Schlumberger Limited (NYSE:SLB) today reported second-quarter
2013 revenue of $11.18 billion versus $10.57 billion in the first
quarter of 2013, and $10.34 billion in the second quarter of
2012.
Income from continuing operations attributable to Schlumberger,
excluding charges and credits, was $1.54 billion—an increase of 19%
sequentially and an increase of 14% year-on-year. Diluted
earnings-per-share from continuing operations, excluding charges
and credits, was $1.15 versus $0.97 in the previous quarter, and
$1.01 in the second quarter of 2012.
Schlumberger completed the wind down of service operations in
Iran during the second quarter of 2013. Accordingly, the historical
results of this business have been reclassified to discontinued
operations and all prior periods have been restated.
Schlumberger recorded $0.51 per share of net credits in the
second quarter of 2013 versus charges of $0.07 per share in the
previous quarter, and charges of $0.02 per share in the second
quarter of 2012.
Oilfield Services revenue of $11.18 billion was up 6%
sequentially and increased 8% year-on-year. Oilfield Services
pretax operating income of $2.28 billion was up 16% sequentially
and increased 12% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, “Strong Schlumberger
second-quarter results were marked by significantly higher
international activity, both offshore and in key land markets. In
North America, we benefited from solid execution on land and
further strength in deepwater activity to achieve solid overall
progress despite competitive land pricing and the effects of the
Western Canada spring break-up. Double-digit sequential revenue
growth was recorded by the Reservoir Characterization Group and by
the Middle East & Asia and the Europe/CIS/Africa Areas. All
Areas displayed strong execution and integration performance that,
together with new technology sales, helped operating margins reach
or exceed 20% across all geographies.
International results were led by the Middle East & Asia
Area, as exploration and drilling activity rebounded in China and
Australia, growth continued in the key markets of Saudi Arabia and
Iraq, and both land and marine seismic activity showed further
progress. In Europe/CIS/Africa, activity levels rebounded in Russia
and the North Sea, while increased exploration in parts of
Sub-Saharan Africa further boosted growth. Latin America saw
increasing Integrated Project Management activity, although the
effect of this was offset by seasonal seismic vessel transits.
New technology deployment was strong in the quarter with growing
customer interest in new formation evaluation, drillbit and well
intervention products and services. The OneSubsea™ joint venture
was completed with Cameron, and we look forward to the
opportunities for the best-in-class new subsea technologies and
solutions that we expect this new organization to provide.
Elsewhere, our growing integration capability has led to
organizational changes that combine our leading project and
production management businesses to fuel growth through joint
expertise and portfolio alignment.
The soft global economic picture has changed little since the
first quarter. The U.S. has shown virtually no impact from the
financial sequester, the Eurozone remains in recession, and data
from China continue to be mixed. Given the lack of change, supply
and demand for both oil and natural gas remain stable, which is
also reflected in oil and gas prices. E&P spending, however,
has been revised upwards making this year the fourth consecutive
year of double-digit spending increases and pointing to the
long-term nature of oil and gas developments.
As a result, we continue to see consistent growth as spending
plans are confirmed by rig count outlooks and customer activity. We
remain confident in the industry outlook, our strategic positioning
in the markets in which we operate, the strength of our technology
portfolio and in our ability to further improve our overall
performance.”
Other Events
- During the quarter, Schlumberger
repurchased 6.8 million shares of its common stock at an average
price of $73.07 for a total purchase price of $500 million. This
repurchase substantially completed the share repurchase program of
$8 billion approved by the Board of Directors in April 2008. As of
June 30, 2013, Schlumberger had repurchased over 105 million shares
of common stock under the program for a total purchase price of
$7.8 billion. The remaining balance of $187 million will be
exhausted in the third quarter of 2013. On July 18, 2013, the Board
of Directors approved a new share repurchase program of $10 billion
to be completed at the latest by June 30, 2018.
- On June 24, 2013, Cameron and
Schlumberger announced that OneSubsea™, a joint venture to
manufacture and develop products, systems and services for the
subsea oil and gas market, had received all required regulatory
approvals. The parties closed the transaction on June 30, 2013.
Schlumberger recognized a $1.03 billion gain as a result of this
transaction.
Oilfield Services
Second-quarter revenue of $11.18 billion was up 6% sequentially
and increased 8% year-on-year, with International Area
revenue of $7.70 billion growing $543 million, or 8% sequentially,
while North America Area revenue of $3.36 billion increased
$67 million, or 2% sequentially.
By segment, Reservoir Characterization Group revenue of
$3.01 billion grew 10% sequentially while Drilling Group
revenue of $4.29 billion increased 4%. These increases were due to
seasonal rebounds, market share gains and higher exploration
activity in both offshore and key international land markets,
particularly for Wireline technologies. Other Technologies that
gained significantly during the quarter were led by WesternGeco,
Schlumberger Information Solutions (SIS), Drilling &
Measurements and M-I SWACO. Despite the seasonal decline in Western
Canada as a result of the spring break-up, the Production
Group posted a sequential increase of 4%. Improving industry
utilization of pressure pumping capacity in US land, increasing
Well Intervention coiled tubing activity worldwide, and strong
international sales of Completions products contributed to
growth.
