TIDMSCL
Schlumberger Limited (NYSE:SLB) today reported results for the
second quarter of 2016.
(Stated in millions, except per share amounts)
Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Jun. 30, 2015 Sequential Year-on-year
Revenue $7,164 $6,520 $9,010 10% ** -20%
Pretax operating income $747 $901 $1,708 -17% -56%
Pretax operating margin 10.4% 13.8% 19.0% -340 bps -854 bps
Net income (loss) (GAAP basis) $(2,160) $501 $1,124 -531% -292%
Net income, excluding charges and credits* $316 $501 $1,124 -37% -72%
Diluted EPS (loss per share) (GAAP basis) $(1.56) $0.40 $0.88 -490% -278%
Diluted EPS, excluding charges and credits* $0.23 $0.40 $0.88 -43% -74%
*These are non-GAAP financial measures. See section entitled "Charges & Credits" for details.
**Total revenue excluding the effects of the Cameron acquisition, which closed on April 1, 2016, declined 14% sequentially and 38% year-on-year.
Schlumberger Chairman and CEO Paal Kibsgaard commented, "In the
second quarter market conditions worsened further in most parts of
our global operations, but in spite of the continuing headwinds we
now appear to have reached the bottom of the cycle. As we continued
to navigate this challenging environment, we again delivered robust
pretax operating income, operating margin, and free cash flow. This
performance came as a result of our strong execution and, in some
cases, at the expense of revenue as we began shifting focus onto
recovering our pricing concessions and high-grading our contract
portfolio.
"Our second-quarter revenue increased 10% sequentially,
reflecting a full quarter of activity from the acquired Cameron
businesses that contributed $1.5 billion in revenue. On a pro forma
basis, revenue decreased 12% sequentially with North America
falling 20% due to the Canadian spring break-up and a 25% drop in
the US land rig count, while international revenue decreased 9% due
to weaker activity, continued pricing pressure, and a large-scale
cutback in our operations in Venezuela. However, our wide
geographical footprint and broad technology portfolio continued to
offer unique advantages that helped to mitigate these effects.
"Among the business segments, second-quarter revenues from the
Reservoir Characterization and Production Groups declined
sequentially by 9% and 11%, respectively, on continued lower demand
for exploration- and development-related products and services as
E&P budgets were further reduced. Drilling Group revenue fell
by 18%, impacted by the steep drop in rig count, particularly in
North and Latin America. Cameron Group revenue decreased 6%
sequentially on a pro forma basis due to declining project backlog
and a further slowdown in activity in US land that impacted the
short-cycle businesses.
"Pretax operating margin was maintained above 10% after a
sequential drop of 340 basis points due to lower activity, pricing
headwinds, an unfavorable activity mix and the significant
reduction of our operations in Venezuela. Decremental operating
margin on a sequential pro forma basis was limited to 38% as a
result of solid cost and resource management while we continued to
maintain our long-term capability. The margin decrease has been
highest in the Drilling Group, where margin contracted by 649 bps
to 8%. Sequentially, Production Group pretax operating margin fell
459 bps to 4%, Reservoir Characterization Group decreased 228 bps
to 17%, and the Cameron Group posted a margin of 16%. Diluted
earnings per share of $0.23, excluding charges and credits, was 43%
lower sequentially.
"As a result of the weakness in activity that will persist
through 2016 as expected, we have made another significant
adjustment to our cost and resource base, including the release of
more than 16,000 employees during the first half of 2016 and a
further streamlining of our overhead, infrastructure, and asset
base. This has led to $646 million in restructuring charges in the
second quarter for the reduction in our workforce, as well as a
non-cash $1.9 billion impairment charge for fixed assets,
inventory, and multiclient seismic data. We also recognized $335
million in merger and integration charges relating to the Cameron
acquisition.
"As the downturn has developed, we have changed our focus from
managing decremental margins to further strengthening market share
where we have seen a significant increase in our tender wins. As
oil prices have nearly doubled from their lows of January 2016, we
are now shifting our focus to recover the temporary pricing
concessions that have been made, and to renegotiate contracts with
limited promise of longer-term financial viability.
"At the same time, the effects of the cuts that we have seen in
E&P spending are now clearly visible in falling oil production,
and with demand remaining strong, we are heading more rapidly
towards an increasing negative gap between global supply and demand
for oil. This will require significant capability and capacity to
reverse, and without pricing recovery the service industry will be
challenged to deliver.
"As we have navigated this downturn, we have made a series of
moves that position us well for the inevitable market recovery. Our
balance sheet remains strong in spite of the investments we have
made in our business and the cash that we have returned to our
shareholders. We have expanded our technology portfolio, not only
by the major acquisition of Cameron International, but also by a
series of smaller acquisitions that are enabling the development of
new integrated drilling and production technologies that will
further lower cost per barrel. And we have leveraged the
opportunities of transformation to create significant competitive
advantage and steadily improve our intrinsic performance.
"Whatever shape the recovery takes, service pricing must rise
while respecting the need for operators to control their costs in
what will likely be a medium-for-longer oil price environment. This
provides an opportunity to share the additional value that can be
mutually created through collaboration and integration. We will
therefore continue to develop the way in which we operate as a
company as well as the nature of the work that we undertake, making
sure we remain at the forefront of an industry that increasingly
needs fundamental change."
Other Events
During the quarter, Schlumberger repurchased 0.4 million shares
of its common stock at an average price of $72.77 per share for a
total purchase price of $31 million.
On April 1, 2016, Schlumberger completed its merger with Cameron
International Corporation (Cameron). The transaction combines two
complementary technology portfolios in a pore-to-pipeline products
and services offering. The merger creates technology-driven growth
by integrating Schlumberger reservoir and well expertise with
Cameron wellhead and surface equipment, flow control, and
processing technology. This combination will result in the
industry's first complete drilling and production systems, which
will be enabled by Schlumberger expertise in instrumentation, data
processing, control software, and system integration.
On June 1, 2016, Schlumberger announced the acquisition of
Saltel Industries, an engineering, manufacturing and service
company that offers expandable patches and steel packers to the oil
and gas industry. These technologies will be integrated into
products and services within the Production Group.
On June 2, 2016, Schlumberger announced the acquisition of Omron
Oilfield and Marine, Inc. (Omron Oilfield). Omron Oilfield designs,
manufactures, sells, and provides aftermarket services for
automated drive and control systems, power houses, and drillers'
cabins. The Company expects that this acquisition will accelerate a
number of Schlumberger well construction and production projects,
including future land rig designs.
