SCHLUMBERGER NET INCOME $279 MLN
SCHLUMBERGER - Schlumberger Announces First-Quarter 2017 Results
- Revenue of $6.9 billion decreased 3% sequentially
- GAAP EPS, including Cameron integration charges of $0.05 per share, was $0.20
- EPS, excluding Cameron integration charges, was $0.25
- Cash flow from operations was $656 million
- Quarterly cash dividend of $0.50 per share was approved
Schlumberger Limited (NYSE:SLB) reported results for the first quarter of 2017.
(Stated in millions, except per share amounts)
|Three Months Ended||
|Mar. 31, 2017||Dec. 31, 2016||Mar. 31, 2016**||Sequential||Year-on-year|
|Pretax operating income||$757||$810||$901||-7%||-16%|
|Pretax operating margin||11.0%||11.4%||13.8%||-42 bps||-284 bps|
|Net income (loss) (GAAP basis)||$279||$(204)||$501||n/m||n/m|
|Net income, excluding charges and credits*||$347||$379||$501||-8%||-31%|
|Diluted EPS (loss per share) (GAAP basis)||$0.20||$(0.15)||$0.40||n/m||n/m|
|Diluted EPS, excluding charges and credits*||$0.25||$0.27||$0.40||-7%||-38%|
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details.
**First-quarter 2016 does not include Cameron, as the acquisition closed on April 1, 2016.
|n/m = not meaningful|
Schlumberger Chairman and CEO Paal Kibsgaard commented, "In the first quarter, the North America land market continued to strengthen in terms of both activity and pricing, leading us to begin accelerating deployment of idle capacity for multiple product lines. Revenue growth was led by hydraulic fracturing and drilling services, but was also increasingly supported by Artificial Lift, Surface Systems and Valves & Measurement. In spite of our capacity re-activation being heavily back-end loaded toward the end of the quarter as we continued to adhere to our profitable growth approach, we still generated 16% sequential revenue growth and 66% incremental margins in our hydraulic fracturing and directional drilling services in US land. These results were driven by productive customer engagement around pricing recovery and operational efficiency, together with timely resource additions and proactive supply chain engagement.
"In the international markets, revenue declined 7% sequentially, driven by a greater than expected seasonal decline in activity and sales, particularly in China, Russia land, and the North Sea. In addition, we saw lower sequential activity in key parts of the Middle East, while production constraints imposed on our Schlumberger Production Management (SPM) Shushufindi project in Ecuador also had a negative impact on our first quarter results. Still, the underlying activity and sentiment from our global customer base were in line with expectations as seen, for instance, by the flat sequential revenue trends in the rest of Latin America as well as in Africa, confirming that these regions have indeed reached the bottom of the cycle.
"Among the business segments, the first-quarter revenue declines were led by the Cameron Group, which fell 9% sequentially driven by lower project volumes in OneSubsea and reduced product sales in Surface Systems. Reservoir Characterization Group revenue decreased 3% sequentially due to the seasonal reduction in revenue for our Software Integrated Solutions (SIS) and WesternGeco product lines. Drilling Group and Production Group revenues were each 1% lower sequentially as continued strong growth in hydraulic fracturing and directional drilling activity in North America land was offset by seasonal revenue reductions in the international markets.
"As we begin the recovery from one of the deepest downturns on record, we see four areas as critical for the industry to restore its strength and advance its capabilities. They are—the need for higher E&P spending to meet growing hydrocarbon demand over the coming years; the need to protect and encourage investments in R&E throughout the entire oil and gas value chain; the need for new business models that foster closer technical collaboration and commercial alignment between operators and suppliers; and the need for broader and more integrated technology platforms that combine hardware, software, data, and expertise.
"While our view of the fundamentals of supply and demand in the oil markets remains constructive, the continuing underinvestment in new supply is increasing the likelihood of a medium-term supply deficit as reservoirs are produced but reserves are not replaced in sufficient volume. In particular, the market continues to focus on headline decline numbers, suggesting that production is holding up well. However, a closer examination of the underlying data clearly shows that the rate of depletion of proven developed reserves is rapidly accelerating in several key non-OPEC countries.
"As the recovery builds momentum, industry cash flow and productivity remain under pressure and limit the industry's ability to increase present levels of E&P investment. At the same time, the value chain remains focused on trying to capture the limited value that is created, rather than seeking new ways to collectively create more value. This approach is not sustainable, either from addressing the underlying industry challenges or from ensuring that the future supply of hydrocarbons can meet the projected growth in demand.
"At Schlumberger, we are therefore actively seeking to position the company at the forefront of an industry that needs to evolve. We are doing this by proactively managing our base business and responding to the ongoing pressures of commoditization, tailoring our offering and performance to the prevailing market conditions. In parallel, we are constantly looking to expand our opportunity set by pursuing a broad and active M&A program; engaging with existing and new customers to establish closer collaboration and more aligned business models; and expanding our offering from technical support to investing alongside our customers in their projects—all with the aim of driving more activity for our 19 product and service lines. As we continue to carefully navigate the current industry landscape, we remain confident and optimistic about the future of Schlumberger, knowing very well that beyond the current market challenges lies a wealth of opportunity for the industry players who are ready and able to think new and to act new."
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