- Revenue of $6.8 billion increased 14% sequentially and 20% year
on year
- GAAP EPS of $0.67 increased 86% sequentially and 123% year on
year
- EPS, excluding charges and credits, of $0.50 increased 47%
sequentially and 67% year on year
- Cash flow from operations was $408 million
- Board approved quarterly cash dividend of $0.175 per share
- Full-year revenue outlook revised upward to at least $27
billion
Schlumberger Limited (NYSE: SLB) today announced results for the
second-quarter 2022.
Second-Quarter Results (Stated in millions, except per share
amounts)
Three Months Ended Change Jun. 30,
2022 Mar. 31, 2022 Jun. 30, 2021
Sequential Year-on-year
Revenue
$6,773
$5,962
$5,634
14%
20%
Income before taxes - GAAP basis
$1,152
$638
$542
81%
113%
Net income - GAAP basis
$959
$510
$431
88%
123%
Diluted EPS - GAAP basis
$0.67
$0.36
$0.30
86%
123%
Adjusted EBITDA*
$1,530
$1,254
$1,198
22%
28%
Adjusted EBITDA margin*
22.6%
21.0%
21.3%
157 bps
132 bps
Pretax segment operating income*
$1,159
$894
$807
30%
44%
Pretax segment operating margin*
17.1%
15.0%
14.3%
212 bps
279 bps
Net income, excluding charges & credits*
$715
$488
$431
47%
66%
Diluted EPS, excluding charges & credits*
$0.50
$0.34
$0.30
47%
67%
Revenue by Geography
International
$5,188
$4,632
$4,511
12%
15%
North America
1,537
1,282
1,083
20%
42%
Other
48
48
40
n/m
n/m
$6,773
$5,962
$5,634
14%
20%
*These are non-GAAP financial measures. See sections titled
"Charges & Credits", "Divisions", and "Supplemental
Information" for details. n/m = not meaningful (Stated in millions)
Three Months Ended Change Jun. 30, 2022 Mar.
31, 2022 Jun. 30, 2021
Sequential Year-on-year
Revenue by
Division Digital & Integration
$955
$857
$817
11%
17%
Reservoir Performance
1,333
1,210
1,117
10%
19%
Well Construction
2,686
2,398
2,110
12%
27%
Production Systems
1,893
1,604
1,681
18%
13%
Other
(94)
(107)
(91)
n/m
n/m
$6,773
$5,962
$5,634
14%
20%
Pretax Operating Income by Division
Digital & Integration
$379
$292
$274
30%
39%
Reservoir Performance
195
160
156
22%
25%
Well Construction
470
388
272
21%
73%
Production Systems
171
114
171
50%
0%
Other
(56)
(60)
(66)
n/m
n/m
$1,159
$894
$807
30%
44%
Pretax Operating Margin by Division
Digital & Integration
39.7%
34.0%
33.5%
570 bps
621 bps
Reservoir Performance
14.6%
13.2%
13.9%
143 bps
69 bps
Well Construction
17.5%
16.2%
12.9%
134 bps
462 bps
Production Systems
9.0%
7.1%
10.2%
190 bps
-114 bps
Other
n/m
n/m
n/m
n/m
n/m
17.1%
15.0%
14.3%
212 bps
279 bps
n/m = not meaningful
Schlumberger CEO Olivier Le Peuch commented, “The second quarter
marked a significant inflection point for Schlumberger with a
strong acceleration of revenue and earnings growth. Sequentially,
revenue grew 14%, by more than $800 million; EPS—excluding charges
and credits—increased 47%; and pretax segment operating margin
expanded 212 basis points (bps). Growth was broad-based, driven by
an increase in activity internationally, in North America, and
across all Divisions. The quarter was also characterized by a
favorable mix of exploration and offshore activity and the
increasing impact of improved pricing, resulting in the largest
sequential quarterly growth since 2010.
“On a year-over-year basis, revenue grew 20%; EPS—excluding
charges and credits—increased 67%; and pretax segment operating
margin expanded 279 bps.
Raising Full-Year Outlook
“The strength of our second-quarter outperformance highlights a
firmly established growth inflection and our ability to
comprehensively participate in drilling and completion activity
growth globally. The multiyear upcycle continues to gain momentum
with upstream activity and service pricing steadily increasing both
internationally and in North America, resulting in a strengthened
outlook for Schlumberger.
“As a result of this performance and based on our updated
outlook for the remainder of the year, 2022 year-on-year revenue
growth is now expected to be in the high-teens which translates to
full-year revenue of at least $27 billion. “We expect this higher
revenue to result in earnings that exceed our previous
expectations, given our ambition to exit the year with adjusted
EBITDA margins 200 basis points higher than in the fourth quarter
of 2021,” Le Peuch said.
Second-Quarter Growth Broad-Based Across All
Geographies
Second-quarter sequential revenue growth was broad-based, with
international revenue increasing 12% and North America revenue
growing 20%. International growth was widespread across all areas
with more than 90% of our GeoUnits experiencing revenue growth.
Growth was led by Europe/CIS/Africa which experienced 20%
sequential growth due to higher Production Systems sales in Europe
and Scandinavia, the seasonal drilling activity rebound in the
Northern Hemisphere, and offshore activity increases in Sub-Sahara
Africa benefitting all Divisions. Latin America sequential revenue
growth of 10% was due to higher stimulation activity in Argentina,
increased Production Systems sales in Brazil and Mexico, and higher
offshore drilling in Guyana. Middle East & Asia revenue
increased 7% sequentially due to higher drilling across Asia,
particularly in China, Australia, and Indonesia, as well as
multidivisional activity increases across the Middle East mainly in
Oman, United Arab Emirates, Saudi Arabia, Egypt, and Iraq. In North
America, sequential revenue growth of 20% was driven by a
significant increase in land and offshore drilling activity and
higher exploration data licensing in the US Gulf of Mexico.
