UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 20192020
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number 1-4601
Schlumberger N.V.
(Schlumberger Limited)
(Exact name of registrant as specified in its charter)
Curaçao |
| 52-0684746 |
(State or other jurisdiction of incorporation or organization) |
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42 rue Saint-Dominique |
| 75007 |
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5599 San Felipe, 17th Floor |
| 77056 |
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62 Buckingham Gate, London, United Kingdom |
| SW1E 6AJ |
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Parkstraat 83, The Hague, |
| 2514 JG |
(Addresses of principal executive offices) |
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Registrant’s telephone number in the United States, including area code, is: (713) 513-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | SLB | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YESYes ☑ NONo ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YESYes ☐ NONo ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YESYes ☑ NO No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) YESYes ☑ NONo ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☑
As of June 30, 2019,2020, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $54.89$25.50 billion.
As of December 31, 2019,2020, the number of shares of common stock outstanding was 1,384,515,345.
1,392,325,960.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be furnished pursuant to Part III of this Form 10-K is set forth in, and is incorporated by reference from, Schlumberger’s definitive proxy statement for its 20202021 Annual General Meeting of Stockholders, to be filed by Schlumberger with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A within 120 days after December 31, 20192020 (the “2020“2021 Proxy Statement”).
1
SCHLUMBERGER LIMITED
Table of Contents
Form 10-K
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PART I |
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Item 1. | 3 | |
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Item 1A. |
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Item 1B. |
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Item 2. |
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Item 3. |
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Item 4. |
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PART II |
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Item 5. |
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Item 6. |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
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Item 8. |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
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Item 9B. |
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PART III |
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Item 10. | Directors, Executive Officers and Corporate Governance of Schlumberger |
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Item 11. |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
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PART IV |
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Item 15. |
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Item 16. |
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| Certifications |
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PART I
Item 1. Business.
All references in this report to “Registrant,” “Company,” “Schlumberger,” “we” or “our” are to Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao)) and its consolidated subsidiaries.
Founded in 1926, Schlumberger is a technology company that partners with customers to access energy by providing leading digital solutions and deploying innovative technologies to enable performance and sustainability for the world’s leading providerglobal energy industry. Schlumberger collaborates to create technology that unlocks access to energy for the benefit of technologyall.
Organizational Structure
During 2020, Schlumberger restructured its organization in order to prepare for reservoir characterization, drilling, productiona changing industry future. This new structure is aligned with customer workflows and processingis directly linked to Schlumberger’s corporate strategy, a key element of which is customer collaboration.
The new organization consists of four Divisions that combine and integrate Schlumberger’s technologies, enhancing the oil and gas industry. Having invented wireline logging as a technique for obtaining downhole data in oil and gas wells, today Schlumberger suppliesportfolio of capabilities that support the industry’s most comprehensive range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance sustainably. As of December 31, 2019, the Company employed approximately 105,000 people representing over 170 nationalities. Schlumberger, which generates revenue in more than 120 countries, has executive offices in Paris, Houston, London and The Hague.
Schlumberger operatesemerging long-term growth opportunities in each of the major oilfield service markets throughthese market segments.
The four segments: Reservoir Characterization, Drilling, Production and Cameron. Each segment consists of a number of technology-based service and product lines, or Technologies. These Technologies cover the entire life cycle of the reservoir and correspond to a number of markets in which Schlumberger holds leading positions. Divisions are:
• | Digital & Integration |
• | Reservoir Performance |
• | Well Construction |
• | Production Systems |
The role of the TechnologiesDivisions is to support Schlumberger in providing the best possible service to customersexecuting its customer-centric performance strategy and to ensure that Schlumberger remains at the forefront ofmaintaining its industry leadership role in technology development and services integration. The TechnologiesDivisions are collectively responsible for driving performance throughout their businesses;respective business lines; overseeing operational processes, resource allocation and personnel; and delivering superior financial results.
The segments are as follows:
Reservoir Characterization Digital & Integration– ConsistsCombines Schlumberger’s software and seismic businesses with its integrated offering of the principal Technologies involved in finding and defining hydrocarbon resources. These include WesternGeco®, Wireline, Testing Services, Software IntegratedAsset Performance Solutions (“SIS”APS”), OneSurface®. APS helps develop or redevelop fields while increasing production, improving cash flow, and Integrated Services Management (“ISM”).extending recovery for customers by providing fit-for-purpose solutions. Through digital solutions and technologies, supported by the future of software, digital, infrastructure, connected assets, and data, this Division enhances efficiency to improve asset and enterprise-wide performance for customers.
The primary offerings comprising this Division are:
| • | Multiclient seismic surveys and data processing: WesternGeco® is a leading geophysical services supplier, providing comprehensive worldwide reservoir interpretation and data processing services. It provides a highly efficient and scientifically advanced imaging platform to its customers. Through access to the industry’s global marine fleet, it provides innovative and accurate |
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APS creates alignment between Schlumberger and the asset holder and/or the operator by Schlumberger receiving remuneration in line with its value creation. These projects are generally focused on developing and co-managing production of customer assets under long-term agreements. Schlumberger invests its own services and products and, in certain historical cases, cash into the field development activities and operations. Although in certain arrangements Schlumberger is paid for a
portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger is generally compensated based on cash flow generated or on a fee-per-barrel basis. This includes certain arrangements whereby Schlumberger is only compensated based on incremental production that it helps deliver above a mutually agreed baseline.
Reservoir Performance – Consists of reservoir-centric technologies and services that are critical to optimizing reservoir productivity and performance. Reservoir Performance develops and deploys innovative technologies and services to evaluate, intervene, and stimulate reservoirs that help customers understand subsurface assets and maximize their value.
The primary offerings comprising this Division are:
• | Wireline: Provides the information necessary to evaluate subsurface geology and |
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Drilling – Consists of the principal Technologies involved in the drilling and positioning of oil and gas wells and comprises Bits & Drilling Tools, M-I SWACO, Drilling & Measurements, Land Rigs and Integrated Drilling Services (“IDS”).
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| • | Stimulation and Intervention: Provides services used during well completions, as well as those used to maintain optimal production throughout the life of a well. Includes pressure pumping, well stimulation, and coiled tubing equipment for downhole mechanical well intervention, reservoir monitoring, and downhole data acquisition. |
On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada (“OneStim®”), including its pressure pumping, pumpdown perforating, and Permian frac sand businesses, to Liberty Oilfield Services Inc. (“Liberty”), in exchange for a 37% equity interest in Liberty. OneStim’s historical results were reported as part of the Reservoir Performance Division through the closing of the transaction.
Well Construction – Combines the full portfolio of products and services to optimize well placement and performance, maximize drilling efficiency, and improve wellbore assurance. Well Construction provides operators and drilling rig manufacturers with services and products related to designing and constructing a well.
The primary offerings comprising this Division are:
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• | Drill Bits: Designs, manufactures and markets roller cone and fixed cutter drill bits for all environments. |
• | Drilling Tools: Includes a wide variety of |
• | Well Cementing: Supports and |
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Production – Consists of the principal Technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, OneStim®, Completions, Artificial Lift, and Asset Performance Solutions (“APS”).
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APS creates alignment between Schlumberger and the asset holder and/or the operator whereby Schlumberger receives remuneration in line with its value creation. These projects are generally focused on developing and co-managing production of customer assets under long-term agreements. Schlumberger invests its own services and products, and historically, cash in certain cases, into the field development activities and operations. Although in certain arrangements Schlumberger is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger is generally compensated based upon cash flow generated or on a fee-per-barrel basis. This includes certain arrangements whereby Schlumberger is only compensated based upon incremental production that it helps deliver above a mutually agreed baseline. APS represented less than 5% of Schlumberger’s consolidated revenue during each of 2019, 2018 and 2017.
Cameron – Consists of the principal Technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities, and includes OneSubsea®, Surface Systems, Drilling Systems, and Valves & Process Systems.
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Production Systems – Develops technologies and provides expertise that enhance production and recovery from subsurface reservoirs to the surface, into pipelines, and to refineries. Production Systems provides a comprehensive portfolio of equipment and services including subsurface production systems, subsea and surface equipment and services, and midstream production systems.
The primary offerings comprising this Division are:
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• | Completions Equipment: Supplies well completion services and equipment that include packers, safety valves and sand control technology, as well as a range of intelligent well completions technology and equipment. |
• | OneSubsea®: Provides integrated solutions, products, systems and services for the subsea market, including integrated subsea production systems involving wellheads, subsea trees, manifolds and flowline connectors, control systems, connectors and services designed to maximize reservoir recovery and extend the life of each field. |
• | Surface: Designs and manufactures onshore and offshore platform wellhead systems and processing solutions, including valves, chokes, actuators and Christmas trees, and provides services to operators. |
• | Valves: Serves portions of the upstream, midstream and downstream markets and provides valve products that are primarily used to control and direct the flow of |
• | Processing: Enables efficient monetization of subsurface assets using standard and custom-designed onshore, offshore and downstream processing and treatment |
Supporting the TechnologiesDivisions is a global network of research and engineering centers. Through this organization,centers, through which Schlumberger is committed to advancedadvances its technology programs thatto enhance oilfieldindustry efficiency and sustainability, lower finding and producing costs, improve productivity, maximize reserve recovery and increase asset value, while accomplishing these goals safely.
The Divisions are deployed around a geographical structure of five Basins: Americas Land, Offshore Atlantic, Middle East and North Africa, Asia, and Russia and Central Asia. The Basins are a collection of GeoUnits, which consist of a single country to several countries, that each have common themes in terms of strategy, economic and operational drivers, and technology needs. With a strong focus on the customer and growth, the Basins are responsible for defining a Basin strategy in line with Schlumberger’s corporate strategy and identifying opportunities for future growth.
Corporate Strategy
Schlumberger’s ambition is to be its customers’ “performance partner” of choice, by putting the customer at the center of everything it does and by being the company that defines performance in the energy services industry. Schlumberger’s strategy is structured around three major themes: (i) strengthen the core; (ii) expand the go-to-market; and (iii) next horizons of growth.
Strengthen the Core
Strengthening the core is focused on developing our people, collaborating with our customers and enhancing our technology performance to enable Schlumberger’s vision of customer performance. Maintaining capital discipline is also a key element of strengthening the core—such as evaluating all investment decisions through the lens of return on capital rather than growth and evolving certain businesses into innovative models that are less capital intensive.
Expand the Go-to-Market
Schlumberger believes that a key shift in the industry is the greater prominence and interplay of regional, or basin-specific, supply and demand. The industry is witnessing a decoupling of the activity characteristics of each major region, resulting in a safeunique set of dynamics for each oil and environmentally sound manner.gas basin across the world.
A network of GeoMarket*There are four main regions withinincreasingly competing against each of four major geographic areas ofother for market access to meet global, regional and domestic energy demand: North America Latin America, Europe/CIS/AfricaLand; Middle East; Russia and Middle East & Asia, provides logistical, technicalCentral Asia; and commercial coordination.offshore. These regions correspond to a different set of resource plays or basins, each facing different economic and operational drivers, which translates into different activity levels and cycles. Current geopolitical uncertainties and trade conflicts will only amplify this trend, resulting in the transition from a global market toward a more localized supply and demand dynamic.
As basins around the world decouple, a key differentiator for Schlumberger will be its “fit-for-basin” approach and ability. Basins have significantly different dynamics, including technological needs, in-country value, and market or technology access. Schlumberger is developing and deploying basin-specific technology that helps its customers overcome the challenges of their respective regions. In-country value enables regional efficiency and performance, while increasing local content and aligning with the strategic priorities of our clients.
Additionally, by employing different business models, Schlumberger will evolve the way it goes to market in certain regions. Schlumberger will seek to monetize its technology advantage by deploying alternative operating models such as selling or leasing selected technologies to regional service providers with a license to operate in these specific markets. Schlumberger expects this approach to expand its total addressable market.
Next Horizons of Growth
Schlumberger’s history and culture have been based on leadership, science and innovation since its founders invented wireline logging as a technique for obtaining downhole data in oil and gas wells. Continuing this tradition, Schlumberger will focus its future growth in two areas: digital innovation and new energy.
Schlumberger seeks to define the future of digital technology in the energy industry. The GeoMarket structure offersapplication of digital technology in field operations has the potential to deliver a step-change in operational workflows to significantly elevate performance. To take the next step in performance that our customers need to deliver energy in today’s competitive environment, Schlumberger is developing and using digital solutions, focused on generating richer data and better insights, that will achieve performance not previously possible across the energy industry.
Schlumberger is leveraging its portfolio of proprietary digital technologies as well as technologies that have transformed other industries to enable our customers to make better and faster decisions. Integrating digital technology into exploration and production (“E&P”) workflows requires extensive domain expertise in upstream hardware and software technologies and in the management and interpretation of vast amounts of subsurface and production data. Schlumberger will continue to lead the digital transformation of the energy industry by applying its unique data and digital expertise to every facet of the E&P life cycle.
Through its New Energy portfolio, Schlumberger is investing in low carbon and carbon-neutral energy technologies that will provide a single pointplatform for future sustainable growth. Schlumberger recognizes that its future will expand beyond oil and gas with the energy transition, and consequently the Company is positioning for significant growth opportunities for the long term. Schlumberger New Energy is taking a business venture approach that will focus on energy efficiency and energy storage as a priority, aimed at developing unique positions in adjacent markets and introducing breakthrough technologies in energy verticals beyond oil and gas. Schlumberger will utilize its domain expertise in areas adjacent to its existing activities where it can deliver at scale with its global footprint and execution platform.
Human Capital
At December 31, 2020, Schlumberger employed approximately 86,000 people representing more than 160 nationalities.
Schlumberger believes that the diversity of contact atits workforce is one of its greatest strengths and aims to maintain its employee population diversity in proportion to the revenue derived from the countries in which it works.
Schlumberger recognizes that its ability to attract, develop, motivate and retain a highly competent and diverse workforce has been key to its success for many decades. As a service company, Schlumberger believes it is critical for its people to communicate with its customers in their native languages and to share the values of the people in the countries where it works. Furthermore, Schlumberger’s diverse workforce is better able to respond to, and deliver services and products that meet the unique expectations and requirements of, its stakeholders, including customers, suppliers and stockholders. Schlumberger’s long-standing commitment to national and cultural diversity fosters a culture that is global in outlook, yet local levelin practice, which permeates every layer of the Company.
In addition to national and cultural diversity, achieving improved gender balance has been a focus of policy and action in Schlumberger since the late 1970s, when it began recruiting women for field operations roles. Since then, Schlumberger has continued to expand opportunities for women across its field operations, technology, business and brings together geographically focused teams to meet local needs and deliver customized solutions. The GeoMarkets are responsible for providing the most efficient and cost-effective support possible to the operations.management roles. Schlumberger believes that these gender diversity initiatives help it maintain its competitive advantage.
Schlumberger primarily usesset its own personnelfirst gender balance target in 1994, with the goal of having women comprise 15% of its salaried workforce by 2015. This goal was achieved ahead of schedule in 2011. Schlumberger’s current gender balance goal is to markethave women comprise 25% of the Company’s salaried workforce by 2025. In 2020, women made up approximately 23% of the Company’s salaried employee population. Additionally, approximately 21% of management roles were held by women in 2020.
Schlumberger is proud of its offerings. The customer base, business risksmeritocratic culture, its commitment to early responsibility and internal promotion, and its “borderless career” philosophy. Schlumberger strives to identify top talent within the Company, and to provide opportunities for growth are essentially uniformemployees who demonstrate exceptional competency and performance to progress to higher levels within the organization. Schlumberger seeks to nurture its talent pool to maximize each employee’s developmental potential through a combination of training and experience. Schlumberger’s “borderless career” philosophy means it supports flexible career paths, helping employees develop their skills across all servicesdifferent functions, businesses and products. Manufacturing and engineering facilities as well as research centers are shared,geographies. These opportunities accelerate career development while fostering an agile workforce and the labor force,next generation of business leaders.
Competition
The principal methods of competition within certain limitations, is interchangeable. Technologicalthe energy services industry are technological innovation, quality of service and price differentiation are the principal methods of competition, whichdifferentiation. These vary geographically with respect to the different services and products offered. Whilethat Schlumberger offers. Schlumberger has numerous competitors, both large and small, Schlumberger believes it is an industry leader in providing wireline logging, well production testing, exploration and production software, rig equipment, surface equipment, artificial lift, hydraulic fracturing, cementing, coiled-tubing services, drilling and completion fluids, solids control and waste management, drilling pressure control, drill bits, measurement-while-drilling, logging-while-drilling, directional-drilling services, and surface data (mud) logging.small.
* Mark of Schlumberger
GENERAL
Intellectual Property
Schlumberger owns and controls a variety of intellectual property, including but not limited to patents, proprietary information and software tools and applications that, in the aggregate, are material to Schlumberger’s business. While Schlumberger seeks and holds numerous patents covering various products and processes, no particular patent or group of patents is material to Schlumberger’s business.
Seasonality
Seasonal changes in weather and significant weather events can temporarily affect the delivery of oilfieldSchlumberger’s products and services. For example, the spring thaw in Canada and consequent road restrictions can affect activity levels, while the winter months in the North Sea, Russia and China can produce severe weather conditions that can temporarily reduce levels of activity. In addition, hurricanes and typhoons can disrupt coastal and offshore operations. Furthermore, customer spending patterns for multiclient data, software and other oilfield services and products may result in higher activity in the fourth quarter of each year as clients seek to fully utilize their annual budgets. Conversely, customer budget constraints may lead to lower demand for our services and products in the fourth quarter of each year.
Customers
Schlumberger’s primary customers are national oil companies, large integrated oil companies and Backlog of Orders
For the year ended December 31, 2019, noindependent operators. No single customer exceeded 10% of Schlumberger’s consolidated revenue. Other thanrevenue during each of 2020, 2019 and 2018.
Governmental Regulations
Schlumberger is subject to numerous environmental, legal and other governmental and regulatory requirements related to its operations worldwide. For additional details, see “Item 1(a). Risk Factors—Legal and Regulatory Risks”, which is incorporated by reference in this Item 1.
Corporate Information
Schlumberger was founded in 1926 and is incorporated under the OneSubsea, Drilling Systems and WesternGeco businesses,laws of Curaçao. Schlumberger has no significant backlog due to the nature of its businesses.executive offices in Paris, Houston, London and The combined backlog of these businesses was $3.0 billion at December 31, 2019 (of which approximately 50% is expected to be recognized as revenue during 2020) and $2.7 billion at December 31, 2018.
5
Information About Our Executive Officers
The following table sets forth, as of January 21, 2020, the names and ages of the executive officers of Schlumberger, including all offices and positions held by each for the past five years.
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Hague.
Available Information
The Schlumberger website is www.slb.com. Schlumberger uses its Investor Relations website, www.slb.com/ir, as a routine channel for distribution of important information, including news releases, analyst presentations, and financial information. Schlumberger makes available free of charge through its Investor Relations website at www.slb.com/ir, access to its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, and amendments to each of those reports, as soon as reasonably practicable after such material is filed with or furnished to the SEC. Alternatively, you may access these reports at the SEC’s website at www.sec.gov. Copies are also available, without charge, from Schlumberger Investor Relations, 5599 San Felipe, 17th Floor, Houston, Texas 77056. Unless expressly noted, the information on ourits website or any other website is not incorporated by reference in this Form 10-K and should not be considered part of this Form 10-K or any other filing Schlumberger makes with the SEC.
Information About Our Executive Officers
The following table sets forth, as of January 27, 2021, the names and ages of the executive officers of Schlumberger, including all offices and positions held by each for the past five years.
Name | Age | Current Position and Five-Year Business Experience |
Olivier Le Peuch | 57 | Chief Executive Officer and Director, since August 2019; Chief Operating Officer, February 2019 to July 2019; Executive Vice President, Reservoir and Infrastructure, May 2018 to February 2019; President, Cameron Group, February 2017 to May 2018; and President, Completions, October 2014 to January 2017. |
Stephane Biguet | 52 | Executive Vice President and Chief Financial Officer, since January 2020; Vice President, Finance, December 2017 to January 2020; Vice President, Treasurer, December 2016 to November 2017; Vice President, Controller, November 2013 to December 2016. |
Khaled Al Mogharbel | 50 | Executive Vice President, Geographies, since July 2020; Executive Vice President, Operations, April 2019 to June 2020; Executive Vice President, Eastern Hemisphere, February 2019 to March 2019; President, Eastern Hemisphere, May 2017 to January 2019; and President, Drilling Group, July 2013 to April 2017. |
Ashok Belani | 62 | Executive Vice President, Schlumberger New Energy, since February 2020; and Executive Vice President, Technology, January 2011 to January 2020. |
Hinda Gharbi | 50 | Executive Vice President, Services and Equipment, since July 2020; Executive Vice President, Reservoir and Infrastructure, February 2019 to June 2020; Vice President, Human Resources, May 2018 to January 2019; President, Reservoir Characterization Group, June 2017 to May 2018; and President, Wireline, July 2013 to May 2017. |
Abdellah Merad | 47 | Executive Vice President, Performance Management, since May 2019; President NAL Production Group, May 2018 to April 2019; President, Production Group, October 2017 to May 2018; Vice President, Controller, Operations, December 2016 to September 2017; and Vice President, Global Shared Services Organization, November 2013 to December 2016. |
Pierre Chereque | 66 | Vice President and Director of Taxes, since June 2017; and Director of Taxes, Operations, July 2004 to May 2017. |
Kevin Fyfe | 47 | Vice President and Controller, since October 2017; Controller, Cameron Group, April 2016 to October 2017; and Vice President, Finance, OneSubsea, July 2013 to March 2016. |
Howard Guild | 49 | Chief Accounting Officer, since July 2005. |
Claudia Jaramillo | 48 | Vice President and Treasurer, since December 2017; ERM and Treasury Projects Manager, July 2017 to November 2017; and Controller, North America Area, July 2014 to July 2017. |
Alexander C. Juden | 60 | Secretary, since April 2009; and General Counsel, April 2009 to November 2020. |
Vijay Kasibhatla | 57 | Director, Mergers and Acquisitions, since January 2013. |
Saul R. Laureles | 55 | Director, Corporate Legal Affairs, since July 2014; and Assistant Secretary, since April 2007. |
Demosthenis Pafitis | 53 | Chief Technology Officer, since February 2020; Senior Vice President, Schlumberger 4.0 Platforms, from December 2017 to January 2020; and Vice President, Engineering, Manufacturing and Sustaining, September 2014 to December 2017. |
Dianne Ralston | 54 | Chief Legal Officer, since December 2020; Executive Vice President, Chief Legal Officer and Secretary, TechnipFMC plc, January 2017 to October 2020; and Senior Vice President, General Counsel and Secretary, FMC Technologies, Inc., January 2015 to January 2017. |
Gavin Rennick | 46 | Vice President, Human Resources, since February 2019; President, Software Integrated Solutions, January 2017 to February 2019; and M&A/Integration Manager, Cameron International, September 2015 to January 2017. |
Item 1A. Risk Factors.
The following discussion of risk factors known to us contains important information for the understanding of our “forward-looking statements,” which are discussed immediately following Item 7A. of this Form 10-K and elsewhere. These risk factors should also be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements and related notes included in this Form 10-K.
We urge you to consider carefully the risks described below, which discuss the material factors that make an investment in our securities speculative or risky, as well as in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our business, reputation, financial condition, results of operations, cash flows and prospects.
Business and Operational Risks
Demand for our products and services is substantially dependent on the levels of expenditures by our customers. The recentcurrent significant oil and gas industry downturn has (and current market conditions have) resulted in reduced demand for oilfield services and lower expenditures by our customers, which havehas had, and may in the futurecontinue to have, a material adverse impacteffect on our financial condition, results of operations and cash flows.
Demand for our products and services depends substantially on expenditures by our customers for the exploration, development and production of oil and natural gas reserves. These expenditures are generally dependent on our customers’ views of future oil and natural gas prices, andas well as their ability to access capital. These expenditures are also sensitive to our customers’ views of future economic growth and the resulting impact on demand for oil and natural gas.
Declines, as well as anticipated declines, inThe continued low oil and gas prices have also caused a reduction in cash flows for our customers, which has had a significant adverse effect on the pastfinancial condition of some of our customers. This has resulted in, and may in the futurecontinue to result in, lower capital expenditures, project modifications, delays or cancellations, general business disruptions, and delays in payment of, or nonpayment of, amounts that are owed to us. These effects have had, and may in the futurecontinue to have, a material adverse effect on our financial condition, results of operations and cash flows.
Historically, oil and natural gas prices have experienced significant volatility and can be affected by a variety of factors, including:
| • | changes in the supply of and demand for hydrocarbons, which |
| • | the ability or willingness of the Organization of Petroleum Exporting Countries and 10 other oil producing countries, including Russia, Mexico and Kazakhstan (“OPEC+”), to set and maintain production levels for oil; |
| • | oil and gas production levels in the United States and by other non-OPEC+ countries; |
| • | changes in the level of |
7
| • | political and economic uncertainty and geopolitical unrest; |
| • | the level of |
• | the level of global oil and gas exploration and production activity; |
• | the level of global oil and natural gas inventories; |
| • | access to potential resources; |
| • | governmental policies and subsidies; |
| • | the costs of exploring for, producing and delivering oil and gas; |
| • | speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts; |
• | government initiatives to promote the use of renewable energy sources and public sentiment regarding alternatives to oil and gas; |
| • | technological advances affecting energy consumption; and |
| • | weather conditions. |
ThereThe oil and gas industry has historically been extremely cyclical. However, there can be no assurance that the demand or pricing for oil and natural gas or for our products and services will follow historic patterns or recover meaningfully in the near or medium term. TheContinued or worsening conditions in the oil and gas industry has historically experienced downturns, whichgenerally may have been characterized by diminished demand for our products and services and downward pressure on the prices that we are able to charge. Sustained market uncertainty can also result in lower demand and pricing for our products and services. A future downturn or sustained market uncertainty could again result in a reduction in demand for oilfield services and could have afurther material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
The COVID-19 pandemic has significantly reduced demand for our services, and has had, and is likely to continue to have, a material adverse effect on our financial condition, results of operations and cash flows.
The effects of the COVID-19 pandemic, including actions taken by businesses and governments to contain the spread of the virus, have resulted in a significant and swift reduction in international and US economic activity. In our industry, geopolitical events that increased the supply of low-priced oil to the global market occurred at the same time that demand weakened due to the worldwide effects of the pandemic, leading to a collapse in oil prices in March 2020. These events together adversely affected the demand for oil and natural gas, as well as for our services and products, and caused significant volatility and disruption of the global financial markets. Other effects of the pandemic have included, and may continue to include, adverse revenue and net income effects; disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets; limitations on access to sources of liquidity; employee impacts from illness, school closures and other community response measures; workforce reductions in response to activity declines; and temporary closures of our facilities or the facilities of our customers and suppliers. This period of extreme economic disruption, low oil prices and reduced demand for our products and services has had, and is likely to continue to have, a material adverse effect on our financial condition, results of operations and cash flows.
The extent to which our operating and financial results will continue to be affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, such as the duration and scope of the pandemic; additional actions by businesses and governments in response to the pandemic; and the speed and effectiveness of responses to combat the virus, including vaccine development and distribution. COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate our other risk factors described in this Form 10-K.
A significant portion of our revenue is derived from our non-United Statesnon-US operations, which exposes us to risks inherent in doing business in each of the overmore than 120 countries in which we operate.generate revenue.
Our non-United Statesnon-US operations accounted for approximately 72%81% of our consolidated revenue in 2020, 72% in 2019 and 68% in 2018 and 74% in 2017.2018. In addition to the risks addressed elsewhere in this section, our operations in countries other than the United States are subject to various risks, including:
| • |
|
| • | exposure to expropriation, nationalization, deprivation or confiscation of our assets or the assets of our customers, or other governmental actions; |
| • | social unrest, acts of terrorism, war or other armed conflict; |
| • | public health crises and other catastrophic events, such as the COVID-19 pandemic; |
• | confiscatory taxation or other adverse tax policies; |
• | theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; |
| • | deprivation of contract rights; |
| • | trade and economic sanctions or other restrictions imposed by the European Union, the United States or other regions or countries; |
| • | exposure under the |
| • |
|
| • | restrictions on the repatriation of income or capital; |
| • | currency exchange controls; |
| • | inflation; and |
| • | currency exchange rate fluctuations and devaluations. |
Severe weather, including extreme weather conditions associated with climate change, has in the past and may in the future adversely affect our operations and financial results.
Our failurebusiness has been, and in the future will be, affected by severe weather in areas where we operate, which could materially affect our operations and financial results. Extreme weather conditions such as hurricanes, flooding and landslides have in the past resulted in, and may in the future result in, the evacuation of personnel, stoppage of services and activity disruptions at our facilities, in our supply chain, or at well-sites. Particularly severe weather events affecting platforms or structures may result in a suspension of activities. In addition, impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall and hurricane-strength winds may damage our facilities. Any such extreme weather-related events may result in increased operating costs or decreases in revenue which could adversely affect our financial condition, results of operations and cash flows.
Legal and Regulatory Risks
Our operations require us to comply with complex US and foreignnumerous laws and regulations, violations of which could have a material adverse effect on our operations, financial condition or financial condition.cash flows.
WeOur operations are subject to international, regional, national, and local laws and regulations in every place where we operate, relating to matters such as environmental protection, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, data privacy and cybersecurity, intellectual property, immigration, and taxation. These laws and regulations are complex, USfrequently change, and foreignhave tended to become more stringent over time. In the event the scope of these laws and regulations expands in the future, the incremental cost of compliance could adversely affect our financial condition, results of operations, or cash flows.
Our international operations are subject to anti-corruption and anti-bribery laws and regulations, such as the FCPA, the U.K. Bribery Act and various other anti-bribery and anti-corruptionsimilar laws. We are also subject to trade control regulations and trade sanctions laws that restrict the movement of certain goods to, and certain operations in, various countries or with certain persons. Our ability to transfer people, products and data among certain countries is subject to maintaining required licenses and complying with these laws and regulations.
The internal controls, policies and procedures, and employee training and compliance programs we have implemented to deter prohibited practices may not be effective in preventing employees, contractors or agents from violating or circumventing such internal policies or from material violations of applicable laws and regulations. Any determination that we have violated or are responsible for violations of anti-bribery, trade control, trade sanctions or anti-corruption laws could have a material adverse effect on our financial condition. Violations of international and US laws and regulations or the loss of any required licenses may result in fines and penalties, criminal sanctions, administrative remedies or restrictions on business conduct, and could have a material adverse effect on our reputation and our business, operating resultsoperations and financial condition. In addition, any major violations could have a significant effect on our reputation and consequently on our ability to win future business and maintain existing customer and supplier relationships.
8
Demand for our products and services could be reduced by existing and future legislation, regulations and public sentiment.
EnvironmentalRegulatory agencies and environmental advocacy groups and regulatory agencies in the European Union, the United States and other regions or countries have been focusing considerable attention on the emissions of carbon dioxide, methane and other greenhouse gases and their potential role in climate change. There is also increased focus, including by governments and our customers, investors and other stakeholders, on these and other sustainability and energy transition matters. Existing or future legislation and regulations related to greenhouse gas emissions and climate change, as well as government initiatives by governments, non-governmental organizations, and companies to conserve energy or promote the use of alternative energy sources, and negative attitudes toward or perceptions of fossil fuel products and their relationship to the environment, may significantly curtail demand for and production of fossil fuels such as oil and gas in areas of the world where our customers operate, and thus reduce future demand for our products and services. This may, in turn, adversely affect our financial condition, results of operations and cash flows.
New or additional legal or regulatory requirements regarding climate change could adversely affect our Our business, reputation orand demand for our stock. There is also increased focus, including by governmental and non-governmental organizations, investors and other stakeholders, on these and otherstock could be negatively affected if we do not (or are perceived to not) act responsibly with respect to sustainability matters. Additionally, some international, national, state and local governments and agencies have adopted laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic fracturing. Future hydraulic fracturing-related legislation or regulations could limit or ban hydraulic fracturing, or lead to operational delays and increased costs, and therefore reduce demand for our pressure pumping services. Enactment of additional international, national, state or local legislation or regulations can adversely affect our financial condition, results of operations and cash flows and could be material.
