- Worldwide revenue was $5.2 billion
- International revenue was $4.2 billion and North America
revenue was $972 million
- EPS was $0.21
- Cash flow from operations was $429 million and free cash flow
was $159 million
- Board approved quarterly cash dividend of $0.125 per share
Regulatory News:
Schlumberger Limited (NYSE: SLB) today reported results for the
first-quarter 2021.
First-Quarter Results (Stated in millions, except per share
amounts)
Three Months Ended Change
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Sequential Year-on-year Revenue*
$5,223
$5,532
$7,455
-6%
-30%
Income (loss) before taxes - GAAP basis
$386
$471
$(8,089)
-18%
n/m
Net income (loss) - GAAP basis
$299
$374
$(7,376)
-20%
n/m
Diluted EPS (loss per share) - GAAP basis
$0.21
$0.27
$(5.32)
-22%
n/m
Adjusted EBITDA**
$1,049
$1,112
$1,347
-6%
-22%
Adjusted EBITDA margin**
20.1%
20.1%
18.1%
0 bps
203 bps
Pretax segment operating income**
$664
$654
$776
1%
-14%
Pretax segment operating margin**
12.7%
11.8%
10.4%
88 bps
230 bps
Net income, excluding charges & credits**
$299
$309
$351
-3%
-15%
Diluted EPS, excluding charges & credits**
$0.21
$0.22
$0.25
-5%
-16%
Revenue by Geography
International
$4,211
$4,343
$5,225
-3%
-19%
North America*
972
1,167
2,180
-17%
-55%
Other
40
22
50
n/m
n/m
$5,223
$5,532
$7,455
-6%
-30%
*During the fourth quarter of 2020,
Schlumberger divested of certain businesses in North America. These
businesses generated revenue of $285 million during the fourth
quarter of 2020 and $659 million during the first quarter of
2020.
Excluding the impact of these
divestitures, worldwide first-quarter 2021 revenue was essentially
flat sequentially and declined 23% year-on-year. North America
first-quarter 2021 revenue, excluding the impact of these
divestitures, increased 10% sequentially and declined 36%
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
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Sequential
Year-on-year
Revenue by Division
Digital & Integration
$773
$833
$885
-7%
-13%
Reservoir Performance*
1,002
1,247
1,969
-20%
-49%
Well Construction
1,935
1,866
2,815
4%
-31%
Production Systems**
1,590
1,649
1,912
-4%
-17%
Other
(77)
(63)
(126)
n/m
n/m
$5,223
$5,532
$7,455
-6%
-30%
Pretax Operating Income by
Division
Digital & Integration
$247
$270
$151
-8%
63%
Reservoir Performance
102
95
134
8%
-24%
Well Construction
209
183
331
15%
-37%
Production Systems
138
155
191
-11%
-27%
Other
(32)
(49)
(31)
n/m
n/m
$664
$654
$776
1%
-14%
Pretax Operating Margin by
Division
Digital & Integration
32.0%
32.4%
17.1%
-37 bps
1,490 bps
Reservoir Performance
10.2%
7.6%
6.8%
261 bps
341 bps
Well Construction
10.8%
9.8%
11.8%
103 bps
-95 bps
Production Systems
8.7%
9.4%
10.0%
-71 bps
-127 bps
Other
n/m
n/m
n/m
n/m
n/m
12.7%
11.8%
10.4%
88 bps
230 bps
*During the fourth quarter of 2020,
Schlumberger divested its OneStim pressure pumping business in
North America. This business generated revenue of $274 million
during the fourth quarter of 2020 and $601 million during the first
quarter of 2020. Excluding the impact of this divestiture,
first-quarter 2021 revenue increased 3% sequentially and declined
27% year-on-year.
**During the fourth quarter of 2020,
Schlumberger divested its low-flow artificial lift business in
North America. This business generated revenue of $11 million
during the fourth quarter of 2020 and $58 million during the first
quarter of 2020. Excluding the impact of this divestiture,
first-quarter 2021 revenue declined 3% sequentially and 14%
year-on-year.
n/m = not meaningful
Schlumberger CEO Olivier Le Peuch commented, “We started the
year with conviction in our strategic direction and our resulting
outlook for 2021. The combination of the promising first-quarter
results and an increasingly constructive macroeconomic view are
strengthening this conviction. With recovery sentiment improving
and the execution of our returns-focused strategy progressing well,
I am extremely proud of the women and men of Schlumberger for
delivering yet another solid quarter.
“First-quarter revenue declined 6% sequentially, reflecting the
expected reduction in North America following divestitures during
the fourth quarter of last year that were focused on the
high-grading and rationalizing of our business portfolio to expand
our margins, minimize earnings volatility, and focus on less
capital-intensive businesses. Excluding the impact of these
divestitures, our global revenue was essentially flat sequentially
as the impact of seasonally lower activity in the Northern
Hemisphere was fully offset by growth in multiple countries.
Notwithstanding the effects of seasonality, the first quarter
affirmed the activity recovery that commenced last quarter.
“In North America, excluding the effects of divestitures,
revenue grew 10% sequentially driven by land revenue which
increased 24% due to higher drilling activity, despite the Texas
freeze. Offshore revenue declined 10% sequentially following the
seasonal fourth-quarter year-end product sales.
“International revenue in the quarter reflects the usual
seasonal dip, though China and Russia experienced a particularly
severe winter. However, the sequential revenue decline was less
pronounced than in prior years due to strong growth in Latin
America and in several key countries in the Middle East and Africa.
The first-quarter revenue sequential decline was the shallowest
since 2008, while international rig count experienced the strongest
first-quarter sequential growth since 2011, affirming the
international recovery.
“First-quarter revenue was also characterized by growth in Well
Construction and Reservoir Performance, excluding the effects of
divestitures and despite seasonality in the Northern Hemisphere.
Well Construction revenue increased 4% sequentially due to higher
drilling activity in North America and Latin America. Reservoir
Performance decreased 20% due to the OneStim® divesture in North
America—but excluding this, the Division grew by 3% driven by
robust international land and offshore activity. Digital &
Integration revenue decreased 7% sequentially due to seasonally
lower sales of software and multiclient seismic data licenses.
Production Systems revenue declined 4%, mostly due to lower product
sales following the strong year-end sales of the previous
quarter.
“Sequentially, despite the revenue decline, first-quarter pretax
segment operating income increased 1%. Pretax segment operating
income margin expanded by 88 bps to 13% while EBITDA margin was
maintained at 20%. These margins represent a more than 200
basis-point improvement compared to the first quarter of 2020
despite a 30% revenue decline year-on-year. This performance
represents a promising start to our margin expansion ambition this
year and highlights the impact of our capital stewardship and
cost-out measures, which provide us with significant operating
leverage.
“First-quarter cash flow from operations was $429 million and
free cash flow was $159 million despite severance payments of $112
million and typical first-quarter consumption of working capital.
We are pleased with the cash flow performance this quarter and
expect cash flow to grow further throughout the year, allowing for
net debt reduction.
“Looking ahead, we continue to be encouraged by constructive
macroeconomic drivers. While the world is still grappling with
COVID-19 infection rates, vaccination programs and fiscal stimulus
packages are expected to support a rebound of economic activity and
oil demand recovery through the year. Industry analysis estimates
5–6 million bbl/d of oil demand will be added by the end of the
year as demand recovery is projected to improve in the second
quarter, exiting the year just 2 million bbl/d short of 2019
levels.
“With the gradual return of oil demand, we anticipate North
America activity to level off at production maintenance levels,
while international activity is poised to ramp up through year-end
2021 and beyond. We expect to significantly benefit from this
anticipated shift to increased international activity due to the
strength and breadth of our international franchise. Consequently,
we are increasingly confident that our international revenue will
see double-digit growth in the second half of 2021 as compared to
the same period last year, which implies potential upside to the
already robust growth that is anticipated in 2022 and beyond.
“There is an increasingly positive sentiment in the industry
outlook as the recovery strengthens despite the lingering concerns
regarding the COVID-19 crisis. The strategic pivot we initiated two
years ago has proven effective and positions us to outperform in
this vastly different landscape that presents new imperatives and
opportunities that play to our strengths.
“Building on the strength of our Well Construction and Reservoir
Performance Divisions, we are accelerating our digital offerings,
positioning the company to lead in the production and recovery
market, and building our New Energy portfolio to embrace the energy
transition—all fully aligned with our customers. A new growth cycle
has finally commenced, and we are prepared to deliver growth and
returns that outperform the market.”
Other Events
On April 22, 2021, Schlumberger’s Board of Directors approved a
quarterly cash dividend of $0.125 per share of outstanding common
stock, payable on July 8, 2021 to stockholders of record on June 2,
2021.
Revenue* by Geographical Area
(Stated in millions)
Three Months Ended
Change
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Sequential
Year-on-year
North America*
$972
$1,167
$2,180
-17%
-55%
Latin America
1,038
969
1,046
7%
-1%
Europe/CIS/Africa
1,256
1,366
1,752
-8%
-28%
Middle East & Asia
1,917
2,008
2,427
-5%
-21%
Other
40
22
50
n/m
n/m
$5,223
$5,532
$7,455
-6%
-30%
International
$4,211
$4,343
$5,225
-3%
-19%
North America*
$972
$1,167
$2,180
-17%
-55%
*During the fourth quarter of 2020,
Schlumberger divested of certain businesses in North America. These
businesses generated revenue of $285 million during the fourth
quarter of 2020 and $659 million during the first quarter of
2020.
