TIDMSCL
Schlumberger Limited (NYSE:SLB) today reported second-quarter
2011 revenue of $9.62 billion versus $8.72 billion in the first
quarter of 2011, and $5.94 billion in the second quarter of
2010.
Income from continuing operations attributable to Schlumberger,
excluding charges, was $1.18 billion--an increase of 22%
sequentially and 45% year-on-year. Diluted earnings-per-share from
continuing operations, excluding charges, was $0.87 versus $0.71 in
the previous quarter, and $0.68 in the second quarter of 2010.
Schlumberger recorded charges of $0.05 per share in the second
quarter of 2011 and $0.02 per share in the first quarter of
2011.
Oilfield Services revenue of $8.99 billion increased 11%
sequentially and 51% year-on-year. Pretax segment operating income
of $1.75 billion was up 20% sequentially and 56% year-on-year.
Distribution revenue of $637 million increased 6% sequentially.
Pretax segment operating income of $24 million improved 8%
sequentially.
Schlumberger Chairman and CEO Andrew Gould commented,
"Second-quarter results showed strong growth worldwide. All Product
Groups grew at double-digit rates. In North America, a prolonged
Canadian spring break-up and poor weather in the northwest were
offset by very strong growth in the rest of US land and a
significant contribution from deepwater operations as the rig count
increased and renewed interest in exploration activity in the Gulf
of Mexico led to high multiclient seismic data sales.
Internationally, the trend towards higher deepwater rig count,
and higher exploration spending continued. This activity was
coupled with a surge in development and workover activity as
producers moved to compensate for reduced Libya barrels and to
profit from higher prices. As a result, all Groups had standout
product lines in the quarter and technology sales showed good
progress. Strong advances were made in all Technologies linked to
deepwater exploration and complex development drilling including
WesternGeco, Drilling & Measurements, M-I SWACO, and openhole
Wireline and Testing services. The Drilling Group continued to
record strong synergistic revenue with the legacy Smith Bits and
Drilling Tool businesses in many areas of the world. At Reservoir
Production, in addition to the strong North American stimulation
market, high growth rates were experienced internationally as
operators moved to improve production and to test unconventional
gas plays in several markets.
Pricing power in North America pressure pumping remained robust,
but more importantly towards the end of the quarter it became clear
that pricing traction for certain other services--particularly
those related to drilling high-risk deepwater plays or other
complex developments--was in place both in North America and
internationally. This is not yet universal, but a positive trend is
in place which should yield results by the end of the year.
In our second-quarter outlook, we outlined the key constituents
of supply and demand for oil and gas over the next few years and
pointed out that, absent a further leg to the recession,
substantial increases in investment would be necessary to maintain
an adequate supply cushion in an era of political uncertainty. We
anticipated that the international supply response would
progressively ramp up over the second half of 2011. It transpired
that the international ramp-up made a strong start in the second
quarter that will continue through the rest of the year and into
2012.
The continued strength in drilling liquid-rich plays in North
America, coupled with an acceleration in drilling both in
exploration and development internationally, will put considerable
strain on the ability of the service industry to meet activity
levels. While it is not unprecedented that a North American cycle
has run concurrently with increasing activity internationally, the
service intensity of drilling and completing horizontal wells in
liquid-rich plays and shale gas basins has introduced a new dynamic
in as much as this activity requires far more service equipment
than was traditionally used in the North American land market. As a
result, the ability of the industry to supply both the North
American and international markets with the required equipment and
people in a concurrent growth phase will be challenged.
Schlumberger, through size, geographical coverage, multinational
workforce, comprehensive product and service portfolio and
technology capability is uniquely placed to help our customers meet
these challenges worldwide."
Other Events:
-- During the quarter, Schlumberger repurchased 8.2 million shares of its
common stock at an average price of $86.27 for a total purchase
price
of $706.7 million under the stock repurchase program approved by
the
Schlumberger Board of Directors on April 17, 2008. This program
has
been extended by two years to expire at the end of 2013.
-- On April 5, 2011, Schlumberger completed the divestiture of its Global
Connectivity Services business. A gain of $0.16 per share was
recorded
in discontinued operations during the second quarter of 2011
relating
to this divestiture.
-- On April 28, 2011, Eurasia Drilling Company Limited (EDC) and
Schlumberger completed the sale and purchase of each other's
drilling
and service assets and together announced the formation of a
Strategic
Alliance where both will cooperate in the supply of oil and
gas
services to EDC for a five-year period.
-- On June 29, 2011, Schlumberger announced the planned acquisition from
Frank Mohn AS of the remaining equity interest in Framo
Engineering
AS, a privately owned Norwegian company specializing in the
manufacture and sales of products and services related to
multiphase
pumps and subsea pump-systems, multiphase metering systems, and
swivel
and marine systems to the oil and gas industry. Subject to
customary
regulatory approval, the closing of the transaction is
anticipated to
occur in the third quarter of 2011.