On June 23, 2016, Schlumberger closed the acquisition of coiled
tubing drilling and coiled tubing units from Xtreme Drilling and
Coil Services Corp. (Xtreme). Xtreme operates coiled tubing
drilling units in Saudi Arabia.
On July 20, 2016, the Company's Board of Directors approved a
quarterly cash dividend of $0.50 per share of outstanding common
stock, payable on October 14, 2016 to stockholders of record on
September 7, 2016.
Geographic Revenue
Second-quarter revenue of $7.2 billion increased 10%
sequentially with North America and International revenue
increasing 19% and 8%, respectively. This included a full quarter
of activity from the acquired Cameron businesses, which contributed
revenue of $0.6 billion in North America and $1.0 billion
internationally.
(Stated in millions)
As reported Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Sequential
North America $ 1,737 $ 1,464 19 %
Latin America 1,007 1,280 -21 %
Europe/CIS/Africa 1,948 1,698 15 %
Middle East & Asia 2,404 2,002 20 %
Eliminations & other 68 77
$ 7,164 $ 6,520 10 %
North America revenue $ 1,737 $ 1,464 19 %
International revenue $ 5,359 $ 4,979 8 %
The following table and commentary is presented on a pro forma basis assuming that Cameron was acquired January 1, 2016.
(Stated in millions)
Pro forma - including Cameron in Q1 2016 Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Sequential
North America $ 1,737 $ 2,165 -20 %
Latin America 1,007 1,353 -26 %
Europe/CIS/Africa 1,948 2,096 -7 %
Middle East & Asia 2,404 2,456 -2 %
Eliminations & other 68 79
$ 7,164 $ 8,148 -12 %
North America revenue $ 1,737 $ 2,165 -20 %
International revenue $ 5,359 $ 5,905 -9 %
North America
North America pro forma revenue decreased 20% sequentially as a
result of the Canadian spring break-up and the US land rig count
decline of 25%. Land revenue fell 22% on lower activity in the
Drilling and Cameron Groups, combined with continuing pricing
pressure in the Production Group. While fracturing stage counts and
active pressure pumping fleets increased more than 15%
sequentially, an unfavorable job and technology mix, combined with
pricing pressure, more than offset the increase in volume. North
America offshore revenue decreased 17%, mainly due to lower
Drilling Group activity, although this was partially offset by
higher WesternGeco multiclient seismic license fees.
International Areas
International pro forma revenue declined 9% sequentially due to
customer budget cuts, continued pricing pressure, activity
disruptions, and the scaling back of operations in Venezuela.
Pro forma revenue in the Latin America Area declined 26%
sequentially, mainly due to scaling back of operations in
Venezuela. Activity in the rest of the Area continued to decline,
particularly in the Mexico & Central America and Brazil
Geomarkets, as land and offshore rig counts fell due to customer
budgetary constraints. In addition, integrated project work
decreased in Mexico as campaigns ended and rigs were demobilized.
The Drilling Group saw the largest drop in the Area, while the
decline in Production Group revenue was partially offset by robust
Schlumberger Production Management (SPM) operations.
Europe/CIS/Africa Area pro forma revenue decreased 7%
sequentially, mainly in the Nigeria & Gulf of Guinea, Central
& West Africa, and Angola GeoMarkets where rig counts declined
and projects ended. Norway & Denmark GeoMarket revenue declined
due to seasonal maintenance shutdowns. Russia and Central Asia
revenue increased, however, as activity recovered after the winter
slowdown and the Russian ruble strengthened.
Middle East & Asia Area pro forma revenue declined 2%
sequentially. This was mainly due to lower activity in the Asia
Pacific region and Australia & Papua New Guinea GeoMarket and
as a result of customer budget cuts and project completions, with
the Drilling Group most affected by this decline. However, revenue
from the China GeoMarket increased on higher Cameron Group
activity. Revenue from the Middle Eastern GeoMarkets was
essentially flat as increased activity for the Production and
Reservoir Characterization Groups was offset by pricing
concessions.
Reservoir
Characterization
Group
(Stated in millions, except margin percentages)
Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Jun. 30, 2015 Sequential Year-on-year
Revenue $ 1,593 $ 1,747 $ 2,510 -9 % -37 %
Pretax operating 266 331 655 -20 % -59 %
income
Pretax operating 16.7 % 19.0 % 26.1 % -228 bps -943 bps
margin
Decremental 43 % 42 %
operating
margin
Reservoir Characterization Group revenue was $1.6 billion, with
80% coming from international operations. Revenue was 9% lower
sequentially, primarily due to the scaling back of operations in
Venezuela and project cancellations that impacted Wireline activity
internationally. Testing Services revenue and Software Integrated
Solutions (SIS) software sales also declined, particularly in Latin
America. These declines were partially offset by higher multiclient
seismic license sales in the US Gulf of Mexico and transfer fees in
the Brazil GeoMarket and the Europe/CIS/Africa Area.
Pretax operating margin of 17% declined 228 basis points (bps)
sequentially due to reduced high-margin Wireline and Testing
Services activities, particularly in Latin America. These effects,
however, were partially offset by improved profitability in
WesternGeco on stronger multiclient seismic license sales and
transfer fees, although decremental margin remained elevated as the
Group maintained longer-term capability and petrotechnical
expertise.
Reservoir Characterization Group performance was boosted by a
number of integrated services benefits, technology deployments,
transformation initiatives, and new contract awards during the
quarter.
Offshore Norway, Integrated Services Management (ISM) used a
combination of drilling and completions technologies for OMV Norge
to drill a horizontal appraisal well in the Barents Sea. Drilling
& Measurements GeoSphere* reservoir mapping-while-drilling
technology enabled optimum well placement in the reservoir by using
deep directional electromagnetic measurements. Drilling efficiency
was enhanced using Stinger* conical diamond element and PowerDrive
Xceed* ruggedized rotary steerable system while Geoservices
Drilling Analyst* services enabled the integration of surface and
downhole measurements to optimize the drilling process, mitigate
risk, and reduce nonproductive time. M-I SWACO STARGLIDE* lubricant
provided enhanced friction reduction while the ENVIROUNIT* offshore
slop water treatment system ensured adherence to environmental
regulations. In addition, Testing Services OrientXact*
tubing-conveyed oriented perforating system minimized perforation
damage by providing stability during drawdown and depletion. As a
result, the customer benefitted from a 461-m section of the well
that delivered high flow rates under minimal drawdown.