Excluding the impact of these
divestitures, worldwide first-quarter 2021 revenue was essentially
flat sequentially and declined 23% year-on-year. North America
first-quarter 2021 revenue, excluding the impact of these
divestitures, increased 10% sequentially and declined 36%
year-on-year.
n/m = not meaningful
Certain prior period amounts have been
reclassified to conform to the current period presentation.
North America
North America revenue of $972 million decreased 17%
sequentially following divestitures that were focused on the
high-grading and rationalizing of our business portfolio to expand
our margins, minimize earnings volatility, and focus on less
capital-intensive businesses. Excluding the impact of the
fourth-quarter divestitures, first-quarter revenue grew 10%
sequentially with land revenue growing 24% due to higher Well
Construction drilling activity and increased Asset Performance
Solutions (APS) project revenue. Offshore revenue declined 10%
sequentially due to reduced sales of subsea production systems and
multiclient seismic data licenses.
International
International revenue had the usual seasonal dip,
particularly in China and Russia, which experienced a severe
winter. The sequential revenue decline was less pronounced than in
prior years because of offsets from strong revenue growth in Latin
America and in several key countries in the Middle East and Africa.
The international revenue decrease was the shallowest first-quarter
revenue decline since 2008 and international rig count experienced
the strongest first-quarter sequential growth since 2011.
Revenue in Latin America of $1.0 billion increased 7%
sequentially due to higher sales of production systems in Brazil,
increased intervention and stimulation activity in Argentina, and
higher well construction drilling activity in Ecuador. Mexico
revenue was modestly higher sequentially, as stronger drilling
activity was offset by reduced sales of multiclient seismic data
licenses.
Europe/CIS/Africa revenue of $1.3 billion decreased 8%
sequentially mainly due to the seasonal winter drilling slowdown in
Russia & Central Asia. Excluding the effects of seasonality,
activity increased across most Divisions, particularly in
Scandinavia and Africa.
Revenue in the Middle East & Asia of $1.9 billion
decreased 5% sequentially due to seasonally lower winter activity
in China and a decline in offshore drilling in Australia due to the
cyclone season. Additionally, there were lower sales of production
systems in India. These revenue declines were partially offset by
robust activity growth in Saudi Arabia and Qatar.
Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Sequential
Year-on-year Revenue International
$610
$689
$731
-11%
-17%
North America
161
142
152
14%
6%
Other
2
2
2
n/m
n/m
$773
$833
$885
-7%
-13%
Pretax operating income
$247
$270
$151
-8%
63%
Pretax operating margin
32.0%
32.4%
17.1%
-37 bps
1,490 bps
n/m = not meaningful
Digital & Integration revenue of $773 million decreased 7%
sequentially due to seasonally lower sales of digital solutions,
software, and multiclient seismic data licenses.
Digital & Integration pretax operating margin of 32% was
essentially flat sequentially. Despite the revenue decline,
operating margin was maintained as the effects of digital solutions
and multiclient revenue declines were largely offset by improved
profitability from APS projects.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Sequential
Year-on-year Revenue International
$922
$906
$1,249
2%
-26%
North America*
78
339
718
-77%
-89%
Other
2
2
2
n/m
n/m
$1,002
$1,247
$1,969
-20%
-49%
Pretax operating income
$102
$95
$134
8%
-24%
Pretax operating margin
10.2%
7.6%
6.8%
261 bps
341 bps
*During the fourth quarter of 2020,
Schlumberger divested its OneStim pressure pumping business in
North America. This business generated revenue of $274 million
during the fourth quarter of 2020 and $601 million during the first
quarter of 2020. Excluding the impact of this divestiture,
first-quarter 2021 revenue increased 3% sequentially and declined
27% year-on-year.
n/m = not meaningful
Reservoir Performance revenue of $1.0 billion declined 20%
sequentially. The revenue decline reflected the divestiture that
was focused on the high-grading and rationalizing of our business
portfolio in North America to expand our margins, minimize earnings
volatility, and focus on less capital-intensive businesses.
Excluding the impact of the OneStim divestiture, revenue grew 3%
sequentially despite the impact of seasonally lower activity in
Russia and China. Revenue increased from higher activity in Latin
America, North America, Sub-Sahara Africa, and the Middle East.
Reservoir Performance pretax operating margin of 10% expanded
261 bps sequentially. Profitability was boosted by the divestiture
of the OneStim business, which was previously dilutive to
margins.
