SCHLUMBERGER DOWN 63%
Schlumberger First-Quarter 2016 Results
- Revenue of $6.5 billion decreased 16% sequentially
- EPS of $0.40 declined 38% sequentially, excluding charges and credits
- Repurchased 7.1 million shares for $475 million during the quarter
- Quarterly cash dividend of $0.50 per share approved
- Cameron merger closed on April 1, 2016
|(Stated in millions, except per share amounts)|
|Three Months Ended||Change|
|Mar. 31, 2016||Dec. 31, 2015||Mar. 31, 2015||Sequential||Year-on-year|
|Pretax operating income||901||1,288||1,993||-30%||-55%|
|Schlumberger net income, excluding charges and credits*||501||819||1,358||-39%||-63%|
|Diluted EPS, excluding charges and credits*||$.40||$0.65||$1.06||-38%||-62%|
|Pretax operating margin||13.8%||16.6%||19.4%||-281 bps||-563 bps|
|North America revenue||$1,464||$1,955||$3,222||-25%||-55%|
|North America pretax operating income||(10)||139||416||-107%||-102%|
|North America pretax operating margin||-0.7%||7.1%||12.9%||-777 bps||-1,357 bps|
|International pretax operating income||1,062||1,259||1,661||-16%||-36%|
|International pretax operating margin||21.3%||22.0%||24.1%||-70 bps||-277 bps|
|**Schlumberger net income, including charges and credits, was $975 million in the first quarter of 2015. Schlumberger net loss, including charges and credits, was $1.016 billion in the fourth quarter of 2015. Diluted EPS, including charges and credits, was $0.76 in the first quarter of 2015. Loss per share, including charges and credits, was $0.81 in the fourth quarter of 2015. There were no charges or credits recorded during the first quarter of 2016. See section entitled "Charges & Credits" for details.|
Schlumberger Chairman and CEO Paal Kibsgaard commented, "During the first quarter of 2016, the decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis. Budgeted E&P spend fell again and substantially affected our operating results. This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.
"Sequentially, the first-quarter revenue decrease of 16% was one of the steepest quarterly declines we have posted since this downturn started. This was driven by a continuing drop in activity and persistent pricing pressure throughout our global operations as well as from project delays, job cancellations and activity disruptions. North America revenue fell 25% sequentially as the US land rig count declined 31% following customer budget cuts. By the end of the quarter, the US land rig count had fallen to around 400, representing a drop of 80% from the peak of October 2014. International revenue declined 13% due to a combination of customer budget cuts, activity disruptions, seasonal winter slowdowns, and continued pricing pressure. The decline in international revenue was most pronounced in the Europe/CIS/Africa Area where seasonally lower performance was exacerbated by the further weakness of the Russian ruble. Revenues in the Latin America and Middle East & Asia Areas also fell significantly.
"Among the business segments, first-quarter revenues of the Drilling and Reservoir Characterization Groups declined sequentially by 16% and 20%, respectively, on continued lower demand for exploration- and development-related products and services as customer budgets were further reduced. Production Group revenue declined by 11% generally due to lower pressure pumping services in North America.
"As previously announced, the Cameron merger closed on April 1, 2016. Cameron is now the fourth Schlumberger product group alongside the existing Reservoir Characterization, Drilling and Production Groups. Cameron's first-quarter revenue was $1.6 billion.
"Meanwhile, E&P spending cuts continue. Recent spending surveys for 2016 now indicate sharper declines than previously forecasted. Global spending reductions in 2016 are approaching 25%, corresponding to reductions between 40% to 50% in North America and around 20% internationally.
"In this environment, our overall outlook for the oil markets remains unchanged with the tightening of the supply-demand balance expected to continue during the rest of the year. Although new exports from Iran and growing global oil inventories drove oil prices lower earlier in the quarter, prices have rebounded to around the $40 level, due to underlying market trends, supply disruptions and talks about a production freeze. Demand growth forecasts remain steady, while OPEC production levels have been largely flat since mid-2015. Production in North America continues to fall as the effects of decline become more pronounced, while mature non-OPEC production is also declining in a number of regions.
"In navigating this landscape, we remain focused on balancing market share against profitability while also working to best preserve the core capabilities of the company for the long term. We will continue to tailor costs and resources to activity, while remaining cautious in adding back capacity given the unpredictable nature of the current market.
"In the midst of a deepening downturn that has already entered its seventh quarter, we are still optimistic and confident about the medium term outlook for Schlumberger. Our unmatched ability to generate cash in the oilfield services industry allows us to capitalize on a variety of significant business opportunities while continuing to return cash to our shareholders through dividends and stock buy-backs. This, combined with the strategic moves we have made that include the Cameron merger, leaves us very well positioned once markets start to recover."
|October, 19, 11:30:00|
|October, 19, 11:25:00|
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|October, 19, 11:05:00|
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