REG-Schlumberger Limited Schlumberger Announces Third-Quarter 2017 Results <Origin Href="QuoteRef">SLB.N</Origin> - Part 2
20/10/2017 12:06
- Part 2: For the preceding part double click ID:nBw7RQmXqa
213 44 - 169 0.12
Schlumberger net income, excluding charges & credits $1,750 $313 $21 $1,416 $1.02
Nine Months 2016
Pretax Tax Noncont.Interests Net DilutedEPS *
Schlumberger net loss (GAAP basis) $(1,691) $(259) $50 $(1,482) $(1.10)
Impairment & other:
Fixed asset impairments 1,058 177 - 881 0.65
Workforce reduction 646 63 - 583 0.43
Inventory write-downs 616 49 - 567 0.42
Multiclient seismic data impairment 198 62 - 136 0.10
Other restructuring charges 55 - - 55 0.04
Merger & integration:
Merger-related employee benefits and professional fees 138 27 - 111 0.08
Other merger and integration-related costs 134 24 - 110 0.08
Amortization of purchase accounting inventory fair value adjustment( 299 90 - 209 0.15
(1))
Schlumberger net income, excluding charges & credits $1,453 $233 $50 $1,170 $0.86
((1)) Recorded in Cost of revenue in the Condensed Consolidated Statement
of Income (Loss).
((2)) Recorded in Impairments & other in the Condensed Consolidated
Statement of Income (Loss).
* Does not add due to rounding
Product Groups
(Stated in millions)
Three Months Ended
Sept. 30, 2017 Jun. 30, 2017 Sept. 30, 2016
Revenue IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue IncomeBeforeTaxes
Reservoir Characterization $1,771 $311 $1,759 $299 $1,667 $329
Drilling 2,120 301 2,107 302 2,021 218
Production 2,876 283 2,496 221 2,104 91
Cameron 1,297 194 1,265 174 1,341 215
Eliminations & other (159) (30) (165) (46) (114) (38)
Pretax operating income 1,059 950 815
Corporate & other (234) (242) (267)
Interest income((1)) 30 28 24
Interest expense((1)) (129) (128) (135)
Charges & credits (49) (591) (237)
$7,905 $677 $7,462 $17 $7,019 $200
(Stated in millions)
Nine Months Ended
Sept. 30, 2017 Sept. 30, 2016
Revenue IncomeBeforeTaxes Revenue IncomeBeforeTaxes
Reservoir Characterization $5,148 $891 $4,972 $930
Drilling 6,212 832 6,548 760
Production 7,559 614 6,601 379
Cameron 3,791 530 2,865 465
Eliminations & other (449) (101) (283) (72)
Pretax operating income 2,766 2,462
Corporate & other (715) (679)
Interest income((1)) 82 61
Interest expense((1)) (383) (391)
Charges & credits (723) (3,144)
$22,261 $1,027 $20,703 $(1,691)
((1)) Excludes interest included in the Product Groups results.
Certain prior period items have been reclassified to conform to the
current period presentation.
Supplemental Information
1) What is the capex guidance for the full year 2017?
Capex (excluding multiclient and SPM investments) is expected to be
$2.1 billion for 2017.
2) What were the cash flow from operations and free cash flow for the third
quarter of 2017?
Cash flow from operations for the third quarter of 2017 was $1.9
billion and included $114 million of severance payments. Free cash
flow for the third quarter of 2017 was $1.1 billion.
3) What were the cash flow from operations and free cash flow for the first nine
months of 2017?
Cash flow from operations for the first nine months of 2017 was $3.4
billion and included $347 million of severance payments. Free cash
flow for the first nine months of 2017 was $1.2 billion.
4) What was included in “Interest and other income” for the third quarter of
2017?
“Interest and other income” for the third quarter of 2017 was $64 million.
This amount consisted of earnings of equity method investments of $30 million
and interest income of $34 million.
5) How did interest income and interest expense change during the third quarter
of 2017?
Interest income of $34 million was flat sequentially. Interest
expense of $142 million was also flat 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 third quarter of 2017?
The ETR for the third quarter of 2017, calculated in accordance with
GAAP, was 17.9% as compared to 590% for the second quarter of 2017.
The ETR for the third quarter of 2017, excluding charges and
credits, was 18.4% as compared to 18.9% for the second quarter of
2017.
8) How many shares of common stock were outstanding as of September 30, 2017 and
how did this change from the end of the previous quarter?
There were 1.385 billion shares of common stock outstanding as of
September 30, 2017. The following table shows the change in the
number of shares outstanding from June 30, 2017 to September 30,
2017.
(Stated in millions)
Shares outstanding at June 30, 2017 1,385
Shares sold to optionees, less shares exchanged -
Vesting of restricted stock -
Shares issued under employee stock purchase plan 2
Stock repurchase program (2 )
Shares outstanding at September 30, 2017 1,385
9) What was the weighted average number of shares outstanding during the third
quarter of 2017 and second quarter of 2017 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 was 1.385 billion
during the third quarter of 2017 and 1.387 billion during the second
quarter of 2017.
