Schlumberger Limited
Schlumberger Limited (NYSE:SLB) today reported third-quarter
2013 revenue of $11.61 billion versus $11.18 billion in the second
quarter of 2013, and $10.50 billion in the third quarter of
2012.
Income from continuing operations attributable to Schlumberger,
excluding charges and credits, was $1.71 billion—an increase of 12%
sequentially and an increase of 24% year-on-year. Diluted
earnings-per-share from continuing operations, excluding charges
and credits, was $1.29 versus $1.15 in the previous quarter, and
$1.04 in the third quarter of 2012.
Schlumberger recorded net credits of $0.51 per share in the
second quarter of 2013 and charges of $0.02 per share in the third
quarter of 2012. Schlumberger did not record any charges or credits
in the third quarter of 2013.
Oilfield Services revenue of $11.61 billion was up 4%
sequentially and increased 11% year-on-year. Oilfield Services
pretax operating income of $2.50 billion was up 10% sequentially
and increased 20% year-on-year.
Schlumberger CEO Paal Kibsgaard commented: “Schlumberger
third-quarter results reached new highs in both revenue and pretax
operating income driven by consistent performance across all
geographic Areas through strong execution based on integration,
quality and efficiency. The international business grew further,
with leading margins expanding in spite of some operational delays.
Performance in North America was particularly strong despite
continued pricing weakness in the land market. Operating margins
exceeded 20% in all Areas and expanded in all Product Groups.
Results were led by North America with a new high in overall
revenue, supported by solid offshore activity and the seasonal
rebound of activity in Western Canada. US land operations showed
impressive resilience through improved efficiency, new technology
penetration and market share gains in a highly competitive market
with largely constant rig count. International results were led by
the Middle East & Asia with growth in key markets in Saudi
Arabia and Iraq, while offshore activity strengthened in Asia, and
land drilling and stimulation activity improved in China.
Europe/CIS/Africa saw strong summer activity in Russia and Central
Asia and a seasonal increase in WesternGeco marine activity in the
Area. Latin America activity was driven by Integrated Project
Management and Schlumberger Production Management operations.
The global economic outlook remains largely unchanged as
relatively encouraging news among OECD countries and in China has
offset lower growth expectations in some of the major emerging
economies. In the US, the underlying trends are positive and the
level of macroeconomic uncertainty was reduced in the near term
following the temporary resolution of the fiscal
debate. Demand for oil in 2013 has again been revised upward
and current estimates for 2014 point to even stronger growth in
demand. Overall, the market continues to support Brent prices at
current levels while international natural gas prices remain
steady. The upward E&P spend revision made in June continues to
be confirmed by rig count improvement and increased customer
activity. Within this landscape, we remain positive on the outlook
for the industry.
Last month I shared a view of the internal transformation
initiatives that we are pursuing together with the potential they
hold in terms of enhanced financial performance. We believe that
the size of our operations and the breadth of our offering
represent significant competitive advantages, and our entire
organization is now focusing on executing these initiatives in
parallel with maintaining just as clear a focus on our operational
execution through integration, quality and efficiency.”
Other Event
- During the quarter, Schlumberger
repurchased 10.1 million shares of its common stock at an average
price of $82.61 for a total purchase price of $833.3 million.
Oilfield Services
Third-quarter revenue of $11.61 billion was up 4% sequentially
and increased 11% year-on-year. International Area revenue
of $7.91 billion grew $209 million, or 3% sequentially, while
North America Area revenue of $3.60 billion increased $245
million, or 7% sequentially. Third-quarter revenue set a new high
for both North America and International Areas.
Sequentially by segment, Reservoir Characterization Group
revenue of $3.23 billion grew 7% while Drilling Group
revenue of $4.41 billion increased 3%. These increases were due to
strong exploration and drilling activity, both offshore and in key
international land markets that benefited Wireline, Testing
Services, Drilling & Measurements and M-I SWACO Technologies.
WesternGeco revenue also increased from improved global marine
vessel activity leading to high asset utilization during the
quarter. Production Group revenue of $4.02 billion grew 3%
despite the transfer of the Schlumberger subsea business at the end
of the second quarter to OneSubsea™, a Cameron/Schlumberger joint
venture. Excluding this effect, the Production Group grew 6%
sequentially mainly from strong results in Well Services,
Completions & Artificial Lift Technologies and Schlumberger
Production Management (SPM) projects. The seasonal rebound in
Western Canada following the spring break-up accounted for the
majority of the sequential increase in Well Services activity with
a significant amount also coming from improved efficiency in US
land hydraulic fracturing services that enabled deployment of four
additional fleets from existing equipment despite continued pricing
weakness.
