NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
Basis of Presentation
The accompanying unaudited consolidated financial statements of Schlumberger Limited and its subsidiaries (“Schlumberger”) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Schlumberger management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements. All intercompany transactions and balances have been eliminated in consolidation. Operating results for the nine-month period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018. The December 31, 2017 balance sheet information has been derived from the Schlumberger 2017 audited financial statements. For further information, refer to the
Consolidated Financial Statements
and notes thereto included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on January 24, 2018.
Recently Adopted Accounting Pronouncement
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,
Revenue from Contracts with Customers
. This ASU amended the existing accounting standards for revenue recognition and requires companies to recognize revenue when control of the promised goods or services is transferred to a customer at an amount that reflects the consideration
a company expects to receive in exchange for those goods or services. Schlumberger adopted this ASU on January 1,
2018 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. The adoption of this ASU did not have a material impact on Schlumberger’s
Consolidated Financial Statements
.
Schlumberger recognizes revenue upon the transfer of control of promised products or services to customers at an amount that reflects the consideration it expects to receive in exchange for these products or services. The vast majority of Schlumberger’s services and product offerings are short-term in nature. The time between invoicing and when payment is due under these arrangements is generally 30 to 60 days.
Revenue is occasionally generated from contractual arrangements that include multiple performance obligations. Revenue from these arrangements is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected costs plus margin.
Revenue is recognized for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs may be required as work progresses. Progress billings are generally issued upon completion of certain phases of work as stipulated in the contract. Any expected losses on a project are recorded in full in the period in which they become probable.
Revenue in excess of billings related to contracts where revenue is recognized over time was $0.2 billion at September 30, 2018 and $0.3 billion at December 31, 2017. Such amounts are included within
Receivables less allowance for doubtful accounts
in the
Consolidated Balance Sheet
.
Due to the nature of its business, Schlumberger does not have significant backlog. Total backlog was $2.5 billion at September 30, 2018, of which approximately 59% is expected to be recognized as revenue over the next 12 months.
Billings and cash collections in excess of revenue was $0.8 billion at both September 30, 2018 and December 31, 2017. Such amounts are included within
Accounts payable and accrued liabilities
in the
Consolidated Balance Sheet
.
Recently Issued Accounting Pronouncement
In February 2016, the FASB issued ASU No. 2016-02,
Leases
. This ASU requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of short-term leases. This ASU is effective for Schlumberger on
8
January 1, 2019
, with early adoption permitted
. Based on its current
lease portfolio, Schlumberger estimates that the adoption of this ASU will result in approximately $
1.2
billion of additional assets and liabilities being reflected on its
Consolidated Balance Sheet
.
2.
Charges and Credits
2018
There were no charges or credits recorded during the first and third quarters of 2018.
During the second quarter of 2018, Schlumberger recorded a $184 million pretax charge ($164 million after-tax) associated with headcount reductions, primarily to further streamline its support cost structure. This charge is classified in
Impairments & other
in the
Consolidated Statement of Income
.
2017
Schlumberger recorded the following charges and credits during the first nine months of 2017:
Third quarter of 2017:
|
•
|
In connection with Schlumberger’s 2016 acquisition of Cameron International Corporation (“Cameron”), Schlumberger recorded $49 million of charges
consisting of employee benefits, facility consolidation and other merger and integration-related costs. These charges are classified in
Merger & integration
in the
Consolidated Statement of Income
.
|
Second quarter of 2017:
|
•
|
During the second quarter of 2017, Schlumberger entered into a financing agreement with its primary customer in Venezuela. This agreement resulted in the exchange of $700 million of outstanding accounts receivable for a promissory note with a three-year term that bears interest at the rate of 6.50% per annum. Schlumberger recorded this note at its estimated fair value on the date of the exchange, which resulted in a charge of $460 million. Schlumberger is accounting for the promissory note as an available-for-sale security reported at fair value in
Other
Assets,
with unrealized gains and losses included as a component of
Accumulated other comprehensive loss
. The fair value of the promissory notes was based on management’s estimate of pricing assumptions that market participants would use.
|
During the second quarter of 2017, Schlumberger also entered into discussions with another customer relating to certain of its outstanding accounts receivable. As a result of those discussions, Schlumberger recorded a charge of $50 million to adjust these receivables to their estimated net realizable value.
