- Global revenue of $5.85 billion increased 4% sequentially and
11% year-on-year
- International revenue was $4.68 billion and North America
revenue was $1.13 billion
- GAAP EPS, including charges and credits, was $0.39 and
increased 30% sequentially
- EPS, excluding charges and credits, was $0.36 and increased 20%
sequentially
- Cash flow from operations was $1.07 billion and free cash flow
was $671 million
- Board approved quarterly cash dividend of $0.125 per share
Regulatory News:
Schlumberger Limited (NYSE: SLB) today reported results for the
third-quarter 2021.
Third-Quarter Results (Stated in millions, except per share
amounts)
Three Months Ended Change Sept. 30,
2021 Jun. 30, 2021 Sept. 30, 2020
Sequential
Year-on-year Revenue*
$5,847
$5,634
$5,258
4%
11%
Income (loss) before taxes - GAAP basis
$691
$542
$(54)
28%
n/m
Net income (loss) - GAAP basis
$550
$431
$(82)
28%
n/m
Diluted EPS (loss per share) - GAAP basis
$0.39
$0.30
$(0.06)
30%
n/m
Adjusted EBITDA**
$1,296
$1,198
$1,018
8%
27%
Adjusted EBITDA margin**
22.2%
21.3%
19.4%
90 bps
280 bps
Pretax segment operating income**
$908
$807
$575
12%
58%
Pretax segment operating margin**
15.5%
14.3%
10.9%
120 bps
460 bps
Net income, excluding charges & credits**
$514
$431
$228
19%
126%
Diluted EPS, excluding charges & credits**
$0.36
$0.30
$0.16
20%
125%
Revenue by Geography
International
$4,675
$4,511
$4,210
4%
11%
North America*
1,129
1,083
1,034
4%
9%
Other
43
40
14
n/m
n/m
$5,847
$5,634
$5,258
4%
11%
*Schlumberger divested certain businesses in North America during
the fourth quarter of 2020. These businesses generated revenue of
$245 million during the third quarter of 2020. Excluding the impact
of these divestitures, global third-quarter 2021 revenue increased
17% year-on-year. North America third-quarter 2021 revenue,
excluding the impact of these divestitures, increased 43%
year-on-year. **These are non-GAAP financial measures. See sections
titled "Charges & Credits", "Divisions", and "Supplemental
Information" for details. n/m = not meaningful
(Stated in millions)
Three Months Ended Change Sept. 30, 2021 Jun.
30, 2021 Sept. 30, 2020
Sequential Year-on-year
Revenue
by Division Digital & Integration
$812
$817
$738
-1%
10%
Reservoir Performance*
1,192
1,117
1,215
7%
-2%
Well Construction
2,273
2,110
1,837
8%
24%
Production Systems**
1,674
1,681
1,532
0%
9%
Other
(104)
(91)
(64)
n/m
n/m
$5,847
$5,634
$5,258
4%
11%
Pretax Operating Income by Division
Digital & Integration
$284
$274
$201
4%
42%
Reservoir Performance
190
156
103
22%
85%
Well Construction
345
272
173
27%
99%
Production Systems
166
171
132
-3%
26%
Other
(77)
(66)
(34)
n/m
n/m
$908
$807
$575
12%
58%
Pretax Operating Margin by Division
Digital & Integration
35.0%
33.5%
27.2%
154 bps
784 bps
Reservoir Performance
16.0%
13.9%
8.4%
202 bps
751 bps
Well Construction
15.2%
12.9%
9.4%
230 bps
576 bps
Production Systems
9.9%
10.2%
8.6%
-27 bps
129 bps
Other
n/m
n/m
n/m
n/m
n/m
15.5%
14.3%
10.9%
120 bps
460 bps
*Schlumberger divested its OneStim® pressure pumping business in
North America during the fourth quarter of 2020. This business
generated revenue of $219 million during the third quarter of 2020.
Excluding the impact of this divestiture, Reservoir Performance
third-quarter 2021 revenue increased 20% year-on-year.
**Schlumberger divested its low-flow artificial lift business in
North America during the fourth quarter of 2020. This business
generated revenue of $26 million during the third quarter of 2020.
Excluding the impact of this divestiture, Production Systems
third-quarter 2021 revenue increased 11% year-on-year. n/m = not
meaningful
Schlumberger CEO Olivier Le Peuch commented, “We started the
second half of the year with strong results, delivering another
quarter of sequential revenue growth, a fifth consecutive quarter
of margin expansion, and a solid free cash flow performance.
Revenue growth was led by Well Construction and Reservoir
Performance, our predominantly service-oriented Divisions,
delivering quality revenue that more than offset the impact of
transitory global supply and logistics constraints in Production
Systems. International revenue grew 11% year-on-year and is on
track to meet our double-digit revenue growth ambition for the
second half of 2021 compared to the same period last year.
“Our returns-focused strategy continues to deliver exceptional
results at this early point of the growth cycle. Our third-quarter
pretax segment operating margin reached its highest level since
2015 and cash flow from operations was $1.07 billion. I am excited
about our improving earnings and cash flow potential as the macro
outlook for energy strengthens significantly through 2022 and
beyond.
“Geographically, international revenue of $4.68 billion grew 4%
sequentially and 11% year-on-year. The sequential revenue increase
was led by double-digit growth in Latin America complemented by
sustained activity in the Europe/CIS/Africa and Middle East &
Asia areas. In North America, revenue of $1.13 billion grew 4%
sequentially and 9% year-on-year. The sequential growth was driven
mainly by a strong seasonal rebound in land drilling, higher Asset
Performance Solutions (APS) revenue in Canada, and an increase in
drilling revenue in North America offshore.
“Among the Divisions, Well Construction continued its growth
momentum, with revenue increasing 8% sequentially due to higher
international and North America drilling activity both on land and
offshore. Similarly, Reservoir Performance revenue increased 7%
sequentially from higher exploration and appraisal activity across
the international markets. Revenue from Digital & Integration
and Production Systems was essentially flat.
