- Fourth-quarter revenue of $7.1 billion increased 1% sequentially
- Fourth-quarter GAAP loss per share, including charges of $0.42 per share, was $0.15
- Fourth-quarter earnings per share, excluding charges was $0.27
- Fourth-quarter cash flow from operations was $2.0 billion. Fourth-quarter free cash flow was $1.1 billion
- Full-year cash flow from operations was $6.3 billion. Full-year free cash flow was $2.5 billion
- Quarterly cash dividend of $0.50 per share approved
HOUSTON--(BUSINESS
WIRE/ME NewsWire)--
Schlumberger Limited (NYSE:SLB) today reported results for full-year 2016 and
the fourth quarter of 2016.
Full-Year Results
|
|
(Stated in millions, except per
share amounts)
|
|||||||||
|
Twelve Months Ended
|
|
Change
|
||||||||
|
Dec. 31, 2016
|
|
Dec. 31, 2015
|
Year-on-year
|
|||||||
|
Revenue
|
$
|
27,810
|
$
|
35,475
|
-22%
|
|||||
|
Pretax operating income
|
$
|
3,273
|
$
|
6,510
|
-50%
|
|||||
|
Pretax operating margin
|
11.8
|
%
|
18.4
|
%
|
-658 bps
|
|||||
|
Net income (loss) (GAAP basis)
|
$
|
(1,687
|
)
|
$
|
2,072
|
n/m
|
||||
|
Net income, excluding charges and
credits*
|
$
|
1,550
|
$
|
4,290
|
-64%
|
|||||
|
Diluted EPS (loss per share) (GAAP
basis)
|
$
|
(1.24
|
)
|
$
|
1.63
|
n/m
|
||||
|
Diluted EPS, excluding charges and
credits*
|
$
|
1.14
|
$
|
3.37
|
-66%
|
|||||
|
|
||||||||||
|
*These are non-GAAP financial
measures. See section below entitled "Charges & Credits" for
details.
|
||||||||||
|
n/m = not meaningful
|
||||||||||
Full-year 2016 revenue of $27.8
billion decreased 22% year-on-year, despite three quarters of activity from the
Cameron Group that contributed $4.2 billion in revenue. Excluding Cameron,
consolidated revenue declined 34%.
Full-year 2016 pretax operating
income of $3.3 billion, including the $653 million contribution from the
Cameron Group, decreased 50% year-on-year. Consolidated margin fell 658 basis
points (bps) to 11.8%. Excluding Cameron, consolidated margin fell 727 bps to
11.1%.
Fourth-Quarter Results
|
|
(Stated in millions, except per
share amounts)
|
|||||||||||||||
|
Three Months Ended
|
|
Change
|
||||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015
|
Sequential
|
|
Year-on-year
|
|||||||||
|
Revenue
|
$
|
7,107
|
$
|
7,019
|
$
|
7,744
|
1%
|
-8%
|
||||||||
|
Pretax operating income
|
$
|
810
|
$
|
815
|
$
|
1,288
|
-1%
|
-37%
|
||||||||
|
Pretax operating margin
|
11.4
|
%
|
11.6
|
%
|
16.6
|
%
|
-21 bps
|
-523 bps
|
||||||||
|
Net income (loss) (GAAP basis)
|
$
|
(204
|
)
|
$
|
176
|
$
|
(1,016
|
)
|
n/m
|
-80%
|
||||||
|
Net income, excluding charges and
credits*
|
$
|
379
|
$
|
353
|
$
|
819
|
7%
|
-54%
|
||||||||
|
Diluted EPS (loss per share) (GAAP
basis)
|
$
|
(0.15
|
)
|
$
|
0.13
|
$
|
(0.81
|
)
|
n/m
|
n/m
|
||||||
|
Diluted EPS, excluding charges and
credits*
|
$
|
0.27
|
$
|
0.25
|
$
|
0.65
|
8%
|
-58%
|
||||||||
|
|
||||||||||||||||
|
*These are non-GAAP financial
measures. See section below entitled "Charges & Credits" for
details.
|
||||||||||||||||
|
n/m = not meaningful
|
||||||||||||||||
“Among the business segments, the
fourth-quarter revenue increase was led by the Production Group, which grew 5%
due to increased hydraulic fracturing activity in the Middle East and in North
America land. Reservoir Characterization Group revenue increased 1% sequentially
due to strong Testing & Process activity in Kuwait that outweighed the
seasonal decline in Wireline activity in Norway and Russia. Drilling Group
revenue was flat sequentially as continued strong directional drilling activity
in North America land was offset by activity declines in Europe/CIS/Africa and
Middle East & Asia. Cameron Group revenue was also flat sequentially, with
growth in OneSubsea and Surface Systems offset by reduced product sales from
Valves & Measurement and from a declining order backlog in Drilling
Systems.
“Pretax operating margin was
essentially flat sequentially at 11.4% as margin improvements in the Production
and Drilling Groups were balanced by contractions in the Cameron and Reservoir
Characterization Groups. In recent quarters, we have managed to stabilize our
business from an activity and capacity standpoint, and this has subsequently
allowed us to refine and reduce our support structure to reflect current
activity and service pricing levels. This has led us to record a $536 million
restructuring charge in the fourth quarter. We also recorded $139 million of
charges relating to the Cameron integration and a currency devaluation loss in
Egypt.
“We maintain our constructive view of the oil
markets, as the tightening of the supply and demand balance continued in the
fourth quarter, as seen by a steady draw in OECD stocks. This
trend was further strengthened by
the December OPEC and non-OPEC agreements to cut production, which should, with
a certain lag, accelerate inventory draws, support a further increase in oil
prices, and lead to increased E&P investments.
“We expect the growth in investments
to initially be led by land operators in North America, where continued
negative free cash flows seem less of a constraint, as external funding is
readily available and the pursuit of shorter-term equity value takes precedence
over full-cycle return on investment. E&P spending surveys currently
indicate that 2017 NAM E&P investments will increase by around 30%, led by
the Permian basin, which should lead to both higher activity and a long overdue
recovery in service industry pricing.
“In the international markets,
operators are more focused on full-cycle returns and E&P investments are
generally governed by the operators’ free cash flow generation. Based on this,
we expect the 2017 recovery in the international markets to start off more
slowly, driven by the economic reality facing the E&P industry. This will
likely lead to a third successive year of underinvestment, with a continued low
rate of new project approvals and an accelerating production decline in the
aging production base. These factors together are increasing the likelihood of
a significant supply deficit in the medium term, which can only be avoided by a
broad-based global increase in E&P spending, which we expect will start
unfolding in the later parts of 2017 and leading into 2018.
“Against this backdrop and following
nine consecutive quarters of relentless workforce reductions, cost cutting, and
restructuring efforts, we are excited to restore focus on the pursuit of growth
and improving returns. As we navigated this downturn, we have streamlined our
cost and support structure, continued to drive the underlying efficiency and
quality of our business workflows, expanded our offering through maintaining
investments in R&E, and made a series of strategic acquisitions. The
combination of these actions has enabled us to further strengthen our global
market position during the downturn, which will enable us to maintain and
extend our well established margin and earnings leadership in both North
America and in all parts of the International markets going forward.
“While earnings growth continues to
be a very important financial driver for us, full-cycle cash generation is even
more critical, and here, we remain unique in the industry. Over the past two
years of this downturn, we have generated $7.5 billion in free cash flow, which
is more than the rest of our major competitors combined. Furthermore, we have
returned $8.0 billion to our shareholders through dividends and share
buy-backs. This clearly demonstrates the full-cycle robustness of Schlumberger,
the careful management of our business, and the strength of our executional
capabilities.”
Other Events
During the quarter, Schlumberger repurchased 1.5
million shares of its common stock at an average price of $78.21 per share for
a total purchase price of $116 million.
On January 5, 2017, Schlumberger
announced the acquisition of Peak Well Systems, a leading specialist enterprise
in the design and development of advanced downhole tools for flow control, well
intervention, and well integrity.
On January 19, 2017, the Company’s
Board of Directors approved a quarterly cash dividend of $0.50 per share of
outstanding common stock, payable on April 17, 2017 to stockholders of record
on February 15, 2017.
Consolidated Revenue by Geography
|
|
(Stated in millions)
|
|
|
||||||
|
Three Months Ended
|
|
Change
|
|||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
Sequential
|
||||||
|
North America
|
$
|
1,765
|
$
|
1,699
|
4%
|
||||
|
Latin America
|
952
|
992
|
-4%
|
||||||
|
Europe/CIS/Africa
|
1,834
|
1,872
|
-2%
|
||||||
|
Middle East & Asia
|
2,494
|
2,385
|
5%
|
||||||
|
Eliminations & other
|
|
62
|
|
71
|
-13%
|
||||
|
$
|
7,107
|
$
|
7,019
|
1%
|
|||||
|
|
|||||||||
|
North America revenue
|
$
|
1,765
|
$
|
1,699
|
4%
|
||||
|
International revenue
|
$
|
5,280
|
$
|
5,249
|
1%
|
||||
Fourth-quarter revenue of $7.1
billion increased 1% sequentially with North America growing 4% and
International increasing 1%.
North America
In North America, revenue increased
4% sequentially, on increased land activity while offshore declined. Excluding
Cameron Group results, land revenue experienced double-digit growth driven by
strong hydraulic fracturing activity as stage count increased, and higher
uptake of Drilling & Measurements, Bits & Drilling Tools, and M-I SWACO
products and services as rig count increased. Revenue on land in the US also
posted double-digit growth on higher activity and a modest pricing recovery,
while revenue in Western Canada grew strongly from a winter ramp-up in activity
in addition to higher sales of artificial lift products. Revenue also increased
from year-end WesternGeco multiclient seismic license sales that were, however,
muted when compared to prior years. Sales from Valves & Measurement and
Drilling Systems declined.
International Areas
International revenue increased 1%
sequentially led by strong growth in the Middle East & Asia Area, which was
partially offset by continued weakness in the Latin America Area and seasonal
activity declines in the Europe/CIS/Africa Area.
Middle East & Asia Area revenue increased 5% sequentially. This was mainly due to
strong fracturing and Integrated Production Services (IPS) activity on
unconventional land resource developments and increased productivity from land
seismic crews in Saudi Arabia. Revenue in Egypt increased from higher
perforating, while Qatar grew from increased horizontal logging work. These
increases, however, were partially offset by declines in Drilling &
Measurements and Integrated Drilling Services (IDS) activity and lower
equipment sales in the India GeoMarket as projects were completed and well
campaigns delayed.
Revenue in the Latin America Area
declined 4% sequentially, mainly in the Mexico & Central America GeoMarket
where customer budget constraints led to a sharp drop in overall rig count that
impacted onshore and offshore operations, affecting both deepwater and
shallow-water projects. Revenue in Mexico also declined following the strong
marine surveys and multiclient license seismic sales last quarter. Revenue in
Argentina decreased as unconventional resource development work was affected by
unfavorable weather conditions and other delays. These declines, however, were
partially mitigated by strong drilling and project activity in the Peru,
Colombia & Ecuador GeoMarket as the rig count increased by 46% following
the rise in oil prices.
Europe/CIS/Africa Area revenue decreased 2% sequentially mainly
due to the seasonal conclusion of peak summer drilling activity in Russia and
exploration services campaigns in Norway that impacted all Technologies, led by
Wireline, Drilling & Measurements, and M-I SWACO. The Sub-Saharan Africa
GeoMarket contributed to the Area revenue decline as rigs demobilized and
projects were completed, mainly in Angola and Congo. These decreases were
partially offset by strong OneSubsea project activity and execution.
Reservoir Characterization Group
|
|
(Stated in millions, except margin
percentages)
|
|||||||||||||||
|
Three Months Ended
|
|
Change
|
||||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015
|
Sequential
|
|
Year-on-year
|
|||||||||
|
Revenue
|
$
|
1,699
|
$
|
1,689
|
$
|
2,193
|
1%
|
-23%
|
||||||||
|
Pretax operating income
|
$
|
316
|
$
|
322
|
$
|
521
|
-2%
|
-39%
|
||||||||
|
Pretax operating margin
|
18.6
|
%
|
19.1
|
%
|
23.8
|
%
|
-49 bps
|
-519 bps
|
||||||||
Reservoir Characterization Group
revenue was $1.7 billion, with 76% coming from international operations.
Revenue was 1% higher sequentially due to the ramp-up in activity on the early
production facilities projects in Kuwait, higher Wireline perforating activity
in Egypt, increased horizontal logging work in Qatar, and increased software
license and maintenance sales. These effects were partially offset by the
seasonal decrease in Wireline activity in the Northern Hemisphere.
Pretax operating margin of 19%
decreased 49 bps sequentially as the increased contribution from software and
maintenance sales was more than offset by the decline in high-margin Wireline
exploration activities.
Reservoir Characterization Group
performance was boosted by a number of Integrated Services Management (ISM)
projects, new contract awards, technology deployments, and transformation
efficiencies during the quarter.
In Ecuador, Schlumberger provided
ISM for Petroamazonas EP and Sinopec to optimize drilling on the Tiputini project.
The Bits & Drilling Tools ONYX* polycrystalline diamond compact (PDC)
cutter and Stinger* conical diamond element technologies enabled better
steerability and stability as well as longer and faster runs. In addition,
Wireline Dielectric Scanner* multifrequency dielectric dispersion service
directly measured water volume and textural rock information while the
Dual-Packer Module isolated the interval for the MDT* modular formation
dynamics tester tool. Furthermore, PowerJet Nova* extradeep penetrating shaped
charges delivered improved efficiency. The customer reduced total drilling time
to 7 1/2 days from the expected 11 days, equivalent to an estimated cost
savings of $250,000.
In Egypt, Belayim Petroleum Company
(Petrobel), a joint venture between Egyptian General Petroleum Corporation and
IEOC Production B.V., awarded Schlumberger Testing & Process a contract
valued at $70 million for the engineering, procurement, construction,
commissioning, and operation of a facility for the Zohr gas field. The facility,
which is expected to be completed 11 months from the date of the award, will
provide accelerated production of gas during the first phase of the project. In
addition, Testing & Process used a combination of technologies for Petrobel
to complete a production test of the first offshore appraisal well of the Zohr
discovery in the Shorouk block. Working at a water depth of 1,450 m, the
production test string included a SenTREE 3* subsea test tree combined with
Muzic* wireless telemetry technology, which activated the SCAR* inline
independent reservoir fluid sampling and Quartet* downhole reservoir testing
systems. The use of Testing Manager* well testing real-time data monitoring and
collaboration software enabled real-time transient analysis and optimization of
the well test program.
In Mexico, Pemex awarded WesternGeco
a 2,400-km2 full-azimuth ocean-bottom-cable project over the Canin Suuk field
in the shallow-water Bay of Campeche. The field is in an area with high
prospectivity within their exploration portfolio and requires new seismic
technology to provide better imaging due to its salt tectonics complexity. The
WesternGeco vessel WG Tasman, newly converted to ocean-bottom
operations, will use Q-Seabed* multicomponent seabed seismic technology that has
a system designed to ensure uniform coupling in all directions. Acquisition
began in 2016 and will continue for approximately one year.
Offshore Norway, Wireline introduced
a combination of technologies for Lundin Norway to overcome challenging formation
geology and reduce operating time in a well in the Barents Sea. The potential
presence of large caves that were not visible via surface seismic imaging
required the use of high-resolution imaging in, around, and beyond the
borehole. Technologies included the hDVS distributed acoustic sensing (DAS)
system using a wireline cable with integrated optical fibers, a Z-Trac*
downhole vibrator, and a VSI* versatile seismic imager all within a single
toolstring. The data acquired by having the vibrator and imager downhole
enabled the customer to see potential hazards ahead of the drill bit and
mitigate drilling risk. The DAS technology reduced operating time to 30 minutes
compared with conventional VSP acquisition that can require up to eight hours.
Offshore the UAE, Testing &
Process deployed a combination of technologies for Al Hosn Gas in the Hail and
Gasha fields. The combination included an eFire-TCP* tubing-conveyed
perforating electronic firing head and new perforation correlation technology,
both enabled by Muzic* wireless telemetry. The wirelessly-enabled depth
correlation was consistent with the traditional wireline gamma ray and casing
collar locator method. In addition, real-time downhole data helped determine
reservoir properties, assessed well performance during and after stimulation,
and supported downhole sampling decisions to reduce the original well test
program by 18 hours.
The transformation program enabled
reductions in equipment numbers and tool reliability repair costs for Schlumberger
by using Technology Lifecycle Management (TLM). In Saudi Arabia for example,
Schlumberger at its Middle East Center for Reliability and Efficiency (CRE) in
Dhahran implemented a new maintenance system for Testing & Process Services
that decreased the overall cost of equipment repair by 48% and improved
turnaround time by 21% in the first three months of operations. In Australia,
WesternGeco deployed its newly developed eSource marine seismic energy source
on the Amazon Conqueror for a multiclient survey. TLM methodology
delivers seismic source reliability improvements for all WesternGeco sources
including the eSource project which is using an acquisition technique that
depends on high source reliability to ensure maximum operational efficiency.
From 2014 to 2016, the reliability of WesternGeco sources improved 47%.
Drilling Group
|
(Stated in millions, except margin
percentages)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Change
|
|||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015
|
Sequential
|
|
Year-on-year
|
|||||||||
|
Revenue
|
$
|
2,013
|
$
|
2,021
|
$
|
2,953
|
-
|
-32%
|
||||||||
|
Pretax operating income
|
$
|
234
|
$
|
218
|
$
|
494
|
7%
|
-53%
|
||||||||
|
Pretax operating margin
|
11.6
|
%
|
10.8
|
%
|
16.7
|
%
|
81 bps
|
-511 bps
|
||||||||
Drilling Group revenue of $2.0
billion, of which 76% came from the international markets, was flat
sequentially as the continued strong directional drilling activity in North
America land was offset by lower drilling activity in the International Areas. The
improvement in North America revenue came from increased uptake of Drilling
& Measurements, Bits & Drilling Tools, and M-I SWACO products and
services. The decreased revenue in the International Areas was due to completed
Drilling & Measurement and IDS projects in India and Iraq, while the winter
slowdown in Russia and Norway affected Drilling & Measurements and M-I
SWACO activity.
Pretax operating margin of 12%
expanded 81 bps sequentially despite revenue being flat. This was due to
pricing improvements from greater uptake of drilling technologies on increasing
activity on land in the US which mainly affected Drilling & Measurements
and Bits & Drilling Tools. Margin also expanded as a result of operational
execution in IDS, M-I SWACO, and Bits & Drilling Tools and through
continuing transformation-related benefits as resources were aligned to match
the shape of the recovery.
A combination of IDS projects,
contract awards, new technology deployments, and transformation efficiencies
contributed to Drilling Group performance in the fourth quarter.
In the Gulf Cooperation Council
(GCC) region, IDS delivered a 40% drilling performance improvement in the first
three quarters of 2016 compared with non-integrated drilling services in
similar fields. The improvement is based on the feet drilled per hour below the
rotary table. This achievement was enabled by a combination of drilling
technologies, such as PowerDrive Archer* high build rate and PowerDrive Xceed*
ruggedized rotary steerable systems to optimize drilling times in horizontal
wells and during extended reach drilling. This included the use of RigHour*
multiwell drilling operational efficiency analysis, and ROPO* rate of
penetration optimization software, which adjusts drilling parameters to
maximize on-bottom drilling performance. Schlumberger combined these
technologies with integrated workflows overseen by multidisciplinary domain
experts in the Saudi Arabia and Abu Dhabi Drilling Technology Integration
Centers to reduce both drilling and overall development costs.
In Norway, Statoil awarded
Schlumberger an eight-year contract with optional periods to deliver integrated
well construction services for one of its Cat-J jackup rigs being built for
operations in the harsh environments and shallow wells of the Norwegian
Continental Shelf. Schlumberger will provide planning and execution for
directional drilling, measurement- and logging-while-drilling, mud logging,
drilling and completion fluids, cementing, pumping, slot recovery and fishing,
electrical wireline logging, waste management, completions, downhole mechanical
isolation, mechanical well wash and tubing-conveyed perforating for the
Gullfaks satellites field with operations planned for start-up later this year.
In the Norwegian sector of the North
Sea, Drilling & Measurements used the GeoSphere* reservoir
mapping-while-drilling service for ExxonMobil to map a complex injectite
reservoir and effectively geosteer into target sands in the Balder field. Given
two goals—avoid costly pilot holes in development wells that often failed to
provide sufficient information to help land the producer wells and avoid
setting the casing in thin injectite sands—GeoSphere technology mapped the top
of the massive sands from more than 20 m total vertical depth above and detected
the oil/water contact while landing the 12 ¼-in section before penetrating the
reservoir. For the 8 ½-in reservoir section, the customer was able to plan a
geosteering strategy ahead of the bit by combining seismic interpretation and
GeoSphere mapping results, and thus increased the productivity of the wells.
In West Texas, Drilling & Measurements used
a combination of technologies to establish a new record in drilling performance
for an operator in the Permian basin. The bottomhole assembly included
PowerDrive Orbit* rotary steerable systems to optimize directional drilling and
a DynaForce* high-performance drilling motor, which provides the highest torque
at the bit and
outperforms conventional motors in
high-volume drilling. In addition, SlimPulse* retrievable MWD service provided
direction, inclination, toolface, and gamma ray measurements in real time for
mud-pulse telemetry. The customer drilled a 7,814-ft lateral in less than 22
hours, which surpassed the customer’s previous footage record in the Permian
basin by 47%. As a result, the customer reduced drilling time by 18 hours
compared with a previous lateral.
In Ecuador, a Drilling &
Measurements PowerDrive*X6 rotary steerable system with customized Smith PDC
bit technologies was deployed for Orion Energy to improve drilling performance
in a well in the Ocano field. With remote support from experts at the Drilling
Technology Integration Center, the operations team drilled 6,400 ft of the
16-in well section in 30 hours, increasing the rate of penetration (ROP) to 201
ft/hr compared with 136 ft/hr in similar wells, a 48% net increase. As a
result, the customer saved approximately $100,000 in drilling costs by completing
the well section two days earlier than originally planned.
In Egypt, Drilling &
Measurements used the GeoSphere* reservoir mapping-while-drilling service for
Belayim Petroleum Company (Petrobel), a joint venture between Egyptian General
Petroleum Corporation and IEOC Production B.V., to eliminate a pilot hole in
the Abu Rudeis field. An unconformity at the top of the oil-bearing sandstone
initially required a pilot hole to determine intermediate casing depth while
pressurized shales above the target zone required a high mud weight that made
penetration of the target sand challenging due to potential mud circulation
losses. GeoSphere technology used deep directional electromagnetic measurements
to reveal subsurface bedding and fluid contact details more than 100 ft from
the wellbore, which helped manage the geological uncertainty and drilling risk.
By eliminating the pilot hole, the customer saved approximately $1.8 million.
In Russia, Bits & Drilling Tools
used a combination of drillbit technologies for LLC LUKOIL-Komi, a subsidiary
production enterprise of PAO LUKOIL, to eliminate four bit trips and increase
the ROP in an offset well in the Kyrtaelskoye field in the Timano-Pechora
region. ONYX 360* rolling PDC cutter technology increased bit durability due to
its 360° of rotation while Stinger* conical diamond elements provided superior
impact strength and wear resistance in this hard and highly abrasive sand
formation. In addition, due to its modular design, the Drilling &
Measurements PowerPak* steerable motor was customized to the drilling
environment. As a result, the customer achieved an average ROP of 9.3 m/h, a
40% increase compared with the maximum ROP achieved in offset wells.
Furthermore, the customer saved five days of operations by drilling the 8
5/8-in section in 15 days instead of the expected 20 days.
In the Neuquén basin in Argentina,
M-I SWACO used KLA-SHIELD* enhanced-polymer water-base drilling fluid for
Wintershall Argentina to drill a 3,281-ft lateral in a challenging formation defined
by abnormally high pore pressure, natural fractures, stresses, and general
geomechanical complexity. The KLA-SHIELD system optimized with STARGLIDE
ROP-enhancing lubricant and DRILZONE rate-of-penetration-enhancing
antiaccretion additive, provided an alternative to non-aqueous drilling fluids.
In addition, VIRTUAL HYDRAULICS* drilling fluid simulation software traced the
well trajectory, performed torque and drag simulations, evaluated the rheology
in terms of equivalent circulating density, and optimized hole cleaning. The
customer benefitted by drilling the well and lateral in 70 days without any
caving, swelling, or tight wellbore issues.
The transformation program enabled
an increase in reliability and efficiency as well as product and service delivery.
Design, engineering, and maintenance teams in Drilling & Measurements at
the Middle East CRE in Dhahran, Saudi Arabia, collaborated to create ruggedized
modular housings for measurement-while-drilling tools and decrease their
susceptibility to movement and wear in a high-shock environment. As a result,
the reliability of ImPulse* integrated MWD platform tools increased 240% and
the reliability of adnVISION* azimuthal density neutron service tools increased
by 47% in the first six months of the CRE’s operation.
Production Group
|
(Stated in millions, except margin
percentages)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Change
|
|||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015
|
Sequential
|
|
Year-on-year
|
|||||||||
|
Revenue
|
$
|
2,179
|
$
|
2,083
|
$
|
2,632
|
5%
|
-17%
|
||||||||
|
Pretax operating income
|
$
|
132
|
$
|
98
|
$
|
302
|
34%
|
-56%
|
||||||||
|
Pretax operating margin
|
6.0
|
%
|
4.7
|
%
|
11.5
|
%
|
134 bps
|
-542 bps
|
||||||||
Production Group revenue of $2.2
billion, of which 72% came from the international markets, was 5% higher
sequentially from strong fracturing activity on unconventional resource
developments on land in the Middle East, mainly in Saudi Arabia, and in North America
where the land rig count and fracturing stage count increased. Revenue on land
in the US increased both on volume and on a modest pricing recovery. Revenue in
Western Canada grew from a seasonal winter ramp-up in activity in addition to
higher sales of artificial lift products. Cementing revenue was up 30% mostly
in North America and IPS grew three-fold primarily in the International Areas.
Pretax operating margin of 6%
increased 134 bps sequentially on increased activity, which drove efficiency and
better operational execution in the Middle East. The modest pricing recovery on
land in the US also contributed to the margin expansion.
Production Group results benefitted
from contract awards, new technology deployments, and transformation
initiatives to improve operational efficiency during the quarter.
The Kuwait Oil Company awarded
Schlumberger a contract for the supply and installation of ResFlow* inflow
control devices to be used in sandstone reservoirs and in a 140-well carbonate
development project. ResFlow technology helps maintain uniform inflow rates
across the entire interval in openhole completions, even in the presence of
permeability variations and thief zones. These two technically challenging
developments require reliable equipment that can operate in complex wells in
order to control and understand reservoir behavior.
In China, Well Services used a combination of
technologies for the Schlumberger-CoPower joint venture to overcome a tight,
under-pressurized gas reservoir in the Ordos basin. FiberFRAC* fiber-based
fracturing fluid technology created a fiber network within the fracturing
fluid,
providing a mechanical means to
transport and place the proppant. In addition, composite fluid from BroadBand*
unconventional reservoir completion services minimized potential screenouts and
optimized proppant distribution. The customer achieved an average production of
nearly 2,280 Mscf/d for 11 wells compared with six offset wells that used
conventional fracturing fluids and had an average production of 812 Mscf/d.
In the UAE, Well Services HiWAY*
flow-channel fracturing technique and UltraMARINE* seawater-base fracturing
fluid were deployed in an offshore environment to stimulate low-permeability,
high-stress source rock for Dubai Petroleum. Eight proppant fracturing jobs
were successfully placed with over half a million pounds pumped. These are the
first multistage, offshore source rock hydraulic fracturing treatments done in
the world, and the eight jobs were completed in 40 hours.
In Ecuador, Well Services used the
Invizion Evaluation* well integrity service for Consortium Shushufindi to
overcome wellbore integrity challenges in the Shushufindi field. The
integration of multiwell data using the Techlog* wellbore software platform
enabled Invizion Evaluation technology to identify post-placement channeling
and differential crossflow between target sands. After optimization of the
original drilling program with improved cement formulation and additives, the
well showed no sign of post-placement channeling. As a result, the customer
avoided potential remedial operational costs equivalent to $450,000.
Offshore Indonesia, Schlumberger
used the MZ-Xpress* system for performing multizone fracturing and gravel
packing for ENI on the Jangkrik project. Two MZ-Xpress systems were each
installed in a single trip to provide multizone sand control in a well
featuring five producing layers across two different casing sizes. The customer
saved approximately 6.5 days of rig time over four zones of completion,
equivalent to $5.1 million in cost savings.
In North America, the transformation
enabled decreases in the cost of asset ownership and improved operating
efficiencies for Well Services. To optimize the inventory of materials and
supplies, a new Supply Planning organization analyzed spend data to ensure
stock is on hand for commonly used items and maximized sharing opportunities.
In June 2016, only four months after its creation, the organization reduced
stock on hand by 20%. Moreover, the use of Logistics Control towers that
centralize management and delivery of field supplies, such as proppant for
hydraulic fracturing operations, minimized costs for operating locations by
conducting all of the planning, tactical sourcing, and purchase-order generation
to ensure cost-effective service delivery of proppant to the field. Since
opening in late 2014, these control towers have saved the Company $250 million
in trucking costs.
In North Texas, the transformation
enabled Well Services to improve tool reliability and reduce maintenance costs.
The CRE in Denton implemented prognostic health management (PHM), using
real-time pump data collected from field locations. During the six months after
implementation, PHM achieved an estimated $6 million of savings in operation
costs.
Cameron Group
|
(Stated in millions, except margin
percentages)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Change
|
|||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015*
|
Sequential
|
|
Year-on-year
|
|||||||||
|
Revenue
|
$
|
1,346
|
$
|
1,341
|
$
|
2,088
|
-
|
-36%
|
||||||||
|
Pretax operating income
|
$
|
188
|
$
|
215
|
$
|
354
|
-13%
|
-47%
|
||||||||
|
Pretax operating margin
|
14.0
|
%
|
16.0
|
%
|
17.0
|
%
|
-207 bps
|
-298 bps
|
||||||||
|
|
||||||||||||||||
|
*Fourth-quarter 2015 is presented
on a pro forma basis for comparative purposes.
|
||||||||||||||||
Cameron Group revenue of $1.3
billion, of which 71% came from international markets, was flat sequentially.
Among the Group’s businesses, OneSubsea reported an 11% sequential increase
from strong project activity and execution in the Europe/CIS/Africa and Latin
America Areas, while Surface Systems posted strong sales in the Middle East.
These increases, however, were offset by a decline in revenue in Drilling
Systems driven by falling backlog and lower bookings. Valves & Measurement
was also lower following the prior quarter’s strong international shipments.
Pretax operating margin of 14%
declined 207 bps sequentially due to the drop in high-margin Drilling Systems
project volume.
Cameron Group secured multiple
strategic contract awards, including the industry’s longest deepwater subsea
multiphase boosting tieback and contracts to reduce the total cost of ownership
for offshore equipment.
Murphy Exploration & Production
Company–USA, a subsidiary of Murphy Oil Corporation, awarded the Subsea
Integration Alliance the industry’s first deepwater integrated subsea
engineering, procurement, construction, installation, and commissioning (EPCIC)
multiphase boosting system contract for the Dalmatian field in the US Gulf of
Mexico. It will be the industry’s longest deepwater subsea multiphase boosting
tieback and the first EPCIC project award for the Subsea Integration Alliance,
which was formed in July 2015 between OneSubsea, Schlumberger, and Subsea 7.
The contract scope includes the supply and installation of subsea multiphase
boosting, topside and subsea controls, and a 35-km integrated power and control
umbilical. Offshore installation activities are scheduled to begin in 2018.
Statoil awarded OneSubsea an
engineering, procurement, and construction contract to supply the subsea
production system for the Utgard gas and condensate field in the North Sea.
Contract scope includes a subsea template manifold system, two subsea wellheads
and vertical monobore subsea trees, production control system, and associated
intervention and workover tooling. Working in close collaboration with Statoil,
OneSubsea will develop a new subsea wellhead system that is suitable for the
fairly shallow waters of the Utgard field. OneSubsea and Statoil have already
worked together to qualify a vertical monobore subsea tree as a standardized
solution for Statoil’s subsea developments. The vertical trees, which are part
of the contract deliverables, will be assembled and tested at the OneSubsea
facility in Horsøy, Norway.
Transocean awarded Schlumberger two
10-year pressure control equipment management service contracts valued at more
than $350 million. The first contract includes Schlumberger management of
Transocean’s Cameron risers in the US Gulf of Mexico as well as storage,
maintenance, inspection, repair, recertification, and data-driven riser
management on the rigs. The second contract entails the provision of a
comprehensive suite of Schlumberger solutions to maintain and service blowout
preventer systems and other pressure control equipment for nine Transocean
ultra-deepwater and harsh environment drilling rigs. These contracts will help
to reduce total cost of ownership for offshore equipment and increase uptime
associated with pressure control equipment via integrated technical, operational,
and commercial solutions.
In Saudi Arabia, Valves &
Measurement was selected by multiple engineering, procurement, and construction
companies led by Saudi KAD to provide and install over $40 million of GROVE*
ball valves and LEDEEN* actuators to support key pipeline projects related to
the Master Gas Phase II and Fadhili Gas programs. Schlumberger in-Kingdom
facilities and support for commissioning and execution activities positioned
Cameron to be the ideal partner for this project.
|
Financial Tables
|
|||||||||||||||
|
|
|||||||||||||||
|
Condensed Consolidated Statement
of Income
|
|||||||||||||||
|
(Stated in millions, except per
share amounts)
|
|||||||||||||||
|
Fourth Quarter
|
Twelve Months
|
||||||||||||||
|
Periods Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||
|
|
|||||||||||||||
|
Revenue
|
$
|
7,107
|
$
|
7,744
|
$
|
27,810
|
$
|
35,475
|
|||||||
|
Interest and other income
|
47
|
81
|
200
|
236
|
|||||||||||
|
Expenses
|
|||||||||||||||
|
Cost of revenue
|
6,193
|
6,292
|
24,110
|
28,321
|
|||||||||||
|
Research & engineering
|
261
|
276
|
1,012
|
1,094
|
|||||||||||
|
General & administrative
|
99
|
132
|
403
|
494
|
|||||||||||
|
Impairments & other (1)
|
599
|
2,136
|
3,172
|
2,575
|
|||||||||||
|
Merger & integration (1)
|
76
|
-
|
648
|
-
|
|||||||||||
|
Interest
|
|
|
139
|
|
|
|
91
|
|
|
|
570
|
|
|
|
346
|
|
Income (loss) before taxes
|
$
|
(213
|
)
|
($1,102
|
)
|
$
|
(1,905
|
)
|
$
|
2,881
|
|||||
|
Taxes on income (loss) (1)
|
|
|
(19
|
)
|
|
|
(113
|
)
|
|
|
(278
|
)
|
|
|
746
|
|
Net income (loss)
|
$
|
(194
|
)
|
($989
|
)
|
$
|
(1,627
|
)
|
$
|
2,135
|
|||||
|
Net income attributable to
noncontrolling interests
|
|
|
10
|
|
|
|
27
|
|
|
|
60
|
|
|
|
63
|
|
Net income (loss) attributable to
Schlumberger (1)
|
|
$
|
(204
|
)
|
|
|
($1,016
|
)
|
|
$
|
(1,687
|
)
|
|
$
|
2,072
|
|
|
|||||||||||||||
|
Diluted earnings (loss) per share
of Schlumberger (1)
|
|
$
|
(0.15
|
)
|
|
|
($0.81
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
1.63
|
|
|
|||||||||||||||
|
Average shares outstanding
|
1,391
|
1,259
|
1,357
|
1,267
|
|||||||||||
|
Average shares outstanding
assuming dilution
|
|
|
1,391
|
|
|
|
1,259
|
|
|
|
1,357
|
|
|
|
1,275
|
|
|
|||||||||||||||
|
Depreciation & amortization
included in expenses (2)
|
|
$
|
1,016
|
|
|
$
|
963
|
|
|
$
|
4,094
|
|
|
$
|
4,078
|
|
(1)
|
|
See section entitled “Charges
& Credits” for details.
|
|
(2)
|
Includes depreciation of property,
plant and equipment and amortization of intangible assets, multiclient
seismic data costs and SPM investments.
|
|
|
||||||
|
Condensed Consolidated Balance
Sheet
|
||||||
|
|
|
|||||
|
(Stated in millions)
|
||||||
|
Dec. 31,
|
Dec. 31,
|
|||||
|
Assets
|
|
2016
|
|
2015
|
||
|
Current Assets
|
||||||
|
Cash and short-term investments
|
$
|
9,257
|
$
|
13,034
|
||
|
Receivables
|
9,387
|
8,780
|
||||
|
Other current assets
|
|
|
5,283
|
|
|
5,098
|
|
23,927
|
26,912
|
|||||
|
Fixed income investments, held to
maturity
|
238
|
418
|
||||
|
Fixed assets
|
12,821
|
13,415
|
||||
|
Multiclient seismic data
|
1,073
|
1,026
|
||||
|
Goodwill
|
24,990
|
15,605
|
||||
|
Intangible assets
|
9,855
|
4,569
|
||||
|
Other assets
|
|
|
5,052
|
|
|
6,060
|
|
|
|
$
|
77,956
|
|
$
|
68,005
|
|
|
||||||
|
Liabilities and Equity
|
|
|
|
|
||
|
Current Liabilities
|
||||||
|
Accounts payable and accrued
liabilities
|
$
|
10,016
|
$
|
7,727
|
||
|
Estimated liability for taxes on
income
|
1,188
|
1,203
|
||||
|
Short-term borrowings and current
portion of long-term debt
|
3,153
|
4,557
|
||||
|
Dividends payable
|
|
|
702
|
|
|
634
|
|
15,059
|
14,121
|
|||||
|
Long-term debt
|
16,463
|
14,442
|
||||
|
Deferred taxes
|
1,880
|
1,075
|
||||
|
Postretirement benefits
|
1,495
|
1,434
|
||||
|
Other liabilities
|
|
|
1,530
|
|
|
1,028
|
|
36,427
|
32,100
|
|||||
|
Equity
|
|
|
41,529
|
|
|
35,905
|
|
|
|
$
|
77,956
|
|
$
|
68,005
|
|
Liquidity
|
|||||||
|
|
|||||||
|
(Stated in millions)
|
|||||||
|
Components of Liquidity
|
|
Dec. 31,
2016 |
|
Sept. 30,
2016 |
|
Dec. 31,
2015 |
|
|
Cash and short-term investments
|
|
$9,257
|
$10,756
|
$13,034
|
|||
|
Fixed income investments, held to
maturity
|
238
|
354
|
418
|
||||
|
Short-term borrowings and current
portion of long-term debt
|
(3,153)
|
(3,739)
|
(4,557)
|
||||
|
Long-term debt
|
(16,463)
|
(17,538)
|
(14,442)
|
||||
|
Net debt (1)
|
$(10,121)
|
$(10,167)
|
$(5,547)
|
||||
|
|
|||||||
|
Details of changes in liquidity
follow:
|
|||||||
|
|
|||||||
|
Periods Ended December 31,
|
|
Twelve
Months 2016 |
Fourth
Quarter 2016 |
Twelve
Months 2015 |
|||
|
Net income (loss) before
noncontrolling interests
|
$(1,627)
|
$(194)
|
$2,135
|
||||
|
Impairment and other charges, net
of tax
|
3,236
|
583
|
2,218
|
||||
|
$1,609
|
$389
|
$4,353
|
|||||
|
Depreciation and amortization (2)
|
4,094
|
1,016
|
4,078
|
||||
|
Pension and other postretirement
benefits expense
|
187
|
48
|
438
|
||||
|
Stock-based compensation expense
|
267
|
57
|
326
|
||||
|
Pension and other postretirement
benefits funding
|
(174)
|
(47)
|
(346)
|
||||
|
Change in working capital
|
416
|
639
|
(478)
|
||||
|
Other
|
(138)
|
(89)
|
434
|
||||
|
Cash flow from operations (3)
|
$6,261
|
$2,013
|
$8,805
|
||||
|
Capital expenditures
|
(2,055)
|
(654)
|
(2,410)
|
||||
|
SPM investments
|
(1,031)
|
(162)
|
(953)
|
||||
|
Multiclient seismic data
capitalized
|
(630)
|
(133)
|
(486)
|
||||
|
Free cash flow (4)
|
2,545
|
1,064
|
4,956
|
||||
|
Stock repurchase program
|
(778)
|
(116)
|
(2,182)
|
||||
|
Dividends paid
|
(2,647)
|
(696)
|
(2,419)
|
||||
|
Proceeds from employee stock plans
|
415
|
71
|
448
|
||||
|
(465)
|
323
|
803
|
|||||
|
Business acquisitions and
investments, net of cash acquired plus debt assumed
|
(4,022)
|
(156)
|
(478)
|
||||
|
Discontinued operations -
settlement with US Department of Justice
|
-
|
-
|
(233)
|
||||
|
Other
|
(87)
|
(121)
|
(252)
|
||||
|
(Increase) decrease in Net Debt
|
(4,574)
|
46
|
(160)
|
||||
|
Net Debt, beginning of period
|
(5,547)
|
(10,167)
|
(5,387)
|
||||
|
Net Debt, end of period
|
$(10,121)
|
$(10,121)
|
$(5,547)
|
||||
|
(1)
|
|
“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. 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)
|
Includes depreciation of property,
plant and equipment and amortization of intangible assets, multiclient
seismic data costs and SPM investments.
|
||
|
(3)
|
Includes severance payments of
approximately $850 million and $810 million during the twelve months ended
December 31, 2016 and 2015, respectively, and $150 million during the fourth
quarter of 2016. Also includes approximately $100 million of
transaction-related payments associated with the acquisition of Cameron
during the twelve months ended December 31, 2016.
|
||
|
(4)
|
“Free cash flow” represents cash
flow from operations less capital expenditures, SPM investments and
multiclient seismic 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 the ability of our
business 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 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 Full-Year and Fourth-Quarter 2016 Earnings Release also includes
non-GAAP financial measures (as defined under the SEC’s Regulation G). Net
income, excluding charges & credits, as well as measures derived from it
(including diluted EPS, excluding charges & credits; net income before
noncontrolling interests and charges & credits; and effective tax rate,
excluding charges & credits) 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 these
non-GAAP measures to the comparable GAAP measures.
|
|
(Stated in millions, except per
share amounts)
|
||||||||||||||||||
|
Fourth Quarter 2016
|
|||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Noncont.
Interest |
|
Net
|
|
Diluted
EPS |
|||||||||||
|
Schlumberger net loss (GAAP basis)
|
$
|
(213
|
)
|
|
$
|
(19
|
)
|
|
$
|
10
|
|
$
|
(204
|
)
|
|
$
|
(0.15
|
)
|
|
|
Workforce reduction
|
234
|
6
|
-
|
228
|
|||||||||||||||
|
Facility closure costs
|
165
|
40
|
-
|
125
|
|||||||||||||||
|
Costs associated with exiting
certain activities
|
98
|
23
|
-
|
75
|
|||||||||||||||
|
Merger & integration
|
76
|
14
|
-
|
62
|
|||||||||||||||
|
Currency devaluation loss in Egypt
|
63
|
-
|
-
|
63
|
|||||||||||||||
|
Contract termination costs
|
|
39
|
|
|
|
9
|
|
|
|
-
|
|
|
30
|
|
|
||||
|
Schlumberger net income, excluding
charges & credits
|
$
|
462
|
|
|
$
|
73
|
|
|
$
|
10
|
|
$
|
379
|
|
$
|
0.27
|
|
||
|
|
|||||||||||||||||||
|
Third Quarter 2016
|
|||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Noncont.
Interest |
|
Net
|
|
Diluted
EPS |
|||||||||||
|
Schlumberger net income (GAAP
basis)
|
$
|
200
|
$
|
10
|
$
|
14
|
$
|
176
|
$
|
0.13
|
|
||||||||
|
Amortization of purchase
accounting inventory fair value adjustment
|
149
|
45
|
-
|
104
|
|||||||||||||||
|
Merger-related employee benefits
and professional fees
|
46
|
10
|
-
|
36
|
|||||||||||||||
|
Other merger and
integration-related
|
|
42
|
|
|
|
5
|
|
|
|
-
|
|
|
37
|
|
|||||
|
Schlumberger net income, excluding
charges & credits
|
$
|
437
|
|
|
$
|
70
|
|
|
$
|
14
|
|
$
|
353
|
|
$
|
0.25
|
|
||
|
|
|||||||||||||||||||
|
Fourth Quarter 2015
|
|||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Noncont.
Interest |
|
Net
|
|
Diluted
EPS |
|||||||||||
|
Schlumberger net loss (GAAP basis)
|
$
|
(1,102
|
)
|
$
|
(113
|
)
|
$
|
27
|
$
|
(1,016
|
)
|
$
|
(0.81
|
)
|
|||||
|
Fixed asset impairments
|
776
|
141
|
-
|
635
|
|||||||||||||||
|
Workforce reduction
|
530
|
51
|
-
|
479
|
|||||||||||||||
|
Inventory write-downs
|
269
|
27
|
-
|
242
|
|||||||||||||||
|
Impairment of SPM project in
Colombia
|
182
|
36
|
-
|
146
|
|||||||||||||||
|
Facility closures
|
177
|
37
|
-
|
140
|
|||||||||||||||
|
Geopolitical events
|
77
|
-
|
-
|
77
|
|||||||||||||||
|
Contract termination costs
|
41
|
2
|
-
|
39
|
|||||||||||||||
|
Other
|
|
84
|
|
|
|
7
|
|
|
|
-
|
|
|
77
|
|
|||||
|
Schlumberger net income, excluding
charges & credits
|
$
|
1,034
|
|
|
$
|
188
|
|
|
$
|
27
|
|
$
|
819
|
|
$
|
0.65
|
|
||
|
|
(Stated in millions, except per
share amounts)
|
||||||||||||||||||
|
Twelve Months 2016
|
|||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Noncont.