Environmental compliance costs and liabilities arising as a result of environmental laws and regulations could reducehave a material adverse effect on our earningsbusiness, financial condition and cash available forresults of operations.
We are subject to increasingly stringentnumerous laws and regulations relating to environmental protection, including those governing air emissions, water discharges and waste management, as well as the importation and use of hazardous materials, radioactive materials, chemicals and explosives and to environmental protection, including laws and regulations governing air emissions, hydraulic fracturing, water discharges and waste management.explosives. We incur, and expect to continue to incur, significant capital and operating costs to comply with environmental laws and regulations. The technical requirements of these laws and regulations are becoming increasingly complex, stringent and expensive to implement. These laws maysometimes provide for “strict liability” for remediation costs, damages to natural resources or threats to public health and safety. Strict liability can render us liable for damages without regard to our degree of care or fault. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances, and, as a result, we could be liable for the actions of others.
We use and generate hazardous substances and wastes in our operations. In addition, many of our current and former properties are, or have been, used for industrial purposes. Accordingly, we could become subject to material liabilities relating to the investigation
and cleanup of potentially contaminated properties, and to claims alleging personal injury or property damage as the result of exposures to, or releases of, hazardous substances. In addition, stricter enforcement or changing interpretations of existing laws and regulations, the enactment of new laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis for new or increased liabilities that could reducehave a material adverse effect on our earningsbusiness, operations and our cash available for operations.financial condition.
We could be subject to substantial liability claims, including catastrophic well incidents, which could adversely affect our reputation, financial condition, results of operations and cash flows.
The technical complexities of our operations expose us to a wide range of significant health, safety and environmental risks. Our operations involve production-related activities, radioactive materials, chemicals, explosives and other equipment and services that are deployed in challenging exploration, development and production environments. Accidents or acts of malfeasance involving these services or equipment, or a failure of a product (including as a result of a cyberattack), could cause personal injury, loss of life, damage to or destruction of property, equipment or the environment, or suspension of operations, which could materially adversely affect us. Any catastrophic well incidents, including blowouts at a well site, may expose us to additional liabilities, which could be material. Generally, we rely on contractual indemnities, releases, and limitations on liability with our customers and insurance to protect us from potential liability related to such events. However, our insurance may not protect us against liability for certain kinds of events, including events involving pollution, or against losses resulting from business interruption. Moreover, we may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate. Any damages caused by our services or products that are not covered by insurance or are in excess of policy limits or subject to substantial deductibles, could adversely affect our financial condition, results of operations and cash flows.
Intellectual Property and Technology Risks
If we are unable to maintain technology leadership, this could adversely affect any competitive advantage we hold.
The oilfield serviceservices industry is highly competitive. Our ability to continually provide competitive technology and services can impact our ability to defend, maintain or increase prices for our products and services, maintain market share, and negotiate acceptable contract terms with our customers. Failurebusiness may be adversely affected if we fail to continue to develop and produce competitive technologies in response to changes in the market, customer requirements and technology trends (including trends in favor of emissions-reducing technologies), or if we fail to deliver itsuch technologies to our clientscustomers in a timely and cost-competitive manner in the various markets we serve,serve. If we are unable to maintain technology leadership in our industry, our ability to maintain market share, defend, maintain or increase prices for our products and services, and negotiate acceptable contract terms with our customers could be adversely affected. Furthermore, if our equipment or proprietary technologies become obsolete, the value of our intellectual property may be reduced, which could adversely affect our financial condition, results of operations and cash flows.
Limitations on our ability to obtain, maintain, protect or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenue and any competitive advantage we hold.
9
There can be no assurance that the steps we take to obtain, maintain, protect and enforce our intellectual property rights will be adequate. Some of our products or services, and the processes we use to produce or provide them, have been granted patent protection, have patent applications pending, or are trade secrets. Our business may be adversely affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected. Patent protection on some types of technology, such as software or machine learning processes, may not be available in certain countries in which we operate. Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, which could adversely affect our financial condition, results of operations and cash flows.
Third parties may claim that we have infringed upon, misappropriated or otherwise violated their intellectual property rights.
The tools, techniques, methodologies, programs and components we use to provide our services and products may infringe upon, misappropriate or otherwise violate the intellectual property rights of others. Infringementothers or be challenged on that basis. Regardless of the merits, any such claims generally result in significant legal and other costs, including reputational harm, and may distract management from running our business. RoyaltyResolving such claims could increase our costs, including through royalty payments underto acquire licenses, if available, from third parties if available, would increase our costs.and through the development of replacement technologies. If a license to resolve a claim were not available, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows. Additionally, developing non-infringing technologies would increase our costs.
Failure to obtain and retain skilled technical personnel could impede our operations.
We require highly skilled personnel to operate and provide technical services and support for our business. Competition for the personnel required for our businesses intensifies as activity increases and technology evolves. In periods of high utilization, it is often more difficult to find and retain qualified individuals. This could increase our costs or have other material adverse effects on our operations.
Severe weather may adversely affect our operations.
Our business has been, and in the future will be affected by severe weather in areas where we operate, which could materially impact our operations and financial results This may entail the evacuation of personnel and stoppage of services. In addition, particularly severe weather affects platforms or structures, which may result in a suspension of activities. Any of these events could adversely affect our financial condition, results of operations and cash flows.
Cyberattacksare subject to cyber incidents that could have a material adverse impacteffect on our business, financial condition and results of operation.operations.
We rely heavilyare increasingly dependent on information systemsdigital technologies and services to conduct our business. We use these technologies for internal purposes, including data storage, processing and transmissions, as well as in our interactions with our business including systems operated by or under the control of third parties. Althoughassociates, such as customers and suppliers. In addition, we devote significant resources to protectdevelop software and other digital products and services that store, retrieve, manipulate and manage our systemscustomers’ information and proprietary data, we have experiencedexternal data, and will continue to experience varying degrees of cyber incidents in the normal conductour own data. Our digital technologies and services, and those of our business.business associates, are subject to the risk of cyberattacks and, given the nature of such attacks, some incidents can remain undetected for a period of time despite efforts to detect and respond to them in a timely manner. There can be no assurance that the systems we have designed to prevent or limit the effects of cyber incidents or attacks will be sufficient to prevent or detect material consequences arising from such incidents or attacks, or to avoid a material adverse impact on our systems after such incidents or attacks do occur. BreachesWe have experienced and will continue to experience varying degrees of cyber incidents in the normal conduct of our business, including attacks resulting from phishing emails and ransomware infections. Even if we successfully defend our own digital technologies and services, we also rely on third-party business associates, with whom we may share data and services, to defend their digital technologies and services against attack.
We could suffer significant damage to our reputation if a cyber incident or circumventionattack were to allow unauthorized access to or modification of our customers’ data, other external data, or our own data, or if the services we provide to our customers were disrupted, or if our digital products or services were reported to have or were perceived as having security vulnerabilities. This could lead to fewer customers using our digital products and services, which could have a material adverse impact on our financial condition and results of operations. In addition, if our systems, or theour third-party business associates’ systems, for protecting against cybersecurity risks prove to be insufficient, we could be adversely affected by, among other things, loss of third parties, including by ransomware or other attacks, result in disruptionsdamage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data; interruption of our business operations; unauthorized accessincreased legal and regulatory exposure and costs; and increased costs required to (or the lossprevent, respond to, or mitigate cybersecurity attacks. These risks could harm our reputation and our relationships with our employees, business associates and other third parties, and may result in claims against us. The occurrence of Company access to) competitively sensitive, confidential or other critical data or systems; loss of customers; financial losses; regulatory fines; and misuse or corruption of critical data and proprietary information, any of whichthese risks could be material.have a material adverse effect on our business, financial condition and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Schlumberger owns or leases numerous manufacturing facilities, administrative offices, service centers, research centers, data processing centers, mines, and other facilities throughout the world, none of which are individually material.
Item 3. Legal Proceedings.
The information with respect to this Item 3. Legal Proceedings is set forth in Note 15 of15—Contingencies, in the accompanying Consolidated Financial Statements.
Item 4. Mine Safety Disclosures.
Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K.
10
PART II
Item 5. Market for Schlumberger’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of December 31, 2019,2020, there were 25,46424,592 stockholders of record. The principal United StatesUS market for Schlumberger’s common stock is the New York Stock Exchange (“NYSE”), where it is traded under the symbol “SLB.”
The following graph compares the cumulative total stockholder return on Schlumberger common stock with the cumulative total return on the Standard & Poor’s 500 Index (“S&P 500 Index”) and the cumulative total return on the Philadelphia Oil Service Index. It assumes $100 was invested on December 31, 20142015 in Schlumberger common stock, in the S&P 500 Index and in the Philadelphia Oil Service Index, as well as the reinvestment of dividends on the last day of the month of payment. The stockholder return set forth below is not necessarily indicative of future performance. The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Schlumberger specifically incorporates it by reference into such filing.
Comparison of Five-Year Cumulative Total Return Among
Schlumberger Common Stock, the S&P 500 Index and the
Philadelphia Oil Service Index
Share Repurchases
On January 21, 2016, the Schlumberger Board of Directors approved a $10 billion share repurchase program for Schlumberger common stock.
11
Schlumberger’sSchlumberger had repurchased $1.0 billion of its common stock under this program as of December 31, 2020 but did not repurchase program activity forany of its common stock during the three months ended December 31, 2019 was as follows:2020.
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| Total Number of Shares Purchased |
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| Average price Paid per Share |
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| Total Number of Shares Purchased as Part of Publicly Announced Program |
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| Maximum Value of Shares that may yet be Purchased Under the Program |
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October 2019 |
| - |
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| $ | - |
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| - |
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| $ | 8,998,416 |
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November 2019 |
| - |
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| $ | - |
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| - |
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| $ | 8,998,416 |
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December 2019 |
| - |
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| $ | - |
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| - |
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| $ | 8,998,416 |
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| - |
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| $ | - |
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| - |
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Unregistered Sales of Equity Securities
None.
Item 6. Selected Financial Data.
The following selected consolidated financial data should be read in conjunction with both “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” of this Form 10-K in order to understand factors, such as business combinations and charges and credits, which may affect the comparability of the Selected Financial Data.
(Stated in millions, except per share amounts) |
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| Year Ended December 31, |
| Year Ended December 31, |
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| 2019 |
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| 2018 |
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| 2017 |
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| 2016 |
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| 2015 |
| 2020 |
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| 2019 |
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| 2018 |
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| 2017 |
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| 2016 |
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Revenue | $ | 32,917 |
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| $ | 32,815 |
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| $ | 30,440 |
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| $ | 27,810 |
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| $ | 35,475 |
| $ | 23,601 |
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| $ | 32,917 |
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| $ | 32,815 |
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| $ | 30,440 |
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| $ | 27,810 |
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Income (loss) from continuing operations | $ | (10,137 | ) |
| $ | 2,138 |
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| $ | (1,505 | ) |
| $ | (1,687 | ) |
| $ | 2,072 |
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Diluted earnings (loss) per share from continuing operations | $ | (7.32 | ) |
| $ | 1.53 |
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| $ | (1.08 | ) |
| $ | (1.24 | ) |
| $ | 1.63 |
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Net income (loss) attributable to Schlumberger | $ | (10,518 | ) |
| $ | (10,137 | ) |
| $ | 2,138 |
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| $ | (1,505 | ) |
| $ | (1,687 | ) | |||||||||||||||||||
Diluted earnings (loss) per share of Schlumberger | $ | (7.57 | ) |
| $ | (7.32 | ) |
| $ | 1.53 |
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| $ | (1.08 | ) |
| $ | (1.24 | ) | |||||||||||||||||||
Cash | $ | 1,137 |
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| $ | 1,433 |
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| $ | 1,799 |
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| $ | 2,929 |
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| $ | 2,793 |
| $ | 844 |
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| $ | 1,137 |
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| $ | 1,433 |
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| $ | 1,799 |
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| $ | 2,929 |
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Short-term investments | $ | 1,030 |
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| $ | 1,344 |
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| $ | 3,290 |
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| $ | 6,328 |
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| $ | 10,241 |
| $ | 2,162 |
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| $ | 1,030 |
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| $ | 1,344 |
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| $ | 3,290 |
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| $ | 6,328 |
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Working capital | $ | 2,432 |
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| $ | 2,245 |
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| $ | 3,215 |
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| $ | 8,868 |
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| $ | 12,791 |
| $ | 2,428 |
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| $ | 2,432 |
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| $ | 2,245 |
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| $ | 3,215 |
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| $ | 8,868 |
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Fixed income investments, held to maturity | $ | - |
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| $ | - |
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| $ | - |
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| $ | 238 |
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| $ | 418 |
| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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| $ | 238 |
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Total assets | $ | 56,312 |
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| $ | 70,507 |
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| $ | 71,987 |
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| $ | 77,956 |
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| $ | 68,005 |
| $ | 42,434 |
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| $ | 56,312 |
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| $ | 70,507 |
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| $ | 71,987 |
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| $ | 77,956 |
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Long-term debt | $ | 14,770 |
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| $ | 14,644 |
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| $ | 14,875 |
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| $ | 16,463 |
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| $ | 14,442 |
| $ | 16,036 |
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| $ | 14,770 |
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| $ | 14,644 |
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| $ | 14,875 |
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| $ | 16,463 |
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Total debt | $ | 15,294 |
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| $ | 16,051 |
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| $ | 18,199 |
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| $ | 19,616 |
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| $ | 18,999 |
| $ | 16,886 |
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| $ | 15,294 |
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| $ | 16,051 |
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| $ | 18,199 |
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| $ | 19,616 |
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Schlumberger stockholders' equity | $ | 23,760 |
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| $ | 36,162 |
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| $ | 36,842 |
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| $ | 41,078 |
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| $ | 35,633 |
| $ | 12,071 |
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| $ | 23,760 |
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| $ | 36,162 |
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| $ | 36,842 |
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| $ | 41,078 |
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Cash dividends declared per share | $ | 2.00 |
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| $ | 2.00 |
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| $ | 2.00 |
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| $ | 2.00 |
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| $ | 2.00 |
| $ | 0.88 |
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| $ | 2.00 |
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| $ | 2.00 |
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| $ | 2.00 |
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| $ | 2.00 |
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During 2018, Schlumberger adopted ASU No. 2016-02, Leases,.which requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases. Prior year amounts reflected in the table above have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. Refer to Note 14 to the Consolidated Financial Statements for further details.
12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources. Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A. Risk Factors” of this Form 10-K.
This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
20192020 Executive Overview
Schlumberger full-year 2019 revenueGlobal demand for oil dropped precipitously from January through April of $32.9 billion was essentially flat with 2018. International revenue, however, grew2020, in the high single-digits as anticipated.
In the oil markets, sentiment was stable and positive for the first four months of 2019,parallel with the Brent oil price moving from $55 per barrel at the beginningexpansion of the yearCOVID-19 coronavirus outbreak, as governments around the world responded with lockdowns and travel decreased significantly. Global stocks of crude and refined products increased as oil supply could not respond quickly enough to balance the market.
As a highresult, Brent crude oil experienced its highest price of $75the year—$70 per barrel—in January, with a low of $9 per barrel in late April. OECD crudemid-April. Collaboration between OPEC and product stocks continuednon-OPEC suppliers, including Russia, led to increase through muchextraordinary supply intervention, resulting in the removal of 2019, reversingmore than eight million barrels per day (“bbl/d”) of oil supply from the markets between April and June. This eased pressure on oil storage capacity and allowed the Brent price to stabilize in the $40 range until gaining strength in December, where it closed at $52 per barrel.
The OPEC-led supply alliance maintained production within an agreed quota and helped to maintain a trend that persisted throughoutrelatively stable oil price, despite oil demand in the firstsecond half of 2018. Internationally, activity and investment continued2020 being more than five million bbl/d lower than same period of 2019. Demand for refined products, other than jet fuel, returned to strengthen, particularly offshore.within two million bbl/d of pre-crisis levels by end of 2020.
Activity in North America land was strongOil price volatility in the first half of 2019 but slowedthe year, compounded by uncertainty over the pace of COVID-19 recovery, caused producers to lay down more than 40% of the world’s drilling rigs in just six months. This suggests that $40 oil is insufficient to stimulate meaningful drilling activity growth. However, even with massive demand reduction, the drilling activity necessary to maintain supply is still significant.
In the US, operators laid down nearly 70% of active rigs between the first and third quarters of 2020, before adding a modest number of rigs in the fourth quarter. As a result, US crude production fell by nearly two million bbl/d by the end of 2020. However, the remaining rigs continued to drill in the highest quality reservoirs, which resulted in supply remaining flat over the second half of the yearyear.
Though global gas demand also suffered in response to the pandemic’s effect on economic activity, its use for power generation, heating, and as a combination of budget exhaustion and cash flow constraints impacted our customers. Althoughchemical feedstock made it more resilient than oil demand as the slowing activity in the second half of the yearpandemic spread. Gas demand for 2020 was consistent with the trend experienced in 2018, activity dropped earlier and steeper in the second half of 2019down only approximately 5% as compared to the previous year.2019.
By midyear, concerns of a recession in the United States and indications of well supplied global oil markets pushed the oil price to its low point for the year. These concerns abated over the latter part of the year as oil demand indicators trended positively. Though trade conflicts persisted, they did not create a significant drag on oil markets for the balance of the year.
The attacks on Saudi Arabia oil infrastructure in September 2019 caused a price increase of only $7 per barrel, and the price of Brent crude retreated to pre-attack levels over the course of the following week, demonstrating that the markets were well supplied. In December 2019, OPEC+ agreed to further production cuts in 2020 to alleviate the projected oversupply.
Global natural gas pricing was consistent with well-supplied markets during 2019. Liquified natural gas (LNG) supply capacity increased by an estimated 10% during 2019, and consequently LNG prices in Asia and Europe were less than half the prices seen in 2018.
Domestically, US Henry Hub natural gas prices showed continued weakness during 2019 as North American gas production increased. Pricesprice averaged $2.56$2.03 per million British thermal units (“mmbtu”) for the year, having also fallen in the first half of 2020. Prices recovered in the second half on decreased tight-oil associated production in line with the peakreduction of $4.25 per mmbtu occurring in March. The price fell to its lowest point of $1.75 per mmbtu in December.active rigs. International gas hub prices were more volatile.
Schlumberger financial performance in 2019 was primarily driven by the international markets. Full-year 2019 internationalAgainst this backdrop, Schlumberger’s full-year 2020 revenue of $21.8$23.6 billion increased 7% over 2018, again outpacing North America revenue and continuing a trend which began in the third quarter of 2018. This strong international performance was the result of increased activity on the part of operators, as they continued to invest in longer-term resource development following a sustained period of underinvestment and declining production.
In contrast, after two years of strong growth, declined 28% year-on-year. North American revenue fell sharply by 10%48% to $10.8$5.5 billion. This decrease was largely driven by weakness in the land market weakness affecting the OneStimas operators reacted to oversupplied markets by making deep cuts to activity. North America operators dropped drilling and pressure pumping business, as customers reached their budget limits earlieractivity quickly in the yearfirst quarter due to the effects of the pandemic on demand, adding a modest volume of completion activity toward the end of the year. International revenue was more resilient, declining only 19% year-on-year. This decline was most prominent in Latin America, Europe, and remained highly disciplined on capital spend.Africa due to downward revisions to customer budgets and COVID-19 disruptions.
Additionally, during the fourth quarter of 2019,2020, Schlumberger completed two major milestones:transactions: the formationcontribution of the Sensia joint ventureits OneStim business in North America to Liberty Oilfield Services (“Liberty”) in exchange for a 37% stake in Liberty, and the divestiture of the Drilling Tools business. Together these two transactions resultedNorth America low-flow rod-lift business in Schlumberger receiving neta cash proceedstransaction. These businesses accounted for approximately 25% of $586 million.Schlumberger’s North America revenue in 2020. Consequently, the percentage of Schlumberger’s revenue that it generates in the international markets will increase significantly going forward. The combination of Schlumberger’s fit-for-basin strategy, digital technology innovation, and scale puts the company in the best position to leverage the anticipated shift of spending growth toward the international markets.
From a macro perspective, oil prices have risen, buoyed by recent supply-led OPEC+ policy, the year ended with sentiment regarding 2020ongoing COVID-19 vaccine rollout, and multinational economic stimulus actions—driving optimism for a meaningful oil demand growth turning positiverecovery throughout 2021. We believe that this sets the stage for oil demand to recover to 2019 levels no later than 2023, or earlier as uncertainty reduced followingper recent industry analysts’ reports, reinforcing a multiyear cycle recovery as the progress made towardglobal economy strengthens. Absent a US-China trade deal. The fallchange to these macro assumptions, this will translate into meaningful activity increases both in the North America production growth estimate of between 400,000 to 800,000 barrels-per-day should continue to support the thesis for international investment. The recent escalation of geopolitical risk should set the floor for the oil price going forward. and internationally.
In the near term, Schlumberger expects the OPEC+ production cuts agreed upon in December 2019 to limit investmentNorth America, spending and activity particularlymomentum is expected to continue in the Middle East and Russia, during the first half of 2020. As2021 towards maintenance levels, albeit moderated by capital discipline and industry consolidation. Internationally, following the year progresses, the effect of slowing North America production growth is likely to cause tightness in the market and further stimulate international operators to increase their investments in the second half of the year and beyond.
Based on these factors, the expectation is for the 2020 exploration and production capex spending growth rate in the international markets to be in the mid-single-digit range. Schlumberger therefore expects its international portfolio revenue to grow at the same pace or higher, excluding theseasonal effects of the businesses transferredfirst quarter of 2021, and as OPEC+ responds to strengthening oil demand, higher spending is expected from the Sensia joint venturesecond quarter onwards. Accelerated
activity is not expected to extend beyond the short-cycle markets and will be broad, including offshore, as witnessed during the fourth quarter.
The quality of Schlumberger’s results in the fourth quarter of 2020 validates the progress of our performance strategy and the businesses divestedreinvention of Schlumberger in this new chapter for the Drilling Tools transaction. The businesses included in these transactions accounted for approximately 2%industry. Building from the swift execution and scale of Schlumberger’s global revenue in 2019. International revenue growth will be more heavily weighted to the second half ofour cost-out program, we exited the year with increasing offshore activity, improving activity mix fromquarterly margins reset to 2019 levels as the early deepwaterupcycle begins. Leveraging our high-graded and restructured business portfolio, we see a clear path to achieve double-digit margins in North America and visible international margin improvement in 2021. Given the depth, diversity, and executional capability of our international business, we believe we are uniquely positioned to benefit as international spending accelerates in the near- and mid-term.
By leveraging our new structure, Schlumberger is fully prepared to capitalize on the growth cycle, and increasing exploration work toward the enddrivers of the yearfuture of our industry, particularly as we accelerate our digital growth ambition and into 2021.
In North America, Schlumberger is continuing to scale-to-fit its organization and portfolio by repurposing or exiting underperforming business units, focusing on asset-light operations, and expanding its technology access business models. Schlumberger is cautiously optimistic that the high-grading of its portfolio will promote margin expansion and the improvement of returnslead in the North America landproduction and recovery market.
Finally, to meet our long-term ambition to bring lower carbon and carbon-neutral energy sources and technology to market, we are visibly expanding our New Energy portfolio, to contribute to the transformation of a more resilient, sustainable, and investable energy services industry.
Fourth Quarter 20192020 Results
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| Fourth Quarter 2019 |
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| Third Quarter 2019 |
| Fourth Quarter 2020 |
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| Third Quarter 2020 |
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| Income |
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| Income (Loss) |
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| Revenue |
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| Revenue |
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| Taxes |
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Reservoir Characterization | $ | 1,643 |
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| $ | 368 |
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| $ | 1,651 |
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| $ | 360 |
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Drilling |
| 2,442 |
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| 303 |
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| 2,470 |
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| 305 |
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Production |
| 2,867 |
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| 253 |
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| 3,153 |
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| 288 |
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Cameron |
| 1,387 |
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| 126 |
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| 1,363 |
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| 173 |
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Digital & Integration | $ | 833 |
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| $ | 270 |
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| $ | 740 |
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| $ | 202 |
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Reservoir Performance |
| 1,247 |
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| 95 |
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| 1,215 |
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| 103 |
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Well Construction |
| 1,866 |
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| 183 |
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| 1,835 |
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| 172 |
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Production Systems |
| 1,649 |
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| 155 |
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| 1,532 |
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| 132 |
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Eliminations & other |
| (111 | ) |
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| (44 | ) |
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| (96 | ) |
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| (30 | ) |
| (63 | ) |
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| (49 | ) |
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| (64 | ) |
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| (34 | ) |
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| 1,006 |
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| 1,096 |
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| 654 |
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| 575 |
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Corporate & other (1) |
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| (215 | ) |
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| (231 | ) |
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| (132 | ) |
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| (151 | ) |
Interest income (2) |
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| 8 |
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| 7 |
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| 5 |
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| 3 |
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Interest expense (3) |
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| (138 | ) |
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| (151 | ) |
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| (137 | ) |
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| (131 | ) |
Charges & credits (4) |
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| (209 | ) |
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| (12,692 | ) |
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| 81 |
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| (350 | ) |
| $ | 8,228 |
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| $ | 452 |
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| $ | 8,541 |
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| $ | (11,971 | ) | $ | 5,532 |
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| $ | 471 |
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| $ | 5,258 |
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| $ | (54 | ) |
(1) | Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items. |
(2) | Excludes interest income included in the segments’ income (fourth quarter |
(3) | Excludes interest expense included in the segments’ income (fourth quarter |
(4) | Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
Fourth quarterFourth-quarter revenue of $8.2 billion was 4% lower sequentially.grew 5% sequentially, driven by strong activity and solid execution both in North America and in the international markets. International revenue of $5.7$4.3 billion grew 2% sequentially. However,3% while North America revenue of $2.5$1.2 billion dropped 14%increased 13%. Despite seasonality, revenue grew sequentially due to customer budget exhaustionin all four Divisions for the first time since the third quarter of 2019.
Sequentially, international revenue growth outpaced rig count and cash flow constraints.
Sequential international growth was led by Latin America and by a global rebound of activity in most offshore deepwater markets. In the Middle East & Asia, area, where revenuegrowth was mostly in China, India, and Oman while Saudi Arabia remained resilient. In Europe/CIS/Africa, activity increased 5%. Latin America revenue grew 1%, while revenuesignificantly in the Europe/CIS/offshore markets of Africa area only declined 2% givenand several countries in Europe, offset by the mildseasonal winter slowdown ofin Russia. In North America, offshore activity in the Northern Hemisphere.US Gulf of Mexico grew, and on land, increased horizontal drilling and pressure pumping activity contributed to the higher revenue.
Digital & Integration
Fourth-quarter revenue of $833 million, 83% of which came from the international markets, increased 13% sequentially. International revenue increased by 14% and North America revenue increased by 6% sequentially. The fourth quarterDigital & Integration revenue increase was primarily driven by APS projects.
Digital & Integration pretax operating margin of 2019 delivered32% expanded by 507 basis points (“bps”) sequentially. The margin expansion was primarily in the first sequential growthinternational markets and was largely driven by improved profitability across APS projects.
Reservoir Performance
Fourth-quarter revenue of $1.2 billion, 73% of which came from the international markets, increased 3% sequentially. International revenue declined 3% while North America revenue increased 23% sequentially. The revenue increase was primarily driven by higher OneStim activity in North America. OneStim fourth-quarter revenue of $274 million increased 25% sequentially. This increase, however, was partially offset by seasonality in Russia and reduced activity in the Middle East & Asia.
Reservoir Performance pretax operating margin of 8% decreased 84 bps sequentially driven by seasonality in Russia, despite improved North American activity.
Well Construction
Fourth-quarter revenue of $1.9 billion, 84% of which came from the international margin in any fourth quarter since 2014. Schlumberger is therefore confident that it has turned the corner, particularlyas it has experienced sequential international margin growth in each of the last three quarters. Meanwhilemarkets, increased 2% sequentially. International and North America revenue increased 1% and 7%, respectively. The revenue increase was due to higher activity in North America, Latin America, and the Middle East & Asia, partially offset by seasonality in Russia.
Well Construction pretax operating margin of 10% improved by 42 bps sequentially. North America margin improved due to higher drilling activity on land while international margin compression from lower activity was minimized by implementing a scale-to-fit strategy, acting decisively in reducing capacity, and restructuring operations to protect margins.essentially flat.
14
Reservoir CharacterizationProduction Systems
Fourth-quarter revenue of $1.6 billion, decreased 1% sequentially following74% of which came from the end of the summer campaigns for Wirelineinternational markets, increased 8% sequentially. International and Testing activity in the North SeaAmerica revenue increased 7% and Russia, where the mild winter did not significantly disrupt activity.
Reservoir Characterization pretax operating margin of 22% increased 59 basis points (“bps”) sequentially primarily driven by increased high-margin SIS digital software sales.
Drilling
Fourth-quarter revenue of $2.4 billion decreased 1% sequentially primarily11%, respectively, due to the end of the summer drilling campaign in Russia and lower drillinghigher activity in North America land.
Drilling pretax operating margin of 12% was flat sequentially as margin improvements from drilling projects in the Middle East were offset by the seasonally lower margins in Russia and lower drilling margins in North America land.across all areas.
Production
Fourth-quarter revenue of $2.9 billion declined 9% sequentially driven by lower activity and pricing for OneStim in North America land due to expected customer budget limitations and cash flow constraints. Schlumberger continued to right-size its hydraulic fracturing capacity by stacking more fleets in light of lower demand.
Production Systems pretax operating margin of 9% contractedincreased by 3282 bps sequentially due to a higher contribution from the lower OneStim activity, partially offset by strengthlong-cycle business of subsea, and improved profitability in international margins fromsurface production systems due to cost reduction measures and higher activity.
Cameron
Fourth-quarter revenue of $1.4 billion increased 2% sequentially from higher OneSubsea, Surface Systems, and Drilling Systems revenue primarily in the international markets. Valves & Process Systems was lower sequentially due to the reduced North America land activity and as a result of contributing the Valves & Process Systems measurement business to the Sensia joint venture, which closed on October1, 2019.
Cameron pretax operating margin of 9% contracted by 359 bps sequentially, driven largely by reduced margins in the OneSubsea project portfolio.
Full-Year 20192020 Results
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| 2019 |
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| 2018 |
| 2020 |
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| 2019 |
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| Income (Loss) |
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| Income |
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| Income (Loss) |
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| Income (Loss) |
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| Revenue |
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| Revenue |
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| Taxes |
| Revenue |
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| Taxes |
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| Revenue |
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| Taxes |
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Reservoir Characterization | $ | 6,312 |
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| $ | 1,327 |
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| $ | 6,173 |
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| $ | 1,347 |
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Drilling |
| 9,721 |
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| 1,216 |
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| 9,250 |
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| 1,239 |
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Production |
| 11,987 |
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|
| 993 |
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| 12,394 |
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| 1,052 |
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Cameron |
| 5,336 |
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| 613 |
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| 5,520 |
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| 653 |
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Digital & Integration | $ | 3,076 |
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| $ | 731 |
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| $ | 4,145 |
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| $ | 882 |
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Reservoir Performance |
| 5,602 |
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| 353 |
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| 9,299 |
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| 992 |
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Well Construction |
| 8,605 |
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| 866 |
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| 11,880 |
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| 1,429 |
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Production Systems |
| 6,650 |
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| 623 |
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| 8,167 |
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| 847 |
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Eliminations & other |
| (439 | ) |
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| (171 | ) |
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| (522 | ) |
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| (104 | ) |
| (332 | ) |
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| (172 | ) |
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| (574 | ) |
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| (172 | ) |
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| 3,978 |
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| 4,187 |
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| 2,401 |
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| 3,978 |
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Corporate & other (1) |
|
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| (957 | ) |
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| (937 | ) |
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| (681 | ) |
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| (957 | ) |
Interest income (2) |
|
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| 33 |
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| 52 |
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| 31 |
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| 33 |
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Interest expense (3) |
|
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| (571 | ) |
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| (537 | ) |
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| (534 | ) |
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| (571 | ) |
Charges & credits (4) |
|
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| (12,901 | ) |
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| (141 | ) |
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| (12,515 | ) |
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| (12,901 | ) |
| $ | 32,917 |
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| $ | (10,418 | ) |
| $ | 32,815 |
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| $ | 2,624 |
| $ | 23,601 |
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| $ | (11,298 | ) |
| $ | 32,917 |
|
| $ | (10,418 | ) |
(1) | Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items. |
(2) | Excludes interest income included in the segments’ income (2020: $2 million; 2019: $8 million). |
(3) | Excludes interest expense included in the segments’ income (2020: $28 million; 2019: $38 million). |
(4) | Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
Full-year 2020 revenue of $23.6 billion decreased 28% year-on-year. North America revenue declined 48% year-on-year reflecting the continued capital discipline of North America operators, who reduced drilling and hydraulic fracturing activity due to the pandemic. International revenue decreased 19% year-on-year, due to COVID-19-related disruptions, the drop in offshore activity, and reduced customer discretionary spending.
