Schlumberger Limited (NYSE:SLB) today reported first-quarter
2012 revenue of $10.61 billion versus $10.97 billion in the fourth
quarter of 2011, and $8.72 billion in the first quarter of
2011.
Net income attributable to Schlumberger, excluding charges and
credits, was $1.31 billion—a decrease of 12% sequentially but an
increase of 35% year-on-year. Diluted earnings-per-share, excluding
charges and credits, was $0.98 versus $1.11 in the previous
quarter, and $0.71 in the first quarter of 2011.
Schlumberger recorded charges of $0.01 per share in the first
quarter of 2012 versus $0.06 per share in the previous quarter, and
$0.02 per share in the first quarter of 2011.
Oilfield Services revenue of $9.92 billion decreased 4%
sequentially but increased 22% year-on-year. Pretax segment
operating income of $1.94 billion was down 10% sequentially but
increased 33% year-on-year.
Distribution revenue of $713 million increased 4% sequentially
and 19% year-on-year. Pretax segment operating income of $35
million increased 32% sequentially and 56% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, “While revenue fell
as a result of the normal seasonal slowdown in product, software
and multiclient sales, our first-quarter results showed good
progress driven by global exploration and deepwater activity
underpinned by strong execution and operational excellence.
Excluding seasonal sales effects, North America revenue was flat
sequentially. On land, the move of rigs and service capacity from
gas-rich to liquids-rich basins accelerated. Subsequently, the
pricing weakness already experienced in the previous quarters also
reached the liquids-rich basins. Offshore, increased drilling and
deepwater exploration activity in the US Gulf of Mexico contributed
positively to results.
Internationally, the normal impact of winter weather and
year-end sales effects lowered revenue, but growing higher-margin
exploration and deepwater activity in a number of regions, as well
as strong execution in all parts of the business, kept margins flat
sequentially. Land activity remained strong in the Middle East and
North Africa.
Bidding remained competitive on large tenders for standard
technology. However, pricing sentiments are starting to move
upwards as the majority of the large international contracts have
now been re-bid and service capacity is tightening further.
WesternGeco saw a strong first quarter in marine seismic.
Capacity for the coming quarters is filling fast, driven by higher
activity in West Africa, the North Sea, the Arctic, and Brazil.
Backlog increased during the quarter, and pricing is trending
upwards.
While uncertainties linked to global financial markets and
potential geopolitical events remain, the risk of a double-dip
global recession has declined. Oil demand in 2012 appears to have
stabilized, and supply continues to be limited by weak non-OPEC
performance and narrow spare capacity margins. These effects should
limit any oil-price decline. In the US, natural gas storage and
abundant supply have led to weakening natural gas activity with
little likelihood of short-term recovery. International gas prices
however, remain solid, driven by strong demand.
We maintain our positive view on the international markets and
expect the rig count to grow by more than 10% in 2012 through
strength in exploration and deepwater activity as well as in key
land markets. Strong execution, solid contracts and rich new
technologies provide the foundation upon which we will capitalize.
In North America, we remain more cautious until the uncertainties
around the dry gas drilling and pressure pumping pricing outlook
become clearer. However, with a balanced land portfolio and strong
deepwater leverage, we remain favorably positioned to outperform
even in this market.”
Other Events:
- During the quarter, Schlumberger
repurchased 4.4 million shares of its common stock at an average
price of $74.01 for a total purchase price of $324 million.
- On March 5, 2012, WesternGeco announced
the formation of a new division to sell and lease the UniQ*
integrated point-receiver land seismic system to other service
companies as well as to energy companies that maintain their own
crews.
- On March 20, 2012, Schlumberger
announced that it had entered into a purchase agreement to acquire
SPT Group—a privately owned software company based in Norway
specializing in dynamic modeling for the oil and gas industry. The
acquisition is subject to various conditions, including customary
regulatory approvals, and is expected to close in the second
quarter of 2012.
- On April 10, 2012, Schlumberger
announced that it had entered into an agreement with National
Oilwell Varco, Inc. to sell its Wilson distribution business.
Closing of the transaction is subject to various conditions,
including customary regulatory approvals.
Condensed Consolidated Statement of Income
(Stated in millions, except per share amounts)
Three Months Periods Ended March 31
2012 2011 Revenue
$ 10,611 $
8,716 Interest and other income, net (1)
47 31 Expenses Cost
of revenue(2)
8,474 7,055 Research & engineering
275 254 General & administrative
93 93 Merger
& integration(2)
15 34 Interest
80 73 Income before taxes
1,721 $ 1,238 Taxes on income(2)
411 295 Net income
1,310 943 Net
income (loss) attributable to noncontrolling interests
9 (1 ) Net income
attributable to Schlumberger(2)
$
1,301 $ 944 Diluted earnings per share
of Schlumberger(2)
$ 0.97
$ 0.69 Average shares outstanding
1,334 1,360
Average shares outstanding assuming dilution
1,344 1,375 Depreciation
& amortization included in expenses(3)
$ 853 $ 788 1) Includes interest
income of: Three months 2012 - $10 million (2011 - $10 million)
2)
See page 6 for details of charges and credits.