Power of the Core—Complemented by Digital
Le Peuch said, “These results demonstrate the power of
Schlumberger’s Core, which is performing exceedingly well and
benefitting from the effects of improved operating leverage,
favorable offshore activity mix, greater technology adoption, and
an improving global service pricing environment.”
Sequentially, all Divisions posted double-digit revenue
growth—outpacing rig count growth both in North America and
internationally. Production Systems led the sequential growth,
posting an 18% revenue increase on higher product deliveries and
backlog conversion during the quarter, mostly internationally. Well
Construction revenue increased 12% sequentially due to higher land
and offshore drilling activity both in North America and
internationally, in addition to improved pricing. Reservoir
Performance revenue grew 10% due to higher intervention,
evaluation, and stimulation activity, both on land and offshore
along with improved pricing. This solid performance in the Core was
complemented by Digital & Integration, which experienced an 11%
sequential revenue increase, driven by higher exploration data
licensing sales.
Overall, second-quarter pretax segment operating income
increased 30% sequentially, and pretax segment operating margin
expanded 212 bps to 17.1%—the highest quarterly operating margin
level since 2015. All four Divisions expanded their margins
sequentially.
Second-quarter cash from operations was $408 million and
reflected the build-up of working capital in line with the
significant revenue growth. Working capital is expected to improve
and, consequently, free cash flow generation will accelerate
through the second half of the year, consistent with our historical
trends.
A Strengthened Outlook Aligned to Schlumberger’s
Strengths
Le Peuch said, “Looking ahead, the second half of the year
continues to shape up very well as highlighted in our revised
expectations for the full year, encompassing all phases of oil and
gas development and all operating environments—from high-volume
onshore to deepwater offshore—and firmly establishing digital,
decarbonization, and improved pricing as defining characteristics
of this upcycle.
“Despite near-term concerns over a global economic slowdown, the
combination of energy security, favorable break-even prices, and
the urgency to grow oil and gas production capacity is expected to
continue to support strong upstream E&P spending growth.
Consequently, we are witnessing a decoupling of upstream spending
from near-term demand volatility, resulting in resilient global oil
and gas activity growth in 2022 and beyond.
“Our second-quarter results were a great demonstration of our
revenue, operating margins, and earnings growth potential. I am
very pleased with our execution thus far in the year and extend my
appreciation to our team for delivering an exceptional
quarter.”
Other Events
On July 21, 2022, Schlumberger’s Board of Directors approved a
quarterly cash dividend of $0.175 per share of outstanding common
stock, payable on October 13, 2022, to stockholders of record on
September 7, 2022.
Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Sequential
Year-on-year North America
$1,537
$1,282
$1,083
20%
42%
Latin America
1,329
1,204
1,057
10%
26%
Europe/CIS/Africa
1,691
1,404
1,453
20%
16%
Middle East & Asia
2,168
2,024
2,001
7%
8%
Eliminations & other
48
48
40
n/m
n/m
$6,773
$5,962
$5,634
14%
20%
International
$5,188
$4,632
$4,511
12%
15%
North America
$1,537
$1,282
$1,083
20%
42%
n/m = not meaningful
International
Revenue in Latin America of $1.3 billion increased 10%
sequentially due to higher stimulation activity in Argentina,
higher Production Systems sales in Brazil and Mexico, and higher
offshore drilling in Guyana.
Year on year, revenue grew 26% due to higher drilling activity
in Mexico, Ecuador, and Brazil as well as increased stimulation
activity in Argentina.
Europe/CIS/Africa revenue of $1.7 billion increased 20%
sequentially. This significant growth was driven by activity that
strengthened beyond the impact of the seasonal drilling activity
recovery in the Northern Hemisphere with higher Production Systems
sales in Europe and Scandinavia and multidivisional activity
increases in Sub-Sahara Africa.
Year on year, revenue grew 16%, primarily from higher Production
Systems sales in Europe and higher exploration drilling in offshore
Sub-Sahara Africa, partially offset by the revenue decline in
Russia.
Revenue in the Middle East & Asia of $2.2 billion
increased 7% sequentially due to higher drilling across Asia,
particularly in China, Australia, and Indonesia as well as
multidivisional activity increases across the Middle East mainly in
Oman, United Arab Emirates, Saudi Arabia, Egypt, and Iraq.
Year on year, revenue increased 8% due to higher drilling,
stimulation, and intervention activity on new projects in Iraq,
Oman, Egypt, Qatar and across Southeast Asia and Australia.
North America
North America revenue of $1.5 billion increased 20%
sequentially and represented the highest sequential quarterly
growth rate since 2017. US land revenue growth outperformed the rig
count increase sequentially, while offshore revenue growth was more
than double the pace of US land—boosted by increased exploration
data licensing in the US Gulf of Mexico and higher drilling
activity. US land revenue increased due to higher drilling activity
and increased sales of surface production systems, while Canada
land revenue increased despite the spring breakup due to higher
Asset Performance Solutions (APS) project revenue.
Compared to the same quarter last year, North America revenue
grew 42%. All Divisions experienced significant growth primarily
from higher drilling and intervention activity, increased sales of
production systems, increased exploration data licensing, and
strong contribution from the APS project in Canada.
Second-Quarter Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Sequential
Year-on-year Revenue International
$627
$631
$625
-1%
0%
North America
327
225
191
45%
71%
Other
1
1
1
n/m
n/m
$955
$857
$817
11%
17%
Pretax operating income
$379
$292
$274
30%
39%
Pretax operating margin
39.7%
34.0%
33.5%
570 bps
621 bps
n/m = not meaningful
Digital & Integration revenue of $955 million increased 11%
sequentially and 17% year on year primarily due to higher
exploration data licensing sales, including $95 million in transfer
fees.
