Schlumberger Announces Second-Quarter 2021 Results

 

PARIS -Tuesday 27 July 2021 [ AETOS Wire ]

·         Global revenue of $5.6 billion increased 8% sequentially

·         International revenue was $4.5 billion and North America revenue was $1.1 billion

·         EPS of $0.30 increased 43% sequentially

·         Cash flow from operations was $1.2 billion and free cash flow was $869 million

·         Board approved quarterly cash dividend of $0.125 per share

(BUSINESS WIRE)-- Schlumberger Limited (NYSE: SLB) today reported results for the second-quarter 2021.

Second-Quarter Results		(Stated in millions, except per share amounts)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
Revenue*		$5,634		$5,223		$5,356		8%		5%
Income (loss) before taxes - GAAP basis		$542		$386		$(3,627)		40%		n/m
Net income (loss) - GAAP basis		$431		$299		$(3,434)		44%		n/m
Diluted EPS (loss per share) - GAAP basis		$0.30		$0.21		$(2.47)		43%		n/m
Adjusted EBITDA**		$1,198		$1,049		$838		14%		43%
Adjusted EBITDA margin**		21.3%		20.1%		15.6%		118 bps		561 bps
Pretax segment operating income**		$807		$664		$396		22%		104%
Pretax segment operating margin**		14.3%		12.7%		7.4%		162 bps		694 bps
Net income, excluding charges & credits**		$431		$299		$69		44%		525%
Diluted EPS, excluding charges & credits**		$0.30		$0.21		$0.05		43%		500%
Revenue by Geography
International		$4,511		$4,211		$4,224		7%		7%
North America*		1,083		972		1,097		11%		-1%
Other		40		40		35		n/m		n/m
		$5,634		$5,223		$5,356		8%		5%
*Schlumberger divested certain businesses in North America during the fourth quarter of 2020. These businesses generated revenue of $159 million during the second quarter of 2020. Excluding the impact of these divestitures, global second-quarter 2021 revenue increased 8% year-on-year. North America second-quarter 2021 revenue, excluding the impact of these divestitures, increased 15% year-on-year.
**These are non-GAAP financial measures. See sections titled "Charges & Credits," "Divisions," and "Supplemental Information" for details.
n/m = not meaningful
		(Stated in millions)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
Revenue by Division
Digital & Integration		$817		$773		$619		6%		32%
Reservoir Performance*		1,117		1,002		1,170		12%		-4%
Well Construction		2,110		1,935		2,089		9%		1%
Production Systems**		1,681		1,590		1,557		6%		8%
Other		(91)		(77)		(79)		n/m		n/m
		$5,634		$5,223		$5,356		8%		5%
Pretax Operating Income by Division
Digital & Integration		$274		$247		$108		11%		154%
Reservoir Performance		156		102		22		52%		609%
Well Construction		272		209		180		30%		51%
Production Systems		171		138		145		24%		18%
Other		(66)		(32)		(59)		n/m		n/m
		$807		$664		$396		22%		104%
Pretax Operating Margin by Division
Digital & Integration		33.5%		32.0%		17.4%		147 bps		1,606 bps
Reservoir Performance		14.0%		10.2%		1.9%		373 bps		1,206 bps
Well Construction		12.9%		10.8%		8.6%		209 bps		427 bps
Production Systems		10.2%		8.7%		9.3%		146 bps		84 bps
Other		n/m		n/m		n/m		n/m		n/m
		14.3%		12.7%		7.4%		162 bps		694 bps
*Schlumberger divested its OneStim® pressure pumping business in North America during the fourth quarter of 2020. This business generated revenue of $140 million during the second quarter of 2020. Excluding the impact of this divestiture, second-quarter 2021 revenue increased 8% year-on-year.
**Schlumberger divested its low-flow artificial lift business in North America during the fourth quarter of 2020. This business generated revenue of $19 million during the second quarter of 2020. Excluding the impact of this divestiture, second-quarter 2021 revenue increased 9% year-on-year.
n/m = not meaningful

Schlumberger CEO Olivier Le Peuch commented, “Our second-quarter results demonstrate the broad strength of our portfolio, the extent of our market participation—both in North America and internationally—and our enhanced ability to capture and translate activity growth into sustained margin expansion and strong free cash flow. The quarter marks a leap forward in achieving our full-year financial targets with the potential for further upside given the right conditions. As I reflect on the progress we have made since last year, I want to acknowledge the entire Schlumberger team whose exemplary commitment to safety and performance has not wavered despite the challenges. Once again, I am extremely proud of our people for their dedication and resilience, and for delivering a strong quarter, clearly seizing the beginning of the upcycle.

“Second-quarter global revenue grew 8% sequentially, outperforming the rig count growth in both North America and the international markets. All four Divisions grew, resulting in the highest sequential quarterly revenue growth rate since the second quarter of 2017.

“In North America, revenue grew 11% sequentially, representing the highest sequential quarterly growth rate for this area since the third quarter of 2017. This performance was driven by US land revenue, which increased 19% due to higher drilling activity and increased sales of well and surface production systems. Well Construction revenue in US land grew more than 30% sequentially, significantly outperforming the rig count growth of 16%. In addition, Canada land revenue increased despite the spring breakup, due to higher Asset Performance Solutions (APS) project revenue, while North America offshore revenue was slightly higher due to sales of subsea production systems.