Consolidated Statement
of Income
(Stated in millions, except per share amounts)
Second Quarter Six Months
Periods Ended June 30 2011 2010 2011 2010
Revenue $ 9,621 $ 5,937 $ 18,337 $ 11,534
Interest and other 29 51 60 115
income, net(1)
Expenses
Cost of revenue 7,638 4,652 14,700 9,064
Research & engineering 274 216 522 423
General 139 74 231 146
& administrative(2)
Merger & integration(2) 32 - 66 35
Interest 69 53 142 99
Income from continuing 1,498 993 2,736 1,882
operations
before taxes
Taxes on income(2) 374 177 669 391
Income from continuing 1,124 816 2,067 1,491
operations
Income from discontinued 220 - 220 -
operations
Net Income 1,344 816 2,287 1,491
Net Income (Loss) 5 (2 ) 4 1
attributable
to noncontrolling
interests
Net Income attributable $ 1,339 $ 818 $ 2,283 $ 1,490
to Schlumberger(2)
Schlumberger amounts
attributable to:
Income from continuing $ 1,119 $ 818 $ 2,063 $ 1,490
operations
Income from discontinued 220 - 220 -
operations
Net Income $ 1,339 $ 818 $ 2,283 $ 1,490
Diluted Earnings
Per Share
of Schlumberger(2)
Income from continuing $ 0.82 $ 0.68 $ 1.51 $ 1.23
operations
Income from discontinued 0.16 - 0.16 -
operations
Net Income $ 0.98 $ 0.68 $ 1.67 $ 1.23
Average shares 1,352 1,192 1,356 1,194
outstanding
Average shares 1,366 1,208 1,370 1,211
outstanding
assuming dilution
Depreciation & $ 804 $ 638 $ 1,592 $ 1,258
amortization
included in expenses(3)
1) Includes interest income of:
Second Quarter 2011 - $9 million (2010 - $15 million)
Six months 2011 - $18 million (2010 - $31 million)
2) See page 6 for details of charges.
3) Including multiclient seismic data cost.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30, Dec. 31,
Assets 2011 2010
Current Assets
Cash and short-term investments $ 4,933 $ 4,990
Receivables 9,356 8,278
Other current assets 5,653 4,830
19,942 18,098
Fixed income investments, held to maturity 318 484
Fixed assets 12,315 12,071
Multiclient seismic data 425 394
Goodwill 13,935 13,952
Other intangible assets 4,996 5,162
Other assets 2,088 1,606
$ 54,019 $ 51,767
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities $ 7,013 $ 6,488
Estimated liability for taxes on income 1,210 1,493
Short-term borrowings and current portion
of long-term debt 3,817 2,595
Dividend payable 336 289
12,376 10,865
Long-term debt 5,745 5,517
Postretirement benefits 1,244 1,262
Deferred taxes 1,488 1,636
Other liabilities 1,104 1,043
21,957 20,323
Equity 32,062 31,444
$ 54,019 $ 51,767
Net Debt
"Net Debt" represents gross debt less cash, short-term
investments and fixed income investments, held to maturity.
Management believes that Net Debt provides useful information
regarding the level of Schlumberger's indebtedness by reflecting
cash and investments that could be used to repay debt. Details of
changes in Net Debt for the year to date follow:
(Stated in millions)
Six Months 2011
Net Debt, January 1, 2011 $ (2,638 )
Income from continuing operations 2,067
Depreciation and amortization 1,592
Pension and other postretirement 185
benefits expense
Excess of equity income over (41 )
dividends received
Stock-based compensation expense 132
Increase in working capital (2,006 )
Capital expenditures (1,720 )
Multiclient seismic data capitalized (131 )
Dividends paid (631 )
Proceeds from employee stock plans 261
Stock repurchase program (1,551 )
Business acquisitions, net 82
of cash and debt acquired
Pension and other postretirement (122 )
benefits funding
Proceeds from divestiture of Global 385
Connectivity Services business
Other 153
Currency effect on net debt (328 )
Net Debt, June 30, 2011 $ (4,311 )
Components of Net Debt Jun. 30,2011 Dec. 31,2010
Cash and short-term investments $ 4,933 $ 4,990
Fixed income investments, held to maturity 318 484
Short-term borrowings and current (3,817 ) (2,595 )
portion of long-term debt
Long-term debt (5,745 ) (5,517 )
$ (4,311 ) $ (2,638 )
Charges
In addition to financial results determined in accordance with
generally accepted accounting principles (GAAP) this Second-Quarter
Earnings Press Release also includes non-GAAP financial measures
(as defined under the SEC's Regulation G). The following is a
reconciliation of these non-GAAP measures to the comparable GAAP
measures:
(Stated in millions, except per share amounts)
Second Quarter 2011
Pretax Tax Noncont.Interest Net DilutedEPS Income StatementClassification
Schlumberger Income from continuing operations,
as reported $ 1,498 $ 374 $ 5 $ 1,119 $ 0.82
Merger and integration costs 32 8 - 24 0.02 Merger & integration
Donation to Schlumberger Foundation 50 10 - 40 0.03 General & administrative
Schlumberger Income from continuing operations,
excluding charges $ 1,580 $ 392 $ 5 $ 1,183 $ 0.87
First Quarter 2011
Pretax Tax Noncont.Interest Net DilutedEPS Income StatementClassification
Schlumberger Income from continuing operations,
as reported $ 1,238 $ 295 $ (1 ) $ 944 $ 0.69
Merger and integration costs 34 6 - 28 0.02 Merger & integration
Schlumberger Income from continuing operations,
excluding charges $ 1,272 $ 301 $ (1 ) $ 972 $ 0.71
There were no charges in the second quarter of 2010. The first quarter of 2010 included after tax charges aggregating $75 million ($0.06 per share) consisting of merger-related costs ($0.03 per share) and the elimination of the tax deduction related to the Medicare Part D subsidy ($0.03 per share).