Offshore Canada, Schlumberger completed the first phase of an
ISM contract for Statoil in the deepwater environment of the
Flemish Pass basin. The phase included nine exploration and
appraisal wells with a total of 24,000 m drilled over 19 months and
incurred no health, safety, or environmental incidents during the
12,000 operational hours. The integration and coordination of a
range of Schlumberger technologies improved drilling efficiency,
assured wellbore integrity, optimized well placement, and played a
significant role in the two discoveries Statoil made during this
campaign. One well established a net rate of penetration record of
190.1 m/h while another well that was drilled in a water depth of
2,829 m was the deepest for offshore Canada and Statoil globally.
The customer benefitted from ISM by completing the project by the
appointed target date, despite weather-related challenges, and
included several of the 33 hole sections among their top drilling
performances worldwide.
In the United Arab Emirates, Testing Services deployed Muzic*
wireless telemetry for Al Hosn Gas during appraisal testing
operations in an undeveloped field. Five downhole tests were
performed to evaluate gas wells with a high H2S content. The
flexible design of Quartet* downhole reservoir testing system
technology eliminated the need for multiple runs while wireless
transmission and monitoring of downhole pressure facilitated
real-time transient analysis to optimize decision-making and
provide critical information to determine reservoir properties. In
addition, information from Signature* quartz gauges helped assess
well performance during stimulation operations and supported
downhole and surface sampling decisions.
In the US Gulf of Mexico, Wireline introduced MaxPull30*
high-pull wireline conveyance system to complete five descents of
logging tools under maximum continuous tension of 20,900 lb in a
deepwater well. During one descent, MaxPull30 technology withstood
29,300 lb of tension to free the tools from the borehole wall,
which avoided a four-day fishing job that would have cost the
customer $3.1 million in rig time. The maximum continuous pull and
the single instantaneous pull to free the tools stand as the
highest tensions recorded. In the same well, XL-Rock* large-volume
rotary sidewall coring service successfully retrieved 91 of the 109
cores attempted.
In China, Wireline Flow Scanner* well production logging
technology was used for Technical Service Company of JHOSC Sinopec
in the Fuling shale gas project to evaluate multistage hydraulic
fracturing operations in a challenging wellbore environment.
Conveyance challenges were overcome using Well Services ACTive PS*
CT real-time production logging service technology that combines
real-time fiber-optic telemetry with advanced wireline production
logging tools to deliver greater operational efficiency, enhanced
production, and a decreased environmental impact. The customer
benefited from accurate data to identify low rates of gas
production in a 30-well campaign.
The Schlumberger transformation program enabled WesternGeco to
increase its global marine operational reliability through
improvements in operations integrity. Since 2013 the nonproductive
time rate has decreased 62% through the optimization of job design,
planning, and execution. A key contributor to this result was a 68%
improvement in marine source reliability during the same period by
implementing reliability centered maintenance (RCM) and procedural
adherence to standard work instructions (SWI). Through the
development of SWI and deployment of the Competency Management
System, WesternGeco is targeting improved utilization of its vessel
fleet.
In North America, EP Energy Corp awarded SIS the first
INTERSECT* high-resolution reservoir simulator in the Cloud
contract. The contract is a part of EP Energy's Model to Design
workflow that digitizes the completion process to optimize
operations. In addition, EP Energy invested in four additional
licenses for Mangrove* engineered stimulation design in the Petrel*
E&P software platform.
In the UK, Total E&P UK awarded WesternGeco a contract for a
4D survey in the North Sea Elgin-Franklin field using IsoMetrix*
marine isometric seismic technology. The complex 250-km2 project,
which is the world's first commercial IsoMetrix 4D monitor survey,
requires simultaneous operations with a second vessel undershooting
obstructions to ensure superior imaging in the highly congested
field. The survey will monitor changes in the reservoir since the
previous WesternGeco survey in 2012.
Drilling Group
(Stated in millions, except margin percentages)
Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Jun. 30, 2015 Sequential Year-on-year
Revenue $ 2,034 $ 2,493 $ 3,469 -18 % -41 %
Pretax operating 171 371 672 -54 % -75 %
income
Pretax operating 8.4 % 14.9 % 19.4 % -649 bps -1,096 bps
margin
Decremental 44 % 35 %
operating
margin
Drilling Group revenue of $2.0 billion, of which 81% came from
the international markets, declined 18% sequentially. This was
mainly the result of a sharp drop in drilling activity from a
combination of the spring break-up in Canada, lower rig counts on
land in the US and Latin America, and the scaling back of
operations in Venezuela. In addition, continued and persistent
pricing pressure negatively impacted Drilling & Measurements
and M-I SWACO results across all of the Areas.
Pretax operating margin of 8% contracted 649 bps sequentially,
leading to higher decrementals as revenue declined on pricing
weakness. This effect was exacerbated by lower rig counts in North
America and the scaling back of highly accretive operations in
Venezuela.
A combination of contract awards, transformation program gains,
integrated services benefits, and new technology deployments
contributed to Drilling Group performance in the second
quarter.
In Norway, Centrica E&P Norway awarded Schlumberger a
four-year integrated drilling services framework agreement for all
Centrica-operated drilling activities on the Norwegian Continental
Shelf. Combining all services into one contract, the framework is
based on the operator and service provider's intent to work
together more closely. The contract model, which is largely
performance based, includes strong incentives to optimize drilling
efficiency and is a win-win for Centrica, its partners, and
Schlumberger.
Offshore Brazil, Schlumberger deployed Stinger* conical diamond
element technology on a Smith customized drill bit for Petrobras to
drill the 12 ¼-in interval in a pre-salt well in the Lula field.
Stinger technology achieved an average rate of penetration (ROP) of
4.37 m/h-exceeding the best average on an offset well by 22%,
saving 22 hours-and drilled the 441-m section in a single run, 42%
faster than average to save an additional 41 hours. This
performance helped Petrobras set a new performance benchmark in
cost per meter for 12¼-in well sections in the Lula field.
In US land, Bits & Drilling Tools used ONYX 360* rolling
polycrystalline diamond compact (PDC) cutter technology to set a
new record for Unit Petroleum in the Granite Wash unconventional
formation. ONYX 360 technology increased drillbit durability and
footage drilled as the entire diamond edge was used to drill the
formations while it rotated 360°. This enabled the customer to
drill the longest and fastest lateral wellbore in the formation by
exceeding the previous record by 62% in lateral length and 27% in
rate of penetration.