Digital & Integration
Full-year 2020 revenue of $3.1 billion decreased 26% year-on-year primarily due to lower multiclient and software sales as customers reduced activity due to COVID-19 and cut discretionary spending.
Year-on-year pretax operating margin increased 249 bps to 24% largely due to improved APS margins as a result of reduced amortization expense following the asset impairment charges that were recorded in the second quarter of 2020 and the effects of cost cutting efforts.
Reservoir Performance
Full-year 2020 revenue of $5.6 billion decreased 40% year-on-year. A little more than half of this revenue decrease was attributable to the sharp drop in OneStim pressure pumping activity in North America land. The remaining portion of the revenue decline resulted from COVID-19 disruptions that caused international activity to be cancelled or suspended.
Year-on-year pretax operating margin decreased 435 bps to 6% due to the steep revenue decline.
Well Construction
Full-year 2020 revenue of $8.6 billion decreased 28% year-on-year primarily due to the activity decline in US land as the rig count decreased significantly, while COVID-19 disruptions caused drilling activities to be cancelled or suspended in several international markets.
Year-on-year pretax operating margin only decreased 196 bps to 10% as the effects of the revenue decline were partially mitigated by prompt cost cutting measures.
Production Systems
Full-year 2020 revenue of $6.7 billion decreased 19% year-on-year primarily driven by lower sales of valves and surface systems in North America.
Year-on-year pretax operating margin decreased 101 bps to 9% due to the revenue decline.
Full-Year 2019 Results
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| Before |
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| Revenue |
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| Revenue |
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| Taxes |
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Digital & Integration | $ | 4,145 |
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| $ | 882 |
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| $ | 3,820 |
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| $ | 882 |
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Reservoir Performance |
| 9,299 |
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| 992 |
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| 10,050 |
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| 1,169 |
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Well Construction |
| 11,880 |
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| 1,429 |
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| 11,310 |
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| 1,465 |
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Production Systems |
| 8,167 |
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|
| 847 |
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| 8,168 |
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| 843 |
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Eliminations & other |
| (574 | ) |
|
| (172 | ) |
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| (533 | ) |
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| (172 | ) |
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| 3,978 |
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| 4,187 |
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Corporate & other (1) |
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| (957 | ) |
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| (937 | ) |
Interest income (2) |
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| 33 |
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| 52 |
|
Interest expense (3) |
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| (571 | ) |
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| (537 | ) |
Charges & credits (4) |
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| (12,901 | ) |
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| (141 | ) |
| $ | 32,917 |
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| $ | (10,418 | ) |
| $ | 32,815 |
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| $ | 2,624 |
|
(1) | Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items. |
(2) | Excludes interest income included in the segments’ income (2019: $8 million; 2018: $8 million). |
(3) | Excludes interest expense included in the segments’ income (2019: $38 million; 2018: $38 million). |
(4) | Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
15
Full-year 2019 revenue of $32.9 billion was essentially flat year-on-year with North America revenue decreasing 10%11% and international revenue increasing 7%. The international results were underpinned by increased investment levels. In contrast, the North America results reflectresult reflected a slowing production growth rate on land as operators maintained capital discipline and reduced drilling and hydraulic fracturing activity.
Reservoir CharacterizationDigital & Integration
Full-year 2019 revenue of $6.3$4.1 billion increased 2%9% year-on-year primarily driven by increased internationalAPS activity.
Year-on-year pretax operating margin decreased 79181 bps to 21%. primarily as a result of a less favorable revenue mix.
DrillingReservoir Performance
Full-year 2019 revenue of $9.7$9.3 billion increased 5%decreased 7% year-on-year primarily due to higher demand for drilling services, largely in the international markets that benefited Drilling & Measurements, M-I SWACO, and Integrated Drilling Services.
Year-on-year, pretax operating margin decreased 89 bps to 13% despite higher revenue as margins were affecteddriven by competitive pricing and higher costs associated with a number of integrated contracts internationally.
Production
Full-year 2019 revenue of $12.0 billion decreased 3% year-on-year with most of the revenue decline attributable to lower OneStim activity in North America as customers reduced spending due to higher cost of capital, lower borrowing capacity and expectationexpectations of better returnsreturn from their shareholders.
Year-on-year pretax operating margin decreased 2097 bps to 8%11% primarily due to reduced profitability in OneStim in North America.
CameronWell Construction
Full-year 2019 revenue of $5.3$11.9 billion decreased 3%increased 5% year-on-year primarily due to lower revenuehigher demand for OneSubsea and Valves & Process Systems.drilling services, largely in the international markets.
Year-on-year pretax operating margin decreased 3593 bps to 11%12% despite higher revenue as margins were affected by competitive pricing and higher costs associated with a number of integrated drilling contracts internationally.
Production Systems
Full-year 2019 revenue of $8.2 billion was essentially flat year-on-year as lower revenue for OneSubsea and valves and process systems was offset by higher surface system and completion sales.
Year-on-year pretax operating margin was essentially unchanged at 10.4%.
Interest and Other Income
Interest & other income consisted of the following:
(Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |
| 2019 |
|
| 2018 |
|
|
|
|
|
|
|
|
|
|
|
| ||
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||||||
Earnings of equity method investments | $ | 91 |
|
| $ | 45 |
|
| $ | 89 |
| |||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| 33 |
|
|
| 41 |
|
|
| 60 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
| |||||||||||
Unrealized gain on marketable securities |
| 39 |
|
|
| - |
|
|
| - |
| |||||||
| $ | 86 |
|
| $ | 149 |
| $ | 163 |
|
| $ | 86 |
|
| $ | 149 |
|
The increase in earnings of equity method investments in 2020 as compared to 2019 is primarily related to higher income associated with Schlumberger’s equity investments in rig- and seismic-related businesses, while the decrease in 2019 as compared to 2018 was primarily related to lower income from those same businesses.
The decrease in interest income in 2019 compared to 2018 is primarily attributable to lower cash and short-term investment balances.
The decreaseunrealized gain on marketable securities in earnings from equity income is associated with Schlumberger’s equity investments2020 relates to an investment in rig-and seismic-related businesses.a start-up company that Schlumberger previously invested in that completed an initial public offering during the fourth quarter of 2020. As a result, Schlumberger recognized an unrealized gain of $39 million to increase the carrying value of this investment to its fair value of $43 million as of December 31, 2020. See Note 3 to the Consolidated Financial Statements.
Interest Expense
Interest expense of $563 million in 2020 decreased $46 million compared to 2019. This decrease was primarily due to certain debt being refinanced with lower interest rate debt. Interest expense of $609 million in 2019 increased $34 million compared to 2018. This increase is primarily due to an increase in the weighted average debt balance during 2019 as compared to 2018.
Other
Research & engineering and General & administrative expenses, as a percentage of Revenue, were as follows:
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
|
| 2018 |
| |||||
Research & engineering |
| 2.2 | % |
|
| 2.1 | % |
| 2.5 | % |
|
| 2.2 | % |
|
| 2.1 | % |
General & administrative |
| 1.4 | % |
|
| 1.4 | % |
| 1.5 | % |
|
| 1.4 | % |
|
| 1.4 | % |
Income Taxes
The Schlumberger effective tax rate is sensitive to the geographic mix of earnings. When the percentage of pretax earnings generated outside of North America increases, the Schlumberger effective tax rate generally decreases. Conversely, when the percentage of pretax earnings generated outside of North America decreases, the Schlumberger effective tax rate generally increases.
The Schlumberger effective tax rate was 7% in 2020 as compared to 3% in 2019. The charges and credits described in Note 3 to the Consolidated Financial Statements, reduced the effective tax rate by approximately 12 and 13 points in 2020 and 2019, respectively, as a significant portion of these charges were not tax effective. Changes in the geographic mix of pretax earnings accounted for the remaining increase in the effective tax rate in 2020 as compared to 2019.
The Schlumberger effective tax rate was 3% in 2019 as compared to 17% in 2018. The lower effective tax rate was almost entirely due to the 2019 charges and credits described in Note 3 to the Consolidated Financial Statements, which primarily related to non-deductible goodwill.
Charges and Credits
Schlumberger recorded significant charges and credits during 2020, 2019 and 2018. These charges and credits, which are summarized below, are more fully described in Note 3 to the Consolidated Financial Statements.
The following is a summary of the 2020 charges and credits.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill | $ | 3,070 |
|
| $ | - |
|
| $ | 3,070 |
|
Intangible assets impairments |
| 3,321 |
|
|
| 815 |
|
|
| 2,506 |
|
Asset Performance Solutions investments |
| 1,264 |
|
|
| (4 | ) |
|
| 1,268 |
|
North America pressure pumping impairment |
| 587 |
|
|
| 133 |
|
|
| 454 |
|
Workforce reductions |
| 202 |
|
|
| 7 |
|
|
| 195 |
|
Other |
| 79 |
|
|
| 9 |
|
|
| 70 |
|
Valuation allowance |
| - |
|
|
| (164 | ) |
|
| 164 |
|
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Workforce reductions |
| 1,021 |
|
|
| 71 |
|
|
| 950 |
|
Asset Performance Solutions investments |
| 730 |
|
|
| 15 |
|
|
| 715 |
|
Fixed asset impairments |
| 666 |
|
|
| 52 |
|
|
| 614 |
|
Inventory write-downs |
| 603 |
|
|
| 49 |
|
|
| 554 |
|
Right-of-use asset impairments |
| 311 |
|
|
| 67 |
|
|
| 244 |
|
Costs associated with exiting certain activities |
| 205 |
|
|
| (25 | ) |
|
| 230 |
|
Multiclient seismic data impairment |
| 156 |
|
|
| 2 |
|
|
| 154 |
|
Repurchase of bonds |
| 40 |
|
|
| 2 |
|
|
| 38 |
|
Postretirement benefits curtailment gain |
| (69 | ) |
|
| (16 | ) |
|
| (53 | ) |
Other |
| 60 |
|
|
| 4 |
|
|
| 56 |
|
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Facility exit charges |
| 254 |
|
|
| 39 |
|
|
| 215 |
|
Workforce reductions |
| 63 |
|
|
| - |
|
|
| 63 |
|
Other |
| 33 |
|
|
| 1 |
|
|
| 32 |
|
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of OneStim |
| (104 | ) |
|
| (11 | ) |
|
| (93 | ) |
Unrealized gain on marketable securities |
| (39 | ) |
|
| (9 | ) |
|
| (30 | ) |
Other |
| 62 |
|
|
| 4 |
|
|
| 58 |
|
| $ | 12,515 |
|
| $ | 1,041 |
|
| $ | 11,474 |
|
As a result of the first quarter 2020 impairment charges, commencing with the second quarter of 2020, depreciation and amortization expense was reduced by approximately $95 million on a quarterly basis. Approximately $33 million of this quarterly reduction is reflected in the Digital & Integration Division and $12 million is reflected in the Reservoir Performance Division. The remaining $50 million is reflected in the “Corporate & other” line item.
As a result of the second quarter 2020 restructuring and impairment charges, commencing with the third quarter of 2020, depreciation and amortization expense was reduced by approximately $80 million and lease expense was reduced by $25 million on a quarterly basis. Approximately $51 million of this quarterly reduction is reflected in the Digital & Integration Division and $31 million is reflected in the Reservoir Performance Division, with the remaining $23 million reflected among the Well Construction Division and Production Systems Division.
As a result of the third quarter 2020 restructuring charges, commencing with the fourth quarter of 2020, depreciation and lease expense was reduced by $15 million on a quarterly basis. This quarterly reduction is reflected among all of the Divisions.
The following is a summary of the 2019 charges and credits, of which the $247 million gain on the formation of the Sensia joint venture is classified in Gain on formation of Sensiacredits. in the Consolidated Statement of Income (Loss), while the $13.15 billion of charges are classified in Impairments & other.
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| Pretax |
|
| Tax |
|
| Net |
| ||||||
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment | $ | 8,828 |
|
| $ | 43 |
|
| $ | 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions investments |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America restructuring | $ | 225 |
|
| $ | 51 |
|
| $ | 174 |
|
| 225 |
|
|
| 51 |
|
|
| 174 |
|
Other restructuring |
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
Workforce reductions |
| 68 |
|
|
| 8 |
|
|
| 60 |
|
| 68 |
|
|
| 8 |
|
|
| 60 |
|
Pension settlement accounting |
| 37 |
|
|
| 8 |
|
|
| 29 |
|
| 37 |
|
|
| 8 |
|
|
| 29 |
|
Repurchase of bonds |
| 22 |
|
|
| 5 |
|
|
| 17 |
|
| 22 |
|
|
| 5 |
|
|
| 17 |
|
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment |
| 8,828 |
|
|
| 43 |
|
|
| 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
|
A significant portion of the third-quarter impairment charges were recorded effective August 31, 2019. Accordingly, the 2019 results reflect a $108 million reduction in depreciation and amortization expense for the last four months of 2019. Approximately $84$64 million of this amount relates tois reflected in the Reservoir Performance Division and $20 million is reflected in the Production segment.Systems Division. The remaining $24 million is reflected in the “Corporate & other” line item.
The following is a summary of the 2018 charges and credits, of which thecredits. The $215 million gain on the sale of the marine seismic acquisition business is classified in GainGains on sale of businessbusinesses in the Consolidated Statement of Income (Loss), while the $356 million of charges are classified in Impairments & other.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Gain on sale of marine seismic acquisition business | $ | (215 | ) |
| $ | (19 | ) |
| $ | (196 | ) |
Workforce reductions |
| 184 |
|
|
| 20 |
|
|
| 164 |
|
Asset impairments |
| 172 |
|
|
| 16 |
|
|
| 156 |
|
| $ | 141 |
|
| $ | 17 |
|
| $ | 124 |
|
Liquidity and Capital Resources
The effects of the COVID-19 pandemic have resulted in a significant and swift reduction in international and US economic activity. These effects have adversely affected the demand for oil and natural gas, as well as for Schlumberger’s products and services, and caused significant volatility and disruption of the financial markets. This period of extreme economic disruption, low oil prices and reduced demand for Schlumberger’s products and services has had, and is likely to continue to have, a material adverse impact on Schlumberger’s business, results of operations, financial condition and, at times, access to sources of liquidity.
In view of the uncertainty of the depth and extent of the contraction in oil demand due to the COVID-19 pandemic combined with the weaker commodity price environment, Schlumberger had total Cash turned its strategic focus to cash conservation and Short-term investments protecting its balance sheet. As a result, in April 2020 Schlumberger announced a 75% reduction to its quarterly cash dividend. The revised dividend supports Schlumberger’s value proposition through a balanced approach of $2.2 billionshareholder distributions and $2.8 billion at December 31, 2019organic investment, while providing flexibility to address the uncertain environment. This decision reflects the Company’s focus on its capital stewardship program as well as its commitment to maintain both a strong liquidity position and 2018, respectively. Total debt was $15.3 billion and $16.1 billion at December 31, 2019 and 2018, respectively.a strong investment grade credit rating that provides privileged access to the financial markets.
Details of the components of liquidity as well as changes in liquidity follow:
| (Stated in millions) |
|
|
|
|
|
|
|
|
| (Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dec. 31, |
|
| Dec. 31, |
| Dec. 31, |
|
| Dec. 31, |
|
| Dec. 31, |
| |||||
Components of Liquidity: | 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
|
| 2018 |
| |||||
Cash | $ | 1,137 |
|
| $ | 1,433 |
| $ | 844 |
|
| $ | 1,137 |
|
| $ | 1,433 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
| 2,162 |
|
|
| 1,030 |
|
|
| 1,344 |
|
Short-term borrowings and current portion of long-term debt |
| (524 | ) |
|
| (1,407 | ) |
| (850 | ) |
|
| (524 | ) |
|
| (1,407 | ) |
Long-term debt |
| (14,770 | ) |
|
| (14,644 | ) |
| (16,036 | ) |
|
| (14,770 | ) |
|
| (14,644 | ) |
Net debt (1) | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (13,880 | ) |
| $ | (13,127 | ) |
| $ | (13,274 | ) |
|
|
|
|
|
|
|
| |||||||||||
Changes in Liquidity: | 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
|
| 2018 |
| |||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
| $ | (10,486 | ) |
| $ | (10,107 | ) |
| $ | 2,177 |
|
Impairments and other charges |
| 13,148 |
|
|
| 356 |
| |||||||||||
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| - |
| |||||||||||
Gain on sale of WesternGeco marine seismic business |
| - |
|
|
| (215 | ) | |||||||||||
Impairments and other charges and credits |
| 12,515 |
|
|
| 12,901 |
|
|
| 141 |
| |||||||
Depreciation and amortization (2) |
| 3,589 |
|
|
| 3,556 |
|
| 2,566 |
|
|
| 3,589 |
|
|
| 3,556 |
|
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
| (1,248 | ) |
|
| (1,011 | ) |
|
| (245 | ) |
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
| (28 | ) |
|
| 6 |
|
|
| (48 | ) |
Stock-based compensation expense |
| 405 |
|
|
| 345 |
|
| 397 |
|
|
| 405 |
|
|
| 345 |
|
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) |
| (16 | ) |
|
| (25 | ) |
|
| (83 | ) |
Increase in working capital and other (3) |
| (327 | ) |
|
| (130 | ) |
| (756 | ) |
|
| (327 | ) |
|
| (130 | ) |
Cash flow from operations |
| 5,431 |
|
|
| 5,713 |
|
| 2,944 |
|
|
| 5,431 |
|
|
| 5,713 |
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
| (1,116 | ) |
|
| (1,724 | ) |
|
| (2,160 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
| (303 | ) |
|
| (781 | ) |
|
| (981 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) |
| (101 | ) |
|
| (231 | ) |
|
| (100 | ) |
Free cash flow (4) |
| 2,695 |
|
|
| 2,472 |
|
| 1,424 |
|
|
| 2,695 |
|
|
| 2,472 |
|
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
| (1,734 | ) |
|
| (2,769 | ) |
|
| (2,770 | ) |
Stock repurchase program |
| (278 | ) |
|
| (400 | ) |
| (26 | ) |
|
| (278 | ) |
|
| (400 | ) |
Proceeds from employee stock plans |
| 219 |
|
|
| 261 |
|
| 146 |
|
|
| 219 |
|
|
| 261 |
|
Net proceeds from divestitures |
| 434 |
|
|
| 348 |
|
|
| - |
| |||||||
Proceeds from formation of Sensia joint venture |
| - |
|
|
| 238 |
|
|
| - |
| |||||||
Proceeds from sale of WesternGeco marine seismic business, net of cash divested |
| - |
|
|
| 579 |
|
| - |
|
|
| - |
|
|
| 579 |
|
Net proceeds from divestiture and formation of Sensia joint venture |
| 586 |
|
|
| - |
| |||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed |
| (23 | ) |
|
| (292 | ) |
| (33 | ) |
|
| (23 | ) |
|
| (292 | ) |
Repayment of finance lease obligations |
| (188 | ) |
|
| - |
|
|
| - |
| |||||||
Other |
| (283 | ) |
|
| (14 | ) |
| (181 | ) |
|
| (204 | ) |
|
| (93 | ) |
Change in net debt before impact of changes in foreign exchange rates on net debt |
| (158 | ) |
|
| 226 |
|
|
| (243 | ) | |||||||
Impact of changes in foreign exchange rates on net debt |
| (595 | ) |
|
| (79 | ) |
|
| 79 |
| |||||||
(Increase) decrease in Net Debt |
| 147 |
|
|
| (164 | ) |
| (753 | ) |
|
| 147 |
|
|
| (164 | ) |
Net Debt, Beginning of period |
| (13,274 | ) |
|
| (13,110 | ) |
| (13,127 | ) |
|
| (13,274 | ) |
|
| (13,110 | ) |
Net Debt, End of period | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (13,880 | ) |
| $ | (13,127 | ) |
| $ | (13,274 | ) |
18
(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) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments. |
(3) | Includes severance payments of approximately $843 million, $128 million |
(4) | “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 the ability of our business to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the |
Key liquidity events during 2020, 2019 and 2018 included:
| • | Cash flow from operations was $2.9 billion in 2020, $5.4 billion in 2019 and $5.7 billion in 2018. The decrease in cash flow from operations in 2020 as compared to 2019 was driven by the sharp reduction in earnings excluding non-cash charges and credits and depreciation and amortization expense as a result of the challenging business conditions in 2020. |
| • | On January 21, 2016, the Schlumberger Board of Directors approved a $10 billion share repurchase program for Schlumberger common stock. Schlumberger had repurchased $1.0 billion of Schlumberger common stock under this program as of December 31, |
The following table summarizes the activity under this share repurchase program during 2020, 2019 and 2018:
(Stated in thousands, except per share amounts) | (Stated in thousands, except per share amounts) |
| (Stated in thousands, except per share amounts) |
| ||||||||||||||||||
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| Total Cost |
|
| Total Number |
|
| Average Price |
| Total Cost |
|
| Total Number |
|
| Average Price |
| ||||||
| of Shares |
|
| of Shares |
|
| Paid per |
| of Shares |
|
| of Shares |
|
| Paid per |
| ||||||
| Purchased |
|
| Purchased |
|
| Share |
| Purchased |
|
| Purchased |
|
| Share |
| ||||||
2020 | $ | 26,244 |
|
|
| 776.2 |
|
| $ | 33.81 |
| |||||||||||
2019 | $ | 278,162 |
|
|
| 6,968.3 |
|
| $ | 39.92 |
| $ | 278,162 |
|
|
| 6,968.3 |
|
| $ | 39.92 |
|
2018 | $ | 399,786 |
|
|
| 6,495.1 |
|
| $ | 61.55 |
| $ | 399,786 |
|
|
| 6,495.1 |
|
| $ | 61.55 |
|
| • | Dividends paid during |
• | Capital investments (consisting of capital expenditures, APS investments and multiclient seismic data capitalized) were $1.5 billion in 2020, $2.7 billion in 2019 and $3.2 billion in 2018. Capital investments during 2021 are expected to be between $1.5 billion and $1.7 billion. |
| • |
|
• | During the third quarter of 2020, Schlumberger issued $500 million of 1.40% Senior Notes due 2025 and $350 million of 2.65% Senior Notes due 2030. |
• | During the second quarter of 2020, Schlumberger issued €1.0 billion of 1.375% Guaranteed Notes due 2026, $900 million of 2.650% Senior Notes due 2030 and €1.0 billion of 2.00% Guaranteed Notes due 2032. |
• | During the second quarter of 2020, Schlumberger repurchased all $600 million of its 4.20% Senior Notes due 2021 and $935 million of its 3.30% Senior Notes due 2021. Schlumberger paid a premium of approximately $40 million in |
• | During the second quarter of 2020, Schlumberger established a €5.0 billion Guaranteed Euro Medium Term Note program that provides for the issuance of various types of debt instruments such as fixed or floating rate notes in |
• | During the first quarter of 2020, |
• | During the first quarter of 2020, Schlumberger completed the sale of its 49% interest in the Bandurria Sur Block in Argentina. The net cash proceeds from this transaction, combined with the proceeds received from the divestiture of a smaller APS project, amounted to |
| • | During the fourth quarter of 2019, Schlumberger repurchased the remaining $416 million of its 3.00% Senior Notes due 2020; $126 million of its 4.50% Senior Notes due 2021; $500 million of its 4.20% Senior Notes due 2021; and $106 million of its 3.60% Senior Notes due 2022. |
| • | During the fourth quarter of 2019, Schlumberger completed the sale of the businesses and associated assets of DRILCO, Thomas Tools and Fishing and Remedial Services and received net cash proceeds of $348 million. These businesses represented less than 1% of Schlumberger’s consolidated 2019 revenue. |
| • | During the fourth quarter of 2019, Schlumberger and Rockwell Automation closed |
| • | During the third quarter of 2019, Schlumberger issued €500 million of 0.00% Notes due 2024, €500 million of 0.25% Notes due 2027 and €500 million of 0.50% Notes due 2031. |
| • | During the third quarter of 2019, Schlumberger repurchased $783 million of its 3.00% Senior Notes due 2020 and $321 million of its 3.625% Senior Notes due 2022. |
| • | During the second quarter of 2019, Schlumberger completed a debt exchange offer, pursuant to which it issued |
| • | During the first quarter of 2019, Schlumberger issued $750 million of 3.75% Senior Notes due 2024 and $850 million of 4.30% Senior Notes due 2029. |
| • | During the fourth quarter of 2018, Schlumberger issued €600 million of 1.00% Guaranteed Notes due 2026. |
19
| • | During the fourth quarter of 2018, Schlumberger completed the divestiture of its marine seismic acquisition business for net proceeds of $579 million (after considering $21 million of cash divested). |
|
|
Schlumberger’s international defined benefit pension plans were a combined 97% funded at both December 31, 2019 and December 31, 2018 based on their projected benefit obligations.
Schlumberger expects to contributereceive an income tax refund of approximately $20 million$0.5 billion in 2021. This receivable is included in Other current assets in the Consolidated Balance Sheet as of December 31, 2020.
Schlumberger has a provision of $0.5 billion relating to severance recorded in its postretirement benefit plans in 2020, subjectConsolidated Balance Sheet as of December 31, 2020. The majority of this balance is expected to market and business conditions.be paid during the first half of 2021.
As of December 31, 2019,2020, Schlumberger had $2.2$3.0 billion of cash and short-term investments on hand. Schlumberger also has separatehad committed credit facility agreements aggregating $6.5 billion with commercial banks aggregating $6.3 billion that support commercial paper programs, of which $4.3$5.9 billion was available and unused as of December 31, 2019. The $6.52020. Schlumberger also has a €1.54 billion of committed revolving credit facility agreements support commercial paper programs.that expires in the second quarter of 2021 but can be extended at Schlumberger’s option for up to an additional year. At December 31, 2020, no amounts have been drawn under this facility. Schlumberger believes these amounts are sufficient to meet future business requirements for at least the next 12 months.
The total outstanding commercial paper borrowings were $0.4 billion as of December 31, 2020 and $2.2 billion as of December 31, 2019 and $2.4 billion as of December 31, 2018.2019.
Summary of Contractual Obligations
| (Stated in millions) |
| (Stated in millions) |
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| Payment Period |
|
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|
|
| Payment Period |
| ||||||||||||||||||||||||||
| Total |
|
| 2020 |
|
| 2021-2022 |
|
| 2023-2024 |
|
| After 2024 |
| Total |
|
| 2021 |
|
| 2022-2023 |
|
| 2024-2025 |
|
| After 2025 |
| ||||||||||
Debt (1) | $ | 15,294 |
|
| $ | 524 |
|
| $ | 4,224 |
|
| $ | 5,149 |
|
| $ | 5,397 |
| $ | 16,886 |
|
| $ | 850 |
|
| $ | 3,761 |
|
| $ | 2,940 |
|
| $ | 9,335 |
|
Interest on fixed rate debt obligations (2) |
| 2,532 |
|
|
| 429 |
|
|
| 707 |
|
|
| 500 |
|
|
| 896 |
|
| 3,202 |
|
|
| 486 |
|
|
| 874 |
|
|
| 655 |
|
|
| 1,187 |
|
Operating leases |
| 1,582 |
|
|
| 510 |
|
|
| 464 |
|
|
| 275 |
|
|
| 333 |
|
| 1,154 |
|
|
| 256 |
|
|
| 360 |
|
|
| 220 |
|
|
| 318 |
|
Purchase obligations (3) |
| 4,501 |
|
|
| 4,371 |
|
|
| 110 |
|
|
| 17 |
|
|
| 3 |
|
| 3,014 |
|
|
| 2,693 |
|
|
| 199 |
|
|
| 75 |
|
|
| 47 |
|
| $ | 23,909 |
|
| $ | 5,834 |
|
| $ | 5,505 |
|
| $ | 5,941 |
|
| $ | 6,629 |
| $ | 24,256 |
|
| $ | 4,285 |
|
| $ | 5,194 |
|
| $ | 3,890 |
|
| $ | 10,887 |
|
(1) | Excludes future payments for interest. |
(2) | Excludes interest on |
(3) | Represents an estimate of contractual obligations in the ordinary course of business. Although these contractual obligations are considered enforceable and legally binding, the terms generally allow Schlumberger the option to reschedule and adjust its requirements based on business needs prior to the delivery of goods. |
Refer to Note 17, Pension and Other Benefit Plans, of the Consolidated Financial Statements for details regarding Schlumberger’s pension and other postretirement benefit obligations.
As discussed in Note 13, Income Taxes, of the Consolidated Financial Statements, included in the Schlumberger Consolidated Balance Sheet at December 31, 20192020 is approximately $1.3 billion of liabilities associated with uncertain tax positions in the over 100 tax jurisdictions in which Schlumberger conducts business. Due to the uncertain and complex application of tax regulations, combined with the difficulty in predicting when tax audits throughout the world may be concluded, Schlumberger cannot make reliable estimates of the timing of cash outflows relating to these liabilities.
Schlumberger has outstanding letters of credit/guarantees that relate to business performance bonds, custom/excise tax commitments, facility lease/rental obligations, etc. These were entered into in the ordinary course of business and are customary practices in the various countries where Schlumberger operates.
20
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires Schlumberger to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. The following accounting policies involve “critical accounting estimates” because they are particularly dependent on estimates and assumptions made by Schlumberger about matters that are inherently uncertain.
Schlumberger bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Allowance for Doubtful Accounts
Schlumberger maintains an allowance for doubtful accounts in order to record accounts receivable at their net realizable value. Judgment is involved in recording and making adjustments to this reserve. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved, or if the financial condition of Schlumberger’s customers were to deteriorate resulting in an impairment of their ability to make payments.
As a large multinational company with a long history of operating in a cyclical industry, Schlumberger has extensive experience in working with its customers during difficult times to manage its accounts receivable. During weak economic environments or when there is an extended period of weakness in oil and gas prices, Schlumberger typically experiences delays in the payment of its receivables. However, except for a $469 million accounts receivable write-off during the fourth quarter of 2017 as a result of the political and economic conditionscondition in Venezuela, Schlumberger has not had material write-offs due to uncollectible accounts receivable over the recent industry downturn. Schlumberger generates revenue in more than 120 countries. As of December 31, 2019,2020, only threefive of those countries individually accounted for greater than 5% of Schlumberger’s net receivablesaccounts receivable balance, of which only one (the United States)(Mexico) accounted for greater than 10% of such receivables.
Goodwill, Intangible Assets and Long-Lived Assets
Schlumberger records the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill. The goodwill relating to each of Schlumberger’s reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred.
Under generally accepted accounting principles, Schlumberger has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount. If, after assessing the totality of events or circumstances, Schlumberger determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing. However, if Schlumberger concludes otherwise, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
Schlumberger has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.
During 2020 and 2019, Schlumberger recorded angoodwill impairment charges of $3.1 billion and $8.8 billion, goodwill impairment charge.respectively. Refer to Note 3 to the Consolidated Financial Statements for details regarding the facts and circumstances that led to this impairment and how the fair value of each reporting unit was estimated, including the significant assumptions used and other details.
Long-lived assets, including fixed assets, intangible assets and investments in APS projects, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual
disposition. If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value, Schlumberger could be required to recognize impairment charges in the future.