Sequentially by Area, North America led the increase with
revenue of $3.60 billion growing 7%. The performance in North
America was driven with the offshore business setting a new high
for quarterly revenue, Western Canada land rebounding from the
seasonal spring break-up in the previous quarter, and US land being
up from improved efficiency, growing new technology penetration,
and market share gains. Middle East & Asia revenue of
$2.80 billion increased 5%, mainly from continued growth across a
diversified portfolio of projects and activities in Saudi Arabia
and Iraq, while high growth rates were posted in the United Arab
Emirates and Qatar. Strong WesternGeco marine vessel activity in
the Brunei, Malaysia & Philippines and Indonesia GeoMarkets,
and increased land drilling and stimulation activities in China
also contributed to the strong results.
Europe/CIS/Africa revenue of $3.18 billion increased 2%
from high WesternGeco marine vessel activity in the North Sea and
Equatorial Guinea and peak summer drilling and exploration activity
in Russia and Central Asia, while Angola and North Africa activity
continued to be subdued by project delays. The Area revenue for the
third quarter reflects the absence of the results of the subsea
business that was transferred to the OneSubsea joint venture in the
second quarter of 2013. Excluding the effect of this business
transfer, the revenue for the Area grew 5% sequentially. Latin
America revenue of $1.93 billion grew 1% with strong
sequential growth posted in Venezuela and Argentina. Higher
incremental production results from the SPM project in Ecuador also
contributed to growth. These increases, however, were partially
offset by a decrease in Brazil due to lower rig count, both on land
and in deepwater.
Third-quarter pretax operating income of $2.50 billion was up
10% sequentially, and increased 20% year-on-year.
International pretax operating income of $1.84 billion
increased 9% sequentially, while North America pretax
operating income of $730 million increased 10% sequentially.
Third-quarter pretax operating income also set a new high, driven
by the International Areas.
Sequentially, pretax operating margin of 21.5% increased 114
basis points (bps), as International pretax operating margin
expanded 134 bps to 23.3%. Middle East & Asia posted a
151-bps sequential margin improvement to reach 26.1%,
Europe/CIS/Africa increased by 189 bps to 22.5%, while
Latin America was steady at 20.6%. The expansion in
International margins was due to strong results in Russia
& Central Asia resulting from deployment of higher-margin
technologies during the peak summer drilling and exploration
campaigns. Increased high-margin wireline and seismic activities
also helped boost international margins further in Middle East
& Asia as exploration work increased. North America
pretax operating margin increased 57 bps sequentially to 20.3% as
Western Canada recovered following the previous quarter’s seasonal
spring break-up. US land margin continued to expand on improving
efficiency, better utilization, and lower raw material costs in
pressure pumping stimulation services. North America offshore
operating margin continued to grow on increasing activity and
technology deployment but overall results decreased sequentially
due to lower multiclient sales during the quarter.
Sequentially by segment, Reservoir Characterization Group
pretax operating margin expanded 27 bps to 30.4% due to strong
exploration activities that benefited Wireline and Testing Services
Technologies. The pretax operating margin of the Drilling
Group increased 154 bps to 20.3% through improved Drilling
& Measurements operational performance and increased
profitability on Integrated Project Management (IPM) projects in
the Latin America and Middle East & Asia Areas. Production
Group pretax operating margin increased 165 bps to 17.6% on
improved profitability in Well Services as Western Canada recovered
from the previous quarter’s spring break-up and as US land margin
continued to expand on improving efficiency, better utilization,
and lower raw material costs. SPM projects in Latin America and
Asia also continued to be accretive to the group’s expanding
margins.
A number of technology innovation and integration highlights
contributed to the third-quarter results.
In Turkmenistan, Schlumberger has been awarded a contract by
Turkmengeology State Corporation for Drilling Group technologies
and Well Services cementing services to accelerate the development
of Galkynysh, one of the country’s largest gas fields. The contract
includes Schlumberger drilling motors, Smith drill bits, M-I SWACO
drilling fluids and Well Services cementing services for a
development well campaign, with the objective of increasing
operational efficiency and meeting aggressive gas production
goals.
In South Texas, Schlumberger technologies were deployed for the
Eagle Ford Completions Optimization Consortium of BHP Billiton,
Lewis Energy, Marathon Oil and Swift Energy in several horizontal
wells in the unconventional Eagle Ford formation. Openhole data
were acquired with SureLog* Thrubit wireline triple-combo and
Wireline Sonic Scanner* acoustic scanning services conveyed by
TuffTRAC* technology, and used to generate optimized completions
designs with Well Services Mangrove* stimulation design software.
The production from each well was evaluated using data from the
Wireline Flow Scanner* well production logging system conveyed by
MaxTRAC* downhole wireline tractor technology, and analysis was
performed using Schlumberger Information Solutions (SIS) Petrel*
E&P software and Techlog* wellbore software platforms to
evaluate the impact of reservoir and completion quality. As a
result, Schlumberger technologies and workflows enabled the
optimized completions to increase the number of perforation
clusters contributing to production by 28%, which elevated all the
Consortium wells to the top quartile in performance compared to
their peers.