“International revenue grew 7% sequentially with all four Divisions registering growth. The revenue growth outpaced the international rig count increase—reflecting the depth and diversity of our portfolio—as activity surpassed the impact of the seasonal recovery in the Northern Hemisphere. Many countries posted double-digit sequential revenue growth.

“Globally, the second-quarter revenue growth was led by Reservoir Performance and Well Construction, where activity intensified beyond the seasonal recovery. Reservoir Performance revenue increased 12% sequentially due to the seasonal activity rebound in the Northern Hemisphere, in addition to higher exploration and appraisal activity. Well Construction revenue increased 9% sequentially from increased drilling activity in US land and broadly across the international markets, particularly offshore. Digital & Integration revenue increased 6% sequentially due to higher sales of digital solutions and higher APS project revenue. Production Systems revenue grew 6%, primarily due to higher sales of well, surface, and subsea production systems.

“Sequentially, second-quarter pretax segment operating income increased 22%. Pretax segment operating margin expanded by 162 basis points (bps) to 14% while adjusted EBITDA margin grew 118 bps to 21%. Adjusted EBITDA margin was the highest since 2018 and pretax segment operating margin reached its highest level since 2015. This performance highlights the impact of our capital stewardship and cost-out measures, which are providing us with significant operating leverage.

“Second-quarter cash flow from operations was $1.2 billion and free cash flow was $869 million. These amounts include a $477 million US federal tax refund. We are very pleased with our cash flow performance which is on track with our full-year target and enabled us to begin deleveraging the balance sheet during the quarter.

“While the rise of the COVID-19 Delta variant and resurgence of related disruptions could impact the pace of economic reopening, industry projections of oil demand reflect the anticipation of a wider vaccine-enabled recovery, improving road mobility, and the impact of various economic stimulus programs. Under this scenario, we believe the momentum of international activity growth that we experienced in the second quarter will continue as the cyclical recovery unfolds. This view is supported by rig count trends, capital spending signals, and customer feedback. In North America, we anticipate the growth rate to moderate; however, drilling activity could still surprise to the upside due to private E&P operator spending.

“Consequently, absent any further setback in the recovery, we continue to see our international revenue growing in the second half of 2021 by double-digits when compared to the second half of last year. This translates into full-year 2021 international revenue growth, setting the stage for a strong baseline as we move into 2022 and beyond.

“During the quarter, we also continued to execute our long-term strategy with advances in Digital and New Energy through our technology and unique partnerships. In addition, we accelerated our commitment to sustainability and decarbonization of our industry. In particular, we took definitive climate change action during the quarter and launched our Transition Technologies portfolio which will aid our clients in meeting their climate change ambitions. Finally, I am very proud that we announced our commitment to achieve net-zero emissions by 2050. Our net-zero emissions target is based on a verifiable, science-based approach that is aligned with the 1.5 degrees Celsius target of the Paris Agreement and includes our Scope 3 emissions.

“Overall, the second-quarter performance and the progress we made on our strategic targets align very well with our long-term financial ambition. We will seize the industry upcycle with strength in our core, will leverage the accretive impact of digital, and will continue building our portfolio of low-carbon energy ventures.

“I am truly excited about Schlumberger in the new industry landscape and our commitment to higher value and lower carbon for our people, our customers, our shareholders, and the global community.”

Other Events

On June 28, 2021, Schlumberger repurchased $665 million of its outstanding 3.300% Senior Notes due September 2021.

On July 22, 2021, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.125 per share of outstanding common stock, payable on October 7, 2021 to stockholders of record on September 1, 2021.

Revenue by Geographical Area

		(Stated in millions)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
North America*		$1,083		$972		$1,097		11%		-1%
Latin America		1,057		1,038		629		2%		68%
Europe/CIS/Africa		1,453		1,256		1,449		16%		-
Middle East & Asia		2,001		1,917		2,146		4%		-7%
Other		40		40		35		n/m		n/m
		$5,634		$5,223		$5,356		8%		5%
International		$4,511		$4,211		$4,224		7%		7%
North America*		$1,083		$972		$1,097		11%		-1%
*Schlumberger divested certain businesses in North America during the fourth quarter of 2020. These businesses generated revenue of $159 million during the second quarter of 2020. Excluding the impact of these divestitures, global second-quarter 2021 revenue increased 8% year-on-year. North America second-quarter 2021 revenue, excluding the impact of these divestitures, increased 15% year-on-year.
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to the current period presentation.

North America

North America revenue of $1.1 billion increased 11% sequentially, with US land revenue growing 19% due to higher drilling activity and increased sales of well and surface production systems. The North America revenue increase represented the highest sequential quarterly growth rate since the third quarter of 2017. Well Construction revenue in US land grew more than 30% sequentially, outperforming the rig count growth of 16%. In addition, Canada land revenue increased despite the spring breakup due to higher APS project revenue, while offshore revenue was slightly higher due to sales of subsea production systems.