Well Construction
(Stated in millions)
Three Months Ended Change
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Sequential
Year-on-year Revenue International
$1,577
$1,568
$2,124
1%
-26%
North America
310
252
635
23%
-51%
Other
48
46
56
n/m
n/m
$1,935
$1,866
$2,815
4%
-31%
Pretax operating income
$209
$183
$331
15%
-37%
Pretax operating margin
10.8%
9.8%
11.8%
103 bps
-95 bps
n/m = not meaningful
Well Construction revenue of $1.9 billion increased 4%
sequentially. The revenue increase was due to robust activity in
North America land. Revenue growth in Latin America and the Middle
East, mainly in Qatar, Saudi Arabia, Iraq, and Oman, has more than
offset the seasonal slowdown in drilling activity in Russia &
Central Asia, China, and Australia.
Sequentially, Well Construction pretax operating margin of 11%
improved by 103 bps, mainly in North America, due to higher
drilling activity on land while international margin was
essentially flat.
Production Systems
(Stated in millions)
Three Months Ended Change
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Sequential
Year-on-year Revenue International
$1,161
$1,215
$1,203
-4%
-3%
North America*
420
433
690
-3%
-39%
Other
9
1
19
n/m
n/m
$1,590
$1,649
$1,912
-4%
-17%
Pretax operating income
$138
$155
$191
-11%
-27%
Pretax operating margin
8.7%
9.4%
10.0%
-71 bps
-127 bps
*During the fourth quarter of 2020,
Schlumberger divested its low-flow artificial lift business in
North America. This business generated revenue of $11 million
during the fourth quarter of 2020 and $58 million during the first
quarter of 2020. Excluding the impact of this divestiture,
first-quarter 2021 revenue declined 3% sequentially and 14%
year-on-year.
n/m = not meaningful
Production Systems revenue of $1.6 billion decreased 4%
sequentially. The revenue decrease was across North America
offshore, Europe/CIS/Africa, and Asia, partially offset by strong
activity in Latin America—mainly in Brazil and Argentina—and the
Middle East, mostly in Saudi Arabia and Qatar. Lower production
system sales were posted in subsea, well production, and surface
while midstream production systems grew sequentially in Latin
America, North America land, and the Middle East.
Despite the revenue decline, pretax operating margin only
decreased 71 basis points to 9%, as a result of cost measures as
well as improved profitability in midstream production systems due
to higher activity.
Quarterly Highlights
Schlumberger continues to harness the power of the cloud to
enable a step change in customer productivity and
performance—through our digital platforms and the application of
artificial intelligence (AI) and internet of things (IoT) solutions
to create new insights from data and optimize operations. During
the quarter:
- Schlumberger and Equinor announced a strategic project, in
collaboration with Microsoft®, to deploy the DELFI* cognitive
E&P environment with seamless integration to the OSDU™ Data
Platform—the industry’s new data standard. This is the first major
deployment of the OSDU Data Platform, which will streamline
strategy planning for Equinor. This project aims to accelerate
Equinor’s ability to integrate data at scale and improve
decision-making, and it will be embedded as a key part of Equinor’s
Microsoft Azure enterprise-wide data platform.
- In Mexico, Schlumberger is collaborating with Pemex, using a
new digital workflow that can accelerate the time from prospect
lead to drilling by at least 30%, transforming the prospect
maturation process currently used in the industry. Enabled by the
DELFI environment, the workflow—called prospect-focused imaging—is
helping Pemex more quickly generate value from its assets in the
challenging Gulf of Mexico Campeche Basin by identifying and
de-risking exploration opportunities in weeks rather than months.
This acceleration is achieved through the DELFI environment, which
enables a remote, multidisciplinary team to work in parallel rather
than sequence, iterating seismic imaging and exploration knowledge
to adjust an earth model in real time.
- In Russia, Schlumberger and Yandex.Cloud announced an
industry-first collaboration to deploy the DELFI environment hosted
on Yandex.Cloud, the first use of the cloud for the conventional
upstream domain in Russia. The deployment includes AI and data
solutions to accelerate the digital transformation of energy
companies and elevate performance across the industry.
- In one of the largest assets in Ecuador, Agora* edge AI and IoT
solutions were leveraged to deliver an 18% increase in production
uptime while reducing the carbon footprint of artificial lift
surveillance operations. The application of digitally enabled well
surveillance and artificial lift optimization workflows in more
than 100 wells resulted in a 36% reduction of CO2 equivalent
emissions due to reduced trips to the field. Agora solutions
enabled digital surveillance of electric submersible pumps and
suction rod pumps within a remote well-operation platform that
covers the entire asset. Agora solutions are providing an
opportunity for operators to achieve a step change in production
uptime while reducing the cost and carbon footprint of
operations.