Statoil has awarded Schlumberger three multiyear contracts for
the provision of drilling and completion fluids, offshore waste
management and cementing services in the Norwegian continental
shelf. The three-year contracts, with options for three times two
additional years, cover drilling and completion fluids for multiple
drilling rigs and cementing services on up to nine platforms and
six deepwater rigs. The award was based on commercial terms, QHSE,
and the Schlumberger proven track record in product and service
quality, reliable execution, and technology deployment.
Reservoir Characterization Group
Third-quarter revenue of $3.23 billion increased 7% sequentially
and grew 14% year-on-year. Pretax operating income of $983 million
was 8% higher sequentially, and increased 23% year-on-year.
Sequentially, the increase in revenue was driven primarily by
higher use of Wireline and Testing Services technologies as a
result of strong exploration activity in the Middle East & Asia
and Europe/CIS/Africa Areas. This was particularly marked in Russia
& Central Asia where drilling & exploration activity
increased during the summer. WesternGeco revenue also increased
sequentially from improved global marine vessel activity leading to
high asset utilization during the quarter, although the effect of
this was partially offset by sequentially lower multiclient
sales.
Pretax operating margin of 30.4% increased 27 bps sequentially
from robust higher-margin exploration activity for Wireline in
Russia and the Middle East & Asia Area, while Testing Services
across all Areas also contributed to the group’s expanding
margin.
A number of technology highlights across the Reservoir
Characterization Group contributed to the third-quarter
results.
In Kazakhstan, a combination of Wireline technologies was
deployed for Zhaikmunai LLP to acquire production logging data in
two horizontal production wells, one highly deviated production
well, and one horizontal injector well located on Chinarevskoe
field. Wireline Flow Scanner horizontal and deviated well
production logging and PS Platform* production services
technologies were used for logging data acquisition in the
production and injector wells, respectively. The tool strings were
conveyed efficiently with the MaxTRAC downhole wireline tractor
system that allows data acquisition while tractoring down. The flow
profile in the producing wells was successfully quantified. Results
of the production logging data analysis were used for time-lapse
production monitoring, updating the dynamic reservoir model, and
locating the source of water production in some wells.
In Libya, Wireline MDT* modular formation dynamics tester and
Quicksilver Probe* technologies in combination with the InSitu
Fluid Analyzer* system were introduced for Akakus Oil Operations to
obtain high-quality water samples from a well drilled with
water-based mud. In order to accurately estimate the resistivity
and ionic concentrations of the formation water, it was essential
to acquire a water sample free of contamination from water-based
mud filtrate. The Quicksilver Probe technology was effective in
separating filtrate from formation water, while the InSitu Fluid
Analyzer downhole sensors enabled real-time measurement of
contamination levels prior to taking samples. As a result, two
sample chambers were filled with pure formation water, free of any
filtrate contamination, enabling the operator to carry out the
analysis required to optimize the field’s water injection
process.
In West Texas, Schlumberger PetroTechnical Services developed a
mechanical earth model for ExL Petroleum, LP to mitigate risk and
reduce horizontal well construction costs in a field known for its
challenging drilling conditions. The formation evaluation used
Wireline ECS* elemental capture spectroscopy and Sonic Scanner
acoustic scanning technologies, which were conveyed in the
horizontal section using the TuffTRAC cased hole services tractor.
The combination of these technologies and the resulting workflow
allowed the operator to reposition the wells’ lateral sections and
eliminate an intermediate casing string for a 10% completions cost
savings of $200,000 per well.
Woodside has awarded WesternGeco the acquisition of the Fortuna
4,000-km2 3D seismic survey on the offshore North West Shelf of
Australia using IsoMetrix* marine isometric seismic technology.
Scheduled to begin in December 2013, this will be the first survey
in Australia using IsoMetrix technology, and will provide the
foundation for future exploration and appraisal programs for
Woodside in the region. With this contract, IsoMetrix technology
will have been deployed offshore across four continents in
2013.
WesternGeco has been awarded a major contract by Abu Dhabi
Marine Operating Company (ADMA-OPCO) for an 800-km2 Ocean-Bottom
Cable (OBC) survey on the Umm Shaif field offshore Abu Dhabi, using
Q-Seabed* technology and the SimSource* simultaneous seismic source
acquisition technique. Two source vessels will be used for the
survey, with the goal of providing the customer with a current,
state-of-the-art dataset to enable decisions regarding field
development and secondary recovery.
Onshore Brazil, Agencia Nacional de Petroleo (ANP) has awarded
WesternGeco a contract for the processing and interpretation of a
2D electromagnetics survey in the Parecis basin, one of the
frontier basins being evaluated by the ANP to define future bidding
blocks for exploration and production. The project will be managed
by the WesternGeco Integrated Electromagnetics Center of Excellence
and includes survey design, data acquisition, infield processing,
and advanced interpretation.