Geographically, the Middle East &
Asia Area led the sequential increase
with revenue of $2.7 billion increasing 11%, mainly
from a seasonal rebound of exploration and drilling activity
in China and Japan, higher WesternGeco UniQ* land seismic
productivity across the region, and continued growth across a
diversified portfolio of projects and activities in Saudi Arabia
and Iraq. Improved WesternGeco marine vessel utilization and robust
drilling activity in the Australasia GeoMarket also contributed to
growth. Europe/CIS/Africa revenue of $3.1 billion
increased 10% from higher WesternGeco multiclient sales ahead of
licensing awards in Norway, and the seasonal pick-up of drilling
and exploration activity in Russia and the North Sea. Sub-Saharan
Africa revenue also grew sequentially through increased exploration
activity in the Gulf of Guinea while activity in Angola was subdued
due to project delays. Latin America revenue of $1.9
billion grew slightly as the effect of strong Integrated Project
Management (IPM) activity in Argentina was largely offset by a
decline in WesternGeco marine utilization following the planned
transit of vessels out of Brazil. North America revenue
of $3.36 billion increased 2%—with North America offshore
revenue up due to robust Wireline deepwater activity and
WesternGeco. US land posted double-digit growth, but this was
offset by the seasonal decline in Western Canada following the
spring break-up. While US land rig count grew only marginally, well
and stage counts increased through drilling efficiency resulting in
improved industry utilization of pressure pumping capacity.
Second-quarter pretax operating income of $2.28 billion was up
16% sequentially, and increased 12% year-on-year.
International pretax operating income of $1.69 billion
increased 18% sequentially, while North America pretax
operating income of $662 million increased 6% sequentially.
Sequentially, pretax operating margin of 20.4% increased 178
basis points (bps), as International pretax operating margin
expanded 202 bps to 22.0% Middle East & Asia posted a
178-bps sequential margin improvement to reach 24.6%,
Europe/CIS/Africa increased by 275 bps to 20.6%, and
Latin America improved by 107 bps to 20.6%. The expansion in
International margins was due to seasonal activity rebounds
combined with strong results in Sub-Saharan Africa and the Middle
East & Asia Area. Increased high-margin exploration, seismic
and deepwater activities also helped boost international margins.
Despite the effect of the seasonal spring break-up in Western
Canada, North America pretax operating margin increased 65
bps sequentially to 19.7%. US land margin expanded on improving
efficiency, better utilization and lower raw material costs in
pressure pumping, while North America offshore margin increased due
to robust Wireline deepwater activity and WesternGeco.
Sequentially by segment, Reservoir Characterization Group
pretax operating margin expanded 380 bps to 30.1% due to the strong
WesternGeco and Wireline results. The pretax operating margin of
the Drilling Group increased 97 bps to 18.7% through
improved Drilling & Measurements performance and increased
profitability on IPM projects in the Middle East and Latin America.
Production Group pretax operating margin increased 116 bps
to 15.9% on improved profitability in Well Services as pressure
pumping utilization and efficiency improved in US land.
A number of technology innovation and integration highlights
contributed to second-quarter results.
Shell has awarded Schlumberger a five-year, multicountry
integrated services contract for the drilling of oil and gas
exploration wells on a recently commissioned deepwater rig
operating in East, West and North Africa. The concept of using a
highly mobile drilling rig for exploration in remote deepwater
environments is enhanced by the integration of services over a
reduced footprint, resulting in overall efficiency gains. In
addition, the continuity of people and processes along with the
application of lessons learned are key enablers for reducing
operational risk and non-productive time.
In the Norwegian sector of the North Sea, a total of 11
Schlumberger oilfield services contracts have been extended over
the next five years with BG Norge to cover both the development of
the Knarr field as well as other activities on the continental
shelf. The contracts include directional drilling, measurements and
logging while drilling, mud logging, wireline logging, drilling
fluids management, coiled tubing, well testing, perforating,
completions and cementing services.
In the UAE, Wireline MicroPilot* single-well in situ enhanced
EOR evaluation technology was introduced for Abu Dhabi Company for
Onshore Operations (ADCO) in a well to carry out downhole water and
formation crude oil injection. MicroPilot technology provided
valuable information on the rock properties governing oil and water
movement in the reservoir. This information also helped to
bridge the gap between the core and reservoir scales, allowing
improved reservoir modeling.
Offshore Congo, Schlumberger technologies were deployed for ENI
in the drilling and completion of a highly complex well in the
Mwafi field. Drilling & Measurements PowerDrive Archer* high
build-rate rotary steerable system technology with customized Smith
drill bits were used to drill a challenging 3D well profile through
the overburden. Well placement in the reservoir was performed in
real time using Drilling & Measurements PeriScope* bed boundary
mapper, adnVISION* azimuthal density neutron, and SonicScope*
multipole sonic while drilling technologies. The well was drilled
to total depth more than 20 days ahead of schedule and completed
with a three-stage fracturing job using PropGUARD* fiber-based
proppant flowback control technology and the Bourbon Herald Well
Services stimulation vessel.
