Schlumberger Limited
Full-Year Results
Schlumberger Limited (NYSE:SLB) today reported full-year 2013
revenue from continuing operations of $45.27 billion versus $41.73
billion in 2012.
Full-year 2013 income from continuing operations attributable to
Schlumberger, excluding charges and credits, was $6.33 billion,
representing diluted earnings-per-share of $4.75 versus $4.01 in
2012.
Fourth-Quarter Results
Fourth-quarter 2013 revenue was $11.91 billion versus $11.61
billion in the third quarter of 2013, and $11.08 billion in the
fourth quarter of 2012.
Income from continuing operations attributable to Schlumberger,
excluding charges and credits, was $1.79 billion—an increase of 4%
sequentially and an increase of 28% year-on-year. Diluted
earnings-per-share from continuing operations, excluding charges
and credits, was $1.35 versus $1.29 in the previous quarter, and
$1.04 in the fourth quarter of 2012.
Schlumberger recorded charges of $0.09 per share in the fourth
quarter of 2013 versus $0.06 per share in the fourth quarter of
2012. Schlumberger did not record any charges or credits in the
third quarter of 2013.
Oilfield Services revenue of $11.91 billion was up 3%
sequentially and increased 7% year-on-year. Oilfield Services
pretax operating income of $2.60 billion was up 4% sequentially and
increased 23% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, “We ended 2013 with
revenue of more than $45 billion, up 8%, and growing for the fourth
consecutive year. International Area revenue grew by $3.2 billion,
or 11%, from higher exploration and development activity--both
offshore and in key land markets. In North America, we demonstrated
continued resilience to the challenges of the land markets by
growing the business by close to $400 million, or 3%, aided by our
strong position in the offshore market, particularly in the US Gulf
of Mexico. Full-year pretax operating income grew 15%, with
International delivering a 24% increase and International margin
expanding by more than 200 basis points for the second consecutive
year to reach 22.2% while still posting a margin of 19.7% in North
America.
Our fourth-quarter results were driven by solid activity in key
international markets and strong year-end product, software and
multiclient seismic sales in almost all areas. Growth was strongest
internationally, where revenue set a new record high, but all Areas
recorded sequential growth underpinned by the quality and
efficiency of our execution. Overall results were, however,
impacted by the temporary shutdown of activity in South Iraq and
seasonal slowdowns in North America, the North Sea, Russia and
China.
Geographical results were led by the Middle East & Asia,
with continuing strength in the key markets of Saudi Arabia and the
United Arab Emirates as well as in exploration activity in Malaysia
and Australia. Deepwater exploration work and strong project
management activity in Argentina and Ecuador led Latin America
higher, while Europe/CIS/Africa made progress through significant
activity in Angola, Azerbaijan and Turkmenistan. In North America,
deepwater activity in the Gulf of Mexico continued to be strong,
while on land increased service intensity, improved efficiency,
market share gains, and new technology uptake was again offset by
further pricing weakness in most product lines.
Among the Technologies, year-end sales most benefited the
Production and Reservoir Characterization groups. Software and
multiclient license sales were more than sufficient to offset
seasonal effects in WesternGeco and Wireline activity as seismic
surveys and exploration drilling projects were completed in
northern regions. Underlying activity was robust for the Drilling
Group on international demand in key markets and grew in Mexico,
Saudi Arabia and Iraq for integrated project management work. New
technology sales remained strong across all groups, offering select
opportunities for higher pricing in a competitive international
market.
The overall global economic outlook continues largely unchanged,
with fundamentals continuing to improve in the U.S., and Europe
seemingly set for stronger growth. These positive effects should
overcome lower growth in some developing economies and support a
continuing rebound in the world economy. Largely as a result,
forecasts for oil demand in 2014 have been revised upwards to reach
the highest demand growth in several years. Supply is expected to
keep pace with demand, with the market, therefore, remaining well
balanced. Natural gas prices internationally should be supported by
demand in Asia and Europe. In the U.S., we see no change in
fundamentals, with any meaningful recovery in dry gas drilling
activity some way out in the future.
The quality of our results in 2013 was driven by strong new
technology sales and an unwavering focus on execution and resource
management. With E&P spending expected to grow further in 2014,
led by international activity and continuing strength in deepwater
US Gulf of Mexico, we remain positive about the year ahead on the
back of a well-balanced business portfolio, wide geographical
footprint and strong operational, organizational, and executional
capability.”
Other Events
- During the quarter, Schlumberger
repurchased 11.9 million shares of its common stock at an average
price of $89.67 per share for a total purchase price of $1.07
billion.
- On January 16, 2014, the Board of
Directors approved a 28% increase in the quarterly dividend. The
next quarterly dividend, which will increase to $0.40 per share of
outstanding common stock, is payable on April 11, 2014 to
stockholders of record on February 19, 2014.
Oilfield Services
Full-Year Results
Full-year 2013 revenue of $45.27 billion increased 8% over 2012
with the International Areas growing by 11% and the North
America Area by 3%. Revenue grew for the fourth consecutive
year setting a new record for the company.