Around the world, our differentiated operational execution
continues to resonate with customers and is being acknowledged
through new contract awards. Awards in the quarter include:
- In Africa, Tullow Oil plc awarded Schlumberger a four-year
contract, valued at more than USD 100 million, for combined
drilling services offshore Ghana. The comprehensive services
contract targets an accelerated drilling restart early in the
second quarter of 2021, and includes the full Well Construction
Division portfolio, as well as adjacent services from the Reservoir
Performance and Digital & Integration Divisions. The contract
incorporates a new, performance-based element—the first such
contract model deployed in Ghana—aligning Schlumberger and Tullow
to collaborate toward additional performance improvements as Tullow
unlocks more value from its world-class deepwater assets.
- In South America, Total awarded Schlumberger a contract for
services across multiple Divisions for a 4- to 10-well deepwater
appraisal and exploration campaign in Block 58 offshore Suriname.
The campaign commenced in February 2021 following discoveries in
the block during 2020, for which Schlumberger delivered the
majority of the Well Construction services.
- In the Middle East, Qatargas awarded Schlumberger a five-year
contract for three stimulation vessels in the giant Qatar North
Field, with an optional five-year extension. OpenPath Reach*
extended-contact stimulation service and MaxCO3 Acid* degradable
diversion acid system are key differentiating technologies included
in the award that were selected to improve stimulation
efficiency.
- In addition, Qatargas awarded Schlumberger a five-year contract
for intervention services in the North Field Expansion project.
This Reservoir Performance award features a unique fit-for-basin
technology with an advanced perforation deployment system that
conveys multiple services with ACTive* real-time downhole coiled
tubing services. The new design eliminates multiple rig ups and rig
downs, reducing health, safety, and environmental exposure and
saving up to three days of rig operations per well.
For more than a century, Schlumberger has developed and deployed
innovative technology. Our technology solutions continue to enhance
customer performance, support basin competitiveness, maximize asset
value, and reduce carbon footprint.
In North America land, Schlumberger fit-for-basin Well
Construction technology and execution is enabling customer
outperformance across multiple basins as the recovery unfolds:
- In the DJ Basin, Schlumberger Well Construction technology
enabled Great Western Petroleum to drill the longest footage in the
8.5-in section covering 21,630 ft of vertical, curve, and lateral
in a single run, using a bottomhole assembly (BHA) comprising all
Schlumberger technology—including NeoSteer* at-bit-steerable system
and a drill bit from Smith Bits, a Schlumberger company.
- In the Delaware Basin, Schlumberger Well Construction
technology enabled an operator to drill a curve and lateral
totaling nearly 24,500 ft in a single run. One BHA comprising all
Schlumberger technology—including PowerDrive Orbit G2* rotary
steerable system and the xBolt G2* accelerated drilling service as
a fit-for-basin solution—remotely drilled the 6.75-in curve and
lateral in 6.5 days with Performance Live* digitally connected
service. Drilling efficiency saved the operator an average of 5
days of rig time per well and as much as 12 days of rig time on an
individual well.
- In the Haynesville Basin, Rockcliff Energy tested the first
drill bit from Smith Bits, designed using the combination of data
analytics from the Synapse* performance insights optimization
service and a new bit design workflow. At-bit performance insights
gathered with the Synapse service and the use of StrataBlade*
concave diamond element bit and StingBlade* conical diamond element
bit technologies enabled the new bit design to achieve a 69% rate
of penetration (ROP) improvement while maintaining the required
drilled footage, saving the operator more than 40 hours of drilling
time.
Internationally, Schlumberger production and recovery
technologies are setting new benchmarks and helping customers bring
new reserves online:
- In Algeria, Schlumberger Reservoir Performance executed the
first horizontal multistage plug and perforate hydraulic fracture
in the tight sands of the Hamra Field, significantly contributing
to field production for Sonatrach. The application of an integrated
suite of Schlumberger stimulation technologies resulted in gas
production exceeding offset wells. Using technologies, including
Kinetix* reservoir-centric stimulation-to-production software,
WellWatcher Stim* stimulation monitoring service, HiWAY*
flow-channel fracturing technique and the ACTive DTS* distributed
temperature measurement and inversion analysis, the project
delivered increased gas production while reducing required proppant
and water volumes. This process accessed gas reserves that would
not have been monetizable otherwise, setting a path for further
development of tight gas resource in the Hamra and similar
fields.
- Offshore North West Shelf Australia, the Julimar JV, operated
by Woodside with partner KUFPEC, recently used Schlumberger
technology to maximize production. In two wells, the Schlumberger
OptiPAC XL* extended-length Alternate Path† gravel-pack screen and
high-temperature fluid system were implemented to ensure complete
packing of the horizontal intervals with downhole temperatures up
to 140 degC—a world record for OptiPAC* openhole Alternate Path
gravel-pack services. Zonal isolation was achieved with a
mechanical packer and completed two producing zones and one non-pay
zone in a single pumping operation—reducing the number of wells
required and increasing ultimate recovery.