In Colombia, Well Intervention LIVE* digital slickline
technology was deployed for Chevron on an onshore well abandonment
campaign. The LIVE service provided both mechanical and real-time
cased-hole services in a single unit to recover a well isolating
plug, punch multiple tubings with Wireline PowerJet Omega* deep
penetrating shaped charges, and run a clean chemical tubing cutter
using Testing Services eFire* electronic firing head technology
correlated in real time. The operational efficiency provided by
this combination of Schlumberger technologies saved Chevron
significant logistical costs and reduced total operating time from
27 planned days to 21 days.
During mid-2012, Liquid Robotics and Schlumberger created Liquid
Robotics Oil & Gas, a joint venture to develop innovative
services for the oil and gas industry using Wave Glider®, the
world’s first wave-powered, autonomous marine vehicle. Recently,
around the Wheatstone area of Northwest Australia, Wave Gliders
equipped with metrology sensors including turbidity were deployed
for Chevron to conduct reliable baseline surveys prior to the start
of their upstream and downstream dredging operations. A total of
1,424 nautical miles were covered over a 60-day period. Additional
time-lapse measurements will be taken during and after the
operations to validate environmental compliance. As Wave Glider
technology deployments continue to expand, offshore oil and gas
operators continue building confidence in their ability to solve
some of the industry’s exploration and environmental monitoring
challenges.
In North America, Schlumberger pioneered the deployment of
bi-fuel or dual fuel technology for the diesel engines used in
hydraulic fracturing operations, having implemented the technology
in Canada more than two years ago. Bi-fuel operations make it
possible for a diesel engine to run on a blend of diesel and
natural gas such as compressed natural gas, liquefied natural gas
or field gas. On land in the US, Schlumberger has multiple bi-fuel
enabled crews deployed across the country as technology development
continues with powerplant suppliers to implement optimized
solutions for the North American market. Schlumberger completed its
600th job in June 2013 using bi-fuel technology, and its bi-fuel
operations have helped decrease overall fuel costs by 25-40% while
lowering environmental impact without compromising safety or engine
performance.
Reservoir Characterization Group
Second-quarter revenue of $3.01 billion increased 10%
sequentially and grew 11% year-on-year. Pretax operating income of
$908 million was 25% higher sequentially, and increased 21%
year-on-year. Sequentially, the revenue increase was driven
primarily by increased use of Wireline services as a result of
strong exploration activity in the US Gulf of Mexico, Brazil,
Sub-Saharan Africa and the Middle East. Revenue in Russia and China
also grew sequentially following seasonal activity rebounds.
WesternGeco revenue increased sequentially from higher multiclient
sales ahead of licensing awards in Norway, the seasonal return of
marine vessel activity in the North Sea, and higher UniQ* land
seismic productivity in Saudi Arabia and Kuwait. SIS revenue
increased also from higher product sales and software maintenance
in Latin America and Europe/CIS/Africa.
Pretax operating margin of 30.1% increased 380 bps sequentially
on strong, high-margin WesternGeco multiclient sales and robust
Wireline deepwater activity.
A number of technology highlights across the Reservoir
Characterization Group contributed to the second-quarter
results.
In the North Sea, WesternGeco has begun acquisition of two
complex 4D surveys for BP using DISCover* broadband deep
interpolated streamer technology, the first time the technology has
been used in the North Sea. The surveys, which cover approximately
740 km2 over the Magnus, Foinaven, Schiehallion, and Loyal fields,
involve undershooting obstructions and considerable simultaneous
operations.
WesternGeco has begun acquisition on the new Four Point 3D
broadband multiclient survey in the DeSoto Canyon, Mississippi
Canyon and Lloyd Ridge areas of the eastern US Gulf of Mexico. The
narrow-azimuth survey covers approximately 400 Outer Continental
Shelf (OCS) blocks over 9,600 km2, and uses ObliQ* sliding-notch
broadband technology to optimize the recorded bandwidth of the
seismic signal. Data processing will include full waveform
inversion and tilted transverse isotropic imaging.
WesternGeco has been awarded a contract by RWE Dea Norge AS for
the acquisition of approximately 1,250 km2 of broadband seismic
data over their new APA 2012 license in the Norwegian Sea. This
will be the first third-party proprietary survey offshore Norway
using the ObliQ sliding-notch broadband acquisition and imaging
technique. Q-Marine Solid* streamers and Delta* calibrated marine
broadband sources will also be used with the objective of enhancing
resolution and improving the fault definition in the Tertiary,
Cretaceous and Jurassic sections where existing data quality is
poor.
WesternGeco has been awarded a multiyear contract by Shell
Canada Limited for acquisition and processing of a 12,000-km2 3D
wide-azimuth survey offshore Nova Scotia, the first wide-azimuth
survey acquired offshore Canada and the largest seismic program in
Nova Scotia history. The survey is over Shell’s new exploration
licenses in the Shelburne basin, approximately 275 km south of
Halifax, and will be conducted by the WG Magellan and WG Cook using
Q-Marine Solid streamer technology and is supported by two
dedicated source vessels Geco Tau and Ocean Odyssey. The survey
commenced in June 2013, with further data to be acquired in
2014.
In the UK sector of the North Sea, Wireline Saturn* 3D Radial
Probe technology was deployed for EnQuest to obtain high quality
viscous oil samples in shallow unconsolidated formations. The
larger flow area offered by the Saturn elliptical probe design also
led to improvements in operational efficiency, enabling the
operator to save up to 75% in fluid sampling time compared with
conventional sampling methods.