On a segment basis, revenues from the Reservoir
Characterization and Drilling Groups increased
10% and 9%, respectively. The increase in Reservoir
Characterization revenue resulted from market share gains and
higher exploration activity in both offshore and key international
land markets that benefited Testing Services, WesternGeco, Wireline
and Schlumberger Information Solutions (SIS). Drilling Group
revenue increased from robust demand for Drilling & Measurement
services as offshore drilling activity strengthened in the US Gulf
of Mexico, Sub-Saharan Africa, Russia and in the Middle East &
Asia Area. Revenue increased also in key international land markets
in Saudi Arabia, China and Australia on higher rig count.
Production Group revenue was up 8%, mostly from Well
Intervention, Completions, Artificial Lift, Schlumberger Production
Management (SPM) and Well Services activities in the international
GeoMarkets.
By Area, International revenue of $30.93 billion
increased $3.15 billion from higher exploration and development
activity in a number of GeoMarkets—both offshore and in key land
markets. The increase was led by the Middle East & Asia
Area, which grew 23% from an expanding portfolio of projects
and activities in Saudi Arabia, Iraq, and the United Arab Emirates;
increased seismic surveys together with exploration and development
work across Asia; and sustained land and offshore drilling activity
in the Australasia and China GeoMarkets. Europe/CIS/Africa
Area increased 8%, led by the Russia and Central Asia region on
strong land activity in West Siberia and robust offshore projects
in Sakhalin. The Sub-Saharan Africa region also contributed to
growth with strong exploration and development activity. Latin
America Area was 3% higher, mainly due to solid progress on SPM
projects in Ecuador and strong Integrated Project Management (IPM)
activity in Argentina. North America Area revenue of $13.90
billion grew 3%, driven by offshore activity where revenue was up
18%, while land revenue declined 2%. The increase in offshore
revenue resulted from higher drilling and exploration activity as
the rig count grew by 12%. Land businesses continued to experience
pricing weakness in drilling, stimulation and wireline services,
although the effect of this was partially offset by increased
service intensity, improved efficiency, market share gains, and new
technology penetration.
Full-year 2013 pretax operating income of $9.34 billion
increased $1.23 billion, or 15%, as International pretax
operating income of $6.88 billion increased 24% while North
America pretax operating income of $2.7 billion was flat
year-on-year.
Pretax operating margin of 20.6% increased 119 basis points
(bps) year-on-year, as International pretax operating margin
expanded 225 bps to 22.2% while North America pretax
operating margin contracted 55 bps to 19.7%. The expansion in
International margin was due to increased high-technology
exploration, seismic and deepwater activity. Middle East & Asia
margin posted a 309 bps improvement to reach 25.0%,
Europe/CIS/Africa increased by 132 bps to 20.9%, and Latin America
grew by 214 bps to 20.5%. North America margin contraction
was due to pricing weakness on land although this was partially
offset by continued expansion of offshore margin that recorded a
five-year high. By segment, Reservoir Characterization Group
pretax operating margin expanded 228 bps to 29.8%, Drilling
Group increased by 156 bps to 19.1%, and Production
Group improved by 72 bps to 16.4%. Growth in pretax operating
margin for the Reservoir Characterization and Drilling Groups was
the result of higher-technology exploration activities in North
America offshore and in the international markets. Production Group
margin expanded on improving profitability in SPM, Completions and
Artificial Lift but this was offset by lower margin for Well
Services as a result of pricing pressure—primarily in North
America.
Fourth-Quarter Results
Fourth-quarter revenue of $11.91 billion increased $298 million
or 3% sequentially, and grew 7% year-on-year. Approximately 75% of
the sequential revenue increase came from the year-end surge in
product and software sales, and 25% came from higher multiclient
seismic sales. International Area revenue of $8.15 billion
grew $235 million or 3% sequentially, while North America
Area revenue of $3.65 billion increased $47 million or 1%
sequentially. Fourth-quarter revenue continued to set a new high
for both North America and the International Areas.
Sequentially, Reservoir Characterization Group revenue
grew 1% to $3.25 billion, while Drilling Group revenue of
$4.50 billion was 2% higher. Production Group revenue
increased 5% sequentially to $4.22 billion. The increase in
Reservoir Characterization Group revenue resulted
mainly from robust international end-of-year SIS software sales and
an increase in WesternGeco multiclient sales. This increase,
however, was largely offset by a sharp seasonal decline in
WesternGeco Marine revenue on lower vessel utilization following
completion of surveys in Norway and Canada. Wireline also declined
sequentially on the conclusion of exploration projects in Eastern
Canada and East Africa together with the seasonal slowdown in
Russia. Drilling Group revenue increased on international
demand for Drilling & Measurements and M-I SWACO technologies
in Mexico and Russia & Central Asia as well as in the Middle
East & Asia Area. Stronger IPM project activity in Mexico,
Saudi Arabia and Iraq also contributed to the increase. The
increase in Production Group revenue resulted
primarily from stronger Completions and Artificial Lift product
year-end sales. Well Intervention Services declined mainly in North
America land, while Well Services revenue grew primarily from
higher activity in international markets. Well Services stage count
in North America land also increased, but revenue declined from
persistent pricing weakness as a result of the continuing hydraulic
horsepower oversupply.
