- Revenue of $6.0 billion increased 14% year-on-year
- GAAP EPS of $0.36 increased 71% year-on-year
- EPS, excluding charges and credits, of $0.34 increased 62%
year-on-year
- Cash flow from operations was $131 million, reflecting the
seasonal increase in working capital
- Board approved a 40% increase in cash dividend to $0.175 per
share
Schlumberger Limited (NYSE: SLB) today reported financial
results for the first-quarter 2022.
First-Quarter Results (Stated in millions, except per share
amounts)
Three Months Ended Change Mar. 31,
2022 Dec. 31, 2021 Mar. 31, 2021
Sequential Year-on-year
Revenue
$5,962
$6,225
$5,223
-4%
14%
Income before taxes - GAAP basis
$638
$755
$386
-16%
65%
Net income - GAAP basis
$510
$601
$299
-15%
70%
Diluted EPS - GAAP basis
$0.36
$0.42
$0.21
-14%
71%
Adjusted EBITDA*
$1,254
$1,381
$1,049
-9%
19%
Adjusted EBITDA margin*
21.0%
22.2%
20.1%
-115 bps
94 bps
Pretax segment operating income*
$894
$986
$664
-9%
35%
Pretax segment operating margin*
15.0%
15.8%
12.7%
-84 bps
229 bps
Net income, excluding charges & credits*
$488
$587
$299
-17%
63%
Diluted EPS, excluding charges & credits*
$0.34
$0.41
$0.21
-17%
62%
Revenue by Geography
International
$4,632
$4,898
$4,211
-5%
10%
North America
1,282
1,281
972
-
32%
Other
48
46
40
n/m
n/m
$5,962
$6,225
$5,223
-4%
14%
*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 Mar. 31, 2022 Dec.
31, 2021 Mar. 31, 2021
Sequential Year-on-year
Revenue by
Division Digital & Integration
$857
$889
$772
-4%
11%
Reservoir Performance
1,210
1,287
1,002
-6%
21%
Well Construction
2,398
2,388
1,936
-
24%
Production Systems
1,604
1,765
1,590
-9%
1%
Other
(107)
(104)
(77)
n/m
n/m
$5,962
$6,225
$5,223
-4%
14%
Pretax Operating Income by Division
Digital & Integration
$292
$335
$247
-13%
18%
Reservoir Performance
160
200
102
-20%
56%
Well Construction
388
368
210
5%
85%
Production Systems
114
159
138
-28%
-18%
Other
(60)
(76)
(33)
n/m
n/m
$894
$986
$664
-9%
35%
Pretax Operating Margin by Division
Digital & Integration
34.0%
37.7%
32.0%
-372 bps
201 bps
Reservoir Performance
13.2%
15.5%
10.2%
-232 bps
299 bps
Well Construction
16.2%
15.4%
10.8%
77 bps
534 bps
Production Systems
7.1%
9.0%
8.7%
-192 bps
-159 bps
Other
n/m
n/m
n/m
n/m
n/m
15.0%
15.8%
12.7%
-84 bps
229 bps
n/m = not meaningful
Schlumberger CEO Olivier Le Peuch commented, “Our first-quarter
results set us firmly on the path to deliver full-year revenue
growth in the mid-teens and another year with a significant
increase in earnings. Compared to the same quarter last year,
revenue grew 14%; EPS—excluding charges and credits—increased 62%;
and pretax segment operating margin expanded 229 basis points
(bps), led by Well Construction and Reservoir Performance. These
results reflect the strength of our core services Divisions, the
broad-based activity increase, and the continued realization of our
improved operating leverage.
“The quarter also marked the tragic start of the conflict in
Ukraine, which is of grave concern. Accordingly, we established
local and global crisis management teams to respond to the crisis
and its effect on employees, business, and our operations. In
addition to ensuring that our operations are compliant with
developing sanctions, we took the step in the quarter to suspend
new investment and technology deployment to our Russia operations.
We urge the cessation of hostilities and are hopeful that peace
will return to Ukraine and the entire region.
Shifting Trends in the Energy Landscape
“Concurrently, a shift in focus is emerging in the energy
landscape, exacerbating an already tightly supplied oil and gas
market. The dislocation of supply flows from Russia will result in
increased global investment across geographies and the entire
energy value chain to ensure the diversification and security of
the world’s energy supply.
“The confluence of elevated commodity prices, demand-led
activity growth, and energy security are resulting in one of the
strongest outlooks for the energy services industry in recent
times—reinforcing the market fundamentals for a stronger and longer
multiyear upcycle—absent a global economic setback.
“In this context, energy has never been more essential to the
world. Schlumberger, which uniquely benefits from increasing
E&P activity and digital transformation, provides the most
comprehensive technology portfolio to help customers deliver
diverse, cleaner, and more affordable energy.
First-Quarter Growth Led by Well Construction and Reservoir
Performance
“Year-on-year revenue growth by Division was led by Well
Construction and Reservoir Performance, our core services
Divisions, both of which grew more than 20%—outperforming global
rig count growth. Digital & Integration revenue grew 11%, while
Production Systems revenue increased 1%. Our core services
Divisions experienced double-digit revenue growth in drilling,
evaluation, intervention, and stimulation services, both on land
and offshore. In Digital & Integration, growth was driven by
strong digital sales, increased exploration data license sales, and
higher revenue from Asset Performance Solutions (APS) projects. In
contrast, Production Systems growth was temporarily hampered by
ongoing supply chain and logistics constraints, resulting in
lower-than-expected product deliveries. However, we are confident
that these constraints will gradually abate, enabling backlog
conversion and accelerating revenue growth for Production Systems
through the rest of 2022.
“On a geographical basis, revenue growth compared to the same
quarter last year was broad-based, with international revenue
increasing 10% and North America growing 32%. International growth
was widespread across all areas, led by Latin America, due to
higher drilling in Mexico, Ecuador, Argentina, and Brazil.
Europe/CIS/Africa grew primarily from higher Production Systems
sales in Turkey and increased exploration drilling in offshore
Africa—particularly in Angola, Namibia, Gabon, and Kenya. These
increases, however, were partially offset by revenue decline in
Russia & Central Asia. Middle East & Asia revenue increased
due to higher drilling, stimulation, and intervention activity in
Qatar, Iraq, the United Arab Emirates, Egypt, Australia, and across
Southeast Asia. In North America, growth was pervasive across
drilling and completions activity, coupled with a strong
contribution from our APS project in Canada.
“Year-on-year, first-quarter pretax segment operating income
margin expanded due to improved operating leverage from higher
activity, favorable offshore activity mix, greater technology
adoption, and an improving global pricing environment, which
continues to evolve favorably in Well Construction and Reservoir
Performance. Digital & Integration margin expanded further,
while Production Systems margin was impacted by supply chain
constraints.
“Sequentially, the quarter’s revenue primarily reflects the
typical seasonal activity decline in the Northern Hemisphere, with
the decline in Europe/CIS/Africa more pronounced due to the
depreciation of the ruble, as well as global supply chain
constraints impacting Production Systems. In contrast, North
America and Latin America revenue was essentially flat
sequentially. By Division, Well Construction revenue was slightly
higher than last quarter as strong drilling activity in North
America, Latin America, and the Middle East more than offset the
seasonal reductions in Europe/CIS/Africa and Asia. Reservoir
Performance, Production Systems, and Digital & Integration were
sequentially lower due to seasonal reductions in activity and
sales.
“First-quarter cash from operations was $131 million, including
a first-quarter build-up of working capital above the usual level,
ahead of the anticipated growth for the year. We expect free cash
flow generation to accelerate throughout the year, consistent with
our historical trend and still expect double-digit free cash flow
margin on a full-year basis.
“Moving forward, the outlook for the rest of the
year—particularly in the second half—is shaping up very well with
both short- and long-cycle investments accelerating. Notably, a
number of FIDs for long-cycle development projects have been
approved, new contracts were awarded, offshore exploration drilling
is resuming, and several customers have announced a significant
step-up in their spending plans for this year and over the next few
years.
“Consequently, it is our view that increased activity—both on
land and offshore—higher technology adoption, and pricing momentum
will drive simultaneous growth internationally and in North
America. This will result in a sequential seasonal rebound in the
second quarter followed by significant growth in the second half of
the year, particularly in the international market.
“With this backdrop and despite the uncertainty linked to
Russia, we believe the current market dynamics should allow us to
maintain our full-year ambitions of year-on-year revenue growth in
the mid-teens and adjusted EBITDA margins exiting the year at least
200 basis points higher than the fourth quarter of 2021. Our
positive outlook extends further into 2023 and beyond as we
anticipate successive years of market growth. As demand continues
to strengthen and new investments are committed to diversify energy
supply, the duration and scale of this upcycle may potentially
prove higher than originally anticipated, absent a setback in the
economic recovery.
“Based on these strengthening fundamentals, we made the decision
to initiate incremental return to shareholders with a 40% dividend
increase. The trajectory of our cashflows affords us the
flexibility to accelerate our return of capital program while
continuing to deleverage the balance sheet and invest for long-term
success.
“At this pivotal moment in energy for the world, Schlumberger is
well positioned. Our advantaged market position, technology
leadership, and execution differentiation are aligned for
significant returns potential throughout the cycle.”
Other Events
On April 21, 2022, Schlumberger’s Board of Directors approved a
40% increase in the quarterly cash dividend from $0.125 per share
of outstanding common stock to $0.175 per share, beginning with the
dividend payable on July 14, 2022, to stockholders of record on
June 1, 2022.
First-Quarter Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change Mar. 31, 2022 Dec.
31, 2021 Mar. 31, 2021
Sequential Year-on-year North America
$1,282
$1,281
$972
-
32%
Latin America
1,204
1,204
1,038
-
16%
Europe/CIS/Africa
1,404
1,587
1,256
-12%
12%
Middle East & Asia
2,024
2,107
1,917
-4%
6%
Eliminations & other
48
46
40
n/m
n/m
$5,962
$6,225
$5,223
-4%
14%
International
$4,632
$4,898
$4,211
-5%
10%
North America
$1,282
$1,281
$972
-
32%
n/m = not meaningful
North America
North America revenue of $1.3 billion was essentially
flat sequentially, as growth on land was offset by seasonally lower
sales of exploration data licenses and production systems in the US
Gulf of Mexico. Land revenue was driven by the ramp-up of drilling
in US land and increased APS revenue in Canada.
Compared to the same quarter last year, North America revenue
grew 32%. Growth was extensive across drilling and completions
activity, coupled with a strong contribution from our APS project
in Canada.