In the US Gulf of Mexico, Wireline deployed the latest
generation of reservoir fluid sampling technology for Shell to
reduce uncertainty in the evaluation of a recent deepwater
exploration success. The MDT* modular formation dynamic tester,
configured with the InSitu Density* reservoir fluid density, InSitu
Viscosity* reservoir fluid viscosity and InSitu Color* reservoir
fluid color sensor measurements, was used to collect over 17
gallons of uncontaminated reservoir fluid. The relatively large,
high quality fluid sample provided the customer with one of
multiple assurances necessary to advance the project from
exploration to development. Also, the variety of measurements made
on the fluid during the sampling process reduced the lab analysis
time for the project by approximately two weeks.
In Australia, Wireline Dielectric Scanner* multifrequency
dielectric dispersion technology was used for ConocoPhillips for
the first time to provide reliable water saturation measurements in
a reservoir with complex mineralogy. The calculation of water
saturation in this reservoir has been challenging due to the
effects of the mineralogy on conventional resistivity measurements.
Dielectric Scanner technology was able to provide irreducible water
saturation in an oil-based mud environment independent of
resistivity logs, core analysis data, and water salinity analysis,
and helped the customer reduce uncertainty on critical reservoir
parameters.
In Qatar, Wireline Sonic Scanner* acoustic scanning platform
technology using a Borehole Acoustic Reflection Survey (BARS) was
deployed for Total E&P Qatar to evaluate formations from the
borehole through casing. The data acquired with this technology
provided reliable imaging up to 100 ft away from the borehole,
allowing integration of the images with 3D surface seismic. The
ability of the BARS technique to evaluate formation features and
reflectors behind casing enables improved well placement and
optimized well completion in mature fields through the
side-tracking, or redesign of existing wells.
In South Texas, Wireline ThruBit* logging services were deployed
to workover a horizontal well after water production became
excessive. A ThruBit memory tool, including density, porosity,
sonic and resistivity sensors, was pumped through the workover
tubing into the openhole completion. The resulting data indicated
that the water production originated from a single set of
fractures, which were subsequently plugged.
In North Dakota, Wireline Isolation Scanner* cement evaluation
technology was deployed for Zenergy in the Bakken shale play. Due
to its unique flexural attenuation measurements, the Isolation
Scanner service was able to clearly image the lightweight cement
behind the well casing, overcoming the challenges faced by
conventional technologies. In addition, the Isolation Scanner tool
measured 72 radial ultrasonic thicknesses to quantify drill wear,
leading to significant savings for the operator in terms of costly
fracturing strings and remedial squeezes.
In Russia, Surgutneftegas has purchased licenses for SIS Petrel*
E&P, GeoFrame* reservoir characterization, ECLIPSE* reservoir
simulation and Techlog* wellbore software platforms, together with
a three-year maintenance agreement. Surgutneftegas has been using
SIS software since 1995, and decided to further adopt the SIS
software platforms in its newly created Geology & Geophysics
and Reservoir Engineering divisions in order to increase efficiency
in E&P decision making, improve reserves recovery management,
and optimize well intervention.
Drilling Group
Second-quarter revenue of $4.29 billion was up 4% sequentially
and grew 8% year-on-year. Pretax operating income of $804 million
was 10% higher sequentially, and increased 11% year-on-year.
Sequentially, revenue increased primarily on strong
international and offshore activity for Drilling & Measurements
and M-I SWACO Technologies, mainly in Russia and the Middle East
& Asia Area. In addition, both Drilling & Measurements and
M-I SWACO posted strong results in US land on higher activity,
which was largely offset by the effect of the seasonal spring
break-up in Western Canada.
Sequentially, pretax operating margin grew 97 bps to 18.7% from
increased land activity for Drilling & Measurements in the US,
Russia and the Middle East, and improved profitability on IPM
projects in the Middle East and Latin America.
A number of Drilling Group technologies contributed to the
second-quarter results.
In China, Drilling & Measurements technologies were deployed
for PetroChina Tarim Oilfield Company to drill 20 wells in
previously unexploited reservoirs in the Hade Field in the
country’s western region known for its complex geology and
challenging drilling environment. A combination of PowerDrive
Archer high build rate rotary steerable, NeoScope*† sourceless
formation evaluation while drilling, PeriScope bed boundary mapper,
and geoVISION* imaging-while-drilling technologies enabled the
accurate placement of a well along thin target layers and avoided
drilling into neighboring water zones. Despite the hard formation,
the drilling technologies achieved the required build rate and
increased both footage per run and rate of penetration. As a
result, the overall drilling time from kickoff to total depth was
reduced from 67 to 42 days. In addition, the average production
tests for the first five wells drilled showed incremental
production 50% above the operator’s target.