Sequentially by Area, Middle East & Asia led the
increase with revenue of $2.94 billion growing 5%, mainly from the
continued increase in drilling activity and the start of new IPM
projects in Saudi Arabia; strong product sales and increased
seismic activity in the United Arab Emirates; strong product and
year-end software sales in Kuwait; strong land and offshore
exploration activity in the Australasia and Thailand & Myanmar
GeoMarkets; and increased WesternGeco marine vessel activity in the
Brunei, Malaysia & Philippines GeoMarket. The increase,
however, was partially reduced by a decline in revenue in Iraq from
the temporary shut-down in operations linked to a security
incident. In Latin America, revenue of $2.00 billion
increased 3%, led by Mexico and Central America on robust deepwater
exploration in addition to stronger land-based project activities.
Strong IPM fracturing and drilling activity in Argentina and solid
progress on SPM projects in Ecuador also contributed to the
increase. Europe/CIS/Africa revenue of $3.21 billion
increased 1% mainly due to robust product and software sales across
the Area particularly in Continental Europe; significant testing
and seismic activities in Angola; and increased offshore seismic
and drilling in Azerbaijan and Turkmenistan. The increase, however,
was partially reduced by seasonally lower activity in Russia and
decreased WesternGeco vessel utilization following the seasonal
transit of vessels out of the North Sea. North America
revenue of $3.65 billion increased 1% sequentially. Land continued
to experience pricing weakness in drilling, stimulation and
wireline services, although the effect of this was offset by
increased service intensity, improved efficiency, market share
gains, new technology uptake and business expansion. Offshore
revenue declined following seasonal completion of seismic and
exploration campaigns in Eastern Canada while revenue in the US
Gulf of Mexico grew on higher drilling and testing activities.
Fourth-quarter pretax operating income of $2.60 billion was up
4% sequentially, and increased 23% year-on-year.
International pretax operating income of $1.92 billion
increased 4% sequentially, while North America pretax
operating income of $716 million declined 2% sequentially.
Fourth-quarter pretax operating income also set a new high, driven
by the International Areas.
Sequentially, pretax operating margin of 21.9% increased 37 bps,
as International pretax operating margin expanded 23 bps to
23.5%. Middle East & Asia and Europe/CIS/Africa
margins were steady at 26.1% and 22.6%, respectively, while
Latin America expanded 59 bps to reach 21.2% on
higher-margin exploration drilling and project activity. North
America pretax operating margin declined 67 bps to 19.6% due to
a seasonal holiday slowdown in activity and continued pricing
weakness on land. Sequentially by segment, Reservoir
Characterization Group pretax operating margin expanded 132 bps
to 31.7% due to strong end-of-year sales of SIS software and
WesternGeco multiclient licenses, while the pretax operating
margins of the Drilling and Production Groups
were 19.6% and 17.3%, respectively.
Reservoir Characterization Group
Fourth-quarter revenue of $3.25 billion increased 1%
sequentially, and grew 5% year-on-year. Pretax operating income of
$1.03 billion was 5% higher sequentially, and increased 16%
year-on-year.
Sequentially, the increase in revenue was mainly driven by
robust international end-of-year SIS software sales and an increase
in WesternGeco multiclient sales. These increases, however, were
largely offset by the sharp seasonal decline in WesternGeco Marine
revenue on lower vessel utilization following completion of surveys
in Norway and Canada. Wireline also declined sequentially on the
completion of exploration projects in Eastern Canada and East
Africa, and the seasonal slowdown of activity in Russia.
Pretax operating margin of 31.7% increased 132 bps sequentially,
and 309 bps year-on-year. The sequential increase from strong
end-of-year sales of SIS software and WesternGeco multiclient
licenses was partially offset by lower WesternGeco Marine vessel
utilization and decreased Wireline high-technology activity
following completion of exploration projects.
A number of technology highlights across the Reservoir
Characterization Group contributed to the fourth-quarter
results.
Offshore India, Wireline MDT* modular formation dynamics tester
and Saturn* 3D radial probe technologies in combination with the
InSitu Fluid Analyzer* system were used for the Oil and Natural Gas
Corporation (ONGC) to obtain reservoir measurements in the Mumbai
High South field. The larger flow area of the Saturn elliptical
probe allowed formation fluid sampling at a mobility below 0.1
mD/cP, which enabled completion of a comprehensive formation test,
downhole fluid analysis and fluid sampling program in the low
permeability reservoir sections. The Saturn probe design also
provided improvements in operational efficiency, enabling ONGC to
save up to 75% in fluid sampling time compared with conventional
formation testing methods.
In Indonesia, Wireline MDT modular formation dynamics tester
packer technologies were used for KrisEnergy to obtain interval
pressure transient testing data and fluid samples in an exploration
well. The dual-packer technique delivered excellent pressure
transient data with minimal pressure drop during the pump-out
periods. The combination of MDT technology and the InSitu Fluid
Analyzer* system helped identify a gas-bearing zone and collect
PVT-quality gas samples for further analysis. The real-time
monitoring capability of the Wireline technologies enabled rapid
decisions to achieve the best quality reservoir data, all within a
four-hour timeframe.
Offshore Atlantic Canada, Wireline deployed a suite of
evaluation technologies in three exploration wells drilled by
Statoil in 2013. The Litho Scanner* high-definition spectroscopy
tool was run for the first time for Statoil and used to determine
mineralogy and Total Organic Carbon. The MDT modular formation
dynamics tester configured with Quicksilver Probe* technology, and
the InSitu Fluid Analyzer and dual packer systems enabled interval
pressure transient testing and fluid sampling to be conducted in
the same run. These techniques were used to determine reservoir
properties and the pressure profile within the reservoir. In
addition, walkaway seismic profiling using VSI* versatile seismic
imager technology was used to better calibrate the wells to
seismic. The Wireline technology combination gave Statoil the
necessary information to evaluate their Harpoon and Bay du Nord
discoveries.