International
Revenue in Latin America of $1.2 billion was flat
sequentially, as higher APS revenue in Ecuador and increased
drilling activity in Mexico was offset by lower revenue in Guyana,
Brazil, and Argentina due to reduced drilling, intervention, and
completions activity as well as lower sales of production systems.
Increased APS revenue in Ecuador was driven by the resumption of
production following the pipeline disruptions in the previous
quarter.
Year-on-year, revenue grew 16% due to higher drilling activity
in Mexico, Ecuador, Argentina, and Brazil.
Europe/CIS/Africa revenue of $1.4 billion decreased 12%
sequentially due to the seasonal activity reduction that impacted
all Divisions and the depreciation of the ruble. The revenue
decline was partially offset by higher revenue in Europe,
particularly in Turkey, due to increased sales of production
systems.
Year-on-year, revenue grew 12%, primarily from higher sales of
production systems in Turkey and higher exploration drilling in
offshore Africa, particularly in Angola, Namibia, Gabon, and Kenya.
These increases, however, were partially offset by the revenue
decline in the Russia & Central Asia region.
Revenue in the Middle East & Asia of $2.0 billion
decreased 4% sequentially due to seasonally lower activity in
China, Southeast Asia, and Australia, coupled with reduced sales of
production systems in Saudi Arabia. This decline was partially
offset by robust drilling activity in the rest of the Middle East,
particularly in the United Arab Emirates.
Year-on-year, revenue increased 6% due to higher drilling,
stimulation, and intervention activity on new projects in Qatar,
Iraq, the United Arab Emirates, Egypt, and across Southeast Asia
and Australia.
First-Quarter Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sequential
Year-on-year Revenue
International
$631
$624
$610
1%
3%
North America
225
263
161
-14%
40%
Other
1
2
1
n/m
n/m
$857
$889
$772
-4%
11%
Pretax operating income
$292
$335
$247
-13%
18%
Pretax operating margin
34.0%
37.7%
32.0%
-372 bps
201 bps
n/m = not meaningful
Digital & Integration revenue of $857 million decreased 4%
sequentially due to seasonally lower sales of digital and
exploration data licenses, primarily in North America and
Europe/CIS/Africa, following the usual year-end sales. This decline
was partially offset by strong contribution from our APS projects
in Ecuador with the resumption of production following the pipeline
disruptions in the previous quarter.
Year-on-year, revenue increased 11% with growth in all areas
driven by strong digital sales, increased exploration data license
sales, and higher revenue from APS projects.
Digital & Integration pretax operating margin of 34%
contracted 372 bps sequentially due to the effects of lower sales
of digital and exploration data licenses that were partially offset
by improved profitability from Ecuador APS projects.
Year-on-year, pretax operating margin expanded 201 bps with
improvement across all areas due to increased profitability in
digital, exploration data licenses, and APS projects, particularly
in Canada.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sequential
Year-on-year Revenue International
$1,105
$1,194
$922
-7%
20%
North America
103
92
78
12%
31%
Other
2
1
2
n/m
n/m
$1,210
$1,287
$1,002
-6%
21%
Pretax operating income
$160
$200
$102
-20%
56%
Pretax operating margin
13.2%
15.5%
10.2%
-232 bps
299 bps
n/m = not meaningful
Reservoir Performance revenue of $1.2 billion decreased 6%
sequentially due to seasonal activity reductions, primarily in the
Northern Hemisphere as well as reduced intervention and stimulation
activity in Latin America. Revenue was also impacted by the
depreciation of the ruble. The decline was partially offset by
strong activity in North America and in the Middle East.
Year-on-year, double-digit revenue growth was broad across all
regions, except for Russia & Central Asia. Double-digit growth
was posted in evaluation, intervention, and stimulation services
both on land and offshore, with more exploration-related activity
during the quarter.
Reservoir Performance pretax operating margin of 13% contracted
232 bps sequentially due to reduced profitability from seasonally
lower evaluation and stimulation activity, primarily in the
Northern Hemisphere—partially offset by improved profitability in
North America.
Year-on-year, pretax operating margin expanded 299 bps with
profitability improving in evaluation and intervention activity
across all regions, except for Russia & Central Asia.
Well Construction
(Stated in millions)
Three Months Ended Change
Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sequential
Year-on-year Revenue
International
$1,865
$1,901
$1,577
-2%
18%
North America
485
441
310
10%
56%
Other
48
46
49
n/m
n/m
$2,398
$2,388
$1,936
-
24%
Pretax operating income
$388
$368
$210
5%
85%
Pretax operating margin
16.2%
15.4%
10.8%
77 bps
534 bps
n/m = not meaningful
Well Construction revenue of $2.4 billion was slightly higher
sequentially driven by increased integrated drilling activity and
drilling fluids revenue, partially offset by reduced measurements
and drilling equipment sales. Strong drilling activity in North
America, Latin America, and the Middle East was partially offset by
seasonal reductions in Europe/CIS/Africa and Asia, as well as the
effects of the depreciation of the ruble.
Year-on-year, double-digit revenue growth was across all
regions, except for Russia & Central Asia. Double-digit growth
was recorded in drilling fluids, measurements, and in integrated
drilling activity—both on land and offshore.
