TIDMSCL
Schlumberger Limited (NYSE:SLB) today reported second-quarter
2012 revenue of $10.45 billion versus $9.92 billion in the first
quarter of 2012, and $8.99 billion in the second quarter of
2011.
Income from continuing operations attributable to Schlumberger,
excluding charges and credits, was $1.4 billion--an increase of 8%
sequentially and 20% year-on-year. Diluted earnings-per-share from
continuing operations, excluding charges and credits, was $1.05
versus $0.96 in the previous quarter, and $0.86 in the second
quarter of 2011.
Following Schlumberger's previously announced sale of both the
Wilson distribution business and its equity ownership interest in
CE Franklin Ltd. (CE Franklin), the Distribution segment has been
reclassified to discontinued operations. All prior periods have
been restated accordingly.
Schlumberger recorded charges of $0.02 per share in the second
quarter and $0.01 per share in the first quarter of 2012 and $0.05
per share in the second quarter of 2011.
Oilfield Services revenue of $10.45 billion was up 5%
sequentially and increased 16% year-on-year. Pretax segment
operating income of $2.1 billion was up 8% sequentially and
increased 20% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, "Solid activity
growth and a consistent focus on execution led to results that
continued to strengthen in the second quarter.
Internationally, sequential results were underpinned by activity
growth both offshore and in key land markets. Latin America and
Middle East & Asia Areas both progressed well, while Europe,
CIS and Africa showed particular strength across the Area. In North
America, the Canadian spring break-up and the weakness in the US
land hydraulic fracturing market lowered results although this was
tempered by robust performance in other land businesses and in the
US Gulf of Mexico.
Service capacity tightened further during the quarter,
particularly for seismic, wireline and drilling services. We
continued to test pricing on smaller contracts and we were
successful in securing work at pricing premiums in some cases due
to the quality and consistency of our performance.
Schlumberger Production Management saw increased activity with
the flawless startup on the Shushufindi field in Ecuador, and
success in securing future work with the award of the Panuco block
in Mexico in partnership with Petrofac.
The quarter saw several significant new technology
introductions. These included the rollout of the groundbreaking
WesternGeco IsoMetrix true 3D seismic acquisition and processing
system, and the unique Drilling & Measurements fully sourceless
NeoScope formation evaluation tool. In addition, the Mangrove
stimulation design software that brings enhanced decision making to
well completions was announced.
Against these results, the worsening of the Eurozone crisis and
the disappointing numbers from China and the US led to downward
revisions of GDP growth and oil demand. Together with inventory
builds from higher OPEC production, these brought oil prices lower
in spite of tight global spare oil capacity and potential
production disruption due to geopolitical events. With the
situation in the global economies remaining unsettled, the present
climate of uncertainty is likely to remain for some time to
come.
In the midst of such uncertainty, we are maintaining focus on
what we can control, which is the planning and execution of our
work. We are currently undertaking further initiatives to extend
our leadership in execution and we believe that such actions,
together with our international strength and our balanced portfolio
in North America, should enable strong relative future
performance."
Other Events:
-- During the quarter, Schlumberger repurchased 7.5 million shares of its
common stock at an average price of $66.30 for a total purchase
price
of $499 million.
-- On May 31, 2012, Schlumberger announced the completion of the sale of
its Wilson distribution business to National Oilwell Varco, Inc.
(NOV)
for $906 million. Additionally, on July 19, 2012,
Schlumberger
divested the remaining portion of its distribution business to
NOV by
selling its 56% equity ownership interest in CE Franklin for
approximately $122 million.
-- During the quarter, Schlumberger completed the previously announced
acquisition of SPT Group--a privately owned software company
based in
Norway specializing in dynamic modeling for the oil and gas
industry.
-- During the quarter, Schlumberger also acquired, or agreed to acquire,
the following business interests:
GEDCO, a Calgary-based provider of geophysical survey design
software and services. GEDCO offers consulting services for
integrated seismic solutions from design through
interpretation.
The CASING DRILLINGtm division of Tesco Corporation.
Schlumberger
and Tesco also entered a long-term agreement in which Tesco
will
provide Casing Drive System equipment to support CASING
DRILLING
projects.
The remaining shares of Radius Service, after having been
the
minority shareholder for the past seven years. Radius Service
is
the market leader in the engineering, manufacturing and service
of
downhole motors and drilling tools for the Russian land
market.
The company employs approximately 1,000 people and operates in
all
major oil and gas producing regions of Russia.
A 20% minority share in Anton Oilfield Services Group, a
leading
independent oilfield services provider in China. This extends
a
strategic cooperation agreement that began in 2010 in
drilling
fluids and well-cementing services. This transaction is
expected
to be completed in the third quarter of 2012.
An ownership interest in the Liquid Robotics Oil & Gas
joint
venture to integrate and deploy new services for the oil and
gas
industry using Liquid Robotics Wave Glider® wave-powered,
autonomous marine vehicles.