Product
Groups
(Stated in
millions)
Three Months Ended
Jun. 30, 2011 Mar. 31, 2011
Revenue Income Before Taxes Revenue IncomeBeforeTaxes
Oilfield
Services
Reservoir $ 2,461 $ 602 $ 2,193 $ 460
Characterization
Drilling 3,458 538 3,204 467
Reservoir 3,060 613 2,716 528
Production
Eliminations 11 (3 ) 9 -
& other
8,990 1,750 8,122 1,455
Distribution 637 24 601 22
Eliminations (6 ) - (7 ) -
631 24 594 22
Corporate - (135 ) - (143 )
& Other
Interest - 10 - 9
Income
Interest - (69 ) - (71 )
Expense
Charges - (82 ) - (34 )
$ 9,621 $ 1,498 $ 8,716 $ 1,238
Geographic
Areas
(Stated in
millions)
Three Months Ended
Jun. 30, 2011 Mar. 31, 2011
Revenue Income Before Taxes Revenue IncomeBeforeTaxes
Oilfield
Services
North $ 2,864 $ 673 $ 2,589 $ 595
America
Latin 1,579 283 1,386 217
America
Europe/CIS/Africa 2,374 332 2,190 273
Middle East 2,078 518 1,848 405
& Asia
Eliminations 95 (56 ) 109 (35 )
and other
8,990 1,750 8,122 1,455
Distribution 637 24 601 22
Eliminations (6 ) - (7 ) -
631 24 594 22
Corporate - (135 ) - (143 )
& Other
Interest - 10 - 9
Income
Interest - (69 ) - (71 )
Expense
Charges - (82 ) - (34 )
$ 9,621 $ 1,498 $ 8,716 $ 1,238
Interest income and interest expense exclude interest included
in the product groups and geographic areas results.
Oilfield Services
Second-quarter revenue of $8.99 billion increased 11%
sequentially and 51% year-on-year. Sequentially, revenue increased
in all Groups and across all geographical Areas.
Sequentially, Reservoir Characterization revenue increased
primarily on higher WesternGeco marine proprietary surveys and
multiclient sales, on greater Wireline exploration activity and a
partial recovery from the previous quarter's exceptional weather
and geopolitical events, and on increased Schlumberger Information
Solutions (SIS) software sales. Drilling revenue increased on
higher M-I SWACO activity, and on stronger Drilling &
Measurements technology penetration, increased pricing and improved
job count. Among the Drilling Technologies, sequential increases
were posted by Bits & Advanced Technologies, Drilling Tools
& Remedial and Pathfinder. These increases, however, were
partially offset by lower Integrated Project Management (IPM) Well
Construction in Russia following the sale of the drilling rig
business related to the strategic alliance with EDC in the
Russia/CIS region. Reservoir Production revenue increased
sequentially on higher pricing, capacity additions and improved
asset utilization for Well Services in North America but this
increase was partially reduced by the effects of the spring
break-up in Canada and adverse weather in the Williston basin.
Internationally, Well Services grew on stronger activity in the
Middle East and Asia Area. Artificial Lift and Completions product
sales also grew robustly in the second quarter, particularly in
Latin America.
On a geographical basis, North America increased sequentially
despite the impact of the spring break-up in Canada and the weather
issues in the Williston basin. Higher pricing for Well Services
technologies in US land, increasing demand and pricing for M-I
SWACO services in unconventional shale plays and the US Gulf of
Mexico, higher WesternGeco marine proprietary surveys offshore
North America, and strong Drilling Tools & Remedial sales
helped propel the percentage revenue increase to double-digit
levels. In Latin America, all Groups contributed double-digit
sequential growth with significant increases posted by the
Venezuela, Trinidad & Tobago; Peru, Colombia & Ecuador; and
Brazil GeoMarkets*. Increased WesternGeco revenue, improved
Drilling & Measurements exploration activity, increased demand
for M-I SWACO services and higher SIS software sales contributed to
the increase. In Europe/CIS/Africa results were driven by higher
WesternGeco and M-I SWACO activities, and increased exploration
activity for Wireline and Testing Services--mainly in the North Sea
GeoMarket. This increase, however, was reduced by lower IPM Well
Construction in Russia following the sale of the drilling rig
business. Middle East & Asia revenue recorded significant
double-digit growth across all Groups with increases led by
Wireline, Well Services and Drilling & Measurements.
Significant expansion was experienced in
the Saudi Arabia, Bahrain; Iraq; and East Asia GeoMarkets while
the Egypt & East Mediterranean and Australia, Papua New Guinea
GeoMarkets recovered from the geopolitical and weather events of
the previous quarter.
Second-quarter pretax operating income of $1.75 billion
increased 20% sequentially and 56% year-on-year. Pretax operating
margin increased 155 basis points (bps) sequentially to 19.5%
primarily due to higher WesternGeco marine proprietary surveys and
multiclient sales; increased Wireline and Drilling &
Measurements exploration activities; higher margin activity for M-I
SWACO; higher SIS software sales; and margin improvements in Bits
& Advanced Technologies, Drilling Tools & Remedial and
Pathfinder.
The quarter's technical highlights were led by the continuing
market penetration of HiWAY* flow-channel hydraulic fracturing
technology in unconventional and tight reservoir applications
around the world. HiWAY technology has now demonstrated the
benefits of improving production and efficiency at lower cost in
reservoirs across all four Schlumberger operating Areas. More than
1,200 stages have been pumped in 2011, saving over 60,000 tons of
proppant compared to standard fracturing techniques. In North
America, more than 700 stages were pumped in the second quarter,
and a total of 15 customers have now deployed the technology with
activity concentrated in the Eagle Ford play in South Texas. In
addition to the operational benefits achieved, the significantly
lower proppant requirements have avoided some 5,300 road hauling
journeys and approximately 700 railroad car trips.
In Russia, one of 10 countries in which HiWAY technology has
been deployed internationally, a pilot trial has been conducted for
TNK-BP in the Zagorskoe field operated by Sorochinskneft. Following
treatment, the well productivity index was more than double that of
wells where conventional fracturing treatments had been performed.
More pilot trials have now taken place in the Orenburgneft Devonian
sands as well as in the Uvat and Nyagan TNK-BP production
units.
Market penetration of other new technologies continued.