In Central China, in partnership with CNPC Chuanqing Drilling
Engineering Company Limited, a subsidiary of China National
Petroleum Corporation (CNPC), Schlumberger Drilling Group
technologies were deployed on the Shell China Sichuan Project to
drill pilot holes and horizontal wells in the Fushun shale gas
block. Drilling & Measurements PowerDrive X6*, PowerDrive
vorteX* and PowerDrive Archer rotary steerable technologies,
combined with MicroScope* resistivity- and imaging-while-drilling
and PeriScope bed boundary mapper technologies were used in
drilling the curve and the horizontal sections. These integrated
drilling services were enabled by ROPO* rate of penetration
optimization and included Smith Spear* shale-optimized steel-body
polycrystalline diamond compact (PDC) drill bits and M-I SWACO WELL
COMMANDER* by-pass circulating technologies. A total of three
horizontal shale gas wells have been drilled and completed, with
all of them achieving Shell’s Best-In-Class & Top Quartile
drilling performance. The well lateral sections were placed
entirely in the reservoir sweet spots and without geological
sidetracks to save the operator more than 54 days.
In Russia, Smith drill bits set new records while drilling the
vertical intervals of exploration wells for Wolgademinoil in the
Avilovskoe field. In the 11 5/8-in section of one well, Smith steel
body PDC bits with premium cutters increased rate of penetration
(ROP) five-fold, and footage by 350%, compared to the best offset
wells. In the same well, but in the 15 1/2-in section, ROP was
doubled and the section completed in one run while the footage
drilled increased by 130%.
In the Caspian Sea, Schlumberger Drilling & Measurements
introduced the PowerDrive Xceed* rotary steerable system for
LUKOIL-Nizhnevolzhskneft on an offshore extended reach drilling
project in the Korchagina oilfield. PowerDrive Xceed technology
enabled the efficient drilling of the world’s longest 9 1/2-in
section and a corresponding saving of two days compared to the well
construction plan.
In Angola, Drilling & Measurements technologies were
deployed for Cabinda Gulf Oil Company to evaluate a development
well in a deepwater channelized reservoir system. StethoScope*
formation pressure-while-drilling and EcoScope*† multifunction
logging-while-drilling technologies were used for petrophysical
data evaluation and to assess reservoir depletion magnitude and
connectivity. The combination of petrophysical data, azimuthal
density images and mud log data, led to the identification of an
additional 30 ft of low resistivity pay which enabled the operator
to deepen the overall completion and increase the perforated
interval. In addition to increasing the reserves, the Drilling
& Measurements technologies provided operational efficiency
through higher data acquisition rates, which led to a significant
reduction of non-productive time and a cost saving to the operator
of approximately 60 hours of rig time.
In South Mexico, Schlumberger IPM and Drilling Group
Technologies introduced the TURBODRILLING application for Pemex on
high-compressibility rock formations. The combination of Drilling
Tools & Remedial Neyfor* turbodrilling systems with customized
Smith hybrid and impregnated bits was able to drill effectively and
build angle on a well interval consisting mainly of compressible
mudstone with up to 40% abrasive chert nodules. The well interval
was drilled in less than 211 hours at an average rate of
penetration close to 7 ft/hr, saving Pemex approximately 96
drilling hours compared with conventional drilling systems.
In Colombia, the Schlumberger Drilling Group Petrotechnical
Engineering Center provided well placement services and proprietary
workflows on a horizontal well with complex lithology in the Apiay
field for Ecopetrol. The integrated solution included use of
PERFORMView* real-time drilling visualization, collaboration, and
analysis software. The well was drilled and placed as planned,
without sidetracks or lost-in-hole events.
In Alberta, Canada, Schlumberger Managed Pressure Drilling (MPD)
services were used for Shell to reduce well drilling times in the
Duvernay unconventional gas play. The horizontal sections of these
wells have narrow pressure windows and extend to lengths beyond
7,000 ft. In order to overcome these challenges, the application of
engineered MPD as part of a larger set of improvements to well
design has helped Shell improve drilling rates by up to 124%.
In Brazil, the M-I SWACO DRILPLEX* mixed-metal-oxide water-based
drilling fluid system was used for HRT Oil & Gas to mitigate
the severe loss of circulation encountered while drilling the first
onshore wells in the Solimões basin. The DRILPLEX system was
effective in minimizing washouts and fluid losses to the formation,
which helped optimize hole cleaning. As a result, the drilling time
for the challenging interval was reduced from 6-8 days to 1.8 days,
and the cost reduced by 45% compared with prior offset wells
drilled with traditional fluids.
In Brazil, M-I SWACO MD-3 shaker technology was used by Diamond
Offshore Brasdril on the deepwater semi-submersible Ocean Star. The
MD-3 composite screen design and optimized screening allowed a
considerably higher flow rate, an increased rate of penetration,
and reduced drilling fluid cost through solids removal and lower
dilution rates. Overall savings exceeding $13 million were realized
in one single well.
Production Group
Second-quarter revenue of $3.93 billion increased 4%
sequentially, and grew 6% year-on-year. Pretax operating income of
$625 million was 13% higher sequentially and increased 4%
year-on-year. Despite the seasonal decline in Western Canada as a
result of the spring break-up, the Group posted overall sequential
growth due to improving industry utilization of pressure pumping
capacity in US land, increasing Well Intervention global coiled
tubing activity, and strong international sales of Completions
products. While US land rig count grew only marginally, well and
stage counts increased through drilling efficiency, resulting in
improved industry utilization of pressure pumping capacity.
Although pricing remained competitive, the pace of decline has
moderated sequentially.