In Mexico, Pemex has awarded WesternGeco GeoSolutions a
multiyear contract in the dedicated processing center in Poza Rica,
enabling access to leading WesternGeco technologies including full
waveform inversion, reverse-time migration, seismic-guided
drilling, and rock physics-guided migration. These state-of-the-art
technologies will support Pemex with an unprecedented level of
integrated solutions for enhanced imaging, reservoir
characterization, and drilling support.
In Angola, Testing Services deployed the Quartet* downhole
reservoir testing system with Muzic* downhole wireless telemetry
for Maersk Oil in the deepwater Block 16. The services forming part
of the Quartet system included the CERTIS* high-integrity
reservoir test isolation system, IRDV* intelligent remote dual
valve technology, SCAR* inline reservoir fluid sampling, and
Signature* high-resolution quartz gauges. The single-trip Quartet
system’s flexible design eliminated the need for multiple runs, and
the wireless transmission and monitoring of downhole pressure
facilitated real-time transient analysis, which optimized
decision-making and enabled the operator to save four days of
costly rig time.
Tanzania Petroleum Development Corporation (TPDC) has awarded
SIS a multiyear software licensing agreement for their oil and gas
exploration activities. The agreement includes the Petrel E&P
software platform to better understand the country’s unexplored
subsurface potential and accurately select the right plays that
enhance exploration success while reducing operational risks and
uncertainties. The agreement also includes Techlog wellbore
software for assurance that wells to be drilled intercept the
targeted sweet spots and collect all the well data required to
quantify reservoir potential. The strategic decision to adopt the
Schlumberger technology platforms supports TPDC’s commitment to
refocus on core oil and gas activities and fast track their
evolution as an independent operating company.
In Brazil, Perenco has awarded Schlumberger PetroTechnical
Services an integrated exploration study in the deepwater blocks
39, 40, and 41 of the Espirito Santo basin. The comprehensive study
includes seismic processing, seismic inversion, multiclient data, a
mechanical earth model and 3D pore pressure predictions. The
results of the study will support plans for Perenco’s exploratory
drilling campaign in 2013 where deepwater wells will target
post-salt reservoirs by drilling through sedimentary sequences with
uncertainties and complexities related to challenging subsalt and
salt tectonics.
Drilling Group
Third-quarter revenue of $4.41 billion was up 3% sequentially
and grew 9% year-on-year. Pretax operating income of $894 million
was 11% higher sequentially, and increased 23% year-on-year.
Sequentially, revenue increased primarily on strong M-I SWACO
performance from the rebound of Western Canada land activity,
increased deepwater work in North America, and increased activity
in Mexico and Russia. Strong Drilling & Measurements activity
in the Middle East & Asia Area, in Russia, and offshore North
America also contributed to growth.
Sequentially, pretax operating margin grew 154 bps to 20.3% from
improved profitability in Drilling & Measurements from stronger
activity and a more favorable geographical and technology mix.
Improved profitability on IPM projects in the Middle East &
Asia and Latin America Areas continued to contribute to the group’s
expanding margins.
A number of Drilling Group technologies contributed to the
third-quarter results.
In Kurdistan, Drilling & Measurements deployed, for the
first time, the PowerDrive Xceed* rotary steerable system for HKN,
Inc. on a deviated well in the Mangesh field. The PowerDrive Xceed
technology helped improve drilling performance in the 17 1/2-in
deviated section by 65%, drilled the section five days ahead of
plan, and kicked off the well successfully from vertical to a 55°
inclination at shallow depth, meeting all the directional well plan
objectives.
In China, Drilling & Measurements established a new drilling
record in the Bohai Bay for CNOOC while drilling eight directional
wells in the Qikou field. In the 8-in well sections, PowerDrive
vorteX* powered rotary steerable technology helped increase the
rate of penetration by 114% compared to previous conventional
drilling systems. As a result of deploying Drilling &
Measurements technologies, the well construction time for wells
with total depths between 3,500 m and 4,000 m was significantly
reduced, enabling the operator to save approximately 26 days of rig
time compared to the well construction plan.
In Algeria, M-I SWACO WELL COMMANDER* ball-activated drilling
valve technology was deployed in a Schlumberger integrated bottom
hole assembly for Sonatrach to drill a 6-in reservoir section with
expected fluid losses. The WELL COMMANDER technology allowed the
controlled pumping of numerous lost circulation material pills
through the drill string, with reduced risks of plugging the
directional and measurement-while-drilling tools. As a result, the
total depth for the well was reached according to plan, with zero
downtime.