Condensed Consolidated
Statement of Income
(Stated in millions,
except
per share amounts)
Second Quarter Six Months
Periods Ended June 30 2012 2011 2012 2011
Revenue $ 10,448 $ 8,990 $ 20,366 $ 17,112
Interest and other 45 29 92 61
income, net(1)
Expenses
Cost of revenue 8,162 7,024 15,973 13,508
Research & engineering 291 281 566 535
General 101 139 199 231
& administrative(2)
Merger 22 31 37 65
& integration(2)
Interest 78 69 158 142
Income before taxes 1,839 1,475 3,525 2,692
Taxes on income(2) 445 366 845 653
Income from continuing 1,394 1,109 2,680 2,039
operations
Income 21 233 40 245
from discontinued
operations
Net income 1,415 1,342 2,720 2,284
Net income attributable 12 3 17 1
to
noncontrolling
interests
Net $ 1,403 $ 1,339 $ 2,703 $ 2,283
income attributable
to Schlumberger
Schlumberger amounts
attributable to:
Income from continuing $ 1,382 $ 1,106 $ 2,663 $ 2,038
operations(2)
Income 21 233 40 245
from discontinued
operations
Net income $ 1,403 $ 1,339 $ 2,703 $ 2,283
Diluted earnings
per share
of Schlumberger
Income from continuing $ 1.03 $ 0.81 $ 1.99 $ 1.49
operations(2)
Income 0.02 0.17 0.03 0.18
from discontinued
operations
Net income $ 1.05 $ 0.98 $ 2.02 $ 1.67
Average shares 1,331 1,352 1,333 1,356
outstanding
Average shares 1,339 1,366 1,341 1,370
outstanding
assuming dilution
Depreciation & $ 854 $ 804 $ 1,706 $ 1,590
amortization
included
in expenses(3)
1) Includes interest income of:
Second quarter 2012 - $6 million (2011 - $10 million)
Six months 2012 - $16 million (2011 - $19 million)
2) See pages 6-7 for details of charges and credits.
3) Including multiclient seismic data cost.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30, Dec. 31,
Assets 2012 2011
Current Assets
Cash and short-term investments $ 3,493 $ 4,827
Receivables 10,802 9,500
Other current assets 6,745 6,212
21,040 20,539
Fixed income investments, held to maturity 261 256
Fixed assets 13,689 12,993
Multiclient seismic data 478 425
Goodwill 14,540 14,154
Other intangible assets 4,980 4,882
Other assets 2,025 1,952
$ 57,013 $ 55,201
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities $ 7,422 $ 7,579
Estimated liability for taxes on income 1,214 1,245
Short-term borrowings and current portion
of long-term debt 2,521 1,377
Dividend payable 369 337
11,526 10,538
Long-term debt 7,953 8,556
Postretirement benefits 1,490 1,732
Deferred taxes 1,800 1,731
Other liabilities 1,277 1,252
24,046 23,809
Equity 32,967 31,392
$ 57,013 $ 55,201
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 2012
Months
Net Debt, January $ (4,850 )
1, 2012
Income from continuing operations 2,680
Depreciation and amortization 1,706
Pension and other postretirement benefits expense 193
Excess of equity income over dividends received (77 )
Stock-based compensation expense 167
Pension and other postretirement benefits funding (338 )
Increase in working capital (2,720 )
Capital expenditures (2,081 )
Multiclient seismic data capitalized (183 )
Dividends paid (701 )
Proceeds from employee stock plans 232
Stock repurchase program (823 )
Business acquisitions, net of cash and debt acquired (682 )
Proceeds from the sale of Wilson 906
Other (309 )
Currency effect on net debt 160
Net Debt, June $ (6,720 )
30, 2012
Components of Jun. 30,2012 Dec. 31,2011
Net Debt
Cash and short-term $ 3,493 $ 4,827
investments
Fixed income investments, 261 256
held to maturity
Short-term borrowings and current (2,521 ) (1,377 )
portion of long-term debt
Long-term (7,953 ) (8,556 )
debt
$ (6,720 ) $ (4,850 )
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
Second-Quarter 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 2012
Pretax Tax Noncont.Interest Net DilutedEPS Income
Statement
Classification
Schlumberger
income from
continuing
operations,
as reported $ 1,839 $ 445 $ 12 $ 1,382 $ 1.03
Merger 22 1 - 21 0.02 Merger
and &
integration integration
costs
Schlumberger
income from
continuing
operations,
excluding $ 1,861 $ 446 $ 12 $ 1,403 $ 1.05
charges
& credits
First Quarter 2012
Pretax Tax Noncont.Interest Net DilutedEPS Income
Statement
Classification
Schlumberger
income from
continuing
operations,
as reported $ 1,687 $ 400 $ 5 $ 1,282 $ 0.95
Merger 15 2 - 13 0.01 Merger
and &
integration integration
costs
Schlumberger
income from
continuing
operations,
excluding $ 1,702 $ 402 $ 5 $ 1,295 $ 0.96
charges
& credits
Second Quarter 2011
Pretax Tax Noncont.Interest Net DilutedEPS Income
Statement
Classification
Schlumberger
income from
continuing
operations,
as reported $ 1,475 $ 366 $ 3 $ 1,106 $ 0.81
Merger 32 8 - 24 0.02 Merger
and &
integration integration
costs
Donation 50 10 - 40 0.03 General
to &
Schlumberger administrative
Foundation
Schlumberger
income from
continuing
operations,
excluding $ 1,557 $ 384 $ 3 $ 1,170 $ 0.86
charges
& credits
Charges & Credits (cont.)