These charges are classified in
Impairments & other
in the
Consolidated Statement of Income.
|
•
|
In connection with Schlumberger’s 2016 acquisition of Cameron, Schlumberger recorded $81 million of charges consisting of employee benefits, facility consolidation and other merger and integration-related costs. These charges are classified in
Merger & integration
in the
Consolidated Statement of Income
.
|
First quarter of 2017:
|
•
|
In connection with Schlumberger’s acquisition of Cameron, Schlumberger recorded $82 million of charges during the first quarter of 2017 relating to employee benefits, facility closures and other merger and integration-related costs. These charges are classified in
Merger & integration
in the
Consolidated Statement of Income
.
|
The following is a summary of the charges and credits recorded during the first nine months of 2017:
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Pretax
|
|
|
Tax
|
|
|
Interests
|
|
|
Net
|
|
Promissory note fair value adjustment and other
|
$
|
510
|
|
|
$
|
-
|
|
|
$
|
12
|
|
|
$
|
498
|
|
Merger & integration
|
|
213
|
|
|
|
44
|
|
|
|
-
|
|
|
|
169
|
|
|
$
|
723
|
|
|
$
|
44
|
|
|
$
|
12
|
|
|
$
|
667
|
|
|
•
|
On December 22, 2017, the US enacted the Tax Cuts and Jobs Act (the “Act”). The Act, which is also commonly referred to as “US tax reform,” significantly changed US corporate income tax laws by, among other things, reducing the US corporate income tax rate to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously
|
9
|
|
deferred foreign earnings of US subsidiaries. As a result, Schlumbe
rger recorded a net charge of $76 million during the fourth quarter of 2017. This amount consisted of two components: (i) a $410 million charge relating to the one-time mandatory tax on previously deferred earnings of certain non-US subsidiaries that are
owned either wholly or partially by a US subsidiary of Schlumberger, and (ii) a $334 million credit resulting from the remeasurement of Schlumberger’s net deferred tax liabilities in the US based on the new lower corporate income tax rate.
|
Although the $76 million net charge represents a reasonable estimate of the impact of the income tax effects of the Act on Schlumberger’s
Consolidated Financial Statements
as of December 31, 2017, it should be considered provisional. Once Schlumberger finalizes certain tax positions, it will be able to conclude whether any further adjustments are required. Any adjustments to these provisional amounts will be reported as a component of
Taxes on income
in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
3.
Earnings Per Share
The following is a reconciliation from basic earnings per share of Schlumberger to diluted earnings per share of Schlumberger:
(Stated in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Schlumberger Net Income
|
|
|
Average
Shares
Outstanding
|
|
|
Earnings per Share
|
|
|
Schlumberger Net Income
|
|
|
Average
Shares
Outstanding
|
|
|
Earnings per Share
|
|
Third Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
644
|
|
|
|
1,385
|
|
|
$
|
0.46
|
|
|
$
|
545
|
|
|
|
1,385
|
|
|
$
|
0.39
|
|
Assumed exercise of stock options
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
1
|
|
|
|
|
|
Unvested restricted stock
|
|
-
|
|
|
|
7
|
|
|
|
|
|
|
|
-
|
|
|
|
6
|
|
|
|
|
|
Diluted
|
$
|
644
|
|
|
|
1,392
|
|
|
$
|
0.46
|
|
|
$
|
545
|
|
|
|
1,392
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Schlumberger Net Income
|
|
|
Average
Shares
Outstanding
|
|
|
Earnings per Share
|
|
|
Schlumberger Net Income
|
|
|
Average
Shares
Outstanding
|
|
|
Earnings per Share
|
|
Nine Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1,599
|
|
|
$
|
1,385
|
|
|
$
|
1.15
|
|
|
$
|
749
|
|
|
$
|
1,388
|
|
|
$
|
0.54
|
|
Assumed exercise of stock options
|
|
-
|
|
|
|
1
|
|
|
|
|
|
|
|
-
|
|
|
|
2
|
|
|
|
|
|
Unvested restricted stock
|
|
-
|
|
|
|
7
|
|
|
|
|
|
|
|
-
|
|
|
|
5
|
|
|
|
|
|
Diluted
|
$
|
1,599
|
|
|
$
|
1,393
|
|
|
$
|
1.15
|
|
|
$
|
749
|
|
|
$
|
1,395
|
|
|
$
|
0.54
|
|
The number of outstanding options to purchase shares of Schlumberger common stock that were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect, was as follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Third Quarter
|
|
40
|
|
|
|
43
|
|
Nine Months
|
|
40
|
|
|
|
30
|
|
10
4.
Inventories
A summary of inventories, which are stated at the lower of average cost or net realizable value, follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
2018
|
|
|
2017
|
|
Raw materials & field materials
|
$
|
1,885
|
|
|
$
|
1,846
|
|
Work in progress
|
|
541
|
|
|
|
503
|
|
Finished goods
|
|
1,682
|
|
|
|
1,697
|
|
|
$
|
4,108
|
|
|
$
|
4,046
|
|
5.
Fixed Assets
A summary of fixed assets follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
2018
|
|
|
2017
|
|
Property, plant & equipment
|
$
|
38,695
|
|
|
$
|
37,813
|
|
Less: Accumulated depreciation
|
|
26,956
|
|
|
|
26,237
|
|
|
$
|
11,739
|
|
|
$
|
11,576
|
|
Depreciation expense relating to fixed assets was as follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Third Quarter
|
$
|
516
|
|
|
$
|
591
|
|
Nine Months
|
$
|
1,564
|
|
|
$
|
1,796
|
|
6.
Multiclient Seismic Data
The change in the carrying amount of multiclient seismic data for the nine months ended September 30, 2018 was as follows:
(Stated in millions)
|
|
|
|
|
|
Balance at December 31, 2017
|
$
|
727
|
|
Capitalized in period
|
|
63
|
|
Charged to expense
|
|
(151
|
)
|
Balance at September 30, 2018
|
$
|
639
|
|
11
7
.
Intangible Assets
The gross book value, accumulated amortization and net book value of intangible assets were as follows:
|
(Stated in millions)
|
|
|
|
|
|
Sept. 30, 2018
|
|
|
Dec. 31, 2017
|
|
|
Gross
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
Gross
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
Book
Value
|
|
|
Amortization
|
|
|
Value
|
|
|
Book Value
|
|
|
Amortization
|
|
|
Value
|
|
Customer relationships
|
$
|
4,775
|
|
|
$
|
1,187
|
|
|
$
|
3,588
|
|
|
$
|
4,832
|
|
|
$
|
1,020
|
|
|
$
|
3,812
|
|
Technology/technical know-how
|
|
3,578
|
|
|
|
1,197
|
|
|
|
2,381
|
|
|
|
3,634
|
|
|
|
1,078
|
|
|
|
2,556
|
|
Tradenames
|
|
2,806
|
|
|
|
609
|
|
|
|
2,197
|
|
|
|
2,806
|
|
|
|
533
|
|
|
|
2,273
|
|
Other
|
|
1,362
|
|
|
|
598
|
|
|
|
764
|
|
|
|
1,295
|
|
|
|
582
|
|
|
|
713
|
|
|
$
|
12,521
|
|
|
$
|
3,591
|
|
|
$
|
8,930
|
|
|
$
|
12,567
|
|
|
$
|
3,213
|
|
|
$
|
9,354
|
|
Amortization expense charged to income was as follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Third Quarter
|
$
|
167
|
|
|
$
|
165
|
|
Nine Months
|
$
|
506
|
|
|
$
|
501
|
|
Based on the net book value of intangible assets at September 30, 2018, amortization charged to income for the subsequent five years is estimated to be: fourth quarter of 2018—$169 million; 2019—$680 million; 2020—$648 million; 2021—$617 million; 2022—$609 million; and 2023—$594 million.
8.
Long-term Debt
A summary of
Long-term Debt
follows:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
2018
|
|
|
2017
|
|
4.00% Senior Notes due 2025
|
$
|
1,742
|
|
|
$
|
1,741
|
|
3.30% Senior Notes due 2021
|
|
1,596
|
|
|
|
1,595
|
|
3.00% Senior Notes due 2020
|
|
1,595
|
|
|
|
1,593
|
|
3.65% Senior Notes due 2023
|
|
1,493
|
|
|
|
1,492
|
|
4.20% Senior Notes due 2021
|
|
1,100
|
|
|
|
1,100
|
|
2.40% Senior Notes due 2022
|
|
997
|
|
|
|
996
|
|
3.63% Senior Notes due 2022
|
|
847
|
|
|
|
846
|
|
2.65% Senior Notes due 2022
|
|
598
|
|
|
|
598
|
|
2.20% Senior Notes due 2020
|
|
498
|
|
|
|
498
|
|
7.00% Notes due 2038
|
|
211
|
|
|
|
212
|
|
4.50% Notes due 2021
|
|
133
|
|
|
|
135
|
|
5.95% Notes due 2041
|
|
115
|
|
|
|
115
|
|
3.60% Notes due 2022
|
|
109
|
|
|
|
110
|
|
5.13% Notes due 2043
|
|
99
|
|
|
|
99
|
|
4.00% Notes due 2023
|
|
82
|
|
|
|
82
|
|
3.70% Notes due 2024
|
|
55
|
|
|
|
56
|
|
0.63% Guaranteed Notes due 2019
|
|
-
|
|
|
|
712
|
|
1.50% Guaranteed Notes due 2019
|
|
-
|
|
|
|
603
|
|
Commercial paper borrowings
|
|
2,600
|
|
|
|
1,694
|
|
Other
|
|
289
|
|
|
|
598
|
|
|
$
|
14,159
|
|
|
$
|
14,875
|
|
12
The estimated fair value of Schlumberger’s
Long-term Debt,
based on quoted market prices at September 30, 2018 and December 31, 2017, was $14.1 billion and $15.2 billion, respectively.
Borrowings under Schlumberger’s commercial paper programs at September 30, 2018 were $3.1 billion, of which $0.5 billion was classified in
Short-term borrowings and current portion of long-term debt
in the
Consolidated Balance Sheet
. At December 31, 2017, borrowings under the commercial paper programs were $3.0 billion, of which $1.3 billion was classified in
Short-term borrowings and current portion of long-term debt
in the
Consolidated Balance Sheet
.
9.
Derivative Instruments and Hedging Activities
Schlumberger is exposed to market risks related to fluctuations in foreign currency exchange rates and interest rates. To mitigate these risks, Schlumberger utilizes derivative instruments. Schlumberger does not enter into derivative transactions for speculative purposes.
Interest Rate Risk
Schlumberger is subject to interest rate risk on its debt and its investment portfolio. Schlumberger maintains an interest rate risk management strategy that uses a mix of variable and fixed rate debt combined with its investment portfolio, and occasionally interest rate swaps, to mitigate the exposure to changes in interest rates.
During 2013, Schlumberger entered into a cross-currency swap for a notional amount of €0.5 billion in order to hedge changes in the fair value of Schlumberger’s €0.5 billion 1.50% Guaranteed Notes due 2019. Under the terms of this swap, Schlumberger will receive interest at a fixed rate of 1.50% on the euro notional amount and pay interest at a floating rate of three-month LIBOR plus approximately 64 basis points on the US dollar notional amount.
This cross-currency swap is designated as a fair value hedge of the underlying debt and is marked to market, with gains and losses recognized immediately in income to largely offset the effects on changes in the fair value of the hedged debt.
During 2017, a Canadian dollar functional currency subsidiary of Schlumberger issued $1.1 billion of US dollar denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of $1.1 billion in order to hedge changes in the fair value of its $0.5 billion 2.20% Senior Notes due 2020 and its $0.6 billion 2.65% Senior Notes due 2022. These cross-currency swaps effectively convert the US dollar notes to Canadian dollar denominated debt with fixed annual interest rates of 1.97% and 2.52%, respectively.
These cross-currency swaps are designated as cash flow hedges. The changes in the fair values of the hedges are recorded on the
Consolidated Balance Sheet
and in
Accumulated Other Comprehensive Loss.
Amounts recorded in
Accumulated Other Comprehensive Loss
are reclassified to earnings in the same periods that the underlying hedged item is recognized in earnings.
At September 30, 2018, Schlumberger had fixed rate debt aggregating $13.3 billion and variable rate debt aggregating $4.1 billion, after taking into account the effect of interest rate swaps.
Short-term investments
were $1.4 billion at September 30, 2018. The carrying value of these investments approximated fair value.
Foreign Currency Exchange Rate Risk
As a multinational company, Schlumberger conducts its business in more than 85 countries. Schlumberger’s functional currency is primarily the US dollar. However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens (strengthens) in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar-reported expenses will increase (decrease).
Schlumberger is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency. Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt denominated in currencies other than the functional currency. Schlumberger uses foreign currency forward contracts to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the changes in the fair value of the hedge recorded on the
Consolidated Balance Sheet
and in
Accumulated Other Comprehensive Loss.
Amounts recorded in
Accumulated Other Comprehensive Loss
are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings.
13
At
September
30
, 2018, Schlumberger recognized a cumulative net $
5
million
loss
in
Accumulated
O
ther
C
omprehensive
L
oss
relating to revaluation of foreign currency forward contracts designated as cash flow hedges, the majority of which is expected to be reclassified into earnings within the next 12 months.
Schlumberger is exposed to changes in the fair value of assets and liabilities that are denominated in currencies other than the functional currency. While Schlumberger uses foreign currency forward contracts and foreign currency options to economically hedge this exposure as it relates to certain currencies, these contracts are not designated as hedges for accounting purposes. Instead, the fair value of the contracts is recorded on the
Consolidated Balance Sheet,
and changes in the fair value are recognized in the
Consolidated Statement of Income
as are changes in fair value of the hedged item.
At September 30, 2018, contracts were outstanding for the US dollar equivalent of $5.0 billion in various foreign currencies, of which $1.9 billion relates to hedges of debt denominated in currencies other than the functional currency.
The effect of derivative instruments designated as fair value and cash flow hedges, and those not designated as hedges, on the
Consolidated Statement of Income
was as follows:
|
|
|
|
|
|
|
|
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized in Income
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
Consolidated Statement of Income Classification
|
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swap
|
$
|
6
|
|
|
$
|
19
|
|
|
$
|
(6
|
)
|
|
$
|
66
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
$
|
(2
|
)
|
|
$
|
-
|
|
|
$
|
3
|
|
|
$
|
-
|
|
|
Cost of services/sales
|
Cross currency swap
|
|
(30
|
)
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
Interest expense
|
|
$
|
(32
|
)
|
|
$
|
-
|
|
|
$
|
28
|
|
|
$
|
-
|
|
|
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
$
|
(17
|
)
|
|
$
|
(10
|
)
|
|
$
|
15
|
|
|
$
|
(3
|
)
|
|
Cost of services/sales
|
10.
Contingencies
Schlumberger is party to various legal proceedings from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote. However, litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings.
14
1
1
.
Segment Information
|
|
|
|
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2018
|
|
|
Third Quarter 2017
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
Before
|
|
|
|
|
|
|
Before
|
|
|
Revenue
|
|
|
Taxes
|
|
|
Revenue
|
|
|
Taxes
|
|
Reservoir Characterization
|
$
|
1,673
|
|
|
$
|
373
|
|
|
$
|
1,771
|
|
|
$
|
311
|
|
Drilling
|
|
2,429
|
|
|
|
339
|
|
|
|
2,120
|
|
|
|
301
|
|
Production
|
|
3,252
|
|
|
|
320
|
|
|
|
2,876
|
|
|
|
283
|
|
Cameron
|
|
1,298
|
|
|
|
148
|
|
|
|
1,297
|
|
|
|
194
|
|
Eliminations & other
|
|
(148
|
)
|
|
|
(28
|
)
|
|
|
(159
|
)
|
|
|
(30
|
)
|
Pretax operating income
|
|
|
|
|
|
1,152
|
|
|
|
|
|
|
|
1,059
|
|
Corporate & other
(1)
|
|
|
|
|
|
(234
|
)
|
|
|
|
|
|
|
(234
|
)
|
Interest income
(2)
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
30
|
|
Interest expense
(3)
|
|
|
|
|
|
(139
|
)
|
|
|
|
|
|
|
(129
|
)
|
Charges and credits
(4)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
(49
|
)
|
|
$
|
8,504
|
|
|
$
|
787
|
|
|
$
|
7,905
|
|
|
$
|
677
|
|
(1)
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.
(2)
Interest income excludes amounts which are included in the segments’ income ($2 million in 2018; $4 million in 2017).
(3)
Interest expense excludes amounts which are included in the segments’ income ($8 million in 2018; $13 million in 2017).
(4)
See Note 2 –
Charges and Credits
.
|
|
|
|
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months 2018
|
|
|
Nine Months 2017
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
Before
|
|
|
|
|
|
|
Before
|
|
|
Revenue
|
|
|
Taxes
|
|
|
Revenue
|
|
|
Taxes
|
|
Reservoir Characterization
|
$
|
4,865
|
|
|
$
|
1,030
|
|
|
$
|
5,148
|
|
|
$
|
891
|
|
Drilling
|
|
6,789
|
|
|
|
921
|
|
|
|
6,212
|
|
|
|
832
|
|
Production
|
|
9,468
|
|
|
|
851
|
|
|
|
7,559
|
|
|
|
614
|
|
Cameron
|
|
3,902
|
|
|
|
481
|
|
|
|
3,791
|
|
|
|
530
|
|
Eliminations & other
|
|
(388
|
)
|
|
|
(63
|
)
|
|
|
(449
|
)
|
|
|
(101
|
)
|
Pretax operating income
|
|
|
|
|
|
3,220
|
|
|
|
|
|
|
|
2,766
|
|
Corporate & other
(1)
|
|
|
|
|
|
(699
|
)
|
|
|
|
|
|
|
(715
|
)
|
Interest income
(2)
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
82
|
|
Interest expense
(3)
|
|
|
|
|
|
(405
|
)
|
|
|
|
|
|
|
(383
|
)
|
Charges and credits
(4)
|
|
|
|
|
|
(184
|
)
|
|
|
|
|
|
|
(723
|
)
|
|
$
|
24,636
|
|
|
$
|
1,976
|
|
|
$
|
22,261
|
|
|
$
|
1,027
|
|
(1)
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.
(2)
Interest income excludes amounts which are included in the segments’ income ($7 million in 2018; $15 million in 2017).
(3)
Interest expense excludes amounts which are included in the segments’ income ($29 million in 2018; $39 million in 2017).
(4)
See Note 2 –
Charges and Credits
.
15
Revenue by geographic area was as follows:
|
|
|
|
|
|
|
|
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
North America
|
$
|
3,189
|
|
|
$
|
2,602
|
|
|
$
|
9,164
|
|
|
$
|
6,675
|
|
Latin America
|
|
978
|
|
|
|
952
|
|
|
|
2,767
|
|
|
|
2,942
|
|
Europe/CIS/Africa
|
|
1,820
|
|
|
|
1,843
|
|
|
|
5,316
|
|
|
|
5,255
|
|
Middle East & Asia
|
|
2,417
|
|
|
|
2,352
|
|
|
|
7,079
|
|
|
|
7,007
|
|
Eliminations & other
|
|
100
|
|
|
|
156
|
|
|
|
310
|
|
|
|
382
|
|
|
$
|
8,504
|
|
|
$
|
7,905
|
|
|
$
|
24,636
|
|
|
$
|
22,261
|
|
North America and International revenue disaggregated by segment was as follows:
|
|
|
|
|
|
|
|
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2018
|
|
|
North
|
|
|
|
|
|
|
Eliminations
|
|
|
|
|
|
|
America
|
|
|
International
|
|
|
& other
|
|
|
Total
|
|
Reservoir Characterization
|
$
|
242
|
|
|
$
|
1,317
|
|
|
$
|
114
|
|
|
$
|
1,673
|
|
Drilling
|
|
601
|
|
|
|
1,760
|
|
|
|
68
|
|
|
|
2,429
|
|
Production
|
|
1,725
|
|
|
|
1,527
|
|
|
|
-
|
|
|
|
3,252
|
|
Cameron
|
|
617
|
|
|
|
656
|
|
|
|
25
|
|
|
|
1,298
|
|
Other
|
|
4
|
|
|
|
(45
|
)
|
|
|
(107
|
)
|
|
|
(148
|
)
|
|
$
|
3,189
|
|
|
$
|
5,215
|
|
|
$
|
100
|
|
|
$
|
8,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months 2018
|
|
|
North
|
|
|
|
|
|
|
Eliminations
|
|
|
|
|
|
|
America
|
|
|
International
|
|
|
& other
|
|
|
Total
|
|
Reservoir Characterization
|
$
|
733
|
|
|
$
|
3,747
|
|
|
$
|
385
|
|
|
$
|
4,865
|
|
Drilling
|
|
1,733
|
|
|
|
4,884
|
|
|
|
172
|
|
|
|
6,789
|
|
Production
|
|
4,919
|
|
|
|
4,545
|
|
|
|
4
|
|
|
|
9,468
|
|
Cameron
|
|
1,761
|
|
|
|
2,070
|
|
|
|
71
|
|
|
|
3,902
|
|
Other
|
|
18
|
|
|
|
(84
|
)
|
|
|
(322
|
)
|
|
|
(388
|
)
|
|
$
|
9,164
|
|
|
$
|
15,162
|
|
|
$
|
310
|
|
|
$
|
24,636
|
|
12.