3)
Including multiclient seismic data cost.
Condensed Consolidated Balance Sheet (Stated
in millions)
Mar. 31, Dec. 31, Assets
2012 2011 Current Assets Cash and short-term
investments
$ 4,085 $ 4,827 Receivables
10,401
9,500 Other current assets
6,806
6,212
21,292 20,539 Fixed income investments,
held to maturity
281 256 Fixed assets
13,314 12,993
Multiclient seismic data
454 425 Goodwill
14,199
14,154 Other intangible assets
4,805 4,882 Other assets
2,021 1,952
$ 56,366 $ 55,201
Liabilities and Equity
Current Liabilities Accounts payable and accrued liabilities
$ 7,294 $ 7,579 Estimated liability for taxes on
income
1,411 1,245 Short-term borrowings and current portion
of long-term debt
1,728 1,377 Dividend payable
369 337
10,802 10,538
Long-term debt
8,439 8,556 Postretirement benefits
1,717 1,732 Deferred taxes
1,749 1,731 Other
liabilities
1,171
1,252
23,878 23,809 Equity
32,488 31,392
$ 56,366 $ 55,201
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
changes in Net Debt for the year to date follow:
(Stated in millions)
Three Months 2012 Net Debt, January 1, 2012 $ (4,850
) Net income 1,310 Depreciation and amortization 853 Pension and
other postretirement benefits expense 97 Excess of equity income
over dividends received (37 ) Stock-based compensation expense 79
Pension and other postretirement benefits funding (54 ) Increase in
working capital (1,567 ) Capital expenditures (961 ) Multiclient
seismic data capitalized (101 ) Dividends paid (334 ) Proceeds from
employee stock plans 203 Stock repurchase program (324 ) Other 5
Currency effect on net debt (120 ) Net Debt, March 31, 2012
$ (5,801 ) Components of Net Debt
Mar. 31,2012
Dec. 31,2011
Cash and short-term investments $ 4,085 $ 4,827 Fixed income
investments, held to maturity 281 256 Short-term borrowings and
current portion of long-term debt (1,728 ) (1,377 ) Long-term debt
(8,439 ) (8,556 ) $ (5,801 ) $ (4,850 )
Charges and Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
first-quarter 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 2012 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Net income attributable to
Schlumberger, as reported $ 1,721 $ 411 $ 9 $ 1,301 $ 0.97
Merger and integration costs 15 2 - 13 0.01 Merger &
integration
Net income attributable to
Schlumberger, excluding charges & credits $ 1,736
$ 413 $ 9 $ 1,314
$ 0.98
Fourth Quarter 2011 Pretax
Tax
Noncont.Interest
Net
DilutedEPS (*)
Income Statement Classification Net income attributable to
Schlumberger, as reported $ 1,886 $ 466 $ 6 $ 1,414 $ 1.05
Merger and integration costs 22 2 - 20 0.01 Merger &
integration Write-off of assets in Libya 60 - - 60 0.04 Cost of
revenue
Net income attributable to
Schlumberger, excluding charges & credits $ 1,968
$ 468 $ 6 $ 1,494
$ 1.11
First Quarter 2011 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Net income attributable to
Schlumberger, as reported $ 1,238 $ 295 $ (1 ) $ 944 $ 0.69
Merger and integration costs 34 6 - 28 0.02 Merger &
integration
Net income attributable to
Schlumberger, excluding charges & credits $ 1,272
$ 301 $ (1 ) $ 972 $ 0.71
(*) Does not add due to rounding
Product Groups
(Stated in millions) Three Months Ended
Mar. 31,
2012 Dec. 31, 2011 Revenue
Income Before
Taxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 2,586
$ 672 $ 2,787 $ 777 Drilling(1)
3,785
657 3,805 650 Production(1)
3,539 621 3,703
775 Eliminations & other
8
(7 ) 7 (33 )
9,918
1,943 10,302 2,169
Distribution
713 35 685 26 Eliminations
(20 ) - (13 )
-
693 35
672 26 Corporate & Other
- (172 ) - (154 ) Interest Income(2)
-
10 - 8 Interest Expense(2)
- (80 ) -
(81 ) Charges & Credits
-
(15 ) - (82 )
$
10,611 $ 1,721 $ 10,974 $
1,886
Geographic Areas
(Stated in millions) Three Months Ended
Mar. 31,
2012 Dec. 31, 2011 Revenue
Income Before
Taxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 3,403 $
777 $ 3,516 $ 947 Latin America
1,754 321
1,834 302 Europe/CIS/Africa
2,614 432 2,704 476
Middle East & Asia
2,058 478 2,142 506
Eliminations and other
89 (65
) 106 (62 )
9,918
1,943 10,302 2,169
Distribution
713 35 685 26 Eliminations
(20 ) - (13 ) -
693 35 672
26 Corporate & Other
-
(172 ) - (154 ) Interest Income(2)
- 10
- 8 Interest Expense(2)
- (80 ) - (81 )
Charges & Credits
- (15
) - (82 )
$ 10,611
$ 1,721 $ 10,974 $ 1,886
(1) Effective January 1, 2012, a component of the Drilling Group
has been reallocated to the Production Group. Historical Product
Group information has been reclassified to conform to this new
presentation. (2) Excludes interest included in the Product Group
and Geographic Area results.
