HOUSTON -Friday 24 April 2020 [ AETOS Wire ]
- Worldwide revenue of $7.5 billion decreased 9% sequentially and 5% year-on-year
- International revenue of $5.1 billion decreased 10% sequentially, but increased 2% year-on-year
- North America revenue of $2.3 billion decreased 7% sequentially and 17% year-on-year
- GAAP loss per share, including charges of $5.57 per share, was $5.32
- EPS, excluding charges, was $0.25
- Cash flow from operations was $784 million and free cash flow was $179 million
- Board approved quarterly cash dividend of $0.125 per share
(BUSINESS WIRE)-- Schlumberger Limited (NYSE: SLB) today reported results for the first quarter of 2020.
| First-Quarter Results | (Stated in millions, except per share amounts) | ||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Sequential | Year-on-year | |||||
| Revenue | $7,455 | $8,228 | $7,879 | -9% | -5% | ||||
| Income (loss) before taxes - GAAP basis | $(8,089) | $452 | $509 | n/m | n/m | ||||
| Pretax segment operating income* | $776 | $1,006 | $908 | -23% | -15% | ||||
| Pretax segment operating margin* | 10.4% | 12.2% | 11.5% | -181 bps | -112 bps | ||||
| Net income (loss) - GAAP basis | $(7,376) | $333 | $421 | n/m | n/m | ||||
| Net income, excluding charges & credits* | $351 | $545 | $421 | -36% | -17% | ||||
| Diluted EPS (loss per share) - GAAP basis | $(5.32) | $0.24 | $0.30 | n/m | n/m | ||||
| Diluted EPS, excluding charges & credits* | $0.25 | $0.39 | $0.30 | -36% | -17% | ||||
| North America revenue | $2,279 | $2,454 | $2,738 | -7% | -17% | ||||
| International revenue | $5,121 | $5,721 | $5,037 | -10% | 2% | ||||
| North America revenue, excluding Cameron | $1,773 | $1,907 | $2,157 | -7% | -18% | ||||
| International revenue, excluding Cameron | $4,395 | $4,892 | $4,416 | -10% | - | ||||
| *These are non-GAAP financial measures. See sections titled "Charges & Credits" and "Segments" for details. | |||||||||
n/m = not meaningful
Schlumberger CEO Olivier Le Peuch commented, “First-quarter revenue of $7.5 billion declined 9% sequentially and 5% year-on-year as the unprecedented global health and economic crisis sparked by the COVID-19 pandemic increasingly impacted industry activity during the quarter. The effect of this was amplified late in the quarter by a new battle for market share between the world’s largest oil producers. This double black swan event created simultaneous shocks in oil supply and demand resulting in the most challenging environment for the industry in many decades.
“Customer spending and drilling activity in North America declined as oil prices slipped early in the quarter before falling abruptly in March. This resulted in a 7% sequential decrease in North America revenue to $2.3 billion as we accelerated our land strategy to high-grade our portfolio and resized our operational footprint. International activity, expected to be seasonally lower sequentially, suffered from COVID-19-related activity disruptions and initial customer spending cuts in response to falling oil prices. International revenue of $5.1 billion declined 10% sequentially.
“The sequential international revenue decline was led by lower winter activity in the Europe/CIS/Africa area, particularly in the Russia & Central Asia and the United Kingdom & Continental Europe GeoMarkets. Latin America area revenue also decreased, mainly due to reduced WesternGeco® multiclient seismic license sales. Middle East & Asia area revenue declined on lower product sales following strong year-end sales and a seasonal decline in activity. COVID-19-related activity disruptions during the quarter impacted our operations, particularly in China, Malaysia, Iraq, Italy, Romania, the United Kingdom, Gabon, Mozambique, Congo, Nigeria, Angola, and offshore North America.
“Looking beyond the sequential results for the quarter, our international business showed some resilience with year-on-year growth of 2% against the backdrop of an increasingly difficult operating environment. Growth was driven by six GeoMarkets—Russia & Central Asia, Saudi Arabia & Bahrain, Far East Asia & Australia, Northern Middle East, Latin America North, and Norway & Denmark. Despite the challenging environment, cash flow performance during the quarter was strong as we generated $784 million of cash flow from operations. This was more than double what we generated in the same quarter last year.
| First-Quarter Revenue by Segment | (Stated in millions) | ||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Sequential | Year-on-year | |||||
| Reservoir Characterization | $1,311 | $1,643 | $1,459 | -20% | -10% | ||||
| Drilling | 2,291 | 2,442 | 2,387 | -6% | -4% | ||||
| Production | 2,703 | 2,867 | 2,890 | -6% | -6% | ||||
| Cameron | 1,254 | 1,387 | 1,259 | -10% | 0% | ||||
| Other | (104) | ($111) | (116) | n/m | n/m | ||||
| $7,455 | $8,228 | $7,879 | -9% | -5% | |||||
| n/m = not meaningful | |||||||||
Certain prior period amounts have been reclassified to conform to the current period presentation.