Our solutions encompass sustainability through evolving existing
technologies, new technology development, and project design and
execution to reduce carbon footprint across industry
applications:
- In the first quarter, OneSubsea® built the first all-electric
manifold for the BP Trinidad and Tobago LLC Matapal gas project
being developed off the coast of Trinidad and Tobago. The
combination of a block valve manifold design and standard
interfacing drop-in-place electric actuators created a simple
solution that also demonstrated optimizations during the
manufacturing and testing process. This is a major milestone in the
Schlumberger and bp electric technology roadmaps. We continue to
develop more sustainable ways of producing hydrocarbons, and
electric systems are key to supporting our customers on their
net-zero goals. The first all-electric manifold is scheduled to
arrive in Trinidad in the second quarter of 2021, with installation
expected in the second half of the year.
- Schlumberger Reservoir Performance has deployed a new service
to evaluate geologic CO2 storage suitability—an essential step in
advancing carbon capture and storage (CCS) projects—during a
project for a power facility operator in the United States. This
service leverages Reservoir Performance domain expertise by
integrating data analysis from a suite of Schlumberger subsurface
evaluation technologies, including Quanta Geo* photorealistic
reservoir geology service, the Sonic Scanner* acoustic scanning
platform, and the Saturn* 3D radial probe. This process evaluates
the CO2 injection suitability and storage potential of any geologic
formation, while also characterizing CO2 movement in the
subsurface. Data from this service supported the research and
evaluation required to secure necessary permitting to store CO2 in
a deep geologic formation.
- Offshore Norway, Schlumberger installed the industry’s first
subsea retrofit multilateral wells to reach new production without
adding new infrastructure in the mature Goliat Field for Vår
Energi. Using the RapidX* TAML 5 high-strength, hydraulic-sealed
multilateral junction, Schlumberger and Vår Energi collaborated on
a well construction and completion design that accessed 7–8 million
additional barrels of oil from different targets of the Snadd and
Goliat West discoveries. Two producing wells were retrofitted as
multilaterals, each maintaining production from their original
bores while adding new production from a lateral. An intelligent
completion provides independent control of each branch that can be
tuned for ultimate recovery. This operation saved the customer
millions of US dollars of capex and an estimated 5,000–10,000
metric tons of CO2 equivalent emissions by avoiding the drilling of
two new subsea wells and procuring and installing the associated
infrastructure.
Financial Tables
Condensed Consolidated
Statement of Income (Loss)
(Stated in millions, except per
share amounts)
Three Months Periods Ended March 31,
2021
2020
Revenue
$5,223
$7,455
Interest & other income
19
39
Expenses Cost of revenue
4,504
6,624
Research & engineering
135
173
General & administrative
81
127
Impairments & other (1)
-
8,523
Interest
136
136
Income (loss) before taxes (1)
$386
$(8,089
)
Tax expense (benefit) (1)
74
(721
)
Net income (loss) (1)
$312
$(7,368
)
Net income attributable to noncontrolling interests
13
8
Net income (loss) attributable to Schlumberger (1)
$299
$(7,376
)
Diluted earnings (loss) per share of Schlumberger (1)
$0.21
$(5.32
)
Average shares outstanding
1,398
1,387
Average shares outstanding assuming dilution
1,419
1,387
Depreciation & amortization included in expenses
(2)
$532
$792
(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
2021
2020
Current Assets Cash and short-term investments
$2,910
$3,006
Receivables
5,269
5,247
Other current assets
4,628
4,666
12,807
12,919
Fixed assets
6,620
6,826
Multiclient seismic data
298
317
Goodwill
12,978
12,980
Intangible assets
3,397
3,455
Other assets
5,936
5,937
$42,036
$42,434
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$7,956
$8,442
Estimated liability for taxes on income
983
1,015
Short-term borrowings and current portion of long-term debt
749
850
Dividends payable
185
184
9,873
10,491
Long-term debt
15,834
16,036
Postretirement benefits
1,003
1,049
Other liabilities
2,354
2,369
29,064
29,945
Equity
12,972
12,489
$42,036
$42,434
Liquidity
(Stated in millions)
Components of Liquidity
Mar. 31,
2021
Dec. 31,
2020
Mar. 31,
2020
Cash and short-term investments
$2,910
$3,006
$3,344