Digital & Integration pretax operating margin of 40%
expanded 570 bps sequentially and 621 bps year on year, due to
higher exploration data licensing sales in the US Gulf of Mexico
and increased profitability in APS projects, particularly in
Canada.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Sequential
Year-on-year Revenue International
$1,222
$1,105
$1,038
11%
18%
North America
111
103
79
8%
41%
Other
-
2
-
n/m
n/m
$1,333
$1,210
$1,117
10%
19%
Pretax operating income
$195
$160
$156
22%
25%
Pretax operating margin
14.6%
13.2%
13.9%
143 bps
69 bps
n/m = not meaningful
Reservoir Performance revenue of $1.3 billion increased 10%
sequentially due to higher activity on land and offshore beyond the
impact of the seasonal rebound in the Northern Hemisphere, along
with improved pricing. International growth was driven by the
seasonal rebound of activity in Scandinavia and China; higher
offshore activity in Sub-Sahara Africa; increased evaluation,
intervention, and stimulation work in Latin America; and increased
evaluation and intervention work in the Middle East & Asia.
North America growth was due to higher intervention activity in the
US Gulf of Mexico.
Year on year, revenue growth was broad across all regions and
GeoUnits, except for Russia & Central Asia. Double-digit growth
was posted in evaluation, intervention, and stimulation services
both on land and offshore, with higher exploration-related activity
during the quarter.
Reservoir Performance pretax operating margin of 15% expanded
143 bps sequentially. Profitability was boosted by the seasonal
recovery in the Northern Hemisphere, higher offshore and
exploration activity, favorable technology mix, and improved
pricing.
Year on year, pretax operating margin expanded 69 bps with
profitability improving both in evaluation and intervention and
geographically in North America, Europe/CIS/Africa, and Latin
America.
Well Construction
(Stated in millions)
Three Months Ended Change
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Sequential
Year-on-year Revenue International
$2,083
$1,865
$1,708
12%
22%
North America
553
485
352
14%
57%
Other
50
48
50
n/m
n/m
$2,686
$2,398
$2,110
12%
27%
Pretax operating income
$470
$388
$272
21%
73%
Pretax operating margin
17.5%
16.2%
12.9%
134 bps
462 bps
n/m = not meaningful
Well Construction revenue of $2.7 billion increased 12%
sequentially due to higher land and offshore drilling activity both
in North America and internationally, beyond the impact of the
seasonal rebound in the Northern Hemisphere, in addition to
improved pricing. In North America, sequential revenue growth
outpaced the rig count increase in US land and offshore, despite
the effects of the Canadian spring breakup. In addition to the
seasonal rebound, international growth was also driven by improved
pricing and new projects, particularly in Guyana, Argentina, and
Sub-Sahara Africa, as well as higher drilling activity across
Southeast Asia, Australia, and in the Middle East, mainly in Saudi
Arabia and Qatar.
Year on year, revenue growth of 27% across all areas was led by
North America and Latin America, both of which grew 50% or more.
Middle East & Asia grew 17% while Europe/CIS/Africa increased
12% year on year. Double-digit growth was recorded in drilling
fluids, measurements, and integrated drilling—both on land and
offshore.
Well Construction pretax operating margin of 18% expanded 134
bps sequentially due to improved profitability across most of its
business lines, particularly in the Europe/CIS/Africa and Middle
East & Asia areas. Margin expansion was due to the seasonal
recovery in the Northern Hemisphere, higher offshore and
exploration activity, favorable technology mix, and improved
pricing.
Year on year, pretax operating margin expanded 462 bps with
profitability improving across most regions, driven by higher
activity and improved pricing.
Production Systems
(Stated in millions)
Three Months Ended Change
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Sequential
Year-on-year Revenue International
$1,341
$1,127
$1,220
19%
10%
North America
550
473
458
16%
20%
Other
2
4
3
n/m
n/m
$1,893
$1,604
$1,681
18%
13%
Pretax operating income
$171
$114
$171
50%
0%
Pretax operating margin
9.0%
7.1%
10.2%
190 bps
-114 bps
n/m = not meaningful
Production Systems revenue of $1.9 billion increased 18%
sequentially as supply chain and logistics constraints abated,
facilitating increased product deliveries and backlog conversion,
mostly internationally. The increase was driven by double-digit
revenue growth across all business lines, led by Europe/CIS/Africa
on higher deliveries of midstream and subsea production systems; by
Latin America due to higher sales of subsea production systems; and
by North America, mainly US Land, on increased sales of surface
production systems.
Year on year, double-digit growth was driven by new projects and
increased product deliveries mainly in Europe/CIS/Africa, North
America, and Latin America.
Production Systems pretax operating margin of 9% expanded 190
bps sequentially due to improved profitability from higher sales of
surface, well, and subsea production systems.
Year on year, pretax operating margin contracted 114 bps due to
higher logistics costs and unfavorable revenue mix.
Quarterly Highlights
Schlumberger continues to secure a pipeline of new contract
awards as customers announce new projects and with the expansion of
existing developments globally. Schlumberger is increasingly being
selected for its superior performance and execution and its
innovative technology that enhances customer success. Examples of
awards from the quarter include the following:
- In Norway, Aker BP ASA has awarded a frame agreement to
Cameron, a Schlumberger company, for surface wellheads and
production trees for up to 64 wells on the North of Alvheim, King
Lear, and Valhall New Central Platform projects in the Norwegian
sector of the North Sea. The ten-year agreement contains optional
extensions for the life of the field and covers engineering,
qualification, and manufacture of digitalized wellhead equipment
and production trees capable of up to 15,000-psi operation and
condition-based monitoring, as well as a new 21-in metal-to-metal
Fontus* configurable production wellhead system. Installation is
scheduled to begin in 2024.
- In Brazil, Petrobras awarded Schlumberger a contract for
integrated intelligent completions for wells in the presalt area.
The advanced completion design selected for these wells includes
premium interval flow control valves, an inductive coupling
downhole wet disconnect tool and a wireless real-time running tool,
GeoGuard* high-performance deepwater safety valves, and Metris*
permanent monitoring systems. This intelligent completion
technology package will enable Petrobras to more accurately monitor
and control production—enhancing ultimate recovery. This contract,
for which work is expected to commence in the first quarter of
2023, is a precursor to the development of an all-electric
completion, currently underway in Brazil at the Schlumberger
Taubaté Engineering Center.
