Schlumberger Announces Third-Quarter 2012 Results

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Schlumberger Announces Third-Quarter 2012 Results

HOUSTON--(BUSINESS WIRE)-- Schlumberger Limited (NYS: SLB) today reported third-quarter 2012 revenue of $10.61 billion versus $10.45 billion in the second quarter of 2012, and $9.55 billion in the third quarter of 2011.

Income from continuing operations attributable to Schlumberger, excluding charges and credits, was $1.44 billion—an increase of 3% sequentially and 10% year-on-year. Diluted earnings-per-share from continuing operations, excluding charges and credits, was $1.08 versus $1.05 in the previous quarter, and $0.96 in the third quarter of 2011.


Schlumberger recorded charges of $0.02 per share in each of the third and second quarters of 2012 and the third quarter of 2011.

Oilfield Services revenue of $10.61 billion increased 2% sequentially and 11% year-on-year. Oilfield Services pretax operating income of $2.14 billion increased 2% sequentially and 11% year-on-year.

Schlumberger CEO Paal Kibsgaard commented, "Our third-quarter results reflected steady international growth although performance in regional markets varied through activity mix and changes to project schedules. Key markets, both on land and offshore, continued to drive performance as international demand for reservoir characterization and drilling services more than offset weakness in the North America pressure pumping market.

Both Middle East & Asia and Europe/CIS/Africa Areas delivered strong results, while Latin America revenue was flat with the previous quarter due to operational delays, project mobilizations and changes in activity mix. In North America, a slow seasonal recovery in Canada, falling US land rig count, continued oversupply of hydraulic fracturing capacity, and the effects of Hurricane Isaac all impacted performance.

International pricing continued a steady upwards trend during the quarter, driven by higher sales of new technology and strong operational performance. Service capacity remained tight for Seismic, Wireline and Drilling & Measurements services, and we also saw signs of capacity tightening in our Well Testing business. Schlumberger Production Management continued to ramp-up operations on the Shushufindi project in Ecuador and the Carrizo field in Mexico, and we started mobilizing for the Panuco project, also in Mexico.

Among new Schlumberger technologies, HiWAY stimulation activity continued to grow, the first commercial IsoMetrix marine seismic acquisition was completed and we introduced several new and unique Wireline services during the quarter.

Against these results, there continues to be uncertainty surrounding the outlook for the global economy. Central bank interventions in the US and in Europe, together with signs of a managed slowdown in the Chinese economy, left estimates for future world GDP growth largely unchanged. At the same time, the balance of oil supply and demand continues to be tight, with continued production challenges in non-OPEC countries, and OPEC spare capacity remaining close to a five-year low. This overall landscape leads us to believe that oil prices will be supported around current levels although remaining subject to volatility.

We still expect our international activity to grow in excess of 10% in 2012. In North America on the other hand, the strength in Gulf of Mexico activity will continue to be challenged by weakness in the land hydraulic fracturing market and early signs of softening in the land coiled-tubing business.

In this market we will continue to maintain a relentless focus on the quality and efficiency of our execution. This, in combination with our balanced technology portfolio and unmatched international strength, creates an environment in which Schlumberger is very favorably placed to deliver superior financial results."

Other Events:

  • During the quarter, Schlumberger repurchased 2.2 million shares of its common stock at an average price of $68.19 for a total purchase price of $149 million.
  • During the quarter, Schlumberger issued $1 billion of 1.25% five-year notes due 2017 and $1 billion of 2.40% ten-year notes due 2022.
    
Condensed Consolidated Statement of Income
 
(Stated in millions, except per share amounts)
 
Third QuarterNine Months
Periods Ended September 30 2012 2011 2012 2011
 
Revenue$10,608$9,546$30,974$26,658

Interest and other income, net(1)

443413794
Expenses
Cost of revenue8,2907,44424,26520,951
Research & engineering289266855800
General & administrative(2)9587294319
Merger & integration(2)32266891
Interest  89  70  246  212
Income before taxes1,8571,6875,383$4,379
Taxes on income(2)  442  398  1,287  1,051
Income from continuing operations1,4151,2894,0963,328
Income from discontinued operations  12  16  51  261
Net income1,4271,3054,1473,589
Net income attributable to noncontrolling interests  3  4  20  5
Net income attributable to Schlumberger $1,424 $1,301 $4,127 $3,584
 
