multistage fracturing and completion technology was deployed for BP
on a Machar Field sidetrack well displaying water encroachment and
unpredictable natural fracture density. Seven fractures were placed
in the best sections of the reservoir using MSR* mud and silt
remover with VDA* viscoelastic diverting technology deployed from
the BIGORANGE XVIII stimulation vessel. The initial productivity
index was three times that expected, and the well was completed
with significant time savings.
In Norway, Eni has awarded Schlumberger a five-year completions
contract with multiple options for extension on the Goliat oil
field development project in the Barents Sea. The award covers
lower completion technologies that include screen hanger packers,
screens, inflow control devices, mechanical FIV* formation
isolation valve systems and open-hole packers. This contract also
covers other Eni operated fields to be developed in Norway
including the Marulk Field planned for 2011.
In Poland, Schlumberger cementing technologies have been
successfully deployed in the Wierzchowice Underground Gas Storage
Field for Polskie Górnictwo Naftowe i Gazownictwo SA (PGNiG). Wells
in the field are subject to significant cyclical variation of
pressure and temperature while the storage formations exhibit very
low fracture gradients. A combination of FlexSTONE flexible cement
and LiteCRETE* slurry system technologies was used to withstand
casing expansion and contraction during the storage cycle and
provide high compressive strength with low slurry density. Four
wells have now been completed with this technology combination with
more wells planned.
In a rigless operation in Algeria for Groupement Ourhoud, a
partnership between Sonatrach, Anadarko, Burlington Resources,
Cepsa, Eni, Maersk and Talisman Energy, the biggest operational
challenge was to perforate upwards across multiple small intervals
instead of across the whole horizontal section while maintaining
accurate depth control. This was successfully achieved by a
perforating string designed specifically for horizontal well
completions. The customized design used new technologies including
PURE* clean perforating systems, addressable perforating gun
switches, secure detonators and PowerJet Omega* deep penetrating
charges. The well, which was perforated in two stages, currently
produces 2,000 m3/d of crude oil over its length.
In Libya, Schlumberger Wireline technology stimulated four wells
in mature fields operated by Mellitah Oil and Gas (an NOC/Eni
controlled joint venture) to reverse falling oil production mainly
caused by scale formation. The stimulation technique deployed is an
adaptation of PURE clean perforating technology and resulted in
average oil production increases of 325% with a corresponding
decrease in water cut of 35%.
In the Aktas Field in Kazakhstan, Schlumberger Wireline PURE
underbalanced perforating system for clean perforations was
deployed for Tasbulat Oil Corporation to boost production in newly
drilled wells vital to production enhancement plans for sustaining
field development. The success of this technology has led to
deployment of P4* post-perforation propellant pulse, a new
generation perforation technique that generates a pressure pulse
powerful enough to fracture the formation.
In a major Eastern Siberia field with complex geology,
conventional drilling and steering technology was being used to
drill and place the horizontal well sections for TNK-BP in a thin
reservoir layer. The introduction of Drilling & Measurements
PowerDrive* rotary steerable, IMPulse* measurement-while-drilling
and adnVISION* logging-while-drilling technologies has led to
dramatic improvements in well construction time and productivity.
The technologies’ real-time petrophysical measurements allowed
Schlumberger and TNK-BP geologists to place a well in the optimum
part of the reservoir, while the PowerDrive system reduced drilling
times for the horizontal section by three days.
In Russia, Schlumberger Drilling & Measurements
significantly increased the volume of directional drilling services
with JSC Gazprom Neft in Muravlenko, gaining an additional 19
horizontal and 4 deviated sidetracks. The award of these additional
wells, based on experience and service quality, places Schlumberger
as the single largest supplier of directional drilling services in
the highly competitive and important horizontal well market of West
Siberia.
Middle East & Asia
Second-quarter revenue of $1.37 billion was 4% higher
sequentially and 5% higher year-on-year. Pretax operating income of
$427 million increased 4% sequentially and 2% year-on-year.
Sequentially, revenue growth was recorded across most of the
Middle Eastern GeoMarkets from increased activity that resulted in
strong demand for Wireline services, and from higher sales of Well
Services products and Artificial Lift equipment. These increases
were partially offset by a decrease in revenue in the
Australia/Papua New Guinea GeoMarket as a change in the mix of
offshore activities reduced demand for Wireline and Drilling &
Measurements services; and by a decrease in the East Asia GeoMarket
on lower IPM activity.
Pretax operating margin remained strong at 31.1% as the positive
impact of the increased activity in the Middle Eastern GeoMarkets
offset the impact of a less favorable revenue mix in the
Australia/Papua New Guinea GeoMarket.
In Saudi Arabia, a combination of Wireline FloScan Imager and
RST* reservoir saturation tool technologies was run on
coiled-tubing for Saudi Aramco. The FloScan Imager determined the
total contribution of each lateral. The RST was run in water flow
log mode to pinpoint water entry zones in each of the laterals.
This was the first time that the water flow log conveyed with a
coiled-tubing multilateral tool has been run in Saudi Arabia where
real-time monitoring and decision making is a critical success
factor for such operations.
Also in Saudi Arabia, Schlumberger Well Services FUTUR* active
set-cement technology was used for LUKOIL Saudi Arabia Energy
Limited on a natural gas well planned to be tested in openhole
under varying conditions of temperature and pressure. After
placement, Wireline cement evaluation logs confirmed optimal cement
bonding across the interval indicating that the self-repairing
cement will be able to react if the cyclical well test stresses
lead to any loss of zonal isolation.
Elsewhere in Saudi Arabia, Well Services FlexSTONE HT* advanced
high-temperature flexible cement technology was used to cement the
liner in a LUKOIL Saudi Arabia Energy Limited well that was to be
fractured. The design of the cement job was based on the expected
fracture stimulation pressure and temperature changes with
subsequent cement bond logs showing excellent bonding between
casing and cement, and between cement and formation. During
fracturing, pressures up to 14,000 psi were experienced while
temperatures reached 340 deg F.
In Oman, Schlumberger has been awarded a five-year contract by
Petroleum Development Oman for well production services. The
contract covers hydraulic fracturing services with coiled-tubing
and surface sand handling and well flow-back operations for
formation clean-up. The contract, which includes the highest number
of fracture stages pumped per year in the region, was awarded based
on operational efficiency, service delivery, and engineering
support.
In India, new technology Wireline services helped Reliance
Industries Limited determine accurate reservoir properties in a
thinly laminated reservoir. The combination of Rt Scanner triaxial
induction and OBMI* oil-base microimager technologies successfully
identified thin sand units within the reservoir while the
PressureXpress* formation pressure while logging service helped
establish pressure gradients and confirmed communication of
individual thin beds. As a result of overall accurate depth
matching, the efficiency of subsequent MDT formation fluid sampling
was optimized at correct depths in reduced time.
In the Gulf of Thailand, Drilling & Measurements PeriScope
bed boundary mapper technology was deployed for Salamander Energy
on a three-well infield horizontal development campaign. The
advanced well-placement technology successfully placed the wells in
the optimal reservoir sections leading to a significant increase in
production. All three wells flowed at the upper end of estimates
when tested, and have all been brought on stream.
Also in the Gulf of Thailand, Wireline CHDT* cased hole dynamics
tester technology was used for NuCoastal (Thailand) Limited to
determine reservoir depletion and connectivity in existing wells
and identify new perforation intervals. In addition, MDT technology
with dual packer module functionality in combination with the
InSitu Fluid Analyzer* system was used to prove hydrocarbon
presence in the low permeability formations. The real-time
capability of the InSitu system confirmed that the new zones have
the same properties as the main field.
Schlumberger was awarded a significant integrated completion
program by CNOOC China Ltd. Tianjin (CCLT) in China. The award,
covering 18 wells, is the result of intensive reservoir and well
placement studies. CCLT collaborated with several Schlumberger
Technologies to determine the optimum method of wellbore
architecture in order to achieve their production enhancement
goals. Numerous methods were evaluated before an openhole gravel
pack lower completion was chosen. The upper completion design was
finalized utilizing Schlumberger subsurface safety valves,
production packers, chemical injection systems and artificial lift
systems.
In East Malaysia, Well Services OilSEEKER* diverter fluid
technology was used for Shell to reverse production decline on a
well producing with high water cut on the South Fourious platform.
The technology successfully plugged the water zone to divert the
treatment fluid into the oil layer to remove damage from fines
migration. Surface pressure during pumping indicated excellent
diverter efficiency and well production post treatment stabilized
at an increase of 100 bbl/d and a water cut of 30%.
In Indonesia, close collaboration between TOTAL E&P
Indonesia and Schlumberger Well Services has helped maintain
production of the giant mature Handil oil field at optimum levels.
Being a structurally stacked reservoir with a wide range of
permeability among its target zones, use of recent advances in
workover techniques without pulling or replacing the completion
added extra complication to remedial operations. A successful
campaign of cement remediation was nevertheless conducted to
isolate water producing zones using a wide range of Schlumberger
cementing technologies with innovative placement techniques.