“Sequentially, third-quarter pretax segment operating income
increased 12% with pretax segment operating margin expanding by 120
basis points (bps) to 15.5%, while adjusted EBITDA margin grew 90
bps to 22.2%. This was driven by our Well Construction and
Reservoir Performance Divisions. We are starting to see signs of
improved service rates in both of these Divisions driven by our
technology, which is creating visibly higher value for our
customers and resulting in stronger technology adoption and
activity share gains—particularly in the international markets.
“Third-quarter cash flow from operations was $1.07 billion and
free cash flow was $671 million. On a year-to-date basis, we have
generated free cash flow of $1.70 billion, which has allowed us to
reduce our net debt by $1.43 billion since the beginning of the
year.
“Looking ahead, we anticipate another quarter of growth, and
expect to close 2021 with strong momentum that will set the
foundation for an exceptional growth cycle.
“The industry macro fundamentals have visibly strengthened this
year, particularly in recent weeks—with demand recovery, oil and
gas commodity prices at recent highs, low inventory levels, and
encouraging trends in pandemic containment efforts. Absent a
recession or pandemic-related setback, these favorable conditions
are expected to materially drive investment over the next few
years—particularly internationally—and result in exceptional
multiyear capital spending growth globally, both on land and
offshore. As the market leader, we have an advantaged position from
which to capture this growth given our technology, integration
capability, and international strength, with our core poised for
activity and earnings outperformance.
“In this context and given our financial outperformance at this
point in the cycle, we are increasingly confident in achieving our
mid-cycle adjusted EBITDA margin ambition of 25% or higher and
sustaining a double-digit free cash flow margin throughout the
cycle.”
Other Events
On October 21, 2021, Schlumberger’s Board of Directors approved
a quarterly cash dividend of $0.125 per share of outstanding common
stock, payable on January 13, 2022 to stockholders of record on
December 1, 2021.
Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change
Sept. 30, 2021 Jun. 30, 2021 Sept. 30, 2020
Sequential Year-on-year North America*
$1,129
$1,083
$1,034
4%
9%
Latin America
1,160
1,057
828
10%
40%
Europe/CIS/Africa
1,481
1,453
1,397
2%
6%
Middle East & Asia
2,034
2,001
1,986
2%
2%
Other
43
40
13
n/m
n/m
$5,847
$5,634
$5,258
4%
11%
International
$4,675
$4,511
$4,210
4%
11%
North America*
$1,129
$1,083
$1,034
4%
9%
*Schlumberger divested certain businesses in North America during
the fourth quarter of 2020. These businesses generated revenue of
$245 million during the third quarter of 2020. Excluding the impact
of these divestitures, global third-quarter 2021 revenue increased
17% year-on-year. North America third-quarter 2021 revenue,
excluding the impact of these divestitures, increased 43%
year-on-year. n/m = not meaningful
North America
North America revenue of $1.13 billion increased 4%
sequentially, with both land and offshore revenue increasing,
driven primarily by Well Construction activity. The sequential
growth was due to a strong seasonal rebound in land drilling,
higher APS revenue in Canada, and higher drilling revenue in North
America offshore that was partially offset by hurricane-related
disruption.
International
International revenue of $4.68 billion increased 4%
sequentially led by double-digit growth in Latin America that was
complemented by sustained activity in the Europe/CIS/Africa and
Middle East & Asia areas.
Revenue in Latin America of $1.16 billion increased 10%
sequentially due to double-digit revenue growth in Mexico,
Argentina, and Brazil from robust activity in Well Construction,
Reservoir Performance, and Production Systems, respectively.
Revenue in Guyana, Ecuador, and Colombia also increased, driven by
higher wireline and intervention activity in Reservoir
Performance.
Europe/CIS/Africa revenue of $1.48 billion increased 2%
sequentially, with growth reported in Scandinavia, Russia, Angola,
and Nigeria. Peak summer drilling drove higher Well Construction
activity in Scandinavia and Russia. Sustained exploration activity
in Africa drove higher wireline and stimulation activity in
Reservoir Performance, while Production Systems sales increased in
Angola.
Revenue in the Middle East & Asia of $2.03 billion
increased 2% sequentially with growth in Australia, East Asia,
Indonesia, Saudi Arabia, and Qatar. Revenue in Australia and
Indonesia increased from higher offshore drilling, benefiting Well
Construction. East Asia revenue increased with growth across all
four Divisions. In the Middle East, revenue in Saudi Arabia and
Qatar grew from higher Reservoir Performance activity.
Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Sept. 30, 2021 Jun. 30, 2021 Sept. 30, 2020
Sequential Year-on-year Revenue International
$615
$625
$603
-2%
2%
North America
196
191
134
3%
46%
Other
1
1
1
n/m
n/m
$812
$817
$738
-1%
10%
Pretax operating income
$284
$274
$201
4%
42%
Pretax operating margin
35.0%
33.5%
27.2%
154 bps
784 bps
n/m = not meaningful
Digital & Integration revenue of $812 million declined 1%
sequentially as higher APS project revenue was offset by lower
digital solutions revenue following strong software sales in the
second quarter. Revenue grew in North America, Latin America, and
Middle East & Asia, offset by lower revenue in
Europe/CIS/Africa.
Digital & Integration pretax operating margin of 35%
expanded 154 bps sequentially, primarily due to increased
profitability from APS projects.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Sept. 30, 2021 Jun. 30, 2021 Sept. 30, 2020
Sequential Year-on-year Revenue* International
$1,112
$1,038
$937
7%
19%
North America*
79
79
275
1%
-71%
Other
1
-
3
n/m
n/m
$1,192
$1,117
$1,215
7%
-2%
Pretax operating income
$190
$156
$103
22%
85%
Pretax operating margin
16.0%
13.9%
8.4%
202 bps
751 bps
*Schlumberger divested its OneStim
pressure pumping business in North America during the fourth
quarter of 2020. This business generated revenue of $219 million
during the third quarter of 2020. Excluding the impact of this
divestiture, global third-quarter 2021 revenue increased 20%
year-on-year. North America third-quarter 2021 revenue, excluding
the impact of this divestiture, increased 41% year-on-year.
n/m = not meaningful
Reservoir Performance revenue of $1.19 billion increased 7%
sequentially due to higher exploration and appraisal programs
across the international markets. Double-digit growth in Latin
America was driven by higher wireline evaluation activity in Guyana
and Mexico, higher intervention activity in Brazil and Ecuador, and
increased stimulation activity in Argentina. Revenue also grew in
Europe and Africa primarily due to higher wireline evaluation
activity. In addition, Saudi Arabia and Qatar revenue increased due
to higher stimulation and intervention activity.
Reservoir Performance pretax operating margin of 16% expanded
202 bps sequentially. Profitability was boosted by higher offshore
and exploration activity and a favorable technology mix,
particularly in Latin America and Africa.
Well Construction
(Stated in millions)
Three Months Ended Change
Sept. 30, 2021 Jun. 30, 2021 Sept. 30, 2020
Sequential Year-on-year Revenue International
$1,839
$1,708
$1,562
8%
18%
North America
382
352
235
9%
62%
Other
52
50
40
n/m
n/m
$2,273
$2,110
$1,837
8%
24%
Pretax operating income
$345
$272
$173
27%
99%
Pretax operating margin
15.2%
12.9%
9.4%
230 bps
576 bps
n/m = not meaningful
Well Construction revenue of $2.27 billion increased 8%
sequentially due to higher land and offshore drilling across the
international markets and increased rig activity in North America.
North America revenue growth was driven by strong seasonal rebound
on land drilling in Canada and higher offshore drilling in the Gulf
of Mexico, notwithstanding the hurricane effects during the
quarter. International revenue was driven by double-digit growth in
Latin America, Africa, and Russia & Central Asia from the
combination of increased offshore exploration activity and the peak
of summer land drilling campaigns.
Well Construction pretax operating margin of 15% improved
sequentially by 230 bps due to higher drilling revenue, boosted by
the favorable mix of activity and new technology.
Production Systems
(Stated in millions)
Three Months Ended Change
Sept. 30, 2021 Jun. 30, 2021 Sept. 30, 2020
Sequential Year-on-year Revenue* International
$1,205
$1,220
$1,138
-1%
6%
North America*
469
458
389
3%
21%
Other
-
3
5
n/m
n/m
$1,674
$1,681
$1,532
0%
9%
Pretax operating income
$166
$171
$132
-3%
26%
Pretax operating margin
9.9%
10.2%
8.6%
-27 bps
129 bps
*Schlumberger divested its low-flow artificial lift business
in North America during the fourth quarter of 2020. This business
generated revenue of $26 million during the third quarter of 2020.
Excluding the impact of this divestiture, global third-quarter 2021
revenue increased 11% year-on-year. North America third-quarter
revenue, excluding the impact of this divestiture, increased 29%
year-on-year. n/m = not meaningful
Production Systems revenue of $1.67 billion was essentially flat
sequentially. Revenue increases in subsea and well production
systems were offset by a revenue decline in midstream production
systems. International activity was driven by double-digit growth
in Latin America due to subsea production systems, particularly in
Brazil and Mexico. US land revenue also increased due to higher
sales of well and surface production systems, which outpaced the
drilling and completed well count growth. These increases were
offset by revenue declines in Europe/CIS/Africa and the Middle East
& Asia, despite double-digit growth in Angola, Nigeria, East
Asia, Indonesia, China, and Iraq. Revenue was partially impacted by
transitory global supply and logistics constraints.
Production Systems pretax operating margin of 10% was
essentially flat sequentially.
Quarterly Highlights
Schlumberger continues to win a growing number of contract
awards based on technology differentiation, integration, and our
ability to execute globally. This is resulting in a robust pipeline
of work, particularly in the Middle East, offshore, and natural gas
projects as the growth cycle expands. During the quarter, the
following notable projects were secured:
- Schlumberger was awarded a multibillion dollar (USD) integrated
stimulation technology and services contract by Saudi Aramco for
its unconventional gas resources. Fit-for-basin technologies will
enable operational performance and efficiency, in a work scope that
includes the full suite of products and services for hydraulic
fracturing, coiled tubing intervention, wireline services, Cameron
hydraulic fracturing trees with MonoFlex* dual-connection
fracturing fluid delivery technology, and flow back. Mobilization
is expected to start in the fourth quarter of 2021.
- Petroleum Development Oman LLC (PDO) awarded Schlumberger a
major services contract for the provision of high-pressure
hydraulic fracturing and stimulation services for up to 350 wells
in Oman. The five-year contract has two independent two-year
options and comprises 105 oil and gas exploration wells and between
171 to 245 gas development wells. The work program is scheduled to
commence in the fourth quarter of 2021.
- Kuwait Oil Company awarded Schlumberger a five-year supply
agreement for wellheads, production trees, and services for 230 new
wells and 250 workover wells in the country's deep Jurassic
formations. The scope of the agreement includes the supply and
installation services of 15,000-psi high-pressure, high-temperature
(HPHT) wellheads, production trees, chokes, and control panels.
Kuwait's Jurassic reservoirs hold significant gas reserves and are
a key element in the country's long-term strategy.
In the offshore markets, Schlumberger continues to win
significant awards as a result of its technology and integration
capabilities driving performance, either by reducing time to first
production, or by improving recovery from existing assets. This
offshore activity growth is being driven by increased final
investment decisions (FIDs) and awards of both short- and
long-cycle projects. Examples from the quarter include:
- Schlumberger was awarded a significant contract by Turkish
Petroleum (TP) for end-to-end production solutions for the
greenfield Phase 1 development of the Sakarya Field, Turkey’s
largest gas reserve. The integrated project scope will cover
subsurface solutions to onshore production, including well
completions, subsea production systems (SPS), and an early
production facility capable of handling up to 350 MMscf/d of gas.
Through this integration, from subsurface to processing facility,
pipeline-ready gas will be delivered on an accelerated
timeline.
- In the Ormen Lange Field, where A/S Norske Shell and the Ormen
Lange Partnership have recently made the FID for Phase 3,
OneSubsea® will deploy a subsea multiphase compression system,
comprising two 16-MW subsea compression stations tied into existing
manifolds and pipelines—an industry leading innovation that will
unlock an additional 30 to 50 billion m3 of natural gas and
increase the field recovery rate from 75% to 85%. The OneSubsea
multiphase compression system will facilitate a significant
reduction in energy consumption, and thus CO2 emissions, when
compared to topside compression.
- In Brazil, Petrobras awarded Schlumberger a contract for
integrated completions on 21 wells in presalt concessions. The
intelligent completion design chosen for these wells includes a
selective open hole lower completion, integrating a premium
isolation valve and downhole interval flow control valves and a
Metris* permanent monitoring system. Intelligent completions will
enable Petrobras to enhance ultimate recovery in these
higher-pressure reservoirs by more accurately monitoring and
controlling production. Installation is expected to commence in the
third quarter of 2022.
- OneSubsea was awarded a significant contract by Aker BP for the
delivery, installation, and commissioning of a subsea production
system with a reduced carbon impact for the Hanz project on the
Norwegian Continental Shelf. The contract—which comprises three
horizontal subsea trees, controls, and additional associated
equipment—includes the use of refurbished subsea production
equipment repurposed from previous projects. This unique approach
will enable Aker BP to develop this field with reduced cost and
carbon footprint as a tieback to the Ivar Aasen platform. This
approach is estimated to remove more than 200 metric tons of CO2e
emissions from the project when compared to a conventional
method.
The increase in customer activity is broad based as the growth
cycle widens, not only geographically, but also across operating
environments including onshore and midstream. Examples include:
- Cairn Oil & Gas, Vedanta Limited has awarded Schlumberger
an integrated well construction and completion contract for 27 deep
gas wells in the Raageshwari Field located in Rajasthan, India.
Under the contract scope, Schlumberger will create reliability and
efficiency improvement opportunities using a combination of unique,
fit-for-basin technologies that has proven effective in the
recently concluded 42-well deep gas campaign in this field. The
integrated well construction and completion approach will drive
value and efficiency for Cairn, which is one of the largest oil and
gas exploration and production companies in India, as it executes
its natural gas development plan.
- In India, Reliance Industries Limited has awarded Schlumberger
a contract for the engineering and supply of two 25 m3/h rich
monoethylene glycol (MEG) reclamation and regeneration plants, and
a pretreatment unit to support increased gas production from the
existing Kakinada onshore terminal. MEG is injected in production
pipelines, captured, and reused to reduce hydrate formation and
maximize gas system throughput. The MEG reclamation trains will use
the PUREMEG* monoethylene glycol reclamation and regeneration
system, which has lower operating cost compared with conventional
systems.
Digital transformation is a key part of the industry’s future.
Through our digital platform, which we continue to enhance, we are
delivering performance impact for customers. Highlights from the
quarter include:
- Schlumberger made a strategic investment in DeepIQ, Inc. to
accelerate self-service analytics for enterprises’ industrial data.
This will help maintain Schlumberger’s leading position in
transformational digital solutions for the energy industry,
leveraging DeepIQ technologies in combination with Schlumberger’s
artificial intelligence (AI) solutions.
- Schlumberger has expanded its digital drilling planning and
operations portfolio by acquiring Independent Data Services (IDS),
the industry’s only automated reporting software for drilling
operations. Augmenting the DrillPlan* coherent well construction
planning solution and DrillOps* on-target well delivery solution
via the cloud or as a stand-alone solution, IDS enables automated
analysis and reporting of operational activities, giving E&P
operators and drilling contractors actionable insights to improve
operational performance.
- Offshore Canada, Schlumberger and ExxonMobil Canada are jointly
working on the deployment of digital drilling solutions, which
recently enabled ExxonMobil Canada to complete the first fully
automated section drilled at the Hebron platform. This was achieved
with a combination of DrillOps on-target well delivery solution,
including the DrillOps Automate drilling solution, and the Cameron
DrillPilot* equipment sequencing software for pipe handling
automation. ExxonMobil Canada and its co-venturers on Hebron have
agreed to a commercial implementation of the DrillOps Automate
solution in its offshore operations. These digital solutions are
expected to create a step change in procedural adherence,
consistency, standardization, and operational efficiency across rig
crews and enable close integration of well construction planning
and execution phases in the future.
- In Deepwater Gulf of Mexico, Performance Live* digitally
connected service helped Shell Exploration and Production Company
improve drilling performance while meeting reduced crew size
objectives. The use of Performance Live service was increased to
deploy both directional drilling and advanced
logging-while-drilling services, such as StethoScope* formation
pressure-while-drilling service. The result was delivery of a 19%
shoe-to-shoe drilling improvement and a 72% reduction in normalized
nonproductive time (NPT), while average wellsite crew size was
reduced by 46% since the start of implementation.
- Aramco and Schlumberger signed an agreement for the Omega*
geophysical data processing platform, one of the industry’s most
advanced geophysical processing solutions. The Omega platform
enhances the geophysics data imaging by integrating comprehensive
workflows and advanced algorithms with leading science, scalable
processing, and unparalleled flexibility.
Schlumberger Transition Technologies* are being increasingly
adopted by customers as they address their Scope 1 and Scope 2
emissions, a commitment we share with our own Scope 3 reduction
targets. These technologies accelerate both our customers’ and
Schlumberger’s journey to net zero, by reducing flaring and
fugitive emissions, reducing the CO2 footprint in drilling
operations, offering development solutions that minimize full-field
carbon footprint, or increasing electrification of infrastructure.
Specific examples of new technology deployments include:
- In Kazakhstan, Schlumberger has deployed a zero-flaring well
test and cleanup solution with Karachaganak Petroleum Operating
B.V.—jointly operated by Shell and Eni—that has avoided the
equivalent of more than 240,000 metric tons of CO2e emissions to
date. Incorporating unique Schlumberger technologies such as Vx
Spectra* surface multiphase flowmeter, high pressure separators,
and REDA Multiphase HPS* horizontal multistage surface pumps, this
project is first-of-a-kind in the world and is aligned with the
long-term net-zero goals of both JV partners and Schlumberger, as
well as the country's environmental goals.
- Offshore Trinidad and Tobago, Schlumberger helped bp achieve
first gas seven months ahead of schedule in the Matapal Field. In
collaboration with bp, OneSubsea leveraged its experience to deploy
its first all-electric manifold and three 10,000-psi subsea trees
with integral Vx Omni* subsea multiphase flowmeters. Agile subsea
production systems (SPS) also enabled bp to capitalize on
standardized hardware and reduce project-specific engineering. This
contributed to reaching first gas in just three years from contract
award, as compared to the four years for similar previous
developments.
- Offshore Norway, Equinor made its first deployment of the
Manara* production and reservoir management system to enhance oil
production while reducing project CO2 emissions in an
extended-reach well in the Heidrun Field. Equinor will use insight
into which zones are contributing to production and the ability to
tailor flow from each using six all-electric monitoring and control
stations to optimize oil output and minimize water production.
Controlling water production with the Manara system will decrease
the energy needed to pump treated water back into the reservoir,
reducing the CO2 emissions per barrel of oil produced.
In addition to reducing CO2 emissions and consumption in oil and
gas operations, Schlumberger domain expertise and experience are
contributing to winning project awards to enable other industries
to reduce carbon emissions.
- FS Bioenergia has awarded Schlumberger Brazil’s first carbon
capture and storage project, which will support the production of
carbon-negative biofuels. Under the agreement, Schlumberger will
conduct reservoir studies, design, and manage drilling of injection
wells, perform injectivity tests, and monitor storage once
injection commences. The project, to be built at the site of the FS
Bioenergia processing plant in Lucas do Rio Verde, is anticipated
to process and store 430,000 tons of CO2 per year upon completion,
scheduled for 2024.
Financial Tables
Condensed Consolidated Statement of Income
(Loss)
(Stated in millions, except per
share amounts)
Third Quarter Nine Months Periods Ended September 30,
2021
2020
2021
2020
Revenue
$5,847
$5,258
$16,704
$18,069
Interest and other income (1)
56
22
91
94
Expenses Cost of revenue
4,862
4,624
14,135
16,172
Research & engineering
140
137
409
452
General & administrative
80
85
231
293
Impairments & other (1)
-
350
-
12,596
Interest
130
138
402
419
Income (loss) before taxes (1)
$691
($54)
$1,618
($11,769)
Tax expense (benefit) (1)
129
19
301
(901)
Net income (loss) (1)
$562
($73)
$1,317
($10,868)
Net income attributable to noncontrolling interest
12
9
37
24
Net income (loss) attributable to Schlumberger (1)
$550
($82)
$1,280
($10,892)
Diluted earnings (loss) per share of Schlumberger (1)
$0.39
($0.06)
$0.90
($7.84)
Average shares outstanding
1,402
1,391
1,399
1,389
Average shares outstanding assuming dilution
1,424
1,391
1,422
1,389
Depreciation & amortization included in expenses (2)
$530
$587
$1,588
$1,983
(1)
See section entitled “Charges &
Credits” for details.
(2)
Includes depreciation of property, plant
and equipment and amortization of intangible assets, multiclient
seismic data costs, and APS investments.
Condensed Consolidated Balance Sheet
(Stated in millions)
Sept. 30, Dec. 31, Assets
2021
2020
Current Assets Cash and short-term investments
$2,942
$3,006
Receivables
5,349
5,247
Inventories
3,296
3,354
Other current assets
800
1,312
12,387
12,919
Investment in affiliated companies
2,110
2,061
Fixed assets
6,375
6,826
Goodwill
12,990
12,980
Intangible assets
3,265
3,455
Other assets
3,911
4,193
$41,038
$42,434
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$7,615
$8,442
Estimated liability for taxes on income
907
1,015
Short-term borrowings and current portion of long-term debt
1,025
850
Dividends payable
188
184
9,735
10,491
Long-term debt
14,370
16,036
Postretirement benefits
905
1,049
Other liabilities
2,363
2,369
27,373
29,945
Equity
13,665
12,489
$41,038
$42,434
Liquidity
(Stated in millions)
Components of Liquidity Sept. 30,2021 Jun. 30,2021 Dec.