Offshore Tanzania, BG Group used a combination of Rt Scanner*
and MR Scanner* technologies with the aim of helping lower the risk
of bypassed pay in deepwater East Africa. The approach was
corroborated by high-quality PVT samples using Quicksilver Probe
low contamination sampling and resulted in further evaluation of
the structure. The zones identified were tested at 60 MMscfd.
In Venezuela, Wireline PowerJet Nova* extradeep penetrating
shaped charge technology was used for PDVSA to improve production
from wells in the Monagas region. The re-perforating campaign was
conducted successfully and led to an increase in oil production of
more than 350%, or 17,500 bbl/d of incremental production, which
exceeded expectations.
In the Bakken shale play in North Dakota, a combination of
Schlumberger technologies was specifically designed for use by
Continental Resources to execute the largest ever downhole
microseismic monitoring operation in the history of the industry.
The hydraulic fracture growth and optimum well spacing were tested
in the Bakken and Three Forks formations using three Wireline VSI*
versatile seismic imager receiver arrays simultaneously conveyed in
three wells using TuffTRAC* cased hole services technology. The VSI
technology acquired high quality data over 3,000 ft from the
location of the microseismic events. The operation was successfully
completed in 63 days and included 293 fracturing stages with the
Wireline monitoring services efficiently conveyed in excess of
300,000 lateral ft.
In Germany, the WesternGeco Amazon Warrior was launched at the
Flensburg shipyard, with the project on time and on budget.
Amazon-class vessels feature the world’s first custom-built hull
and propulsion system, developed exclusively for seismic operations
using a WesternGeco proprietary design. The vessel is expected to
be completed in Q1 2014 and begin operations in Q2.
In Russia, IG Seismic Services Ltd (IGSS) has purchased its
third WesternGeco UniQ* integrated point-receiver land seismic
system, and will be deploying over 70,000 UniQ broadband
point-receiver recording channels on projects for their customers
in Russia this winter season.
ConocoPhillips has awarded Schlumberger a global licensing
agreement to implement the Techlog* wellbore software platform in
all of its operating units worldwide. The Techlog platform will
enable standardization of petrophysical and geological well data
analysis across the customer’s business units. The agreement also
includes a comprehensive training and deployment program designed
to effectively support global implementation.
In the UAE, Schlumberger technologies and petrotechnical
expertise assisted Dragon Oil in a challenging reservoir study in
the Lam Main asset in the Cheleken Block in Turkmenistan. SIS MEPO*
multiple realization optimizer software with the help of
experimental designs and workflow optimization techniques enabled
the customer to evaluate the full range of options for asset
development and production challenges, and to mitigate risk and
improve reservoir management decisions. MEPO technology and
associated workflows enabled Dragon Oil to generate history-matched
models in two months, compared to the six to eight months using
conventional methods and provided the customer with a higher level
of confidence in its development plan.
Drilling Group
Fourth-quarter revenue of $4.50 billion was up 2% sequentially
and grew 9% year-on-year. Pretax operating income of $880 million
was 2% lower sequentially, but increased 28% year-on-year.
Sequentially, revenue increased on international demand for
Drilling & Measurements and M-I SWACO technologies in Mexico
and Russia & Central Asia as well as in the Middle East &
Asia Area. Stronger IPM project activity in Mexico, Saudi Arabia
and Iraq also contributed to the increase.
Sequentially, pretax operating margin declined 69 bps to 19.6%
but increased 288 bps year-on-year. The sequential decline was due
to operational start-up delays and the geographical mix of
activity.
A number of Drilling Group technologies contributed to the
fourth-quarter results.
In China, Schlumberger Drilling Group technologies were deployed
for CNOOC (Tianjin Branch) to drill three infill wells in the
offshore SZ36-1 field, known for its complex geology and
challenging unconsolidated formations. The combination of Drilling
& Measurements PowerDrive Archer* high build rate rotary
steerable and EcoScope*† multifunction logging-while-drilling
technologies, with a customized Smith polycrystalline diamond
compact (PDC) bit and i-DRILL* engineered drilling system design,
enabled the wells to be placed accurately in the pay zone. This
technology combination delivered a 130% average rate of penetration
(ROP) improvement over conventional drilling systems.
Also in China, Drilling & Measurements deployed StethoScope*
formation pressure-while-drilling technology for Energy Development
Corporation (China), Inc. (EDC), a joint venture between Sinopec
and Noble Energy, on an offshore well in the Shengli oilfield. A
total of 61 pressure tests identified 12 fluid gradients. The
pressure gradient information from this job helped EDC identify up
to 55 m of new potential low-resistivity pay zones, which have been
ignored in the past when evaluated using only petrophysical log
data.
In Malaysia, Drilling & Measurements technologies were
deployed for Petronas Carigali Sdn. Bhd. to drill a horizontal
injector well in a formation with thin, depleted sands. Combination
of PowerDrive* rotary steerable, PeriScope* bed boundary mapping,
EcoScope multifunction logging-while-drilling, and StethoScope
formation pressure-while-drilling technologies enabled Petronas
Carigali to accurately place the well within the thin target zone,
while securing valuable real-time formation pressure measurements
in the highly depleted sands. Periscope technology mapped the top
and bottom boundaries continuously, successfully guiding the
steering of the well within the 1-m target zone and resulting in
100% sand exposure.