(Stated in millions, except
per share amounts)
Six Months 2012
Pretax Tax Noncont.Interest Net DilutedEPS(*) Income Statement Classification
Schlumberger income from
continuing operations,
as reported $ 3,525 $ 845 $ 17 $ 2,663 $ 1.99
Merger and integration costs 37 3 - 34 0.03 Merger & integration
Schlumberger income from
continuing operations,
excluding charges & credits $ 3,562 $ 848 $ 17 $ 2,697 $ 2.01
Six Months 2011
Pretax Tax Noncont.Interest Net DilutedEPS Income Statement Classification
Schlumberger income from
continuing operations,
as reported $ 2,692 $ 653 $ 1 $ 2,038 $ 1.49
Merger and integration costs 66 14 - 52 0.04 Merger & integration
Donation to Schlumberger 50 10 - 40 0.03 General & administrative
Foundation
Schlumberger income from
continuing operations,
excluding charges & credits $ 2,808 $ 677 $ 1 $ 2,130 $ 1.56
(*) Does not add
due to rounding
Product
Groups
(Stated in
millions)
Three Months Ended
Jun. 30, 2012 Mar. 31, 2012
Revenue Income Before Taxes Revenue IncomeBeforeTaxes
Oilfield
Services
Reservoir $ 2,778 $ 784 $ 2,586 $ 672
Characterization
Drilling(1) 4,001 738 3,785 657
Production(1) 3,738 612 3,539 621
Eliminations (69 ) (35 ) 8 (7 )
& other
10,448 2,099 9,918 1,943
Corporate - (169 ) - (171 )
& other
Interest - 7 - 10
income(2)
Interest - (76 ) - (80 )
expense(2)
Charges & - (22 ) - (15 )
credits
$ 10,448 $ 1,839 $ 9,918 $ 1,687
Geographic
Areas
(Stated in
millions)
Three Months Ended
Jun. 30, 2012 Mar. 31, 2012
Revenue Income Before Taxes Revenue IncomeBeforeTaxes
Oilfield
Services
North $ 3,346 $ 695 $ 3,403 $ 777
America
Latin 1,844 351 1,754 321
America
Europe/CIS/Africa 2,967 596 2,614 432
Middle East 2,193 506 2,058 478
& Asia
Eliminations 98 (49 ) 89 (65 )
& other
10,448 2,099 9,918 1,943
Corporate - (169 ) - (171 )
& other
Interest - 7 - 10
income(2)
Interest - (76 ) - (80 )
expense(2)
Charges & - (22 ) - (15 )
credits
$ 10,448 $ 1,839 $ 9,918 $ 1,687
(1) Effective January 1, 2012, a component of the Drilling
Group has been reallocated to the Production Group.
Historical Product Group information has been reclassified
to conform to this new presentation.
(2) Excludes interest included in the Product
Groups and Geographic Areas Results.
Oilfield Services
Second-quarter revenue of $10.45 billion increased 5%
sequentially and 16% year-on-year. Sequentially, revenue increased
in all Groups as higher exploration offshore and in key land
markets, together with strong deepwater activities, continued to
benefit the Reservoir Characterization and Drilling Groups. Higher
sales of Artificial Lift and Completions products combined with
increased Schlumberger Production Management (SPM) project activity
helped the Production Group post a sequential increase despite
lower Well Services revenue in North America land. All Geographical
Areas grew sequentially with the exception of North America as a
result of the seasonal spring break-up in Western Canada and
continued pricing pressure in the US land hydraulic fracturing
market. Excluding Western Canada, North America grew sequentially
on increased offshore activity, particularly in the US Gulf of
Mexico. Internationally, revenue grew sequentially by 9% following
a seasonal rebound of activity in Russia, the North Sea and China;
more project-related revenues, robust product sales and higher
offshore activity in the Mexico & Central America GeoMarket*;
the commencement of an SPM project in the Ecuador GeoMarket; and
increased offshore rig activity in the Australia & Papua New
Guinea GeoMarket.
Increased Reservoir CharacterizationGroup revenue was driven
primarily by a rebound in Schlumberger Information Solutions (SIS)
software sales together with strong Testing Services and Wireline
activity on deepwater exploration projects in Africa, and in the
North Sea and Australia & Papua New Guinea GeoMarkets.
WesternGeco grew slightly as higher UniQ* land seismic productivity
in the Saudi Arabia & Bahrain GeoMarket more than offset lower
Marine vessel utilization from planned transits and dry-docks
during the quarter. DrillingGroup revenue expanded on robust
international and offshore demand for Drilling & Measurements
and M-I SWACO technologies. Integrated Project Management (IPM)
operations in Latin America and in the North Africa and Australia
& Papua New Guinea GeoMarkets were also stronger.
ProductionGroup revenue grew as increased sales of Artificial Lift
and Completions products across all Areas in addition to the start
of an SPM project in Ecuador more than compensated for lower Well
Services revenue on land in North America.