Oilfield Services
First-quarter revenue of $9.92 billion decreased 4% sequentially
but increased 22% year-on-year. The strong seasonal product,
software and multiclient sales experienced in the fourth quarter of
2011 accounted for approximately two-thirds of the sequential
decrease in revenue in the first quarter of 2012. The transition of
Well Services activities from gas-rich to liquids-rich basins in
North America also impacted results as reduced fleet utilization
and new industry capacity additions led to competitive pricing
declines. The effect of this transition was offset, however, by
stronger winter exploration in Western Canada and Alaska and
increased deepwater activity in the US Gulf of Mexico. Excluding
seasonality effects, international activity continued to show signs
of strength, particularly in deepwater and exploration activities
in Sub-Saharan Africa and Latin America.
Reservoir Characterization Group revenue decreased
primarily on lower WesternGeco multiclient and Schlumberger
Information Solutions (SIS) software sales following the fourth
quarter of 2011 seasonal highs, but these effects were partially
offset by higher WesternGeco marine acquisition activity.
Drilling Group revenue was flat as higher M-I SWACO
sales in North America land, increasing deepwater activity in the
US Gulf of Mexico, and robust international activity across the
Group were offset by lower Integrated Project Management (IPM)
operations in the Mexico & Central America and Iraq GeoMarkets.
Production Group revenue decreased sequentially on
lower Well Services pricing and fleet utilization in North America
land, the effect of seasonally strong Artificial Lift and
Completions Systems equipment sales experienced in the fourth
quarter of 2011, and lower Framo and Schlumberger Production
Management activities.
On a geographical basis, North America Area revenue
decreased due to lower WesternGeco multiclient sales following the
seasonally strong fourth-quarter 2011 results. Excluding this
impact, revenue was flat sequentially as the decline in US land was
partially offset by the stronger winter exploration activity in
Western Canada and Alaska, although the effect in Canada was muted
by the very early spring break-up. Area revenue also benefited from
increased drilling and deepwater exploration activity in the US
Gulf of Mexico. In the Latin America Area, revenue declined
in the Mexico & Central America GeoMarket from lower IPM
project activities; in the Peru, Colombia & Ecuador GeoMarket
from the effect of the strong product sales seen in the fourth
quarter of 2011; and in the Brazil GeoMarket from reduced
WesternGeco multiclient sales. These declines, however, were
partially offset by higher WesternGeco marine activity in the
Venezuela, Trinidad & Tobago GeoMarket and higher shale-related
activity that benefited Well Services, Wireline and M-I SWACO in
the Argentina, Bolivia and Chile GeoMarket. In the
Europe/CIS/Africa Area, revenue decreased following the
seasonally strong product and software sales of the fourth quarter
of 2011, and sluggish winter activity in Russia and the North Sea
GeoMarket. Excluding these seasonal impacts, Area revenue grew
sequentially due to strong exploration activities in the Southern
and Eastern Africa GeoMarket; a continued resumption of activities
in the Libya GeoMarket; and robust M-I SWACO sales in the Nigeria
and Gulf of Guinea Africa GeoMarket. In the Middle East &
Asia Area, revenue decreased from the effect of seasonally
strong product and software sales in the fourth quarter of 2011.
Reduced IPM project activity in Iraq and the shutdown of operations
in Syria and South Sudan also contributed to this decline although
the effect was largely mitigated by increased activity in the East
Asia GeoMarket following the monsoon-related slowdowns of the
fourth quarter of 2011.
First-quarter pretax operating income of $1.94 billion decreased
10% sequentially but increased 33% year-on-year. Pretax operating
margin decreased 147 basis points (bps) sequentially to 19.6%
primarily due to the reduced software and product sales as well as
to the lower WesternGeco multiclient sales. North America
pretax operating margin decreased 409 bps sequentially to 22.8%
from lower WesternGeco multiclient sales and reduced Well Services
asset utilization and pricing. International pretax
operating margin was flat at 19.1% despite the significant impact
of the fourth-quarter 2011 product, software and multiclient sales,
and the seasonal drop in Russia and the North Sea during the first
quarter of 2012. Excluding seasonality, the increase in high-
margin exploration and deepwater activities helped sustain robust
international margins.
A number of significant contracts won during the quarter
highlighted recent technology portfolio developments. These
included awards for IPM, Schlumberger Production Management and
Framo, as well as for products and services across the
portfolio.
In Saudi Arabia, Schlumberger has been awarded a 10-well
contract for the well logging, slickline, proppant fracturing, well
testing, coiled-tubing and nitrogen services required for the
development of unconventional tight and shale gas resources in a
remote area with limited infrastructure. The scope of work includes
multistage shale and tight sandstone targets and Schlumberger will
provide all engineering, equipment, materials, services,
transportation, storage, accommodations and logistics.
In Argentina, YPF awarded Schlumberger a contract to provide
integrated services for shale completions in the Neuquen province.