WesternGeco began acquisition of the Revolution II survey in the
Green Canyon area of the US Gulf of Mexico. This full-azimuth
multiclient project over 3,200 km2, or 140 outer continental shelf
(OCS) blocks, is the second Dual Coil Shooting* multivessel survey
following the success of the Revolution I project acquired in the
Eastern Gulf of Mexico in late 2010. WesternGeco also completed
acquisition of the E-Octopus XIV wide-azimuth multiclient survey in
the Green Canyon area. This survey consists of 3,660 km2, or 157
OCS blocks, and includes illumination of the Shenzi, Atlantis, and
Big Foot discoveries.
Wireline Dielectric Scanner* multifrequency dielectric
dispersion technology has been used for the first time in
Kazakhstan for the Ural Oil and Gas Company to support reservoir
studies through the determination of the oil-water contact in a
very tight carbonate reservoir. Before introduction of the
Dielectric Scanner service, this determination could not be made
directly by conventional petrophysical methods. The new service
also provided direct computation of the cementation exponent needed
for accurate hydrocarbon saturation calculation.
In the Marcellus shale, a Data & Consulting Services
reservoir characterization study based on Schlumberger measurements
allowed Ultra Petroleum to determine that well location, rather
than completion technique, was the major contributor to variable
well performance and enabled Ultra to prioritize its drilling and
completion plans for several wells. The study was performed by
integrating 3D surface seismic with EcoScope*| and SonicVision*
logging-while-drilling data on 19 laterals, and ECS*, FMI* and
SonicScanner* data on seven vertical pilot wells. The results
highlighted sweet spot areas with better reservoir quality where
wells produced superior results compared to average levels
previously seen in the field. This study has helped Ultra establish
criteria that will reduce risk as it continues development of its
Marcellus acreage.
Within the Drilling Group, integration of new products and
advanced services between complementary Smith and Schlumberger
Technologies helped customers improve drilling performance and
efficiency.
In the Oklahoma Woodford Shale, Cimarex Energy Co. ran a
combination of Drilling & Measurements PowerDrive Archer*
high-build-rate rotary-steerable-system technology and an
engineered Smith polycrystalline diamond compact (PDC) drill bit to
drill a tight 10°/100-ft curve at a rate of penetration 56% faster
than the field average. In addition, the 4,763-ft horizontal
lateral was drilled with a PowerDrive X5* system in a record 2.2
days. The combination of PowerDrive* systems and engineered Smith
drill bits resulted in a smoother wellbore with a 16% reduction in
drilling-related friction.
In the TNK-BP Verknechonskoe field in Eastern Siberia, advanced
Schlumberger drilling technologies have yielded significant
performance improvements in spite of remote logistics, extreme
climate and challenging geology. A combination of solutions from
Drilling & Measurements, Bits & Advanced Technologies and
M-I SWACO has contributed to this effort. The introduction of
PowerDrive X5 technology, for example, increased rate of
penetration (ROP) to an extent that horizontal sections can be
drilled in 3.6 days--saving three days over standard
technology--while allowing the well to be placed within the sweet
spot of the reservoir to improve net-to-gross reservoir exposure to
over 70%. The result has doubled typical well production rates.
Deployment of PowerDrive vorteX* powered rotary steerable systems
has permitted use of new Smith PDC drill bits that have increased
ROP by 58% on average in one formation of hard dolomites while
Smith IDEAS* integrated drillbit design technology has led to
bespoke drillbit design through iterative dynamic modeling. M-I
SWACO DuoVis* bio-polymer drilling fluid has enabled difficult salt
intervals to be drilled continuously with limited washouts and
DrillFree* lubricant has improved torque and drag across critical
zones.
New contract awards during the quarter also illustrated the
growing strength of international activity.
LUKOIL Mid East Limited awarded Schlumberger a contract for the
processing and interpretation of newly acquired 3D seismic data
with subsequent construction of a 3D geological model for use in
the development of the West Qurna 2 Oilfield Development Project in
Iraq. The scope of work covers 540 km2 of 3D seismic and data from
30 exploration wells. The processing and interpretation teams will
work together to evaluate the field's complicated naturally
fractured carbonate reservoirs.
In Turkmenistan, CNPC International (Turkmenistan) awarded
Schlumberger the majority of the wireline logging tender. The total
scope of work over two years with an optional extension of two
further years covers standard and high-tier wireline logging
services. The award represents the first long-term contract for
Schlumberger in the southeast of Turkmenistan and a new base to
support the operation is expected to be opened later in the
year.
Total has awarded Schlumberger a number of contracts for
exploration work on deepwater block CA1 in Brunei. The scope
includes surface and downhole well testing, tubing-conveyed
perforating, slickline, coiled-tubing and sand management services,
as well as drilling tools, directional drilling, measurement- and
logging-while-drilling, wireline logging and mudlogging
operations.
The State Oil Company of Azerbaijan (SOCAR) has awarded
Schlumberger a five-year contract for directional drilling,
measurement-while-drilling and logging-while drilling services
based on performance during a nine-month period that allowed
Drilling & Measurements to demonstrate excellence in
reliability and service quality. Currently SOCAR operates 20
offshore platforms and 20 land rigs and expects new technology
deployment to improve drilling performance and formation
evaluation.
Reservoir Characterization Group
Second-quarter revenue of $2.46 billion was 12% higher
sequentially and increased 7% year-on-year. Pretax operating income
of $602 million was 31% higher sequentially and increased 9%
year-on-year. Pretax operating margins increased 348 bps
sequentially to 24.5%.