21
Income Taxes
Schlumberger conducts business in more than 100 tax jurisdictions, a number of which have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audits by the tax authorities. These audits may result in assessments for additional taxes that are resolved with the authorities or, potentially, through the courts. Schlumberger recognizes the impact of a tax position in its financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits. Estimates of these tax liabilities are made based upon prior experience and are updated in light of changes in facts and circumstances. However, due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities that could be materially different from these estimates. In such an event, Schlumberger will record additional tax expense or tax benefit in the period in which such resolution occurs.
Revenue Recognition for Certain Long-livedLong-term Construction-type Contracts
Schlumberger recognizes revenue for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Under this method, revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. Approximately 5% of Schlumberger’s revenue in each of 2020, 2019 and 2018, respectively, was recognized under this method.
The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Profits are recognized based on the estimated project profit multiplied by the percentage complete. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs are often required as work progresses. Any expected losses on a project are recorded in full in the period in which they become probable.
Multiclient Seismic Data
Schlumberger capitalizes the costs associated with obtaining multiclient seismic data. The carrying value of the multiclient seismic data library at December 31, 2020 and 2019 and 2018 was $568$317 million and $601$568 million, respectively. Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that Schlumberger expects to receive from the sales of such data. However, under no circumstances will an individual survey generally will not carry a net book value greater than a 4-year, straight-line amortized value.
The carrying value of surveys is reviewed for impairment annually as well as when an event or change in circumstance indicates an impairment may have occurred. Adjustments to the carrying value are recorded when it is determined that estimated future revenues, which involve significant judgment on the part of Schlumberger, would not be sufficient to recover the carrying value of the surveys. Significant adverse changes in Schlumberger’s estimated future cash flows could result in impairment charges in a future period. For purposes of performing the annual impairment test of the multiclient library, surveys are primarily analyzed for impairment on a survey-by-survey basis.
Pension and Postretirement Benefits
Schlumberger’s pension and postretirement benefit obligations are described in detail in Note 17 to the Consolidated Financial Statements. The obligations and related costs are calculated using actuarial concepts, which include critical assumptions related to the discount rate, expected rate of return on plan assets and medical cost trend rates. These assumptions are important elements of expense and/or liability measurement and are updated on an annual basis, or upon the occurrence of significant events.
The discount rate that Schlumberger uses reflects the prevailing market rate of a portfolio of high-quality debt instruments with maturities matching the expected timing of payment of the related benefit obligations. The following summarizes the discount rates utilized by Schlumberger for its various pension and postretirement benefit plans:
| • | The discount rate utilized to determine the liability for Schlumberger’s United States pension plans and postretirement medical plan was 2.60% at December 31, 2020 and 3.30% at December 31, |
| • | The weighted-average discount rate utilized to determine the liability for Schlumberger’s international pension plans was 2.38% at December 31, 2020 and 3.27% at December 31, |
| • | The weighted-average discount rate utilized to determine expense for Schlumberger’s United States pension plans and postretirement medical plan |
22
| • | The weighted-average discount rate utilized to determine expense for Schlumberger’s international pension plans |
The expected rate of return for Schlumberger’s retirement benefit plans represents the average rate of return expected to be earned on plan assets over the period that benefits included in the benefit obligation are expected to be paid, with consideration given to the distribution of investments by asset class and historical rates of return for each individual asset class. The weighted average expected rate of return on plan assets for the United States pension plans was 6.60% in 2019both 2020 and 7.25% in 2018.2019. The weighted average expected rate of return on plan assets for the international pension plans was 6.71% in 2020 and 7.22% in 2019 and 7.40% in 2018.2019. A lower expected rate of return would increase pension expense.
Schlumberger’s medical cost trend rate assumptions are developed based on historical cost data, the near-term outlook and an assessment of likely long-term trends. The overall medical cost trend rate assumption utilized to determine the 20192020 postretirement medical expense and the postretirement medical liability at December 31, 20192020 was 7.50%7.25%, graded to 4.5% over the next twelveeleven years.
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for Schlumberger’s United States and international pension plans:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||
|
|
|
|
|
| |||||
|
|
| Effect on |
|
|
| Effect on |
| ||
| Effect on 2019 |
| Dec. 31, 2019 |
| Effect on 2020 |
| Dec. 31, 2020 |
| ||
Change in Assumption | Pretax Expense |
| Liability |
| Pretax Expense |
| Liability |
| ||
25 basis point decrease in discount rate | +$35 |
| +$567 |
| +$42 |
| +$664 |
| ||
25 basis point increase in discount rate | -$31 |
| -$535 |
| -$40 |
| -$625 |
| ||
25 basis point decrease in expected return on plan assets | +$30 |
|
| - |
| +$31 |
|
| - |
|
25 basis point increase in expected return on plan assets | -$29 |
|
| - |
| -$31 |
|
| - |
|
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for Schlumberger’s United States postretirement medical plans:
(Stated in millions) | |||
|
|
| |
Effect on | |||
| Effect on |
| Dec. 31, |
Change in Assumption | Pretax Expense |
| Liability |
25 basis point decrease in discount rate | - |
| +$ |
25 basis point increase in discount rate | - |
| -$42 |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Schlumberger is subject to market risks primarily associated with changes in foreign currency exchange rates and interest rates.
As a multinational company, Schlumberger generates revenue in more than 120 countries. Schlumberger’s functional currency is primarily the US dollar. Approximately 78%73% of Schlumberger’s revenue in 20192020 was denominated in US dollars. However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar-reported expenses will increase.
Schlumberger maintains a foreign-currency risk management strategy that uses derivative instruments to manage the impact of changes in foreign exchange rates on its earnings. Schlumberger enters into foreign currency forward contracts to provide a hedge against currency fluctuations on certain monetary assets and liabilities, and certain expenses denominated in currencies other than the functional currency.
A 10% appreciation in the US dollar from the December 31, 20192020 market rates would decreaseincrease the unrealized value of Schlumberger’s forward contracts by $8$2 million. Conversely, a 10% depreciation in the US dollar from the December 31, 20192020 market rates would increasedecrease the unrealized value of Schlumberger’s forward contracts by $9$5 million. In either scenario, the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future earnings.
23
At December 31, 2019,2020, contracts were outstanding for the US dollar equivalent of $7.7$8.6 billion in various foreign currencies, of which $3.0$6.4 billion related to hedges of debt balances denominated in currencies other than the functional currency.
Schlumberger is subject to interest rate risk on its debt and its investment portfolio. Schlumberger maintains an interest rate risk management strategy that uses a mix of variable and fixed rate debt combined with its investment portfolio and occasionally interest rate swaps to mitigate the exposure to changes in interest rates. At December 31, 2019,2020, Schlumberger had fixed rate debt aggregating approximately $12.9$16.3 billion and variable rate debt aggregating approximately $2.4 billion, before considering the effects of cross currency swaps.$0.6 billion.
Schlumberger’s exposure to interest rate risk associated with its debt is also partially mitigated by its investment portfolio. Short-term investments, which totaled approximately $1.0$2.2 billion at December 31, 2019,2020, are comprised primarily of money market funds, time deposits, certificates of deposit, commercial paper, bonds and notes, substantially all of which are denominated in US dollars. The average return on investments was 3.0%1.5% in 2019.2020.
The following table reflects the carrying amounts of Schlumberger’s debt at December 31, 20192020 by year of maturity:
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| (Stated in millions) |
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| (Stated in millions) |
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| 2020 |
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| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| Thereafter |
|
| Total |
| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
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| 2028 |
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| Thereafter |
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| Total |
| ||||||||||||||||||||
Fixed rate debt |
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2.20% Senior Notes | $ | 499 |
|
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|
|
|
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|
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|
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|
|
| $ | 499 |
| |||||||||||||||||||||||||||||||||||||||
3.30% Senior Notes |
|
|
|
| $ | 1,597 |
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,597 |
| $ | 664 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 664 |
|
4.20% Senior Notes |
|
|
|
|
| 600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
| 600 |
| |||||||||||||||||||||||||||||||||||||||
2.40% Senior Notes |
|
|
|
|
|
|
|
| $ | 998 |
|
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|
|
|
|
| 998 |
| |||||||||||||||||||||||||||||||||||||||
2.65% Senior Notes |
|
|
|
|
|
|
|
|
| 598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 598 |
|
|
|
|
| $ | 598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 598 |
|
3.63% Senior Notes |
|
|
|
|
|
|
|
|
| 294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 294 |
|
|
|
|
|
| 295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 295 |
|
2.40% Senior Notes |
|
|
|
|
| 999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 999 |
| |||||||||||||||||||||||||||||||||||||||
3.65% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,495 |
|
|
|
|
|
|
|
|
| $ | 1,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,496 |
|
4.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| 81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 81 |
|
|
|
|
|
|
|
|
|
| 80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 80 |
|
3.70% Notes |
|
|
|
|
|
|
|
|
|
|
|
| $ | 55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
| |||||||||||||||||||||||||||||||||||||||
3.75% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 746 |
|
0.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 611 |
|
3.70% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
| |||||||||||||||||||||||||||||||||||||||
1.40% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 498 |
| |||||||||||||||||||||||||||||||||||||||
4.00% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 930 |
|
1.375% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,221 |
| |||||||||||||||||||||||||||||||||||||||
1.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 665 |
|
|
|
|
|
|
|
|
|
|
| 665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 736 |
|
0.25% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 550 |
|
|
|
|
|
|
| 550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,100 |
|
|
|
|
|
|
|
|
|
|
| 1,100 |
|
3.90% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,444 |
|
|
| 1,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,450 |
|
|
|
|
|
|
| 1,450 |
|
4.30% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 845 |
|
|
| 845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 846 |
|
|
| 846 |
|
2.65% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,250 |
|
|
| 1,250 |
| |||||||||||||||||||||||||||||||||||||||
0.50% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 544 |
|
|
| 544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,099 |
|
|
| 1,099 |
|
2.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,214 |
|
|
| 1,214 |
| |||||||||||||||||||||||||||||||||||||||
7.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 208 |
|
|
| 208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 206 |
|
|
| 206 |
|
5.95% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 114 |
|
|
| 114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 114 |
|
|
| 114 |
|
5.13% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 99 |
|
|
| 99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 99 |
|
|
| 99 |
|
Total fixed rate debt | $ | 499 |
|
| $ | 2,197 |
|
| $ | 1,890 |
|
| $ | 1,576 |
|
| $ | 1,352 |
|
| $ | 929 |
|
| $ | 665 |
|
| $ | 550 |
|
| $ | 3,254 |
|
| $ | 12,912 |
| $ | 664 |
|
| $ | 1,892 |
|
| $ | 1,576 |
|
| $ | 1,412 |
|
| $ | 1,428 |
|
| $ | 1,957 |
|
| $ | 1,100 |
|
| $ | 1,450 |
|
| $ | 4,828 |
|
| $ | 16,307 |
|
Variable rate debt |
| 25 |
|
|
| 135 |
|
|
| - |
|
|
| 347 |
|
|
| 1,875 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,382 |
|
| 186 |
|
|
| - |
|
|
| 293 |
|
|
| - |
|
|
| 100 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 579 |
|
Total | $ | 524 |
|
| $ | 2,332 |
|
| $ | 1,890 |
|
| $ | 1,923 |
|
| $ | 3,227 |
|
| $ | 929 |
|
| $ | 665 |
|
| $ | 550 |
|
| $ | 3,254 |
|
| $ | 15,294 |
| $ | 850 |
|
| $ | 1,892 |
|
| $ | 1,869 |
|
| $ | 1,412 |
|
| $ | 1,528 |
|
| $ | 1,957 |
|
| $ | 1,100 |
|
| $ | 1,450 |
|
| $ | 4,828 |
|
| $ | 16,886 |
|
The fair market value of the outstanding fixed rate debt was approximately $13.4$17.6 billion as of December 31, 2019.2020. The weighted average interest rate on the variable rate debt as of December 31, 20192020 was 2.3%1.0%.
Schlumberger does not enter into derivatives for speculative purposes.
Forward-looking Statements
This Form 10-K, as well as other statements we make, containcontains “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 segmentsDivisions (and for specified productsbusiness lines or geographic areas within each segment)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, including our transformation program;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; ourSchlumberger’s restructuring efforts and charges recorded as a result of such efforts; access to raw materials; Schlumberger’s 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.
24
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, politicalgeopolitical 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 Form 10-K and other filings that we make with the SEC. 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 Form 10-K are made as of January 27, 2021, 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.
25
Item 8. Financial Statements and Supplementary Data.
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (LOSS)
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions, except per share amounts) |
| |||||||||
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services | $ | 24,358 |
|
| $ | 24,296 |
|
| $ | 21,927 |
| $ | 16,533 |
|
| $ | 24,358 |
|
| $ | 24,296 |
|
Product sales |
| 8,559 |
|
|
| 8,519 |
|
|
| 8,513 |
|
| 7,068 |
|
|
| 8,559 |
|
|
| 8,519 |
|
Total Revenue |
| 32,917 |
|
|
| 32,815 |
|
|
| 30,440 |
|
| 23,601 |
|
|
| 32,917 |
|
|
| 32,815 |
|
Interest & other income |
| 86 |
|
|
| 149 |
|
|
| 224 |
|
| 163 |
|
|
| 86 |
|
|
| 149 |
|
Gain on sale of business |
| - |
|
|
| 215 |
|
|
| - |
| |||||||||||
Gain on formation of Sensia joint venture |
| 247 |
|
|
| - |
|
|
| - |
| |||||||||||
Gains on sales of businesses |
| 104 |
|
|
| 247 |
|
|
| 215 |
| |||||||||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
| 20,828 |
|
|
| 20,618 |
|
|
| 18,206 |
|
| 14,675 |
|
|
| 20,828 |
|
|
| 20,618 |
|
Cost of sales |
| 7,892 |
|
|
| 7,860 |
|
|
| 8,337 |
|
| 6,325 |
|
|
| 7,892 |
|
|
| 7,860 |
|
Research & engineering |
| 717 |
|
|
| 702 |
|
|
| 787 |
|
| 580 |
|
|
| 717 |
|
|
| 702 |
|
General & administrative |
| 474 |
|
|
| 444 |
|
|
| 432 |
|
| 365 |
|
|
| 474 |
|
|
| 444 |
|
Impairments & other |
| 13,148 |
|
|
| 356 |
|
|
| 3,211 |
|
| 12,658 |
|
|
| 13,148 |
|
|
| 356 |
|
Merger & integration |
| - |
|
|
| - |
|
|
| 308 |
| |||||||||||
Interest |
| 609 |
|
|
| 575 |
|
|
| 566 |
|
| 563 |
|
|
| 609 |
|
|
| 575 |
|
Income (loss) before taxes |
| (10,418 | ) |
|
| 2,624 |
|
|
| (1,183 | ) |
| (11,298 | ) |
|
| (10,418 | ) |
|
| 2,624 |
|
Tax expense (benefit) |
| (311 | ) |
|
| 447 |
|
|
| 330 |
|
| (812 | ) |
|
| (311 | ) |
|
| 447 |
|
Net income (loss) |
| (10,107 | ) |
|
| 2,177 |
|
|
| (1,513 | ) |
| (10,486 | ) |
|
| (10,107 | ) |
|
| 2,177 |
|
Net income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Net income attributable to noncontrolling interests |
| 32 |
|
|
| 30 |
|
|
| 39 |
| |||||||||||
Net income (loss) attributable to Schlumberger | $ | (10,137 | ) |
| $ | 2,138 |
|
| $ | (1,505 | ) | $ | (10,518 | ) |
| $ | (10,137 | ) |
| $ | 2,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.54 |
|
| $ | (1.08 | ) | $ | (7.57 | ) |
| $ | (7.32 | ) |
| $ | 1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.53 |
|
| $ | (1.08 | ) | $ | (7.57 | ) |
| $ | (7.32 | ) |
| $ | 1.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| 1,385 |
|
|
| 1,385 |
|
|
| 1,388 |
|
| 1,390 |
|
|
| 1,385 |
|
|
| 1,385 |
|
Assuming dilution |
| 1,385 |
|
|
| 1,393 |
|
|
| 1,388 |
|
| 1,390 |
|
|
| 1,385 |
|
|
| 1,393 |
|
See the Notes to Consolidated Financial Statements
26
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | (10,486 | ) |
| $ | (10,107 | ) |
| $ | 2,177 |
|
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change arising during the period |
| 67 |
|
|
| (191 | ) |
|
| (3 | ) |
| (239 | ) |
|
| 67 |
|
|
| (191 | ) |
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss arising during the period |
| - |
|
|
| (11 | ) |
|
| (8 | ) |
| - |
|
|
| - |
|
|
| (11 | ) |
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on cash flow hedges |
| (32 | ) |
|
| (16 | ) |
|
| 22 |
| |||||||||||
Net loss on cash flow hedges |
| (90 | ) |
|
| (32 | ) |
|
| (16 | ) | |||||||||||
Reclassification to net income (loss) of net realized loss |
| 10 |
|
|
| 1 |
|
|
| - |
|
| 54 |
|
|
| 10 |
|
|
| 1 |
|
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gain (loss) arising during the period |
| 127 |
|
|
| (186 | ) |
|
| 134 |
|
| (247 | ) |
|
| 127 |
|
|
| (186 | ) |
Amortization to net income (loss) of net actuarial loss |
| 94 |
|
|
| 187 |
|
|
| 159 |
|
| 200 |
|
|
| 94 |
|
|
| 187 |
|
Amortization to net income (loss) of net prior service (credit) cost |
| (11 | ) |
|
| (5 | ) |
|
| 80 |
|
| (17 | ) |
|
| (11 | ) |
|
| (5 | ) |
Impact of curtailment |
| (69 | ) |
|
| - |
|
|
| - |
| |||||||||||
Income taxes on pension and other postretirement benefit plans |
| (71 | ) |
|
| (18 | ) |
|
| (15 | ) |
| (38 | ) |
|
| (71 | ) |
|
| (18 | ) |
Comprehensive income (loss) |
| (9,923 | ) |
|
| 1,938 |
|
|
| (1,144 | ) |
| (10,932 | ) |
|
| (9,923 | ) |
|
| 1,938 |
|
Comprehensive income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Comprehensive income attributable to noncontrolling interests |
| 32 |
|
|
| 30 |
|
|
| 39 |
| |||||||||||
Comprehensive income (loss) attributable to Schlumberger | $ | (9,953 | ) |
| $ | 1,899 |
|
| $ | (1,136 | ) | $ | (10,964 | ) |
| $ | (9,953 | ) |
| $ | 1,899 |
|
See the Notes to Consolidated Financial Statements
27
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| |||||||||||
|
|
|
|
|
|
|
| ||||||||
December 31, | 2019 |
|
| 2018 |
|
| 2020 |
|
| 2019 |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 844 |
|
| $ | 1,137 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
|
| 2,162 |
|
|
| 1,030 |
|
Receivables less allowance for doubtful accounts (2019 - $255; 2018 - $249) |
| 7,747 |
|
|
| 7,881 |
| ||||||||
Receivables less allowance for doubtful accounts (2020 - $301; 2019 - $255) |
|
| 5,247 |
|
|
| 7,747 |
| |||||||
Inventories |
| 4,130 |
|
|
| 4,010 |
|
|
| 3,354 |
|
|
| 4,130 |
|
Other current assets |
| 1,486 |
|
|
| 1,063 |
|
|
| 1,312 |
|
|
| 1,486 |
|
|
| 15,530 |
|
|
| 15,731 |
|
|
| 12,919 |
|
|
| 15,530 |
|
Investments in Affiliated Companies |
| 1,565 |
|
|
| 1,538 |
|
|
| 2,061 |
|
|
| 1,565 |
|
Fixed Assets less accumulated depreciation |
| 9,270 |
|
|
| 11,679 |
|
|
| 6,826 |
|
|
| 9,270 |
|
Multiclient Seismic Data |
| 568 |
|
|
| 601 |
|
|
| 317 |
|
|
| 568 |
|
Goodwill |
| 16,042 |
|
|
| 24,931 |
|
|
| 12,980 |
|
|
| 16,042 |
|
Intangible Assets |
| 7,089 |
|
|
| 8,727 |
|
|
| 3,455 |
|
|
| 7,089 |
|
Other Assets |
| 6,248 |
|
|
| 7,300 |
|
|
| 3,876 |
|
|
| 6,248 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 42,434 |
|
| $ | 56,312 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| 10,663 |
|
|
| 10,223 |
|
|
| 8,442 |
|
|
| 10,663 |
|
Estimated liability for taxes on income |
| 1,209 |
|
|
| 1,155 |
|
|
| 1,015 |
|
|
| 1,209 |
|
Short-term borrowings and current portion of long-term debt |
| 524 |
|
|
| 1,407 |
|
|
| 850 |
|
|
| 524 |
|
Dividends payable |
| 702 |
|
|
| 701 |
|
|
| 184 |
|
|
| 702 |
|
|
| 13,098 |
|
|
| 13,486 |
|
|
| 10,491 |
|
|
| 13,098 |
|
Long-term Debt |
| 14,770 |
|
|
| 14,644 |
|
|
| 16,036 |
|
|
| 14,770 |
|
Postretirement Benefits |
| 967 |
|
|
| 1,153 |
|
|
| 1,049 |
|
|
| 967 |
|
Deferred Taxes |
| 491 |
|
|
| 1,441 |
|
|
| 19 |
|
|
| 491 |
|
Other Liabilities |
| 2,810 |
|
|
| 3,197 |
|
|
| 2,350 |
|
|
| 2,810 |
|
|
| 32,136 |
|
|
| 33,921 |
|
|
| 29,945 |
|
|
| 32,136 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
| 13,078 |
|
|
| 13,132 |
|
|
| 12,970 |
|
|
| 13,078 |
|
Treasury stock |
| (3,631 | ) |
|
| (4,006 | ) |
|
| (3,033 | ) |
|
| (3,631 | ) |
Retained earnings |
| 18,751 |
|
|
| 31,658 |
|
|
| 7,018 |
|
|
| 18,751 |
|
Accumulated other comprehensive loss |
| (4,438 | ) |
|
| (4,622 | ) |
|
| (4,884 | ) |
|
| (4,438 | ) |
Schlumberger stockholders' equity |
| 23,760 |
|
|
| 36,162 |
|
|
| 12,071 |
|
|
| 23,760 |
|
Noncontrolling interests |
| 416 |
|
|
| 424 |
|
|
| 418 |
|
|
| 416 |
|
|
| 24,176 |
|
|
| 36,586 |
|
|
| 12,489 |
|
|
| 24,176 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 42,434 |
|
| $ | 56,312 |
|
See the Notes to Consolidated Financial Statements
28
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | (10,486 | ) |
| $ | (10,107 | ) |
| $ | 2,177 |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairments and other charges |
| 13,148 |
|
|
| 356 |
|
|
| 3,764 |
| |||||||||||
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| - |
|
|
| - |
| |||||||||||
Gain on sale of WesternGeco marine seismic acquisition business |
| - |
|
|
| (215 | ) |
|
| - |
| |||||||||||
Impairments and other charges and credits |
| 12,515 |
|
|
| 12,901 |
|
|
| 141 |
| |||||||||||
Depreciation and amortization (1) |
| 3,589 |
|
|
| 3,556 |
|
|
| 3,837 |
|
| 2,566 |
|
|
| 3,589 |
|
|
| 3,556 |
|
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (1,248 | ) |
|
| (1,011 | ) |
|
| (245 | ) |
Stock-based compensation expense |
| 405 |
|
|
| 345 |
|
|
| 343 |
|
| 397 |
|
|
| 405 |
|
|
| 345 |
|
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) |
|
| (133 | ) |
| (16 | ) |
|
| (25 | ) |
|
| (83 | ) |
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
|
| (56 | ) |
| (28 | ) |
|
| 6 |
|
|
| (48 | ) |
Change in assets and liabilities: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in receivables |
| 142 |
|
|
| 430 |
|
|
| (124 | ) | |||||||||||
(Increase) decrease in inventories |
| (314 | ) |
|
| (10 | ) |
|
| 108 |
| |||||||||||
(Increase) decrease in other current assets |
| (68 | ) |
|
| 121 |
|
|
| (174 | ) | |||||||||||
Decrease (increase) in other assets |
| 22 |
|
|
| (58 | ) |
|
| 402 |
| |||||||||||
Decrease in receivables |
| 2,345 |
|
|
| 142 |
|
|
| 430 |
| |||||||||||
Decrease (increase) in inventories |
| 86 |
|
|
| (314 | ) |
|
| (10 | ) | |||||||||||
Decrease (increase) in other current assets |
| 267 |
|
|
| (68 | ) |
|
| 121 |
| |||||||||||
(Increase) decrease in other assets |
| (25 | ) |
|
| 22 |
|
|
| (58 | ) | |||||||||||
Decrease in accounts payable and accrued liabilities |
| (161 | ) |
|
| (824 | ) |
|
| (737 | ) |
| (3,330 | ) |
|
| (161 | ) |
|
| (824 | ) |
(Decrease) increase in estimated liability for taxes on income |
| 6 |
|
|
| (103 | ) |
|
| 115 |
|
| (201 | ) |
|
| 6 |
|
|
| (103 | ) |
(Decrease) increase in other liabilities |
| (52 | ) |
|
| 69 |
|
|
| (28 | ) | |||||||||||
Increase (decrease) in other liabilities |
| 19 |
|
|
| (52 | ) |
|
| 69 |
| |||||||||||
Other |
| 98 |
|
|
| 245 |
|
|
| 119 |
|
| 83 |
|
|
| 98 |
|
|
| 245 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 5,431 |
|
|
| 5,713 |
|
|
| 5,663 |
|
| 2,944 |
|
|
| 5,431 |
|
|
| 5,713 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
|
| (2,107 | ) |
| (1,116 | ) |
|
| (1,724 | ) |
|
| (2,160 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
|
| (1,609 | ) |
| (303 | ) |
|
| (781 | ) |
|
| (981 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) |
|
| (276 | ) |
| (101 | ) |
|
| (231 | ) |
|
| (100 | ) |
Net proceeds from divestitures |
| 434 |
|
|
| 348 |
|
|
| - |
| |||||||||||
Proceeds from formation of Sensia joint venture |
| - |
|
|
| 238 |
|
|
| - |
| |||||||||||
Proceeds from sale of WesternGeco marine seismic business, net of cash divested |
| - |
|
|
| - |
|
|
| 579 |
| |||||||||||
Business acquisitions and investments, net of cash acquired |
| (23 | ) |
|
| (292 | ) |
|
| (847 | ) |
| (33 | ) |
|
| (23 | ) |
|
| (292 | ) |
Net proceeds from divestiture and formation of Sensia joint venture |
| 586 |
|
|
| - |
|
|
| - |
| |||||||||||
Proceeds from sale of WesternGeco marine seismic business, net of cash divested |
| - |
|
|
| 579 |
|
|
| - |
| |||||||||||
Sale of investments, net |
| 317 |
|
|
| 1,943 |
|
|
| 3,277 |
| |||||||||||
(Purchase) sale of investments, net |
| (1,141 | ) |
|
| 317 |
|
|
| 1,943 |
| |||||||||||
Other |
| (155 | ) |
|
| (29 | ) |
|
| (217 | ) |
| (93 | ) |
|
| (155 | ) |
|
| (29 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
| (2,011 | ) |
|
| (1,040 | ) |
|
| (1,779 | ) |
| (2,353 | ) |
|
| (2,011 | ) |
|
| (1,040 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
|
| (2,778 | ) |
| (1,734 | ) |
|
| (2,769 | ) |
|
| (2,770 | ) |
Proceeds from employee stock purchase plan |
| 196 |
|
|
| 227 |
|
|
| 212 |
|
| 146 |
|
|
| 196 |
|
|
| 227 |
|
Proceeds from exercise of stock options |
| 23 |
|
|
| 34 |
|
|
| 85 |
|
| - |
|
|
| 23 |
|
|
| 34 |
|
Stock repurchase program |
| (278 | ) |
|
| (400 | ) |
|
| (969 | ) |
| (26 | ) |
|
| (278 | ) |
|
| (400 | ) |
Proceeds from issuance of long-term debt |
| 4,004 |
|
|
| 898 |
|
|
| 2,371 |
|
| 5,837 |
|
|
| 4,004 |
|
|
| 898 |
|
Repayment of long-term debt |
| (4,799 | ) |
|
| (2,861 | ) |
|
| (2,961 | ) |
| (4,975 | ) |
|
| (4,799 | ) |
|
| (2,861 | ) |
Net decrease in short-term borrowings |
| (44 | ) |
|
| (85 | ) |
|
| (1,022 | ) | |||||||||||
Net increase (decrease) in short-term borrowings |
| 156 |
|
|
| (44 | ) |
|
| (85 | ) | |||||||||||
Repayment of finance lease-related obligations |
| (188 | ) |
|
| - |
|
|
| - |
| |||||||||||
Other |
| (51 | ) |
|
| (63 | ) |
|
| 29 |
|
| (89 | ) |
|
| (51 | ) |
|
| (63 | ) |
NET CASH USED IN FINANCING ACTIVITIES |
| (3,718 | ) |
|
| (5,020 | ) |
|
| (5,033 | ) |
| (873 | ) |
|
| (3,718 | ) |
|
| (5,020 | ) |
Net decrease in cash before translation effect |
| (298 | ) |
|
| (347 | ) |
|
| (1,149 | ) |
| (282 | ) |
|
| (298 | ) |
|
| (347 | ) |
Translation effect on cash |
| 2 |
|
|
| (19 | ) |
|
| 19 |
|
| (11 | ) |
|
| 2 |
|
|
| (19 | ) |
Cash, beginning of period |
| 1,433 |
|
|
| 1,799 |
|
|
| 2,929 |
|
| 1,137 |
|
|
| 1,433 |
|
|
| 1,799 |
|
Cash, end of period | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,799 |
| $ | 844 |
|
| $ | 1,137 |
|
| $ | 1,433 |
|
(1) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments. |
(2) | Net of the effect of business acquisitions and divestitures. |
See the Notes to Consolidated Financial Statements
29
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
| (Stated in millions) |
|
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
|
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| |||||||||||
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
|
| Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| ||||||||||||||||
| Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| ||||||||||||||||||||||||||||||||
Balance, January 1, 2017 | $ | 12,801 |
|
| $ | (3,550 | ) |
| $ | 36,470 |
|
| $ | (4,643 | ) |
| $ | 451 |
|
| $ | 41,529 |
| ||||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| (1,505 | ) |
|
|
|
|
|
| (8 | ) |
|
| (1,513 | ) | ||||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (3 | ) |
|
|
|
|
|
| (3 | ) | ||||||||||||||||||||||||||
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| (8 | ) |
|
|
|
|
|
| (8 | ) | ||||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| 22 |
|
|
|
|
|
|
| 22 |
| ||||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 358 |
|
|
|
|
|
|
| 358 |
| ||||||||||||||||||||||||||
Shares sold to optionees, less shares exchanged |
| (10 | ) |
|
| 95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 85 |
| ||||||||||||||||||||||||||
Vesting of restricted stock |
| (110 | ) |
|
| 110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
| (52 | ) |
|
| 264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 212 |
| ||||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
| (969 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (969 | ) | ||||||||||||||||||||||||||
Stock-based compensation expense |
| 343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 343 |
| ||||||||||||||||||||||||||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,775 | ) |
|
|
|
|
|
|
|
|
|
| (2,775 | ) | ||||||||||||||||||||||||||
Other |
| 3 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| (24 | ) |
|
| (20 | ) | ||||||||||||||||||||||||||
Balance, December 31, 2017 |
| 12,975 |
|
|
| (4,049 | ) |
|
| 32,190 |
|
|
| (4,274 | ) |
|
| 419 |
|
|
| 37,261 |
| ||||||||||||||||||||||||||
Balance, January 1, 2018 |
| $ | 12,975 |
|
| $ | (4,049 | ) |
| $ | 32,190 |
|
| $ | (4,274 | ) |
| $ | 419 |
|
| $ | 37,261 |
| |||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
| 2,138 |
|
|
|
|
|
|
| 39 |
|
|
| 2,177 |
|
|
|
|
|
|
|
|
|
|
| 2,138 |
|
|
|
|
|
|
| 39 |
|
|
| 2,177 |
| ||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (191 | ) |
|
| (5 | ) |
|
| (196 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (191 | ) |
|
| (5 | ) |
|
| (196 | ) | ||
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| (11 | ) |
|
|
|
|
|
| (11 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (11 | ) |
|
|
|
|
|
| (11 | ) | ||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| (15 | ) |
|
|
|
|
|
| (15 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (15 | ) |
|
|
|
|
|
| (15 | ) | ||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) | ||
Shares sold to optionees, less shares exchanged |
| (41 | ) |
|
| 75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34 |
|
|
| (41 | ) |
|
| 75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34 |
| ||
Vesting of restricted stock |
| (72 | ) |
|
| 72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| (72 | ) |
|
| 72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||
Shares issued under employee stock purchase plan |
| (67 | ) |
|
| 294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 227 |
|
|
| (67 | ) |
|
| 294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 227 |
| ||
Stock repurchase program |
|
|
|
|
| (400 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (400 | ) |
|
|
|
|
|
| (400 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (400 | ) | ||
Stock-based compensation expense |
| 345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 345 |
|
|
| 345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 345 |
| ||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) | ||
Stranded tax related to US pension |
|
|
|
|
|
|
|
|
| 109 |
|
|
| (109 | ) |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
| 109 |
|
|
| (109 | ) |
|
|
|
|
|
| - |
| ||
Other |
| (8 | ) |
|
| 2 |
|
|
| (9 | ) |
|
|
|
|
|
| (29 | ) |
|
| (44 | ) |
|
| (8 | ) |
|
| 2 |
|
|
| (9 | ) |
|
|
|
|
|
| (29 | ) |
|
| (44 | ) | ||
Balance, December 31, 2018 |
| 13,132 |
|
|
| (4,006 | ) |
|
| 31,658 |
|
|
| (4,622 | ) |
|
| 424 |
|
|
| 36,586 |
|
|
| 13,132 |
|
|
| (4,006 | ) |
|
| 31,658 |
|
|
| (4,622 | ) |
|
| 424 |
|
|
| 36,586 |
| ||
Net loss |
|
|
|
|
|
|
|
|
| (10,137 | ) |
|
|
|
|
|
| 30 |
|
|
| (10,107 | ) |
|
|
|
|
|
|
|
|
|
| (10,137 | ) |
|
|
|
|
|
| 30 |
|
|
| (10,107 | ) | ||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
|
| (1 | ) |
|
| 66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
|
| (1 | ) |
|
| 66 |
| ||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) | ||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
| 139 |
| ||
Shares sold to optionees, less shares exchanged |
| (26 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
|
|
| (26 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
| ||
Vesting of restricted stock |
| (155 | ) |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| (155 | ) |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||
Shares issued under employee stock purchase plan |
| (249 | ) |
|
| 445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 196 |
|
|
| (249 | ) |
|
| 445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 196 |
| ||
Stock repurchase program |
|
|
|
|
| (278 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (278 | ) |
|
|
|
|
|
| (278 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (278 | ) | ||
Stock-based compensation expense |
| 405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 405 |
|
|
| 405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 405 |
| ||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) | ||
Other |
| (29 | ) |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (62 | ) |
|
| (29 | ) |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (62 | ) | ||
Balance, December 31, 2019 | $ | 13,078 |
|
| $ | (3,631 | ) |
| $ | 18,751 |
|
| $ | (4,438 | ) |
| $ | 416 |
|
| $ | 24,176 |
|
|
| 13,078 |
|
|
| (3,631 | ) |
|
| 18,751 |
|
|
| (4,438 | ) |
|
| 416 |
|
|
| 24,176 |
| ||
Net loss |
|
|
|
|
|
|
|
|
|
| (10,518 | ) |
|
|
|
|
|
| 32 |
|
|
| (10,486 | ) | |||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (239 | ) |
|
| 7 |
|
|
| (232 | ) | |||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36 | ) |
|
|
|
|
|
| (36 | ) | |||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (171 | ) |
|
|
|
|
|
| (171 | ) | |||||||||||||||||||||||||
Vesting of restricted stock |
|
| (173 | ) |
|
| 173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| |||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
|
| (298 | ) |
|
| 444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 146 |
| |||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
|
| (26 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (26 | ) | |||||||||||||||||||||||||
Stock-based compensation expense |
|
| 397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 397 |
| |||||||||||||||||||||||||
Dividends declared ($0.875 per share) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) | |||||||||||||||||||||||||
Other |
|
| (34 | ) |
|
| 7 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (64 | ) | |||||||||||||||||||||||||
Balance, December 31, 2020 |
| $ | 12,970 |
|
| $ | (3,033 | ) |
| $ | 7,018 |
|
| $ | (4,884 | ) |
| $ | 418 |
|
| $ | 12,489 |
|
See the Notes to Consolidated Financial Statements
30
SCHLUMBERGER LIMITED AND SUBSIDIARIES
SHARES OF COMMON STOCK
|
|
|
|
| (Stated in millions) |
|
|
|
|
|
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares |
| |
|
|
|
|
|
|
|
|
| Shares |
|
| Issued |
|
| In Treasury |
|
| Outstanding |
| ||||
| Issued |
|
| In Treasury |
|
| Outstanding |
| |||||||||||||||
Balance, January 1, 2017 |
| 1,434 |
|
|
| (43 | ) |
|
| 1,391 |
| ||||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
| ||||||||||||
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
| ||||||||||||
Shares issued under employee stock purchase plan |
| - |
|
|
| 3 |
|
|
| 3 |
| ||||||||||||
Stock repurchase program |
| - |
|
|
| (13 | ) |
|
| (13 | ) | ||||||||||||
Balance, December 31, 2017 |
| 1,434 |
|
|
| (50 | ) |
|
| 1,384 |
| ||||||||||||
Balance, January 1, 2018 |
|
| 1,434 |
|
|
| (50 | ) |
|
| 1,384 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
|
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Vesting of restricted stock |
| - |
|
|
| 1 |
|
|
| 1 |
|
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Shares issued under employee stock purchase plan |
| - |
|
|
| 3 |
|
|
| 3 |
|
|
| - |
|
|
| 3 |
|
|
| 3 |
|
Stock repurchase program |
| - |
|
|
| (6 | ) |
|
| (6 | ) |
|
| - |
|
|
| (6 | ) |
|
| (6 | ) |
Balance, December 31, 2018 |
| 1,434 |
|
|
| (51 | ) |
|
| 1,383 |
|
|
| 1,434 |
|
|
| (51 | ) |
|
| 1,383 |
|
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
|
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
|
|
| - |
|
|
| 2 |
|
|
| 2 |
|
Shares issued under employee stock purchase plan |
| - |
|
|
| 6 |
|
|
| 6 |
|
|
| - |
|
|
| 6 |
|
|
| 6 |
|
Stock repurchase program |
| - |
|
|
| (7 | ) |
|
| (7 | ) |
|
| - |
|
|
| (7 | ) |
|
| (7 | ) |
Balance, December 31, 2019 |
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
|
|
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
|
Shares sold to optionees, less shares exchanged |
|
| - |
|
|
| 6 |
|
|
| 6 |
| |||||||||||
Vesting of restricted stock |
|
| - |
|
|
| 2 |
|
|
| 2 |
| |||||||||||
Stock repurchase program |
|
| - |
|
|
| (1 | ) |
|
| (1 | ) | |||||||||||
Balance, December 31, 2020 |
|
| 1,434 |
|
|
| (42 | ) |
|
| 1,392 |
|
See the Notes to Consolidated Financial Statements
31
Notes to Consolidated Financial Statements
1. Business Description
Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao) and its consolidated subsidiaries (collectively, “Schlumberger”) compriseform a technology company that partners with customers to access energy. Schlumberger provides leading digital solutions and deploys innovative technologies to enable performance and sustainability for the world’s leading supplierglobal energy industry. Schlumberger collaborates to create technology that unlocks access to energy for the benefit of technology for reservoir characterization, drilling, production and processing to the oil and gas industry.all.