On a geographical basis, North America Area revenue decreased
due to the seasonal spring break-up in Western Canada and the
weaker US land hydraulic fracturing market. Revenue in North
America however, excluding Western Canada, improved sequentially
due to increased offshore activity--particularly in deepwater US
Gulf of Mexico operations. In the Latin America Area, the increase
in revenue came mainly from the Mexico & Central America
GeoMarket--driven by IPM land activity, SIS software sales, and
demand for Drilling Group technologies offshore. The Ecuador
GeoMarket was also up significantly with the start of an SPM
production incentive contract. In the Europe/CIS/Africa Area,
revenue increased from the strong seasonal rebound of exploration
and development activity in the North Sea GeoMarket while the
seasonal pick-up of activity in Russia--particularly in Sakhalin,
the Caspian and Western Siberia--also contributed to the sequential
improvement. Sub-Sahara Africa also grew due to high exploration
activity in Tanzania and Mozambique as well as strong exploration
and development activity in the Nigeria & the Gulf of Guinea
GeoMarket. In the Middle East & Asia Area, the revenue increase
was led by the Australia & Papua New Guinea GeoMarket as a
result of strong offshore drilling activity. The China GeoMarket
also posted a strong seasonal pick-up in onshore activity while the
Saudi Arabia & Bahrain GeoMarket continued to register growth
in both rig and rig-less operations.
Second-quarter pretax operating income of $2.1 billion increased
8% sequentially and 20% year-on-year. Pretax operating margin
increased 50 basis points (bps) sequentially. International pretax
operating margin expanded 161 bps sequentially to 20.8% due to the
seasonal rebounds of activity in Russia, the North Sea and China
combined with strong results in Europe and Africa, and in other
GeoMarkets in the Asia-Pacific countries and Latin America Area.
The continued shift to higher-margin exploration and deepwater
activities helped sustain international margins. In North America
pretax operating margin decreased 208 bps sequentially to 20.8% as
a result of the spring break-up in Canada and continued cost
inflation and pricing pressure in the US land hydraulic fracturing
market.
Reservoir Characterization Group
Second-quarter revenue of $2.78 billion increased 7%
sequentially and 13% year-on-year. Pretax operating income of $784
million was 17% higher sequentially and grew 30% year-on-year.
Sequentially, the revenue increase was driven primarily by a
rebound in SIS software sales. Strong performances by Testing
Services and Wireline Technologies on deepwater exploration
projects in Africa, the North Sea and the Australia & Papua New
Guinea GeoMarkets also contributed to growth. WesternGeco was
slightly higher as increased productivity from the land seismic
UniQ crew in the Saudi Arabia & Bahrain GeoMarket more than
offset lower Marine vessel utilization resulting from planned
transits and dry-docks during the quarter.
Pretax operating margin increased 223 bps sequentially to 28.2%
primarily due to strong SIS software sales combined with the more
favorable revenue mix that resulted from higher deepwater and
exploration activity.
A number of technology highlights across the Reservoir
Characterization Group portfolio contributed to the second-quarter
results.
In the UAE, new Wireline MDT* modular formation dynamics tester
packer technologies were used for the first time in the world for
Al Hosn Gas in the Shah field in the presence of the highest
concentrations of H2S gas tested so far. The dual-packer technique
deployed not only reduced single-probe sampling station times of 21
hours to 6 hours, but also reduced pressure drawdowns
significantly.
Offshore Angola, Wireline imaging technologies complemented
real-time lithology logs and sidewall cores to evaluate a Cobalt
International Energy presalt exploration well. ECS* elemental
capture spectroscopy, Rt Scanner* triaxial induction, and
PressureXpress* fluid sampling services were deployed as part of
the well's logging programs, which were conducted without lost time
over a three-week period.
Wireline Dielectric Scanner* multifrequency dielectric
dispersion and MR Scanner* expert magnetic resonance technologies
have been used in heavy oil reservoirs in the Orinoco Belt in
Venezuela for Petrocarabobo. By avoiding incorrect hydrocarbon
volume estimations due to possible fresh water and salinity
variations and determining the presence of free water, the
dielectric and magnetic resonance measurements helped confirm true
reservoir potential.
Advanced Schlumberger Wireline technologies were deployed in the
South Fuwaris field in the Neutral Zone to evaluate the Ratawi
Oolite carbonate heavy oil reservoir for Joint Operations. The
workflow combined data from magnetic resonance logs with Dielectric
Scanner multifrequency dielectric dispersion saturation
measurements and was complemented by laboratory measurements. The
approach successfully resolved production uncertainties and was
supported by in situ fluid analysis and downhole mobility
measurements.
In Kazakhstan, Schlumberger Wireline successfully acquired
production logging data in one highly deviated and two horizontal
wells for Zhaikmunai LLP. Since a complex multiphase flow profile
was expected in all wells, FloScan Imager* technology was used for
production logging data acquisition using MaxTRAC* downhole well
tractor technology in the horizontal wells. Despite the presence of
stagnant water in all wells, flow profiles were successfully
measured with five mini-spinners deployed on the vertical axis of
the wellbore.
WesternGeco IsoMetrix* marine isometric seismic technology was
launched at the EAGE convention in Copenhagen on June 5, 2012. This
breakthrough technology provides isometrically sampled
point-receiver data in both crossline and inline directions,
capturing the returning wavefield in three dimensions for the first
time and providing highly accurate images of the subsurface. Using
MEMS multisensor technology, IsoMetrix service measures both
acoustic pressure and vertical and crossline acceleration over a
wide frequency range.
In Australia, Drillsearch Energy Limited awarded WesternGeco
more than 1,500 km2 of acquisition and processing using UniQ
integrated point-receiver land seismic technology in the
Cooper-Eromanga Basin. In a second win for the UniQ system, Hess
Corporation also awarded WesternGeco over 2,000 km2 of 2D data
acquisition and processing in the Beetaloo Basin of the Northern
Territory. The seismic data will be combined with gravity and
electromagnetic measurements to build near-surface velocity and
surface statics models. These awards highlight continuing
acceptance of UniQ technology in the Australian market, in which a
low-impact point-source, point-receiver configuration is key to
addressing environmental issues in remote areas.
