Schlumberger Limited (NYSE:SLB) today reported full-year 2011 revenue of $39.54 billion versus $27.45 billion in 2010.
Full-year 2011 income from continuing operations attributable to Schlumberger, excluding charges and credits, was $4.97 billion, representing diluted earnings-per-share of $3.66 versus $2.86 in 2010.
Fourth-Quarter Results:
Fourth-quarter 2011 revenue was $10.97 billion versus $10.23 billion in the third quarter of 2011, and $9.07 billion in the fourth quarter of 2010.
Income from continuing operations attributable to Schlumberger, excluding charges and credits, was $1.49 billion"”an increase of 13% sequentially and 28% year-on-year. Diluted earnings-per-share from continuing operations, excluding charges and credits, was $1.11 versus $0.98 in the previous quarter, and $0.85 in the fourth quarter of 2010.
Schlumberger recorded charges of $0.06 per share in the fourth quarter of 2011 versus $0.02 per share in the previous quarter, and $0.09 per share in the fourth quarter of 2010.
Oilfield Services revenue of $10.30 billion increased 8% sequentially and 21% year-on-year. Pretax segment operating income of $2.17 billion was up 12% sequentially and 28% year-on-year.
Distribution revenue of $685 million decreased 2% sequentially but increased 19% year-on-year. Pretax segment operating income of $26 million declined 14% sequentially but increased 26% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, "Fourth-quarter results showed solid sequential growth driven by stronger activity both on land and offshore for most Technologies, and stronger product sales for completions, software and multiclient seismic. All Areas and Product Groups grew sequentially.
Growth in North America was led by high-technology services in deepwater Gulf of Mexico, where operational performance was extremely solid. Significant multiclient seismic sales were recorded and a second wide-azimuth seismic fleet was mobilized. North America land revenue grew in line with rig count while performance improved through asset deployment and crew efficiency. Pricing momentum in our Wireline and Drilling product lines continued though the trend slowed somewhat versus the prior quarter.
International growth was driven by deepwater and exploration activity, particularly in East and West Africa, and by strong land activity in the Middle East and North Africa. In addition, regional strength was seen for drilling and production technologies in a number of GeoMarkets.
Bidding remained competitive on large tenders for standard technology. We continued to see positive pricing signs for Wireline and Drilling & Measurements driven by our unique technology capability and strong operational performance.
Integration with Smith made further progress during the quarter and revenue synergies in 2011 exceeded our revised targets. The transaction was accretive on an earnings-per-share basis in the quarter and for the full year.
Uncertainty remains over the outlook for 2012 due to the continuing sovereign debt crisis in Europe which places downward pressure on GDP and oil demand forecasts. Natural gas markets are well supplied in North America with gas storage well above five-year highs. In this environment, the thin excess oil supply cushion is expected to support oil prices close to current levels, while global demand for LNG continues to increase. Recent E&P customer spending forecasts also point to higher E&P investment in 2012, particularly in international markets.
Against this backdrop we are planning for growth in 2012, while building the required flexibility into our resource plans. We remain confident that any potential reductions in activity will be short-lived and that our competitive position remains strong, given our presence and strength in the international markets and the balance we have established between reservoir characterization, drilling and production services in our North America offering."
Other Events:
- During the quarter, Schlumberger repurchased 9.2 million shares of its common stock at an average price of $69.42 for a total purchase price of $635 million.
- On December 2, 2011, Schlumberger and Saxon Energy Services Inc. ("Saxon") merged their rig businesses. Under the terms of the transaction, 14 Schlumberger land drilling rigs and crews in Oman, Pakistan and Venezuela have become part of Saxon´s operations. Saxon will also provide technical drilling contracting support to existing Schlumberger joint ventures and operations in Saudi Arabia, Algeria, Iraq, and Venezuela (Lake Maracaibo). Saxon continues to be owned by Schlumberger, affiliates of First Reserve Corporation and Saxon management.
- During the quarter, Schlumberger completed the purchase of ThruBit, LLC, a company that provides openhole logging services using a unique through-the-bit deployment technique.
- On January 5, 2012, Petrofac and Schlumberger signed a cooperation agreement under which both will establish a working relationship to deliver integrated and high-value production projects in the emerging and growing production services and production enhancement market.
