Schlumberger Announces Fourth-Quarter and Full-Year 2012 Results
Full-year 2012 income from continuing operations attributable to Schlumberger, excluding charges and credits, was $5.58 billion, representing diluted earnings-per-share of $4.17 versus $3.61 in 2011.
Fourth-quarter 2012 revenue was $11.17 billion versus $10.61 billion in the third quarter of 2012, and $10.30 billion in the fourth quarter of 2011.
Income from continuing operations attributable to Schlumberger, excluding charges and credits, was $1.44 billion, which was flat sequentially, and represents a 3% decrease year-on-year. Diluted earnings-per-share from continuing operations, excluding charges and credits, was $1.08, the same as in the previous quarter, and $1.10 in the fourth quarter of 2011.
Schlumberger recorded charges of $0.06 per share in the fourth quarter of 2012 versus $0.02 per share in the previous quarter, and $0.06 per share in the fourth quarter of 2011.
Oilfield Services revenue of $11.17 billion increased 5% sequentially and 8% year-on-year. Oilfield Services pretax operating income of $2.2 billion increased 1% sequentially and was flat year-on-year.
Schlumberger CEO Paal Kibsgaard commented, "We capped the year with revenues of over $42 billion, up by 14%, with the International Areas growing by $4 billion, or 16%, their strongest growth by far since 2008. International grew from robust exploration and development activity, both offshore and in key land markets. In North America, we demonstrated our resiliency from the challenges of the land markets by growing the business by more than $1 billion, or 9%, aided by our strong position in the offshore market, particularly in the US Gulf of Mexico. In addition, full-year pretax operating income grew 14%, with International delivering a 31% increase leading to International margins expanding 226 basis points (bps) to reach 20.5%, higher than North American margins of 20.3%.
Our fourth-quarter results showed continued growth in key markets in addition to typical year-end product, software and multiclient sales. Performance was driven by international areas where service quality was strong, and service capacity tight for certain product lines. Our results were, however, impacted by the previously announced seasonal slowdowns and contract delays as well as by mobilization and new project start-up costs. In North America, strong performance in the US Gulf of Mexico overcame lower-than-expected activity in Canada and further weakening in the US land markets.
Significant revenue growth was recorded in the Latin America and Middle East & Asia Areas. Pretax operating margins showed improvement in Latin America while in the Middle East & Asia Area margins declined on activity mix and IPM project start-up costs. Revenue declined by 1% in the Europe/CIS/Africa Area which also saw decreased margins from the seasonal slow-downs in the North Sea and Russia combined with contract delays in North Africa. International pricing continued to slowly improve driven by strong execution, new technology sales and proactive bidding on small- to medium-size contracts.
In North America, deepwater drilling operations drove strong activity and excellent performance in the US Gulf of Mexico where results more than offset lower drilling activity and the impact of lower pricing in US land for hydraulic fracturing, drilling, coiled tubing and cased-hole wireline services. As a result, North America revenue and pretax margins both advanced sequentially.
Among the technology highlights for the quarter, WesternGeco ended the first IsoMetrix season with three commercial projects and the technology continues to gain attention as exploration of difficult and complex reservoir prospects evolves. Two IsoMetrix vessels will be available in 2013. Meanwhile, Wireline ThruBit* pump-down openhole logging technology saw substantial market penetration in US land and the Well Services SPARK* business model also saw growth with the unique approach of offering customers access to our engineered fluid systems, while using their own personnel and hydraulic horsepower.
The world macroeconomic environment remains uncertain while the GDP growth outlook for 2013 remains unchanged. Global oil demand is expected to grow at similar levels to 2012. The supply side will see further growth in North America while other non-OPEC production will likely continue to face delay and decline challenges. Absent any unexpected macroeconomic or geopolitical events, global spare capacity is expected to remain largely unchanged.