Pretax operating margin of 15.9% increased 116 bps sequentially
but declined 23 bps year-on-year. Sequentially, margin expanded
primarily on improved profitability for Well Services technologies
as the result of improving efficiency, better utilization and lower
raw material costs in pressure pumping in US land despite
competitive pricing. In addition, Completions and Well Intervention
Technologies posted improved international profitability.
Highlights during the quarter included successes for a number of
Production Group Technologies.
Saudi Aramco has awarded Schlumberger Completions, for the first
time, a five-plus-two-year, contract for the supply of the products
and services associated with well completion activities in Saudi
Arabia. This is the first contract concluded under the 10-year
corporate procurement agreement recently signed by both companies
and establishes the framework for future contracts under this
master agreement. The award was based on the proven Schlumberger
track record in product and service quality performance, on-time
delivery and national content contribution.
In Saudi Arabia, Well Intervention LIVE digital slickline
technology, utilizing a proprietary coating on a conventional
slickline wire core to enable telemetry, was used for Saudi Aramco
to perform remedial operations on wells in the Hyra field. The LIVE
cable, due to its slickline core, allowed jarring action if
required to avoid sticking with a junk basket drift run. An
electrohydraulic setting tool was then used, without the need for
explosives, to set the plugs away from collars with real-time
gamma-ray correlation. The deployment of the logging tools on top
of the mechanical tools made it possible to drift the well and
correlate marking of the tubing conveyed perforation operation
simultaneously. The overall efficiency of the LIVE truck and crew
enabled a reduction in the number of people on location and
simplified logistics.
In Mexico, Well Intervention LIVE digital slickline technology
was deployed for Pemex on a well in the offshore Ku-Maloob-Zaap
field. The LIVE technology provided real-time cased-hole services
combined with mechanical services capability in a single field
unit, with only one rig-up required to condition the well, run
pressure and temperature gauges, and deploy a tubing puncher using
a Testing Services eFire electronic firing head system correlated
in real time. The efficiency of the LIVE system in a very limited
offshore production platform footprint helped Pemex increase well
production while avoiding the need for a costly workover rig.
In Russia, PetroStim, a Schlumberger joint venture, conducted a
trial refracturing campaign with Well Services HiWAY* flow-channel
technology for Slavneft-Megionneftegas in the mature Vatinskoe
oilfield. The majority of producing wells in the field have been
hydraulically fractured at least once in the past, and conventional
re-stimulation techniques have not proved effective in this field.
However, the production results of the first HiWAY treatments in
the Jurassic sandstone reservoirs almost doubled expectations and
broadened applications of the technology in mature fields as a
proven solution to increase oil recovery.
In Russia, a Schlumberger Completions RapidX* Level 5
multilateral completions system was installed in a well for Exxon
Neftegas Limited offshore Sakhalin Island. This was the first
multilateral well completed in Sakhalin and the first Technology
Advancement for Multilaterals (TAML) Level 5 junction installed
offshore in Russia. The RapidX system allows the operator to access
new sections of the reservoir by reentering existing wellbores and
adding additional laterals to increase overall recovery.
In Kuwait, Schlumberger Well Intervention performed a water
shutoff intervention campaign for Joint Operations Wafra in
openhole horizontal wells using CoilFLATE* coiled tubing
through-tubing inflatable packer and ACTive* in-well live
performance technologies to accurately define the downhole
conditions needed for controlled packer seating and inflation. The
use of these technologies led to a significant decrease in water
production.
Offshore Egypt, Well Intervention deployed ACTive live downhole
coiled tubing technology for Raspetco to stimulate a subsea gas
well in the Sapphire field, which was suffering from fines that had
migrated and accumulated near the wellbore to reduce production.
ACTive technology enabled the controlled placement of Well Services
OCA* organic clay fluid in the live subsea well by monitoring the
fluid level and optimizing the nitrogen pumped through the coiled
tubing annulus. ACTive distributed temperature sensing, acquired
while the well was flowing, delivered a quantitative production log
of the producing zones. As a result of this intervention, the
well’s gas production was tripled.
In Brunei, Schlumberger Sand Management Services deployed
OptiPac* Alternate Path‡ systems incorporating several
customizations for Shell Petroleum (BSP) on uphill trajectory
(fish-hook) wells drilled from land to exploit unconsolidated
reservoirs located in shallow water offshore. In order to overcome
the limitations associated with traditional gravel pack
completions, OptiPac technology including customized shunted swell
packers, quasi blanks and diverter valves was applied in seven high
angle wells to date with positive results. In February, 2013
Schlumberger Sand Management Services set a world record by
completing the longest gravel pack in a fish-hook well, using
OptiPac technology with 578 m of screens installed.
Schlumberger Completions has been awarded several contracts by
Petrobras for the provision of TRC-II* tubing-retrievable charged
safety valves. The contracts mark an unprecedented total of 108
subsurface safety valves awarded for the extremely challenging
Brazil deepwater and ultra-deepwater environments.
In Oman, Schlumberger Artificial Lift has been awarded a
performance-based contract worth approximately $40 million by
Daleel Petroleum Company to supply, install, commission, and manage
about 200 electric submersible pump systems. The five-year
contract, with an option for a two-year extension, includes the
provision of REDA Maximus* electric submersible pump technology,
XT150 gauges, and a total of 18 pulse drive systems.