- OneSubsea®, the subsea technologies, production, and processing
systems business of Schlumberger, has been awarded an engineering,
procurement, construction, and installation (EPCI) contract by OKEA
for the supply of three subsea high-boost pumps to increase
production from the Draugen Field, located in the southern part of
the Norwegian Sea. Under the contract, which is part of a frame
agreement signed in 2017 by OKEA and Subsea Integration Alliance,
OneSubsea will deliver a new high-boost pump module and modify two
existing pump modules into high-boost pumps capable of handling
higher differential pressure and throughput to maximize production
from this asset. Delivery of the pump modules is scheduled for
2023.
- Sarawak Shell Berhad has awarded Schlumberger a contract for
integrated drilling services on seven exploration wells offshore
Malaysia. The scope of the contract includes drilling and
measurement, electrical wireline, drilling fluids, solids control,
cementing, casing drilling, bits, and mud logging. Schlumberger
will apply a variety of technologies, including the Allegro CD*
directional casing-while-drilling service with the sonicVISION*
sonic-while-drilling service to enhance performance of this
operation, which commenced during the second quarter of 2022.
- Equinor has made a direct award to Schlumberger for downhole
completion and artificial lift equipment to extend the life of the
Statfjord Field in the North Sea. Supporting Equinor's dual
objective of increasing recovery from the field while significantly
reducing the carbon intensity of incremental production, the award
includes a Shuttle* rigless electric submersible pump (ESP) using a
REDA* pump powered through a completion-integrated downhole
wet-mate docking station. Because an ESP can more completely drain
the reservoir using less electricity per barrel than
compressor-driven gas lift, this solution will increase annual
production and lower carbon intensity. Installation of the
completions using the Shuttle rigless ESP technology is expected to
commence in the first quarter of 2023.
- Chariot, the African-focused transitional energy company, has
signed a front-end engineering and design (FEED) contract with
Schlumberger and Subsea 7, as part of a consortium, for the Anchois
gas development project offshore Morocco. The scope of the
agreement incorporates offshore components including well
completions; subsea production systems; and subsea umbilicals,
risers, and flowlines (SURF) that will be delivered by Subsea
Integration Alliance. Onshore components include a central
processing facility (CPF) and flowlines and controls from the CPF
to the shore crossing that will be delivered by Schlumberger.
- Talos Energy has awarded Schlumberger contracts for well
construction services including drilling fluids, directional
drilling, bits and reamers, and logging while drilling in the
deepwater Gulf of Mexico. This adds to previous awards on ongoing
Talos projects, including developmental drilling from the Pompano
platform on the Continental Shelf. The new awards include
technologies that will deliver demanding 3D directional drilling
profiles and high-quality data with superior logging-while-drilling
technology. Talos is scheduled to deploy a semisubmersible rig in
August 2022 for this multiwell, deepwater campaign—the latest
project in a collaboration between the two companies that has
developed over years to deliver best-in-class wells.
- The Abu Dhabi National Oil Company (ADNOC) has awarded
Schlumberger a five-year wireline services contract. The contract,
which includes an optional two-year extension, covers open- and
cased-hole wireline logging, as well as perforating and coiled
tubing logging services. Schlumberger technologies, including the
Pulsar* multifunction spectroscopy service and Saturn* 3D radial
probe, will be deployed to maximize the production of existing
wells and appraise new fields for production expansion. Work is
expected to commence in the third quarter of 2022.
Digital adoption across the industry continues to gather
momentum, expanding how customers access their data, improve
existing or create new workflows, and use data to guide decisions
that boost performance in the field. Customers are adopting our
industry-leading digital platform and edge solutions in the field
to solve new challenges and improve operational performance.
Examples from the quarter include the following:
- Offshore Brazil, Schlumberger’s autonomous operations on the
Peregrino platform offer a glimpse into the future of well
construction—built on a digitally native foundation and unique
equipment and service integration capabilities. In addition to the
delivery of the full drilling and control systems on the platform,
Schlumberger developed a digital avatar of the rig, fully enabling
the seamless digital orchestration of the surface equipment and
subsurface well construction process—a step closer to the
autonomous drilling vision.
- In Malaysia, PETRONAS has awarded Schlumberger a contract to
incorporate the DrillOps* on-target well delivery solution in a
drilling campaign in the West Malaysia offshore, the first
deployment of this digital application in Asia. Drilling has
already commenced, with the DrillOps solution expected to deliver
superior drilling performance, safety, and efficiency for PETRONAS.
This deployment builds on digital partnerships initiated between
Schlumberger and PETRONAS to accelerate its field development
planning and optimize asset production performance.
- In Ecuador, Schlumberger deployed a digital water injection
solution—built on Agora* edge AI and IoT solutions—that is
increasing production for PetroEcuador in the Shushufindi Field.
The system integrates smart hardware and Agora solutions to
generate continuous real-time surveillance, smart notifications,
and local control loops for water injection. Leveraging AI deployed
at the edge, the system has predicted early water injection pump
failures and consequently avoided reduced oil production stemming
from limited water handling capacity. This digital solution has
avoided 12,000 bbl of production losses, corrective maintenance
cost, and 100 labor hours that would have otherwise reduced project
performance. The customer expects to expand the deployment of this
Agora solution to other injection systems across the field.
Schlumberger continues to introduce new technologies that boost
customer efficiency and improve operational performance. Among the
new technologies deployed were solutions from the Transition
Technologies* portfolio that delivered significant emissions
reduction.
- In East Texas, Schlumberger delivered the fastest one-mile
curve-and-lateral production hole in KJ Energy history in the
challenging Cotton Valley Formation. The fit-for-basin bottomhole
assembly (BHA) comprising only Schlumberger technology—including
PowerDrive Orbit G2* rotary steerable system, xBolt G2* accelerated
drilling service, and AxeBlade* ridged diamond element bit—remotely
drilled the 6.75-in curve and lateral in 10.6 days with Performance
Live* digitally connected service. This performance helped the
customer beat its average performance by 28% and its previous well
record by 24 hours.