Well Construction pretax operating margin of 16% expanded 77 bps
sequentially due to improved profitability in integrated drilling,
impacting all areas, particularly in North America, Latin America,
and the Middle East. This was partially offset by reduced margins
in the Northern Hemisphere and Asia due to seasonality.
Year-on-year, pretax operating margin expanded 534 bps with
profitability improving in integrated drilling, equipment sales,
and measurements services across most regions.
Production Systems
(Stated in millions)
Three Months Ended Change
Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sequential
Year-on-year Revenue
International
$1,127
$1,278
$1,161
-12%
-3%
North America
473
484
420
-2%
13%
Other
4
3
9
n/m
n/m
$1,604
$1,765
$1,590
-9%
1%
Pretax operating income
$114
$159
$138
-28%
-18%
Pretax operating margin
7.1%
9.0%
8.7%
-192 bps
-159 bps
n/m = not meaningful
Production Systems revenue of $1.6 billion declined 9%
sequentially due to lower sales of well production systems across
all areas and reduced revenue from subsea projects. Revenue was
temporarily impacted by supply chain and logistics constraints,
resulting in lower-than-expected product deliveries.
Year-on-year, double-digit growth in North America and Europe
& Africa was driven by new projects in contrast to reductions
in Middle East & Asia and Latin America resulting from the end
of projects and temporary supply chain constraints. As these
constraints gradually abate, enabling backlog conversion, revenue
growth for Production Systems will accelerate through the rest of
2022.
Production Systems pretax operating margin of 7% declined 192
bps sequentially and 159 bps year-on-year. The margin contraction
was primarily due to reduced profitability in well production
systems driven primarily by the impact of global supply chain and
logistics constraints.
Quarterly Highlights
Investment in oil and gas production continues to grow as
Schlumberger customers invest to provide reliable energy to meet
increasing and evolving demand. Customers globally are announcing
new projects and expanding existing developments, and Schlumberger
is increasingly being selected for its performance in execution and
innovative technology that enhances customer success. Selected
awards this quarter include:
- bp has awarded Schlumberger a three-year contract for
comprehensive services on six rigs operating offshore Azerbaijan.
The scope of the contract covers drilling and measurement, drilling
fluids, cementing, bits, and mud logging—including operations on
challenging high-pressure, deepwater gas wells in the Shah Deniz
Field. Both companies collaborated closely to design the most
efficient technical solutions, supported by innovative operating
and commercial models, to achieve a step change in total cost of
ownership for bp. The contract will commence in the second quarter
of 2022.
- Saudi Aramco has awarded Schlumberger a major contract award
for integrated drilling and well construction services in a gas
drilling project. The integrated project scope encompasses drilling
rigs and technologies and services, including drill bits,
measurement while drilling (MWD) and logging while drilling (LWD),
drilling fluids, cementing, and completing wells. Schlumberger will
leverage digital solutions to enhance integrated drilling
performance, including the DrillOps* on-target well delivery
solution, which uses data analysis, learning systems, and
automation to execute a digital well plan, improving drilling
efficiency, consistency, and performance.
- Schlumberger was awarded contracts by BOE Exploration &
Production LLC for multiple work scopes in the Gulf of Mexico. The
awards include contracts for the supply of services and equipment
for high-pressure, high-temperature (HPHT) drilling on the
Shenandoah Phase I development project, as well as the supply of
advanced completions valve technology—GeoGuard* high-performance
deepwater safety valves—for the project. Shenandoah drilling will
employ our capability and technology to help maximize value for
development of the lower Tertiary formation, which comprises
high-pressure reservoirs. Schlumberger will bring years of
technical experience and leading HPHT technology to the project in
collaboration with the operator. Drilling is slated to commence in
2022.
- Schlumberger has contracts in place with ENI for well
construction services covering infill development campaigns in
North America, that are expected to commence in April 2022. The
campaigns cover numerous onshore and offshore wells, including
several deepwater wells where Schlumberger directional drilling and
cementing services will be deployed. Key technology across ENI’s
campaigns during the drilling phase will include the PowerDrive
Xcel* and PowerDrive Orbit* rotary steerable systems to execute
demanding 3D trajectories and high-angle wellbores, and Performance
Live* digitally connected service to improve operational efficiency
while reducing HSE risk and carbon footprint.
- TotalEnergies has awarded Schlumberger an extensive contract
for drilling, completions, and production services for its Tilenga
onshore oil development in Uganda. The scope of the contract
includes the provision of directional drilling services, upper
completions, lower completions, artificial lift solutions, and
wellheads for the Tilenga development, which comprises six fields
with up to 426 wells, which will be developed across 31
wellpads.
- In North Africa, Schlumberger was awarded a three-year
contract, valued at more than USD 200 million, for exploration and
production services. The contract scope includes wireline, coiled
tubing, well testing, slickline, hydraulic fracturing, and
stimulation services. Schlumberger will take a fit-for-basin
approach to designing and deploying a combination of technologies
and solutions across the region, which will support exploration
success and improve production performance from existing
assets.
- Kuwait Oil Company (KOC) awarded Schlumberger a seven-year
contract, for more than 400 installations of progressing cavity
pump (PCP) equipment and services. The contract scope includes
supply, installation, and commissioning of PCPs, which are ideally
suited for increasing production from KOC’s mature, heavy oil
assets. Under the contract, Schlumberger will also provide a
single, comprehensive automation solution for the remote monitoring
and maintenance of PCPs on existing wells while also enabling new
wells to be easily added. This digital solution will enhance PCP
performance and KOC operational efficiency on these assets. Work
commenced in the second quarter of 2022.