WesternGeco has begun acquisition of the first of three
ocean-bottom cable surveys in the UK North Sea for BP using a
Q-Seabed* multicomponent seabed seismic system. The survey will
also include the first commercial deployment of the WesternGeco
Azimuthally Invariant Source Array (AISA), an omni-directional
marine source that is designed to remove the complications created
by azimuthal variations in the source output.
BP also awarded WesternGeco a 280-km2 shallow-water,
high-resolution 3D marine acquisition and processing program over
the ACG field in the Caspian Sea. This is the third in a sequence
of recent programs for BP in the Caspian Sea and will be acquired
with the seismic vessel Gilavar.
Offshore Angola, WesternGeco has successfully completed
acquisition of a 7,000-km2 seismic survey over Blocks 19 and 20 in
conjunction with Sonangol E.P. The 6-month survey, which was
completed ahead of schedule, is the first multiclient 3D survey
using Q-Marine Solid* streamer technology to be acquired in West
Africa and is part of a 4-year acquisition and reprocessing
depth-merge program that successfully illuminates the presalt
section over 38,000 km2 of the Kwanza Basin.
In the US Gulf of Mexico, WesternGeco successfully completed
acquisition of the Petronius 4D monitor survey for Chevron U.S.A.
Inc. and Marathon Oil Company. This time-lapse survey was acquired
using WesternGeco Q-Marine Solid streamer technology including
Dynamic Spread Control (DSC) to maximize source and receiver
repeatability in the complex current regimes of the Gulf of
Mexico.
Tullow Oil plc has awarded WesternGeco a contract for
approximately 3,000 km2 of seismic acquisition offshore Suriname.
The survey will be acquired during the second and third quarters of
2012 by the Western Regent using Q-Marine Solid streamer
technology. To ensure optimal coverage in the area's challenging
currents, WesternGeco is using DSC technology for automated
positioning of the vessel, source and streamers.
Petrobras has awarded WesternGeco a two-year electromagnetics
data processing contract that includes leading-edge inversion
solutions for several marine projects. The work will be executed in
the WesternGeco GeoSolutions data processing facility located in
Rio de Janeiro.
Schlumberger Testing Services helped complete a Union Oil
Company of California deepwater well in the US Gulf of Mexico in
more than 7,000 ft of water using advanced perforating systems
under bottomhole pressure of 20,000 psi at a total well depth that
exceeded 28,000 ft. During the operation, four production zones
were simultaneously perforated with 7-in, 18 shot-per-foot
PowerFlow* slug-free big hole shaped charges with INsidr*
perforating shock and debris reduction technology. The total
perforating string spanned nearly 1,300 ft--a record length for
large diameter guns at such depths and pressures. The bottomhole
assembly was deployed on 5 ?-in drill pipe, and included
Schlumberger IRIS* intelligent remote implementation and PosiTest*
long-stroke retrievable packer technologies. The job was completed
in a single run without non-productive time and reflected excellent
execution between rig personnel, Chevron U.S.A. Inc. (an affiliate
of Union) and Schlumberger.
In Iraq, Schlumberger Testing Services drillstem test (DST)
technologies have been deployed for Petronas Carigali
Iraq--including Signature* quartz gauges, IRIS intelligent remote
implementation valves and SCAR* inline independent reservoir fluid
sampling services. The technologies saved three days of rig time
and form part of the Quartet* high-performance downhole reservoir
testing system that offers greater safety, a shorter string design,
and fewer connections compared to conventional DST
technologies.
In Russia, Schlumberger has been awarded a contract by LUKOIL
for well testing services on a high-pressure natural gas
exploration well in the remote Yamal arctic region. The services
include perforating, drillstem testing, surface testing and fluid
sampling using the latest-generation Quartet high-performance
downhole reservoir testing system. Quartet technology will be
deployed in conjunction with the InterACT* connectivity,
collaboration, and information system for quality control and well
test data interpretation.
Talisman has awarded Schlumberger a five-year Global Licensing
Agreement covering all operations in North America, Latin America,
Southeast Asia, the North Sea, North Africa and Poland. The
contract includes Petrel* E&P software with geology,
geophysics, and reservoir engineering modules, the Ocean* software
development framework, ECLIPSE* reservoir simulation software and
PetroMod* petroleum systems modeling software. The range of
products licensed aligns with a business objective of increasing
efficiency and better quantifying uncertainty across exploration
and development activities.
Drilling Group
Second-quarter revenue of $4.00 billion increased 6%
sequentially and 19% year-on-year. Pretax operating income of $738
million was 12% higher sequentially and grew 38% year-on-year.
Sequentially, revenue increased primarily on strong
international and offshore activity for Drilling & Measurements
and M-I SWACO technologies. In particular, Drilling &
Measurements performance was driven by both stronger activity and
an improved technology revenue mix that led to some pricing gains.
In addition, M-I SWACO also posted strong results from deepwater
operations in the US Gulf of Mexico as M-I SWACO activity returned
to pre-Macondo levels. IPM operations in Latin America, and the
North Africa and Australia & Papua New Guinea GeoMarkets were
also higher with the start of several new projects.