Pension and Other Postretirement Benefit Plans
Net pension cost for the Schlumberger pension plans included the following components:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
US
|
|
|
Int'l
|
|
|
US
|
|
|
Int'l
|
|
|
US
|
|
|
Int'l
|
|
|
US
|
|
|
Int'l
|
|
|
Service cost
|
$
|
14
|
|
|
$
|
35
|
|
|
$
|
14
|
|
|
$
|
24
|
|
|
$
|
44
|
|
|
$
|
105
|
|
|
$
|
44
|
|
|
$
|
71
|
|
|
Interest cost
|
|
41
|
|
|
|
77
|
|
|
|
44
|
|
|
|
76
|
|
|
|
125
|
|
|
|
229
|
|
|
|
131
|
|
|
|
230
|
|
|
Expected return on plan assets
|
|
(61
|
)
|
|
|
(149
|
)
|
|
|
(60
|
)
|
|
|
(135
|
)
|
|
|
(186
|
)
|
|
|
(442
|
)
|
|
|
(181
|
)
|
|
|
(406
|
)
|
|
Amortization of prior service cost
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
24
|
|
|
|
9
|
|
|
|
8
|
|
|
|
9
|
|
|
|
73
|
|
|
Amortization of net loss
|
|
12
|
|
|
|
35
|
|
|
|
10
|
|
|
|
30
|
|
|
|
36
|
|
|
|
105
|
|
|
|
29
|
|
|
|
90
|
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
19
|
|
|
$
|
28
|
|
|
$
|
5
|
|
|
$
|
32
|
|
|
$
|
58
|
|
|
16
The net periodic benefit credit for the Schlumberger US postretirement medical plan included the following components:
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Service cost
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
24
|
|
|
$
|
22
|
|
Interest cost
|
|
11
|
|
|
|
12
|
|
|
|
33
|
|
|
|
35
|
|
Expected return on plan assets
|
|
(15
|
)
|
|
|
(16
|
)
|
|
|
(47
|
)
|
|
|
(46
|
)
|
Amortization of prior service credit
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(21
|
)
|
|
|
(22
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
(11
|
)
|
|
$
|
(11
|
)
|
13.
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
consists of the following:
|
(Stated in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and
|
|
|
|
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Translation
|
|
|
Marketable
|
|
|
Cash Flow
|
|
|
Postretirement
|
|
|
|
|
|
|
Adjustments
|
|
|
Securities
|
|
|
Hedges
|
|
|
Benefit Plans
|
|
|
Total
|
|
Balance, January 1, 2018
|
$
|
(2,139
|
)
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
(2,151
|
)
|
|
$
|
(4,274
|
)
|
Other comprehensive loss before reclassifications
|
|
(128
|
)
|
|
|
(33
|
)
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(167
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
130
|
|
|
|
128
|
|
Net other comprehensive income
|
|
(128
|
)
|
|
|
(33
|
)
|
|
|
(8
|
)
|
|
|
130
|
|
|
|
(39
|
)
|
Balance, September 30, 2018
|
$
|
(2,267
|
)
|
|
$
|
(20
|
)
|
|
$
|
(5
|
)
|
|
$
|
(2,021
|
)
|
|
$
|
(4,313
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and
|
|
|
|
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Translation
|
|
|
Marketable
|
|
|
Cash Flow
|
|
|
Postretirement
|
|
|
|
|
|
|
Adjustments
|
|
|
Securities
|
|
|
Hedges
|
|
|
Benefit Plans
|
|
|
Total
|
|
Balance, January 1, 2017
|
$
|
(2,136
|
)
|
|
$
|
21
|
|
|
$
|
(19
|
)
|
|
$
|
(2,509
|
)
|
|
$
|
(4,643
|
)
|
Other comprehensive gain (loss) before reclassifications
|
|
49
|
|
|
|
(66
|
)
|
|
|
19
|
|
|
|
-
|
|
|
|
2
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
179
|
|
|
|
183
|
|
Income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Net other comprehensive income
|
|
49
|
|
|
|
(66
|
)
|
|
|
23
|
|
|
|
177
|
|
|
|
183
|
|
Balance, September 30, 2017
|
$
|
(2,087
|
)
|
|
$
|
(45
|
)
|
|
$
|
4
|
|
|
$
|
(2,332
|
)
|
|
$
|
(4,460
|
)
|
17