- On January 19, 2012, the Board of Directors approved a 10% increase in the quarterly dividend. The next quarterly dividend, which will increase to $0.275 per share of outstanding common stock, is payable on April 13, 2012 to stockholders of record on February 22, 2012.
| Condensed Consolidated Statement of Income | |||||||||||||
| (Stated in millions, except per share amounts) | |||||||||||||
| Fourth Quarter | Twelve Months | ||||||||||||
| Periods Ended December 31 | 2011 | 2010 | 2011 | 2010 | |||||||||
| Revenue | $ | 10,974 | $ | 9,067 | $ | 39,540 | $ | 27,447 | |||||
| Interest and other income, net (1) | 35 | 45 | 129 | 214 | |||||||||
| Gain on investment in M-I SWACO(2) | - | - | - | 1,270 | |||||||||
| Expenses | |||||||||||||
| Cost of revenue(2) | 8,642 | 7,305 | 31,418 | 21,842 | |||||||||
| Research & engineering | 273 | 256 | 1,073 | 919 | |||||||||
| General & administrative(2) | 100 | 90 | 427 | 311 | |||||||||
| Merger & integration(2) | 22 | 33 | 115 | 165 | |||||||||
| Restructuring & other(2) | - | 32 | - | 331 | |||||||||
| Interest | 86 | 61 | 298 | 207 | |||||||||
| Income from continuing operations before taxes | 1,886 | 1,335 | 6,338 | $ | 5,156 | ||||||||
| Taxes on income (2) | 466 | 290 | 1,545 | 890 | |||||||||
| Income from continuing operations | 1,420 | 1,045 | 4,793 | 4,266 | |||||||||
| Income from discontinued operations | - | - | 220 | - | |||||||||
| Net income | 1,420 | 1,045 | 5,013 | 4,266 | |||||||||
| Net income (loss) attributable to noncontrolling interests | 6 | 2 | 16 | (1 | ) | ||||||||
| Net income attributable to Schlumberger(2) | $ | 1,414 | $ | 1,043 | $ | 4,997 | $ | 4,267 | |||||
| Schlumberger amounts attributable to: | |||||||||||||
| Income from continuing operations | $ | 1,414 | $ | 1,043 | $ | 4,777 | $ | 4,267 | |||||
| Income from discontinued operations | - | - | 220 | - | |||||||||
| Net Income | $ | 1,414 | $ | 1,043 | $ | 4,997 | $ | 4,267 | |||||
| Diluted earnings per share of Schlumberger(2) | |||||||||||||
| Income from continuing operations | $ | 1.05 | $ | 0.76 | $ | 3.51 | $ | 3.38 | |||||
| Income from discontinued operations | - | - | 0.16 | - | |||||||||
| Net Income | $ | 1.05 | $ | 0.76 | $ | 3.67 | $ | 3.38 | |||||
| Average shares outstanding | 1,338 | 1,363 | 1,349 | 1,250 | |||||||||
| Average shares outstanding assuming dilution | 1,347 | 1,376 | 1,361 | 1,263 | |||||||||
| Depreciation & amortization included in expenses(3) | $ | 860 | $ | 808 | $ | 3,280 | $ | 2,759 | |||||
| 1) | Includes interest income of: | |||||
| Fourth quarter 2011 - $11 million (2010 - $10 million) | ||||||
| Twelve months 2011 - $39 million (2010 - $50 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) | ||||||
| Dec. 31, | Dec. 31, | |||||
| Assets | 2011 | 2010 | ||||
| Current Assets | ||||||
| Cash and short-term investments | $ | 4,827 | $ | 4,990 | ||
| Receivables | 9,500 | 8,278 | ||||
| Other current assets | 6,212 | 4,830 | ||||
| 20,539 | 18,098 | |||||
| Fixed income investments, held to maturity | 256 | 484 | ||||
| Fixed assets | 12,993 | 12,071 | ||||
| Multiclient seismic data | 425 | 394 | ||||
| Goodwill | 14,154 | 13,952 | ||||
| Other intangible assets | 4,882 | 5,162 | ||||
| Other assets | 1,952 | 1,606 | ||||
| $ | 55,201 | $ | 51,767 | |||
| Liabilities and Equity | ||||||
| Current Liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 7,579 | $ | 6,488 | ||
| Estimated liability for taxes on income | 1,245 | 1,493 | ||||
| Short-term borrowings and current portion of long-term debt | 1,377 | 2,595 | ||||
| Dividend payable | 337 | 289 | ||||
| 10,538 | 10,865 | |||||
| Long-term debt | 8,556 | 5,517 | ||||
| Postretirement benefits | 1,732 | 1,262 | ||||
| Deferred taxes | 1,731 | 1,636 | ||||