Digital adoption across the industry continues to gather
momentum, evolving how customers access and use their data,
improving or creating new workflows, and using data to guide
decisions that boost performance in the field. Customers are
adopting our industry-leading digital platform and edge solutions
in the field to solve new challenges and improve operational
performance. Examples from the quarter include:
- ConocoPhillips has awarded Schlumberger the deployment of its
enterprise-wide, cloud-based DELFI* cognitive E&P environment.
ConocoPhillips will use Schlumberger digital solutions enabled by
the DELFI environment to bring its reservoir engineering modeling,
data, and workflows to the cloud. Upon completion of the
integration, ConocoPhillips reservoir engineers will have access to
cloud-based, high-performance computing resources in the DELFI
environment as well as Schlumberger’s reservoir engineering
solutions—including the Petrel* E&P software platform's Petrel
Reservoir Engineering, INTERSECT* high-resolution reservoir
simulator, and ECLIPSE* industry-reference reservoir
simulator.
- In Malaysia, PETRONAS has signed a Memorandum of Understanding
(MOU) with Schlumberger to jointly explore opportunities in the
areas of sustainability, digital, and Internet of Things (IoT)
technologies, as well as research and development projects. Under
the MOU, PETRONAS and Schlumberger will create key sustainability
initiatives, such as the setup of a Carbon Capture and Storage
(CCS) Centre of Excellence—which will comprise CO2 separation
technologies, a competency development program, emissions
management, and a cloud-based repository for carbon storage data.
This collaboration aligns with PETRONAS’ efforts to establish
Malaysia as a leading CCS solutions hub in the region. PETRONAS
will leverage Schlumberger capabilities to develop reliable, safer,
and ready-to-deploy technologies that reduce the carbon footprint
in its upstream operations, while developing a capability framework
and efficient data management. PETRONAS is taking deliberate steps
to build a resilient and sustainable portfolio to support the
transition towards low-to-zero carbon energy sources.
- Schlumberger expanded its INNOVATION FACTORI network with the
opening of a new center in Houston, Texas, the first INNOVATION
FACTORI center in North America. Through INNOVATION FACTORI,
customers can turn promising concepts into fully deployed,
enterprise-scale AI and digital solutions that extract maximum
value from data. Customers benefit from an agile approach by
leveraging the DELFI cognitive E&P environment, which
seamlessly integrates with Agora* edge AI and IoT solutions.
Customers also have access to a powerful machine learning platform
with unrivalled AI capabilities through Schlumberger’s partnership
with Dataiku. Together with Dataiku, Schlumberger is enabling
customers to leverage a single, centralized platform to design,
deploy, govern, and manage AI and analytics applications—allowing
everyday users to develop ‘low-code no-code’ AI solutions.
- In Libya, Sirte Oil Company (SOC) began digitalizing operations
with Agora edge Al and IoT solutions to increase production and
electric submersible pump (ESP) reliability. Using secure satellite
connectivity and solar power in the remote AI-Khair Field, SOC is
now improving production and monitoring the first of multiple
wells, with additional deployments slated for 2022. This
first-of-a-kind implementation of a predictive ESP performance
application in concert with Al-driven video analytics deployed via
Agora solutions at the wellsite improves production, enhances site
security, and can reduce required wellsite visits by more than 90%.
SOC will remotely capture other information from analog gauges on
subsequent wells using Al-powered digital vision and Agora
solutions.
During the quarter, Schlumberger introduced several new
technologies and received recognition for industry-advancing
innovation. Customers are leveraging our Transition Technologies*
and digital solutions to improve operational performance and reduce
carbon footprint.
- In the Eagle Ford Shale, Ensign Natural Resources was able to
reduce new well capital expenditure and well pad emissions using Vx
Spectra* surface multiphase flowmeters. Previously, Ensign was
using a three-phase separator for production monitoring on every
well. By deploying Vx Spectra flowmeters—which measure without the
need to separate components of production—Ensign is now able to use
a single test separator per pad and a Vx Spectra flowmeter for
real-time monitoring of individual well performance. This reduced
capex by decreasing the number of required separators, lowering
well pad emissions by 75%.
- The first worldwide 6-in Ora* intelligent wireline formation
testing platform implementation was performed in Kuwait in January
2022, with a 3D-focused radial probe on a deep drilling rig at
16,100 ft, enabling the first-ever downhole sampling in the
Jurassic tight gas reservoir. KOC’s implementation was a great
opportunity to prove Schlumberger technology leadership, and the
Ora platform enabled a fourfold increase in sampling efficiency in
one of the most complex reservoirs in Kuwait. This operation
reduced KOC’s carbon footprint using one of our Transition
Technologies, and paves the way for further deployment to realize
the environmental, social, and governance (ESG) vision of KOC.
- Schlumberger technologies received several honors from the
Offshore Technology Conference (OTC), the leading industry event
dedicated to advancing scientific and technical knowledge for
offshore resources and environmental matters. ReSOLVE iX*
intelligent extreme wireline intervention service and Autonomous
Directional Drilling have each won an OTC 2022 Spotlight on New
Technology® Award, which recognizes companies that are
revolutionizing the future of offshore energy through technological
advancement and innovation. In addition, ProdOps* tuned production
operations solution and the Optiq Seismic* fiber-optic borehole
seismic solution each won an OTC Asia 2022 Spotlight on New
Technology Award. These technologies are all being deployed by
customers to improve operational performance.
The growth cycle continues to strengthen as customers
increasingly invest to find and bring new supply to market. Well
construction is a key part of that process, and Schlumberger
continues to introduce technologies that not only drive well
construction efficiency but provide deeper understanding of
reservoirs, empowering customers to create more value. Drilling
technology highlights during the quarter:
- Schlumberger announced the introduction of the GeoSphere 360*
3D reservoir mapping-while-drilling service, which leverages
advanced cloud and digital solutions to deliver real-time 3D
profiling of reservoir objects. Using GeoSphere 360 3D service,
customers can now place fewer, higher-quality wells with greater
certainty and confidence, improving returns from complex reservoirs
and reducing the carbon intensity of field development. Unlike
conventional technologies, 3D reservoir mapping while drilling
identifies fluid bodies and faults—at reservoir scale—which is
unique in the industry. In the North Sea, Equinor used the
new Schlumberger GeoSphere 360 3D service to provide a complete 3D
structural understanding of a key section of a well, which led to
the delivery of nearly 100 m of extra net pay interval. Subsurface
insight from GeoSphere 360 3D service informed Equinor's high-angle
well placement that optimized total hydrocarbon recovery.
Geosteering support from the top of the reservoir to the main
section of the horizontal interval resulted in Equinor electing to
extend the well in the reservoir pay zone, improving project
economics.
Our industry must advance sustainability in its operations,
reducing environmental impact while contributing to the stability
of global energy supply. Schlumberger continues to create and apply
technology to both reduce emissions from customer operations and
support clean energy generation around the world.
- During the quarter, the company formally launched the
Schlumberger End-to-end Emissions Solutions (SEES) business, which
offers a comprehensive set of services and cutting-edge
technologies designed to give operators a robust and scalable
solution for measuring, monitoring, reporting, and—ultimately—
eliminating methane and routine flare emissions from their
operations. Methane and flare emissions currently account for more
than 60% of operators’ direct—or Scope 1 and 2—greenhouse gas (GHG)
emissions. SEES delivers a holistic approach to enable operators to
develop a successful methane emissions elimination strategy. The
approach enables customers to plan, measure, and act using the
industry’s first methane emissions digital platform, accessible in
the DELFI environment, providing a comprehensive and differentiated
path for operators to achieve their decarbonization
objectives.
- In Germany, Schlumberger performed a successful stimulation on
a horizontal geothermal well for the Ruhr Universität Bochum,
creating a model for rejuvenating geothermal wells across Germany
and beyond, while meeting the highest environmental standards.
Previous types of treatments were unsuccessful in this complex,
high-temperature reservoir. Kinetix* reservoir-centric
stimulation-to-production software was used to plan a treatment
delivered with the BroadBand Precision* integrated completion
service—including a customized formulation of the ThermaFRAC*
shear-tolerant high-temperature fracturing fluid. This solution
supported project permitting within the Bavarian Environment
Agency, Bayerisches Landesamt für Umwelt (LfU Bayern), and Mining
Office South Bavaria (Bergamt Südbayern) through compliance with
Germany’s strict environmental requirements. This process can be
used to renew productivity of geothermal wells around the
world.
- Veitur Utilities PLC has made a direct award to Schlumberger
for three high-temperature electric submersible REDA* pumps (ESP)
for installation in geothermal water wells situated in and around
Reykjavik, Iceland. This award is the result of a previous
Schlumberger installation in 2020 of a REDA pump to replace a
lineshaft pump (LSP) in Veitur’s district heating wells. The
Schlumberger ESP can operate in higher temperature environments,
increased depths, and higher deviation from vertical than LSPs,
which are typical in geothermal applications. The REDA pump
produces higher flow rates without the need for additional cooling,
reducing energy consumption while meeting increasing demand for
heating in the district heating network.
- In New Zealand, Ballance Agri-Nutrients Ltd. has awarded
Schlumberger a contract to use the Symmetry* process software
platform to create a digital twin of the Kapuni ammonia-urea plant
and use custom thermodynamic simulation to increase plant output.
The thermodynamics engine of the Symmetry platform, coupled with
bespoke urea modeling tools, will enable Ballance to combine this
plant with a renewable energy farm that will not only produce green
ammonia and urea for agriculture, but will also supply green
hydrogen for transportation fuel.