- Offshore Brazil, Schlumberger’s recent application of
technology and an integrated drilling contract model has enabled
Petrobras to drill two of its fastest wells on record, including
the most recent national record of 23 days—7 days ahead of plan.
The adoption of an integrated approach enabled Petrobras’ bold
drilling plan that was executed with fit-for-purpose technology,
including GeoSphere HD* high-definition reservoir
mapping-while-drilling service, and AxeBlade ridged diamond element
bit. This marked the first use of geometric cutters in the Marlim
Field and contributed to operational success. With the recent
record-breaking performances, Schlumberger Well Construction has
now drilled the three fastest wells offshore Brazil.
- Offshore East Java, Schlumberger enabled Saka Indonesia Pangkah
Limited (SIPL) to bring two plugged exploration wells into
production, avoiding the need to drill new wells and shortening
time to first gas. This was the first conversion of an offshore
exploration well to a producing well where the casing had been cut
at the seabed. To achieve this, Schlumberger used a novel
application of its Casing Reconnect* metal-to-metal, gas-tight
casing repair system for reentry and completion.
- Schlumberger is deploying a new technology that can increase
the efficiency of rigless plugging and abandonment (P&A) of
wells, delivering a step change in the P&A process for the
industry. The Schlumberger dual-string P&A barrier evaluation
technology was run for the first time in the Gulf of Mexico to
evaluate cement bonding in the annulus between the 13 3/8-in and
16-in casing with the logging tool run inside uncemented 9 5/8-in
production casing. The technique documented sufficient cement
bonding to allow the Bureau of Safety and Environmental Enforcement
to waive further remediation of that annulus. This saved W&T
Offshore Inc. multiple days on the abandonment operation being
performed by the Q4000 vessel, operated by Helix Energy Solutions
Group, Inc., Schlumberger’s partner in the nonincorporated Subsea
Services Alliance.
Our industry must advance sustainability in its operations by
reducing environmental impact while contributing to the stability
of the global energy supply. Schlumberger continues to create and
apply technology to both reduce emissions from customer operations
and support clean energy generation around the world.
- Zorlu Enerji, Turkey’s leading geothermal investor, installed
the country’s first REDA Thermal* power-efficient geothermal
electric submersible pump (ESP) to increase zero-carbon electricity
generation at its Kızıldere geothermal power facility. The REDA
Thermal pump uses ESP permanent magnet motor technology, one of
Schlumberger's Transition Technologies, to reduce the parasitic
load needed to operate the ESP—increasing net generated power. REDA
Thermal pumps are designed specifically for the geothermal
industry, combining innovation that overcomes oil and gas
production challenges with materials that meet the operational and
longevity requirements of geothermal wells. This technology was
developed leveraging industry domain expertise from GeothermEx, a
Schlumberger multidisciplinary geothermal consulting and services
company.
Schlumberger continues to advance its portfolio of new energy
ventures in Schlumberger New Energy, where it is applying domain
expertise and technology industrialization capabilities to growing
new energy markets.
- Celsius Energy, a Schlumberger New Energy business venture
focused on heating and cooling solutions for buildings, commenced
installation of its novel geoenergy solution for Groupement Optic
2000, a leading French eyewear brand, at its headquarters in
Clamart, France. The facility comprises 12,000 m2 of offices and a
workshop in which glasses are manufactured from recycled materials.
In line with Groupement Optic 2000’s commitment to sustainable
development, the Celsius system was selected for its capability to
reduce both CO2 emissions and energy costs, and it is expected to
decrease the location’s CO2 footprint by 70% and its energy
consumption by 40%. This installation is one of five projects
ongoing in Europe for Celsius Energy and is expected to be
operational in the fourth quarter of 2022.
FINANCIAL TABLES
Condensed Consolidated Statement of Income
(Stated in millions, except per
share amounts)
Second Quarter Six Months Periods Ended June 30,
2022
2021
2022
2021
Revenue
$6,773
$5,634
$12,735
$10,857
Interest & other income (1)
311
16
361
35
Expenses Cost of revenue
5,568
4,768
10,581
9,274
Research & engineering
154
134
295
268
General & administrative
86
70
183
150
Interest
124
136
247
272
Income before taxes (1)
$1,152
$542
$1,790
$928
Tax expense (1)
182
99
300
173
Net income (1)
$970
$443
$1,490
$755
Net income attributable to noncontrolling interest
11
12
21
25
Net income attributable to Schlumberger (1)
$959
$431
$1,469
$730
Diluted earnings per share of Schlumberger (1)
$0.67
$0.30
$1.02
$0.51
Average shares outstanding
1,414
1,398
1,413
1,398
Average shares outstanding assuming dilution
1,436
1,421
1,435
1,420
Depreciation & amortization included in expenses (2)
$532
$526
$1,065
$1,058
(1)
See section entitled “Charges &
Credits” for details.