WesternGeco led the sequential increases with revenue and
margins up significantly from higher vessel utilization on
proprietary marine surveys. There was also a significant increase
in multiclient sales in Brazil, the North Sea and Asia. Wireline
revenue and margins expanded on stronger exploration activities in
a number of GeoMarkets in Latin America, Africa, the North Sea and
Asia and grew on a partial recovery from the previous quarter's
geopolitical and weather issues, particularly in GeoMarkets in
North Africa, Middle East and Australia. Deepwater activity rose in
the US Gulf of Mexico but this was offset by the seasonal spring
break-up in Canada. SIS contributed to the sequential improvements
in revenue and margins due to significantly higher software sales
across the Areas.
Reservoir Characterization Group activities saw a number of new
or significant technology deployments in the quarter.
In Angola, Schlumberger ran a full suite of the latest
generation wireline logs on an appraisal program for Angola LNG.
Some of the new technologies introduced on this job included
deployment of a high-tension capstan system as well as the
QuickSilver Probe* service that acquired samples judged purer than
previous samples taken in other wells on the project. In addition,
the new InSitu Fluid Analyzer* system was run to understand reverse
compositional grading and vertical discontinuity within the
reservoir. Based on careful and extensive job planning,
specifically designed tool combinations saved one trip in the well
with the program being accomplished in two runs compared to the
three runs expected, thereby saving 12 hours of rig time.
Next-generation downhole fluid analysis equipment and techniques
allowed Marathon to accurately assess varying oil quality,
asphaltene distribution, and reservoir connectivity across multiple
sands in a deepwater US Gulf of Mexico field. In the past,
conventional laboratory analysis of oil samples from these wells
did not give conclusive answers but the combination of laboratory
tests with the advanced in situ fluid analysis capability of the
MDT* modular formation dynamics tester service provided a more
definitive answer that will allow Marathon to plan future
development wells with a greater degree of confidence.
In the PEMEX Mexico North Region, Wireline Scanner Family*
technologies confirmed a number of gas zones in a new exploration
well. This was the first time the technologies were run in the
Region with the MR Scanner* expert magnetic resonance service used
to confirm the presence of gas in the reservoir's laminated shaly
sands, the Rt Scanner* triaxial induction service identifying
additional net pay, and the Sonic Scanner acoustic scanning
platform providing geomechanical properties to optimize fracture
design. The same logging program has been confirmed for the next
exploration well with the addition of spectroscopy and spectral
gamma ray logging.
In the PEMEX Mexico Marine Region, three gas zones were
confirmed in a deepwater exploration well in which a number of
innovative Schlumberger Wireline technologies were deployed. Sonic
Scanner acoustic scanning platform and PressureXpress* reservoir
pressure-while-logging technologies confirmed gas in three
different prospect zones while the CMR-Plus* high-logging-speed
magnetic resonance tool confirmed that the gas sands did not
contain free water and that the bottom zone was not producible.
Further, Rt Scanner triaxial induction technology showed net pay to
be dramatically higher than previously thought. Clean reservoir
fluid samples were obtained by Quicksilver Probe focused extraction
of pure reservoir fluid. PEMEX acknowledged the value of such
technologies in reducing uncertainty in the exploration environment
and confirmed the technologies for future deepwater operations.
Schlumberger Wireline successfully completed a 38-day TuffTRAC*
tractor operation for a major operator offshore Newfoundland,
Canada. A record 85,987 m were tractored in 19 runs conveying
cement evaluation and sonic tools, perforating guns and the
latest-generation mechanical intervention service. The operation
also deployed the TuffTRAC tandem service which allowed running
through the completion gas lift mandrels.
Shell affiliate, Nederlandse Aardolie Maatschappij B.V. became
the first customer to deploy the new Powerjet Nova* extra-deep
penetrating shaped charge on a natural gas well in the Dutch Sector
of the North Sea. The completion system deployed allowed the well
to clean up immediately after perforating and feed 700,000 m³/d of
gas into the pipeline, which exceeded expectations. Powerjet Nova
charges have demonstrated up to 30% increased penetration over
existing technology in stressed rock conditions and are considered
important for many of the challenging well conditions found in the
North Sea.
In Mexico Marine, Wireline performed the largest walkaway
vertical seismic profile (VSP) acquisition to date for PEMEX to
characterize the reservoir in the Tumut field to accurately define
new drilling locations in a complex geological environment affected
by salt tectonics. The operation, which included 2D walkaway and
zero offset VSPs, was designed to enhance the structural model with
high-quality data. A total of 6 lines and 82,000 m were shot using
20-shuttle VSI* vertical seismic imager technology with
interconnected cables between each shuttle. The Dual Delta air gun
cluster and the SWINGS* seismic navigational positioning system
were used to shoot each line every 40 m. The success of this job
was based on extensive job preparation and efficient mobilization
of resources from the UK and the US. PEMEX stated that it now
believes this technology could be implemented for field development
planning on other offshore basins.
In India, WesternGeco successfully deployed the DISCover*
acquisition technique to deliver broadband seismic data in the
Kerala-Konkan Basin for Oil & Natural Gas Corporation Limited
(ONGC). This was the first commercial DISCover project with ONGC
and the customer received seismic data rich in both high and low
frequencies for high-definition imaging to mitigate risk. The
prestack time migration and prestack depth migration processing
were carried out in the WesternGeco GeoSolutions center in Mumbai
using advanced workflows and have shown a substantial improvement
in bandwidth compared to legacy data, specifically in sub-basalt
basins.
In Western Australia, Apache awarded WesternGeco the Cambozola
3D marine seismic survey in the Carnarvon Basin with the objective
of improving reservoir delineation over a recent offshore
discovery. The scope of work includes Q-Marine* point-receiver
seismic technology with simultaneous source acquisition as well as
data processing with proprietary 3D demultiple techniques and depth
imaging.