FINANCIAL TABLES
Condensed Consolidated Statement of Income
(Stated in millions, except per
share amounts)
Three Months Periods Ended March 31,
2022
2021
Revenue
$5,962
$5,223
Interest and other income (1)
50
19
Expenses Cost of revenue
5,013
4,504
Research & engineering
141
135
General & administrative
97
81
Interest
123
136
Income before taxes (1)
$638
$386
Tax expense (1)
118
74
Net income (1)
$520
$312
Net income attributable to noncontrolling interest
10
13
Net income attributable to Schlumberger (1)
$510
$299
Diluted earnings per share of Schlumberger (1)
$0.36
$0.21
Average shares outstanding
1,412
1,398
Average shares outstanding assuming dilution
1,434
1,419
Depreciation & amortization included in expenses (2)
$533
$532
(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)
Mar. 31, Dec. 31, Assets
2022
2021
Current Assets Cash and short-term investments
$2,649
$3,139
Receivables
5,713
5,315
Inventories
3,719
3,272
Other current assets
1,172
928
13,253
12,654
Investment in affiliated companies
1,955
2,044
Fixed assets
6,354
6,429
Goodwill
12,978
12,990
Intangible assets
3,158
3,211
Other assets
4,269
4,183
$41,967
$41,511
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$8,638
$8,382
Estimated liability for taxes on income
940
879
Short-term borrowings and current portion of long-term debt
923
909
Dividends payable
195
189
10,696
10,359
Long-term debt
13,163
13,286
Postretirement benefits
232
231
Other liabilities
2,237
2,349
26,328
26,225
Equity
15,639
15,286
$41,967
$41,511
Liquidity
(Stated in millions)
Components of Liquidity Mar. 31,2022 Dec. 31,2021 Mar. 31,2021 Cash
and short-term investments
$2,649
$3,139
$2,910
Short-term borrowings and current portion of long-term debt
(923)
(909)
(749)
Long-term debt
(13,163)
(13,286)
(15,834)
Net Debt (1)
$(11,437)
$(11,056)
$(13,673)
Details of changes in liquidity follow:
Three
Three
Months
Months
Periods Ended March 31,
2022
2021
Net income
$520
$312
Charges and credits, net of tax (2)
(22)
-
498
312
Depreciation and amortization (3)
533
532
Stock-based compensation expense
89
84
Change in working capital
(948)
(455)
Other
(41)
(44)
Cash flow from operations (4)
131
429
Capital expenditures
(304)
(178)
APS investments
(168)
(85)
Multiclient seismic data capitalized
(40)
(7)
Free cash flow (5)
(381)
159
Dividends paid
(175)
(174)
Proceeds from employee stock plans
71
62
Business acquisitions and investments, net of cash acquired plus
debt assumed
-
(13)
Proceeds from sale of Liberty shares
84
-
Other
(105)
(61)
Change in net debt before impact of changes in foreign exchange
rates
(506)
(27)
Impact of changes in foreign exchange rates on net debt
125
234
Decrease (increase) in Net Debt
(381)
207
Net Debt, beginning of period
(11,056)
(13,880)
Net Debt, end of period
$(11,437)
$(13,673)
(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 $22
million and $112 million during the three months March 31, 2022,
and 2021, 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
first-quarter 2022 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, excluding charges & credits, as well
as measures derived from it (including diluted EPS, excluding
charges & credits; Schlumberger net income, excluding charges
& credits; effective tax rate, excluding charges & credits;
and adjusted EBITDA) are non-GAAP financial measures. Management
believes that the exclusion of charges & credits from these
financial measures enables 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. 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 is a reconciliation 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)
First Quarter 2022 Pretax Tax Noncont.Interests Net
DilutedEPS Schlumberger net income (GAAP basis)
$638
$118
$10
$510
$0.36
Gain on sale of Liberty shares (1)
(26)
(4)
-
(22)
(0.02)
Schlumberger net income, excluding charges & credits
$612
$114
$10
$488
$0.34
Fourth Quarter 2021 Pretax Tax
Noncont.Interests Net DilutedEPS Schlumberger net income (GAAP
basis)
$755
$144
$10
$601
$0.42
Gain on sale of Liberty shares
(28)
(4)
-
(24)
(0.02)
Early repayment of bonds
10
-
-
10
0.01
Schlumberger net income, excluding charges & credits
$737
$140
$10
$587
$0.41
There were no charges or credits during
the first quarter of 2021.
(1) Classified in Interest & other
income in the Condensed Consolidated Statement of Income
(Loss).
Divisions
(Stated in millions)
Three Months Ended Mar. 31,
2022 Dec. 31, 2021 Mar. 31, 2021
Revenue
IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue
IncomeBeforeTaxes Digital & Integration
$857
$292
$889
$335
$772
$247
Reservoir Performance
1,210
160
1,287
200
1,002
102
Well Construction
2,398
388
2,388
368
1,936
210
Production Systems
1,604
114
1,765
159
1,590
138
Eliminations & other
(107)
(60)
(104)
(76)
(77)
(33)
Pretax segment operating income
894
986
664
Corporate & other
(164)
(140)
(150)
Interest income(1)
2
14
4
Interest expense(1)
(120)
(123)
(132)
Charges & credits(2)
26
18
-
$5,962
$638
$6,225
$755
$5,223
$386
(1) Excludes amounts, which are included
in the segments’ results.
(2) See section entitled “Charges &
Credits” for details.
Supplementary Information
Frequently Asked Questions
1)
What is the capital investment guidance
for the full-year 2022?
Capital investment (comprised of capex,
multiclient, and APS investments) for the full-year 2022 is
expected to be between $1.9 and $2.0 billion. Capital investment in
2021 was $1.7 billion.
2)
What were cash flow from
operations and free cash flow for the first quarter of
2022?
Cash flow from operations for the
first quarter of 2022 was $131 million and free cash flow was
negative $381 million, resulting from the typical first-quarter
build-up of working capital ahead of the anticipated growth for the
year.
3)
What was included in “Interest and
other income” for the first quarter of 2022?