With international E&P spending forecast to increase by around 10% in the coming year, and a strong activity outlook for the US Gulf of Mexico, Schlumberger is well positioned for growth with a balanced business portfolio, wide geographical footprint and strong executional capability."
- On November 15, 2012 Schlumberger and Cameron International Corporation ("Cameron") announced that they had entered into an agreement with respect to the creation of OneSubsea™, a joint venture to manufacture and develop products, systems and services for the subsea oil and gas market. Schlumberger will own 40% of OneSubsea. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close by the second quarter of 2013. Under the terms of the agreement, Cameron and Schlumberger will each contribute all of their respective subsea businesses to the joint venture and Schlumberger will make a $600 million cash payment to Cameron. Cameron will manage OneSubsea and Schlumberger will equity account for its investment in the joint venture.
- On December 20, 2012, Gazprom Geologorazvedka and Schlumberger signed a technology cooperation framework agreement to maximize exploration efficiency for Gazprom's land and offshore fields and license areas in the Russian Federation. The agreement includes the introduction of Schlumberger technology and software products, and the development of a personnel training program. This agreement follows the technology framework agreement signed in 2008 between Gazprom and Schlumberger.
- On January 17, 2013, the Board of Directors approved a 13.6% increase in the quarterly dividend. The next quarterly dividend, which will increase to $0.3125 per share of outstanding common stock, is payable on April 12, 2013 to stockholders of record on February 20, 2013.
|Condensed Consolidated Statement of Income|
|(Stated in millions, except per share amounts)|
|Fourth Quarter||Twelve Months|
|Periods Ended December 31,||2012||2011||2012||2011|
|Interest and other income, net (1)||35||35||172||130|
|Cost of revenue(2)||8,798||7,997||33,056||28,949|
|Research & engineering||307||273||1,168||1,073|
|General & administrative(2)||111||98||405||417|
|Merger & integration(2)||60||22||128||113|
|Income before taxes||1,807||1,860||7,191||6,239|
|Taxes on income(2)||436||457||1,723||1,509|
|Income from continuing operations||1,371||1,403||5,468||4,730|
|Income from discontinued operations||-||16||51||277|
|Net income attributable to noncontrolling interests||9||5||29||10|
|Net income attributable to Schlumberger||$||1,362||$||1,414||$||5,490||$||4,997|
|Schlumberger amounts attributable to:|
|Income from continuing operations(2)||$||1,362||$||1,398||$||5,439||$||4,720|
|Income from discontinued operations||-||16||51||277|
|Diluted earnings per share of Schlumberger|
|Income from continuing operations(2)||$||1.02||$||1.04||$||4.06||$||3.47|
|Income from discontinued operations||-||0.01||0.04||0.20|
|Average shares outstanding||1,328||1,338||1,330||1,349|
|Average shares outstanding assuming dilution||1,336||1,347||1,339||1,361|
|Depreciation & amortization included in expenses(3)||$||930||$||859||$||3,500||$||3,274|
|1)||Includes interest income of:|
|Fourth quarter 2012 - $5 million (2011 - $11 million)|
|Twelve months 2012 - $29 million (2011 - $39 million)|
|2)||See pages 6 for details of charges and credits.|
|3)||Including multiclient seismic data cost.|
|Condensed Consolidated Balance Sheet|
|(Stated in millions)|
|Dec. 31,||Dec. 31,|
|Cash and short-term investments||$||6,274||$||4,827|
|Other current assets||6,531||6,212|
|Fixed income investments, held to maturity||245||256|
|Multiclient seismic data||518||425|
|Other intangible assets||4,802||4,882|
|Liabilities and Equity|
|Accounts payable and accrued liabilities||$||8,453||$||7,579|
|Estimated liability for taxes on income||1,426||1,245|
|Short-term borrowings and current portion|
|of long-term debt||2,121||1,377|
"Net Debt" represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger's indebtedness by reflecting cash and investments that could be used to repay debt. Details of changes in Net Debt for the full year 2012 follow: