REG-Schlumberger Limited Schlumberger Announces Full-Year and Fourth-Quarter 2016 Results <Origin Href="QuoteRef">SLB.N</Origin> - Part 2
20/01/2017 14:15
- Part 2: For the preceding part double click ID:nBw19NgFVa
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 DilutedEPS
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 DilutedEPS
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 DilutedEPS
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 DilutedEPS
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 DilutedEPS
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 IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue IncomeBeforeTaxes
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 IncomeBeforeTaxes Revenue IncomeBeforeTaxes
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 Quarter2016 Third Quarter2016
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 Quarter2016 Third Quarter2016
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
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*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
(http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.slb.com%2Firwebcast&esheet=51496179&newsitemid=20170120005054&lan=en-US&anchor=www.slb.com%2Firwebcast&index=2&md5=8308f49ba1f7275889b56142f37d8d23)
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
(mailto:investor-relations@slb.com)
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