Offshore Ivory Coast, Drilling & Measurements deployed a
formation evaluation technology suite for Foxtrot International
which featured the acquisition of a high-quality set of nuclear
measurements without the need for chemical sources. The combination
of NeoScope*† sourceless formation evaluation while drilling,
proVISION* nuclear magnetic resonance, StethoScope* formation
pressure-while-drilling, and SonicVISION* sonic-while-drilling
technologies, a first worldwide, helped the customer identify
reservoir fluid contents in a complex reservoir and enabled the
design of a horizontal drain.
In Russia, Schlumberger Drilling Group Technologies and
Petrotechnical Engineering Center expertise helped ERIELL
successfully drill the first horizontal well through the complex
Achimov formation in the Urengoyskoe field in northwest Siberia. A
geomechanical model was developed to overcome the main challenges
of drilling through the Achimov formation with its high
overpressure, narrow equivalent circulating density window, and
unstable formations lying between the productive layers. Drilling
& Measurements SonicScope* multipole sonic-while-drilling
technology was used to update the geomechanical model in real time
to prevent costly wellbore stability issues. In addition, the
combination of PowerDrive X6* rotary steerable technology with a
customized Smith polycrystalline diamond compact (PDC) bit and the
M-I SWACO Megadril* drilling fluid system drilled the well 15 days
ahead of plan, which led to a significant cost saving for the
operator.
Offshore Mexico, integration of Drilling & Measurement
technologies with Schlumberger PetroTechnical Services helped Pemex
drill a highly challenging section in an exploration well in the
Chac field. The use of SonicScope multipole sonic-while-drilling
technology and real-time geomechanics enabled accurate prediction
of formation pore pressures so that mud weight could be maintained
below the forecasted value. This operation marked the first time
Pemex has used logging-while-drilling and sonic-while-drilling
technologies for shallow-water exploration wells and, as a result,
the customer saved one casing run by drilling 300 m deeper than
originally planned.
In Russia, Schlumberger was earlier this year awarded a contract
by GazpromNeft Orenburg, one of the largest operators in the
country, for the supply and service of Smith drill bits on the
Kapitonovskoe, Tsarichanskoe and Orenburgskoe fields in the
Orenburg region. This contract award was based on the broad
experience and solid track record achieved by Smith drill bits with
some of the large operators in the region.
In Canada, Smith drillbit technology helped Sinopec Daylight
Energy drill a horizontal well in the highly abrasive Rock Creek
formation in central Alberta. A 6 ¼-in customized Smith PDC bit
with ONYX 360* cutter technology enabled the operator to improve
efficiency by drilling longer well sections and by reducing the
number of bit trips. In one application, fully rotating ONYX 360
cutters contributed to the drilling of a continuous well section
that was 80% longer than the average of three previous wells
drilled using conventional PDC bits in the same type of formation.
In the well’s horizontal section, the ONYX 360 cutter technology
also enabled a single bit run to be drilled 18% faster than
subsequent runs in the same horizontal section using conventional
drill bits.
In US land, Schlumberger deployed Stinger* conical diamond
element technology for Apache Corporation in over 10 wells in the
Anadarko Basin. In the 8 3/4-in vertical section of these wells,
Smith customized PDC bits with Stinger technology increased the
rate of penetration over 59%, and drilled the sections 36% faster
compared to offset wells. This performance led to significant
drilling cost savings for the customer.
In the US Gulf of Mexico, a Drilling Tools & Remedial
Services Rhino RHE* dual-reamer system was deployed for Noble
Energy in a deepwater exploration well in the Troubadour prospect.
The Rhino RHE technology eliminated the need to conduct a dedicated
cleanout operation which led to a 30-hour reduction in drilling
time and a cost saving for the operator of approximately $1.3
million.
Production Group
Third-quarter revenue of $4.02 billion increased 3%
sequentially, and grew 10% year-on-year. Pretax operating income of
$707 million was 13% higher sequentially and increased 32%
year-on-year.
The group’s revenue increased 3% despite the transfer of the
subsea business to the OneSubsea joint venture. Excluding the
effect of the transfer of this business, the Group grew 6% mainly
from strong results in Well Services, Completions, Artificial Lift
and SPM. The rebound from the seasonal spring break-up in Western
Canada accounted for the majority of the sequential increase in
Well Services while a significant proportion came through improved
efficiency in the US land hydraulic fracturing market with the
deployment of additional fleets and crews from existing assets
despite continued pricing weakness. Strong sales of Completions and
Artificial Lift products in the Latin America and Middle East &
Asia Areas also contributed to growth.
Pretax operating margin of 17.6% increased 165 bps sequentially
on improved profitability in Well Services as Western Canada
recovered from the previous quarter’s seasonal spring break-up and
as US land margin continued to expand on improving efficiency,
better utilization, and lower raw material costs. SPM projects in
Latin America and Asia also continued to be accretive to the
group’s expanding margins.
Highlights during the quarter included successes for a number of
Production Group technologies.