Short-term borrowings and current portion of long-term debt
(749
)
(850
)
(1,233
)
Long-term debt
(15,834
)
(16,036
)
(15,409
)
Net Debt (1)
$(13,673
)
$(13,880
)
$(13,298
)
Details of changes in liquidity follow:
Three
Three
Months
Months
Periods Ended March 31,
2021
2020
Net income (loss)
$312
$(7,368
)
Charges and credits, net of tax (2)
-
7,727
312
$359
Depreciation and amortization (3)
532
792
Stock-based compensation expense
84
108
Change in working capital
(455
)
(482
)
Other
(44
)
7
Cash flow from operations (4)
429
784
Capital expenditures
(178
)
(407
)
APS investments
(85
)
(163
)
Multiclient seismic data capitalized
(7
)
(35
)
Free cash flow (5)
159
179
Dividends paid
(174
)
(692
)
Stock repurchase program
-
(26
)
Proceed from employee stock plans
62
74
Net proceeds from assets divestiture
-
298
Business acquisitions and investments, net of cash acquired plus
debt assumed
(13
)
-
Other
(61
)
(63
)
Change in net debt before impact of changes in foreign exchange
rates
(27
)
(230
)
Impact of changes in foreign exchange rates on net debt
234
59
Increase (decrease) in Net Debt
207
(171
)
Net Debt, beginning of period
(13,880
)
(13,127
)
Net Debt, end of period
$(13,673
)
$(13,298
)
(1)
“Net Debt” represents gross debt
less cash, short-term investments, and fixed income investments,
held to maturity. Management believes that Net Debt provides useful
information regarding the level of Schlumberger’s indebtedness by
reflecting cash and investments that could be used to repay debt.
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
$112 million and $56 million during the three months ended March
31, 2021 and 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
first-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, as
well as measures derived from it (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 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” (Item 9).
(Stated in millions, except per
share amounts)
Fourth Quarter 2020
Pretax
Tax
Noncont.
Interests
Net
Diluted EPS
Schlumberger net income (GAAP basis)
$471
$89
$8
$374
$0.27
Gain on sale of OneStim
(104
)
(11
)
-
(93
)
(0.07
)
Unrealized gain on marketable securities
(39
)
(9
)
-
(30
)
(0.02
)
Other
62
4
-
58
0.04
Schlumberger net income, excluding charges & credits
$390
$73
$8
$309
$0.22
First Quarter 2020
Pretax
Tax
Noncont.
Interests
Net
Diluted EPS
Schlumberger net loss (GAAP basis)
$(8,089
)
$(721
)
$8
$(7,376
)
$(5.32
)
Goodwill impairments
3,070
-
-
3,070
2.21
Intangible assets impairments
3,321
815
-
2,506
1.81
APS investments impairments
1,264
(4
)
-
1,268
0.91
North America pressure pumping impairment
587
133
-
454
0.33
Workforce reductions
202
7
-
195
0.14
Other
79
9
-
70
0.05
Valuation allowance
-
(164
)
-
164
0.12
Schlumberger net income, excluding charges & credits
$434
$75
$8
$351
$0.25
All Charges & Credits recorded in the
first quarter of 2020 were classified in Impairments & other in
the accompanying Condensed Consolidated Statement of Income
(Loss).
There were no charges or credits during
the first quarter of 2021.
Divisions
(Stated in millions)
Three Months Ended Mar. 31,
2021 Dec. 31, 2020 Mar. 31, 2020
Revenue
Income
Before
Taxes
Revenue
Income
Before
Taxes
Revenue
Income
(Loss)
Before
Taxes
Digital & Integration
$773
$247
$833
$270
$885
$151
Reservoir Performance
1,002
102
1,247
95
1,969
134
Well Construction
1,935
209
1,866
183
2,815
331
Production Systems
1,590
138
1,649
155
1,912
191
Eliminations & other
(77
)
(32
)
(63
)
(49
)
(126
)
(31
)
Pretax segment operating income
664
654
776
Corporate & other
(150
)
(132
)
(228
)
Interest income(1)
4
5
15
Interest expense(1)
(132
)
(137
)
(129
)
Charges & credits(2)
-
81
(8,523
)
$5,223
$386
$5,532
$471
$7,455
$(8,089
)
(1)
Excludes amounts which are
included in the segments’ results.
(2)
See section entitled “Charges
& Credits” for details.
Supplemental Information
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
still expected to be between $1.5 to $1.7 billion. Capital
investment in 2020 was $1.5 billion.
2)
What were cash flow from
operations and free cash flow for the first quarter of
2021?
Cash flow from operations for the
first quarter of 2021 was $429 million and free cash flow was $159
million, despite making $112 million of severance payments during
the quarter.
3)
What was included in “Interest
and other income” for the first quarter of 2021?
“Interest and other income” for
the first quarter of 2021 was $19 million. This amount consisted of
earnings of equity method investments of $14 million, and interest
income of $5 million.