In Ecuador, Schlumberger used a combination of drilling and
completions technologies to drill two wells for ENAP-SIPEC in the
Inchi field. Drilling & Measurements PowerDrive* rotary
steerable systems and StingBlade* conical diamond element bit
technology provided drilling efficiency with remote support from
experts working in the Drilling Technology Integration Center.
Completions automatic release gun anchor (MAXR) combined with
Wireline PowerJet* deep penetrating shaped charges and the PURE*
clean perforations system maximized penetration and reduced
reservoir damage. As a result, the customer achieved a 278%
increase in the wells' combined production. Also, one well was
drilled one-and-half days ahead and the second well four days ahead
of the original plan, reducing drilling costs by approximately $1.5
million.
In Russia, Bits & Drilling Tools introduced AxeBlade* ridged
diamond element bit technology for GazpromNeft to drill wells in
the Tsarichanskoye and Filatovskoye oil and gas condensate fields
of the Orenburg region. AxeBlade bit technology features a
ridge-shaped geometry that combines the shearing action of a
conventional PDC cutter with the crushing action of a tungsten
carbide insert cutter. In one well section, AxeBlade technology
increased the rate of penetration by 45% compared to the best
offset well drilled with a conventional PDC drill bit. In addition,
the customer saved rig time by completing the section in three runs
rather than the usual five.
In China, Drilling & Measurements used PowerDrive Orbit*
rotary steerable system for CNOOC to overcome challenging drilling
conditions and save rig time in a 12 1/4-in well section in the
Huangyan basin. PowerDrive Orbit technology drilled 2,498 m in a
single run, which now stands as a record for the longest single run
meterage for this technology in a 12 1/4-in well section, and also
established a benchmark for the region. As a result, the customer
avoided one additional run, saving $140,000 and 28 hours of rig
time.
Offshore Azerbaijan, Bits & Drilling Tools used a
combination of technology for BP Azerbaijan to overcome drilling
challenges in the Chirag field in the Caspian Sea. The Rhino XS*
hydraulically expandable reamer and the M-I SWACO WELL COMMANDER
circulating tool enabled complex mud conditioning and wellbore
cleanout operations. Rhino XS reamer has a single-piece body that
allows for higher tensile and torque-load capacity, while WELL
COMMANDER tools enable operators to boost circulation to remove
cuttings at strategic points in the drillstring. As a result, the
customer saved 48 hours of rig time on an offshore platform.
In Gabon, Drilling & Measurements used PowerDrive Archer*
high build rate rotary steerable system for Shell to drill three
wells in the Rabi field. These medium, short radius wells were
drilled in a single run from the whipstock window to the end of the
horizontal drain. The customer benefitted from decreased costs as
each sidetracked well was delivered two to six days earlier than
planned. In addition, the repositioning of the drains in the
reservoir enabled a 20% production increase.
In Russia, the Schlumberger transformation program enabled
increases in people productivity through remote operations.
Drilling & Measurements implemented an automated notification
system that helps identify jobs for remote operations and more
efficiently manages crew size via a drilling portal. Since
implementing the system, the use of remote operations increased
from approximately 50% of jobs in the second quarter of 2015 to 75%
of jobs in the first quarter of 2016. In addition, on-site crew
size decreased by 6% in 2015 compared to 2014, which reduced
exposure to safety and environmental risks while maintaining a high
level of service quality.
In Norway, Det norske oljeselskap ASA (Det norske) awarded M-I
SWACO a four-year contract to supply specialty chemicals and
associated services for the Alvheim and new Ivar Aasen offshore
developments. Technical support will be supplied to all of the
company's offshore operations from the Trondheim shore base and
Stavanger remote operations center.
Production Group
(Stated in millions, except margin percentages)
Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016 Jun. 30, 2015 Sequential Year-on-year
Revenue $ 2,099 $ 2,348 $ 3,059 -11 % -31 %
Pretax operating 90 208 397 -57 % -77 %
income
Pretax operating 4.3 % 8.9 % 13.0 % -459 bps -871 bps
margin
Decremental 48 % 32 %
operating
margin
Production Group revenue of $2.1 billion decreased 11%
sequentially with more than one-half of the revenue decrease
attributable to a decline in North America from the Canadian spring
break-up and increased pricing pressure. While pressure pumping
fracturing stage counts and active fleets increased more than 15%
sequentially, an unfavorable revenue mix combined with pricing
pressure more than offset the increase in activity volume. North
America's contribution to the Group's revenue this quarter declined
to 25%.
Pretax operating margin of 4% decreased 459 bps sequentially,
mainly from lower activity and increasing pricing weakness in
pressure pumping services on land in North America. Sequential
decremental operating margin expanded as a result of the decision
to maintain operational capability in certain locations to defend
market share despite lower activity. Robust Schlumberger Production
Management projects, from which co-managed production worldwide has
now reached around 250,000 bbl/d, continued to contribute to
accretive margins for the Group.
Production Group results benefitted from a number of new
technology deployments and transformation program initiatives
during the quarter.
In Kuwait, Well Services used the HiWAY* flow-channel fracturing
technique in six wells in a sandstone reservoir with high shale and
silt content in the southeastern part of the country. HiWAY
technology increased conductivity while also reducing water and
proppant consumption, which translated to a smaller operational
footprint as well as simpler logistics. Although the six wells had
been treated with conventional stimulation systems that did not
induce production after treatment, HiWAY technology helped the
customer achieve production flow rates that are three times higher
than initial expectations.
In Oman, Completions deployed the first behind-the-casing fiber
optic distributed temperature sensing (DTS) technology for PDO in
the Marmul field. Currently under enhanced oil recovery using a
polymer flood process, the Marmul field benefitted from the
combination of DTS and distributed acoustic sensing technology,
which provide in-depth measurements used in the analysis of
injection and production profiles for polymer flood
conformance.
Offshore Brazil, Well Services used CoilFLATE* coiled tubing
through-tubing inflatable packer technology for Petrobras during a
plug and abandon campaign in the Campos basin. CoilFLATE technology
is designed to keep the packer in place, providing a reliable
high-pressure seal at large inflation ratios, which can withstand
any chemical environment and temperatures up to 375 degF. In
addition, ACTive DTS* distributed temperature measurement enabled
real-time downhole data acquisition that detected a leak and
subsequently avoided three rig days of unnecessary remedial work in
order to successfully complete the operation.