Interest |
|
Net
|
|
Diluted
EPS |
|||||||||||
|
Schlumberger net loss (GAAP basis)
|
$
|
(1,905
|
)
|
|
$
|
(278
|
)
|
|
$
|
60
|
|
$
|
(1,687
|
)
|
|
$
|
(1.24
|
)
|
|
|
Fixed asset impairments
|
1,058
|
177
|
-
|
881
|
|||||||||||||||
|
Workforce reduction
|
880
|
69
|
-
|
811
|
|||||||||||||||
|
Inventory write-downs
|
616
|
49
|
-
|
567
|
|||||||||||||||
|
Amortization of purchase
accounting inventory fair value adjustment
|
299
|
90
|
-
|
209
|
|||||||||||||||
|
Other merger and
integration-related
|
211
|
37
|
-
|
174
|
|||||||||||||||
|
Multiclient seismic data
impairment
|
198
|
62
|
-
|
136
|
|||||||||||||||
|
Facility closure costs
|
165
|
40
|
-
|
125
|
|||||||||||||||
|
Merger-related employee benefits
and professional fees
|
138
|
27
|
111
|
||||||||||||||||
|
Costs associated with exiting
certain activities
|
98
|
23
|
-
|
75
|
|||||||||||||||
|
Currency devaluation loss in Egypt
|
63
|
-
|
-
|
63
|
|||||||||||||||
|
Other restructuring charges
|
55
|
-
|
-
|
55
|
|||||||||||||||
|
Contract termination costs
|
|
39
|
|
|
|
9
|
|
|
|
-
|
|
|
30
|
|
|||||
|
Schlumberger net income, excluding
charges & credits
|
$
|
1,915
|
|
|
$
|
305
|
|
|
$
|
60
|
|
$
|
1,550
|
|
$
|
1.14
|
|
||
|
|
|||||||||||||||||||
|
|
|||||||||||||||||||
|
Twelve Months 2015
|
|||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Noncont.
Interest |
|
Net
|
|
Diluted
EPS |
|||||||||||
|
Schlumberger net income (GAAP
basis)
|
$
|
2,881
|
$
|
746
|
$
|
63
|
$
|
2,072
|
$
|
1.63
|
|
||||||||
|
Workforce reduction
|
920
|
107
|
-
|
813
|
|||||||||||||||
|
Fixed asset impairments
|
776
|
141
|
-
|
635
|
|||||||||||||||
|
Inventory write-downs
|
269
|
27
|
-
|
242
|
|||||||||||||||
|
Impairment of SPM project in
Colombia
|
182
|
36
|
-
|
146
|
|||||||||||||||
|
Facility closures
|
177
|
37
|
-
|
140
|
|||||||||||||||
|
Geopolitical events
|
77
|
-
|
-
|
77
|
|||||||||||||||
|
Currency devaluation loss in
Venezuela
|
49
|
-
|
-
|
49
|
|||||||||||||||
|
Contract termination costs
|
41
|
2
|
-
|
39
|
|||||||||||||||
|
Other
|
|
84
|
|
|
|
7
|
|
|
|
-
|
|
|
77
|
|
|||||
|
Schlumberger net income, excluding
charges & credits
|
$
|
5,456
|
|
|
$
|
1,103
|
|
|
$
|
63
|
|
$
|
4,290
|
|
$
|
3.37
|
|
||
|
Product Groups
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
(Stated in millions)
|
||||||||||||||||||||||||
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2015
|
||||||||||||||||||||
|
Revenue
|
|
Income
Before Taxes |
Revenue
|
|
Income
Before Taxes |
Revenue
|
|
Income
Before Taxes |
||||||||||||||||
|
Reservoir Characterization
|
$
|
1,699
|
$
|
316
|
$
|
1,689
|
$
|
322
|
$
|
2,193
|
$
|
521
|
||||||||||||
|
Drilling
|
2,013
|
234
|
2,021
|
218
|
2,953
|
494
|
||||||||||||||||||
|
Production
|
2,179
|
132
|
2,083
|
98
|
2,632
|
302
|
||||||||||||||||||
|
Cameron
|
1,346
|
188
|
1,341
|
215
|
-
|
-
|
||||||||||||||||||
|
Eliminations & other
|
(130
|
)
|
|
(60
|
)
|
(115
|
)
|
|
(38
|
)
|
(34
|
)
|
|
(29
|
)
|
|||||||||
|
Pretax operating income
|
810
|
815
|
1,288
|
|||||||||||||||||||||
|
Corporate & other
|
(245
|
)
|
(267
|
)
|
(179
|
)
|
||||||||||||||||||
|
Interest income(1)
|
23
|
24
|
8
|
|||||||||||||||||||||
|
Interest expense(1)
|
(126
|
)
|
(135
|
)
|
(83
|
)
|
||||||||||||||||||
|
Charges & credits
|
|
|
(675
|
)
|
|
|
(237
|
)
|
|
|
(2,136
|
)
|
||||||||||||
|
$
|
7,107
|
|
$
|
(213
|
)
|
$
|
7,019
|
|
$
|
200
|
|
$
|
7,744
|
|
$
|
(1,102
|
)
|
|||||||
|
|
||||||||||||||||
|
(Stated in millions)
|
||||||||||||||||
|
Twelve Months Ended
|
||||||||||||||||
|
Dec. 31, 2016
|
|
Dec. 31, 2015
|
||||||||||||||
|
Revenue
|
|
Income
Before Taxes |
Revenue
|
|
Income
Before Taxes |
|||||||||||
|
Reservoir Characterization
|
$
|
6,743
|
$
|
1,228
|
$
|
9,738
|
$
|
2,465
|
||||||||
|
Drilling
|
8,561
|
994
|
13,563
|
2,538
|
||||||||||||
|
Production
|
8,709
|
528
|
12,311
|
1,570
|
||||||||||||
|
Cameron
|
4,211
|
653
|
-
|
-
|
||||||||||||
|
Eliminations & other
|
(414
|
)
|
|
(130
|
)
|
(137
|
)
|
|
(63
|
)
|
||||||
|
Pretax operating income
|
3,273
|
6,510
|
||||||||||||||
|
Corporate & other
|
(925
|
)
|
(768
|
)
|
||||||||||||
|
Interest income(1)
|
84
|
30
|
||||||||||||||
|
Interest expense(1)
|
(517
|
)
|
(316
|
)
|
||||||||||||
|
Charges & credits
|
|
|
(3,820
|
)
|
|
|
(2,575
|
)
|
||||||||
|
$
|
27,810
|
|
$
|
(1,905
|
)
|
$
|
35,475
|
|
$
|
2,881
|
|
|||||
|
|
||||||||||||||||
|
(1) Excludes interest included in the Product Groups results.
|
||||||||||||||||
|
|
||||||||||||||||
Supplemental Information
|
1)
|
|
What is the capex guidance for the
full year 2017?
|
|
|
|
Capex (excluding multiclient and
SPM investments) is expected to be $2.2 billion for 2017. Capex for the full
year 2016 was $2.1 billion.
|
|
|
||
|
2)
|
What was the free cash flow as a
percentage of net income before noncontrolling interests and charges and
credits, for the fourth quarter of 2016?
|
|
|
Free cash flow, which was $1.1
billion and included approximately $150 million of severance payments, as a
percentage of income from continuing operations before noncontrolling
interests and charges and credits was 274% for the fourth quarter of 2016.
|
||
|
|
||
|
3)
|
What was the free cash flow as a
percentage of net income from continuing operations before noncontrolling
interests and charges and credits, for the full year 2016?
|
|
|
Free cash flow, which was $2.5
billion and included approximately $850 million of payments associated with
workforce reductions and $100 million of transaction-related payments
associated with the Cameron acquisition, as a percentage of net income before
noncontrolling interests and charges and credits was 158% for the full year
2016.
|
||
|
|
||
|
4)
|
What was included in “Interest and
other income” for the fourth quarter of 2016?
|
|
|
“Interest and other income” for
the fourth quarter of 2016 was $47 million. This amount consisted of earnings
of equity method investments of $18 million and interest income of $29
million.