Financial Tables
Condensed Consolidated Statement of
Income (Stated in millions, except per share amounts)
Second Quarter Six Months Periods Ended June 30
2013 2012
2013 2012
Revenue
$ 11,182 $ 10,341
$ 21,752 $
20,150 Interest and other income, net (1)
30 45
63 92
Gain on formation of OneSubsea(2)
1,028 -
1,028 -
Expenses Cost of revenue
8,712 8,119
17,118 15,884
Research & engineering
293 287
585 558 General
& administrative
100 101
196 199 Merger &
integration(2)
- 22
- 37 Impairment & other(2)
364 -
456 - Interest
98
78
197 158
Income before taxes
2,673 1,779
4,291 3,406 Taxes on
income(2)
449 439
855 833 Income from continuing
operations
2,224 1,340
3,436 2,573 Income (loss) from
discontinued operations
(124 )
75
(69 ) 147 Net
income
2,100 1,415
3,367 2,720 Net income
attributable to noncontrolling interests
5
12
13
17 Net income attributable to Schlumberger
$
2,095 $ 1,403
$ 3,354
$ 2,703 Schlumberger amounts attributable to:
Income from continuing operations(2)
$ 2,219 $ 1,328
$ 3,423 $ 2,556 Income (loss) from discontinued
operations
(124 ) 75
(69 ) 147 Net income
$ 2,095 $ 1,403
$
3,354 $ 2,703 Diluted earnings per
share of Schlumberger Income from continuing operations(2)
$
1.66 $ 0.99
$ 2.56 $ 1.91 Income (loss) from
discontinued operations
(0.09 )
0.06
(0.05 ) 0.11
Net income
$ 1.57 $ 1.05
$ 2.51 $ 2.02 Average shares
outstanding
1,327 1,331
1,329 1,333 Average shares
outstanding assuming dilution
1,336
1,339
1,339
1,341 Depreciation & amortization included in
expenses(3)
$ 910 $ 854
$ 1,806 $ 1,706
1)
Includes interest income of:
Second quarter 2013 - $6 million (2012 - $6 million) Six months
2013 - $11 million (2012 - $16 million)
2)
See pages 13-14 for details of charges and
credits.
3)
Including multiclient seismic data
cost.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30, Dec. 31, Assets
2013 2012 Current Assets Cash and short-term
investments
$ 5,925 $ 6,274 Receivables
11,277
11,351 Other current assets
6,597
6,531
23,799 24,156 Fixed income investments, held to
maturity
417 245 Fixed assets
14,742 14,780
Multiclient seismic data
634 518 Goodwill
14,407
14,585 Other intangible assets
4,673 4,802 Other assets
4,579 2,461
$ 63,251 $ 61,547 Liabilities and
Equity Current Liabilities Accounts
payable and accrued liabilities
$ 7,815 $ 8,453
Estimated liability for taxes on income
1,361 1,426
Short-term borrowings and current portion
of long-term debt
2,858 2,121 Dividend payable
420
368
12,454 12,368 Long-term debt
9,098 9,509
Postretirement benefits
2,031 2,169 Deferred taxes
1,450 1,493 Other liabilities
1,170
1,150
26,203 26,689 Equity
37,048 34,858
$
63,251 $ 61,547
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) Six Months
2013 Net Debt, January 1, 2013
$
(5,111 ) Income from continuing operations
3,436 Depreciation and amortization
1,806 Gain on
formation of OneSubsea
(1,028 ) Pension and other
postretirement benefits expense
255 Stock-based compensation
expense
168 Pension and other postretirement benefits
funding
(231 ) Increase in working capital
(1,140 ) Capital expenditures
(1,800 )
Multiclient seismic data capitalized
(222 ) Dividends
paid
(781 ) Proceeds from employee stock plans
189 Stock repurchase program
(692 ) Payment
for OneSubsea transaction
(600 ) Other business
acquisitions, net of cash and debt acquired
(117 )
Other
190 Currency effect on net debt
64
Net Debt, June 30, 2013
$ (5,614 )
Components of Net Debt
Jun. 30,2013
Dec. 31,2012
Cash and short-term investments
$ 5,925 $ 6,274 Fixed
income investments, held to maturity
417 245 Short-term
borrowings and current portion of long-term debt
(2,858
) (2,121 ) Long-term debt
(9,098 )
(9,509 )
$ (5,614 ) $ (5,111 )
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
Second-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)
Second Quarter 2013 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 2,673 $ 449 $ 5 $ 2,219 $ 1.66 Gain on formation of OneSubsea
joint venture (1,028 ) - - (1,028 ) (0.77 ) Gain on formation of
OneSubsea Impairment of equity method investments (1) 364
19 - 345
0.26 Impairment & other Schlumberger
income from continuing operations,
excluding charges & credits
$ 2,009 $ 468 $ 5 $ 1,536
$ 1.15
First Quarter 2013 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 1,618 $ 406 $ 9 $ 1,203 $ 0.90 Currency devaluation loss in
Venezuela 92 - -
92 0.07 Impairment & other
Schlumberger income from continuing operations,
excluding charges & credits
$ 1,710 $ 406 $ 9 $ 1,295
$ 0.97
Second Quarter 2012 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 1,779 $ 439 $ 12 $ 1,328 $ 0.99 Merger and integration costs
22 1 - 21
0.02 Merger & integration
Schlumberger income from continuing operations,
excluding charges & credits
$ 1,801 $ 440 $ 12 $ 1,349
$ 1.01
First Quarter 2012 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 1,628 $ 394 $ 5 $ 1,229 $ 0.91 Merger and integration costs
15 2 - 13
0.01 Merger & integration
Schlumberger income from continuing operations,
excluding charges & credits
$ 1,643 $ 396 $ 5 $ 1,242
$ 0.92
Six Months 2013 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 4,291 $ 855 $ 13 $ 3,423 $ 2.56 Currency devaluation loss in
Venezuela 92 - - 92 0.07 Impairment & other Gain on formation
of OneSubsea joint venture (1,028 ) - - (1,028 ) (0.77 ) Gain on
formation of OneSubsea Impairment of equity method investments (1)
364 19 -
345 0.26 Impairment & other
Schlumberger income from continuing operations,
excluding charges & credits
$ 3,719 $ 874 $ 13 $ 2,832
$ 2.12
Six Months 2012 Pretax
Tax
Noncont.Interest
Net
DilutedEPS(2)
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 3,406 $ 833 $ 17 $ 2,556 $ 1.91 Merger and integration costs
37 3 - 34
0.03 Merger & integration
Schlumberger income from continuing operations,
excluding charges & credits
$ 3,443 $ 836 $ 17 $ 2,590
$ 1.93
(1) Relates to the impairment of two drilling-related equity
method investments.(2) Does not add due to rounding.