“By business segment, first-quarter revenue for Reservoir Characterization fell 20% sequentially, due to seasonally lower sales of software and multiclient seismic licenses and reduced winter activity in the Northern Hemisphere. Customers began to cut both discretionary spending and activity toward the end of the quarter, significantly reducing exploration activity in several GeoMarkets. Drilling revenue declined 6% sequentially, mostly due to seasonal effects in the Northern Hemisphere. Production revenue also declined 6% sequentially, driven by lower Well Services activity and weaker Artificial Lift Solutions sales in the international markets, while OneStim® revenue grew 2% sequentially. Cameron revenue declined 10% sequentially, mostly due to lower revenue in Surface Systems and Valves & Process Systems from reduced North America land activity, while OneSubsea® revenue decreased due to lower project deliveries following the strong year-end sales of the previous quarter.
“The first quarter results include an $8.5 billion pretax charge primarily relating to the impairment of goodwill, intangible assets, and other long-lived assets. This charge, which is almost entirely non-cash, was driven by the significant decline in market valuations during March 2020.
“The operating environment that has now emerged is characterized by simultaneous shocks to both supply and demand. The spread of COVID-19 has caused more than 50 countries to implement lockdown measures affecting three billion people. Worldwide economic activity is falling sharply, and oil demand destruction is leading to an unprecedented supply-demand imbalance in the range of 20–30 million bbl/d. This is translating to near term uncertainties in activity and budget projections.
“At this time, customer feedback and our analysis indicate global capex spend is expected to decline by about 20% in 2020, with the largest share of the reduction affecting North America, which is estimated to drop by about 40%. In contrast, international E&P capex is expected to decline by about 15%. As it relates to customers, Independents are expected to decrease their spending faster than IOCs, while NOCs have reduced the least to this point but might adjust following the recent OPEC+ agreement. FID sanctions are expected to fall back to trough levels of 2015, which would indicate project delays to 2021 and beyond.
“In this environment—the duration of which remains uncertain—we have planned for a range of scenarios and have taken a number of actions. To protect our workforce in the wake of COVID-19, we have taken the steps necessary to keep our people safe by supporting those affected, mandating that as many employees and contractors as possible work from home, and monitoring those who cannot do so and are required to be present at work. To reinforce our cost control and cash discipline, we are reducing our structural and variable costs, and restructuring our organization to match activity where necessary, including furloughing personnel, cutting salaries, lowering headcount, and closing facilities. In addition, our Board of Directors and executive officers have voluntarily agreed to reductions in their cash compensation. We have reduced our capital investment program by more than 30% and will allocate resources to the more resilient markets while remaining focused on capital stewardship and maintaining our commitment to a strong balance sheet.
“We are also leveraging three factors of our market differentiation. In North America, we have accelerated our land strategy to high-grade our portfolio and resize our operational footprint. Globally, we have emphasized our executional capability, operational resilience, and organizational agility. In new technology, we are using to the greatest extent the capabilities we have developed to support remote operations and are focusing on our digital strategy.
“In view of the uncertainty of the depth and extent of the contraction in oil demand due to the COVID-19 pandemic combined with the weaker commodity price environment, we have turned our strategic focus to cash conservation and protecting our balance sheet. We have therefore taken the prudent decision to reduce our dividend by 75%. The revised dividend supports Schlumberger’s value proposition through a balanced approach of shareholder distributions and organic investment, while providing the flexibility to weather the uncertain environment. This decision reflects our focus on our capital stewardship program as well as our commitment to maintain both a strong liquidity position and a strong investment grade credit rating that provides privileged access to the financial markets.
“The enormity of the task ahead will require levels of response and depths of resilience that have yet to be fully realized. Our immediate actions have been focused on those things we can control in protecting our business in an uncertain industry and global environment. We will continue to take the steps necessary to protect the safety and health of our people and pursue our desire to be the performance partner of choice for our customers. The future of our industry poses difficult challenges—for people and for the environment—but in challenge lies opportunity. Backed by the resilience and performance of our people, technology leadership, and financial strength, we believe we are well-placed to succeed as the industry recovers from this unprecedented downturn.”
Click here for the full press release.
About Schlumberger
Schlumberger is the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. With product sales and services in more than 120 countries and employing approximately 103,000 people who represent over 170 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 sustainably.
Schlumberger Limited has executive offices in Paris, Houston, London, and The Hague, and reported revenues of $32.92 billion in 2019. For more information, visit www.slb.com.
*Mark of Schlumberger or Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the earnings press release and business outlook on Friday, April 17, 2020. The call is scheduled to begin at 8:30 a.m. US Eastern Time. To access the call, which is open to the public, please contact the conference call operator at +1 (844) 721-7241 within North America, or +1 (409) 207-6955 outside North America, approximately 10 minutes prior to the call’s scheduled start time, and provide the access code 4013483. At the conclusion of the conference call, an audio replay will be available until May 17, 2020 by dialing +1 (866) 207-1041 within North America, or +1 (402) 970-0847 outside North America, and providing the access code 8905486. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same web site until May 17, 2020.
This first-quarter 2020 earnings release, as well as other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger and Schlumberger’s customers; our effective tax rate; Schlumberger’s APS projects, joint ventures and alliances; Schlumberger’s greenhouse gas emissions targets and progress against those targets; future global economic and geopolitical conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, changing global economic conditions; public health crises, such as the COVID-19 pandemic, and any related actions taken by businesses and governments; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of Schlumberger’s customers and suppliers, particularly during extended periods of low prices for crude oil and natural gas; 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 competitiveness of alternate-energy sources or product substitutes; and other risks and uncertainties detailed in this first-quarter 2019 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. Statements in this first-quarter 2020 earnings release are made as of April 17, 2020, and Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200417005200/en/
Contacts
Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
investor-relations@slb.com
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