|
||
|
|
||
|
5)
|
How did interest income and
interest expense change during the fourth quarter of 2016?
|
|
|
Interest income of $29 million
decreased $1 million sequentially. Interest expense of $139 million decreased
$10 million sequentially.
|
||
|
|
||
|
6)
|
What is the difference between
pretax operating income and Schlumberger’s consolidated income before taxes?
|
|
|
The difference principally
consists of corporate items (including 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 (including intangible asset amortization expense
resulting from the acquisition of Cameron), certain centrally managed
initiatives, and other nonoperating items.
|
||
|
|
||
|
7)
|
What was the effective tax rate
(ETR) for the fourth quarter of 2016?
|
|
|
The ETR for the fourth quarter of
2016 calculated in accordance with GAAP was 8.8% as compared to 5.1% for the
third quarter of 2016. The ETR for the fourth quarter of 2016, excluding
charges and credits, was 15.8% as compared to 16.0% for the third quarter of
2016.
|
||
|
|
||
|
8)
|
How many shares of common stock
were outstanding as of December 31, 2016 and how did this change from the end
of the previous quarter?
|
|
|
There were 1.391 billion shares of
common stock outstanding as of December 31, 2016. The following table shows
the change in the number of shares outstanding from September 30, 2016 to
December 31, 2016.
|
|
|
|
|
|
(Stated in millions)
|
|||
|
Shares outstanding at September
30, 2016
|
|
1,391
|
|||||
|
Shares sold to optionees, less
shares exchanged
|
1
|
||||||
|
Vesting of restricted stock
|
-
|
||||||
|
Shares issued under employee stock
purchase plan
|
-
|
||||||
|
Stock repurchase program
|
(1
|
)
|
|||||
|
Shares outstanding at December 31,
2016
|
1,391
|
|
|||||
|
|
||
|
9)
|
What was the weighted average
number of shares outstanding during the fourth quarter of 2016 and third
quarter of 2016 and how does this reconcile to the average number of shares
outstanding, assuming dilution used in the calculation of diluted earnings
per share, excluding charges and credits?
|
|
|
The weighted average number of
shares outstanding during the fourth quarter of 2016 was 1.391 billion and
1.392 billion during the third quarter of 2016.
|
||
|
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, excluding charges and credits.
|
|
|
|
|
|
|
(Stated in millions)
|
|||
|
Fourth Quarter
2016 |
|
Third Quarter
2016 |
||||||
|
Weighted average shares
outstanding
|
1,391
|
|
1,392
|
|||||
|
Assumed exercise of stock options
|
5
|
4
|
||||||
|
Unvested restricted stock
|
5
|
|
5
|
|||||
|
Average shares outstanding,
assuming dilution
|
1,401
|
|
1,401
|
|||||
|
|
||
|
10)
|
What was the amount of WesternGeco
multiclient sales in the fourth quarter of 2016?
|
|
|
Multiclient sales, including
transfer fees, were $143 million in the fourth quarter of 2016 and $144
million in the third quarter of 2016.
|
||
|
|
||
|
11)
|
What was the WesternGeco backlog
at the end of the fourth quarter of 2016?
|
|
|
WesternGeco backlog, which is
based on signed contracts with customers, was $759 million at the end of the
fourth quarter of 2016. It was $845 million at the end of the third quarter
of 2016.
|
||
|
|
||
|
12)
|
What were the orders and backlogs
for Cameron Group’s OneSubsea and Drilling Systems businesses?
|
|
|
OneSubsea and Drilling Systems
orders and backlogs were as follows:
|
|
(Stated in millions)
|
||||||
|
Orders
|
|
Fourth Quarter
2016 |
|
Third Quarter
2016 |
||
|
OneSubsea
|
$
|
523
|
|
$
|
434
|
|
|
Drilling Systems
|
$
|
132
|
|
$
|
179
|
|
|
|
||||||
|
Backlog (at the end of period)
|
||||||
|
OneSubsea
|
$
|
2,526
|
$
|
2,527
|
||
|
Drilling Systems
|
$
|
607
|
|
$
|
865
|
|
|
13)
|
|
What do the various charges
Schlumberger recorded during the fourth quarter of 2016 relate to?
|
|
We are making further adjustments
to our global support structure and facilities footprint to align our
resources to the shape of the recovery. This has led us to record $536
million in restructuring charges. We have also recorded $139 million of
pretax charges relating to the Cameron acquisition and a currency devaluation
loss in Egypt. These $675 million of pretax charges consist of the following:
|
||
|
-- $234 million of workforce
reduction costs
|
||
|
-- $165 million of facility
closure costs
|
||
|
-- $98 million of costs associated
with exiting certain activities
|
||
|
-- $76 million of merger and
integration costs relating to the Cameron acquisition
|
||
|
-- $63 million of currency
devaluation loss in Egypt
|
||
|
-- $39 million of contract
termination costs
|
About Schlumberger
Schlumberger is the world's leading
provider of technology for reservoir characterization, drilling, production,
and processing to the oil and gas industry. Working in more than 85 countries
and employing approximately 100,000 people who represent over 140
nationalities, Schlumberger supplies the industry's most comprehensive range of
products and services, from exploration through production, and integrated
pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir
performance.
Schlumberger Limited has principal
offices in Paris, Houston, London and The Hague, and reported revenues of
$27.81 billion in 2016. For more information, visit www.slb.com.
*Mark of Schlumberger or of
Schlumberger companies
Notes
Schlumberger will hold a conference
call to discuss the earnings press release and business outlook on Friday,
January 20, 2017. The call is scheduled to begin at 7:30 a.m. (US Central
Time), 8:30 a.m. (Eastern Time), 2:30 p.m. (Paris time). To access the call,
which is open to the public, please contact the conference call operator at +1
(800) 288-8967 within North America, or +1 (612) 333-4911 outside 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 20, 2017 by
dialing +1 (800) 475-6701 within North America, or +1 (320) 365-3844 outside
North America, and providing the access code 405410.
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 until March 31, 2017.
This full-year and fourth-quarter
2016 earnings 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 as our
forecasts or expectations regarding business outlook; growth for Schlumberger
as a whole and for each of its segments (and for specified products or
geographic areas within each segment); oil and natural gas demand and
production growth; oil and natural gas prices; improvements in operating
procedures and technology, including our transformation program; capital
expenditures by Schlumberger and the oil and gas industry; the business
strategies of Schlumberger’s customers; the anticipated benefits of the Cameron
transaction; the success of Schlumberger’s joint ventures and alliances; future
global economic conditions; and future results of operations. These statements
are subject to risks and uncertainties, including, but not limited to, global
economic conditions; changes in exploration and production spending by
Schlumberger’s customers and changes in the level of oil and natural gas
exploration and development; general economic, political and business
conditions in key regions of the world; foreign currency risk; pricing
pressure; weather and seasonal factors; operational modifications, delays or
cancellations; production declines; changes in government regulations and
regulatory requirements, including those related to offshore oil and gas
exploration, radioactive sources, explosives, chemicals, hydraulic fracturing
services and climate-related initiatives; the inability of technology to meet
new challenges in exploration; the inability to integrate the Cameron business
and to realize expected synergies; the inability to retain key employees; and
other risks and uncertainties detailed in this full-year and fourth-quarter
2016 earnings release and Supplemental Information 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 outcomes may vary materially from those
reflected in our forward-looking statements. Schlumberger disclaims any
intention or obligation to update publicly or revise such statements, whether
as a result of new information, future events or otherwise.
Schlumberger Limited
Simon Farrant – Schlumberger Limited, Vice President of Investor Relations
Joy V. Domingo – Schlumberger Limited, Manager of Investor Relations
Office +1 (713) 375-3535
investor-relations@slb.com
Simon Farrant – Schlumberger Limited, Vice President of Investor Relations
Joy V. Domingo – Schlumberger Limited, Manager of Investor Relations
Office +1 (713) 375-3535
investor-relations@slb.com
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