“Interest and other income” for the first
quarter of 2022 was $50 million. This consisted of a gain on the
sale of 7.2 million shares of Liberty Oilfield Services (Liberty)
of $26 million (refer to Question 11), interest income of $14
million, and earnings of equity method investments of $10
million.
4)
How did interest income and
interest expense change during the first quarter of 2022?
Interest income of $14 million
for the first quarter of 2022 decreased $1 million sequentially.
Interest expense of $123 million decreased $4 million
sequentially.
5)
What is the difference between
Schlumberger’s consolidated income 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 first quarter of 2022?
The ETR for the first quarter of 2022,
calculated in accordance with GAAP, was 18.4% as compared to 19.1%
for the fourth quarter of 2021. Excluding charges and credits, the
ETR for the first quarter of 2022 was 18.6% as compared to 19.0%
for the fourth quarter of 2021.
7)
How many shares of common
stock were outstanding as of March 31, 2022, and how did this
change from the end of the previous quarter?
There were 1.413 billion shares
of common stock outstanding as of March 31, 2022, and 1.403 billion
shares as of December 31, 2021.
(Stated in millions)
Shares outstanding at December 31, 2021
1,403
Shares issued under employee stock purchase plan
2
Vesting of restricted stock
8
Shares outstanding at March 31, 2022
1,413
8)
What was the weighted average number of
shares outstanding during the first quarter of 2022 and fourth
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 1.412 billion during the first quarter of 2022 and
1.403 billion during the fourth 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)
First Quarter2022 Fourth Quarter2021
Weighted average shares outstanding
1,412
1,403
Unvested restricted stock
22
27
Average shares outstanding, assuming dilution
1,434
1,430
9)
What was Schlumberger’s adjusted EBITDA
in the first quarter of 2022, the fourth quarter of 2021, and the
first quarter of 2021?
Schlumberger’s adjusted EBITDA was $1.254
billion in the first quarter of 2022, $1.381 billion in the fourth
quarter of 2021, and $1.049 billion in the first quarter of 2021,
and was calculated as follows:
(Stated in millions)
First Quarter2022 Fourth Quarter2021
First Quarter2021
Net income attributable to
Schlumberger
$510
$601
$299
Net income attributable to
noncontrolling interests
10
10
13
Tax expense
118
144
74
Income before taxes
$638
$755
$386
Charges & credits
(26)
(18)
-
Depreciation and amortization
533
532
532
Interest expense
123
127
136
Interest income
(14)
(15)
(5)
Adjusted EBITDA
$1,254
$1,381
$1,049
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 first quarter of
2022, the fourth quarter of 2021, and the first quarter of
2021?
The components of depreciation and
amortization expense for the first quarter of 2022, the fourth
quarter of 2021, and the first quarter of 2021 were as follows:
(Stated in millions)
First Quarter2022 Fourth Quarter2021
First Quarter2021 Depreciation of fixed assets
$338
$345
$355
Amortization of intangible assets
75
76
75
Amortization of APS investments
83
71
76
Amortization of multiclient seismic data costs capitalized
37
40
26
$533
$532
$532
11)
What were the components of the pretax
credit of $26 million recorded during the first quarter of 2022
related to?
During the first quarter of 2022,
Schlumberger sold 7.2 million of its shares in Liberty and received
proceeds of $84 million. As a result of the transaction,
Schlumberger recognized a gain of $26 million. This gain is
reflected in Interest and other income in the Condensed
Consolidated Statement of Income. As of March 31, 2022,
Schlumberger had a 27% equity interest in Liberty.
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.
Conference Call Information
Schlumberger will hold a conference call to discuss the earnings
press release and business outlook on Friday, April 22, 2022. 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 May 22, 2022 by dialing +1
(866) 207-1041 within North America, or +1 (402) 970-0847 outside
North America, and providing the access code 9031593. 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 May 22,
2022.
This first-quarter 2022 earnings press 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,” “precursor,”
“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 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 our preparedness for other widespread health
emergencies; the impact of the ongoing conflict in Ukraine on
global energy supply; 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 and geopolitical conditions; changes in
exploration and production spending by our customers, and changes
in the level of oil and natural gas exploration and development;
the results of operations and financial condition of our customers
and suppliers; the inability to achieve its financial and
performance targets and other forecasts and expectations; the
inability to achieve our net-zero carbon emissions goals or interim
emissions reduction goals; general economic, geopolitical, and
business conditions in key regions of the world; the ongoing
conflict in Ukraine; 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
our supply chain; production declines; the extent of future
charges; the inability to recognize efficiencies and other intended
benefits from our business strategies and initiatives, such as
digital or Schlumberger New Energy; as well as our cost reduction
strategies; 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 press 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 results or outcomes may vary materially from
those reflected in our forward-looking statements. Forward-looking
and other statements in this press release regarding our
environmental, social, and other sustainability plans and goals are
not an indication that these statements are necessarily material to
investors or required to be disclosed in our filings with the SEC.
In addition, historical, current, and forward-looking
environmental, social, and sustainability-related statements may be
based on standards for measuring progress that are still
developing, internal controls and processes that continue to
evolve, and assumptions that are subject to change in the future.
Statements in this press 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/20220420006025/en/
Investor Relations Contacts:
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
Media Contacts:
Josh Byerly, Vice President of Communications, Schlumberger
Limited Giles Powell, Director of Communications, Schlumberger
Limited Office +44 7385 402312 communication@slb.com
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