Offshore Gabon, Schlumberger Drilling Group technologies were
deployed for Total to drill an ultra-deepwater exploration well in
a pre-salt play. Drilling & Measurements PowerV* vertical
drilling rotary steerable technology was used to maintain
verticality of the well. In the reservoir section, the combination
of PowerDrive vorteX* powered rotary steerable technology and
customized Smith bits drilled the well section efficiently, 30%
ahead of the planned time. Overall, the combination of these
technologies, together with flawless execution, led to zero
non-productive time under challenging pre-salt conditions.
In Namibia, Drilling & Measurements seismicVISION*
seismic-while-drilling technology was deployed for HRT Africa
Petroleo S.A. (HRT) on three deepwater exploration wells in the
Orange and Walvis basins. The seismicVISION technology provided
real-time data for the PetroTechnical Services InterACT* global
connectivity service, which was used to provide continuous updates
of the drill bit position on the seismic section to the Petrel*
E&P software platform. The real-time, look-ahead vertical
seismic profile image enabled HRT to visualize key formation tops
ahead of the bit, which helped make confident drilling decisions by
eliminating depth uncertainty, which in some cases, exceeded 100
m.
In the UK sector of the North Sea, Schlumberger Drilling Group
Technologies and Petrotechnical Engineering Center expertise helped
EnQuest drill an 8 1/2-in well section with a reduced four-man
offshore crew, supported by two engineers in the Schlumberger
Operations Support Center in Aberdeen. Drilling & Measurements
PowerDrive Xceed* rotary steerable, EcoScope multifunction
logging-while-drilling, StethoScope formation
pressure-while-drilling, and sonicVISION* sonic-while-drilling
technologies provided the drilling efficiency to enable the
successful remote operations which led to a reduction of two people
on board the space-limited offshore platform.
In Russia, Schlumberger Drilling Group Technologies established
a new field record for Eriell while drilling an 8 5/8-in well
section in the Samburgskoe field in the Novy Urengoy region.
Drilling & Measurements PowerDrive vorteX* powered rotary
steerable technology with a customized Smith PDC bit achieved a
rate of penetration of 41.4 m/h and meterage of 1,968 m, which
represent the best results in the field.
In Kazakhstan, Schlumberger Drilling Group Technologies
established a new record for Zhaikmunai LLP while drilling the 11
5/8-in section of a well in the Chinarevskoe field. A combination
of Drilling & Measurements PowerDrive X6* rotary steerable
technology and a customized Smith PDC bit with ONYX* cutter
technology enabled the entire section to be drilled in a single run
at an average rate of penetration of 21.9 m/h, representing the
best field result to date.
In Russia, Schlumberger deployed Stinger* conical diamond
element technology on a Smith customized drill bit for VCNG, a
Rosneft company, to drill a 12 1/4-in well section in the East
Siberia Verchnechonskoe field. The drill bit increased the drilling
ROP by over 63% compared to the best offset well in the same field,
and showed minimum wear. In addition, the entire 12 1/4-in section
was drilled in a single run at an average ROP 140% higher compared
to conventional PDC bits.
In the Caspian Sea, Drilling Group Technologies performed a
successful underreaming-while-drilling operation for BP Azerbaijan
in a complex, extended-reach well offshore Baku. The combination of
Drilling Tools & Remedial Rhino XC* on-demand hydraulically
actuated reamer and customized Smith PDC bit with ONYX II* cutter
technology enabled rapid reamer activation and deactivation from
surface—helping overcome various technical challenges including
equivalent circulating density control. A post-run analysis
indicated that the Rhino XC and ONYX cutter technologies met all
operational objectives and, upon inspection, showed minimum wear.
This job was the first non-ball, multiactivation/deactivation
underreamer run in the Caspian Sea basin.
Production Group
Fourth-quarter revenue of $4.22 billion increased 5%
sequentially, and grew 8% year-on-year. Pretax operating income of
$730 million was 3% higher sequentially, and increased 26%
year-on-year.
The increase in revenue resulted primarily from stronger
Completions and Artificial Lift product year-end sales coupled with
new technology uptake and business expansion. Well Intervention
Services declined mainly in North America land, while Well Services
revenue grew primarily from higher activity in international
markets. Well Services stage count in North America land also
increased, but revenue declined from the persistent pricing
weakness resulting from the continued hydraulic horsepower
oversupply.
Sequentially, pretax operating margin of 17.3% was essentially
flat but increased 244 bps year-on-year. The sequential result was
attributable to the favorable impact of year-end Completions and
Artificial Lift product sales and improved SPM profitability being
fully offset by continued Well Services pricing weakness and
decline in Well Intervention Services activity.
Highlights during the fourth quarter included successes for a
number of Production Group technologies.
In Russia, PetroStim, a Schlumberger joint venture, conducted
the first multistage stimulation treatment for Gazpromneft Orenburg
in the eastern part of the Orenburg oil and gas condensate field.
The five-stage stimulation treatment was executed along a 600-m
horizontal section of a well drilled in a very tight carbonate
formation. As a result, the well’s average initial production was
approximately 500 bbl/d, twice that expected.