(2)
Includes depreciation of property, plant
and equipment and amortization of intangible assets, exploration
data costs, and APS investments.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30,
Dec. 31,
Assets
2022
2021
Current Assets Cash and short-term investments
$2,816
$3,139
Receivables
6,247
5,315
Inventories
3,968
3,272
Other current assets
1,285
928
14,316
12,654
Investment in affiliated companies
1,767
2,044
Fixed assets
6,386
6,429
Goodwill
13,009
12,990
Intangible assets
3,102
3,211
Other assets
4,247
4,183
$42,827
$41,511
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$8,528
$8,382
Estimated liability for taxes on income
884
879
Short-term borrowings and current portion of long-term debt
901
909
Dividends payable
270
189
10,583
10,359
Long-term debt
12,946
13,286
Postretirement benefits
232
231
Other liabilities
2,441
2,349
26,202
26,225
Equity
16,625
15,286
$42,827
$41,511
Liquidity
(Stated in millions) Components of Liquidity Jun. 30, 2022 Mar. 31,
2022 Jun. 30, 2021 Dec. 31, 2021 Cash and short-term investments
$2,816
$2,649
$2,682
$3,139
Short-term borrowings and current portion of long-term debt
(901)
(923)
(36)
(909)
Long-term debt
(12,946)
(13,163)
(15,687)
(13,286)
Net Debt (1)
$(11,031)
$(11,437)
$(13,041)
$(11,056)
Details of changes in liquidity follow:
Six
Second
Six
Months
Quarter
Months
Periods Ended June 30,
2022
2022
2021
Net income
$1,490
$970
$755
Charges and credits, net of tax (2)
(266)
(244)
-
1,224
726
755
Depreciation and amortization (3)
1,065
532
1,058
Stock-based compensation expense
160
71
156
Change in working capital
(1,884)
(936)
(758)
US federal tax refund
-
-
477
Other
(26)
15
(39)
Cash flow from operations (4)
539
408
1,649
Capital expenditures
(664)
(360)
(421)
APS investments
(311)
(143)
(188)
Exploration data capitalized
(64)
(24)
(12)
Free cash flow (5)
(500)
(119)
1,028
Dividends paid
(352)
(177)
(349)
Proceeds from employee stock plans
93
22
62
Business acquisitions and investments, net of cash acquired plus
debt assumed
(8)
(8)
(35)
Proceeds from sale of Liberty shares
513
429
-
Proceeds from sale of real estate
120
120
-
Other
(171)
(66)
(30)
Change in net debt before impact of changes in foreign exchange
rates
(305)
201
676
Impact of changes in foreign exchange rates on net debt
330
205
163
Decrease in Net Debt
25
406
839
Net Debt, beginning of period
(11,056)
(11,437)
(13,880)
Net Debt, end of period
$(11,031)
$(11,031)
$(13,041)
(1)
“Net Debt” represents gross debt less cash
and short-term investments. 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. Net Debt is a non-GAAP financial measure that should
be considered in addition to, not as a substitute for or superior
to, total debt.
(2)
See section entitled “Charges &
Credits” for details.
(3)
Includes depreciation of property, plant
and equipment and amortization of intangible assets, exploration
data costs, and APS investments.
(4)
Includes severance payments of $38 million
and $16 million during the six months and second quarter ended June
30, 2022, respectively; and $184 million and $72 million during the
six months and second quarter ended June 30, 2021,
respectively.
(5)
“Free cash flow” represents cash flow from
operations less capital expenditures, APS investments, and
exploration data costs capitalized. Management believes that free
cash flow is an important liquidity measure for the company and
that it is useful to investors and management as a measure of
Schlumberger’s ability to generate cash. Once business needs and
obligations are met, this cash can be used to reinvest in the
company for future growth or to return to shareholders through
dividend payments or share repurchases. Free cash flow does not
represent the residual cash flow available for discretionary
expenditures. Free cash flow is a non-GAAP financial measure that
should be considered in addition to, not as a substitute for or
superior to, cash flow from operations.
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
second-quarter 2022 earnings release also includes non-GAAP
financial measures (as defined under the SEC’s Regulation G). In
addition to the non-GAAP financial measures discussed under
“Liquidity”, net income, excluding charges & credits, as well
as measures derived from it (including diluted EPS, excluding
charges & credits; Schlumberger net income, excluding charges
& credits; effective tax rate, excluding charges & credits;
and adjusted EBITDA) are non-GAAP financial measures. Management
believes that the exclusion of charges & credits from these
financial measures enables it to evaluate more effectively
Schlumberger’s operations period over period and to identify
operating trends that could otherwise be masked by the excluded
items. These measures are also used by management as performance
measures in determining certain incentive compensation. The
foregoing non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, other measures
of financial performance prepared in accordance with GAAP. The
following is a reconciliation of certain of these non-GAAP measures
to the comparable GAAP measures. For a reconciliation of adjusted
EBITDA to the comparable GAAP measure, please refer to the section
titled “Supplemental Information” (Question 9).
(Stated in millions, except per
share amounts)
Second Quarter 2022
Pretax Tax Noncont. Interests Net
Diluted EPS
Schlumberger net income (GAAP basis)
$1,152
$182
$11
$959
$0.67
Gain on sale of Liberty shares (1)
(216)
(13)
-
(203)
(0.14)
Gain on sale of real estate (1)
(43)
(2)
-
(41)
(0.03)
Schlumberger net income, excluding charges & credits
$893
$167
$11
$715
$0.50
Six Months 2022
Pretax Tax Noncont. Interests Net
Diluted EPS *
Schlumberger net income (GAAP basis)
$1,790
$300
$21
$1,469
$1.02
Gain on sale of Liberty shares (1)
(242)
(17)
-
(225)
(0.16)
Gain on sale of real estate (1)
(43)
(2)
-
(41)
(0.03)
Schlumberger net income, excluding charges & credits
$1,505
$281
$21
$1,203
$0.84
First Quarter 2022
Pretax Tax Noncont. Interests Net
Diluted EPS
Schlumberger net income (GAAP basis)
$638
$118
$10
$510
$0.36
Gain on sale of Liberty shares (1)
(26)
(4)
-
(22)
(0.02)
Schlumberger net income, excluding charges & credits
$612
$114
$10
$488
$0.34
There were no charges or credits during
the first six months of 2021.
* Does not add due to rounding.
(1)
Classified in Interest & other income in the Condensed
Consolidated Statement of Income.