2. Summary of Accounting Policies
The Consolidated Financial Statements of Schlumberger have been prepared in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, Schlumberger evaluates its estimates, including those related to collectibility of accounts receivable; revenue recognized for certain long-term construction-type contracts over time; recoverability of fixed assets, goodwill, intangible assets, Asset Performance Solutions investments and investments in affiliates; income taxes; multiclient seismic data; contingencies and actuarial assumptions for employee benefit plans. Schlumberger bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Schlumberger adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers on January 1, 2018. This ASU amended the existing accounting standards for revenue recognition and requires companies to recognize revenue when control of the promised goods or services is transferred to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Under the transition method selected by Schlumberger, this ASU was applied only to those contracts which were not completed as of January 1, 2018. Prior period amounts havewere not been adjusted and continue to bewere reflected in accordance with Schlumberger’s historical accounting. The adoption of this ASU did not have a material impact on Schlumberger’s Consolidated Financial Statements.
Schlumberger recognizes revenue upon the transfer of control of promised products or services to customers at an amount that reflects the consideration it expects to receive in exchange for these products or services. The vast majority of Schlumberger’s services and product offerings are short-term in nature. The time between invoicing and when payment is due under these arrangements is generally between 30 to 60 days.
Revenue is occasionally generated from contractual arrangements that include multiple performance obligations. Revenue from these arrangements is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected costs plus margin.
Revenue is recognized for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs may be required as work progresses. Progress billings are generally issued upon completion of certain phases of work as stipulated in the contract. Any expected losses on a project are recorded in full in the period in which they become probable.
Due to the nature of its businesses, Schlumberger does not have significant backlog. Total backlog was $3.0$2.6 billion at December 31, 2019,2020, of which approximately 50%60% is expected to be recognized as revenue during 2020.2021.
32
Short-term Investments
Short-term investments are comprised primarily of money market funds, time deposits, certificates of deposit, commercial paper, bonds and notes, substantially all of which are denominated in US dollars and are stated at cost plus accrued interest, which approximates fair value.
For purposes of the Consolidated Statement of Cash Flows, Schlumberger does not consider Short-term investments to be cash equivalents.
Investments in Affiliated Companies
Investments in companies in which Schlumberger does not have a controlling financial interest, but over which it has significant influence, are accounted for using the equity method. Schlumberger’s share of the after-tax earnings of equity method investees is included in Interest and other income. Investments in privately held companies in which Schlumberger does not have the ability to exercise significant influence are accounted for using the cost method.
Equity and cost method investments are classified as Investments in Affiliated Companiespublicly traded companies in which Schlumberger does not have the ability to exercise significant influence are reported at fair value, with unrealized gains and losses reported as a component of Consolidated Balance SheetInterest and other income.
Multiclient Seismic Data
Schlumberger’s multiclient library consists of completed and in-process seismic surveys that are licensed on a nonexclusive basis. Schlumberger capitalizes costs directly incurred in acquiring and processing the multiclient seismic data. Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that Schlumberger expects to receive from the sales of such data. However, under no circumstance will an individual survey generally will not carry a net book value greater than a 4-year, straight-line amortized value.
The carrying value of the multiclient library is reviewed for impairment annually as well as when an event or change in circumstance indicating impairment may have occurred. Adjustments to the carrying value are recorded when it is determined that estimated future cash flows, which involve significant judgment on the part of Schlumberger, would not be sufficient to recover the carrying value of the surveys. Significant adverse changes in Schlumberger’s estimated future cash flows could result in impairment charges in a future period.
Asset Performance Solutions
Asset Performance Solutions (“APS”), formerly Schlumberger Production Management, projects are focused on developing and managingco-managing production on behalf of Schlumberger’s clientscustomers’ assets under long-term agreements. Schlumberger will investinvests its own services and products, and historically, cash in certain historical cases, cash into the field development activities and operations. Although in certain arrangements Schlumberger is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger is generally compensated based uponon cash flow generated or on a fee-per-barrel basis. This includes certain arrangements whereby Schlumberger is only compensated based uponon incremental production it helps deliver above a mutually agreed baseline. Revenue from APS arrangements, which is recognized as the related production is achieved, represented less than 5% of Schlumberger’s consolidated revenue during each of 2019, 2018 and 2017.
Schlumberger capitalizes its cash investments in a project as well as the direct costs associated with providing services or products for which Schlumberger will be compensated when the related production is achieved. These capitalized investments are amortized to the Consolidated Statement of Income (Loss) as the related production is achieved based on the units of production method, whereby each unit produced is assigned a pro-rata portion of the unamortized costs based on estimated total production, resulting in a matching of revenue with the applicable costs. Amortization expense relating to these capitalized investments was $396 million, $731 million and $568 million in 2020, 2019 and $465 million in 2019, 2018, and 2017, respectively.
The unamortized portion of Schlumberger’s investments in APS projects was $3.724$1.713 billion and $4.201$3.724 billion at December 31, 20192020 and 2018,2019, respectively. These amounts are included within Other Assets in Schlumberger’s Consolidated Balance Sheet.
33
Concentration of Credit Risk
Schlumberger’s assets that are exposed to concentrations of credit risk consist primarily of cash, short-term investments, receivables from clients and derivative financial instruments. Schlumberger places its cash and short-term investments with financial institutions and corporations and limits the amount of credit exposure with any one of them. Schlumberger regularly evaluates the creditworthiness of the issuers in which it invests. By using derivative financial instruments to hedge certain exposures, Schlumberger exposes itself to some credit risk. Schlumberger minimizes this credit risk by entering into transactions with high-quality counterparties, limiting the exposure to each counterparty and monitoring the financial condition of its counterparties.
Schlumberger generates revenue in more than 120 countries and as such, its accounts receivable are spread over many countries and customers. Accounts receivable in the United StatesMexico represented 18%approximately 14% of Schlumberger’s net accounts receivable balance at December 31, 2019.2020. NaN other country accounted for greater than 10% of Schlumberger’s accounts receivable balance. Schlumberger maintains an allowance for uncollectible accounts receivable based on expected collectability and performs ongoing credit evaluations of its customers’ financial condition. If the financial condition of Schlumberger’s customers were to deteriorate resulting in an impairment of their ability to make payments, adjustments to the allowance may be required.
Earnings per Share
The following is a reconciliation from basic to diluted earnings (loss) per share of Schlumberger for each of the last three years:
(Stated in millions, except per share amounts) | (Stated in millions, except per share amounts) |
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) Attributable to Schlumberger |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
| |||
|
| Net Income (Loss) Attributable to Schlumberger |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
| |||||||||||||||
2020: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) | ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Diluted |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) | ||||||||||||
2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
Diluted |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 2,138 |
|
|
| 1,385 |
|
| $ | 1.54 |
|
| $ | 2,138 |
|
|
| 1,385 |
|
| $ | 1.54 |
|
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
Unvested restricted stock |
|
| - |
|
|
| 8 |
|
|
|
|
|
|
| - |
|
|
| 8 |
|
|
|
|
|
Diluted |
| $ | 2,138 |
|
|
| 1,393 |
|
| $ | 1.53 |
|
| $ | 2,138 |
|
|
| 1,393 |
|
| $ | 1.53 |
|
2017: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | (1,505 | ) |
|
| 1,388 |
|
| $ | (1.08 | ) | ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Diluted |
| $ | (1,505 | ) |
|
| 1,388 |
|
| $ | (1.08 | ) |
The number of outstanding employee stock options to purchase shares of Schlumberger common stock and unvested restricted stock units that were not included in the computation of diluted earnings/loss per share, because to do so would have had an anti-dilutive effect, were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Employee stock options |
| 46 |
|
|
| 40 |
|
|
| 47 |
|
| 48 |
|
|
| 46 |
|
|
| 40 |
|
Unvested restricted stock |
| 12 |
|
|
| - |
|
|
| 5 |
|
| 19 |
|
|
| 12 |
|
|
| - |
|
34
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation.
3. Charges and Credits
2020
Schlumberger recorded the following charges and credits during 2019, 20182020, all of which, unless otherwise noted, are classified in Impairments & other in the Consolidated Statement of Income (Loss):
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill | $ | 3,070 |
|
| $ | - |
|
| $ | 3,070 |
|
Intangible assets impairments |
| 3,321 |
|
|
| 815 |
|
|
| 2,506 |
|
Asset Performance Solutions investments |
| 1,264 |
|
|
| (4 | ) |
|
| 1,268 |
|
North America pressure pumping impairment |
| 587 |
|
|
| 133 |
|
|
| 454 |
|
Workforce reductions |
| 202 |
|
|
| 7 |
|
|
| 195 |
|
Other |
| 79 |
|
|
| 9 |
|
|
| 70 |
|
Valuation allowance |
| - |
|
|
| (164 | ) |
|
| 164 |
|
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Workforce reductions |
| 1,021 |
|
|
| 71 |
|
|
| 950 |
|
Asset Performance Solutions investments |
| 730 |
|
|
| 15 |
|
|
| 715 |
|
Fixed asset impairments |
| 666 |
|
|
| 52 |
|
|
| 614 |
|
Inventory write-downs |
| 603 |
|
|
| 49 |
|
|
| 554 |
|
Right-of-use asset impairments |
| 311 |
|
|
| 67 |
|
|
| 244 |
|
Costs associated with exiting certain activities |
| 205 |
|
|
| (25 | ) |
|
| 230 |
|
Multiclient seismic data impairment |
| 156 |
|
|
| 2 |
|
|
| 154 |
|
Repurchase of bonds |
| 40 |
|
|
| 2 |
|
|
| 38 |
|
Postretirement benefits curtailment gain |
| (69 | ) |
|
| (16 | ) |
|
| (53 | ) |
Other |
| 60 |
|
|
| 4 |
|
|
| 56 |
|
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Facility exit charges |
| 254 |
|
|
| 39 |
|
|
| 215 |
|
Workforce reductions |
| 63 |
|
|
| - |
|
|
| 63 |
|
Other |
| 33 |
|
|
| 1 |
|
|
| 32 |
|
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of OneStim |
| (104 | ) |
|
| (11 | ) |
|
| (93 | ) |
Unrealized gain on marketable securities |
| (39 | ) |
|
| (9 | ) |
|
| (30 | ) |
Other |
| 62 |
|
|
| 4 |
|
|
| 58 |
|
| $ | 12,515 |
|
| $ | 1,041 |
|
| $ | 11,474 |
|
First quarter 2020:
�� | Geopolitical events that increased the supply of low-priced oil to the global market occurred at the same time that demand weakened due to the worldwide effects of the COVID-19 pandemic, leading to a collapse in oil prices during March 2020. As a result, Schlumberger’s market capitalization deteriorated significantly compared to the end of 2019. Schlumberger’s stock price reached a low during the first quarter of 2020 not seen since 1995. Additionally, the Philadelphia Oil Services Sector index, which is comprised of companies involved in the oil services sector, reached an all-time low. As a result of these facts, Schlumberger determined that it was more likely than not that the fair value of certain of its reporting units was less than their carrying value. Therefore, Schlumberger performed an interim goodwill impairment test. |
Schlumberger had 11 reporting units with goodwill balances aggregating $16.0 billion. Schlumberger determined that the fair value of 4 of its reporting units, representing $4.5 billion of goodwill, was substantially in excess of their carrying value. Schlumberger performed a detailed quantitative impairment assessment of the remaining 7 reporting units, which represented $11.5 billion of goodwill. As a result of this assessment, Schlumberger concluded that the goodwill associated with each of these seven reporting units was impaired, resulting in a $3.1 billion goodwill impairment charge.
Following the $3.1 billion goodwill impairment charge relating to these seven reporting units,6 of these reporting units had a remaining goodwill balance. These goodwill balances ranged between $0.2 billion and 2017:$5.0 billion and aggregated to $8.4 billion as of March 31, 2020.
Schlumberger used the income approach to estimate the fair value of its reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting each reporting unit’s estimated future cash flows using Schlumberger’s estimate of the discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results. The market approach involves significant judgement involved in the selection of the appropriate peer group companies and valuation multiples.
Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. Schlumberger selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. Schlumberger’s estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, particularly in a volatile market, actual results may differ from those used in Schlumberger’s valuations which could result in additional impairment charges in the future.
The discount rates utilized to value Schlumberger’s reporting units were between 12.0% and 13.5%, depending on the risks and uncertainty inherent in the respective reporting unit as well as the size of the reporting unit. Assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50-basis point increase or decrease in the discount rate assumptions would have changed the fair value of the 7 reporting units, on average, by less than 5%.
• | The negative market indicators described above were triggering events that indicated that certain of Schlumberger’s long-lived intangible and tangible assets may have been impaired. Recoverability testing indicated that certain long-lived assets were impaired. The estimated fair value of these assets was determined to be below their carrying value. As a result, Schlumberger recorded the following impairment charges: |
- | $3.3 billion relating to intangible assets, of which $2.2 billion relates to Schlumberger’s 2016 acquisition of Cameron International Corporation and $1.1 billion relates to Schlumberger’s 2010 acquisition of Smith International, Inc. Following this impairment charge, the carrying value of the impaired intangible assets was approximately $0.9 billion. |
- | $1.3 billion relating to the carrying value of certain APS projects in North America. |
- | $0.6 billion of fixed assets associated with the pressure pumping business in North America. |
• | $202 million of severance. |
• | $79 million of other restructuring charges, primarily consisting of the impairment of an equity method investment that was determined to be other-than-temporarily impaired. |
• | $164 million relating to a valuation allowance against certain deferred tax assets. |
Second quarter 2020:
• | As previously noted, late in the first quarter of 2020 geopolitical events that increased the supply of low-priced oil to the global market occurred at the same time as demand weakened due to the worldwide effects of the COVID-19 pandemic, which led to a collapse in oil prices. As a result, the second quarter of 2020 was the most challenging quarter in decades. Schlumberger responded to these market conditions by taking actions to restructure its business and rationalize its asset base during the second quarter of 2020. These actions included reducing headcount, closing facilities and exiting business lines in certain countries. Additionally, due to the resulting activity decline, Schlumberger had assets that would no longer be utilized. As a consequence of these circumstances and decisions, Schlumberger recorded the following restructuring and asset impairment charges: |
- | $1.021 billion of severance associated with reducing its workforce by more than 21,000 employees. |
- | $730 million relating to the carrying value of certain APS projects in Latin America. |
- | $666 million of fixed asset impairments primarily relating to equipment that would no longer be utilized and facilities it exited. |
- | $603 million write-down of the carrying value of inventory to its net realizable value. |
- | $311 million write-down of right-of-use assets under operating leases associated with leased facilities Schlumberger exited and excess equipment. |
- | $205 million of costs associated with exiting certain activities. |
- | $156 million impairment of certain multiclient seismic data. |
- | $60 million of other costs, including a $42 million increase in the allowance for the doubtful accounts. |
• | During the second quarter of 2020, Schlumberger repurchased certain Senior Notes (see Note 9 – Long-term Debt), which resulted in a $40 million charge. |
• | As a consequence of the workforce reductions described above, Schlumberger recorded a curtailment gain of $69 million relating to its US postretirement medical plan. See Note 17 – Pension and Other Postretirement Benefit Plans for further details. |
The fair value of the impaired intangible assets, fixed assets, APS investments, right-of-use assets and multiclient seismic data was estimated based on the present value of projected future cash flows that the underlying assets are expected to generate. Such estimates included unobservable inputs that required significant judgement.
Third quarter 2020:
• | During the third quarter of 2020, Schlumberger recorded the following restructuring charges: |
- | $254 million of facility exit charges as Schlumberger continued to rationalize its real estate footprint relating to both leased and owned facilities. |
- | $63 million of severance. |
- | $33 million of other charges. |
Fourth quarter 2020:
• | On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada (“OneStim”), including its pressure pumping, pumpdown perforating and Permian frac sand business to Liberty Oilfield Services Inc. (“Liberty”) in exchange for a 37% equity interest in Liberty. As a result of this transaction, Schlumberger recognized a gain of $104 million during the fourth quarter of 2020. This gain is classified in Gains on sales of businesses in the Consolidated Statement of Income (Loss). |
Schlumberger will account for its investment in Liberty under the equity method of accounting and will record its share of Liberty’s net income on a one-quarter lag. Based on the quoted market price of Liberty’s shares as of December 31, 2020, the value of Schlumberger’s investment is approximately $0.7 billion.
• | During the fourth quarter of 2020, a start-up company that Schlumberger previously invested in completed an initial public offering. As a result, Schlumberger recognized an unrealized gain of $39 million to increase the carrying value of this investment to its fair value of approximately $43 million. This unrealized gain is reflected in Interest and other income in the Consolidated Statement of Income (Loss). |
• | During the fourth quarter of 2020, Schlumberger entered into an agreement to purchase new software licenses. This transaction rendered certain previously purchased licenses obsolete. As a result, Schlumberger wrote off the remaining $62 million of net book value associated with the obsolete software licenses. |
As market conditions evolve and Schlumberger continues to develop its strategy to deal with such conditions, it may result in further restructuring and/or impairment charges in future periods.
2019
Schlumberger recorded the following charges and credits during 2019, all of which are classified as Impairments & other in the Consolidated Statement of Income (Loss), except for the gain on the formation of the Sensia joint venture:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| Pretax |
|
| Tax |
|
| Net |
| ||||||
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment | $ | 8,828 |
|
| $ | 43 |
|
| $ | 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions investments |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America restructuring | $ | 225 |
|
| $ | 51 |
|
| $ | 174 |
|
| 225 |
|
|
| 51 |
|
|
| 174 |
|
Other restructuring |
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
Workforce reductions |
| 68 |
|
|
| 8 |
|
|
| 60 |
|
| 68 |
|
|
| 8 |
|
|
| 60 |
|
Pension settlement accounting |
| 37 |
|
|
| 8 |
|
|
| 29 |
|
| 37 |
|
|
| 8 |
|
|
| 29 |
|
Repurchase of bonds |
| 22 |
|
|
| 5 |
|
|
| 17 |
|
| 22 |
|
|
| 5 |
|
|
| 17 |
|
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment |
| 8,828 |
|
|
| 43 |
|
|
| 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
|
Fourth quarter of 2019:
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
Third quarter of 2019:
| • | During August 2019, Schlumberger’s market capitalization deteriorated significantly compared to the end of the second quarter of 2019. Schlumberger’s stock price reached a low not seen since 2005. Additionally, the Philadelphia Oil Services Sector Index, which is comprised of companies in the oil services sector, reached an 18-year low. |
As a result of these facts, Schlumberger determined that it was more likely than not that the fair value of certain of its reporting units werewas less than their carrying value. Therefore, Schlumberger performed an interim goodwill impairment test as of August 31, 2019.
As of August 31, 2019, Schlumberger had 17 reporting units with goodwill balances aggregating $25.0 billion. Schlumberger determined that the fair value of 7 of its reporting units, representing approximately $13.8 billion of the goodwill, was substantially in excess of their carrying value. Schlumberger performed a detailed quantitative impairment assessment of the remaining 10 reporting units, which represented $11.2 billion of goodwill. As a result of this assessment, Schlumberger concluded that the goodwill associated with 9 of the 10 reporting units was impaired, resulting in an $8.8 billion goodwill impairment charge. This charge primarily relates to Schlumberger’s Drilling and Cameron segments.
Following the $8.8 billion goodwill impairment charge relating to these nine reporting units, only 3 had a remaining goodwill balance. These three reporting units had goodwill balances which ranged between $0.4 billion and $0.6 billion and aggregated to $1.5 billion as of August 31, 2019. The 10th reporting unit, which was determined not to be impaired, had $0.9 billion of goodwill.
Schlumberger primarily used the income approach to estimate the fair value of its reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting each reporting unit’s estimated future cash flows using Schlumberger’s estimate of the discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results. The market approach involves significant judgement involved in the selection of the appropriate peer group companies and valuation multiples.
Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. Schlumberger selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. Schlumberger’s estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, actual results may differ from those used in Schlumberger’s valuations which could result in additional impairment charges in the future.
The discount rates utilized to value Schlumberger’s reporting units were between 12.5% and 14.0%, depending on the risks and uncertainty inherent in the respective reporting unit. Assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50 basis point increase in the discount rate assumption would have increased the goodwill impairment charge by approximately $0.3 billion. Conversely, assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50 basis point decrease in the discount rate assumption would have decreased the goodwill impairment charge by approximately $0.4 billion.
| • | The negative market indicators described above combined with deteriorating market conditions in North America, as well as the results of the previously mentioned fair value determinations of certain of Schlumberger’s reporting units and the appointment of a new Chief Executive Officer, |
36
Recoverability testing, which was performed as of August 31, 2019, indicated that long-lived assets associated with certain asset groups were impaired. The estimated fair value of these asset groups was determined to be below their carrying value. As a result, Schlumberger recorded the following impairment and related charges:
| - | $1.085 billion of intangible assets, of which $842 million relates to Schlumberger’s 2010 acquisition of Smith International, Inc. The remaining $243 million primarily relates to other acquisitions in North America. |
| - | $1.575 billion of charges relating to Schlumberger’s pressure pumping business in North America. This amount consists of $1.324 billion of pressure pumping equipment and related assets; $98 million of right-of-use assets under operating leases; $121 million relating to a supply contract; $19 million of inventory; and $13 million of severance. |
| - | $310 million of charges primarily relating to other businesses in North America, consisting of $230 million of fixed asset impairments, $70 million of inventory write-downs and $10 million of severance. |
| • | As a result of the |
| • | Schlumberger also recorded the following impairment and restructuring charges during the third quarter of 2019: |
| - | $231 million relating to certain equity method investments that were determined to be other-than-temporarily impaired. |
| - | $294 million impairment relating to the carrying value of certain smaller APS projects. |
| - | $242 million of restructuring charges consisting of: $62 million of severance; $57 million relating to the acceleration of stock-based compensation expense associated with certain individuals; $49 million of business divestiture costs; $29 million relating to the repurchase of certain Senior Notes (see Note 9 - Long-term Debt); and $45 million of other provisions. |
The fair value of certain of the assets impaired during the fourth quarter of 2019 was estimated based on the present value of projected future cash flows that the underlying assets are expected to generate. Such estimates included unobservable inputs that required significant judgment.
