SCHLUMBERGER NET INCOME $644 MLN
SCHLUMBERGER - Schlumberger Announces Third-Quarter 2018 Results
- Revenue of $8.5 billion increased 2% sequentially
- Pretax operating income of $1.2 billion increased 5% sequentially
- EPS was $0.46
- Cash flow from operations was $1.8 billion
- Free cash flow was $1.0 billion
|(Stated in millions, except per share amounts)|
|Three Months Ended||Change|
|Sept. 30, 2018||Jun. 30, 2018||Sept. 30, 2017||Sequential||Year-on-year|
|Pretax operating income||$1,152||$1,094||$1,059||5%||9%|
|Pretax operating margin||13.5%||13.2%||13.4%||36 bps||15 bps|
|Net income - GAAP basis||$644||$430||$545||50%||18%|
|Net income, excluding charges and credits*||$644||$594||$581||8%||11%|
|Diluted EPS - GAAP basis||$0.46||$0.31||$0.39||48%||18%|
|Diluted EPS, excluding charges and credits*||$0.46||$0.43||$0.42||7%||10%|
|North America revenue||$3,189||$3,139||$2,602||2%||23%|
|North America revenue, excluding Cameron||$2,572||$2,546||$2,086||1%||23%|
|International revenue, excluding Cameron||$4,559||$4,387||$4,430||4%||3%|
|*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details.
Schlumberger Chairman and CEO Paal Kibsgaard commented, "Our third-quarter revenue of $8.5 billion grew 2% sequentially, driven by the International Areas where the broad-based activity recovery continued and where sequential revenue growth outpaced that of North America for the first time since the second quarter of 2014. In North America, sequential growth remained positive but slowed from the rates of previous quarters as takeaway constraints in the Permian impacted hydraulic fracturing activity.
"In North America, third-quarter revenue of $2.6 billion, excluding Cameron, increased 1% sequentially driven by Artificial Lift and Drilling as we continued to gain market share on the back of our leading technology portfolio. Service revenue from our OneStimSM hydraulic fracturing business was increasingly impacted by softening activity and pricing over the course of the quarter. This was offset, however, by robust performance from our vertically integrated sand business, which in addition to serving OneStim now also competes in the third-party market. Offshore North America, drilling activity was impacted by scheduled platform maintenance and planned workover operations, the combination of which led to a less favorable activity mix for Schlumberger.
"In the International Areas, third-quarter revenue of $4.6 billion, excluding Cameron, grew 4% sequentially as we continued to see solid growth in all operating regions. Sequential performance, excluding Cameron, was driven by 7% growth in Latin America and 3% growth in the Middle East & Asia due to higher activity for both national oil companies and independents throughout both Areas. This resulted from the continued ramp-up of our lump-sum turnkey (LSTK) projects in Saudi Arabia and strong Integrated Drilling Services (IDS) activity in Iraq, India, and Mexico. However, this performance was partly offset by lower hydraulic fracturing activity as we completed and demobilized a major contract in the Middle East. In Europe, CIS, and Africa, our sequential growth was a solid 4% as strong activity in Russia and Sub-Saharan Africa more than offset the impact of labor disputes and scheduled summer maintenance in the North Sea.
"Turning to our technologies, our performance was led by Drilling with 9% sequential growth as we successfully mobilized an additional 19 drilling rigs for our integrated drilling projects where activity was strong, particularly in Russia, Mexico, Saudi Arabia, Iraq, and India. This supported solid sequential growth for our IDS, Drilling & Measurements, and M-I SWACO product lines. Reservoir Characterization grew 2% sequentially, driven by strong activity for our Wireline and Testing Services product lines in the international markets. Revenue from Production was largely unchanged from the previous quarter due to the softening hydraulic fracturing activity in North America land. Cameron revenue was flat sequentially as increased sales in Surface Systems and Drilling Systems were offset by lower revenue from our OneSubseaTM and Valves & Measurement product lines.
"Looking at pricing and contracts, we continued to see improvements in terms and conditions and basic rates for selected contracts in the international markets. However, this has yet to make a significant impact on our results. Still, we expect to fully deploy our remaining excess international equipment capacity by the end of the year. As a result, we anticipate pricing discussions to accelerate in the coming quarters as the certainty of products and services supply will become more important for our customers.
"From a macro perspective, the oil market continued to tighten in the third quarter as seen by a further draw in global oil inventories and a significant increase in oil prices despite continued strong production from the US and increasing output from key OPEC countries. Global spare capacity is now less than 2%. The tightening supply and demand balance is driven by accelerating decline rates in the international production base and is further exacerbated by the ongoing reduction in Venezuelan and Iranian exports. Geopolitical events and their impact on supply are also becoming an increasing oil market consideration as the challenging security situation in several key countries could affect activity and production going forward. And while the current Permian takeaway constraints in North America should be addressed within the next 12 to 18 months, a series of reservoir- and production-related challenges is emerging in the US shale basins that could dampen the most optimistic production growth projections.
"With the outlook for global economic growth and oil demand remaining solid, we continue to see a need for a multiyear increase in international E&P investment, which is very good news for Schlumberger. Through the work we have done over the past four years to expand our external offering and modernize our internal execution platform, we are very well positioned to outgrow the market in the coming upcycle and to generate superior operating margins and cash returns for the benefit of our shareholders."
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of $64.98 per share, for a total purchase price of $100 million.
On August 22, 2018, Schlumberger and Shearwater GeoServices Holding AS announced that they have entered into a definitive agreement for Shearwater to acquire the marine seismic acquisition assets and operations of WesternGeco, the geophysical services product line of Schlumberger. The transaction is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2018.
On October 18, 2018, Schlumberger's Board of Directors approved a quarterly cash dividend of $0.50 per share of outstanding common stock, payable on January 11, 2019 to stockholders of record on December 5, 2018.
More information is here.
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U.S. DT - The sum total in September of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of $29.1 billion. Of this, net foreign private inflows were $23.5 billion, and net foreign official outflows were $52.7 billion.
U.S. FRB - Industrial production edged up 0.1 percent in October, as a gain for manufacturing outweighed decreases elsewhere. As a result of upward revisions primarily in mining, the overall index is now reported to have advanced at an annual rate of 4.7 percent in the third quarter, appreciably above the gain of 3.3 percent reported initially.
WNN - "nuclear energy is a "mature, low greenhouse gas emission source of baseload generation that could make an increasing contribution to global development based on low-carbon energy supply".
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