Schlumberger amounts attributable to:
Income from continuing operations(2)$1,412$1,285$4,076$3,323
Income from discontinued operations  12  16  51  261
Net income $1,424 $1,301 $4,127 $3,584
 
Diluted earnings per share of Schlumberger
Income from continuing operations(2)$1.06$0.95$3.04$2.43
Income from discontinued operations  0.01  0.01  0.04  0.19
Net income $1.07 $0.96 $3.08 $2.62
 
Average shares outstanding1,3281,3451,3311,352
Average shares outstanding assuming dilution  1,336  1,357  1,340  1,365
 
Depreciation & amortization included in expenses(3) $864 $825 $2,570 $2,415
    1) Includes interest income of:
Third quarter 2012 - $8 million (2011 - $10 million)
Nine months 2012 - $23 million (2011 - $28 million)
2)

See page 6 for details of charges and credits.

3)Including multiclient seismic data cost.
   
Condensed Consolidated Balance Sheet
 
(Stated in millions)
 
Sept. 30,Dec. 31,
Assets 2012  2011
Current Assets
Cash and short-term investments$4,760$4,827
Receivables11,4509,500
Other current assets  6,741   6,212
22,95120,539
Fixed income investments, held to maturity246256
Fixed assets14,10412,993
Multiclient seismic data504425
Goodwill14,52414,154
Other intangible assets4,8584,882
Other assets  2,254   1,952
  $59,441  $55,201
 
Liabilities and Equity     
Current Liabilities
Accounts payable and accrued liabilities$7,913$7,579
Estimated liability for taxes on income1,4591,245
Short-term borrowings and current portion
of long-term debt1,7921,377
Dividend payable  368   337
11,53210,538
Long-term debt9,3978,556
Postretirement benefits1,3981,732
Deferred taxes1,6421,731
Other liabilities  1,161   1,252
25,13023,809
Equity  34,311   31,392
  $59,441  $55,201
 

Net Debt

"Net Debt" represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger's indebtedness by reflecting cash and investments that could be used to repay debt. Details of changes in Net Debt for the year to date follow:

 
(Stated in millions)
 
Nine Months2012
Net Debt, January 1, 2012$(4,850)
Income from continuing operations4,096
Depreciation and amortization2,570
Pension and other postretirement benefits expense298
Excess of equity income over dividends received(87)
Stock-based compensation expense251
Pension and other postretirement benefits funding(462)
Increase in working capital(2,816)
Capital expenditures(3,162)
Multiclient seismic data capitalized(260)
Dividends paid(1,067)
Proceeds from employee stock plans385
Stock repurchase program(972)
Business acquisitions and investments, net of cash and debt acquired(712)
Proceeds from the sale of Wilson906
Proceeds from the sale of CE Franklin122
Other(472)
Currency effect on net debt 49 
Net Debt, September 30, 2012$(6,183)
 
Components of Net Debt

Sept. 30,
2012

 

Dec. 31,
2011

Cash and short-term investments$4,760$4,827
Fixed income investments, held to maturity246256
Short-term borrowings and current portion of long-term debt(1,792)(1,377)
Long-term debt (9,397) (8,556)
$(6,183)$(4,850)
 

Charges & Credits

In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this document also includes non-GAAP financial measures (as defined under the SEC's Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:

  
(Stated in millions, except per share amounts)
    
Third Quarter 2012
Pretax Tax 

Noncont.
Interest

 Net 

Diluted
EPS

Income Statement Classification
Schlumberger income from continuing operations,

as reported

$1,857$442$3$1,412$1.06
Merger and integration costs 32  4  -  28  0.02Merger & integration
Schlumberger income from continuing operations,

excluding charges & credits

$1,889 $446 $3 $1,440 $1.08
 
Second Quarter 2012
Pretax Tax 

Noncont.
Interest

 Net 

Diluted
EPS

Income Statement Classification
Schlumberger income from continuing operations,

as reported

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