Product Groups (Stated in millions)
Three
Months Ended Jun. 30, 2013 Mar. 31, 2013 Jun. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 3,014
$ 908 $ 2,750 $ 724 $ 2,714 $ 749 Drilling
4,292 804 4,113 730 3,977 727 Production
3,926
625 3,759 555 3,718 601 Eliminations & other
(50 ) (59 ) (52 )
(44 ) (68 ) (38 )
11,182 2,278 10,570
1,965 10,341 2,039 Corporate & other
- (181
) - (168 ) - (169 ) Interest income(1)
- 4 - 6
- 7 Interest expense(1)
- (92 ) - (93 ) - (76
) Charges & credits
- 664
- (92 ) - (22 )
$ 11,182 $ 2,673 $ 10,570
$ 1,618 $ 10,341 $ 1,779
Geographic Areas (Stated in millions)
Three Months
Ended Jun. 30, 2013 Mar. 31, 2013 Jun. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 3,357 $
662 $ 3,290 $ 627 $ 3,376 $ 693 Latin America
1,913
394 1,904 371 1,857 354 Europe/CIS/Africa
3,125
643 2,851 508 2,924 592 Middle East & Asia
2,667
655 2,406 548 2,091 445 Eliminations & other
120 (76 ) 119
(89 ) 93 (45 )
11,182
2,278 10,570 1,965 10,341 2,039 Corporate & other
- (181 ) - (168 ) - (169 ) Interest income(1)
- 4 - 6 - 7 Interest expense(1)
- (92
) - (93 ) - (76 ) Charges & credits
-
664 - (92 )
- (22 )
$ 11,182 $
2,673 $ 10,570 $ 1,618 $ 10,341
$ 1,779
(1) Excludes interest included in the Product Groups and
Geographic Areas Results.
Product
Groups (Stated in millions)
Six Months Ended Jun. 30,
2013 Jun. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 5,764
$ 1,633 $ 5,231 $ 1,384 Drilling
8,405
1,534 7,737 1,374 Production
7,684 1,181 7,241
1,209 Eliminations & other
(101 )
(105 ) (59 ) (45 )
21,752
4,243 20,150 3,922 Corporate & other
-
(348 ) - (339 ) Interest income(1)
- 9
- 16 Interest expense(1)
- (185 ) - (156 )
Charges & credits
- 572
- (37 )
$ 21,752
$ 4,291 $ 20,150 $ 3,406
Geographic Areas (Stated in millions)
Six Months
Ended Jun. 30, 2013 Jun. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 6,647 $
1,289 $ 6,809 $ 1,470 Latin America
3,817 765
3,623 676 Europe/CIS/Africa
5,976 1,151 5,501 1,020
Middle East & Asia
5,073 1,203 4,046 861
Eliminations & other
239
(165 ) 171 (105 )
21,752
4,243 20,150 3,922 Corporate & other
-
(348 ) - (339 ) Interest income(1)
- 9
- 16 Interest expense(1)
- (185 ) - (156 )
Charges & credits
- 572
- (37 )
$ 21,752
$ 4,291 $ 20,150 $ 3,406
(1) Excludes interest included in the Product Groups and
Geographic Areas Results.
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 120,000 people representing over 140 nationalities
and working in more than 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 from continuing operations of
$41.73 billion in 2012. 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. The
EcoScope and NeoScope services use technology that resulted from
this collaboration.
‡Alternate Path is a Mark of ExxonMobil Corp and the technology
is licensed exclusively to Schlumberger.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, July 19, 2013. 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 +1-612-288-0340 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 19, 2013 by dialing +1-800-475-6701
within North America, or +1-320-365-3844 outside of North America,
and providing the access code 291800.
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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