| Other liabilities | 1,252 | 1,043 | ||||
| 23,809 | 20,323 | |||||
| Equity | 31,392 | 31,444 | ||||
| $ | 55,201 | $ | 51,767 | |||
| Net Debt | ||||||||
| "Net Debt" represents gross debt less cash, short-term investments and fixed income investments, held to maturity. | ||||||||
| (Stated in millions) | ||||||||
| Twelve Months | 2011 | |||||||
| Net Debt, January 1, 2011 | $ | (2,638 | ) | |||||
| Income from continuing operations | 4,793 | |||||||
| Depreciation and amortization | 3,281 | |||||||
| Pension and other postretirement benefits expense | 365 | |||||||
| Excess of equity income over dividends received | (64 | ) | ||||||
| Stock-based compensation expense | 272 | |||||||
| Pension and other postretirement benefits funding | (601 | ) | ||||||
| Increase in working capital | (2,148 | ) | ||||||
| Capital expenditures | (4,016 | ) | ||||||
| Multiclient seismic data capitalized | (289 | ) | ||||||
| Dividends paid | (1,300 | ) | ||||||
| Proceeds from employee stock plans | 438 | |||||||
| Stock repurchase program | (2,998 | ) | ||||||
| Business acquisitions, net of cash and debt acquired | (610 | ) | ||||||
| Proceeds from divestiture of Global Connectivity Services business | 385 | |||||||
| Other | 257 | |||||||
| Currency effect on net debt | 23 | |||||||
| Net Debt, December 31, 2011 | $ | (4,850 | ) | |||||
| Components of Net Debt | Dec. 31, | Dec. 31, | ||||||
| Cash and short-term investments | $ | 4,827 | $ | 4,990 | ||||
| Fixed income investments, held to maturity | 256 | 484 | ||||||
| Short-term borrowings and current portion of long-term debt | (1,377 | ) | (2,595 | ) | ||||
| Long-term debt | (8,556 | ) | (5,517 | ) | ||||
| $ | (4,850 | ) | $ | (2,638 | ) | |||
| Charges and Credits | |||||||||||||
| In addition to financial results determined in accordance with generally accepted accounting principles (GAAP), this Fourth-Quarter and Full-Year Results 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) | |||||||||||||
| Fourth Quarter 2011 | |||||||||||||
| Pretax | Tax | Noncont. Interest | Net | Diluted | Income Statement Classification | ||||||||
| Schlumberger income from continuing operations, as reported | $ | 1,886 | $ | 466 | $ | 6 | $ | 1,414 | $ | 1.05 | |||
| Merger and integration costs | 22 | 2 | - | 20 | 0.01 | Merger & integration | |||||||
| Write-off of assets in Libya | 60 | - | - | 60 | 0.04 | Cost of revenue | |||||||
| Schlumberger income from continuing operations, excluding charges & credits | $ | 1,968 | $ | 468 | $ | 6 | $ | 1,494 | $ | 1.11 | |||
| Third Quarter 2011 | |||||||||||||
| Pretax | Tax | Noncont. Interest | Net | Diluted | Income Statement Classification | ||||||||
| Schlumberger Income from continuing operations, as reported | $ | 1,717 | $ | 410 | $ | 6 | $ | 1,301 | $ | 0.96 | |||
| Merger and integration costs | 27 | 4 | - | 23 | 0.02 | Merger & integration | |||||||
| Schlumberger income from continuing operations, excluding charges & credits | $ | 1,744 | $ | 414 | $ | 6 | $ | 1,324 | $ | 0.98 | |||
| Twelve Months 2011 | |||||||||||||
| Pretax | Tax | Noncont. Interest | Net | Diluted | Income Statement Classification | ||||||||
| Schlumberger income from continuing operations, as reported | $ | 6,338 | $ | 1,545 | $ | 16 | $ | 4,777 | $ | 3.51 | |||
| Merger and integration costs | 115 | 19 | - | 96 | 0.07 | Merger & integration | |||||||
| Donation to Schlumberger Foundation | 50 | 10 | - | 40 | 0.03 | General & administrative | |||||||
| Write-off of assets in Libya | 60 | - | - | 60 | 0.04 | Cost of revenue | |||||||
| Schlumberger income from continuing operations, excluding charges & credits | $ | 6,563 | $ | 1,574 | $ | 16 | $ | 4,973 | $ | 3.66 | |||
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