In Kuwait, after Schlumberger jointly evaluated several
candidate wells with Kuwait Oil Company (KOC), the upper Burgan
reservoir in the Sabriyah field was stimulated using Well Services
HiWAY* flow-channel fracturing technology. Following the analysis
of the DataFRAC* fracture data determination service, the pump
schedule was finalized and the treatment successfully executed as
per the design. Post-job, the well flow-tested at approximately
1,000 bfpd with 20% water cut, delivering about 400 bopd of
additional incremental oil above initial expectations. This was the
first application of the HiWAY technique in Kuwait and, based on
these results, a second job is being scheduled in the nearby
Raudhatain field.
In Kuwait, Well Intervention Blaster* services were used for
Kuwait Oil Company in the stimulation treatment of a newly drilled
well in the tight Ratawi limestone formation. The Blaster services
provided an efficient means of removal for the filter cake, which
together with a coiled-tubing-deployed stimulation treatment,
enabled the operator to more than double the well's production.
In Russia, Well Intervention performed a complex water shutoff
intervention for Lukoil in a horizontal well in West Siberia, which
was planned for abandonment as it produced only water. The Vantage*
modular coiled tubing logging head system was used for the initial
and post-treatment production logging measurements to identify the
water breakthrough zones and evaluate the efficiency of the water
shutoff operation. Once the water producing zones were identified,
the water shutoff treatment was performed using a cement slurry
solution, accurately placed using two CoilFLATE* coiled tubing
inflatable packers. After intervention, the water cut decreased by
30%, which allowed the customer to put the well back in
production.
Offshore Nigeria, Well Services deployed OneSTEP* simplified
sandstone stimulation system for Star Deep Water Petroleum Limited
to overcome increasing skin and declining production on two wells
in the 17D formation of the deepwater Agbami field. Prior to the
matrix stimulation treatment, formation core samples were taken and
analyzed, and the damage mechanism identified as fines migration.
The OneSTEP stimulation was then pumped efficiently, as a
single-stage fluid, compared to conventional matrix stimulation
systems that require several stages. The OneSTEP stimulation
treatment effectively remediated the impairment and led to a
production improvement in both wells of 90% and 150% respectively,
compared to pre-stimulation production rates. The operation was
executed safely and exceeded the customer’s expectations.
In French Guiana, Well Services successfully placed 11
extended-length cement plugs of over 350 m each for Shell in
exploratory wells in the ultra-deep Zaedyus and Priondontes field.
The job execution was flawless, and the results saved Shell over 24
hours of operating time, representing approximately $1.2 million in
drillship day rate savings.
In Arkansas, Schlumberger Completions next-generation multistage
stimulation technologies were used for BHP Billiton to reduce
completion times in the Fayetteville shale play. The combination of
KickStart* rupture disc valve and degradable materials technologies
eliminated the need for mechanical intervention during the first
hydraulic fracturing stage of each well, along with time-consuming
plug milling operations.
In Colombia, Schlumberger executed the first multizone,
single-selective horizontal openhole gravel pack for Hocol, a
subsidiary of Ecopetrol, in order to control sand production and
high water cut in a well in the Los Llanos foreland basin. The
completion design was based on Sand Management Solutions OptiPAC*
Alternate Path‡ systems with oil swell packers and a hybrid
inner-selective production string. Wireline Flow Scanner*
horizontal well production logging technology enabled a better
understanding of reservoir behavior, and provided the production
data for each sand to validate successful zonal isolation. The
combination of Schlumberger technologies used in this challenging
horizontal well helped provide the customer’s asset team with a
more robust reservoir characterization leading to improved
reservoir management and the addition of new reserves.
Murphy Sabah Oil Co. Ltd. has awarded Schlumberger a four-year
contract for the supply of the products and services associated
with gravel pack activities offshore Sabah, Malaysia. The contract
includes Sand Management Solutions OptiPac Alternate Path systems,
Well Services ClearPAC* fluid system for gravel packing, and
deployment using the fit-for-purpose DeepSTIM* II stimulation
vessel.
CNR International (Côte d'Ivoire) SARL (CNRI) has awarded
Schlumberger the completions work on wells planned to be drilled as
part of the Baobab Phase 3 project in waters offshore the Ivory
Coast. The development includes the installation of completions in
six subsea wells. The award covers upper and lower completions
including sand screens and gravel packing. In addition, the OptiPAC
Alternate Path gravel pack system will be used to ensure complete
packing of the long horizontal intervals in a challenging
environment.
Offshore Qatar, Schlumberger Completions was awarded a
three-year contract by Maersk Oil Qatar AS to provide products and
services in the Block-5 field. The award covers permanent downhole
gauges, single and multiline flatpacks, control line clamps, and
surface hydraulically controllable sliding sleeves and services.
The first Schlumberger permanent downhole gauges for Maersk Oil
Qatar AS were installed in 1995, and the gauges continue to provide
reliable, real-time pressure and temperature data. In total, 188
Schlumberger permanent downhole gauges and sensors with surface
data communication systems have been installed in this customer’s
offshore field, enabling the real-time remote monitoring of wells
for improved reservoir management.