31,2020 Sept. 30,2020 Cash and short-term investments
$2,942
$2,682
$3,006
$3,837
Short-term borrowings and current portion of long-term debt
(1,025)
(36)
(850)
(1,292)
Long-term debt
(14,370)
(15,687)
(16,036)
(16,471)
Net Debt (1)
$(12,453)
$(13,041)
$(13,880)
$(13,926)
Details of changes in liquidity follow:
Nine
Third
Nine
Months
Quarter
Months
Periods Ended September 30,
2021
2021
2020
Net income (loss)
$1,317
$562
$(10,868)
Charges and credits, net of tax (2)
(36)
(36)
11,539
1,281
526
$671
Depreciation and amortization (3)
1,588
530
1,983
Stock-based compensation expense
229
73
318
Change in working capital
(798)
(40)
(822)
US federal tax refund
477
-
-
Other
(58)
(19)
(84)
Cash flow from operations (4)
2,719
1,070
2,066
Capital expenditures
(694)
(273)
(858)
APS investments
(305)
(117)
(252)
Multiclient seismic data capitalized
(21)
(9)
(86)
Free cash flow (5)
1,699
671
870
Dividends paid
(524)
(175)
(1,560)
Proceeds from employee stock plans
137
75
146
Stock repurchase program
-
-
(26)
Business acquisitions and investments, net of cash acquired plus
debt assumed
(98)
(63)
(33)
Proceeds from divestitures
-
-
325
Other
(79)
(49)
(149)
Change in net debt before impact of changes in foreign exchange
rates
1,135
459
(427)
Impact of changes in foreign exchange rates on net debt
292
129
(372)
Decrease (increase) in Net Debt
1,427
588
(799)
Net Debt, beginning of period
(13,880)
(13,041)
(13,127)
Net Debt, end of period
$(12,453)
$(12,453)
$(13,926)
(1)
“Net Debt” represents gross debt less cash
and short-term investments. 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. Net Debt is a non-GAAP financial measure that should
be considered in addition to, not as a substitute for or superior
to, total debt.
(2)
See section entitled “Charges &
Credits” for details.
(3)
Includes depreciation of property, plant
and equipment and amortization of intangible assets, multiclient
seismic data costs, and APS investments.
(4)
Includes severance payments of $226
million and $42 million during the nine months and third quarter
ended September 30, 2021, respectively; and $699 million and $273
million during the nine months and third quarter ended September
30, 2020, respectively.
(5)
“Free cash flow” represents cash flow from
operations less capital expenditures, APS investments, and
multiclient seismic data costs capitalized. Management believes
that free cash flow is an important liquidity measure for the
company and that it is useful to investors and management as a
measure of Schlumberger’s ability to generate cash. Once business
needs and obligations are met, this cash can be used to reinvest in
the company for future growth or to return to shareholders through
dividend payments or share repurchases. Free cash flow does not
represent the residual cash flow available for discretionary
expenditures. Free cash flow is a non-GAAP financial measure that
should be considered in addition to, not as a substitute for or
superior to, cash flow from operations.
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
third-quarter 2021 earnings release also includes non-GAAP
financial measures (as defined under the SEC’s Regulation G). In
addition to the non-GAAP financial measures discussed under
“Liquidity”, net income (loss), excluding charges & credits and
pretax segment operating income, as well as measures derived from
them (including diluted EPS, excluding charges & credits;
Schlumberger net income (loss), excluding charges & credits;
effective tax rate, excluding charges & credits; and adjusted
EBITDA) are non-GAAP financial measures. Management believes that
these financial measures enable it to evaluate more effectively
Schlumberger’s operations period over period and to identify
operating trends that could otherwise be masked by the excluded
items. Certain of these measures are also used by management as
performance measures in determining certain incentive compensation.
The foregoing non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, other measures
of financial performance prepared in accordance with GAAP. The
following are reconciliations of certain of these non-GAAP measures
to the comparable GAAP measures. For a reconciliation of adjusted
EBITDA to the comparable GAAP measure, please refer to the section
titled “Supplemental Information” (Question 9).
(Stated in millions, except per
share amounts)
Third Quarter 2021 Pretax Tax Noncont.Interests Net
DilutedEPS Schlumberger net income (GAAP basis)
$691
$129
$12
$550
$0.39
Unrealized gain on marketable securities (1)
(47)
(11)
-
(36)
(0.03)
Schlumberger net income, excluding charges & credits
$644
$118
$12
$514
$0.36
Third Quarter 2020 Pretax Tax Noncont.Interests Net
DilutedEPS Schlumberger net loss (GAAP basis)
$(54)
$19
$9
$(82)
$(0.06)
Facility exit charges
254
39
-
215
0.15
Workforce reductions
63
-
-
63
0.05
Other
33
1
-
32
0.02
Schlumberger net income, excluding charges & credits
$296
$59
$9
$228
$0.16
Nine Months 2021 Pretax Tax Noncont.Interests Net
DilutedEPS * Schlumberger net income (GAAP basis)
$1,618
$301
$37
$1,280
$0.90
Unrealized gain on marketable securities (1)
(47)
(11)
-
(36)
(0.03)
Schlumberger net income, excluding charges & credits
$1,571
$290
$37
$1,244
$0.88
(Stated in millions, except per
share amounts)
Nine Months 2020 Pretax Tax Noncont.Interests Net
DilutedEPS * Schlumberger net loss (GAAP basis)
$(11,769)
$(901)
$24
$(10,892)
$(7.84)
Goodwill
3,070
-
-
3,070
2.21
Intangible assets impairments
3,321
815
-
2,506
1.80
Asset Performance Solutions investments
1,994
11
-
1,983
1.43
Workforce reductions
1,286
78
-
1,208
0.87
Fixed asset impairments
666
52
-
614
0.44
Inventory write-downs
603
49
-
554
0.40
North America pressure pumping impairments
587
133
-
454
0.33
Right-of-use asset impairments
311
67
-
244
0.18
Facility exit charges
254
39
-
215
0.15
Costs associated with exiting certain activities
205
(25)
230
0.17
Multiclient seismic data impairment
156
2
-
154
0.11
Repurchase of bonds
40
2
-
38
0.03
Postretirement benefits curtailment gain
(69)
(16)
-
(53)
(0.04)
Other
172
14
-
158
0.11
Valuation allowance
-
(164)
-
164
0.12
Schlumberger net income, excluding charges & credits
$827
$156
$24
$647
$0.46
* Does not add due to rounding.
(1)
Classified in Interest & other income
in the Condensed Consolidated Statement of Income (Loss)
Unless otherwise noted, all Charges &
Credits are classified in Impairments & other in the Condensed
Consolidated Statement of Income (Loss).
Divisions
(Stated in millions)
Three Months Ended Sept. 30,
2021 Jun. 30, 2021 Sept. 30, 2020
Revenue
IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue
Income(Loss)BeforeTaxes Digital & Integration
$812
$284
$817
$274
$738
$201
Reservoir Performance
1,192
190
1,117
156
1,215
103
Well Construction
2,273
345
2,110
272
1,837
173
Production Systems
1,674
166
1,681
171
1,532
132
Eliminations & other
(104)
(77)
(91)
(66)
(64)
(34)
Pretax segment operating income
908
807
575
Corporate & other
(145)
(138)
(151)
Interest income (1)
8
5
3
Interest expense (1)
(127)
(132)
(131)
Charges & credits (2)
47
-
(350)
$5,847
$691
$5,634
$542
$5,258
$(54)
(Stated in millions)
Nine Months Ended Sept. 30,
2021 Sept. 30, 2020
Revenue IncomeBeforeTaxes
Revenue Income(Loss)BeforeTaxes Digital & Integration
$2,401
$805
$2,235
$458
Reservoir Performance
3,312
448
4,354
259
Well Construction
6,319
827
6,747
687
Production Systems
4,946
475
5,001
467
Eliminations & other
(274)
(176)
(268)
(124)
Pretax segment operating income
2,379
1,747
Corporate & other
(434)
(548)
Interest income (1)
17
25
Interest expense (1)
(391)
(397)
Charges & credits (2)
47
(12,596)
$16,704
$1,618
$18,069
$(11,769)
(1)
Excludes amounts which are included in the
segments’ results
(2)
See section entitled “Charges &
Credits” for details.
Supplementary Information
Frequently Asked Questions (FAQs)
1)
What is the capital investment guidance
for the full-year 2021?
Capital investment (comprised of capex,
multiclient, and APS investments) for the full-year 2021 is now
expected to be approximately $1.6 billion. Capital investment for
the full-year 2020 was $1.5 billion.
2)
What were cash flow from operations and
free cash flow for the third quarter of 2021?
Cash flow from operations for the third
quarter of 2021 was $1.07 billion and free cash flow was $671
million, despite making $42 million of severance payments during
the quarter.
3)
What was included in “Interest and
other income” for the third quarter of 2021?
“Interest and other income” for the third
quarter of 2021 was $56 million. This amount consisted of an
unrealized gain on marketable securities of $47 million (refer to
Question 11), interest income of $8 million, and earnings of equity
method investments of $1 million.
4)
How did interest income and interest
expense change during the third quarter of 2021?
Interest income of $8 million for the
third quarter of 2021 increased $2 million sequentially. Interest
expense of $130 million decreased $6 million sequentially.
5)
What is the difference between
Schlumberger’s consolidated income (loss) before taxes and pretax
segment operating income?
The difference consists of corporate
items, charges and credits, and interest income and interest
expense not allocated to the segments as well as stock-based
compensation expense, amortization expense associated with certain
intangible assets, certain centrally managed initiatives, and other
nonoperating items.
6)
What was the effective tax rate (ETR)
for the third quarter of 2021?
The ETR for the third quarter of 2021,
calculated in accordance with GAAP, was 18.6% as compared to 18.2%
for the second quarter of 2021. Excluding charges and credits, the
ETR for the third quarter of 2021 was 18.3%. There were no charges
and credits in the second quarter of 2021.
7)
How many shares of common stock were
outstanding as of September 30, 2021 and how did this change from
the end of the previous quarter?
There were 1.403 billion shares of common
stock outstanding as of September 30, 2021 and 1.398 billion as of
June 30, 2021.
(Stated in millions)
Shares outstanding at June 30, 2021
1,398
Shares issued under employee stock purchase plan
3
Vesting of restricted stock
2
Shares outstanding at September 30, 2021
1,403
8)
What was the weighted average number of
shares outstanding during the third quarter of 2021 and second
quarter of 2021? How does this reconcile to the average number of
shares outstanding, assuming dilution, used in the calculation of
diluted earnings per share?
The weighted average number of shares
outstanding was 1.402 billion during the third quarter of 2021 and
1.398 billion during the second quarter of 2021. The following is a
reconciliation of the weighted average shares outstanding to the
average number of shares outstanding, assuming dilution, used in
the calculation of diluted earnings per share.
(Stated in millions)
Third Quarter2021 Second Quarter2021 Weighted average shares
outstanding
1,402
1,398
Unvested restricted stock
22
23
Average shares outstanding, assuming dilution
1,424
1,421
9)
What was Schlumberger’s adjusted EBITDA
in the third quarter of 2021, the second quarter of 2021, and the
third quarter of 2020?
Schlumberger’s adjusted EBITDA was $1.296
billion in the third quarter of 2021, $1.198 billion in the second
quarter of 2021, and $1.018 billion in the third quarter of 2020,
and was calculated as follows:
(Stated in millions)
Third Quarter2021 Second Quarter2021 Third Quarter2020 Net
income (loss) attributable to Schlumberger
$550
$431
$(82)
Net income attributable to noncontrolling interests
12
12
9
Tax (benefit) expense
129
99
19
Income (loss) before taxes
$691
$542
$(54)
Charges & credits
(47)
-
350
Depreciation and amortization
530
526
587
Interest expense
130
136
138
Interest income
(8)
(6)
(3)
Adjusted EBITDA
$1,296
$1,198
$1,018
Adjusted EBITDA represents income before
taxes excluding charges & credits, depreciation and
amortization, interest expense, and interest income. Management
believes that adjusted EBITDA is an important profitability measure
for Schlumberger and that it allows investors and management to
more efficiently evaluate Schlumberger’s operations period over
period and to identify operating trends that could otherwise be
masked. Adjusted EBITDA is also used by management as a performance
measure in determining certain incentive compensation. Adjusted
EBITDA should be considered in addition to, not as a substitute for
or superior to, other measures of financial performance prepared in
accordance with GAAP.