The contract covers pressure pumping, cased-hole wireline,
drillable bridge and fracture plug, fracture plug drillout and
flowback, coiled-tubing and integrated project management services.
This is the first fully dedicated shale completions crew in Latin
America and has so far performed more than 100 treatments in the
Vaca Muerta shale.
In South Mexico, PEMEX E&P has awarded Schlumberger
Production Management a 25-year contract to evaluate, develop and
produce hydrocarbons in the Carrizo field. The contract is focused
on increasing reservoir recovery through a commercial model based
on incremental oil production. Schlumberger expertise in project
and asset management, subsurface knowledge, well construction,
production engineering and technology will be applied to address
field redevelopment and the use of thermal processes and
technologies to develop the field's heavy oil resources.
In Ecuador, EP PETROECUADOR has awarded Schlumberger Production
Management and its partners two 15-year service contracts to
redevelop and rejuvenate the Shushufindi and Libertador fields
located in the Oriente region of Ecuador. Schlumberger leads the
Shushufindi field consortium with Tecpetrol Corporation and
Kohlberg Kravis Roberts as partners, and holds a share in the
Libertador field consortium, which is led by Tecpetrol and includes
Canacol Energy Ltd. and Sertecpet as partners. Both contracts are
based on a commercial model that rewards investment based on
incremental oil production and also provide for selected improved
and enhanced recovery techniques on an experimental basis that, if
successful, have the potential to further rejuvenate the
fields.
In Brazil, IPM extended its service agreements to continue
support of OGX offshore exploration and development campaigns. The
scope of work will continue to span all Schlumberger Technologies.
These include the FlexSTIM* modular offshore stimulation vessel as
well as the subsea completion installation services that will be
used to install more than 10 subsea trees over the duration of the
project.
Also in Brazil, BP has extended its contracts with Schlumberger
for a broad selection of technologies to support deepwater
development of the Polvo field in the Campos basin as well as
ongoing exploration drilling. The extension includes a wide range
of Drilling & Measurements, Wireline, M-I SWACO, Geoservices,
Well Services, and Artificial Lift technologies.
Elsewhere in Brazil, Petrobras has awarded WesternGeco the
largest share of a three-year data processing contract that
includes a full portfolio of leading-edge depth imaging algorithms
for land and marine seismic data. The work will be executed in the
WesternGeco GeoSolutions data processing facility in the
Schlumberger Brazil Research and Geoengineering Center located in
Rio de Janeiro.
Additionally in Brazil, Schlumberger Artificial Lift has been
awarded a five-year extendable contract for the deepwater heavy oil
Papa-Terra field in the Campos basin for 23 electrical submersible
pumps, 8 of which will operate on subsea wellheads. Four-pump
configurations will be installed using REDA Maximus* electrical
submersible pump technology.
On the Alaska North Slope, Schlumberger has been awarded the
wireline logging services contract for the Repsol E&P USA Inc.
three-rig program. A number of advanced technologies form part of
the contract, including Rt Scanner* triaxial induction,
PressureXpress* reservoir pressure while logging and MDT* modular
formation dynamics tester services. The award was based on
Schlumberger technological expertise and extensive North Slope
infrastructure.
In Canada, Chevron contracted WesternGeco for the first
Q-Marine* point-receiver marine seismic survey in the Beaufort Sea
for the 2012 summer season. WesternGeco has proven seismic
acquisition experience in the area’s harsh arctic conditions and
also offers the use of environmentally friendly technologies that
include the Q-Marine Solid* streamer with nonfluid fill.
Offshore Norway, Framo has been awarded a contract by Statoil to
design and build a gas-compression plant for the Gullfaks field.
The plant, one of the world's first subsea gas compression systems,
is expected to help increase field recovery by boosting reservoir
pressure and builds on the unique technology position of Framo.
Reservoir Characterization Group
First-quarter revenue of $2.59 billion was 7% lower sequentially
but increased 18% year-on-year. Pretax operating income of $672
million was 14% lower sequentially but increased 46%
year-on-year.
Sequentially, revenue decreased primarily on lower WesternGeco
multiclient and SIS software sales following their fourth-quarter
2011 seasonal highs, but these effects were partially offset by
increased WesternGeco marine acquisition on higher vessel
utilization. Wireline revenue was flat as strong activity in the
North America and Latin America Areas was offset by slowdowns in
the Europe/CIS/Africa and Middle East & Asia Areas due to
weather and seasonality. Excluding seasonality, the Group grew on
stronger deepwater and exploration activity in Sub-Saharan Africa,
Latin America and the US Gulf of Mexico.
Pretax operating margin decreased 189 bps sequentially to 26%
primarily due to the seasonally lower WesternGeco multiclient and
SIS software sales but this effect was partially mitigated by
higher WesternGeco vessel utilization on lower marine transits.
Excluding seasonality, margins improved through deepwater and
exploration activities and better WesternGeco vessel
utilization.
Technology successes for the Group’s services and products
focused on exploration and deepwater operations as well as on
enhanced reservoir understanding in unconventional resource
development.
Offshore Liberia, advanced Wireline logging technologies were
deployed for African Petroleum in a deepwater exploration well to
evaluate a series of finely laminated and thin-bedded reservoirs.
The technologies included the Rt Scanner triaxial induction
service, the ECS* elemental capture spectroscopy sonde, and the
CMR* combinable magnetic resonance tool. The data were analyzed
using Thin Beds Advisor* petrophysical evaluation for clastic
reservoirs that led to more accurate hydrocarbon volumes and guided
an optimal formation pressure testing and fluid sampling program.
Other Schlumberger technology deployed on this project included
Drilling & Measurements directional drilling and
logging-while-drilling services.
In Nigeria, Wireline MR Scanner* expert magnetic resonance
technology helped Addax Petroleum Development Nigeria Limited
distinguish potential oil-bearing reservoirs from water zones in an
onshore exploration well. The well had been drilled through a
succession of high-quality stacked sandstone formations in an area
of fresh reservoir waters that rendered saturations difficult to
determine with conventional resistivity methods. The multiple
depth-of-investigation scanning capability of the MR Scanner
service identified the nature of the reservoir fluids and enabled
Addax to avoid testing the water-bearing levels.
Schlumberger Testing Services technology has been deployed on a
deepwater well in the US Gulf of Mexico in record water depths for
the SenTREE* high-pressure subsea test tree and SenTURIAN* subsea
landing string electrohydraulic operating systems. As part of the
completion, the operator also used Schlumberger PowerFlow*
slug-free big hole shaped charges, deepwater IRIS* intelligent
remote implementation system valves, a longstroke 9 5/8-in packer,
and the PURE* perforating system for clean perforations.
In a well in the Marcellus Shale, Schlumberger Wireline acquired
multiple borehole seismic data sets that included vertical seismic,
offset seismic and walkaway seismic profiles together with a
27-position walkaround survey. The seismic profiles were recorded
using 12-shuttle VSI* versatile seismic imager technology with
vibrator seismic sources with the data being used to calibrate and
enhance surface seismic data to provide better understanding of
this unconventional reservoir.
Offshore Trinidad and Tobago, WesternGeco completed the first
phase of a project for BP that included a Q-Seabed* multicomponent
seabed seismic system with simultaneous source acquisition.
WesternGeco also won a multiyear agreement with BP for the
acquisition of a 4D Q-Marine point-receiver seismic survey in the
Valhall field of the southern North Sea. This marks the third
season that WesternGeco has acquired seismic data for BP in the
North Sea.
WesternGeco has introduced the ObliQ* sliding-notch broadband
acquisition and imaging solution—a new marine technique that
optimizes the recorded bandwidth of the seismic signal by utilizing
a variable depth cable. The technique can be employed with all
types of survey design, including both narrow- and wide-azimuth
acquisition as well as Coil Shooting* single-vessel full-azimuth
geometries. The ultra‐low-frequency system response of the Q‐Marine
point-receiver seismic system when combined with the proprietary
deghosting solution ensures high‐fidelity recording of the
bandwidth extension towards the low frequencies enabled by the
ObliQ solution.
In the US Gulf of Mexico, WesternGeco has begun acquisition of
the Revolution IV multiclient survey. This multivessel Dual Coil
Shooting* multivessel full-azimuth acquisition in the Alaminos
Canyon area follows the March 2012 completion of the Revolution III
survey which used the same technology to acquire data in the
Keathley Canyon area.
In Western Australia, new Wireline ReSOLVE Family* instrumented
wireline intervention services were deployed using the TuffTRAC*
cased hole services tractor to overcome operational challenges in a
highly deviated offshore well. These included setting a plug at
5,200 m in a section deviated at 85°, positioning a debris catcher
at 5,200 m and setting an isolation sleeve at 500 m under 17°
deviation. The ability of the technology to successfully perform
these mechanical services avoided mobilization of a separate
slickline crew, saving about 16 hours of rig time. This was the
first worldwide application of TuffTRAC tractor-conveyed ReSOLVE*
services in a single trip to the wellsite.
Drilling Group
First-quarter revenue of $3.78 billion was flat sequentially but
22% higher year-on-year. Pretax operating income of $657 million
was 1% higher sequentially and increased 42% year-on-year.
Sequentially, revenue was flat as higher M-I SWACO sales in
North America land, increasing deepwater activity in the US Gulf of
Mexico, and robust international activity across the Group were
offset by lower IPM activity in the Mexico & Central America
and Iraq GeoMarkets. Drilling & Measurements revenue slipped
marginally due to winter weather in Russia, although this was
partially offset by higher activities in the Latin America and
Middle East and Asia Areas. Bits and Advanced Technologies revenue
decreased slightly due to the effect of the seasonal product sales
experienced in the fourth quarter of 2011.
Sequentially, pretax operating margin increased 28 bps to 17.4%
due to stronger M-I SWACO pricing in North America land, the
Group’s increasing high-margin deepwater activity in North America,
and an increased international footprint for former Smith
Technologies.
A number of Drilling Group technologies contributed to the
first-quarter’s results.
Advanced Drilling & Measurements services have been deployed
offshore Australia to position a well in challenging geology
rendered complex by thin unconsolidated sands, compartmentalized
shallow oil-water contacts, and marine erosional surfaces that
required high rates of penetration to maintain directional control.
The combination of PowerDrive Archer* high-build-rate rotary
steerable systems and PeriScope* bed boundary mapper technology
enabled 8 1/2-in multilateral wells to be positioned within 1 to 2
m of the reservoir top avoiding any crossing of the oil-water
contact that would have necessitated a redrill. Overall drilling
time was reduced by one-third compared to previous bottomhole
assembly configurations.
In the South China Sea, the CACT Operators Group, consisting of
CNOOC, Chevron and Eni, deployed Drilling & Measurements
StethoScope* formation pressure-while-drilling technology in a
pilot directional well to evaluate depletion in a mature reservoir
before drilling and completing a new sidetrack. The data helped
select the target reservoir for the sidetrack, which was
subsequently drilled using a PowerDrive X6* rotary steerable system
in combination with EcoScope*† multifunction logging-while-drilling
and PeriScope bed boundary mapper technology. In accurately placing
the challenging 386-m sidetrack within the 1-m thick target zone,
the value of the technology was clearly demonstrated.
In China, Drilling & Measurements Scope* services for
greater efficiency, improved reliability and better answers have
been deployed for PetroChina SWOGC. In one tight gas horizontal
exploration well, SonicScope* multipole sonic-while-drilling
technology was used to help quantify reservoir quality in real time
with the high quality of the data providing valuable permeability
estimation, fracture information and gas detection. As a result,
the horizontal length of the well was doubled by adjusting
trajectory based on real-time integration of SonicScope and seismic
data. In another well, MicroScope* resistivity- and
imaging-while-drilling service enabled identification of structural
dip, faults and fractures for well placement and completion
optimization in a thin tight gas carbonate reservoir, while the
same technology was also deployed in a thick tight gas sandstone
reservoir to steer a horizontal well to intersect the most highly
fractured areas. These applications have opened new opportunities
to further develop tight gas reservoirs in the Sichuan Basin.
In Iraq, Drilling & Measurements PowerDrive X5* rotary
steerable technology with a Smith MDi613 polycrystalline diamond
compact (PDC) bit was deployed in the Rumaila field for the Rumaila
Operating Organization to drill the 6-in deviated section of a
re-entry well. The technology successfully drilled the 1,050-m
section in a single run with a 60% reduction in rig time compared
to offset wells drilled with conventional technology.
Also in Iraq, Drilling & Measurements PowerPak* steerable
motor technology was deployed in the Rumaila field operated by the
Rumaila Operating Organization to drill a 12 1/4-in section. The
technology successfully drilled the section with a 180% increase in
performance over the field average.
Elsewhere in Iraq, Drilling & Measurements PowerDrive
vorteX* powered rotary steerable technology was deployed to drill
the 12 1/4-in section of a deviated well. The technology
successfully drilled the section in one bit run with full
directional control and improved the rate of penetration (ROP) by
50% over the field average for vertical wells.
In Gabon, Drilling & Measurements PowerDrive Archer
high-build-rate rotary steerable system technology enabled Total
Gabon to drill the deviated section of a land horizontal well in a
single bit run. Build rates of 7°/100 ft were required to manage
vertical depth uncertainties and to place the well at the optimum
distance from the oil-water contact in the heterogeneous Gamba
unconsolidated sandstone formation. This would not have been
possible with conventional technology and yielded significant time
reduction and risk mitigation. The subsequent completion was run
without problem.
PowerDrive Archer high-build-rate rotary steerable technology
was also introduced for BP in Alaska on a complex horizontal well
that required a build rate of more than 10°/100ft. The PowerDrive*
system was run with a customized Smith MDi513 drill bit and
PeriScope bed-boundary mapper and adnVISION* services.
In West Texas, Jetta Operating used Schlumberger Pathfinder
services including PowerDrive rotary steerable systems, and
PeriScope, MicroScope and SonicScope advanced
logging-while-drilling technologies to position a 5,100-ft lateral
in an 11-ft thick reservoir while also acquiring the data needed to
optimize the completion design. During the subsequent stimulation
job, Jetta made adjustments to the program based on these data,
resulting in improvements to well performance.
Offshore Cameroon, Drilling & Measurements high-temperature
PowerDrive, EcoScope azimuthal density neutron, sonicVISION*
sonic-while-drilling and ImPulse* technologies have now been
successfully deployed in three wells for Bowleven (Euroil) and have
reached maximum operating temperatures of 194 deg C and depths of
4,800 m. Average circulating-drilling temperatures reached 170 deg
C in the reservoir with static temperatures in excess of 200 deg
C.
In the South China Sea, CNOOC Zhan Jiang deployed Drilling &
Measurements PeriScope bed boundary mapper technology with
PowerDrive X6 rotary steerable and EcoScope multifunction
logging-while-drilling services to help better understand formation
structure and drill back to the reservoir after encountering a
fault. The success of the operation, which achieved 40% extra
lateral length and avoided a sidetrack, demonstrated the value of
bed boundary mapper technology.
In the Yurubcheno-Tokhomskoe field in eastern Siberia, Smith
Bits engineers together with the technology department of LLC
“RN-Burenie” (Rosneft) reduced the number of trips by 30% during
the drilling of a 6-in liner section by using new-generation ONYX*
PDC cutter technology. Collaboration between field engineers,
design engineers and hydraulics experts using the Smith IDEAS*
integrated drillbit design platform optimized the drilling process
and helped choose the proper premium PDC bit with ONYX cutters to
replace the rotary-cone technology previously used in the field’s
dolomitic formations.
In Russia, INTEGRA BURENIE awarded Schlumberger a contract for
the supply and service of Smith drill bits on the Dulisma field in
eastern Siberia in 2012. The award was based on the reduced
drilling times achieved in 2011 using PDC and rotary cone bit
designs combined with optimized drilling parameters appropriate to
field well profiles and geological conditions. New-technology ONYX
II* premium PDC cutter technology also contributed to the overall
performance improvement.
In the Cotton Valley field in Texas, Anadarko used Schlumberger
Drilling Group technologies that included the PowerDrive Archer 675
high-build-rate system with a Smith MSi713 bit and M-I SWACO fluids
and solids control to drill a 3,000-ft horizontal well in 19.4
days. The 10°/100-ft curved section was completed in 49 hours,
beating the previous best by 8 hours. M-I SWACO centrifuge
technology maintained low-gravity solids content below 7%, which
reduced materials consumption and improved filter cake quality.
Throughout this field, the services have helped reduce well
construction times by approximately five days per well.
Production Group
First-quarter revenue of $3.54 billion decreased 4% sequentially
but increased 26% year-on-year. Pretax operating income of $621
million was 20% lower sequentially but increased 17%
year-on-year.
Sequentially, revenue decreased on lower Well Services pricing
and fleet utilization in North America land, the effect of the
exceptional Artificial Lift and Completions Systems equipment sales
seen in the fourth quarter of 2011, and lower Framo and
Schlumberger Production Management activities. The transition of
Well Services activities from gas-rich to liquids-rich basins in
North America also impacted results as the reduced fleet
utilization and new industry pressure-pumping capacity led to
competitive pricing declines.
First-quarter pretax operating margin decreased 338 bps to 17.6%
reflecting pricing erosion for Well Services technologies through
increased competitive forces from the introduction of new industry
pressure-pumping capacity into liquids plays following the industry
migration from gas-rich basins. Operating margin was also affected
by reduced asset fleet utilization and cost inflation for certain
materials. The seasonally lower Artificial Lift and Completions
Systems equipment sales also contributed to the margin decline.
Production Group highlights during the quarter included a number
of successes for Well Services and Well Intervention Services
technologies.
In West Siberia, Well Services HiWAY* flow-channel hydraulic
fracturing technology was implemented in the remote Taylakovskoe
oil field for Slavneft-Megionneftegaz. Productivity analysis after
treatment showed a significant increase in oil production rate,
reaching up to 50% higher when compared to offset wells treated
with conventional stimulating techniques.
In the Haynesville Shale, Comstock Resources was the first
operator to apply the HiWAY channel fracturing technique by
completing two wells in January. The HiWAY technique was applied on
both a three-well pad and a single-well pad so that direct offset
comparisons could be made. Although production results are still
forthcoming, Comstock noted savings associated with the reduced
water and proppant used during the HiWAY completions.
In Egypt, HiWAY technology has been deployed for operators in
the Western Desert including Sahara Oil & Gas and Petrosilah.
Post-stimulation production data over 10 Sahara Oil & Gas wells
showed a 22% increase in oil production rates compared to offsets
in the same field while 2 Petrosilah wells were successfully
stimulated without the screen-outs that have typified treatments in
the El Fayum concession. These two wells are also producing at
higher initial post-stimulation rates compared to offset wells
fractured with conventional techniques.
In India, Well Services HiWAY flow-channel hydraulic fracturing
technology was successfully applied in the largest onshore
brownfield for ONGC. A multidisciplinary team comprising of members
from ONGC and Schlumberger was formed to perform a thorough study
of the reservoir and suggested application of HiWAY technology to
this field. Initial results, post fracture, indicate an increase in
liquid production rate of about 200%.
In the Kurdistan Region of Iraq, Schlumberger Well Services
performed the first stimulation with VDA* viscoelastic diverter
fluid technology for Gulf Keystone Petroleum International Ltd.,
operator of the Shaikan block, using coiled-tubing conveyance in
the Shaikan-4 appraisal well in two zones in the Butmah and Kurra
Chine-B limestone formations. While these two zones would not
produce before treatment, after stimulation they produced at flow
rates above 2,500 and 5,000 bbl/d, respectively, exceeding
expectations.
In Brazil, Well Intervention Services ACTive* Matrix in-well
live performance and Jet Blaster* high jetting scale removal
technology were deployed to stimulate an exploration well for
Petrobras. The results from ACTive pressure and temperature
monitoring in combination with post-treatment production logging
results had demonstrated that conventional stimulation methods were
not suitable for multiple zones with varying permeability profiles
and that selective treatments could be optimized using inflatable
packers and distributed temperature sensing. The development of
this technique in Brazil was made possible through the joint
efforts of Schlumberger Technologies and Petrobras engineering.
In Algeria, innovative use of Well Intervention Services ACTive
coiled tubing with ABRASIJET* hydraulic pipe-cutting and
perforating services enabled explosives-free completion of a
natural gas well. The real-time capability of the ACTive system
enabled accurate depth control as well as the ability to monitor
the well during the operation while resolving the logistical
challenges of the completion operation.
In Saudi Arabia, Schlumberger Well Intervention Services
performed an ACTive in-well live performance stimulation job in an
open-hole completion in a natural gas well. The ACTive system used
was equipped with the new iFC+ fiber-optic string that permits
pumping rates of up to 6 bpm. After identification of a thief zone
at the liner shoe based on distributed temperature sensor
measurements, the pumping schedule was modified to successfully
stimulate the hydrocarbon-bearing interval at the toe of the
lateral using JetBlaster and ABRASIJET technologies to bypass the
damaged formation.
In Oman, Well Intervention Services ACTive in-well live
performance technology has been deployed for Petroleum Development
of Oman in an appraisal well in an oil-bearing carbonate reservoir.
The operation was performed in a challenging 600-m horizontal
perforated completion zone with 6% hydrogen sulphide content. The
ACTive services run included perforation debris removal,
matrix stimulation using distributed temperature sensing, and
conveyance of Wireline Flow Scanner* horizontal and deviated well
production logging technology. Initial production results showed a
26% improvement above target.
In Indonesia, the Well Services ClearPAC* fluid system for
gravel packing technology has been introduced to replace earlier
generations of carrier fluids in gravel pack operations in East
Kalimantan for Total E&P Indonesie (TEPI). The technology was
used for the first time after laboratory tests qualified the fluid
as a replacement for the HEC-based fluids used previously. After
clean-up, the first field test on a well in the field produced at
double the rate expected using the previous technology. Based on
these results, TEPI has decided to use ClearPAC fluids on future
gravel pack operations in East Kalimantan.
In Montana, Schlumberger Completions deployed 36 Falcon*
multistage stimulation systems in an exploration well for Anschutz
Exploration. The technology, which uses hydraulically set open-hole
packers to isolate fracture stages during stimulation treatments,
permits up to 20 stages to be fractured continuously using balls of
progressively increasing diameters with drillable ball seats to
increase efficiency during multistage fracture operations.
Well Services DeepCRETE* deepwater well cementing technology
with GASBLOK* gas migration control was used for Statoil on a
deepwater exploration well in more than 2,582 m of water offshore
Tanzania. Cement returns and casing pressure tests confirmed good
zonal isolation.
In Pakistan, Schlumberger Losseal* reinforced composite mat
pills were used for Ocean Pakistan Limited in a well on the Potwar
Plateau field to control loss of circulation in cementing the 9
5/8-in casing in the 12 1/4-in hole, and in drilling the 8 1/2-in
section. The combination of natural and induced fractures, and the
mud weight contrast between the two hole sections make wells in the
field highly challenging to drill. Losseal technology was used as a
spacer during the 9 5/8-in two-stage cement job, and two Losseal
pills were placed in two separate zones in the 8 1/2-in section. As
a result of the success of the jobs, Ocean Pakistan Limited has
requested a permanent stock of Losseal pills to be at their
rig-site.
In Trinidad and Tobago, Schlumberger completed the first well in
the BP Serrette development with a lower completion optimized for
high gas flow rates that was developed by a joint team from BP and
Schlumberger in a fully integrated approach. M-I SWACO EMS 6700
filter-cake removal technology was tested and used in conjunction
with HEC carrier fluid for the operation to ensure efficient
filter-cake removal, effective gravel packing, and maximum
production rate. The fluids were used in conjunction with an
Alternate Path gravel pack system and a FIV* formation isolation
valve tool to prevent formation damage. Thorough planning and
execution resulted in a successful operation and a well producing
at the planned flow rate with significantly reduced drawdown
pressure.
In Brazil, Well Services Jet Blaster technology was deployed
with a Well Intervention Services X-11* modular offshore
coiled-tubing services unit for Repsol to successfully remove an
83-m hydrates plug that had developed during well testing
operations. The intervention was rapidly engineered to overcome the
challenges of other hydrate removal methods.
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
more than 113,000 people representing over 140 nationalities and
working in approximately 85 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 $39.54 billion in 2011. For
more information, visit www.slb.com.
*Mark of Schlumberger or of Schlumberger Companies
†Japan Oil, Gas and Metals National Corporation (JOGMEC),
formerly Japan National Oil Corporation (JNOC), and Schlumberger
collaborated on a research project to develop LWD technology.
EcoScope service uses technology that resulted from this
collaboration.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, April 20, 2012. 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
+1-800-230-1085 within North America, or +1-612-288-0337 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 May 20, 2012 by dialing +1-800-475-6701
within North America, or +1-320-365-3844 outside of North America,
and providing the access code 239412.
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 information is
available at www.slb.com/ir.
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