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)
Third Quarter2017 Second Quarter2017
Weighted average shares outstanding 1,385 1,387
Assumed exercise of stock options 1 1
Unvested restricted stock 6 5
Average shares outstanding, assuming dilution 1,392 1,393
10) What are Schlumberger Production Management (SPM) projects and how does
Schlumberger recognize revenue from these projects?
SPM projects are focused on developing and co-managing production on
behalf of Schlumberger customers under long-term agreements.
Schlumberger will invest its own services, products, and in some
cases, cash, into the field development activities and operations.
Although in certain arrangements Schlumberger recognizes revenue and
is paid for a portion of the services or products it provides,
generally Schlumberger will not be paid at the time of providing its
services or upon delivery of its products. Instead, Schlumberger
recognizes revenue and is compensated based upon cash flow generated
or on a fee-per-barrel basis. This may include certain arrangements
whereby Schlumberger is only compensated based upon incremental
production it helps deliver above a mutually agreed baseline.
11) How are Schlumberger products and services that are invested in SPM projects
accounted for?
Revenue and the related costs are recorded within the respective
Schlumberger Group for services and products that each Group
provides to Schlumberger’s SPM projects. This revenue (which is
based on arms-length pricing) and the related profit is then
eliminated through an intercompany adjustment that is included
within the “Eliminations & other” line. (Note that the “Eliminations
& other” line includes other items in addition to the SPM
eliminations.) The direct cost associated with providing
Schlumberger services or products to SPM projects is then
capitalized on the balance sheet.
These capitalized investments, which may be in the form of cash as
well as the previously mentioned direct costs, are expensed in the
income statement as the related production is achieved and
associated revenue is recognized. This amortization expense is based
on the units of production method, whereby each unit is assigned a
pro-rata portion of the unamortized costs based on total estimated
production.
SPM revenue along with the amortization of the capitalized
investments and other operating costs incurred in the period are
reflected within the Production Group.
12) What was the unamortized balance of Schlumberger’s investment in SPM
projects at September 30, 2017 and how did it change in terms of investment
and amortization when compared to June 30, 2017?
The unamortized balance of Schlumberger’s investments in SPM
projects was approximately $2.8 billion and $2.6 billion at
September 30, 2017 and June 30, 2017, respectively. These amounts
are included within Other Assets in Schlumberger’s Condensed
Consolidated Balance Sheet. The change in the unamortized balance of
Schlumberger’s investment in SPM projects was as follows:
(Stated in millions)
Balance at June 30, 2017 $2,573
SPM investments 164
Other additions 184
Amortization of SPM investment (117 )
Balance at September 30, 2017 $2,804
13) What was the amount of WesternGeco multiclient sales in the third quarter of
2017?
Multiclient sales, including transfer fees, were $127 million in the
third quarter of 2017 and $182 million in the second quarter of 2017.
14) What was the WesternGeco backlog at the end of the third quarter of 2017?
WesternGeco backlog, which is based on signed contracts with
customers, was $489 million at the end of the third quarter of 2017.
It was $566 million at the end of the second quarter of 2017.
15) 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 Third Quarter2017 Second Quarter2017
OneSubsea $347 $181
Drilling Systems $156 $170
Backlog (at the end of period)
OneSubsea $2,328 $2,371
Drilling Systems $523 $566
About SchlumbergerSchlumberger 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
(http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.slb.com&esheet=51701389&newsitemid=20171020005094&lan=en-US&anchor=www.slb.com&index=1&md5=dc0ecc25c92940619f381b17a4c89ac3)
.
*Mark of Schlumberger or of Schlumberger companies.
(†)Japan Oil, Gas and Metals National Corporation (JOGMEC), formerly Japan
National Oil Corporation (JNOC), and Schlumberger collaborated on a research
project to develop logging while drilling (LWD) technology that reduces the
need for traditional chemical sources. Designed around the pulsed neutron
generator (PNG), EcoScope service uses technology that resulted from this
collaboration. The PNG and the comprehensive suite of measurements in a single
collar are key components of the EcoScope service that deliver game-changing
LWD technology.
Notes
Schlumberger will hold a conference call to discuss the earnings press release
and business outlook on Friday, October 20, 2017. 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 November 20, 2017 by
dialing +1 (800) 475-6701 within North America, or +1 (320) 365-3844 outside
North America, and providing the access code 428578.
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=51701389&newsitemid=20171020005094&lan=en-US&anchor=www.slb.com%2Firwebcast&index=2&md5=ff5663835811d62cbc69f6b37b8cd350)
on a listen-only basis. A replay of the webcast will also be available at the
same web site until November 30, 2017.
This third-quarter 2017 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 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; the inability
to retain key employees; and other risks and uncertainties detailed in this
third-quarter 2017 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.
Simon Farrant – Schlumberger Limited, Vice President of Investor
RelationsJoy V. Domingo – Schlumberger Limited, Manager of Investor
RelationsOffice +1 (713) 375-3535investor-relations@slb.com
(mailto:investor-relations@slb.com)
LEI - 5493000C01ZX7D35SD85Classification: Inside information
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