WesternGeco
Second-quarter revenue of $476 million was 1% higher
sequentially but 15% lower year-on-year. Pretax operating income of
$47 million decreased 31% sequentially and 52% year-on-year.
Sequentially, Marine revenue increased primarily due to the
addition of two new vessels to the fleet and to greater
productivity on a number of projects. Data Processing revenue grew
on higher activity in Europe and Africa and in North America. These
increases were partially offset by lower Multiclient revenue,
mostly in North America following the seasonally stronger first
quarter, and by a decrease in Land revenue following the completion
of a contract in the Middle East.
Pretax operating margin decreased 447 bps sequentially to 9.8%
primarily due to the decrease in Multiclient revenue and to the
lower Land revenue coupled with start-up costs on a land project in
Africa. These decreases were partially offset by the positive
impact of the higher productivity in Marine.
WesternGeco completed the acquisition of two 3D DISCover*
surveys for Oil & Natural Gas Corporation Limited (ONGC)
offshore the west coast of India. The DISCover technique is enabled
by Q-Marine* technology and employs a sparse set of streamers towed
beneath a conventional 3D streamer array resulting in a broader
bandwidth data set. The technique was used in two blocks measuring
500 km2 and 1,000 km2. These projects were designed to improve
seismic imaging of the sub-basalt section, which is one of the key
challenges for these frontier basins of the Kerala-Konkan and
Gujarat areas in India. The acquisition commenced in March and was
completed before the onset of the monsoon season. Currently, the
data are undergoing processing at the WesternGeco Mumbai
GeoSolutions center.
In the second quarter of 2010, WesternGeco completed acquisition
of a new multiclient survey in the West Loppa area of the Barents
Sea. The survey, covering 1,491 km2, extends the area of 3D
coverage acquired in 2008 and 2009 over an exciting area where
mapping of existing 2D data shows potential Tertiary, Cretaceous
and Jurassic plays. Fast-track seismic data processing, including
3D GSMP* general surface multiple prediction, will be available by
the end of July, in time for the Norwegian 21st Licensing
Round.
In the US Gulf of Mexico, a WesternGeco multiclient wide-azimuth
Q-Marine crew completed acquisition of the E-Octopus X survey over
the Garden Banks Tiber discovery. A second crew continued acquiring
the E-Octopus VIII wide-azimuth survey in the highly prospective
Alaminos and Keathley Canyon areas.
The WesternGeco multiclient library expanded in the quarter to
include the completion of several offshore and onshore projects in
North America. In the Walker Ridge area of the US Gulf of Mexico,
E-Octopus VI final products were delivered, including a reverse
time migration volume. Velocity model creation on this wide-azimuth
survey employed well-constrained tomography with successful
results. Onshore, the final anisotropic depth migration
deliverables are available for both the Piceance Basin 3D Q-Land*
survey in Colorado's Rio Blanco County and the South Texas Karnes
DeWitt Goliad (KGD) project.
In North America, onshore acquisition activity included an
encouraging point-receiver feasibility test for the Bakken Shale in
the prolific Williston Basin area. This test deployed a Q-Land mini
acquisition system to acquire receiver-dense 2D lines. The
information gathered is to be used to assist in a survey evaluation
and design for the determination of the optimum parameters for a
possible larger 3D Q-Land acquisition survey.
About Schlumberger
Schlumberger is the world’s leading supplier of technology,
integrated project management and information solutions to
customers working in the oil and gas industry worldwide. Employing
approximately 83,000 people representing over 140 nationalities and
working in approximately 80 countries, Schlumberger provides the
industry’s widest range of products and services from exploration
through production.
Schlumberger Limited has principal offices in Paris, Houston and
The Hague and reported revenues of $22.70 billion in 2009. For more
information, visit www.slb.com.
*Mark of Schlumberger
EcoScope service uses technology that resulted from a
collaboration between Japan Oil, Gas and Metals National
Corporation (JOGMEC), formerly Japan National Oil Corporation
(JNOC), and Schlumberger.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, July 23, 2010. The
call is scheduled to begin at 8:00 a.m. US Central Time (CT), 9:00
a.m. Eastern Time (ET). To access the call, which is open to the
public, please contact the conference call operator at
+1-800-230-1096 within North America, or +1-612-332-0107 outside of
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 23, 2010 by dialing +1-800-475-6701
within North America, or +1-320-365-3844 outside of North America,
and providing the access code 157440.
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 at the same
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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