In India, Schlumberger has been awarded a multiple services
contract by Oil India Ltd. for the engineering design, drilling and
completion of six horizontal wells in the Makum, Deohal and North
Hapjan onshore fields. Traditionally, the horizontal wells in these
fields have been completed with conventional slotted liners. A key
contributing factor for this contract award was the introduction of
Schlumberger Completions FluxRITE* inflow control device systems
for the reliable control of produced water and improved sand
management, allowing the customer to maximize oil recovery. The
18-month contract includes services from Drilling &
Measurements, M-I SWACO, Drilling Tools & Remedial,
Completions, Artificial Lift and Well Services.
Financial Statements
Condensed Consolidated Statement of Income
(Stated in
millions, except per share amounts) Fourth Quarter Twelve
Months Periods Ended December 31,
2013
2012
2013 2012
Revenue
$ 11,906 $ 11,083
$ 45,266 $
41,731 Interest and other income, net (1)
59 35
165
172 Gain on formation of OneSubsea(2)
- -
1,028 -
Expenses Cost of revenue(2)
9,283 8,762
35,331 32,885
Research & engineering
304 304
1,174 1,153
General & administrative
111 111
416 405 Merger
& integration(2)
- 60
- 128 Impairment &
other(2)
- 33
456 33 Interest
97 93
391 340 Income before taxes
2,170 1,755
8,691 6,959 Taxes on income(2)
487 432
1,848 1,700 Income from
continuing operations
1,683 1,323
6,843 5,259 Income
(loss) from discontinued operations
-
48
(69 )
260 Net income
1,683 1,371
6,774
5,519 Net income attributable to noncontrolling interests
19 9
42 29 Net income attributable to
Schlumberger
$ 1,664 $
1,362
$ 6,732 $
5,490 Schlumberger amounts attributable to: Income from
continuing operations(2)
$ 1,664 $ 1,314
$
6,801 $ 5,230 Income (loss) from discontinued
operations
- 48
(69 ) 260
Net income
$ 1,664
$ 1,362
$ 6,732 $
5,490 Diluted earnings per share of Schlumberger Income from
continuing operations(2)
$ 1.26 $ 0.98
$
5.10 $ 3.91 Income (loss) from discontinued
operations
- 0.04
(0.05 )
0.19 Net income
$ 1.26
$ 1.02
$ 5.05
$ 4.10 Average shares outstanding
1,312 1,328
1,323 1,330 Average shares outstanding assuming dilution
1,326 1,336
1,333 1,339
Depreciation & amortization included in expenses(3)
$ 930 $ 930
$ 3,666 $ 3,500
1) Includes interest income of:
Fourth quarter 2013 - $11 million (2012 -
$6 million)
Twelve months 2013 - $31 million (2012 -
$29 million)
2) See page 14 for details of charges and
credits.
3) Including multiclient seismic data
cost.
Condensed Consolidated Balance Sheet
(Stated in millions)
Dec.
31, Dec. 31, Assets
2013
2012 Current Assets Cash and short-term investments
$
8,370 $ 6,274 Receivables
11,497 11,351 Other
current assets
6,358
6,531
26,225 24,156 Fixed income investments, held to
maturity
363 245 Fixed assets
15,096 14,780
Multiclient seismic data
667 518 Goodwill
14,706
14,585 Other intangible assets
4,709 4,802 Other assets
5,334 2,461
$ 67,100 $ 61,547
Liabilities and Equity
Current Liabilities Accounts payable and accrued liabilities
$ 8,837 $ 8,453 Estimated liability for taxes on
income
1,490 1,426
Short-term borrowings and current portion
of long-term debt
2,783 2,121 Dividend payable
415 368
13,525 12,368 Long-term
debt
10,393 9,509 Postretirement benefits
670 2,169
Deferred taxes
1,708 1,493 Other liabilities
1,169 1,150
27,465 26,689
Equity
39,635
34,858
$ 67,100
$ 61,547
Net Debt
“Net Debt”, a non-GAAP measure, 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 full year follow:
(Stated in millions)
Twelve Months
2013 Net
Debt, January 1, 2013
$ (5,111 ) Income from
continuing operations
6,801 Depreciation and amortization
3,666 Gain on formation of OneSubsea
(1,028 )
Charges
608 Pension and other postretirement benefits
expense
518 Stock-based compensation expense
344
Pension and other postretirement benefits funding
(527
) Increase in working capital
(27 ) Capital
expenditures
(3,943 ) Multiclient seismic data
capitalized
(394 ) Dividends paid
(1,608
) Proceeds from employee stock plans
537 Stock
repurchase program
(2,596 ) Payment for OneSubsea
transaction
(600 ) Other business acquisitions, net
of cash and debt acquired
(610 ) Other
(358
) Currency effect on net debt
(115 )
Net Debt, December 31, 2013
$ (4,443 )
Components of Net Debt
Dec. 31,2013
Dec. 31,2012
Cash and short-term investments
$ 8,370 $ 6,274 Fixed
income investments, held to maturity
363 245 Short-term
borrowings and current portion of long-term debt
(2,783
) (2,121 ) Long-term debt
(10,393 )
(9,509 )
$ (4,443 ) $ (5,111 )
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
Fourth-Quarter Press Release also includes non-GAAP financial
measures (as defined under the SEC’s Regulation G). The following
is a reconciliation of non-GAAP measures to the comparable GAAP
measures:
(Stated in millions, except per share amounts)
Fourth Quarter 2013 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification
Schlumberger income from continuing
operations, as reported
$ 2,170 $ 487 $ 19 $ 1,664 $ 1.26 Provision for accounts
receivable(1) 152 30
- 122
0.09 Cost of revenue
Schlumberger income from continuing
operations, excluding charges & credits
$ 2,322 $ 517 $ 19
$ 1,786 $ 1.35
Fourth Quarter
2012 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification
Schlumberger income from continuing
operations, as reported
$ 1,755 $ 432 $ 9 $ 1,314 $ 0.98 Merger and integration costs 60 10
- 50 0.04 Merger & integration Workforce reduction 33
6 -
27 0.02 Cost of revenue
Schlumberger income from continuing
operations, excluding charges & credits
$ 1,848 $ 448 $ 9
$ 1,391 $ 1.04
Twelve Months
2013 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification
Schlumberger income from continuing
operations, as reported
$ 8,691 $ 1,848 $ 42 $ 6,801 $ 5.10 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
Provision for accounts receivable(1) 152 30 - 122 0.09
Cost of revenue
Currency devaluation loss in Venezuela 92
- - 92
0.07
Impairment & other
Schlumberger income from continuing
operations, excluding charges & credits
$ 8,271 $ 1,897 $ 42
$ 6,332 $ 4.75
Twelve
Months 2012 Pretax Tax
Noncont.Interest
Net
DilutedEPS
Income Statement Classification
Schlumberger income from continuing
operations, as reported
$ 6,959 $ 1,700 $ 29 $ 5,230 $ 3.91 Merger and integration costs
128 16 - 112 0.08 Merger & integration Workforce reduction
33 6 -
27 0.02
Cost of revenue
Schlumberger income from continuing
operations, excluding charges & credits
$ 7,120 $ 1,722 $ 29
$ 5,369 $ 4.01
There were no charges or credits in the third quarter of 2013.
(1) Relates to a client in Brazil that filed for bankruptcy.
Product Groups (Stated in millions)
Three Months Ended Dec. 31, 2013
Sept. 30, 2013 Dec. 31, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 3,249
$ 1,031 $ 3,232 $ 983 $ 3,093 $ 886 Drilling
4,497 880 4,415 894 4,120 688 Production
4,219
730 4,024 707 3,906 581 Eliminations & other
(59 ) (37 ) (63 )
(88 ) (36 ) (43 )
11,906 2,604 11,608
2,496 11,083 2,112 Corporate & other
- (197
) - (179 ) - (180 ) Interest income(1)
- 7 - 6
- 6 Interest expense(1)
- (92 ) - (92 ) - (90
) Charges & credits
- (152
) - - - (93
)
$ 11,906 $ 2,170 $
11,608 $ 2,231 $ 11,083 $ 1,755
Geographic Areas (Stated in millions)
Three Months
Ended Dec. 31, 2013 Sept. 30, 2013 Dec. 31, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 3,649 $
716 $ 3,602 $ 730 $ 3,422 $ 656 Latin America
2,000
425 1,934 399 2,071 377 Europe/CIS/Africa
3,211
725 3,178 714 2,958 579 Middle East & Asia
2,936
767 2,801 730 2,485 549 Eliminations & other
110 (29 ) 93
(77 ) 147 (49 )
11,906
2,604 11,608 2,496 11,083 2,112 Corporate & other
- (197 ) - (179 ) - (180 ) Interest income(1)
- 7 - 6 - 6 Interest expense(1)
- (92
) - (92 ) - (90 ) Charges & credits
-
(152 ) - -
- (93 )
$ 11,906 $
2,170 $ 11,608 $ 2,231 $ 11,083
$ 1,755
(1) Excludes interest included in the
Product Groups and Geographic Areas Results.
Product Groups (Stated in millions)
Twelve Months Ended Dec. 31, 2013 Dec.
31, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services Reservoir Characterization
$ 12,246
$ 3,647 $ 11,159 $ 3,069 Drilling
17,317
3,309 15,892 2,789 Production
15,927 2,619
14,802 2,327 Eliminations & other
(224 )
(231 ) (122 ) (68 )
45,266 9,344 41,731 8,117 Corporate & other
- (726 ) - (696 ) Interest income(1)
-
22 - 30 Interest expense(1)
- (369 ) -
(331 ) Charges & credits
-
420 - (161 )
$
45,266 $ 8,691 $ 41,731 $
6,959
Geographic Areas (Stated in millions)
Twelve Months Ended Dec. 31, 2013 Dec. 31, 2012
Revenue
IncomeBeforeTaxes
Revenue
IncomeBeforeTaxes
Oilfield Services North America
$ 13,897 $
2,735 $ 13,535 $ 2,737 Latin America
7,751
1,589 7,554 1,387 Europe/CIS/Africa
12,366
2,589 11,444 2,245 Middle East & Asia
10,810
2,700 8,775 1,921 Eliminations & other
442
(269 ) 423 (173 )
45,266 9,344 41,731 8,117 Corporate & other
- (726 ) - (696 ) Interest income(1)
-
22 - 30 Interest expense(1)
- (369 ) -
(331 ) Charges & credits
-
420 - (161 )
$
45,266 $ 8,691 $ 41,731 $
6,959
(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
123,000 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
$45.27 billion in 2013. 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, January 17, 2014. 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
+1-800-230-1766 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 February 17, 2014 by dialing
+1-800-475-6701 within North America, or +1-320-365-3844 outside of
North America, and providing the access code 306544.
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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