In Russia, PetroStim, a Schlumberger joint venture, conducted
its first fracturing treatment in the Domanic shale formation of
DirectNeft’s Kashaev block in the Orenburg region. The exploration
well was stimulated with conventional crosslinked fluid with
reduced polymer loading and intermediate-strength proppant. The job
was executed as per plan, and the initial production test showed
significant potential.
In North Dakota, a combination of Schlumberger technologies was
used for Whiting Petroleum to optimize the completion design on
wells in the Bakken shale play. An extensive set of measurements
was taken from a neighboring well, including Wireline Sonic Scanner
acoustic scanning, ECS elemental capture spectroscopy, CMR-Plus*
magnetic resonance, and Rt Scanner* triaxial induction logging
data. These datasets were used in a model which allowed Well
Services engineers to recommend improvements to the fracturing
fluid system, stage count, pumping schedule, and proppant type. The
wells that underwent this optimized completion design are currently
performing in the top quartile for the particular Whiting Petroleum
areas studied.
HiWAY* hydraulic fracturing technology continues to gain
momentum and add value for customers worldwide. Since its
commercialization, Schlumberger Well Services has used the HiWAY
technique in over 20,000 fracturing treatments in 19
countries. At the end of the third quarter, the number of
HiWAY fracturing treatments worldwide had already exceeded the
total number in 2012 by over 21%. The key benefits leading the
expansion of HiWAY technology include significant production gains
from both oil- and gas-bearing reservoirs, savings associated with
reduced water and proppant use, elimination of premature treatment
termination, and new viability of marginal or mature targets not
possible with conventional fracturing treatments.
In Argentina, Well Services Mangrove reservoir-centric
stimulation design software enabled Panamerican Energy to optimize
multistage completions on two exploratory wells in the Lindero
Atravesado field in the Neuquén basin. By using an integrated
workflow including the selection of payzones, the application of
specific petrophysics for tight gas formations, and a methodology
to complete the zones efficiently based on an anisotropic model and
the Mangrove fracturing simulator, the best completion approach was
adopted. Following successful completion of the two wells, the
results enabled Panamerican Energy to secure the required budget
for starting a development phase in the area.
In Egypt, Schlumberger Well Intervention performed a workover
operation for PHPC-BP to restore productivity in the Ha’py 10
subsea gas well. ACTive* family live downhole coiled tubing
technology enabled the controlled placement of the treatment fluid
in the well’s upper zone, consisting of two producing intervals.
ACTive distributed temperature sensing, acquired while the well was
flowing, delivered a quantitative production log for the producing
zone and confirmed the contribution from both intervals. The
combination of Schlumberger technologies delivered the real-time
data that enabled the operator to make timely decisions and reduce
operational risk. As a result of this intervention, the upper
zone’s productivity index was increased more than threefold, and
the well’s overall production was restored.
In Kazakhstan, Schlumberger Well Intervention and AMS Co., a
service division of CNPC, performed their first joint operation
consisting of a complex carbonate stimulation treatment for CNPC in
an oil-producing well in the Kenkiyak field. Schlumberger provided
the technical design, stimulation fluids and well site job
supervision. The stimulation treatment was completed as per design
and the well was returned to a production level which exceeded the
customer’s expectations.
Offshore Mexico, Well Intervention deployed combined ACTive
profiling in-well live performance and Jet Blaster* jetting scale
removal technologies for the first time in the matrix stimulation
of a high-temperature well in the Taratunich field for Pemex. Data
interpretation from the ACTive distributed temperature sensing
(DTS) measurements enabled Pemex to optimize the stimulation
treatment in a carbonate formation with highly contrasted
permeability profiles.
In Oman, Schlumberger Completions has been awarded a $30-million
contract by PDO for the provision of gaslift and completion
products and associated services. The five-year contract, with an
option for a two-year extension, was granted based on a strong
technical submission and competitive commercial offering while
maximizing national Omani content and in-country value that
included setting up infrastructure, developing nationals, and
creating local employment.
In Norway, Schlumberger Completions has been awarded a
four-year contract by Marathon Oil for the lower completions in
their upcoming developments on the continental shelf. Key to the
award was the combination of ResCheck* technology with ResFlow*
inflow control devices and LineSlot* single wire-wrapped sand
screen technologies that enabled efficient standalone screen
installation in long, highly deviated wells, resulting in
substantial rig-time savings.
Onshore India, Schlumberger Artificial Lift has been awarded an
electric submersible pump (ESP) contract worth $15 million by Cairn
India Limited. The three-year sales and services contract covers
the supply of ESPs to lift produced oil and injection water on 63
wells in the Mangala, Aishwarya and Thumbli fields. This is the
first ESP contract awarded to Schlumberger in India by this
customer, and the offering includes technologies such as new
pump-stage designs and low-line harmonic variable speed drives.
In Malaysia, Schlumberger has been awarded a five-year contract
for the supply of cementing services for all six production sharing
contract (PSC) operators who participated in the joint
Pan-Malaysian Cementing Tender, including Petronas Carigali Sdn.