Sequentially, pretax operating margin increased 107 bps to 18.4%
due to increasing high-margin deepwater activity both in North
America and internationally. Margin expansion was also the result
of a favorable revenue mix that led to selected pricing
gains--particularly for Drilling & Measurements services.
A number of highlights that included a focus on the integration
of Drilling Group Technologies contributed to second-quarter
results.
Integration of Drilling Group technologies delivered further
record drilling performance in the TNK-BP Verknechonskoe field in
Siberia. On pad 19-2244, PowerDrive X6* rotary steerable systems
with a Smith MDSi613WPX bit were used with an M-l SWACO FLO Pro NT*
mud system to drill the longest well and the longest horizontal
section in the field. Average rates of penetration and meterage per
circulating hour reached 34.1 m/h and 17.2 m/h respectively. Both
figures represented new best performances for any bottomhole
assembly run in the field.
In Iraq, operator HKN Inc. selected a combination of Drilling
& Measurements PowerDrive vorteX* rotary steerable systems,
Schlumberger measurement-while-drilling and logging-while-drilling
technologies, and Smith MDi616 polycrystalline diamond compact
(PDC) bits with ONYX* cutters to drill the 8 ½-in section of a well
in a measured pressure drilling environment. The section was
drilled with a 140% improvement on below rotary table times
compared to conventional methods used earlier on the well.
In Ecuador, a number of Schlumberger technologies helped IPM
drill and complete a horizontal well in the OSO field for
Petroamazonas EP. The well was completed 1 ½ days ahead of schedule
with the longest horizontal section drilled in the field and is the
field's best producer with initial production of 6,700 bbl/d.
PeriScope* bed boundary mapper, PowerDrive Xceed* rotary steerable
systems, ScavengerPlus* scavenger slurry stabilizer and the
Perform* performance through risk management process all
contributed to this success.
Integration of Pathfinder and Smith Bits services in Oklahoma
helped Marathon Oil save approximately 3 ½ days compared to offset
well performance in the Cana/Woodford Field. The combination of
Schlumberger PowerDrive Archer* 675 high-build-rate rotary
steerable technology with a Smith MSi613UPX bit delivered dogleg
severity of 10°/100 ft in the curve before drilling 90 ft into the
lateral at an optimal rate of penetration. Also in Oklahoma, a new
design for the Smith MSi713 bit was developed with collaboration
from Cimarex engineers that helped improve rate of penetration. The
bit was deployed with the PowerDrive Archer service to achieve the
highest footage per day ever drilled in the curve section in the
Cana field for Cimarex at 353 ft versus an average of 191 ft.
PowerDrive Archer high-build-rate rotary steerable technology
has been introduced in Thailand for Salamander Energy to allow
accurate well positioning in an unconsolidated formation in a well
with a 1,000-m tangent section at an inclination of 80º. The
complete section was drilled in a single run and represented the
first PowerDrive Archer deployment in Thailand and the second
combination of PowerDrive Archer and EcoScope*| multifunction
logging-while-drilling service worldwide. The bottomhole assembly
was run with a new Smith MDi519LBPX five-blade drill bit that had
been identified with the IDEAS* integrated drillbit design platform
as being capable of yielding low vibrations at high rates of
penetration through high dogleg sections. The system recorded
consistent performance while improving rate of penetration by more
than 60% compared to previous wells drilled with motors.
In Saudi Arabia, an integrated approach combining Schlumberger
seismic-while-drilling, sonic-while-drilling and vertical seismic
profile technologies helped optimize drilling practices through and
below salt in an exploration well for Saudi Aramco. The data sets
not only helped predict and drill through the salt sections, but
also established the workflows to be used to drill similar
structures in future wells in the area.
In the Cuu Long Basin of Vietnam, advanced Drilling &
Measurements logging-while-drilling technologies were deployed for
Japan Vietnam Petroleum Co., LTD. to evaluate a fractured granite
basement reservoir. Due to hole conditions, NeoScope*| sourceless
formation evaluation while drilling service was used to acquire
conventional triple-combo measurements in combination with
geoVISION* resistivity for fracture evaluation, and sonicVISION*
sonic-while-drilling technology for formation evaluation and rock
strength determination.
In the South China Sea, CNOOC deployed Drilling &
Measurements PowerDrive rotary steerable, EcoScopemultifunction
logging-while-drilling and PeriScope bed boundary mapper
technologies in a challenging horizontal well in a mature
reservoir. The value of the technology was clearly demonstrated by
smoothly landing the well in the reservoir and accurately placing
the 304-m horizontal section within a thin channel layer that
varied from 1 ½ to 3 m in thickness. The well has reached oil
production of 6,000 bbl/d--far exceeding the production goal of
1,500 bbl/d and marking a new production record from a highly
mature reservoir in the South China Sea.
In Azerbaijan, Schlumberger logging-while-drilling measurements
helped Total evaluate an exploration well in which conventional
wireline operations were not possible due to high overburden and
depleted reservoir pressures. Drilling & Measurements
arcVISION* and adnVISION* services in combination with StethoScope*
formation-pressure-while-drilling technology were successfully used
to acquire the formation evaluation measurements needed for
reserves estimation. Subsequent tests confirmed the discovery of a
natural gas and condensate reservoir.