4)
How did interest income and
interest expense change during the first quarter of 2021?
Interest income of $5 million for
the first quarter of 2021 was flat sequentially. Interest expense
of $136 million decreased $8 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 first quarter of 2021?
The ETR for the first quarter of
2021, calculated in accordance with GAAP, was 19.2% as compared to
18.9% for the fourth quarter of 2020. Excluding charges and
credits, the ETR for the fourth quarter of 2020 was 18.8%. There
were no charges and credits in the first quarter of 2021.
7)
How many shares of common
stock were outstanding as of March 31, 2021 and how did this change
from the end of the previous quarter?
There were 1.398 billion shares
of common stock outstanding as of March 31, 2021 and 1.392 billion
as of December 31, 2020.
(Stated in millions)
Shares outstanding at December 31, 2020
1,392
Shares issued under employee stock purchase plan
4
Vesting of restricted stock
2
Shares outstanding at March 31, 2021
1,398
8)
What was the weighted average
number of shares outstanding during the first quarter of 2021 and
fourth quarter of 2020? How does this reconcile to the average
number of shares outstanding, assuming dilution, used in the
calculation of diluted earnings per share, excluding charges and
credits?
The weighted average number of
shares outstanding was 1.398 billion during the first quarter of
2021 and 1.392 billion during the fourth quarter of 2020. 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,
excluding charges and credits.
(Stated in millions)
First Quarter
2021
Fourth Quarter
2020
Weighted average shares outstanding
1,398
1,392
Unvested restricted stock
21
19
Average shares outstanding, assuming dilution
1,419
1,411
9)
What was Schlumberger’s
adjusted EBITDA in the first quarter of 2021, the fourth quarter of
2020, and the first quarter of 2020?
Schlumberger’s adjusted EBITDA
was $1.049 billion in the first quarter of 2021, $1.112 billion in
the fourth quarter of 2020, and $1.347 billion in the first quarter
of 2020, and was calculated as follows:
(Stated in millions)
First Quarter
2021
Fourth Quarter
2020
First Quarter
2020
Net income (loss) attributable to Schlumberger
$299
$374
$(7,376
)
Net income attributable to noncontrolling interests
$13
8
8
Tax (benefit) expense
$74
89
(721
)
Income (loss) before taxes
$386
$471
$(8,089
)
Charges & credits
-
(81
)
8,523
Depreciation and amortization
532
583
792
Interest expense
136
144
136
Interest income
(5
)
(5
)
(15
)
Adjusted EBITDA
$1,049
$1,112
$1,347
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
2021, the fourth quarter of 2020, and the first quarter of
2020?
The components of depreciation
and amortization expense for the first quarter of 2021, the fourth
quarter of 2020, and the first quarter of 2020 were as follows:
(Stated in millions)
First Quarter
2021
Fourth Quarter
2020
First Quarter
2020
Depreciation of fixed assets
$355
$374
$449
Amortization of APS investments
75
88
163
Amortization of intangible assets
76
79
133
Amortization of multiclient seismic data costs capitalized
26
42
47
$532
$583
$792
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.
†Mark of ExxonMobil Corp.; technology licensed exclusively to
Schlumberger.
Notes
Schlumberger will hold a conference call to discuss the earnings
press release and business outlook on Friday, April 23, 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 May 23, 2021 by dialing +1
(866) 207-1041 within North America, or +1 (402) 970-0847 outside
North America, and providing the access code 8458766. 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 23,
2021.
This first-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 as our forecasts or
expectations regarding business outlook; growth for Schlumberger as
a whole and for each of its Divisions (and for specified business
lines or geographic areas within each Division); oil and natural
gas demand and production growth; oil and natural gas prices;
pricing; Schlumberger’s response to, and preparedness for, the
COVID-19 pandemic and other widespread health emergencies;
improvements in operating procedures and technology; capital
expenditures by Schlumberger and the oil and gas industry; the
business strategies of Schlumberger, including digital and “fit for
basin,” as well as the strategies of Schlumberger’s customers;
Schlumberger’s restructuring efforts and charges recorded as a
result of such efforts; access to raw materials; our effective tax
rate; Schlumberger’s APS projects, joint ventures, and other
alliances; 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,
particularly during extended periods of low prices for crude oil
and natural gas; Schlumberger’s inability to achieve its financial
and performance targets and other forecasts and expectations;
Schlumberger’s inability to sufficiently monetize assets; the
extent of future charges; general economic, geopolitical, and
business conditions in key regions of the world; foreign currency
risk; pricing pressure; 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 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, hydraulic fracturing services, 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 first-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 first-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/20210423005254/en/
For more information, contact 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