PARIS-Monday 22 April 2019 [ AETOS Wire ]- Worldwide revenue of $7.9 billion decreased 4% sequentially, but increased 1% year-on-year
- International revenue of $5.0 billion decreased 5% sequentially, but increased 3% year-on-year
- North America revenue of $2.7 billion decreased 3% sequentially and 3% year-on-year
- Pretax operating income of $908 million decreased 6% sequentially and 7% year-on-year
- EPS was $0.30
- Cash flow from operations was $326 million
- Quarterly cash dividend of $0.50 per share was approved
(Stated in millions, except per share amounts)
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||||||||||||||||||
Three Months Ended
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Change
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|||||||||||||||||
| Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Sequential | Year-on-year | ||||||||||||||
Revenue
|
$7,879
|
$8,180
|
$7,829
|
-4%
|
1%
|
|||||||||||||
Pretax operating income
|
$908
|
$967
|
$974
|
-6%
|
-7%
|
|||||||||||||
Pretax operating margin
|
11.5
|
%
|
11.8
|
%
|
12.4
|
%
|
-30 bps
|
-91 bps
|
||||||||||
Net income - GAAP basis
|
$421
|
$538
|
$525
|
-22%
|
-20%
|
|||||||||||||
Net income, excluding charges & credits*
|
$421
|
$498
|
$525
|
-15%
|
-20%
|
|||||||||||||
Diluted EPS - GAAP basis
|
$0.30
|
$0.39
|
$0.38
|
-23%
|
-21%
|
|||||||||||||
Diluted EPS, excluding charges & credits*
|
$0.30
|
$0.36
|
$0.38
|
-17%
|
-21%
|
|||||||||||||
North America revenue
|
$2,738
|
$2,820
|
$2,835
|
-3%
|
-3%
|
|||||||||||||
International revenue
|
$5,037
|
$5,283
|
$4,883
|
-5%
|
3%
|
|||||||||||||
North America revenue, excluding Cameron
|
$2,178
|
$2,265
|
$2,285
|
-4%
|
-5%
|
|||||||||||||
International revenue, excluding Cameron
|
$4,469
|
$4,581
|
$4,147
|
-2%
|
8%
| |||||||||||||
*These are non-GAAP financial measures. See section titled "Charges & Credits" for details.
Schlumberger Chairman and CEO Paal Kibsgaard commented, “First-quarter revenue of $7.9 billion declined 4% sequentially, reflecting the expected reduction in North America land activity and seasonally lower international activity in the Northern Hemisphere. In addition, reduced software, product, and multiclient seismic license sales following the fourth-quarter increase and lower Cameron long-cycle project deliveries contributed to the sequential decline. Improved sequential activity in Latin America marginally offset these declines.
“Looking beyond the headline numbers for the quarter, our international business results were strong, with Reservoir Characterization, Drilling, and Production combining to deliver year-on-year revenue growth of 8%, tracking our expectation of high single-digit growth in the international markets in 2019.
“In North America, first-quarter revenue was 3% lower sequentially as expected, driven by softer pricing and lower activity for both our hydraulic fracturing- and drilling-related businesses, while revenue from our artificial lift product line was flat sequentially. Offshore revenue in North America was slightly down sequentially with increased wireline activity in the US Gulf of Mexico offset by lower multiclient seismic license sales. Cameron revenue in North America was marginally up sequentially.
“By business segment, first-quarter revenue for Reservoir Characterization fell 7% sequentially due to seasonally lower sales of software and multiclient seismic licenses. Drilling revenue declined 3% sequentially due to reduced winter activity in the Northern Hemisphere, but increased 12% year-on-year on strong growth from Integrated Drilling Services (IDS) projects in several GeoMarkets. Production revenue was 2% lower sequentially, driven by decreased OneStim® revenue in North America and reduced artificial lift sales in the international markets. Cameron revenue declined 7% sequentially, mostly due to lower project deliveries from the long-cycle businesses of OneSubsea® and Drilling Systems following strong year-end sales of the previous quarter.
“From a macro perspective, we expect the oil market sentiments to steadily improve over the course of 2019, supported by a solid demand outlook combined with the OPEC and Russia production cuts taking full effect, slowing shale oil production growth in North America, and a further weakening of the international production base as the impact of four years of underinvestment becomes increasingly evident.
“We also continue to see clear signs that E&P investments are starting to normalize as the industry heads toward a more sustainable financial stewardship of the global resource base. Directionally, this means that higher investments in the international markets are required simply to keep production flat, while North America land is set for lower investments with a likely downward adjustment to the current production growth outlook.
“Our view of the international markets is consistent with recent third-party spending surveys, suggesting that E&P investments will increase by 7 to 8% in 2019, supported by a higher rig count and a rise in the number of customer project FIDs. In line with this, offshore development activity plans continue to strengthen, with subsea tree awards reaching their highest level since 2013 last year. We are also seeing the start of a return to exploration activity on renewed interest in reserves replacement. Notably, new discoveries in 2018 were at the lowest level since 2000.
“Conversely in North America land, the higher cost of capital, lower borrowing capacity, and investors looking for increased returns suggest that future E&P investment levels will likely be dictated by free cash flow. We therefore see E&P investments in North America land down 10% in 2019. In addition, rising technical challenges—from parent-child well interference, step-outs from core acreage, and limited growth in lateral length and proppant per stage—all point to more moderate growth in US shale oil production in the coming years.
“The normalization of global E&P spending, with increased international market investments and a reduction in North America land capex, represents a positive market shift for Schlumberger and the welcome return of a very familiar opportunity set, given our unmatched global strength. We have further extended our global leadership position with the efforts and investments we have made in recent years of modernizing our execution platform, expanding our technology offering, driving digital and technology-system innovation, evolving our business models, and strengthening our global footprint. In addition, after enduring four years of major pricing concessions in support of our international customers, we see the recovery of international service and product pricing and improving our own financial returns as a major business priority—firmly supported by increasing activity levels, little to no spare equipment capacity, and prudent deployment of new capital. Furthermore, the foundation for our 2019 business plan is a clear commitment to generate sufficient cash flow to cover our business needs without increasing net debt.”
Click here for the full press release.
About Schlumberger
Schlumberger is the world's leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. With product sales and services in more than 120 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 executive offices in Paris, Houston, London, and The Hague, and reported revenues of $32.82 billion in 2018. For more information, visit www.slb.com.
*Mark of Schlumberger or Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on Thursday, April 18, 2019. The call is scheduled to begin at 8:30 a.m. US Eastern 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 May 18, 2019 by dialing +1 (800) 475-6701 within North America, or +1 (320) 365-3844 outside North America, and providing the access code 464084. 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 web site until May 18, 2019.
This first-quarter 2019 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; our effective tax rate; Schlumberger’s SPM projects, 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; and other risks and uncertainties detailed in this first-quarter 2019 earnings 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 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.
Contacts
Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Manager of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
investor-relations@slb.com
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