Bhd. (PCSB), Murphy Sarawak Oil Co., Ltd. and Murphy Sabah Oil Co.,
Ltd. The contract includes the provision of Well Services
DeepCRETE* deepwater cementing solution, FUTUR* self-healing cement
system, EverCRETE* CO2-resistant cement system, Losseal* reinforced
composite mat pills, and FlexSTONE* advanced flexible cement
technology. The contract scope covers conventional and deepwater
wells.
Financial Tables
Condensed Consolidated Statement of
Income (Stated in millions, except per share amounts)
Third Quarter Nine Months Periods Ended September 30
2013 2012
2013 2012
Revenue
$ 11,608 $ 10,498
$ 33,360 $
30,648 Interest and other income, net (1)
43 44
105
137 Gain on formation of OneSubsea(2)
- -
1,028 -
Expenses Cost of revenue
8,926 8,237
26,047 24,124
Research & engineering
286 291
870 849 General
& administrative
110 95
305 294 Merger &
integration(2)
- 32
- 68 Impairment & other(2)
- -
456 - Interest
98
89
294 246 Income
before taxes
2,231 1,798
6,521 5,204 Taxes on
income(2)
506 436
1,361 1,268 Income from continuing
operations
1,725 1,362
5,160 3,936 Income (loss) from
discontinued operations
- 65
(69 ) 211 Net income
1,725 1,427
5,091 4,147 Net income attributable to
noncontrolling interests
10 3
23 20 Net income
attributable to Schlumberger
$ 1,715 $
1,424
$ 5,068 $ 4,127
Schlumberger amounts attributable to: Income from continuing
operations(2)
$ 1,715 $ 1,359
$ 5,137 $
3,916 Income (loss) from discontinued operations
- 65
(69 )
211 Net income
$ 1,715 $ 1,424
$ 5,068 $ 4,127 Diluted
earnings per share of Schlumberger Income from continuing
operations(2)
$ 1.29 $ 1.02
$ 3.84 $
2.92 Income (loss) from discontinued operations
- 0.05
(0.05 )
0.16 Net income
$ 1.29 $
1.07
$ 3.79 $ 3.08
Average shares outstanding
1,322 1,328
1,326 1,331
Average shares outstanding assuming dilution
1,333 1,336
1,336
1,340 Depreciation & amortization included
in expenses(3)
$ 931 $ 864
$ 2,737 $ 2,570
1) Includes interest income of:
Third quarter 2013 - $9 million (2012 - $8
million)
Nine months 2013 - $20 million (2012 - $23
million)
2) See pages 13 for details of charges and
credits.
3) Including multiclient seismic data
cost.
Condensed Consolidated Balance Sheet
(Stated in millions)
Sept. 30, Dec. 31, Assets
2013 2012 Current Assets Cash and
short-term investments
$ 6,435 $ 6,274 Receivables
12,057 11,351 Other current assets
6,601 6,531
25,093 24,156 Fixed
income investments, held to maturity
363 245 Fixed assets
14,828 14,780 Multiclient seismic data
650 518
Goodwill
14,623 14,585 Other intangible assets
4,732
4,802 Other assets
4,834
2,461
$ 65,123 $ 61,547
Liabilities and Equity
Current Liabilities Accounts payable and accrued liabilities
$ 8,366 $ 8,453 Estimated liability for taxes on
income
1,471 1,426 Short-term borrowings and current portion
of long-term debt
2,498 2,121 Dividend payable
418 368
12,753 12,368 Long-term
debt
9,916 9,509 Postretirement benefits
1,833 2,169
Deferred taxes
1,479 1,493 Other liabilities
1,111 1,150
27,092 26,689 Equity
38,031 34,858
$ 65,123 $ 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) Nine Months
2013 Net Debt, January 1, 2013
$
(5,111 ) Income from continuing operations
5,137 Depreciation and amortization
2,737 Gain on
formation of OneSubsea
(1,028 ) Pension and other
postretirement benefits expense
388 Stock-based compensation
expense
255 Pension and other postretirement benefits
funding
(468 ) Increase in working capital
(1,182 ) Capital expenditures
(2,753 )
Multiclient seismic data capitalized
(300 ) Dividends
paid
(1,196 ) Proceeds from employee stock plans
415 Stock repurchase program
(1,526 ) Payment
for OneSubsea transaction
(600 ) Other business
acquisitions, net of cash and debt acquired
(544 )
Other
203 Currency effect on net debt
(43
) Net Debt, September 30, 2013
$ (5,616
) Components of Net Debt
Sept. 30,2013
Dec. 31,2012
Cash and short-term investments
$ 6,435 $ 6,274 Fixed
income investments, held to maturity
363 245 Short-term
borrowings and current portion of long-term debt
(2,498
) (2,121 ) Long-term debt
(9,916 )
(9,509 )
$ (5,616 ) $ (5,111 )
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
Third-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)
Third Quarter 2012 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 1,798 $ 436 $ 3 $ 1,359 $ 1.02 Merger and integration costs
32 4 - 28
0.02 Merger & integration
Schlumberger income from continuing operations,
excluding charges & credits
$ 1,830 $ 440 $ 3 $ 1,387
$ 1.04
Nine Months 2013 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 6,521 $ 1,361 $ 23 $ 5,137 $ 3.84 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
364 19 -
345 0.26 Impairment & other
Schlumberger income from continuing operations,
excluding charges & credits
$ 5,949 $ 1,380 $ 23 $ 4,546
$ 3.40
Nine Months 2012 Pretax
Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification Schlumberger income from continuing
operations,
as reported
$ 5,204 $ 1,268 $ 20 $ 3,916 $ 2.92 Merger and integration costs
68 6 - 62
0.05 Merger & integration
Schlumberger income from continuing operations,
excluding charges & credits
$ 5,272 $ 1,274 $ 20 $ 3,978
$ 2.97
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 364
19 - 345
0.26 Impairment & other Schlumberger income from
continuing operations,
excluding charges & credits
$ 2,009 $ 468 $ 5 $ 1,536
$ 1.15 There were no charges or credits in the
third quarter of 2013.