During the thirdFourth quarter of 2019, Schlumberger’s Board of Directors announced the appointment of a new Chief Executive Officer. As the new Chief Executive Officer further develops and implements his strategy, it may result in additional restructuring charges in future periods. Furthermore, Schlumberger may be required to record additional impairment charges if industry conditions deteriorate.2019:
• | Schlumberger recorded the following restructuring charges during the fourth quarter of 2019: |
- | $225 million associated with facility closures and costs to exit certain activities in North America. These charges included $123 million relating to fixed assets; $55 million of right-of-use assets under operating leases; and $47 million of other exit costs. |
- | $104 million primarily relating to restructuring certain activities outside of North America, which included $68 million associated with assets to be divested and $36 million of facility closure costs. |
- | $68 million of severance associated with streamlining its operations and exiting certain activities. |
• | Certain of Schlumberger’s defined benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit which resulted in Schlumberger recording a pension settlement charge of $37 million in the fourth quarter of 2019. See Note 17 – Pension and Other Postretirement Benefit Plans for further details. |
• | During the fourth quarter of 2019, Schlumberger repurchased certain Senior Notes (see Note 9 – Long-term Debt), which resulted in a $22 million charge. |
• | On October 1, 2019, Schlumberger and Rockwell completed the formation of Sensia, a joint venture that is the oil and gas industry’s first digitally enabled integrated automation solutions provider. Rockwell Automation owns 53% of the joint venture and Schlumberger owns 47%. In connection with this transaction, Schlumberger received a cash payment of $238 million. Schlumberger will account for its investment under the equity method of accounting. During the fourth quarter of 2019, Schlumberger recorded a $247 million gain as a result of the deconsolidation of certain of its businesses in connection with the formation of the joint venture. This gain, which is equal to the sum of the $238 million of cash proceeds received and the fair value of Schlumberger’s retained noncontrolling investment in the businesses it contributed less the carrying amount of the assets and liabilities of such businesses at the time of the closing, is classified as Gains on sale of businesses in the Consolidated Statement of Income (Loss). |
2018
During 2018, Schlumberger recorded the following charges and credits:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Gain on sale of marine seismic acquisition business | $ | (215 | ) |
| $ | (19 | ) |
| $ | (196 | ) |
Workforce reductions |
| 184 |
|
|
| 20 |
|
|
| 164 |
|
Asset impairments |
| 172 |
|
|
| 16 |
|
|
| 156 |
|
| $ | 141 |
|
| $ | 17 |
|
| $ | 124 |
|
| • | During the fourth quarter of 2018, Schlumberger completed the divestiture of its marine seismic acquisition business to Shearwater GeoServices (“Shearwater”) for $600 million of cash and a 15% equity interest in Shearwater. As a result of this transaction, Schlumberger recognized a $215 million gain. This gain is classified in Gain on sale of business in the Consolidated Statement of Income (Loss). |
| • | During the fourth quarter of 2018, Schlumberger recorded $172 million of charges to fully impair certain long-lived assets. This amount is classified in Impairments & other in the Consolidated Statement of Income (Loss). |
| • | During the second quarter of 2018, Schlumberger recorded a $184 million charge associated with workforce reductions, primarily to further streamline its support cost structure. This charge is classified in Impairment & other in the Consolidated Statement of Income (Loss). |
37
2017
Schlumberger recorded the following charges and credits during 2017, of which $3.211 billion were classified as Impairments & other, $245 million were classified in Cost of sales and $308 million were classified as Merger & integration in the Consolidated Statement of Income (Loss):
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
|
|
|
| |
| Pretax |
|
| Tax |
|
| Interests |
|
| Net |
| ||||
Impairment & other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WesternGeco seismic restructuring charges | $ | 1,114 |
|
| $ | 20 |
|
| $ | - |
|
| $ | 1,094 |
|
Venezuela investment write-down |
| 938 |
|
|
| - |
|
|
| - |
|
|
| 938 |
|
Promissory note fair value adjustment and other |
| 510 |
|
|
| - |
|
|
| 12 |
|
|
| 498 |
|
Workforce reductions |
| 247 |
|
|
| 13 |
|
|
| - |
|
|
| 234 |
|
Multiclient seismic data impairment |
| 246 |
|
|
| 81 |
|
|
| - |
|
|
| 165 |
|
Other restructuring charges |
| 156 |
|
|
| 10 |
|
|
| 22 |
|
|
| 124 |
|
Cost of sales |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
Provision for loss on long-term construction project |
| 245 |
|
|
| 22 |
|
|
| - |
|
|
| 223 |
|
Merger & integration |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
Merger and integration-related costs |
| 308 |
|
|
| 70 |
|
|
| - |
|
|
| 238 |
|
US tax reform charge |
| - |
|
|
| (76 | ) |
|
| - |
|
|
| 76 |
|
| $ | 3,764 |
|
| $ | 140 |
|
| $ | 34 |
|
| $ | 3,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
4. Inventories
Inventories, which are stated at the lower of average cost or net realizable value, consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Raw materials & field materials | $ | 1,857 |
|
| $ | 1,803 |
| $ | 1,573 |
|
| $ | 1,857 |
|
Work in progress |
| 515 |
|
|
| 519 |
|
| 464 |
|
|
| 515 |
|
Finished goods |
| 1,758 |
|
|
| 1,688 |
|
| 1,317 |
|
|
| 1,758 |
|
| $ | 4,130 |
|
| $ | 4,010 |
| $ | 3,354 |
|
| $ | 4,130 |
|
5. Fixed Assets
Fixed assets consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Land | $ | 483 |
|
| $ | 462 |
| $ | 362 |
|
| $ | 483 |
|
Buildings & improvements |
| 5,156 |
|
|
| 5,534 |
|
| 3,757 |
|
|
| 5,156 |
|
Machinery & equipment |
| 29,370 |
|
|
| 32,668 |
|
| 25,625 |
|
|
| 29,370 |
|
|
| 35,009 |
|
|
| 38,664 |
|
| 29,744 |
|
|
| 35,009 |
|
Less: Accumulated depreciation |
| 25,739 |
|
|
| 26,985 |
|
| 22,918 |
|
|
| 25,739 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,826 |
|
| $ | 9,270 |
|
The estimated useful lives of Buildings & improvements are primarily 25 to 30 years. The estimated useful lives of Machinery & equipment are primarily 5 to 10 years.
Depreciation expense, which is recorded on a straight-line basis, was $1.6 billion, $2.0 billion and $2.1 billion in 2020, 2019 and $2.3 billion in 2019, 2018, and 2017, respectively.
39
6. Multiclient Seismic Data
The change in the carrying amount of multiclient seismic data is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Balance at beginning of year | $ | 601 |
|
| $ | 727 |
| $ | 568 |
|
| $ | 601 |
|
Capitalized in period |
| 231 |
|
|
| 100 |
|
| 101 |
|
|
| 231 |
|
Charged to expense |
| (264 | ) |
|
| (226 | ) |
| (174 | ) |
|
| (264 | ) |
Impairment charge (see Note 3) |
| (156 | ) |
|
| - |
| |||||||
Other |
| (22 | ) |
|
| - |
| |||||||
| $ | 568 |
|
| $ | 601 |
| $ | 317 |
|
| $ | 568 |
|
7. Goodwill
The changes in the carrying amount of goodwill by segment were as follows:
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reservoir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Characterization |
|
| Drilling |
|
| Production |
|
| Cameron |
|
| Total |
| |||||
Balance, January 1, 2018 | $ | 4,848 |
|
| $ | 10,126 |
|
| $ | 4,697 |
|
| $ | 5,447 |
|
| $ | 25,118 |
|
Acquisitions |
| 39 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 39 |
|
Business divestiture |
| (175 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (175 | ) |
Impact of changes in exchange rates |
| (9 | ) |
|
| (15 | ) |
|
| (19 | ) |
|
| (8 | ) |
|
| (51 | ) |
Balance, December 31, 2018 |
| 4,703 |
|
|
| 10,111 |
|
|
| 4,678 |
|
|
| 5,439 |
|
|
| 24,931 |
|
Impairment |
| (97 | ) |
|
| (3,025 | ) |
|
| (705 | ) |
|
| (5,001 | ) |
|
| (8,828 | ) |
Impact of changes in exchange rates and other |
| (46 | ) |
|
| 6 |
|
|
| (24 | ) |
|
| 3 |
|
|
| (61 | ) |
Balance, December 31, 2019 | $ | 4,560 |
|
| $ | 7,092 |
|
| $ | 3,949 |
|
| $ | 441 |
|
| $ | 16,042 |
|
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reservoir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Characterization |
|
| Drilling |
|
| Production |
|
| Cameron |
|
| Total |
| |||||
Balance, January 1, 2019 | $ | 4,703 |
|
| $ | 10,111 |
|
| $ | 4,678 |
|
| $ | 5,439 |
|
| $ | 24,931 |
|
Impairment (see Note 3) |
| (97 | ) |
|
| (3,025 | ) |
|
| (705 | ) |
|
| (5,001 | ) |
|
| (8,828 | ) |
Impact of changes in exchange rates and other |
| (46 | ) |
|
| 6 |
|
|
| (24 | ) |
|
| 3 |
|
|
| (61 | ) |
Balance, December 31, 2019 |
| 4,560 |
|
|
| 7,092 |
|
|
| 3,949 |
|
|
| 441 |
|
|
| 16,042 |
|
Impairment (see Note 3) |
| - |
|
|
| (1,659 | ) |
|
| (1,228 | ) |
|
| (183 | ) |
|
| (3,070 | ) |
Impact of changes in exchange rates and other |
| - |
|
|
| 10 |
|
|
| (17 | ) |
|
| 3 |
|
|
| (4 | ) |
Balance, September 30, 2020 | $ | 4,560 |
|
| $ | 5,443 |
|
| $ | 2,704 |
|
| $ | 261 |
|
| $ | 12,968 |
|
In connection with the change in reportable segments discussed in Note 16 – Segment Information, Schlumberger reallocated goodwill that existed as of September 30, 2020 to the new reporting units on a relative fair value basis as follows:
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Digital & |
|
| Reservoir |
|
| Well |
|
| Production |
|
|
|
|
| ||||
| Integration |
|
| Performance |
|
| Construction |
|
| Systems |
|
| Total |
| |||||
Balance, October 1, 2020 | $ | 2,041 |
|
| $ | 3,806 |
|
| $ | 6,267 |
|
| $ | 854 |
|
| $ | 12,968 |
|
Impact of changes in exchange rates and other |
| 6 |
|
|
| (4 | ) |
|
| 11 |
|
|
| (1 | ) |
|
| 12 |
|
Balance, December 31, 2020 | $ | 2,047 |
|
| $ | 3,802 |
|
| $ | 6,278 |
|
| $ | 853 |
|
| $ | 12,980 |
|
8. Intangible Assets
Intangible assets consist of the following:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||||||||
| Gross |
|
| Accumulated |
|
| Net Book |
|
| Gross |
|
| Accumulated |
|
| Net Book |
| Gross |
|
| Accumulated |
|
| Net Book |
|
| Gross |
|
| Accumulated |
|
| Net Book |
| ||||||||||||
| Book Value |
|
| Amortization |
|
| Value |
|
| Book Value |
|
| Amortization |
|
| Value |
| Book Value |
|
| Amortization |
|
| Value |
|
| Book Value |
|
| Amortization |
|
| Value |
| ||||||||||||
Customer Relationships | $ | 3,779 |
|
| $ | 868 |
|
| $ | 2,911 |
|
| $ | 4,768 |
|
| $ | 1,243 |
|
| $ | 3,525 |
| $ | 1,744 |
|
| $ | 485 |
|
| $ | 1,259 |
|
| $ | 3,779 |
|
| $ | 868 |
|
| $ | 2,911 |
|
Technology/Technical Know-How |
| 2,498 |
|
|
| 779 |
|
|
| 1,719 |
|
|
| 3,494 |
|
|
| 1,246 |
|
|
| 2,248 |
|
| 1,284 |
|
|
| 488 |
|
|
| 796 |
|
|
| 2,498 |
|
|
| 779 |
|
|
| 1,719 |
|
Tradenames |
| 1,885 |
|
|
| 264 |
|
|
| 1,621 |
|
|
| 2,799 |
|
|
| 628 |
|
|
| 2,171 |
|
| 767 |
|
|
| 166 |
|
|
| 601 |
|
|
| 1,885 |
|
|
| 264 |
|
|
| 1,621 |
|
Other |
| 1,514 |
|
|
| 676 |
|
|
| 838 |
|
|
| 1,404 |
|
|
| 621 |
|
|
| 783 |
|
| 1,488 |
|
|
| 689 |
|
|
| 799 |
|
|
| 1,514 |
|
|
| 676 |
|
|
| 838 |
|
| $ | 9,676 |
|
| $ | 2,587 |
|
| $ | 7,089 |
|
| $ | 12,465 |
|
| $ | 3,738 |
|
| $ | 8,727 |
| $ | 5,283 |
|
| $ | 1,828 |
|
| $ | 3,455 |
|
| $ | 9,676 |
|
| $ | 2,587 |
|
| $ | 7,089 |
|
Customer relationships are generally amortized over periods ranging from 18 to 28 years, technology/technical know-how are generally amortized over periods ranging from 10 to 18 years, and tradenames are generally amortized over periods ranging from 15 to 30 years.
Amortization expense was $371 million in 2020, $618 million in 2019 and $673 million in 2018 and $663 million in 2017.2018.
Based on the carrying value of intangible assets at December 31, 2019,2020, amortization expense for the subsequent five years is estimated to be as follows: 2020: $530 million, 2021: $521$307 million, 2022: $497$304 million, 2023: $476$293 million, 2024: $269 million and 2024: $4722025: $259 million.
40
9. Long-term Debt and Debt Facility Agreements
Long-term Debt consists of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
3.30% Senior Notes due 2021 | $ | 1,597 |
|
| $ | 1,596 |
| |||||||
3.65% Senior Notes due 2023 |
| 1,495 |
|
|
| 1,493 |
| $ | 1,496 |
|
| $ | 1,495 |
|
3.90% Senior Notes due 2028 |
| 1,444 |
|
|
| - |
|
| 1,450 |
|
|
| 1,444 |
|
2.65% Senior Notes due 2030 |
| 1,250 |
|
|
| - |
| |||||||
1.375% Guaranteed Notes due 2026 |
| 1,221 |
|
|
| - |
| |||||||
2.00% Guaranteed Notes due 2032 |
| 1,214 |
|
|
| - |
| |||||||
0.25% Notes due 2027 |
| 1,100 |
|
|
| 550 |
| |||||||
0.50% Notes due 2031 |
| 1,099 |
|
|
| 544 |
| |||||||
2.40% Senior Notes due 2022 |
| 998 |
|
|
| 997 |
|
| 999 |
|
|
| 998 |
|
4.00% Senior Notes due 2025 |
| 929 |
|
|
| 1,742 |
|
| 930 |
|
|
| 929 |
|
4.3% Senior Notes due 2029 |
| 845 |
|
|
| - |
| |||||||
4.30% Senior Notes due 2029 |
| 846 |
|
|
| 845 |
| |||||||
3.75% Senior Notes due 2024 |
| 746 |
|
|
| - |
|
| 746 |
|
|
| 746 |
|
1.00% Guaranteed Notes due 2026 |
| 665 |
|
|
| 678 |
|
| 736 |
|
|
| 665 |
|
4.20% Senior Notes due 2021 |
| 600 |
|
|
| 1,100 |
| |||||||
0.00% Notes due 2024 |
| 611 |
|
|
| 551 |
| |||||||
2.65% Senior Notes due 2022 |
| 598 |
|
|
| 598 |
|
| 598 |
|
|
| 598 |
|
0.00% Notes due 2024 |
| 551 |
|
|
| - |
| |||||||
0.25% Notes due 2027 |
| 550 |
|
|
| - |
| |||||||
0.50% Notes due 2031 |
| 544 |
|
|
| - |
| |||||||
1.40% Senior Notes due 2025 |
| 498 |
|
|
| - |
| |||||||
3.63% Senior Notes due 2022 |
| 294 |
|
|
| 847 |
|
| 295 |
|
|
| 294 |
|
7.00% Notes due 2038 |
| 208 |
|
|
| 210 |
|
| 206 |
|
|
| 208 |
|
5.95% Notes due 2041 |
| 114 |
|
|
| 115 |
|
| 114 |
|
|
| 114 |
|
5.13% Notes due 2043 |
| 99 |
|
|
| 99 |
|
| 99 |
|
|
| 99 |
|
4.00% Notes due 2023 |
| 81 |
|
|
| 82 |
|
| 80 |
|
|
| 81 |
|
3.70% Notes due 2024 |
| 55 |
|
|
| 55 |
|
| 55 |
|
|
| 55 |
|
3.00% Senior Notes due 2020 |
| - |
|
|
| 1,596 |
| |||||||
2.20% Senior Notes due 2020 |
| - |
|
|
| 499 |
| |||||||
4.50% Notes due 2021 |
| - |
|
|
| 132 |
| |||||||
3.60% Notes due 2022 |
| - |
|
|
| 109 |
| |||||||
3.30% Senior Notes due 2021 |
| - |
|
|
| 1,597 |
| |||||||
4.20% Senior Notes due 2021 |
| - |
|
|
| 600 |
| |||||||
Commercial paper borrowings |
| 2,222 |
|
|
| 2,433 |
|
| 393 |
|
|
| 2,222 |
|
Other |
| 135 |
|
|
| 263 |
|
| - |
|
|
| 135 |
|
| $ | 14,770 |
|
| $ | 14,644 |
| $ | 16,036 |
|
| $ | 14,770 |
|
During the third quarter of 2020, Schlumberger issued $500 million of 1.40% Senior Notes due 2025 and $350 million of 2.65% Senior Notes due 2030.
During the second quarter of 2020, Schlumberger issued €1.0 billion of 1.375% Guaranteed Notes due 2026, $900 million of 2.65% Senior Notes due 2030 and €1.0 billion of 2.00% Guaranteed Notes due 2032.
During the second quarter of 2020, Schlumberger repurchased all $600 million of its 4.20% Senior Notes due 2021 and $935 million of its 3.30% Senior Notes due 2021. Schlumberger paid a premium of approximately $40 million in connection with these repurchases. This premium was classified in Impairments & other in the Consolidated Statement of Income (Loss). (See Note 3 – Charges and Credits.)
During the second quarter of 2020, Schlumberger established a €5.0 billion Guaranteed Euro Medium Term Note program that provides for the issuance of various types of debt instruments such as fixed or floating rate notes in euro, US dollar or other currencies. At December 31, 2020, Schlumberger had not issued any debt under this program.
During the first quarter of 2020, Schlumberger issued €400 million of 0.25% Notes due 2027 and €400 million of 0.50% Notes due 2031.
During the fourth quarter of 2019, Schlumberger repurchased the remaining $416 million of its 3.00% Senior Notes due 2020; $126 million of its 4.50% Senior Notes due 2021; $500 million of its 4.20% Senior Notes due 2021; and $106 million of its 3.60% Senior Notes due 2022. Schlumberger paid a premium of $28 million in connection with these repurchases. This premium, net of related credits, was classified as Impairments & other in the Consolidated Statement of Income (Loss). (See Note 3 - Charges and Credits.)
During the third quarter of 2019, Schlumberger issued €500 million of 0.00% Notes due 2024, €500 million of 0.25% Notes due 2027 and €500 million of 0.50% Notes due 2031.
During the third quarter of 2019, Schlumberger repurchased $783 million of its 3.00% Senior Notes due 2020 and $321 million of its 3.625% Senior Notes due 2022. Schlumberger paid a premium of $29 million in connection with these repurchases. This premium was classified as Impairments & other in the Consolidated Statement of Income (Loss). (See Note 3 - Charges and Credits.)
During the second quarter of 2019, Schlumberger completed a debt exchange offer, pursuant to which it issued $1.500 billion in principal of 3.90% Senior Notes due 2028 (the “New Notes”) in exchange for $401 million of 3.00% Senior Notes due 2020, $234 million of 3.63% Senior Notes due 2022 and $817 million of 4.00% Senior Notes due 2025. In connection with the exchange of principal, Schlumberger paid a premium of $48 million, substantially all of which was in the form of New Notes. This premium is being amortized as additional interest expense over the term of the New Notes.
During the first quarter of 2019 Schlumberger issued $750 million of 3.75% Senior Notes due 2024 and $850 million of 4.30% Senior Notes due 2029.
During the fourth quarter of 2018, Schlumberger issued €600 million of 1.00% Guaranteed Notes due 2026.
At December 31, 2019,2020, Schlumberger had separate committed credit facility agreements aggregating $6.5 billion with commercial banks aggregating $6.25 billion, of which $4.3$5.86 billion was available and unused. These committed facilities support commercial paper programs in the United States and Europe, and $1.0 billion matures in February 2020,of which $2.02.75 billion matures in February 2023, $2.0 billion matures in February 20242025 and $1.5 billion matures in July 2024.2025. Schlumberger also has a €1.54 billion committed revolving credit facility that expires in the second quarter of 2021 but can be extended at Schlumberger’s option for up to an additional year. At December 31, 2020, no amounts had been drawn under this facility. Interest rates and other terms of borrowing under these lines of credit vary from country to country.
by facility.
Commercial paper borrowings are classified as long-term debt to the extent they are backed up by available and unused committed credit facilities maturing in more than one year and to the extent it is Schlumberger’s intent to maintain these obligations for longer than one year. Borrowings under the commercial paper programs at December 31, 20192020 were $2.2 billion, all of which was classified in Long-term debtin the Consolidated Balance Sheet. At December 31, 2018, borrowings under the commercial paper programs were $2.4$0.4 billion, all of which was classified in Long-term debt in the Consolidated Balance Sheet. At December 31, 2019, borrowings under the commercial paper programs were $2.2 billion, all of which was classified in Long-term debt in the Consolidated Balance Sheet.
The weighted average interest rate on variable rate debt as of December 31, 20192020 was 2.3%1.0%.
Long-term Debt as of December 31, 20192020 is due as follows: $2.3 billion in 2021, $1.91.9 billion in 2022, $1.9 billion in 2023, $3.2$1.4 billion in 2024, $0.9$1.5 billion in 2025, $0.7$2.0 billion in 2026, $1.1 billion in 2027 and $3.9$6.3 billion thereafter.
The fair value of Schlumberger’s Long-term Debt at December 31, 20192020 and December 31, 20182019 was $15.3$17.3 billion and $14.6$15.3 billion, respectively, and was estimated based on quoted market prices.
Schlumberger Limited fully and unconditionally guarantees the securities issued by certain of its subsidiaries, including securities issued by Schlumberger Investment SA aand Schlumberger Finance Canada Ltd., both wholly-owned finance subsidiarysubsidiaries of Schlumberger.Schlumberger Limited.
10. Derivative Instruments and Hedging Activities
Schlumberger is exposed to market risks related to fluctuations in interest rates and foreign currency exchange rates. To mitigate these risks, Schlumberger utilizes derivative instruments. Schlumberger does not enter into derivative transactions for speculative purposes.
Interest Rate Risk
Schlumberger is subject to interest rate risk on its debt and its investment portfolio. Schlumberger maintains an interest rate risk management strategy that uses a mix of variable and fixed rate debt combined with its investment portfolio to mitigate the exposure to changes in interest rates.
At December 31, 2019, Schlumberger had fixed rate debt aggregating $12.9 billion and variable rate debt aggregating $2.4 billion.
Foreign Currency Exchange Rate Risk
As a multinational company, Schlumberger conducts its business in over 120 countries. Schlumberger’s functional currency is primarily the US dollar. Approximately 78%73% of Schlumberger’s revenues in 20192020 were denominated in US dollars. However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens (strengthens) in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar–reported expenses will increase (decrease).
Schlumberger is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency. Schlumberger uses foreign currency forward contracts to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in Accumulated Other Comprehensive Loss. Amounts recorded in Accumulated Other Comprehensive Loss are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings.
Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt denominated in currencies other than the functional currency. Schlumberger uses cross-currency swaps to provide a hedge against these cash flow risks.
42
During 2017, a Canadian-dollar functional currency subsidiary of Schlumberger issued $1.1 billion of US-dollar denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of $1.1 billion Included in orderOther Assets was $427 million at December 31, 2020 ($41 million at December 31, 2019) and included in Other Liabilities was $13 million at December 31, 2020 ($38 million at December 31, 2019) relating to hedge changes in the fair value of its $0.5 billion of 2.20% Senior Notes due 2020 and its $0.6 billion of 2.65% Senior Notes due 2022. Theseoutstanding cross-currency swaps effectively convertswap derivatives. The fair value was determined using a model with inputs that are observable in the US-dollar denominated notes to Canadian-dollar denominated debt with fixed annual interest rates of 1.97% and 2.52%, respectively.market or can be derived or collaborated by observable data.
During the third quarter of 2019, a US-dollar functional currency subsidiary of Schlumberger issued €1.5 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €1.5 billion in order to hedge changes in the fair value of its €0.5 billion 0.00% Notes due 2024, €0.5 billion 0.25% Notes due 2027 and €0.5 billion 0.50% Notes due 2031. These cross-currency swaps effectively convertedconvert the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 2.29%, 2.51% and 2.76%, respectively.
At December 31, 2019,During the first quarter of 2020, a US-dollar functional currency subsidiary of Schlumberger recognizedissued €0.8 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €0.8 billion in order to hedge changes in the fair value of its €0.4 billion of 0.25% Notes due 2027 and €0.4 billion of 0.50% Notes due 2031. These cross-currency swaps effectively convert the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 1.87% and 2.20%, respectively.
During the second quarter of 2020, a cumulative net $34 million lossUS-dollar functional currency subsidiary of Schlumberger issued €2.0 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €2.0 billion in Accumulated Other Comprehensive Loss relatingorder to revaluationhedge changes in the fair value of foreignits €1.0 billion of 1.375% Guaranteed Notes due 2026 and €1.0 billion of 2.00% Guaranteed Notes due 2032. These cross-currency swaps effectively convert the swapped portion of the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 2.77% and 3.49%, respectively.
During the third quarter of 2020, a Canadian dollar functional currency forward contracts designated as cash flow hedges,subsidiary of Schlumberger issued $0.5 billion of US dollar denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of $0.5 billion in order to hedge changes in the majorityfair value of which is expectedits $0.5 billion 1.40% Senior Notes due 2025. These cross-currency swaps effectively convert the US dollar notes to be reclassified into earnings within the next 12 months.Canadian dollar denominated debt with a fixed annual interest rate of 1.73%.
Schlumberger is exposed to changes in the fair value of assets and liabilities denominated in currencies other than the functional currency. While Schlumberger uses foreign currency forward contracts to economically hedge this exposure as it relates to certain currencies, these contracts are not designated as hedges for accounting purposes. Instead, the fair value of the contracts is recorded on the Consolidated Balance Sheet and changes in the fair value are recognized in the Consolidated Statement of Income (Loss), as are changes in the fair value of the hedged item. Transaction losses of $21 million in 2020 and transaction gains of $2 million in 2019 transaction gains ofand $1 million in 2018 and transaction losses of $17 million in 2017 were recognized in the Consolidated Statement of Income (Loss) net of related hedging activities.
At December 31, 2019,2020, contracts were outstanding for the US dollar equivalent of $7.7$8.6 billion in various foreign currencies, of which $3.0$6.4 billion relates to hedges of debt denominated in currencies other than the functional currency.
TheOther than the previously mentioned cross-currency swaps, the fair value of the other outstanding derivatives was 0t material at December 31, 20192020 and 2018.2019.
The effect of derivative instruments designated as hedges and those not designated as hedges on the Consolidated Statement of Income (Loss) was as follows:
|
|
|
|
| (Stated in millions) |
|
|
|
|
|
|
| (Stated in millions) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gain (Loss) Recognized in Income (Loss) |
|
| Consolidated Statement | Gain (Loss) Recognized in Income (Loss) |
|
| Consolidated Statement | ||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| of Income (Loss) Classification | ||||||||||||||||
Derivatives designated as fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Cross currency swap | $ | - |
|
| $ | (25 | ) |
| $ | 73 |
|
| Interest expense | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| of Income (Loss) Classification | |||
Derivatives designated as cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swap | $ | (35 | ) |
| $ | 80 |
|
| $ | (8 | ) |
| Interest expense | $ | 493 |
|
| $ | (35 | ) |
| $ | 55 |
|
| Cost of services/sales |
Foreign exchange contracts |
| (10 | ) |
|
| (1 | ) |
|
| - |
|
| Cost of services/sales |
| (5 | ) |
|
| (10 | ) |
|
| (1 | ) |
| Cost of services/sales |
| $ | (45 | ) |
| $ | 79 |
|
| $ | (8 | ) |
|
| $ | 488 |
|
| $ | (45 | ) |
| $ | 54 |
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | (5 | ) |
| $ | 40 |
|
| $ | (26 | ) |
| Cost of services/sales | $ | (29 | ) |
| $ | (5 | ) |
| $ | 40 |
|
| Cost of services/sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schlumberger does not enter into derivative transactions for speculative purposes.
11. Stockholders’ Equity
Schlumberger is authorized to issue 4,500,000,000 shares of common stock, par value $0.01 per share, of which 1,384,515,3451,392,325,960 and 1,382,964,3241,384,515,345 shares were outstanding on December 31, 20192020 and 2018,2019, respectively. Holders of common stock are entitled to one vote for each share of stock held. Schlumberger is also authorized to issue 200,000,000 shares of preferred stock, par value $0.01 per share, which may be issued in series with terms and conditions determined by the Schlumberger Board of Directors. NaN shares of preferred stock have been issued.
43
Accumulated Other Comprehensive Loss consists of the following:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension and |
|
|
|
|
| ||
| Currency |
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
| Currency |
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
| ||||
| Translation |
|
| Marketable |
|
| Cash Flow |
|
| Postretirement |
|
|
|
|
| Translation |
|
| Marketable |
|
| Cash Flow |
|
| Postretirement |
|
|
|
|
| ||||||||
| Adjustments |
|
| Securities |
|
| Hedges |
|
| Benefit Plans |
|
| Total |
| Adjustments |
|
| Securities |
|
| Hedges |
|
| Benefit Plans |
|
| Total |
| ||||||||||
Balance, January 1, 2017 | $ | (2,136 | ) |
| $ | 21 |
|
| $ | (19 | ) |
| $ | (2,509 | ) |
| $ | (4,643 | ) | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications |
| (3 | ) |
|
| (8 | ) |
|
| 22 |
|
|
| 134 |
|
|
| 145 |
| |||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| - |
|
|
| 239 |
|
|
| 239 |
| |||||||||||||||||||
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (15 | ) |
|
| (15 | ) | |||||||||||||||||||
Balance, December 31, 2017 |
| (2,139 | ) |
|
| 13 |
|
|
| 3 |
|
|
| (2,151 | ) |
|
| (4,274 | ) | |||||||||||||||||||
Balance, January 1, 2018 | $ | (2,139 | ) |
| $ | 13 |
|
| $ | 3 |
|
| $ | (2,151 | ) |
| $ | (4,274 | ) | |||||||||||||||||||
Reclassification to Retained Earnings of stranded tax effects resulting from US tax reform |
| - |
|
|
| - |
|
|
| - |
|
|
| (109 | ) |
|
| (109 | ) |
| - |
|
|
| - |
|
|
| - |
|
|
| (109 | ) |
|
| (109 | ) |
Other comprehensive loss before reclassifications |
| (191 | ) |
|
| (11 | ) |
|
| (16 | ) |
|
| (186 | ) |
|
| (404 | ) |
| (191 | ) |
|
| (11 | ) |
|
| (16 | ) |
|
| (186 | ) |
|
| (404 | ) |
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 1 |
|
|
| 182 |
|
|
| 183 |
|
| - |
|
|
| - |
|
|
| 1 |
|
|
| 182 |
|
|
| 183 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (18 | ) |
|
| (18 | ) |
| - |
|
|
| - |
|
|
| - |
|
|
| (18 | ) |
|
| (18 | ) |
Balance, December 31, 2018 |
| (2,330 | ) |
|
| 2 |
|
|
| (12 | ) |
|
| (2,282 | ) |
|
| (4,622 | ) |
| (2,330 | ) |
|
| 2 |
|
|
| (12 | ) |
|
| (2,282 | ) |
|
| (4,622 | ) |
Other comprehensive loss before reclassifications |
| 67 |
|
|
| - |
|
|
| (32 | ) |
|
| 127 |
|
|
| 162 |
|
| 67 |
|
|
| - |
|
|
| (32 | ) |
|
| 127 |
|
|
| 162 |
|
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 10 |
|
|
| 83 |
|
|
| 93 |
|
| - |
|
|
| - |
|
|
| 10 |
|
|
| 83 |
|
|
| 93 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (71 | ) |
|
| (71 | ) |
| - |
|
|
| - |
|
|
| - |
|
|
| (71 | ) |
|
| (71 | ) |
Balance, December 31, 2019 | $ | (2,263 | ) |
| $ | 2 |
|
| $ | (34 | ) |
| $ | (2,143 | ) |
| $ | (4,438 | ) |
| (2,263 | ) |
|
| 2 |
|
|
| (34 | ) |
|
| (2,143 | ) |
|
| (4,438 | ) |
Other comprehensive loss before reclassifications |
| (239 | ) |
|
| - |
|
|
| (90 | ) |
|
| (247 | ) |
|
| (576 | ) | |||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 54 |
|
|
| 114 |
|
|
| 168 |
| |||||||||||||||||||
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (38 | ) |
|
| (38 | ) | |||||||||||||||||||
Balance, December 31, 2020 | $ | (2,502 | ) |
| $ | 2 |
|
| $ | (70 | ) |
| $ | (2,314 | ) |
| $ | (4,884 | ) |
Other comprehensive loss was $447 million in 2020 and $239 million in 2018. Other comprehensive income was $184 million in 2019 and $369 million in 2017. Other comprehensive loss was $239 million in 2018.2019.