Divisions
(Stated in millions)
Three Months Ended Jun. 30,
2022 Mar. 31, 2022 Jun. 30, 2021
Revenue Income
Before Taxes Revenue Income Before Taxes Revenue Income Before
Taxes Digital & Integration
$955
$379
$857
$292
$817
$274
Reservoir Performance
1,333
195
1,210
160
1,117
156
Well Construction
2,686
470
2,398
388
2,110
272
Production Systems
1,893
171
1,604
114
1,681
171
Eliminations & other
(94)
(56)
(107)
(60)
(91)
(66)
Pretax segment operating income
1,159
894
807
Corporate & other
(148)
(164)
(138)
Interest income(1)
3
2
5
Interest expense(1)
(121)
(120)
(132)
Charges & credits(2)
259
26
-
$6,773
$1,152
$5,962
$638
$5,634
$542
(Stated in millions)
Six
Months Ended Jun. 30, 2022
Jun. 30, 2021
Revenue Income
Before Taxes Revenue Income Before Taxes
Digital & Integration
$1,813
$671
$1,590
$521
Reservoir Performance
2,543
355
2,119
258
Well Construction
5,083
858
4,045
482
Production Systems
3,497
285
3,271
309
Eliminations & other
(201)
(115)
(168)
(99)
Pretax segment operating income
2,054
1,471
Corporate & other
(313)
(288)
Interest income(1)
5
9
Interest expense(1)
(241)
(264)
Charges & credits(2)
285
-
$12,735
$1,790
$10,857
$928
(1)
Excludes amounts which are included in the
segments’ results.
(2)
See section entitled “Charges &
Credits” for details.
Supplementary Information Frequently Asked
Questions
1)
What is the capital investment guidance
for the full-year 2022?
Capital investment (composed of capex,
exploration data costs, and APS investments) for the full-year 2022
is expected to be approximately $2 billion. Capital investment in
2021 was $1.7 billion.
2)
What were cash flow from operations and
free cash flow for the second quarter of 2022?
Cash flow from operations for the second
quarter of 2022 was $408 million and free cash flow was negative
$119 million.
3)
What was included in “Interest and
other income” for the second quarter of 2022?
“Interest and other income” for the second
quarter of 2022 was $311 million. This consisted of a gain on the
sale of 26.5 million shares of Liberty Energy Inc. (Liberty) of
$216 million (refer to Question 11), a gain on the sale of certain
real estate of $43 million (refer to Question 11), interest income
of $19 million, and earnings of equity method investments of $33
million.
4)
How did interest income and interest
expense change during the second quarter of 2022?
Interest income of $19 million for the
second quarter of 2022 increased $5 million sequentially. Interest
expense of $124 million increased $1 million sequentially.
5)
What is the difference between
Schlumberger’s consolidated income before taxes and pretax segment
operating income?
The difference consists of corporate
items, charges and credits, and interest income and interest
expense not allocated to the segments as well as stock-based
compensation expense, amortization expense associated with certain
intangible assets, certain centrally managed initiatives, and other
nonoperating items.
6)
What was the effective tax rate (ETR)
for the second quarter of 2022?
The ETR for the second quarter of 2022,
calculated in accordance with GAAP, was 15.8% as compared to 18.4%
for the first quarter of 2022. Excluding charges and credits, the
ETR was 18.6% for both the second and first quarter of 2022.
7)
How many shares of common stock were
outstanding as of June 30, 2022, and how did this change from the
end of the previous quarter?
There were 1.414 billion shares of common
stock outstanding as of June 30, 2022, and 1.413 billion shares as
of March 31, 2022.
(Stated in millions)
Shares outstanding at March 31, 2022
1,413
Shares issued under employee stock
purchase plan
-
Shares issued to optionees, less shares
exchanged
1
Vesting of restricted stock
-
Shares outstanding at June 30, 2022
1,414
8)
What was the weighted average number of
shares outstanding during the second quarter of 2022 and first
quarter of 2022? How does this reconcile to the average number of
shares outstanding, assuming dilution, used in the calculation of
diluted earnings per share?
The weighted average number of shares
outstanding was 1.414 billion during the second quarter of 2022 and
1.412 billion during the first quarter of 2022. The following is a
reconciliation of the weighted average shares outstanding to the
average number of shares outstanding, assuming dilution, used in
the calculation of diluted earnings per share.
(Stated in millions)
Second Quarter 2022
First Quarter 2022
Weighted average shares outstanding
1,414
1,412
Unvested restricted stock
22
22
Average shares outstanding, assuming
dilution
1,436
1,434
9)
What was Schlumberger’s adjusted EBITDA
in the second quarter of 2022, the first quarter of 2022, and the
second quarter of 2021?
Schlumberger’s adjusted EBITDA was $1.530
billion in the second quarter of 2022, $1.254 billion in the first
quarter of 2022, and $1.198 billion in the second quarter of 2021,
and was calculated as follows:
(Stated in millions)
Second Quarter 2022 First
Quarter 2022 Second Quarter 2021 Net income attributable to
Schlumberger
$959
$510
$431
Net income attributable to noncontrolling interests
11
10
12
Tax expense
182
118
99
Income before taxes
$1,152
$638
$542
Charges & credits
(259)
(26)
-
Depreciation and amortization
532
533
526
Interest expense
124
123
136
Interest income
(19)
(14)
(6)
Adjusted EBITDA
$1,530
$1,254
$1,198
Adjusted EBITDA represents income before
taxes, excluding charges & credits, depreciation and
amortization, interest expense, and interest income. Management
believes that adjusted EBITDA is an important profitability measure
for Schlumberger and that it allows investors and management to
more efficiently evaluate Schlumberger’s operations period over
period and to identify operating trends that could otherwise be
masked. Adjusted EBITDA is also used by management as a performance
measure in determining certain incentive compensation. Adjusted
EBITDA should be considered in addition to, not as a substitute for
or superior to, other measures of financial performance prepared in
accordance with GAAP.
10)
What were the components of
depreciation and amortization expense for the second quarter of
2022, the first quarter of 2022, and the second quarter of
2021?
The components of depreciation and
amortization expense for the second quarter of 2022, the first
quarter of 2022, and the second quarter of 2021 were as
follows:
(Stated in millions)
Second Quarter 2022 First
Quarter 2022 Second Quarter 2021 Depreciation of fixed
assets
$340
$338
$352
Amortization of intangible assets
75
75
75
Amortization of APS investments
87
83
77
Amortization of exploration data costs capitalized
30
37
22
$532
$533
$526
11)
What were the components of the pretax credit of $259
million recorded during the second quarter of 2022 related to?