Product Groups (Stated in millions)
Three Months
Ended Sept. 30, 2013 Jun. 30, 2013 Sept. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 3,232
$ 983 $ 3,014 $ 908 $ 2,835 $ 799 Drilling
4,415 894 4,292 804 4,035 727 Production
4,024
707 3,926 625 3,655 537 Eliminations & other
(63 ) (88 ) (50 )
(59 ) (27 ) 21
11,608 2,496
11,182 2,278 10,498 2,084 Corporate & other
-
(179 ) - (181 ) - (177 ) Interest income(1)
-
6 - 4 - 8 Interest expense(1)
- (92 ) -
(92 ) - (85 ) Charges & credits
-
- - 664 -
(32 )
$ 11,608 $ 2,231
$ 11,182 $ 2,673 $ 10,498 $ 1,798
Geographic Areas (Stated in millions)
Three
Months Ended Sept. 30, 2013 Jun. 30, 2013 Sept. 30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 3,602 $
730 $ 3,357 $ 662 $ 3,303 $ 612 Latin America
1,934
399 1,913 394 1,860 333 Europe/CIS/Africa
3,178
714 3,125 643 2,984 645 Middle East & Asia
2,801
730 2,667 655 2,244 511 Eliminations & other
93 (77 ) 120
(76 ) 107 (17 )
11,608
2,496 11,182 2,278 10,498 2,084 Corporate & other
- (179 ) - (181 ) - (177 ) Interest income(1)
- 6 - 4 - 8 Interest expense(1)
- (92
) - (92 ) - (85 ) Charges & credits
-
- - 664
- (32 )
$ 11,608 $
2,231 $ 11,182 $ 2,673 $ 10,498
$ 1,798
(1) Excludes interest included in the
Product Groups and Geographic Areas Results.
Product Groups (Stated in
millions)
Nine Months Ended Sept. 30, 2013 Sept. 30,
2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$8,996
$2,616 $8,066 $2,183 Drilling
12,820 2,429
11,772 2,102 Production
11,708 1,888 10,896 1,746
Eliminations & other
(164) (193) (86) (26)
33,360 6,740 30,648 6,005 Corporate & other
- (529) - (516) Interest income(1)
- 15
- 24 Interest expense(1)
- (277) - (241) Charges
& credits
- 572 - (68)
$33,360
$6,521 $30,648 $5,204
Geographic Areas (Stated
in millions)
Nine Months Ended Sept. 30, 2013 Sept.
30, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$10,249 $2,019
$10,112 $2,082 Latin America
5,751 1,164 5,483 1,010
Europe/CIS/Africa
9,154 1,865 8,485 1,666 Middle East
& Asia
7,874 1,933 6,290 1,372 Eliminations &
other
332 (241) 278 (125)
33,360 6,740
30,648 6,005 Corporate & other
- (529) - (516)
Interest income(1)
- 15 - 24 Interest expense(1)
- (277) - (241) Charges & credits
-
572 - (68)
$33,360 $6,521 $30,648 $5,204
(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.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, October 18, 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
+1-800-230-1059 within North America, or +1-612-234-9959 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 November 18, 2013 by dialing
+1-800-475-6701 within North America, or +1-320-365-3844 outside of
North America, and providing the access code 298703.
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.
Schlumberger LimitedMalcolm Theobald – Schlumberger Limited,
Vice President of Investor RelationsJoy V. Domingo – Schlumberger
Limited, Manager of Investor RelationsOffice +1 (713)
375-3535investor-relations@slb.com
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