International

International revenue of $4.5 billion grew 7% sequentially outperforming the rig count growth. The revenue increases that all four Divisions experienced was driven by activity that strengthened beyond the impact of the seasonal recovery in the Northern Hemisphere, leading to double-digit sequential revenue growth in several countries.

Revenue in Latin America of $1.1 billion increased 2% sequentially due to double-digit sequential revenue growth in both Argentina and Guyana from higher Reservoir Performance intervention activity. In addition, Ecuador revenue increased due to higher Well Construction activity, partially offset by reduced drilling in Mexico and lower Production Systems revenue in Brazil following strong sales in the previous quarter.

Europe/CIS/Africa revenue of $1.5 billion increased 16% sequentially. This significant growth was driven by activity that strengthened beyond the impact of the seasonal recovery in the Northern Hemisphere, leading to double-digit sequential growth in most of the countries in the area. All four Divisions posted double-digit sequential revenue growth in the area, primarily from higher activity in digital solutions, stimulation, wireline, wellbore drilling including measurements, and fluids.

Revenue in the Middle East & Asia of $2.0 billion increased 4% sequentially. Growth was posted across all countries in the area except for India, which was impacted by COVID-related disruption. Double-digit sequential revenue growth was posted in Qatar, United Arab Emirates (UAE), and East Asia from higher Reservoir Performance and Well Construction activity. The revenue growth was driven by higher activity in wireline, intervention, stimulation, wellbore drilling including measurements, and fluids.

Results by Division

Digital & Integration

		(Stated in millions)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
Revenue
International		$625		$610		$470		2%		33%
North America		191		161		145		19%		32%
Other		1		2		4		n/m		n/m
		$817		$773		$619		6%		32%
Pretax operating income		$274		$247		$108		11%		154%
Pretax operating margin		33.5%		32.0%		17.4%		147 bps		1,606 bps
n/m = not meaningful

Digital & Integration revenue of $817 million increased 6% sequentially due to strong sales of digital solutions and higher APS project revenue partially offset by lower sales of multiclient seismic data licenses. Growth was led by Canada land from higher APS revenue in addition to higher digital solutions sales in Europe/CIS/Africa.

Digital & Integration pretax operating margin of 33% expanded 147 bps sequentially due to increased high-margin digital solutions sales and improved profitability from APS projects.

Reservoir Performance

		(Stated in millions)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
Revenue*
International		$1,038		$922		$952		13%		9%
North America*		79		78		215		-		-63%
Other		-		2		3		n/m		n/m
		$1,117		$1,002		$1,170		12%		-4%
Pretax operating income		$156		$102		$22		52%		609%
Pretax operating margin		13.9%		10.2%		1.9%		373 bps		1,206 bps
*Schlumberger divested its OneStim pressure pumping business in North America during the fourth quarter of 2020. This business generated revenue of $140 million during the second quarter of 2020. Excluding the impact of this divestiture, global second-quarter 2021 revenue increased 8% year-on-year. North America second-quarter 2021 revenue, excluding the impact of this divestiture, increased 5% year-on-year.
n/m = not meaningful

Reservoir Performance revenue of $1.1 billion increased 12% sequentially due to higher activity that surpassed the impact of the seasonal rebound in the Northern Hemisphere, resulting in double-digit sequential revenue growth internationally. Growth was driven by seasonal rebound of activity in Russia, China, and Europe and higher offshore exploration in Guyana and Angola, benefiting wireline and testing activity. Higher activity was also posted in Argentina, Qatar, and the UAE.

Reservoir Performance pretax operating margin of 14% expanded 373 bps sequentially. Profitability was boosted by the seasonal recovery in the Northern Hemisphere, higher offshore and exploration activity, and favorable technology mix in wireline activity in Africa and in the Middle East.

Well Construction

		(Stated in millions)
		Three Months Ended						Change
		Jun. 30, 2021		Mar. 31, 2021		Jun. 30, 2020		Sequential		Year-on-year
Revenue
International		$1,708		$1,577		$1,704		8%		-
North America		352		310		331		13%		6%
Other		50		48		54		n/m		n/m
		$2,110		$1,935		$2,089		9%		1%
Pretax operating income		$272		$209		$180		30%		51%
Pretax operating margin		12.9%		10.8%		8.6%		209 bps		427 bps
n/m = not meaningful

Well Construction revenue of $2.1 billion increased 9% sequentially. Stronger North America and international activity beyond the seasonal rebound in the Northern Hemisphere was supported by the rig count increase. North America revenue growth was driven by US land revenue growth of more than 30%, outpacing the US land rig count increase of 16%, but partially offset by the decline in Canada land revenue due to the spring breakup. International growth was led by double-digit growth in Ecuador, the United Kingdom, Algeria, Angola, Gabon, Nigeria, Russia, Qatar, Iraq, East Asia, and Australia.

Sequentially, Well Construction pretax operating margin of 13% improved by 209 bps due to higher drilling activity following the seasonal recovery in the Northern Hemisphere, higher drilling in US land, increased volume of activity in Europe & Africa and the Middle East, and increased higher-margin offshore exploration activity in Africa.