Also in Azerbaijan, Drilling & Measurements real-time
formation evaluation measurements were deployed for SOCAR on an
exploration well. TeleScope* and arcVISION logging-while-drilling
technologies were run from surface to a total depth of 6,380 m with
the acquired data helping evaluate formation properties under the
challenging conditions of high pressure and depleted zones.
In Sichuan, Central China, PetroChina SWOGC used Drilling &
Measurements PowerDrive rotary steerable, PeriScope bed boundary
mapper and SonicScope sonic-while-drilling technologies to
accurately place a 506-m lateral well in a tight carbonate oil
reservoir while identifying fractures to optimize completion
design. During the subsequent stimulation job, PetroChina SWOGC
made adjustments to the program based on the data that led to
improved well performance.
ONYX II* premium cutter technology has been successfully
introduced for OrenburgNeft in the Volga-Urals region in Russia.
Smith PDC bits optimized with IDEAS drillbit design software
achieved targets by drilling an 8 ½-in directional interval through
hard carbonate rock with proper control, maximum footage and a
penetration rate 29% higher than offset wells. This performance
also made it possible to drill the section in one run instead of
two.
In the Yakutsk region, Eastern Siberia, Smith Bits technologies
enabled Surgutneftegaz to increase drilling speeds on the Talakan
and Alinsloe fields. Analysis of the drilling process, and the use
of ONYX cutters together with SHARC* high-abrasion-resistance PDC
drillbit technology, and the IDEAS integrated drillbit design
platform led to development of an optimized bit that helped drill
faster. As a result, the rate of penetration while drilling the
6,200-m section was increased by 60%, leading to significant cost
savings and the possibility of starting oil production earlier than
planned.
In California, SERVCO sidetracking services successfully
completed the first known three-casing whipstock exit in North
America utilizing the Trackmaster* whipstock system with a
FasTrack* one-trip mill to successfully mill through 7-in, 8 5/8-in
and 13 3/8-in casings in a single run.
In Norway, Schlumberger has been awarded a five-year contract by
ConocoPhillips for M-I SWACO drilling and completion fluids,
drilling waste management, mechanical clean-up and circulation
tools, and onshore real-time engineering services on the Greater
Ekofisk Development.
In Kuwait, M-I SWACO FAZEPRO* reversible invert emulsion mud and
FAZEBREAK* filtercake breaker together with MeshRite* stainless
steel screens helped KOC drill and complete two dual lateral wells
in a complex reservoir with heterogeneous highly permeable sands,
active faults and shale stringers. The combination of the
technologies led to production rates approximately 60% above
expectation, and their use has been planned for all similar
upcoming wells.
Production Group
Second-quarter revenue of $3.74 billion increased 6%
sequentially and 19% year-on-year. Pretax operating income of $612
million was 1% lower sequentially and flat year-on-year.
Sequentially, revenue grew as increased sales of Artificial Lift
and Completions products across all Areas and the start of an SPM
project in Ecuador more than compensated for lower Well Services
revenue on land in North America. Well Services revenue from
offshore and international activities also grew sequentially to
further offset the lower Well Services land activity due to the
Canadian spring break-up and the downward pricing trend.
Second-quarter pretax operating margin decreased 117 bps to
16.4%. This decline was largely attributable to the North American
land hydraulic fracturing market as a result of the spring break-up
in Canada and the continued cost inflation and pricing pressure in
US land. This was offset in part by better margins posted by the
other Production Group Technologies.
Production Group highlights during the quarter included
successes for a number of Group Technologies.
Well Services HiWAY* flow-channel hydraulic fracturing
technology was deployed in West Siberia for Megionneftegaz in the
Taylakovskoe oilfield on refracturing operations for the first time
in Russia. On one well, which had first been fracture-stimulated in
2009 with a conventional treatment, HiWAY technology almost doubled
stabilized oil production. Megionneftegaz plans on continuing to
use the technology for wells previously stimulated with
conventional methods.
In Egypt, Well Services HiWAY technology has continued to
penetrate the market and has now been deployed for the first time
for the Qarun Petroleum Company--a joint venture between EGPC,
Phoenix Resources Company of Qarun, Apache Oil Egypt Inc. and GNR
Seagull. Post-stimulation, initial production data showed a
considerable increase in oil production rate compared to offsets in
the same field.
In the Eagle Ford Shale in LaSalle County, South Texas, Hess
Corporation implemented use of Well Services HiWAY flow-channel
hydraulic fracture technology in December 2011. Recent comparisons
of well performance have shown increased production from
HiWAY-treated wells relative to those treated with other
technologies. The productivity differential between HiWAY and
conventional treatments has continued to increase with time,
leading to an increase in expected ultimate recovery for wells in
which HiWAY technology was deployed.
Also in US land, Well Services HiWAY technology with nitrogen
foam has been deployed for the first time for Encana. The initial
production of the well was greater than expected and significantly
higher than offset wells that were completed with conventional
technology.
Customised Well Services OCA* organic clay acid technology has
been deployed to stimulate a well for Tullow Oil in the Jubilee
field offshore Ghana. The stimulation design incorporated data from
core samples and used Virtual Lab* geochemical simulation software
to simulate fluid interactions to ensure optimum fluid formulation.
The operation, which was executed flawlessly using a FlexSTIM*
modular offshore stimulation system, significantly increased
production and as a result of this success, a number of additional
wells have been planned for similar treatments.