12. Stock-based Compensation Plans
Schlumberger has three types of stock-based compensation programs: (i) stock options, (ii) a restricted stock, restricted stock unit and performance share unit program (collectively referred to as “restricted stock”), and (iii) a discounted stock purchase plan (“DSPP”).
Stock Options
Key employees aremay be granted stock options under Schlumberger stock option plans. For all stock options granted, theThe exercise price equals the average of the high and low sales prices of Schlumberger stock on the date of grant; thegrant. The maximum term is 10 years, and the options generally vest in increments over five years.
The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions and resulting weighted-average fair value per share:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Dividend yield |
| 4.8 | % |
|
| 2.6 | % |
|
| 2.3 | % |
| 5.2 | % |
|
| 4.8 | % |
|
| 2.6 | % |
Expected volatility |
| 25 | % |
|
| 26 | % |
|
| 27 | % |
| 26 | % |
|
| 25 | % |
|
| 26 | % |
Risk-free interest rate |
| 2.7 | % |
|
| 2.6 | % |
|
| 2.4 | % |
| 1.7 | % |
|
| 2.7 | % |
|
| 2.6 | % |
Expected option life in years |
| 7.0 |
|
|
| 7.0 |
|
|
| 7.0 |
|
| 7.0 |
|
|
| 7.0 |
|
|
| 7.0 |
|
Weighted-average fair value per share | $ | 6.21 |
|
| $ | 17.37 |
|
| $ | 20.85 |
| $ | 5.07 |
|
| $ | 6.21 |
|
| $ | 17.37 |
|
44
The following table summarizes information related to options outstanding and options exercisable as of December 31, 2019:2020:
| (Shares stated in thousands) |
| |||||||||||||||||
|
|
| |||||||||||||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Average |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Remaining |
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
| Options |
|
| Contractual Life |
|
| Average |
|
| Options |
|
| Average |
| |||||
Exercise prices range | Outstanding |
|
| (in years) |
|
| Exercise Price |
|
| Exercisable |
|
| Exercise Price |
| |||||
$41.47 - $69.98 |
| 11,307 |
|
|
| 5.6 |
|
| $ | 53.99 |
|
|
| 5,343 |
|
| $ | 65.01 |
|
$70.92 - $76.74 |
| 10,202 |
|
|
| 3.0 |
|
| $ | 72.11 |
|
|
| 9,958 |
|
| $ | 72.17 |
|
$77.10 - $83.15 |
| 7,714 |
|
|
| 6.4 |
|
| $ | 79.32 |
|
|
| 4,257 |
|
| $ | 79.62 |
|
$84.22 - $88.77 |
| 9,210 |
|
|
| 3.8 |
|
| $ | 85.88 |
|
|
| 6,885 |
|
| $ | 85.38 |
|
$91.28 - $114.83 |
| 7,836 |
|
|
| 4.4 |
|
| $ | 95.86 |
|
|
| 7,160 |
|
| $ | 96.25 |
|
|
| 46,269 |
|
|
| 4.6 |
|
| $ | 75.65 |
|
|
| 33,603 |
|
| $ | 77.77 |
|
| (Shares stated in thousands) |
| |||||||||||||||||
|
|
| |||||||||||||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Average |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Remaining |
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
| Options |
|
| Contractual Life |
|
| Average |
|
| Options |
|
| Average |
| |||||
Exercise prices range | Outstanding |
|
| (in years) |
|
| Exercise Price |
|
| Exercisable |
|
| Exercise Price |
| |||||
$38.75 - $69.98 |
| 15,562 |
|
|
| 7.7 |
|
| $ | 44.48 |
|
|
| 3,846 |
|
| $ | 56.69 |
|
$70.31 - $76.74 |
| 9,462 |
|
|
| 2.1 |
|
| $ | 72.10 |
|
|
| 9,399 |
|
| $ | 72.06 |
|
$77.10 - $83.15 |
| 7,303 |
|
|
| 5.4 |
|
| $ | 79.29 |
|
|
| 5,425 |
|
| $ | 79.52 |
|
$83.89 - $88.77 |
| 8,549 |
|
|
| 3.0 |
|
| $ | 85.96 |
|
|
| 7,097 |
|
| $ | 85.66 |
|
$90.00 - $114.83 |
| 7,396 |
|
|
| 3.4 |
|
| $ | 95.79 |
|
|
| 7,396 |
|
| $ | 95.79 |
|
|
| 48,272 |
|
|
| 4.8 |
|
| $ | 70.37 |
|
|
| 33,163 |
|
| $ | 79.70 |
|
The weighted-average remaining contractual life of stock options exercisable as of December 31, 20192020 was 3.473.3 years.
The following table summarizes stock option activity during the years ended December 31, 2020, 2019 2018 and 2017:2018:
| (Shares stated in thousands) |
| (Shares stated in thousands) |
| |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| |||||||||||||||||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||||||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| |||||||
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
| |||||||
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| |||||||||||||
Outstanding at beginning of year |
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
|
| 46,502 |
|
| $ | 78.31 |
|
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
| |
Granted |
| 5,604 |
|
| $ | 41.50 |
|
|
| 2,121 |
|
| $ | 76.95 |
|
|
| 5,024 |
|
| $ | 86.55 |
|
| 7,468 |
|
| $ | 38.75 |
|
|
| 5,604 |
|
| $ | 41.50 |
|
|
| 2,121 |
|
| $ | 76.95 |
| |
Exercised |
| (1,045 | ) |
| $ | 38.50 |
|
|
| (936 | ) |
| $ | 54.20 |
|
|
| (1,156 | ) |
| $ | 57.87 |
|
| - |
|
| $ | - |
|
|
| (1,045 | ) |
| $ | 38.50 |
|
|
| (936 | ) |
| $ | 54.20 |
| |
Forfeited |
| (1,819 | ) |
| $ | 74.69 |
|
|
| (4,866 | ) |
| $ | 84.19 |
|
|
| (3,160 | ) |
| $ | 86.99 |
|
| (5,465 | ) |
| $ | 71.86 |
|
|
| (1,819 | ) |
| $ | 74.69 |
|
|
| (4,866 | ) |
| $ | 84.19 |
| |
Outstanding at year-end |
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
| 48,272 |
|
| $ | 70.37 |
|
|
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
Stock options outstanding and stock options exercisable as of December 31, 20192020 had 0 intrinsic value.
The total intrinsic value of options exercised during the years ended December 31, 2019 and 2018 and 2017 was $4$4 million and $15 million, and $26 million, respectively. There were 0 stock options exercised during the year ended December 31, 2020.
Restricted Stock
Schlumberger grants performance share units to -its executivesits executive officers. The number of shares earned is determined at the end of each performance periodbased on Schlumberger’s achievement of certain predefined targets as defined in the underlying performance share unit agreement. In the event Schlumberger exceeds the predefined target, shares for up to the maximum of 250% of the target award may be awarded. In the event Schlumberger falls below the predefined target, a reduced number of shares may be awarded. If
Schlumberger falls below the threshold award performance level, 0 shares will be awarded. As of December 31, 2019, 3.62020, 3.8 million performance share unitswere outstanding assuming the achievement of 100% of target.
All other restricted stock awards generally vest at the end of three years.years or vest ratably in equal tranches over a three-year period.
Restricted stock awards generally do not pay dividends or have voting rights prior to vesting. Accordingly, the fair value of a restricted stock award is the quoted market price of Schlumberger’s stock on the date of grant less the present value of the expected dividends not received prior to vesting.
45
The following table summarizes information related to restricted stock transactions:
| (Shares stated in thousands) |
| (Shares stated in thousands) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||||||||||||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| ||||||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| ||||||
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| ||||||||||||
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
| ||||||||||||
Unvested at beginning of year |
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
|
| 5,112 |
|
| $ | 78.31 |
|
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
Granted |
| 7,888 |
|
| $ | 35.56 |
|
|
| 3,204 |
|
| $ | 70.54 |
|
|
| 2,495 |
|
| $ | 73.09 |
|
| 10,637 |
|
| $ | 26.53 |
|
|
| 7,888 |
|
| $ | 35.56 |
|
|
| 3,204 |
|
| $ | 70.54 |
|
Vested |
| (2,722 | ) |
| $ | 72.09 |
|
|
| (982 | ) |
| $ | 77.62 |
|
|
| (1,645 | ) |
| $ | 83.03 |
|
| (3,059 | ) |
| $ | 71.56 |
|
|
| (2,722 | ) |
| $ | 72.09 |
|
|
| (982 | ) |
| $ | 77.62 |
|
Forfeited |
| (295 | ) |
| $ | 57.41 |
|
|
| (699 | ) |
| $ | 70.67 |
|
|
| (534 | ) |
| $ | 80.17 |
|
| (637 | ) |
| $ | 45.95 |
|
|
| (295 | ) |
| $ | 57.41 |
|
|
| (699 | ) |
| $ | 70.67 |
|
Unvested at year-end |
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
| 18,763 |
|
| $ | 35.24 |
|
|
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
Discounted Stock Purchase Plan
Under the terms of the DSPP, employees can choose to have a portion of their earnings withheld, subject to certain restrictions, to purchase Schlumberger common stock. The purchase price of the stock is 92.5% of the lower of the stock price at the beginning or end of the plan period at six-month intervals.
The fair value of the employees’ purchase rights under the DSPP was estimated using the Black-Scholes model with the following assumptions and resulting weighted-average fair value per share:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Dividend yield |
| 5.3 | % |
|
| 2.9 | % |
|
| 2.7 | % |
| 4.0 | % |
|
| 5.3 | % |
|
| 2.9 | % |
Expected volatility |
| 30 | % |
|
| 22 | % |
|
| 19 | % |
| 43 | % |
|
| 30 | % |
|
| 22 | % |
Risk-free interest rate |
| 2.3 | % |
|
| 1.6 | % |
|
| 1.0 | % |
| 0.88 | % |
|
| 2.3 | % |
|
| 1.6 | % |
Weighted-average fair value per share | $ | 5.81 |
|
| $ | 9.01 |
|
| $ | 9.46 |
| $ | 5.38 |
|
| $ | 5.81 |
|
| $ | 9.01 |
|
Total Stock-based Compensation Expense
The following summarizes stock-based compensation expense recognized in income:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Stock options | $ | 99 |
|
| $ | 134 |
|
| $ | 161 |
| $ | 75 |
|
| $ | 99 |
|
| $ | 134 |
|
Restricted stock |
| 274 |
|
|
| 179 |
|
|
| 148 |
|
| 293 |
|
|
| 274 |
|
|
| 179 |
|
DSPP |
| 32 |
|
|
| 32 |
|
|
| 34 |
|
| 29 |
|
|
| 32 |
|
|
| 32 |
|
| $ | 405 |
|
| $ | 345 |
|
| $ | 343 |
| $ | 397 |
|
| $ | 405 |
|
| $ | 345 |
|
At December 31, 2019,2020, there was $324$335 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements, of which $191$198 million is expected to be recognized in 2020, $100 million in 2021, $27$102 million in 2022, $6$26 million in 2023.2023, and $9 million in 2024.
As of December 31, 2019,2020, approximately 3516 million shares of Schlumberger common stock were available for future grants under Schlumberger’s stock-based compensation programs.
46
13. Income Taxes
Schlumberger operates in more than 100 tax jurisdictions, where statutory tax rates generally vary from 0% to 35%.
Income (loss) before taxes subject to United States and non-United States income taxes was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
United States | $ | (8,991 | ) |
| $ | (55 | ) |
| $ | (841 | ) | $ | (4,394 | ) |
| $ | (8,991 | ) |
| $ | (55 | ) |
Outside United States |
| (1,427 | ) |
|
| 2,679 |
|
|
| (342 | ) |
| (6,904 | ) |
|
| (1,427 | ) |
|
| 2,679 |
|
| $ | (10,418 | ) |
| $ | 2,624 |
|
| $ | (1,183 | ) | $ | (11,298 | ) |
| $ | (10,418 | ) |
| $ | 2,624 |
|
Schlumberger recorded net pretax charges of $12.515 billion in 2020 ($3.961 billion in the US and $8.554 billion outside the US); $12.901 billion in 2019 ($8.769 billion in the US and $4.132 billion outside the US); and $141 million in 2018 ($102 million in the US and $39 million outside the US); and $3.764 billion in 2017 ($533 million in the US and $3.231 billion outside the US). These charges and credits are included in the table above and are more fully described in Note 3 – Charges and Credits.
The components of net deferred tax assets (liabilities) were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Postretirement benefits | $ | 51 |
|
| $ | 122 |
| |||||||
Intangible assets |
| (1,833 | ) |
|
| (2,110 | ) | $ | (881 | ) |
| $ | (1,790 | ) |
Investments in non-US subsidiaries |
| (220 | ) |
|
| (223 | ) | |||||||
Net operating losses |
| 421 |
|
|
| 144 |
| |||||||
Fixed assets, net |
| 434 |
|
|
| (140 | ) |
| 151 |
|
|
| 434 |
|
Inventories |
| 155 |
|
|
| 111 |
|
| 59 |
|
|
| 155 |
|
Investments in non-US subsidiaries |
| (171 | ) |
|
| (220 | ) | |||||||
Foreign tax credits |
| 312 |
|
|
| 343 |
|
| - |
|
|
| 312 |
|
Other, net |
| 610 |
|
|
| 456 |
|
| 402 |
|
|
| 474 |
|
| $ | (491 | ) |
| $ | (1,441 | ) | $ | (19 | ) |
| $ | (491 | ) |
The above deferred tax balances at December 31, 20192020 and 20182019 were net of valuation allowances relating to net operating losses in certain countries of $127 million and $82 million, respectively. Additionally, the deferred tax balances at December 31, 2020 were net of valuation allowances relating to foreign tax credits and $87capital losses of $106 million and $54 million, respectively.
Approximately $353 million of the $421 million deferred tax asset relating to net operating losses at December 31, 2020 can be carried forward indefinitely. The vast majority of the remaining balance expires at various dates between 2030 and 2040.
Schlumberger generally does not provide for taxes related to itsthe undistributed earnings of its subsidiaries because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested. Taxes that would be incurred if the undistributed earnings of other Schlumberger subsidiaries were distributed to their ultimate parent company would not be material.
The components of Tax expense (benefit) were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (81 | ) |
| $ | 124 |
|
| $ | (170 | ) | $ | 21 |
|
| $ | (81 | ) |
| $ | 124 |
|
United States-State |
| 11 |
|
|
| (50 | ) |
|
| 57 |
|
| 5 |
|
|
| 11 |
|
|
| (50 | ) |
Outside United States |
| 770 |
|
|
| 618 |
|
|
| 703 |
|
| 410 |
|
|
| 770 |
|
|
| 618 |
|
|
| 700 |
|
|
| 692 |
|
|
| 590 |
|
| 436 |
|
|
| 700 |
|
|
| 692 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (660 | ) |
| $ | (143 | ) |
| $ | (225 | ) | $ | (824 | ) |
| $ | (660 | ) |
| $ | (143 | ) |
United States-State |
| (93 | ) |
|
| (4 | ) |
|
| 4 |
|
| (67 | ) |
|
| (93 | ) |
|
| (4 | ) |
Outside United States |
| (257 | ) |
|
| (69 | ) |
|
| (47 | ) |
| (563 | ) |
|
| (257 | ) |
|
| (69 | ) |
Valuation allowance |
| (1 | ) |
|
| (29 | ) |
|
| 8 |
|
| 206 |
|
|
| (1 | ) |
|
| (29 | ) |
|
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (1,248 | ) |
|
| (1,011 | ) |
|
| (245 | ) |
| $ | (311 | ) |
| $ | 447 |
|
| $ | 330 |
| $ | (812 | ) |
| $ | (311 | ) |
| $ | 447 |
|
47
A reconciliation of the United States statutory federal tax rate to the consolidated effective tax rate follows:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
US federal statutory rate |
| 21 | % |
|
| 21 | % |
|
| 35 | % |
| 21 | % |
|
| 21 | % |
|
| 21 | % |
State tax |
| - |
|
|
| (2 | ) |
|
| - |
|
| - |
|
|
| - |
|
|
| (2 | ) |
Non-US income taxed at different rates |
| - |
|
|
| (2 | ) |
|
| 29 |
|
| - |
|
|
| - |
|
|
| (2 | ) |
Charges and credits (See Note 3) |
| (19 | ) |
|
| - |
|
|
| (93 | ) |
| (14 | ) |
|
| (19 | ) |
|
| - |
|
Enactment of US tax reform (See Note 3) |
| - |
|
|
| - |
|
|
| (6 | ) | |||||||||||
Other |
| 1 |
|
|
| - |
|
|
| 7 |
|
| - |
|
|
| 1 |
|
|
| - |
|
|
| 3 | % |
|
| 17 | % |
|
| (28 | )% |
| 7 | % |
|
| 3 | % |
|
| 17 | % |
A number of the jurisdictions in which Schlumberger operates have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audit by the tax authorities. These audits may result in assessments for additional taxes that are resolved with the tax authorities or, potentially, through the courts. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits. Due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities which could be materially different from these estimates.
A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for the years ended December 31, 2020, 2019 2018 and 20172018 is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Balance at beginning of year | $ | 1,433 |
|
| $ | 1,393 |
|
| $ | 1,419 |
| $ | 1,301 |
|
| $ | 1,433 |
|
| $ | 1,393 |
|
Additions based on tax positions related to the current year |
| 86 |
|
|
| 88 |
|
|
| 132 |
|
| 76 |
|
|
| 86 |
|
|
| 88 |
|
Additions for tax positions of prior years |
| 65 |
|
|
| 145 |
|
|
| 58 |
|
| 78 |
|
|
| 65 |
|
|
| 145 |
|
Impact of changes in exchange rates |
| 2 |
|
|
| (41 | ) |
|
| 23 |
|
| (3 | ) |
|
| 2 |
|
|
| (41 | ) |
Settlements with tax authorities |
| (50 | ) |
|
| (22 | ) |
|
| (41 | ) |
| (15 | ) |
|
| (50 | ) |
|
| (22 | ) |
Reductions for tax positions of prior years |
| (176 | ) |
|
| (57 | ) |
|
| (157 | ) |
| (87 | ) |
|
| (176 | ) |
|
| (57 | ) |
Reductions due to the lapse of the applicable statute of limitations |
| (59 | ) |
|
| (73 | ) |
|
| (41 | ) |
| (79 | ) |
|
| (59 | ) |
|
| (73 | ) |
| $ | 1,301 |
|
| $ | 1,433 |
|
| $ | 1,393 |
| $ | 1,271 |
|
| $ | 1,301 |
|
| $ | 1,433 |
|
The amounts above exclude accrued interest and penalties of $184 million, $188 million $205 million and $195$205 million at December 31, 2020, 2019 2018 and 2017,2018, respectively. Schlumberger classifies interest and penalties relating to uncertain tax positions within Tax expense (benefit) in the Consolidated Statement of Income (Loss).
The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Schlumberger operates:
Canada |
|
Ecuador | 2016 - |
Mexico | 2012 - |
Norway |
|
Russia | 2016 - |
Saudi Arabia | 2015 - |
United Kingdom | 2017 - |
United States | 2017 - |
In certain of the jurisdictions noted above, Schlumberger operates through more than one legal entity, each of which may have different open years subject to examination. The table above presents the open years subject to examination for the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above, the statute of limitations can extend beyond the open years subject to examination.
48
14. Leases and Lease Commitments
During the fourth quarter of 2018, Schlumberger adopted ASU No. 2016-02, Leases, effective January 1, 2018. This ASU requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases.
Under the transition method selected by Schlumberger, leases existing at, or entered into after, January 1, 2018 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. The adoption of this standard resulted in the recording of operating lease assets and operating lease liabilities of approximately of $1.3 billion as of January 1, 2018, with no related impact on Schlumberger’s Consolidated Statement of Equity or Consolidated Statement of Income (Loss). Short-term leases have not been recorded on the balance sheet.
Schlumberger elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allows companies to carry forward their historical lease classification.
Schlumberger’s leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment. Total operating lease expense, which approximates cash paid and includes short-term leases, was $1.4 billion in 2020 and $1.7 billion in each of 2019and 2018, and $1.4 billion in 2017.
2018.
Maturities of operating lease liabilities as of December 31, 20192020 were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||
|
|
|
|
|
|
|
2020 | $ | 510 |
| |||
2021 |
| 276 |
| $ | 256 |
|
2022 |
| 188 |
|
| 200 |
|
2023 |
| 152 |
|
| 160 |
|
2024 |
| 124 |
|
| 128 |
|
2025 |
| 92 |
| |||
Thereafter |
| 332 |
|
| 318 |
|
Total lease payments | $ | 1,582 |
| $ | 1,154 |
|
Less: Interest |
| (171 | ) |
| (143 | ) |
| $ | 1,411 |
| $ | 1,011 |
|
Amounts recognized in Balance Sheet |
|
|
| |||
Amounts recognized in balance sheet |
|
|
| |||
Accounts payable and accrued liabilities | $ | 494 |
| $ | 248 |
|
Other Liabilities |
| 917 |
|
| 763 |
|
| $ | 1,411 |
| $ | 1,011 |
|
Operating lease assets of $1.3$0.8 billion and $1.8$1.3 billion as of December 31, 20192020 and 2018,2019, respectively, were included in Other Assets in the Consolidated Balance Sheet. Operating lease liabilities as of December 31, 20182019 were $1.8$1.0 billion, of which $0.6$0.2 billion was classified in Accounts payable and accrued liabilities and $1.2$0.8 billion was classified in Other Liabilities in the Consolidated Balance Sheet.
The weighted-average remaining lease term as of December 31, 20192020 was 78 years. The weighted-average discount rate used to determine the operating lease liability as of December 31, 20192020 was 3.2%.
15. Contingencies
Schlumberger is party to various legal proceedings from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote. However, litigation is inherently uncertain, and it is not possible to predict the ultimate disposition of any of these proceedings.
49
16. Segment Information
During 2020, Schlumberger restructured its organization in order to prepare for a changing industry future. This new structure is aligned with customer workflows and is directly linked to Schlumberger’s corporate strategy, a key element of which is customer collaboration.
The new organization consists of four Divisions that combine and integrate Schlumberger’s technologies, enhancing the portfolio of capabilities that support the emerging long-term growth opportunities in each of these market segments.
The four Divisions, representing Schlumberger’s segments, are as follows:are:
| • |
|
| • |
|
• | Well Construction – Combines the |
| • | Production Systems – |
|
|
Financial information for the years ended December 31, 2020, 2019 2018 and 2017,2018, by segment, is as follows:
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| 2020 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| ||||||||||
Reservoir Characterization | $ | 6,312 |
|
| $ | 1,327 |
|
| $ | 3,909 |
|
| $ | 643 |
|
| $ | 307 |
| |||||||||||||||||||
Drilling |
| 9,721 |
|
|
| 1,216 |
|
|
| 5,724 |
|
|
| 540 |
|
|
| 616 |
| |||||||||||||||||||
Production |
| 11,987 |
|
|
| 993 |
|
|
| 10,289 |
|
|
| 1,540 |
|
|
| 551 |
| |||||||||||||||||||
Cameron |
| 5,336 |
|
|
| 613 |
|
|
| 4,102 |
|
|
| 233 |
|
|
| 166 |
| |||||||||||||||||||
Digital & Integration | $ | 3,076 |
|
| $ | 731 |
|
| $ | 3,595 |
|
| $ | 615 |
|
| $ | 413 |
| |||||||||||||||||||
Reservoir Performance |
| 5,602 |
|
|
| 353 |
|
|
| 3,489 |
|
|
| 549 |
|
|
| 384 |
| |||||||||||||||||||
Well Construction |
| 8,605 |
|
|
| 866 |
|
|
| 4,768 |
|
|
| 580 |
|
|
| 420 |
| |||||||||||||||||||
Production Systems |
| 6,650 |
|
|
| 623 |
|
|
| 4,665 |
|
|
| 338 |
|
|
| 240 |
| |||||||||||||||||||
Eliminations & other |
| (439 | ) |
|
| (171 | ) |
|
| 1,414 |
|
|
| 216 |
|
|
| 84 |
|
| (332 | ) |
|
| (172 | ) |
|
| 940 |
|
|
| 276 |
|
|
| 63 |
|
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 23,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,436 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,167 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 3,006 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 5,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,535 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (957 | ) |
|
|
|
|
|
| 417 |
|
|
|
|
|
|
|
|
|
| (681 | ) |
|
|
|
|
|
| 208 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (571 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (534 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (12,515 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 56,312 |
|
| $ | 3,589 |
|
| $ | 1,724 |
| $ | 23,601 |
|
| $ | (11,298 | ) |
| $ | 42,434 |
|
| $ | 2,566 |
|
| $ | 1,520 |
|
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| |||||
Reservoir Characterization | $ | 6,173 |
|
| $ | 1,347 |
|
| $ | 4,306 |
|
| $ | 667 |
|
| $ | 296 |
|
Drilling |
| 9,250 |
|
|
| 1,239 |
|
|
| 5,843 |
|
|
| 597 |
|
|
| 718 |
|
Production |
| 12,394 |
|
|
| 1,052 |
|
|
| 12,625 |
|
|
| 1,417 |
|
|
| 886 |
|
Cameron |
| 5,520 |
|
|
| 653 |
|
|
| 4,138 |
|
|
| 247 |
|
|
| 152 |
|
Eliminations & other |
| (522 | ) |
|
| (104 | ) |
|
| 1,460 |
|
|
| 189 |
|
|
| 108 |
|
|
|
|
|
|
| 4,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 33,658 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,777 |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
|
|
|
|
|
|
| 5,700 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (937 | ) |
|
|
|
|
|
| 439 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (141 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,815 |
|
| $ | 2,624 |
|
| $ | 70,507 |
|
| $ | 3,556 |
|
| $ | 2,160 |
|
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2019 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| ||||||||||
Reservoir Characterization | $ | 6,476 |
|
| $ | 1,184 |
|
| $ | 4,714 |
|
| $ | 981 |
|
| $ | 304 |
| |||||||||||||||||||
Drilling |
| 8,392 |
|
|
| 1,151 |
|
|
| 5,513 |
|
|
| 697 |
|
|
| 629 |
| |||||||||||||||||||
Production |
| 10,630 |
|
|
| 936 |
|
|
| 12,450 |
|
|
| 1,240 |
|
|
| 889 |
| |||||||||||||||||||
Cameron |
| 5,524 |
|
|
| 792 |
|
|
| 4,156 |
|
|
| 268 |
|
|
| 151 |
| |||||||||||||||||||
Digital & Integration | $ | 4,145 |
|
| $ | 882 |
|
| $ | 6,388 |
|
| $ | 1,069 |
|
| $ | 1,020 |
| |||||||||||||||||||
Reservoir Performance |
| 9,299 |
|
|
| 992 |
|
|
| 5,198 |
|
|
| 807 |
|
|
| 569 |
| |||||||||||||||||||
Well Construction |
| 11,880 |
|
|
| 1,429 |
|
|
| 6,913 |
|
|
| 656 |
|
|
| 650 |
| |||||||||||||||||||
Production Systems |
| 8,167 |
|
|
| 847 |
|
|
| 5,625 |
|
|
| 390 |
|
|
| 384 |
| |||||||||||||||||||
Eliminations & other |
| (582 | ) |
|
| (142 | ) |
|
| 1,665 |
|
|
| 213 |
|
|
| 134 |
|
| (574 | ) |
|
| (172 | ) |
|
| 1,314 |
|
|
| 250 |
|
|
| 113 |
|
|
|
|
|
|
| 3,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 34,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23,130 |
|
|
|
|
|
|
|
|
|
Cash, short term investments and fixed income investments |
|
|
|
|
|
|
|
|
| 5,089 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 2,167 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 3,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,577 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (934 | ) |
|
|
|
|
|
| 438 |
|
|
|
|
|
|
|
|
|
| (957 | ) |
|
|
|
|
|
| 417 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (513 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (571 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (3,764 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 30,440 |
|
| $ | (1,183 | ) |
| $ | 71,987 |
|
| $ | 3,837 |
|
| $ | 2,107 |
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 56,312 |
|
| $ | 3,589 |
|
| $ | 2,736 |
|
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| |||||
Digital & Integration | $ | 3,820 |
|
| $ | 882 |
|
| $ | 6,784 |
|
| $ | 894 |
|
| $ | 1,091 |
|
Reservoir Performance |
| 10,050 |
|
|
| 1,169 |
|
|
| 7,396 |
|
|
| 850 |
|
|
| 899 |
|
Well Construction |
| 11,310 |
|
|
| 1,465 |
|
|
| 7,112 |
|
|
| 713 |
|
|
| 769 |
|
Production Systems |
| 8,168 |
|
|
| 843 |
|
|
| 5,632 |
|
|
| 423 |
|
|
| 343 |
|
Eliminations & other |
| (533 | ) |
|
| (172 | ) |
|
| 1,448 |
|
|
| 237 |
|
|
| 139 |
|
|
|
|
|
|
| 4,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 33,658 |
|
|
|
|
|
|
|
|
|
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 2,777 |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
|
|
|
|
|
|
| 5,700 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (937 | ) |
|
|
|
|
|
| 439 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (141 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,815 |
|
| $ | 2,624 |
|
| $ | 70,507 |
|
| $ | 3,556 |
|
| $ | 3,241 |
|
(1) | Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, |
(2) | Interest income excludes amounts which are included in the segments’ income |
(3) | Interest expense excludes amounts which are included in the segments’ income |
(4) | See Note 3 – Charges and Credits. |
Segment assets consist of receivables, inventories, fixed assets, multiclient seismic data and APS investments.
51Capital investments includes capital expenditures, APS investments and multiclient seismic data cost capitalized.
Depreciation and amortization includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments.
Revenue by geographic area for the years ended December 31, 2020, 2019 2018 and 20172018 is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
North America | $ | 10,843 |
|
| $ | 11,984 |
|
| $ | 9,487 |
| $ | 5,478 |
|
| $ | 10,446 |
|
| $ | 11,730 |
|
Latin America |
| 4,149 |
|
|
| 3,745 |
|
|
| 3,976 |
|
| 3,472 |
|
|
| 4,544 |
|
|
| 4,013 |
|
Europe/CIS/Africa |
| 7,683 |
|
|
| 7,158 |
|
|
| 7,072 |
|
| 5,963 |
|
|
| 7,682 |
|
|
| 7,113 |
|
Middle East & Asia |
| 10,017 |
|
|
| 9,543 |
|
|
| 9,394 |
|
| 8,567 |
|
|
| 10,016 |
|
|
| 9,582 |
|
Eliminations & other |
| 225 |
|
|
| 385 |
|
|
| 511 |
|
| 121 |
|
|
| 229 |
|
|
| 377 |
|
| $ | 32,917 |
|
| $ | 32,815 |
|
| $ | 30,440 |
| $ | 23,601 |
|
| $ | 32,917 |
|
| $ | 32,815 |
|
Revenue is based on the location where services are provided and products are sold.
During each of the three years ended December 31, 2020, 2019 2018 and 2017,2018, no single customer exceeded 10% of consolidated revenue.
Schlumberger did not have revenue from third-party customers in its country of domicile during the last three years. Revenue in the United States in 2020, 2019 and 2018 and 2017 was $4.5 billion, $9.3 billion $10.1 billion and $8.1$10.1 billion, respectively.