In Brazil, Well Services used Invizion RT* real-time well
integrity service in a well for Repsol Sinopec Brasil in the
ultra-deepwater Campos basin. Invizion RT technology improved
cementing operations in the intermediate well section by enabling
monitoring, control, and evaluation of cement placement in real
time. The ability to eliminate a top-of-liner squeeze job and
confirm the top of isolation saved the customer more than 12 hours
of rig time.
Offshore Angola, Well Services used a combination of
technologies for Total Exploration & Production on the Kaombo
project. Deepwater wells present challenges to isolate intermediate
water-bearing and hydrocarbon- bearing zones with narrow pore
pressure differentials and fracture gradients. Losseal
Microfracture* lost circulation technology combined with the
MUDPUSH* spacer family provided optimal mud removal and saved rig
time during cementing operations.
In US land, Well Services used LiteCRETE* lightweight cement
slurry to isolate a customer's newly designed production casing
with cement to surface in a Lea County, New Mexico well. LiteCRETE
technology has exceptional compressive strength and permeability
when set and provides excellent perforation quality without
reducing cement integrity. By eliminating one casing string of what
is generally a three-string approach, the customer saved
approximately $500,000.
In North America, the Schlumberger transformation program
enabled improvements in reliability and service delivery for Well
Services operations. Implementing RCM for blenders and hydraulic
fracturing pumps along with a comprehensive staff training program
saved approximately $9 million over a nine-month period and also
reduced blender-related nonproductive time by 64%. The use of
predictive analytics has enabled Regional Support Centers to
predict equipment issues for fracturing pump power-end components
since September 2015 which, combined with other measures, has saved
nearly $8 million in materials and supplies. Furthermore, the
application of predictive analytics to field data from 2014 enabled
the development of a Pump Asset Care Program that uses RCM and,
once fully implemented, we expect this to increase asset
availability by 8% and accumulate a total savings of $30 million
over a three-year period.
Cameron Group
(Stated in millions, except margin percentages)
Three Months Ended Change
Jun. 30, 2016 Mar. 31, 2016* Jun. 30, 2015* Sequential Year-on-year
Revenue $ 1,536 $ 1,628 $ 2,236 -6 % -31 %
Pretax operating income 243 236 328 3 % -26 %
Pretax operating margin 15.8 % 14.5 % 14.7 % 130 bps 113 bps
Decremental operating NA 12 %
margin
*First-quarter 2016 and second-quarter 2015 are presented
on a pro forma basis for comparative purposes.
Cameron Group reported revenue of $1.5 billion and pretax
operating margin of 16%. Revenue, of which 62% came from
international markets, was impacted by a declining project backlog
as well as a further slowdown in activity on land in the US that
mainly affected the short-cycle businesses of the Valves &
Measurement and Surface product lines.
Pretax operating margin of 16% improved sequentially on a pro
forma basis despite the market downturn. This was driven by strong
project execution from OneSubsea, Drilling, and Process Systems
product lines.
New contract awards and project startups impacted the
performance of the Cameron Group. These included a number of
additional successes for OneSubsea, a Schlumberger company.
Woodside Energy Ltd. awarded OneSubsea an engineering,
procurement, integration, and construction (EPIC) contract totaling
approximately $300 million for the Greater Enfield Project offshore
Australia. The contract includes six horizontal SpoolTree* subsea
trees; six horizontal trees for the water injection system; six
multiphase meters; a high-boost dual pump station with high-voltage
motors, umbilical, topside, subsea controls and distribution;
intervention and workover control systems; landing string; and
installation and commissioning services.
In Egypt, Belayim Petroleum Company (Petrobel) awarded an EPIC
contract totaling more than $170 million to OneSubsea for the
supply of a subsea production system for the first stage of the
Zohr gas field located in the Shorouk Concession offshore Egypt.
The award follows an accelerated front-end engineering and design
(FEED) study by OneSubsea in which a multidisciplinary team
collaborated with Eni and Petrobel to develop the subsea equipment
architecture for this high gas volume field with the world's second
longest step-out of more than 150 km. The scope of the contract
includes six horizontal SpoolTree* subsea trees, intervention and
workover control systems, landing string, tie-in, high-integrity
pressure protection system, topside and subsea controls and
distribution enabled by fiber-optic communications technology,
water detection and salinity monitoring using the AquaWatcher*
water analysis sensor, and installation and commissioning
services.
BP Exploration (Delta) Ltd. and partner Deutsche Erdoel AG
awarded OneSubsea a contract to supply subsea production systems
for the West Nile Delta Giza/Fayoum and Raven fields offshore
Egypt. Giza/Fayoum will be tied back to modified onshore Rosetta
facilities and integrated with a new onshore plant for Raven.
Supply for the long-distance gas fields includes large-bore subsea
trees, manifold systems incorporating high-integrity pressure
protection systems, connection systems, and controls systems along
with project engineering, management, and testing.
In the US Gulf of Mexico, OneSubsea successfully executed the
commissioning and startup of subsea boosting systems installed in
ultradeep waters. By reducing the back-pressure on the reservoir,
the subsea boosting pump technology has the potential to improve
the recovery factor by 10% to 30%, which translates to between 50
and 150 million barrels of additional oil recovery.
Financial Tables
Condensed
Consolidated
Statement of Income
(Stated in millions, except per share amounts)
Second Quarter Six Months
Periods Ended 2016 2015 2016 2015
June 30,
Revenue $ 7,164 $ 9,010 $ 13,684 $ 19,258
Interest and 54 47 98 96
other income
Expenses
Cost of revenue 6,315 7,136 11,774 15,231
Research 257 279 497 546
& engineering
General 103 120 213 239
& administrative
Impairments 2,573 - 2,573 439
& other(1)
Merger 335 - 335 -
& integration(1)
Interest 149 86 282 169
Income (loss) $ (2,514 ) $ 1,436 $ (1,892 ) $ 2,730
before taxes
Taxes on income (368 ) 302 (269 ) 608
(loss)(1)
Net income (loss) $ (2,146 ) $ 1,134 $ (1,623 ) $ 2,122
Net 14 10 36 23
income attributable
to
noncontrolling
interests
Net income (loss) $ (2,160 ) $ 1,124 $ (1,659 ) $ 2,099
attributable
to Schlumberger(1)
Diluted earnings $ (1.56 ) $ 0.88 $ (1.26 ) $ 1.64
(loss) per
share
of Schlumberger(1)
Average shares 1,389 1,269 1,321 1,273
outstanding
Average shares 1,389 1,280 1,321 1,282
outstanding
assuming dilution
Depreciation & $ 1,113 $ 1,047 $ 2,080 $ 2,089
amortization
included
in expenses(2)
(1) See section entitled "Charges & Credits" for details.
(2) Includes depreciation of property, plant
and equipment and amortization of
intangible assets, multiclient seismic
data costs and SPM investments.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30, Dec. 31,
Assets 2016 2015
Current Assets
Cash and short-term investments $ 11,192 $ 13,034
Receivables 9,374 8,780
Other current assets 6,629 5,098
27,195 26,912
Fixed income investments, held to maturity 386 418
Fixed assets 13,226 13,415
Multiclient seismic data 976 1,026
Goodwill 24,603 15,605
Intangible assets 9,921 4,569
Other assets 4,864 6,060
$ 81,171 $ 68,005
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities $ 9,494 $ 7,727
Estimated liability for taxes on income 1,043 1,203
Short-term borrowings and current portion
of long-term debt 3,371 4,557
Dividends payable 701 634
14,609 14,121
Long-term debt 18,252 14,442
Deferred taxes 2,631 1,075
Postretirement benefits 1,341 1,434
Other liabilities 1,359 1,028
38,192 32,100
Equity 42,979 35,905
$ 81,171 $ 68,005
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 supplemental
information regarding the level of Schlumberger's indebtedness by
reflecting cash and investments that could be used to repay
debt.
"Free cash flow" represents cash flow from operations less
capital expenditures, SPM investments and multiclient seismic data
costs capitalized. Management believes that free cash flow is an
important liquidity measure for the Company and that it is useful
to investors and management as a measure of the ability of our
business to generate cash. Once business needs and obligations are
met, this cash can be used to reinvest in the Company for future
growth or to return to our shareholders through dividend payments
or share repurchases. Free cash flow does not represent the
residual cash flow available for discretionary expenditures.
Net Debt and free cash flow are non-GAAP financial measures that
should be considered in addition to, not as substitute for, or
superior to, total debt or cash flow from operations.
Details of changes in Net Debt follow:
(Stated in millions)
Periods Ended SixMonths2016 SecondQuarter2016 SixMonths2015
June 30,
Net income $ (1,623 ) $ (2,146 ) $ 2,122
(loss)
before
noncontrolling
interests
Impairment 2,476 2,476 383
and other
charges, net
of tax
Net income 853 330 2,505
before
noncontrolling
interest,excluding
charges &
credits
Depreciation 2,080 1,113 2,089
and
amortization(1)
Pension and 92 32 217
other
postretirement
benefits
expense
Stock-based 145 84 167
compensation
expense
Pension and (83 ) (38 ) (214 )
other
postretirement
benefits
funding
Change in (250 ) 213 (837 )
working
capital
Other 5 (102 ) 157
Cash flow 2,842 1,632 4,084
from
operations
(2)
Capital (998 ) (449 ) (1,193 )
expenditures
SPM (729 ) (132 ) (222 )
investments
Multiclient (333 ) (166 ) (221 )
seismic
data
capitalized
Free cash 782 885 2,448
flow
Stock (506 ) (31 ) (1,239 )
repurchase
program
Dividends (1,255 ) (626 ) (1,151 )
paid
Proceeds from 195 32 256
employee
stock plans
(784 ) 260 314
Business (3,790 ) (3,709 ) (206 )
acquisitions
and
investments,
net
of
cash acquired
plus
debt assumed
Discontinued - - (233 )
operations
- settlement
with
US Department
of Justice
Other 76 58 (86 )
Increase in (4,498 ) (3,391 ) (211 )
Net Debt
Net (5,547 ) (6,654 ) (5,387 )
Debt,
beginning
of period
Net Debt, end $ (10,045 ) $ (10,045 ) $ (5,598 )
of period
Components of Jun. 30,2016 Mar. 31,2016 Dec. 31,2015 Jun. 30,2015
Net Debt
Cash $ 11,192 $ 14,432 $ 13,034 $ 7,274
and
short-term
investments
Fixed income 386 401 418 469
investments,
held
to maturity
Short-term (3,371 ) (4,254 ) (4,557 ) (4,231 )
borrowings
and current
portion of
long-term
debt
Long-term (18,252 ) (17,233 ) (14,442 ) (9,110 )
debt
$ (10,045 ) $ (6,654 ) $ (5,547 ) $ (5,598 )
(1) Includes depreciation of property, plant
and equipment and amortization of
intangible assets, multiclient seismic
data costs and SPM investments.
(2) Includes severance payments of approximately
$545 million and $455 million during the
six months ended June 30, 2016 and 2015,
respectively, and $285 million during
the second quarter of 2016. Also includes
approximately $100 million of one-off
transaction-related payments associated
with the acquisition of Cameron.
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
second-quarter 2016 earnings release also includes non-GAAP
financial measures (as defined under the SEC's Regulation G). Net
income, excluding charges & credits, as well as measures
derived from it (including diluted EPS, excluding charges &
credits; net income before noncontrolling interests, excluding
charges & credits; and effective tax, excluding charges &
credits) are non-GAAP financial measures. Management believes that
the exclusion of charges & credits from these financial
measures enables it to evaluate more effectively Schlumberger's
operations period over period and to identify operating trends that
could otherwise be masked by the excluded items. These measures are
also used by management as performance measures in determining
certain incentive compensation. The foregoing non-GAAP financial
measures should be considered in addition to, not as a substitute
for or superior to, other measures of financial performance
prepared in accordance with GAAP. The following is a reconciliation
of these non-GAAP measures to the comparable GAAP measures.
(Stated in millions, except per share amounts)
Second Quarter 2016
Pretax Tax Noncont.Interest Net Diluted
EPS
Schlumberger $ 394 $ 64 $ 14 $ 316 $ 0.23
net income,
excluding
charges &
credits
Fixed (1,058 ) (177 ) - (881 )
asset
impairments
Workforce (646 ) (63 ) - (583 )
reduction
Inventory (616 ) (49 ) - (567 )
write-downs
Multiclient (198 ) (62 ) - (136 )
seismic
data
impairment
Other (55 ) - - (55 )
restructuring
charges
Amortization (150 ) (45 ) - (105 )
of purchase
accounting
inventory fair
value
adjustment
Merger-related (92 ) (17 ) - (75 )
employee
benefits
and
professional
fees
Other (93 ) (19 ) - (74 )
merger
and
integration-related
Schlumberger $ (2,514 ) $ (368 ) $ 14 $ (2,160 ) $ (1.56 )
net loss
(GAAP basis)
(Stated in millions, except per share amounts)
Six Months 2016
Pretax Tax Noncont.Interest Net Diluted
EPS
Schlumberger $ 1,015 $ 162 $ 36 $ 817 $ 0.62
net income,
excluding
charges &
credits
Fixed (1,058 ) (177 ) - (881 )
asset
impairments
Workforce (646 ) (63 ) - (583 )
reduction
Inventory (616 ) (49 ) - (567 )
write-downs
Multiclient (198 ) (62 ) - (136 )
seismic
data
impairment
Other (55 ) - - (55 )
restructuring
charges
Amortization (150 ) (45 ) - (105 )
of purchase
accounting
inventory fair
value
adjustment
Merger-related (92 ) (17 ) - (75 )
employee
benefits
and
professional
fees
Other (93 ) (19 ) - (74 )
merger
and
integration-related
Schlumberger $ (1,893 ) $ (270 ) $ 36 $ (1,659 ) $ (1.26 )
net loss
(GAAP basis)
Six Months 2015
Pretax Tax Noncont.Interest Net Diluted
EPS
Schlumberger $ 3,169 $ 664 $ 23 $ 2,482 $ 1.94
net income,
excluding
charges &
credits
Workforce (390 ) (56 ) - (334 )
reduction
Currency (49 ) - - (49 )
devaluation
loss
in Venezuela
Schlumberger $ 2,730 $ 608 $ 23 $ 2,099 $ 1.64
net income
(GAAP basis)
There were
no charges
or credits
during the
first
quarter
of 2016 and
the second
quarter of
2015.
Product
Groups
(Stated in
millions)
Three Months Ended
Jun. 30, 2016 Mar. 31, 2016 Jun. 30, 2015
Revenue Income Before Taxes Revenue IncomeBeforeTaxes Revenue IncomeBeforeTaxes
Reservoir $ 1,593 $ 266 $ 1,747 $ 331 $ 2,510 $ 655
Characterization
Drilling 2,034 171 2,493 371 3,469 672
Production 2,099 90 2,348 208 3,059 397
Cameron 1,536 243 - - - -
Eliminations (98 ) (23 ) (68 ) (9 ) (28 ) (16 )
& other
Pretax 747 901 1,708
operating
income
Corporate (241 ) (172 ) (199 )
& other
Interest 24 13 6
income(1)
Interest (136 ) (120 ) (79 )
expense(1)
Charges & (2,908 ) - -
credits
$ 7,164 $ (2,514 ) $ 6,520 $ 622 $ 9,010 $ 1,436
(Stated in millions)
Six Months Ended
Jun. 30, 2016 Jun. 30, 2015
Revenue Income Before Taxes Revenue IncomeBeforeTaxes
Reservoir $ 3,339 $ 597 $ 5,165 $ 1,327
Characterization
Drilling 4,527 542 7,391 1,450
Production 4,447 298 6,764 941
Cameron 1,536 243 - -
Eliminations & other (165 ) (32 ) (62 ) (17 )
Pretax operating 1,648 3,701
income
Corporate & other (413 ) (390 )
Interest income(1) 37 14
Interest expense(1) (256 ) (156 )
Charges & credits (2,908 ) (439 )
$ 13,684 $ (1,892 ) $ 19,258 $ 2,730
(1) Excludes interest included in
the Product Group's results.
Supplemental
Information
1) What is the definition of decremental operating margin?
Decremental operating margin is equal to the ratio of the change in pretax operating income over the change in revenue.
2) What was the cash flow from operations for the second quarter of 2016?
Cash flow from operations was $1.6 billion for the second quarter of 2016 and included approximately $285 million of severance payments and $100 million of one-off transaction-related payments associated with the acquisition of Cameron during the quarter.
3) What was the cash flow from operations for the first half of 2016?
Cash flow from operations was $2.8 billion for the first half of 2016 and included approximately $545 million of severance payments and $100 million of one-off transaction-related payments associated with the acquisition of Cameron during the quarter.
4) What was the free cash flow as a percentage of net income before noncontrolling interests and charges and credits, for the second quarter of 2016?
Free cash flow, which was $855 million and included approximately $285 million of severance payments, $100 million of one-off transaction-related payments, $449 million of capex, $132 million of SPM investments, and $166 million of multiclient seismic data, as a percentage of net income before noncontrolling interests and charges and credits was 268% for the second quarter of 2016.
5) What was the free cash flow as a percentage of net income before noncontrolling interests and charges and credits, for the first half of 2016?
Free cash flow, which was $782 million and included approximately $545 million of severance payments, $100 million of one-off transaction-related payments, $998 million of capex, $729 million of SPM investments, and $333 million of multiclient seismic data, as a percentage of net income before noncontrolling interests and charges and credits was 92% for the first half of 2016.
6) What is the capex guidance for the full year 2016?
Capex (excluding multiclient and SPM investments) is expected to be $2.2 billion for 2016, including three quarters of capex for the acquired Cameron businesses.
7) What was included in "Interest and other income" for the second quarter of 2016?
"Interest and other income" for the second quarter of 2016 was $54 million. This amount consisted of earnings of equity method investments of $24 million and interest income of $30 million.
8) How did interest income and interest expense change during the second quarter of 2016?
Interest income of $30 million increased $11 million sequentially. Interest expense of $149 million increased $16 million sequentially.
9) What is the difference between pretax operating income and Schlumberger's consolidated income before taxes?
The difference principally consists of corporate items (including charges and credits) and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets (including intangible asset amortization expense resulting from the acquisition of Cameron), certain centrally managed initiatives and other nonoperating items.
10) What was the effective tax rate (ETR) for the second quarter of 2016?
The ETR for the second quarter of 2016 calculated in accordance with GAAP was 14.6% as compared to 15.9% for the first quarter of 2016.
The ETR for the second quarter of 2016, excluding charges and credits, was 16.2% as compared to 15.9% for the first quarter of 2016.
11) How many shares of common stock were outstanding as of June 30, 2016 and how did this change from the end of the previous quarter?
There were 1.391 billion shares of common stock outstanding as of June 30, 2016. The following table shows the change in the number of shares outstanding from March 31, 2016 to June 30, 2016.