The components of the net pretax charges & credits are
as follows (in millions):
Gain on sale of Liberty shares(a)
$216
Gain on sale of real estate(b)
43
$259
(a)
During the second quarter of 2022,
Schlumberger sold 26.5 million of its shares in Liberty and
received proceeds of $429 million. As a result of the transaction,
Schlumberger recognized a gain of $216 million. This gain is
reflected in Interest & other income in the Condensed
Consolidated Statement of Income. As of June 30, 2022, Schlumberger
had a 12% equity interest in Liberty.
(b)
During the second quarter of 2022,
Schlumberger sold certain real estate and received proceeds of $120
million. As a result of the transaction, Schlumberger recognized a
gain of $43 million. This gain is reflected in Interest & other
income in the Condensed Consolidated Statement of Income.
About Schlumberger
Schlumberger (SLB: NYSE) is a technology company that partners
with customers to access energy. Our people, representing over 160
nationalities, are providing leading digital solutions and
deploying innovative technologies to enable performance and
sustainability for the global energy industry. With expertise in
more than 120 countries, we collaborate to create technology that
unlocks access to energy for the benefit of all.
Find out more at www.slb.com
*Mark of Schlumberger or a Schlumberger company. Other company,
product, and service names are the properties of their respective
owners.
Conference Call Information
Schlumberger will hold a conference call to discuss the earnings
press release and business outlook on Friday, July 22, 2022. The
call is scheduled to begin at 9:30 a.m. US Eastern Time. To access
the call, which is open to the public, please contact the
conference call operator at +1 (844) 721-7241 within North America,
or +1 (409) 207-6955 outside North America, approximately 10
minutes prior to the call’s scheduled start time, and provide the
access code 8858313. At the conclusion of the conference call, an
audio replay will be available until August 22, 2022, by dialing +1
(866) 207-1041 within North America, or +1 (402) 970-0847 outside
North America, and providing the access code 9508868. The
conference call will be webcast simultaneously at
www.slb.com/irwebcast on a listen-only basis. A replay of the
webcast will also be available at the same website until August 22,
2022.
This second-quarter 2022 earnings press release, as well as
other statements we make, contain “forward-looking statements”
within the meaning of the federal securities laws, which include
any statements that are not historical facts. Such statements often
contain words such as “expect,” “may,” “can,” “believe,” “predict,”
“plan,” “potential,” “projected,” “projections,” “precursor,”
“forecast,” “outlook,” “expectations,” “estimate,” “intend,”
“anticipate,” “ambition,” “goal,” “target,” “scheduled,” “think,”
“should,” “could,” “would,” “will,” “see,” “likely,” and other
similar words. Forward-looking statements address matters that are,
to varying degrees, uncertain, such as statements about our
financial and performance targets and other forecasts or
expectations regarding, or dependent on, our business outlook;
growth for Schlumberger as a whole and for each of its Divisions
(and for specified business lines, geographic areas, or
technologies within each Division); oil and natural gas demand and
production growth; oil and natural gas prices; forecasts or
expectations regarding energy transition and global climate change;
improvements in operating procedures and technology; capital
expenditures by Schlumberger and the oil and gas industry; our
business strategies, including digital and “fit for basin,” as well
as the strategies of our customers; our effective tax rate; our APS
projects, joint ventures, and other alliances; our response to the
COVID-19 pandemic and our preparedness for other widespread health
emergencies; the impact of the ongoing conflict in Ukraine on
global energy supply; access to raw materials; future global
economic and geopolitical conditions; future liquidity; and future
results of operations, such as margin levels. These statements are
subject to risks and uncertainties, including, but not limited to,
changing global economic and geopolitical conditions; changes in
exploration and production spending by our customers, and changes
in the level of oil and natural gas exploration and development;
the results of operations and financial condition of our customers
and suppliers; the inability to achieve its financial and
performance targets and other forecasts and expectations; the
inability to achieve our net-zero carbon emissions goals or interim
emissions reduction goals; general economic, geopolitical, and
business conditions in key regions of the world; the ongoing
conflict in Ukraine; foreign currency risk; inflation; pricing
pressure; weather and seasonal factors; unfavorable effects of
health pandemics; availability and cost of raw materials;
operational modifications, delays, or cancellations; challenges in
our supply chain; production declines; the extent of future
charges; the inability to recognize efficiencies and other intended
benefits from our business strategies and initiatives, such as
digital or Schlumberger New Energy; as well as our cost reduction
strategies; changes in government regulations and regulatory
requirements, including those related to offshore oil and gas
exploration, radioactive sources, explosives, chemicals, and
climate-related initiatives; the inability of technology to meet
new challenges in exploration; the competitiveness of alternative
energy sources or product substitutes; and other risks and
uncertainties detailed in this press release and our most recent
Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities
and Exchange Commission. If one or more of these or other risks or
uncertainties materialize (or the consequences of any such
development changes), or should our underlying assumptions prove
incorrect, actual results or outcomes may vary materially from
those reflected in our forward-looking statements. Forward-looking
and other statements in this press release regarding our
environmental, social, and other sustainability plans and goals are
not an indication that these statements are necessarily material to
investors or required to be disclosed in our filings with the SEC.
In addition, historical, current, and forward-looking
environmental, social, and sustainability-related statements may be
based on standards for measuring progress that are still
developing, internal controls and processes that continue to
evolve, and assumptions that are subject to change in the future.
Statements in this press release are made as of the date of this
release, and Schlumberger disclaims any intention or obligation to
update publicly or revise such statements, whether as a result of
new information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220720005947/en/
Investor Relations Contacts: Ndubuisi Maduemezia – Vice
President of Investor Relations, Schlumberger Limited Joy V.
Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535 investor-relations@slb.com
Media Contacts: Josh Byerly, Vice President of
Communications, Schlumberger Limited Moira Duff, Director of
External Communications, Schlumberger Limited Office +1 (713)
375-3407 media@slb.com
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