In the Marcellus Shale, Well Services StimMAP* hydraulic
fracture stimulation diagnostics technology helped Shell assess
fracture orientation, size and growth. As part of the deployment,
Wireline VSI* versatile seismic imager tools were conveyed by
MaxTRAC tractor technology along two horizontal wells and run in a
third vertical well. The acquired data contributed to understanding
of the field, and will allow for optimal development in the future.
StimMAP diagnostics were also used in Colorado for a leading North
American energy producer. Wireline TuffTRAC* technology conveyed an
8-sensor VSI imager over more than 1 ½ miles of horizontal wellbore
to a measured depth of 15,633 ft at a speed of 1,400 ft/h to help
optimize the well treatment program.
Well Services Losseal* W reinforced composite mat pills have
been introduced for an operator in the North of Oman to stop lost
circulation in the 8 ½-in hole section where static losses of up to
350 bbl/h are normally experienced. The new technology was deployed
in two wells after attempts with conventional pills had failed. No
further fluid losses were encountered and the operator was able to
resume drilling and run casing without problems.
In Italy, Well Services FlexSTONE* advanced flexible cement
technology has been deployed for Eni on three wells in the Adriatic
Sea. The wells, which are fracture-stimulated and gravel-packed,
make zonal isolation a critical challenge as such completions can
damage conventional cement and compromise hydraulic isolation.
Cement bond logging confirmed successful FlexSTONE placement, which
contributed to the success of this offshore well construction
program.
In Russia, Schlumberger AbrasiFRAC* abrasive perforating and
fracturing technology with fiber-enhanced proppant plugs was
deployed on a multistage fracturing stimulation operation in a
horizontal sidetrack well completed with a cemented liner in the
LUKOIL Tevlinsko-Russinskoe oilfield. Production increased by a
factor of four--representing an improvement 35% greater than
expected. Use of the technology succeeded in providing the reliable
zonal isolation that conventional proppant plugs have historically
been unable to achieve.
In Colombia, integrated Schlumberger Well Intervention and
Testing Services technologies enabled Equion Energia to improve
efficiency in perforating a well in the Mirador formation. The
e-Fire* electronic firing head system for coiled tubing deployment
was run with ACTive* in-well live performance coiled tubing
technology to change wellbore fluid, correlate, perforate
underbalance, drop the guns, take fluid samples and isolate the
formation by pumping cement--all in a single run. The success of
this operation has led to plans for similar operations on the
Florena and Resetor fields.
In Libya, Schlumberger Well Intervention Services technology was
deployed in an offshore deviated well to demonstrate its viability
in the stimulation of an oil producer well on the Mellitah Oil and
Gas Bouri field. In a rig-less operation, Schlumberger CoilFLATE*
packer technology was used for a selective zonal matrix treatment
on the newly perforated upper zone of the well. The results were
highly successful and will permit operational and quality
optimization on future treatments as CoilFLATE technology becomes
the solution of choice for selective zonal matrix treatments.
In the UK sector of North Sea, Enquest PLC awarded Schlumberger
Artificial Lift a contract to supply, install and provide
operational support for electrical submersible pump (ESP) systems
for the Alma and Galia subsea field development project. The
project involves subsea deployment of DualLife* tandem ESP
completion systems for seven wells. The award was based on the
Schlumberger ability to provide integrated technology covering
ESPs, variable speed drives, and electrical connectors as well as a
proven track record in subsea installations worldwide.
In Norway, Framo has recently been awarded a contract by A/S
Norske Shell for a complete Subsea Booster Pump System for the
Draugen Field in the North Sea. Framo, the industry leader in
multiphase subsea pumping and metering focused on a systems
approach, was fully acquired by Schlumberger in 2011.
Schlumberger Completions was awarded a three-year contract by
Total E&P for intelligent completions products and services in
Qatar. The award was based on a five-year history of successful
intelligent completion installation, new technology introduction,
operational excellence and continuous reliability improvement. Work
under the contract began in May 2012.
In Iraq, Schlumberger Completions WellWatcher* permanent
monitoring quartz gauges have been installed in the Gharraf field
for Petronas Carigali Iraq. The technology represents a step change
in production monitoring to maximize overall recovery.
In Equatorial Guinea, Schlumberger Completions provided a full
range of completion services to Noble Energy on three subsea gas
injector wells and three platform producer wells on the Alen field.
The products and services provided included M-I SWACO drilling and
completion technologies; AquaPac* integrated water-packing and
OptiPac* Alternate Path| gravel pack systems; and WellWatcher*
permanent monitoring technology as well as TRMAXX*
surface-controlled and SlimTech* reduced-OD safety valves.
In Brazil, Schlumberger Completions has been awarded the first
OGX field development program. The award was based on cooperation
and experience during prior exploration campaigns managed by
Schlumberger IPM, and by integration of the completion systems and
stimulation designs that will be required for field
development.
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 115,000 people representing over 140 nationalities
and working in about 85 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 from continuing operations of
$36.96 billion in 2011. 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. The
EcoScope and NeoScope services use technology that resulted from
this collaboration.
|Alternate Path is a Mark of ExxonMobil Corp and the technology
is licensed exclusively to Schlumberger.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, July 20, 2012. 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
+1-800-230-1951 within North America, or +1-612-234-9960 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 August 20, 2012 by dialing +1-800-475-6701
within North America, or +1-320-365-3844 outside of North America,
and providing the access code 246811.
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 information 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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