(Stated in millions)
Shares outstanding at March 31, 2016 1,252
Acquisition of Cameron 138
Shares sold to optionees, less shares exchanged 1
Vesting of restricted stock -
Shares issued under employee stock purchase plan -
Stock repurchase program -
Shares outstanding at June 30, 2016 1,391
12) What was the weighted average number of
shares outstanding during the second
quarter of 2016 and first quarter of 2016
and how does this reconcile to
the average number of shares outstanding,
assuming dilution used in the calculation
of diluted earnings per share, excluding charges and credits?
The weighted average number of shares outstanding
during the second quarter of 2016
and first quarter of 2016 was 1.389 billion
and 1.254 billion, respectively.
The following is a reconciliation of the weighted average shares
outstanding to the average number of shares outstanding,
assuming dilution, used in the calculation of diluted
earnings per share, excluding charges and credits.
(Stated in millions)
Second Quarter 2016 First Quarter2016
Weighted average shares 1,389 1,254
outstanding
Assumed exercise 3 1
of stock options
Unvested restricted stock 5 4
Average shares outstanding, 1,397 1,259
assuming dilution
13) What were multiclient sales in the second quarter of 2016?
Multiclient sales, including transfer fees, were $145 million in the
second quarter of 2016 and $77 million in the first quarter of 2016.
14) What was the WesternGeco backlog at the
end of the second quarter of 2016?
WesternGeco backlog, which is based on signed contracts
with customers, was $865 million at the end
of the second quarter of 2016. It was $966 million
at the end of the first quarter of 2016.
15) What were the orders and backlog for Cameron's
Subsea and Drilling segments?
Subsea and Drilling orders and backlog were as follows:
(Stated in millions)
Orders Second Quarter 2016 First Quarter2016
Subsea $315 $305
Drilling $166 $150
Backlog(at the end of period)
Subsea $2,642 $2,870
Drilling $1,050 $1,308
16) What do the various charges Schlumberger recorded
during the second quarter of 2016 relate to?
Asset impairment charges:
As a result of the persistent unfavorable oil and
gas industry market conditions that have
continued to deteriorate and their impact on
the activity outlook, Schlumberger determined
that carrying values of certain assets were no
longer recoverable, which resulted in the
following $1.9 billion of pretax asset impairment
charges during the second quarter:
-- $1.058 billion of fixed asset impairments primarily
relating to underutilized equipment and facilities.
-- $616 million to write-down the carrying
value of certain inventory.
-- $198 million of multiclient seismic data impairment.
-- $55 million of other restructuring charges.
Schlumberger does not expect to incur any significant cash
expenditures as a result of these asset impairment charges.
Workforce reduction:
As a result of the weakness in activity
that we expect to persist through
2016, Schlumberger decided to further reduce its headcount.
As a result, Schlumberger recorded a
$646 million pretax charge during
the second quarter associated with these headcount reductions.
Merger and integration charges relating to the Cameron acquisition:
In connection with Schlumberger's acquisition
of Cameron, Schlumberger
recorded $335 million of pretax charges consisting
of $150 million relating to the non-cash amortization
of purchase accounting adjustments associated
with the write-up of acquired inventory to its estimated fair
value; $92 million of merger-related employee-related
benefits and professional fees; and $93 million of
other merger and integration related charges.
About Schlumberger
Schlumberger is the world's leading provider of technology for
reservoir characterization, drilling, production, and processing to
the oil and gas industry. Working in more than 85 countries and
employing approximately 100,000 people who represent over 140
nationalities, Schlumberger supplies the industry's most
comprehensive range of products and services, from exploration
through production, and integrated pore-to-pipeline solutions that
optimize hydrocarbon recovery to deliver reservoir performance.
Schlumberger Limited has principal offices in Paris, Houston,
London and The Hague, and reported revenues of $35.47 billion in
2015. For more information, visit www.slb.com.
*Mark of Schlumberger or of Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the above
announcement and business outlook on Friday, July 22, 2016. The
call is scheduled to begin at 7:00 a.m. (US Central Time), 8:00
a.m. (Eastern Time) and 1:00 p.m. (London time). To access the
call, which is open to the public, please contact the conference
call operator at +1 (800) 288-8967 within North America, or +1
(612) 333-4911 outside 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 22, 2016 by dialing
+1 (800) 475-6701 within North America, or +1 (320) 365-3844
outside of North America, and providing the access code 392686.
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 until September 30, 2016.
This second-quarter 2016 earnings release, as well as other
statements we make, contain "forward-looking statements" within the
meaning of the federal securities laws, which include any
statements that are not historical facts, such as our forecasts or
expectations regarding business outlook; growth for Schlumberger as
a whole and for each of its Groups and segments (and for specified
products or geographic areas within each segment); oil and natural
gas demand and production growth; oil and natural gas prices;
improvements in operating procedures and technology, including our
transformation program; capital expenditures by Schlumberger and
the oil and gas industry; the business strategies of Schlumberger's
customers; the anticipated benefits of the Cameron transaction; the
success of Schlumberger's joint ventures and alliances; future
global economic conditions; and future results of operations. These
statements are subject to risks and uncertainties, including, but
not limited to, global economic conditions; changes in exploration
and production spending by Schlumberger's customers and changes in
the level of oil and natural gas exploration and development;
demand for our integrated services and new technologies; our future
cash flows; the success of our transformation efforts; general
economic, political and business conditions in key regions of the
world; foreign currency risk; pricing pressure; weather and
seasonal factors; operational modifications, delays or
cancellations; production declines; changes in government
regulations and regulatory requirements, including those related to
offshore oil and gas exploration, radioactive sources, explosives,
chemicals, hydraulic fracturing services and climate-related
initiatives; the inability of technology to meet new challenges in
exploration; the inability to integrate the Cameron business and to
realize expected synergies; the inability to retain key employees;
and other risks and uncertainties detailed in this second-quarter
2016 earnings release and our most recent Forms 10-K, 10-Q and 8-K
filed with or furnished to the Securities and Exchange Commission.
If one or more of these or other risks or uncertainties materialize
(or the consequences of any such development changes), or should
our underlying assumptions prove incorrect, actual outcomes may
vary materially from those reflected in our forward-looking
statements. Schlumberger disclaims any intention or obligation to
update publicly or revise such statements, whether as a result of
new information, future events or otherwise.
Schlumberger LimitedSimon Farrant - Schlumberger Limited, Vice
President of Investor RelationsJoy V. Domingo - Schlumberger
Limited, Manager of Investor RelationsOffice +1 (713)
375-3535investor-relations@slb.com
View source version on businesswire.com:
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