10)
What were the components of
depreciation and amortization expense for the third quarter of
2021, the second quarter of 2021, and the third quarter of
2020?
The components of depreciation and
amortization expense for the third quarter of 2021, the second
quarter of 2021, and the third quarter of 2020 were as follows:
(Stated in millions)
Third Quarter2021 Second Quarter2021 Third Quarter2020
Depreciation of fixed assets
$350
$352
$385
Amortization of APS investments
82
77
87
Amortization of intangible assets
75
75
79
Amortization of multiclient seismic data costs capitalized
23
22
36
$530
$526
$587
11)
What does the pretax credit of $47
million recorded during the third quarter of 2021 relate
to?
During the third quarter of 2021, a
start-up company that Schlumberger previously invested in was
acquired. As a result of this transaction, Schlumberger’s ownership
interest was converted into shares of a publicly traded company.
Schlumberger recognized an unrealized gain of $47 million to
increase the carrying value of this investment to its fair value.
This unrealized gain is reflected in Interest and other income in
the Consolidated Statement of Income (Loss).
About Schlumberger
Schlumberger (SLB: NYSE) is a technology company that partners
with customers to access energy. Our people, representing over 160
nationalities, are providing leading digital solutions and
deploying innovative technologies to enable performance and
sustainability for the global energy industry. With expertise in
more than 120 countries, we collaborate to create technology that
unlocks access to energy for the benefit of all.
Find out more at www.slb.com
*Mark of Schlumberger or a Schlumberger company. Other company,
product, and service names are the properties of their respective
owners.
Notes
Schlumberger will hold a conference call to discuss the earnings
press release and business outlook on Friday, October 22, 2021. The
call is scheduled to begin at 9:30 a.m. US Eastern Time. To access
the call, which is open to the public, please contact the
conference call operator at +1 (844) 721-7241 within North America,
or +1 (409) 207-6955 outside North America, approximately 10
minutes prior to the call’s scheduled start time, and provide the
access code 8858313. At the conclusion of the conference call, an
audio replay will be available until November 22, 2021 by dialing
+1 (866) 207-1041 within North America, or +1 (402) 970-0847
outside North America, and providing the access code 6702282. The
conference call will be webcast simultaneously at
www.slb.com/irwebcast on a listen-only basis. A replay of the
webcast will also be available at the same website until November
22, 2021.
This third-quarter 2021 earnings release, as well as other
statements we make, contain “forward-looking statements” within the
meaning of the federal securities laws, which include any
statements that are not historical facts. Such statements often
contain words such as “expect,” “may,” “can,” “believe,” “predict,”
“plan,” “potential,” “projected,” “projections,” “forecast,”
“estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,”
“think,” “should,” “could,” “would,” “will,” “see,” “likely,” and
other similar words. Forward-looking statements address matters
that are, to varying degrees, uncertain, such as statements about
our financial and performance targets and other forecasts or
expectations regarding, or dependent on, our business outlook;
growth for Schlumberger as a whole and for each of its Divisions
(and for specified business lines, geographic areas, or
technologies within each Division); oil and natural gas demand and
production growth; oil and natural gas prices; forecasts or
expectations regarding the energy transition and global climate
change; improvements in operating procedures and technology;
capital expenditures by Schlumberger and the oil and gas industry;
our business strategies, including digital and “fit for basin,” as
well as the strategies of our customers; our effective tax rate;
our APS projects, joint ventures, and other alliances; our response
to the COVID-19 pandemic and preparedness for other widespread
health emergencies; access to raw materials; future global economic
and geopolitical conditions; future liquidity; and future results
of operations, such as margin levels. These statements are subject
to risks and uncertainties, including, but not limited to, changing
global economic conditions; changes in exploration and production
spending by Schlumberger’s customers, and changes in the level of
oil and natural gas exploration and development; the results of
operations and financial condition of Schlumberger’s customers and
suppliers; Schlumberger’s inability to achieve its financial and
performance targets and other forecasts and expectations;
Schlumberger’s inability to achieve net-zero carbon emissions goals
or interim emissions reduction goals; general economic,
geopolitical, and business conditions in key regions of the world;
foreign currency risk; pricing pressure; inflation; weather and
seasonal factors; unfavorable effects of health pandemics;
availability and cost of raw materials; operational modifications,
delays, or cancellations; challenges in Schlumberger’s supply
chain; production declines; Schlumberger’s inability to recognize
efficiencies and other intended benefits from its business
strategies and initiatives, such as digital or Schlumberger New
Energy; as well as its restructuring and structural cost reduction
plans; changes in government regulations and regulatory
requirements, including those related to offshore oil and gas
exploration, radioactive sources, explosives, chemicals, and
climate-related initiatives; the inability of technology to meet
new challenges in exploration; the competitiveness of alternative
energy sources or product substitutes; and other risks and
uncertainties detailed in this third-quarter 2021 earnings release
and our most recent Forms 10-K, 10-Q, and 8-K filed with or
furnished to the Securities and Exchange Commission. If one or more
of these or other risks or uncertainties materialize (or the
consequences of any such development changes), or should our
underlying assumptions prove incorrect, actual outcomes may vary
materially from those reflected in our forward-looking statements.
Statements in this third-quarter earnings release are made as of
the date of this release, and Schlumberger disclaims any intention
or obligation to update publicly or revise such statements, whether
as a result of new information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211022005193/en/
Ndubuisi Maduemezia – Vice President of Investor Relations,
Schlumberger Limited Joy V. Domingo – Director of Investor
Relations, Schlumberger Limited Office +1 (713) 375-3535
investor-relations@slb.com
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