In Azerbaijan, BP awarded Caspian Geophysical a contract for
acquisition of a 3D seismic survey over the Shafag/Asiman block in
the Caspian sea using the M/V Gilavar. Caspian Geophysical is a
joint venture between WesternGeco and SOCAR, the State Oil Company
of Azerbaijan.
Testing Services has been awarded a two-year contract by
Anadarko Moçambique Área 1, Ltda to conduct interference tests in
an ultra-deepwater environment offshore Mozambique. The combination
of industry-leading technologies such as the PhaseTester* portable
multiphase well testing equipment and PhaseSampler* multiphase
sampling equipment as well as the EverGreen* minimal environmental
impact well effluent burner will be deployed during the course of
the campaign along with an electro-hydraulic subsea landing
string.
In Mexico Marine, Testing Services and Artificial Lift were also
awarded an extended well test on a deepwater, heavy oil exploration
project. The award was based on a single-trip approach that
combined Testing Services IRIS* intelligent remote implementation
technology with the eFire* electronic firing head system, a
drillstem test string, and an electrical submersible pump. Based on
the performance of this integrated approach, PEMEX is considering
use of the same system on future heavy oil deepwater exploration
wells.
Also in Mexico Marine, Testing Services applied the world's
first flow assurance study to mitigate hydration risks during gas
well testing on a deepwater exploration well with very complex
reservoir lithology. The surface flowing conditions allowed
temperature reduction during the test by incrementally increasing
the amount of condensates flowing.
Statoil has recently approved the Petrel* workflow process
software for seismic interpretation and related geology and
geophysical workflows for its global exploration business. A new
contract for Petrel was signed in June 2011, which provides Statoil
access to Petrel software for its global exploration teams.
Drilling Group
Second-quarter revenue of $3.46 billion was 8% higher
sequentially and 127% higher year-on-year. Pretax operating income
of $538 million was 15% higher sequentially and increased 88%
year-on-year.
Within the Drilling Group, M-I SWACO recorded the largest
sequential revenue increase on favorable higher-margin activity in
the North Sea and Latin America, on continued growth in
unconventional shale plays in North America, on resumption of
drilling in the US Gulf of Mexico, and on the increasing recovery
in activity in the Middle East and Asia after the previous
quarter's geopolitical and weather events. Drilling &
Measurements revenue increased sequentially on higher-margin
technology penetration, superior pricing and improved job count
mainly in Latin America and Middle East and Asia. Drilling Tools
& Remedial increased significantly on higher activity in North
America. Pathfinder in US land also reported increased revenue on
higher drilling activity in unconventional liquid-rich plays while
Bits & Advanced Technologies grew despite the effects of the
spring break-up in Canada. IPM Well Construction continued to
expand in Iraq as new contracts began and drilling efficiency
improved, however, this increase was more than offset by the effect
of the sale of the drilling rig business in Russia.
Sequentially, pretax operating margin grew 98 bps to 15.6%. M-I
SWACO margins improved with increased high-margin activity in the
North Sea GeoMarket, Latin America and US Gulf of Mexico. Drilling
& Measurements margins grew due to superior pricing and a more
favorable technology mix. Margins also expanded in Bits &
Advanced Technologies, Drilling Tools & Remedial, and
Pathfinder as service mix and pricing both improved.
During the quarter, a number of highlights confirmed the
accelerating opportunities generated by the combination of Smith
and Schlumberger drilling technologies.
Smith Bits and Drilling & Measurements technologies were
deployed in the Tuha field for PetroChina in a challenging
horizontal well to yield record-breaking performance. PowerDrive
vorteX powered rotary steerable technology in combination with a
Smith PDC drill bit successfully drilled the longest interval and
the most rotary steerable hours in a single run in 6-in hole to
save 6 round trips compared to standard technology and to achieve
the longest reservoir exposure ever drilled in this thin reservoir
area. The technology combination was selected based on the Smith
IDEAS integrated drillbit design platform.
Multiple drilling records have been set in drilling four
challenging wells for Talisman Energy Norge AS in the Norwegian
sector of the North Sea while saving a combined total of 19 days
versus plan. Excellent planning, drilling engineering solutions,
drilling practices and rotary steerable integration with new Smith
drillbit technology led to the significant reduction in total
drilling time on the Varg and Gyda fields.
Noble Energy has awarded Schlumberger the development and
exploration work on a rig drilling in the Eastern Mediterranean Sea
to improve drilling performance in an expensive deepwater drilling
environment. PowerDrive vorteX and PowerDrive Xceed rotary
steerable systems will be deployed in conjunction with Smith drill
bits and other Smith bottomhole assembly (BHA) components.
In the West Texas Delaware Basin, Anadarko Petroleum Corporation
used cutting-edge drilling and evaluation services to place a
3,500-ft horizontal wellbore within a structurally variable 12-ft
thick target zone. A Drilling & Measurements PowerDrive rotary
steerable assembly in conjunction with PeriScope* bed boundary
mapper technology allowed the lateral to be drilled in just four
days, while keeping the wellbore entirely within the target zone.
MicroScope* advanced resistivity and imaging-while-drilling with
SonicScope* multipole sonic-while-drilling technologies were used
with the drilling assembly to improve fracture identification and
characterization in a tight reservoir in an effort to help evaluate
production variability.
In Brazil, Chevron has extended the Schlumberger directional
drilling contract for two years based on the high quality of
services delivered together with excellent health, safety and
environment (HSE) performance during the 22-well drilling campaign
on the initial development phase of the Frade deepwater field. New
technologies deployed included the Scope* family of services for
greater efficiency, improved reliability and better answers that
enhance operational safety during drilling.
Pearl Oil has set new benchmarks for the application of
logging-while-drilling (LWD) technology in the Gulf of Thailand
offshore market using combined Schlumberger EcoScope multifunction
logging-while-drilling, PeriScope bed boundary mapper, and
StethoScope* formation pressure while drilling technologies. Two
challenging 6 1/8-in horizontal laterals were each drilled from
casing shoe to total depth in one run representing an aggregate of
2,813 ft with maximum inclination of 104°. During the operation, 43
formation pressure pretests were also successfully acquired.
On an exploration well in Southeast Asia, Drilling &
Measurements seismicVISION* seismic-while-drilling technology was
used to reduce risk on casing point selection. With initial depth
uncertainty from the 2D surface seismic being as much as 100 m, the
operator needed to reduce this to below 50 m at a depth of over
3,000 m subsea to optimize the well construction process and
successfully navigate an expected pressure ramp. Using
seismicVISION data, the drilling was stopped within 10 m of the
marker thereby enabling safe and successful drilling to total depth
of the well.
In the UAE, Drilling & Measurements StethoScope
formation-pressure-while-drilling technology was successfully
deployed for several companies to enhance operational safety,
obtain pressure measurements in challenging conditions and make
informed decisions on completion design. Working for a major
operator in a well environment with 42% hydrogen sulphide, the
technology provided the pressure measurements needed to optimize
mud weight while drilling, thereby preventing influx of fluid and
sour gases. In another well, StethoScope data verified pressure
communication between different faulted blocks in a slim horizontal
lateral while in a well where pressure measurements were
unobtainable using other methods, the StethoScope service overcame
well trajectory and borehole stability challenges to successfully
acquire the needed data. Meanwhile, StethoScope pressure and
mobility measurements recorded in an exploration well for an
offshore operator were used to decide placement of inflow control
devices required in the completion design.
In the Santos Basin offshore Brazil, WARP* fluid technology
using unique micronized weighting material was deployed for
Petrobras for the first time in a difficult high-pressure,
high-temperature well that presented challenging well control
conditions. Offset wells in the area had experienced significant
losses due to narrow equivalent circulating density operating
windows. Using WARP technology, the 7-in liner was successfully run
to the bottom with no sag or losses observed. Petrobras also saw
more efficient solids separation using finer screens on primary
shakers.
OGX also used WARP fluid technology as an alternative to heavy
brine as a completion fluid in high-pressure high-temperature wells
in Brazil to replace conventional synthetic-base barite mud that
can lead to barite sag, downhole valve activation problems, and
issues of compatibility with completion tools. With the new
technology, there were no problems opening and closing the valves
on the drillstem test string even after the WARP system had not
been circulated for three days prior to the well test.
Reservoir Production Group
Second-quarter revenue of $3.06 billion increased 13%
sequentially and 47% year-on-year. Pretax operating income of $613
million was 16% higher sequentially and increased 146%
year-on-year.
Among Reservoir Production Technologies, Well Services revenue
expanded sequentially in North America on higher pricing, capacity
additions and improved asset utilization as the market transitions
to liquid-rich plays on the strength of the oil price. This
increase, however, was partially reduced by the spring break-up in
Canada and adverse weather in the Williston basin. Internationally,
Well Services posted high double-digit growth in the Middle East
and Asia Area in the Saudi Arabia, Bahrain; Kuwait; Oman; East
Asia; and China GeoMarkets. Completions revenue increased
sequentially on higher product sales in Latin America and robust
service and product sales in Saudi Arabia. Artificial Liftrevenue
grew sequentially with all regions contributing to the increase
except for Europe/CIS/Africa due to the shutdown in Libya.
Sequentially, second-quarter pretax operating margin increased
57 bps to 20.0%. Excluding the impact of the spring break-up in
Canada, Well Services margins grew on pricing gains, better
efficiency and utilization of resources in North America, and
improved performance across the Middle East and Asia due to
stronger product sales and services, and higher vessel activity.
Artificial Lift margins increased through higher sales on land in
North America and Russia.
Reservoir Production Group highlights included technology
deployments in a number of key areas.
Offshore Italy, Well Services successfully pumped FlexSTONE*
advanced flexible cement on eight wells that had been hydraulically
fractured and gravel-packed. FlexSTONE technology enhances wellbore
isolation in such completions through its flexibility that avoids
both reduced production and workover risk. As part of this well
integrity solution, Schlumberger Wireline USI* ultrasonic imager
technology was used to confirm the hydraulic seal of the cement in
all eight wells.
In Australia, Well Services Ultra LiteCRETE* very low density
cement combined with CemNET* advanced fiber technology has been
successfully pumped to minimize wellbore invasion to increase the
effectiveness of future stimulation work in coal-gas beds in the
Surat Basin. The low fracture gradient of the formations indicated
that ultra low density cement with optimized particle-size
distribution would be needed to minimize lost circulation problems
and limit excessive invasion.
Well Services Losseal* fiber-based lost-circulation pill
technology continued introduction in Middle East markets with the
technology being used in two Joint Operations wells in Kuwait to
control lost circulation. In one well, Losseal was used after
standard treatments failed to reduce openhole losses sufficiently
and allowed drilling to continue without further problems. In the
second well, Losseal material was pumped as spacer before cementing
casing with its use enabling cement returns to surface. Also in
Kuwait, Losseal technology was deployed for Kuwait Oil Company
(KOC) in a development well during the 12 1/4-in drilling phase.
After four days of trying to stem losses with standard materials,
Losseal treatment was pumped through the BHA and drill bit to
successfully reduce total loss of circulation to a manageable 5
bbl/h, enabling drilling to continue to total depth with full
returns.
The new Well Services X-11* modular offshore coiled-tubing unit
with active process control and automated safety systems has been
successfully deployed in the North Sea for CNR International. The
flexible, soundproof unit is readily adaptable to many offshore
structures including platforms, floaters and tension leg platforms
and offers the full capabilities of a conventional coiled-tubing
unit. Designed in safer and more efficient skid-mounted packages,
the unit conducted 9 runs over a 33-day period on one well.
In Denmark, Schlumberger deployed CoilFLATE* coiled tubing
through-tubing inflatable packer technology for Maersk Oil in
offshore injector wells on the Dan Field to improve stimulation
treatments. Within the first 100 days of 2011, 25 packers were
successfully run with 15 being set in one month on a single well.
All packers were retrieved successfully.
In Saudi Arabia, Well Services performed ACTive* in-well live
performance perforating jobs in two natural gas wells using
fiber-optic-enabled coiled tubing with real-time casing collar
locator and gamma ray measurements for depth control. The first job
was performed with ABRASIJET* hydraulic pipe-cutting and
perforating technology to cut slots by pumping nitrified sand
slurry, and the second using guns with the eFire electronic firing
head system. Both jobs were accomplished successfully and
eliminated additional coiled-tubing depth correlation runs.
Well Services ACTive in-well live performance technology with
fiber-optic distributed temperature sensing (DTS) has been run in
Italy for Eni during coiled-tubing stimulation operations. The DTS
thermal analysis at flowing conditions clearly identified the main
production zones with customized reservoir modeling being used to
link reservoir production behavior with possible flow rates per
interval. After workover operations, the well was put on production
without post-stimulation treatment as water-free oil production of
approximately 1,000 m3/d exceeded expectations.
In Guatemala, Well Services ACTive in-well live performance
technology was successfully introduced for Perenco on a well
intervention campaign in the Xan field to monitor stimulation job
performance. DTS data were used to optimize the stimulation
treatments in real time based on the bottom-hole information
displayed in the control cabin. Further deployments of ACTive
technology are planned for the second part of 2011.
In Iraq, Well Services has begun coiled-tubing operations in
Kurdistan for Reliance Exploration & Production DMCC in the
Sarta field leveraging existing Smith International and M-I SWACO
infrastructure.
In Mexico Marine, the Well Services DeepSTIM stimulation vessel
that started operations for PEMEX in the Bay of Campeche in June
2010 has now performed more than 250 treatments mainly focused in
matrix stimulation, conformance control, and formation and tubing
clean outs. The vessel has shown a highly successful track record
in improving production results and these results are expected to
improve even further this year with the incorporation of new
technology into the current stimulation services portfolio.
In China, CNOOC has awarded Artificial Lift a contract to
supply, install, and provide operational support for electrical
submersible pump (ESP) systems for the LiuHua 4-1 subsea field
development project. The project involves subsea deployment of
eight DuaLife* tandem ESP completion systems with a 14-km tie back
to the main LiuHua FPSO. This will be the world's first multiwell
dual ESP system deployment using the Schlumberger POD system and
represents a milestone in the ongoing development of subsea
artificial lift technology. The award was based on the ability to
provide both local and global support as well as the service
quality delivered on the current LiuHua development.
In India, Schlumberger Completions has been awarded an 18-well
intelligent completions contract by ONGC for the Mumbai offshore
operational area. The scope of work covers design, procurement and
installation of the completions. The wells are all to be completed
in openhole with flow control valves monitoring each of three
producing zones using a six-gauge system on a single cable. Six of
the wells will also incorporate DTS technology using the Neon*
opto-electric permanent monitoring cable.
In Azerbaijan, innovative Schlumberger Completions technology
has been deployed on the BP Central Azeri field using a new gravel
pack tool designed for 7 5/8-in casing. Close cooperation between
Schlumberger and BP led to successful deployment of the 411-m
completion--believed to be the longest slimhole gravel pack ever
run. The operation was marked by excellent performance and a well
that delivered 25,000 bbl/d--a figure significantly above the rate
expected by BP.
Schlumberger LIVE* digital slickline services were commercially
introduced in April 2011 at the Intervention & Coiled Tubing
Association (ICoTA) Conference & Exhibition in Houston where
the technology was awarded the Intervention Technology Award for
2011. More than 450 digital slickline operations have been
performed to date in North America, Europe and Asia in a wide range
of well types, fluids and deviations including borehole
temperatures up to 275 deg F, bottomhole pressures up to 8,000 psi
and well depths down to 16,000 ft. LIVE digital slickline services
have delivered customer-recognized time savings and real-time
optimization through correlation precision, tool status
confirmation and continuous tool control.
About Schlumberger
Schlumberger is the world's leading supplier of technology,
integrated project management and information solutions to
customers working in the oil and gas industry worldwide. Employing
approximately 110,000 people representing over 140 nationalities
and working in approximately 80 countries, Schlumberger provides
the industry's widest range of products and services from
exploration through production.
Schlumberger Limited has principal offices in Paris, Houston and
The Hague and reported revenues of $27.45 billion in 2010. For more
information, visit www.slb.com.
*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 LWD technology.
EcoScope service uses technology that resulted from this
collaboration.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, July 22, 2011. The
call is scheduled to begin at 8:00 a.m. US Central Time (CT), 9:00
a.m. Eastern Time (ET). To access the call, which is open to the
public, please contact the conference call operator at
+1-800-230-1096 within North America, or +1-612-332-0107 outside of
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 Aug 22, 2011 by dialing +1-800-475-6701
within North America, or +1-320-365-3844 outside of North America,
and providing the access code 202491.
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.
Supplemental information in the form of a question and answer
document on this press release and financial schedules is available
at www.slb.com/ir.
Schlumberger LimitedMalcolm Theobald, +1 (713) 375-3535Vice
President of Investor RelationsorJoy V. Domingo, +1 (713)
375-3535Manager of Investor Relationsinvestor-relations@slb.com
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