North America and International revenue disaggregated by segment was as follows:
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Reservoir Characterization | $ | 1,027 |
|
| $ | 5,263 |
|
| $ | 22 |
|
| $ | 6,312 |
|
Drilling |
| 2,220 |
|
|
| 7,294 |
|
|
| 207 |
|
|
| 9,721 |
|
Production |
| 5,336 |
|
|
| 6,647 |
|
|
| 4 |
|
|
| 11,987 |
|
Cameron |
| 2,318 |
|
|
| 2,975 |
|
|
| 43 |
|
|
| 5,336 |
|
Other |
| (58 | ) |
|
| (330 | ) |
|
| (51 | ) |
|
| (439 | ) |
| $ | 10,843 |
|
| $ | 21,849 |
|
| $ | 225 |
|
| $ | 32,917 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 573 |
|
| $ | 2,496 |
|
| $ | 7 |
|
| $ | 3,076 |
|
Reservoir Performance |
| 1,547 |
|
|
| 4,043 |
|
|
| 12 |
|
|
| 5,602 |
|
Well Construction |
| 1,453 |
|
|
| 6,956 |
|
|
| 196 |
|
|
| 8,605 |
|
Production Systems |
| 1,921 |
|
|
| 4,702 |
|
|
| 27 |
|
|
| 6,650 |
|
Eliminations & other |
| (16 | ) |
|
| (195 | ) |
|
| (121 | ) |
|
| (332 | ) |
| $ | 5,478 |
|
| $ | 18,002 |
|
| $ | 121 |
|
| $ | 23,601 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Reservoir Characterization | $ | 992 |
|
| $ | 5,031 |
|
| $ | 150 |
|
| $ | 6,173 |
|
Drilling |
| 2,332 |
|
|
| 6,684 |
|
|
| 234 |
|
|
| 9,250 |
|
Production |
| 6,312 |
|
|
| 6,077 |
|
|
| 5 |
|
|
| 12,394 |
|
Cameron |
| 2,427 |
|
|
| 3,007 |
|
|
| 86 |
|
|
| 5,520 |
|
Other |
| (79 | ) |
|
| (353 | ) |
|
| (90 | ) |
|
| (522 | ) |
| $ | 11,984 |
|
| $ | 20,446 |
|
| $ | 385 |
|
| $ | 32,815 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 865 |
|
| $ | 3,272 |
|
| $ | 8 |
|
| $ | 4,145 |
|
Reservoir Performance |
| 3,779 |
|
|
| 5,509 |
|
|
| 11 |
|
|
| 9,299 |
|
Well Construction |
| 2,814 |
|
|
| 8,809 |
|
|
| 257 |
|
|
| 11,880 |
|
Production Systems |
| 3,053 |
|
|
| 5,059 |
|
|
| 55 |
|
|
| 8,167 |
|
Eliminations & other |
| (65 | ) |
|
| (407 | ) |
|
| (102 | ) |
|
| (574 | ) |
| $ | 10,446 |
|
| $ | 22,242 |
|
| $ | 229 |
|
| $ | 32,917 |
|
52
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 786 |
|
| $ | 2,894 |
|
| $ | 140 |
|
| $ | 3,820 |
|
Reservoir Performance |
| 4,975 |
|
|
| 5,066 |
|
|
| 9 |
|
|
| 10,050 |
|
Well Construction |
| 2,911 |
|
|
| 8,083 |
|
|
| 316 |
|
|
| 11,310 |
|
Production Systems |
| 3,139 |
|
|
| 4,966 |
|
|
| 63 |
|
|
| 8,168 |
|
Eliminations & other |
| (81 | ) |
|
| (301 | ) |
|
| (151 | ) |
|
| (533 | ) |
| $ | 11,730 |
|
| $ | 20,708 |
|
| $ | 377 |
|
| $ | 32,815 |
|
Fixed Assets less accumulated depreciation by geographic area are as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
North America | $ | 3,646 |
|
| $ | 5,715 |
| $ | 1,588 |
|
| $ | 3,326 |
|
Latin America |
| 824 |
|
|
| 898 |
|
| 841 |
|
|
| 912 |
|
Europe/CIS/Africa |
| 2,258 |
|
|
| 2,364 |
|
| 1,840 |
|
|
| 2,309 |
|
Middle East & Asia |
| 2,453 |
|
|
| 2,604 |
|
| 2,353 |
|
|
| 2,502 |
|
Unallocated |
| 89 |
|
|
| 98 |
|
| 204 |
|
|
| 221 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,826 |
|
| $ | 9,270 |
|
17. Pension and Other Benefit Plans
Pension Plans
Schlumberger sponsors several defined benefit pension plans that cover substantially all US employees hired prior to October 1, 2004. The benefits are based on years of service and compensation, on a career-average pay basis.
In addition to the US defined benefit pension plans, Schlumberger sponsors several other international defined benefit pension plans. The most significant of these international plans are the International Staff Pension Plan and the UK pension plan (collectively, the “International plans”). The International Staff Pension Plan covers certain international employees hired prior to July 1, 2014 and is based on years of service and compensation on a career-average pay basis. The UK plan covers employees hired prior to April 1, 1999, and is based on years of service and compensation, on a final salary basis.
The weighted-average assumed discount rate, compensation increases and expected long-term rate of return on plan assets used to determine the net pension cost for the US and International plans were as follows:
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||||||||
Discount rate |
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
|
| 4.00 | % |
|
| 3.55 | % |
|
| 4.13 | % |
| 3.30 | % |
|
| 4.30 | % |
|
| 3.70 | % |
|
| 3.27 | % |
|
| 4.00 | % |
|
| 3.55 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.81 | % |
|
| 4.81 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.82 | % |
|
| 4.83 | % |
|
| 4.81 | % |
Return on plan assets |
| 6.60 | % |
|
| 7.25 | % |
|
| 7.25 | % |
|
| 7.22 | % |
|
| 7.40 | % |
|
| 7.40 | % |
| 6.60 | % |
|
| 6.60 | % |
|
| 7.25 | % |
|
| 6.71 | % |
|
| 7.22 | % |
|
| 7.40 | % |
Net pension cost (credit) for 2020, 2019 2018 and 20172018 included the following components:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||||||||
Service cost - benefits earned during the period | $ | 49 |
|
| $ | 59 |
|
| $ | 57 |
|
| $ | 112 |
|
| $ | 138 |
|
| $ | 95 |
| $ | 55 |
|
| $ | 49 |
|
| $ | 59 |
|
| $ | 140 |
|
| $ | 112 |
|
| $ | 138 |
|
Interest cost on projected benefit obligation |
| 180 |
|
|
| 167 |
|
|
| 175 |
|
|
| 333 |
|
|
| 304 |
|
|
| 306 |
|
| 148 |
|
|
| 180 |
|
|
| 167 |
|
|
| 301 |
|
|
| 333 |
|
|
| 304 |
|
Expected return on plan assets |
| (232 | ) |
|
| (248 | ) |
|
| (242 | ) |
|
| (592 | ) |
|
| (584 | ) |
|
| (541 | ) |
| (233 | ) |
|
| (232 | ) |
|
| (248 | ) |
|
| (591 | ) |
|
| (592 | ) |
|
| (584 | ) |
Amortization of prior service cost |
| 10 |
|
|
| 13 |
|
|
| 12 |
|
|
| 7 |
|
|
| 10 |
|
|
| 97 |
|
| 8 |
|
|
| 10 |
|
|
| 13 |
|
|
| - |
|
|
| 7 |
|
|
| 10 |
|
Amortization of net loss |
| 29 |
|
|
| 47 |
|
|
| 39 |
|
|
| 70 |
|
|
| 140 |
|
|
| 120 |
|
| 41 |
|
|
| 29 |
|
|
| 47 |
|
|
| 159 |
|
|
| 70 |
|
|
| 140 |
|
Settlement charge |
| 37 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
|
| 37 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 73 |
|
| $ | 38 |
|
| $ | 41 |
|
| $ | (70 | ) |
| $ | 8 |
|
| $ | 77 |
| $ | 19 |
|
| $ | 73 |
|
| $ | 38 |
|
| $ | 9 |
|
| $ | (70 | ) |
| $ | 8 |
|
Certain of Schlumberger’s deferred benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit. Schlumberger’s pension plans paid $257 million from pension plan assets to those who accepted this offer, thereby reducing its pension benefit obligations. These transactions resulted in a non-cash pension settlement charge of $37 million, representing the immediate recognition of the related deferred actuarial losses in Accumulated Other Comprehensive Loss, in the fourth quarter of 2019. See Note 3 -– Charges and Credits for details regarding the 2019 settlement charge..
The weighted-average assumed discount rate and compensation increases used to determine the projected benefit obligations for the US and International plans were as follows:
|
|
|
|
| ||||||||||||||||||||||||||
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 3.27 | % |
|
| 4.00 | % |
| 2.60 | % |
|
| 3.30 | % |
|
| 2.38 | % |
|
| 3.27 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.83 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.82 | % |
|
| 4.83 | % |
The changes in the projected benefit obligation, plan assets and funded status of the plans were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||||
Change in Projected Benefit Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year | $ | 4,278 |
|
| $ | 4,603 |
|
| $ | 8,111 |
|
| $ | 8,752 |
| $ | 4,593 |
|
| $ | 4,278 |
|
| $ | 9,647 |
|
| $ | 8,111 |
|
Service cost |
| 49 |
|
|
| 59 |
|
|
| 112 |
|
|
| 138 |
|
| 55 |
|
|
| 49 |
|
|
| 140 |
|
|
| 112 |
|
Interest cost |
| 180 |
|
|
| 167 |
|
|
| 333 |
|
|
| 304 |
|
| 148 |
|
|
| 180 |
|
|
| 301 |
|
|
| 333 |
|
Contribution by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 94 |
|
|
| 63 |
|
Actuarial (gains) losses |
| 535 |
|
|
| (349 | ) |
|
| 1,304 |
|
|
| (758 | ) | |||||||||||||||
Actuarial losses |
| 370 |
|
|
| 535 |
|
|
| 1,233 |
|
|
| 1,304 |
| |||||||||||||||
Currency effect |
| - |
|
|
| - |
|
|
| 50 |
|
|
| (87 | ) |
| - |
|
|
| - |
|
|
| 68 |
|
|
| 50 |
|
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
|
| - |
|
|
| (240 | ) |
|
| (5 | ) |
|
| (17 | ) |
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (226 | ) |
|
| (209 | ) |
|
| (338 | ) |
|
| (309 | ) |
Projected benefit obligation at end of year | $ | 4,593 |
|
| $ | 4,278 |
|
| $ | 9,647 |
|
| $ | 8,111 |
| $ | 4,940 |
|
| $ | 4,593 |
|
| $ | 11,140 |
|
| $ | 9,647 |
|
Change in Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets at fair value at beginning of year | $ | 3,748 |
|
| $ | 4,058 |
|
| $ | 7,872 |
|
| $ | 8,507 |
| $ | 4,236 |
|
| $ | 3,748 |
|
| $ | 9,363 |
|
| $ | 7,872 |
|
Actual return on plan assets |
| 931 |
|
|
| (112 | ) |
|
| 1,676 |
|
|
| (370 | ) |
| 760 |
|
|
| 931 |
|
|
| 1,282 |
|
|
| 1,676 |
|
Currency effect |
| - |
|
|
| - |
|
|
| 59 |
|
|
| (105 | ) |
| - |
|
|
| - |
|
|
| 72 |
|
|
| 59 |
|
Company contributions |
| 6 |
|
|
| 4 |
|
|
| 19 |
|
|
| 78 |
|
| 6 |
|
|
| 6 |
|
|
| 20 |
|
|
| 19 |
|
Contributions by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 94 |
|
|
| 63 |
|
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
|
| - |
|
|
| (240 | ) |
|
| - |
|
|
| (17 | ) |
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (226 | ) |
|
| (209 | ) |
|
| (338 | ) |
|
| (309 | ) |
Plan assets at fair value at end of year | $ | 4,236 |
|
| $ | 3,748 |
|
| $ | 9,363 |
|
| $ | 7,872 |
| $ | 4,776 |
|
| $ | 4,236 |
|
| $ | 10,493 |
|
| $ | 9,363 |
|
Unfunded Liability | $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | $ | (164 | ) |
| $ | (357 | ) |
| $ | (647 | ) |
| $ | (284 | ) |
Amounts Recognized in Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Benefits | $ | (357 | ) |
| $ | (530 | ) |
| $ | (602 | ) |
| $ | (514 | ) | $ | (199 | ) |
| $ | (357 | ) |
| $ | (849 | ) |
| $ | (602 | ) |
Other Assets |
| - |
|
|
| - |
|
|
| 318 |
|
|
| 275 |
|
| 35 |
|
|
| - |
|
|
| 202 |
|
|
| 318 |
|
| $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | $ | (164 | ) |
| $ | (357 | ) |
| $ | (647 | ) |
| $ | (284 | ) |
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses | $ | 622 |
|
| $ | 852 |
|
| $ | 1,638 |
|
| $ | 1,440 |
| $ | 423 |
|
| $ | 622 |
|
| $ | 1,981 |
|
| $ | 1,638 |
|
Prior service cost |
| 9 |
|
|
| 18 |
|
|
| - |
|
|
| 9 |
|
| 1 |
|
|
| 9 |
|
|
| - |
|
|
| - |
|
| $ | 631 |
|
| $ | 870 |
|
| $ | 1,638 |
|
| $ | 1,449 |
| $ | 424 |
|
| $ | 631 |
|
| $ | 1,981 |
|
| $ | 1,638 |
|
Accumulated benefit obligation | $ | 4,345 |
|
| $ | 4,070 |
|
| $ | 9,376 |
|
| $ | 7,895 |
| $ | 4,739 |
|
| $ | 4,345 |
|
| $ | 10,844 |
|
| $ | 9,376 |
|
54
The unfunded liability represents the difference between the plan assets and the projected benefit obligation (“PBO”). The PBO represents the actuarial present value of benefits based on employee service and compensation and includes an assumption about future compensation levels. The accumulated benefit obligation (“ABO”) represents the actuarial present value of benefits based on employee service and compensation but does not include an assumption about future compensation levels.
Actuarial losses arising during 2020 and 2019 arewere primarily attributable to the decreasedecreases in the discount rate used to determine the PBO. As of December 31, 2019,2020, the PBO and fair value of plan assets for plans with PBOs in excess of plan assets were $12.6$9.4 billion and $11.7$8.3 billion, respectively. The related ABO for these plans was $12.2$9.1 billion at December 31, 2019.2020.
The weighted-average allocation of plan assets and the target allocations by asset category are as follows:
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
|
| International |
| US |
|
|
| International |
| ||||||||||||||||||||||||||||||||||||||||||||
| Target |
|
|
| 2019 |
|
|
| 2018 |
|
|
| Target |
|
|
| 2019 |
|
|
| 2018 |
| Target |
|
|
| 2020 |
|
|
| 2019 |
|
|
| Target |
|
|
| 2020 |
|
|
| 2019 |
| ||||||||||||
Equity securities | 20 - 30 |
| % |
|
| 22 |
| % |
|
| 21 |
| % |
| 47 - 59 |
| % |
|
| 50 |
| % |
|
| 50 |
| 11 - 20 |
| % |
|
| 15 |
| % |
|
| 22 |
| % |
| 40 - 54 |
| % |
|
| 43 |
| % |
|
| 50 |
| ||||
Debt securities | 63 - 77 |
|
|
|
| 70 |
|
|
|
| 70 |
|
|
| 27 - 33 |
|
|
|
| 31 |
|
|
|
| 32 |
| 70 - 83 |
|
|
|
| 76 |
|
|
|
| 70 |
|
|
| 28 - 43 |
|
|
|
| 36 |
|
|
|
| 31 |
| ||||
Cash and cash equivalents | 0 - 3 |
|
|
|
| 2 |
|
|
|
| 2 |
|
|
| 0 - 5 |
|
|
|
| 4 |
|
|
|
| 2 |
| 0 - 3 |
|
|
|
| 3 |
|
|
|
| 2 |
|
|
| 0 - 5 |
|
|
|
| 4 |
|
|
|
| 4 |
| ||||
Alternative investments | 5 - 10 |
|
|
|
| 6 |
|
|
|
| 7 |
|
|
| 15 - 22 |
|
|
|
| 15 |
|
|
|
| 16 |
| 5 - 10 |
|
|
|
| 6 |
|
|
|
| 6 |
|
|
| 15 - 22 |
|
|
|
| 17 |
|
|
|
| 15 |
| ||||
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
|
Asset performance is monitored frequently with an overall expectation that plan assets will meet or exceed the weighted index of its target asset allocation and component benchmark over rolling five-year periods.
The expected rate of return on assets assumptions reflect the long-term average rate of earnings expected on funds invested or to be invested. The assumptions have been determined based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rates of return. The appropriateness of the assumptions is reviewed annually.
The fair value of Schlumberger’s pension plan assets at December 31, 20192020 and 2018,2019, by asset category, is presented below and was determined based on valuation techniques categorized as follows:
| • | Level One: The use of quoted prices in active markets for identical instruments. |
| • | Level Two: The use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or other inputs that are observable in the market or can be corroborated by observable market data. |
| • | Level Three: The use of significant unobservable inputs that typically require the use of management’s estimates of assumptions that market participants would use in pricing. |
55
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US Plan Assets |
| US Plan Assets |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 73 |
|
| $ | 59 |
|
| $ | 14 |
|
| $ | - |
|
| $ | 80 |
|
| $ | 44 |
|
| $ | 36 |
|
| $ | - |
| $ | 140 |
|
| $ | 127 |
|
| $ | 13 |
|
| $ | - |
|
| $ | 73 |
|
| $ | 59 |
|
| $ | 14 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US (a) |
| 605 |
|
|
| 500 |
|
|
| 105 |
|
|
| - |
|
|
| 501 |
|
|
| 416 |
|
|
| 85 |
|
|
| - |
|
| 527 |
|
|
| 441 |
|
|
| 86 |
|
|
| - |
|
|
| 605 |
|
|
| 500 |
|
|
| 105 |
|
|
| - |
|
International (b) |
| 320 |
|
|
| 315 |
|
|
| 5 |
|
|
| - |
|
|
| 267 |
|
|
| 263 |
|
|
| 4 |
|
|
| - |
|
| 186 |
|
|
| 182 |
|
|
| 4 |
|
|
| - |
|
|
| 320 |
|
|
| 315 |
|
|
| 5 |
|
|
| - |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds (c) |
| 1,687 |
|
|
| - |
|
|
| 1,687 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
| 1,945 |
|
|
| - |
|
|
| 1,945 |
|
|
| - |
|
|
| 1,687 |
|
|
| - |
|
|
| 1,687 |
|
|
| - |
|
Government and government-related debt securities (d) |
| 1,256 |
|
|
| 74 |
|
|
| 1,182 |
|
|
| - |
|
|
| 1,072 |
|
|
| 66 |
|
|
| 1,006 |
|
|
| - |
|
| 1,658 |
|
|
| 180 |
|
|
| 1,478 |
|
|
| - |
|
|
| 1,256 |
|
|
| 74 |
|
|
| 1,182 |
|
|
| - |
|
Collateralized mortgage obligations and mortgage backed securities (e) |
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
|
| 40 |
|
|
| - |
|
|
| 40 |
|
|
| - |
|
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity (f) |
| 181 |
|
|
| - |
|
|
| - |
|
|
| 181 |
|
|
| 185 |
|
|
| - |
|
|
| - |
|
|
| 185 |
|
| 204 |
|
|
| - |
|
|
| - |
|
|
| 204 |
|
|
| 181 |
|
|
| - |
|
|
| - |
|
|
| 181 |
|
Real estate (g) |
| 93 |
|
|
| - |
|
|
| - |
|
|
| 93 |
|
|
| 86 |
|
|
| - |
|
|
| - |
|
|
| 86 |
|
| 95 |
|
|
| - |
|
|
| - |
|
|
| 95 |
|
|
| 93 |
|
|
| - |
|
|
| - |
|
|
| 93 |
|
Total | $ | 4,236 |
|
| $ | 948 |
|
| $ | 3,014 |
|
| $ | 274 |
|
| $ | 3,748 |
|
| $ | 789 |
|
| $ | 2,688 |
|
| $ | 271 |
| $ | 4,776 |
|
| $ | 930 |
|
| $ | 3,547 |
|
| $ | 299 |
|
| $ | 4,236 |
|
| $ | 948 |
|
| $ | 3,014 |
|
| $ | 274 |
|
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| International Plan Assets |
| International Plan Assets |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||||||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||||||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and Cash Equivalents | $ | 351 |
|
| $ | 166 |
|
| $ | 185 |
|
| $ | - |
|
| $ | 157 |
|
| $ | 75 |
|
| $ | 82 |
|
| $ | - |
| $ | 457 |
|
| $ | 215 |
|
| $ | 242 |
|
| $ | - |
|
| $ | 351 |
|
| $ | 166 |
|
| $ | 185 |
|
| $ | - |
| ||
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
US (a) |
| 2,834 |
|
|
| 2,347 |
|
|
| 487 |
|
|
| - |
|
|
| 2,421 |
|
|
| 2,028 |
|
|
| 393 |
|
|
| - |
|
| 2,797 |
|
|
| 2,393 |
|
|
| 404 |
|
|
| - |
|
|
| 2,834 |
|
|
| 2,347 |
|
|
| 487 |
|
|
| - |
| ||
International (b) |
| 1,871 |
|
|
| 1,723 |
|
|
| 148 |
|
|
| - |
|
|
| 1,526 |
|
|
| 1,406 |
|
|
| 120 |
|
|
| - |
|
| 1,711 |
|
|
| 1,615 |
|
|
| 96 |
|
|
| - |
|
|
| 1,871 |
|
|
| 1,723 |
|
|
| 148 |
|
|
| - |
| ||
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Corporate bonds (c) |
| 1,105 |
|
|
| - |
|
|
| 1,105 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
| 1,260 |
|
|
| - |
|
|
| 1,260 |
|
|
| - |
|
|
| 1,105 |
|
|
| - |
|
|
| 1,105 |
|
|
| - |
| ||
Government and government-related debt securities (d) |
| 1,602 |
|
|
| 5 |
|
|
| 1,597 |
|
|
| - |
|
|
| 1,377 |
|
|
| 5 |
|
|
| 1,372 |
|
|
| - |
|
| 2,405 |
|
|
| 213 |
|
|
| 2,192 |
|
|
| - |
|
|
| 1,602 |
|
|
| 5 |
|
|
| 1,597 |
|
|
| - |
| ||
Collateralized mortgage obligations and mortgage backed securities (e) |
| 161 |
|
|
| - |
|
|
| 161 |
|
|
| - |
|
|
| 236 |
|
|
| - |
|
|
| 236 |
|
|
| - |
|
| 122 |
|
|
| - |
|
|
| 122 |
|
|
| - |
|
|
| 161 |
|
|
| - |
|
|
| 161 |
|
|
| - |
| ||
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Private equity (f) |
| 623 |
|
|
| - |
|
|
| - |
|
|
| 623 |
|
|
| 565 |
|
|
| - |
|
|
| - |
|
|
| 565 |
|
| 851 |
|
|
| - |
|
|
| - |
|
|
| 851 |
|
|
| 623 |
|
|
| - |
|
|
| - |
|
|
| 623 |
| ||
Real estate (g) |
| 183 |
|
|
| - |
|
|
| - |
|
|
| 183 |
|
|
| 150 |
|
|
| - |
|
|
| - |
|
|
| 150 |
|
| 200 |
|
|
| - |
|
|
| - |
|
|
| 200 |
|
|
| 183 |
|
|
| - |
|
|
| - |
|
|
| 183 |
| ||
Other |
| 633 |
|
|
| - |
|
|
| - |
|
|
| 633 |
|
|
| 517 |
|
|
| - |
|
|
| - |
|
|
| 517 |
|
| 690 |
|
|
| - |
|
|
| - |
|
|
| 690 |
|
|
| 633 |
|
|
| - |
|
|
| - |
|
|
| 633 |
| ||
Total | $ | 9,363 |
|
| $ | 4,241 |
|
| $ | 3,683 |
|
| $ | 1,439 |
|
| $ | 7,872 |
|
| $ | 3,514 |
|
| $ | 3,126 |
|
| $ | 1,232 |
| $ | 10,493 |
|
| $ | 4,436 |
|
| $ | 4,316 |
|
| $ | 1,741 |
|
| $ | 9,363 |
|
| $ | 4,241 |
|
| $ | 3,683 |
|
| $ | 1,439 |
|
(a) | US equities include companies that are well-diversified by industry sector and equity style (i.e., growth and value strategies). Active and passive management strategies are employed. Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks. |
(b) | International equities are invested in companies that are traded on exchanges outside the US and are well-diversified by industry sector, country and equity style. Active and passive strategies are employed. The vast majority of the investments are made in companies in developed markets, with a small percentage in emerging markets. |
(c) | Corporate bonds consist primarily of investment grade bonds from diversified industries. |
(d) | Government and government-related debt securities are comprised primarily of inflation-protected US treasuries and, to a lesser extent, other government-related securities. |
56
(e) | Collateralized mortgage obligations and mortgage backed-securities are debt obligations that represent claims to the cash flows from pools of mortgage loans, which are purchased from banks, mortgage companies, and other originators and then assembled into pools by governmental, quasi-governmental and private entities. |
(f) | Private equity includes investments in several funds of funds. |
(g) | Real estate primarily includes investments in real estate limited partnerships, concentrated in commercial real estate. |
Schlumberger’s funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial accrued liability, amounts that are deductible for income tax purposes, legal funding requirements and available cash flow. Schlumberger expects to contribute approximately $20 million to its postretirement benefit plans in 2020,2021, subject to market and business conditions.
Postretirement Benefits Other Than Pensions
Schlumberger provides certain healthcare benefits to certain former US employees who have retired. Effective April 1, 2015, Schlumberger changed the way it provides healthcare coverage to certain retirees who are age 65 and over. Under the amended plan, these retirees transferred to individual coverage under the Medicare Exchange. Schlumberger subsidizes the cost of the program by providing these retirees with a Health Reimbursement Account. The annual subsidy may be increased based on medical cost inflation, but it will not be increased by more than 5% in any given year.
The actuarial assumptions used to determine the accumulated postretirement benefit obligation and net periodic benefit cost for the US postretirement medical plan were as follows:
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Benefit Obligations |
|
| Net Periodic Benefit |
| Benefit Obligations |
|
| Net Periodic Benefit |
| ||||||||||||||||||||||||||||
| At December 31, |
|
| Cost for the Year |
| At December 31, |
|
| Cost for the Year |
| ||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
| 2.60 | % |
|
| 3.30 | % |
|
| 3.30 | % |
|
| 4.30 | % |
|
| 3.70 | % |
Return on plan assets | - |
|
| - |
|
|
| 7.00 | % |
|
| 7.00 | % |
|
| 7.00 | % | - |
|
| - |
|
|
| 7.00 | % |
|
| 7.00 | % |
|
| 7.00 | % | ||||
Current medical cost trend rate |
| 7.50 | % |
|
| 7.50 | % |
|
| 7.50 | % |
|
| 7.00 | % |
|
| 7.25 | % |
| 7.25 | % |
|
| 7.50 | % |
|
| 7.25 | % |
|
| 7.50 | % |
|
| 7.00 | % |
Ultimate medical cost trend rate |
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 5.00 | % |
|
| 5.00 | % |
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 5.00 | % |
Year that the rate reaches the ultimate trend rate | 2031 |
|
| 2031 |
|
| 2031 |
|
| 2026 |
|
| 2026 |
| 2031 |
|
| 2031 |
|
| 2031 |
|
| 2031 |
|
| 2026 |
|
The net periodic benefit credit for the US postretirement medical plan included the following components:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Service cost | $ | 29 |
|
| $ | 32 |
|
| $ | 29 |
| $ | 31 |
|
| $ | 29 |
|
| $ | 32 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
|
| 46 |
|
| 36 |
|
|
| 45 |
|
|
| 43 |
|
Expected return on plan assets |
| (64 | ) |
|
| (63 | ) |
|
| (60 | ) |
| (70 | ) |
|
| (64 | ) |
|
| (63 | ) |
Amortization of prior service credit |
| (28 | ) |
|
| (28 | ) |
|
| (29 | ) |
| (25 | ) |
|
| (28 | ) |
|
| (28 | ) |
Curtailment gain |
| (69 | ) |
|
| - |
|
|
| - |
| |||||||||||
| $ | (18 | ) |
| $ | (16 | ) |
| $ | (14 | ) | $ | (97 | ) |
| $ | (18 | ) |
| $ | (16 | ) |
57Due to the actions taken by Schlumberger to reduce its global workforce during 2020, Schlumberger experienced a significant reduction in the expected aggregate years of future service of its employees in its US postretirement medical plan. Accordingly, Schlumberger recorded a curtailment gain of $69 million during the second quarter of 2020 relating to this plan. The curtailment gain includes recognition of the decrease in the benefit obligation as well as a portion of the previously unrecognized prior service credit, reflecting the reduction in expected years of future service. As a result of the curtailment, Schlumberger performed a remeasurement of the plan, which had an immaterial impact. This gain was classified in Impairments & other in the Consolidated Statement of Loss. See Note 3 – Charges and Credits.
The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Change in Projected Benefit Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year | $ | 1,106 |
|
| $ | 1,213 |
| $ | 1,193 |
|
| $ | 1,106 |
|
Service cost |
| 29 |
|
|
| 32 |
|
| 31 |
|
|
| 29 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
| 36 |
|
|
| 45 |
|
Contribution by plan participants |
| 8 |
|
|
| 8 |
|
| 8 |
|
|
| 8 |
|
Actuarial (gains) losses |
| 65 |
|
|
| (128 | ) |
| 64 |
|
|
| 65 |
|
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (58 | ) |
|
| (60 | ) |
Curtailment |
| (40 | ) |
|
| - |
| |||||||
Benefit obligation at end of year | $ | 1,193 |
|
| $ | 1,106 |
| $ | 1,234 |
|
| $ | 1,193 |
|
Change in Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets at fair value at beginning of year | $ | 997 |
|
| $ | 1,094 |
| $ | 1,185 |
|
| $ | 997 |
|
Actual return on plan assets |
| 240 |
|
|
| (44 | ) |
| 221 |
|
|
| 240 |
|
Company contributions |
| - |
|
|
| 1 |
| |||||||
Contributions by plan participants |
| 8 |
|
|
| 8 |
|
| 8 |
|
|
| 8 |
|
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (58 | ) |
|
| (60 | ) |
Plan assets at fair value at end of year | $ | 1,185 |
|
| $ | 997 |
| $ | 1,356 |
|
| $ | 1,185 |
|
Unfunded Liability | $ | (8 | ) |
| $ | (109 | ) | |||||||
Asset (Unfunded Liability) | $ | 122 |
|
| $ | (8 | ) | |||||||
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial (gains) losses | $ | (98 | ) |
| $ | 14 |
| $ | (186 | ) |
| $ | (98 | ) |
Prior service credit |
| (158 | ) |
|
| (186 | ) |
| (104 | ) |
|
| (158 | ) |
| $ | (256 | ) |
| $ | (172 | ) | $ | (290 | ) |
| $ | (256 | ) |
The $122 million asset relating to this plan at December 31, 2020 was included in Other Assets while the $8 million unfunded liability isat December 31, 2019 was included in Postretirement Benefits in the Consolidated Balance Sheet.
The assets of the US postretirement medical plan are invested 60%61% in equity securities and 40%39% in debt securities at December 31, 2019.2020. The fair value of these assets was primarily determined based on Level Two valuation techniques.
Other Information
The expected benefits to be paid under the US and International pension plans as well as the postretirement medical plan are as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension Benefits |
|
| Postretirement |
| Pension Benefits |
|
| Postretirement |
| ||||||||||||
| US |
|
| International |
|
| Medical Plan |
| US |
|
| International |
|
| Medical Plan |
| ||||||
2020 | $ | 218 |
|
| $ | 333 |
|
| $ | 52 |
| |||||||||||
2021 | $ | 221 |
|
| $ | 343 |
|
| $ | 54 |
| $ | 235 |
|
| $ | 349 |
|
| $ | 56 |
|
2022 | $ | 225 |
|
| $ | 353 |
|
| $ | 55 |
| $ | 235 |
|
| $ | 359 |
|
| $ | 56 |
|
2023 | $ | 229 |
|
| $ | 365 |
|
| $ | 56 |
| $ | 236 |
|
| $ | 370 |
|
| $ | 56 |
|
2024 | $ | 233 |
|
| $ | 366 |
|
| $ | 57 |
| $ | 237 |
|
| $ | 381 |
|
| $ | 56 |
|
2025-2029 | $ | 1,213 |
|
| $ | 2,057 |
|
| $ | 317 |
| |||||||||||
2025 | $ | 237 |
|
| $ | 385 |
|
| $ | 57 |
| |||||||||||
2026-2030 | $ | 1,193 |
|
| $ | 2,146 |
|
| $ | 297 |
|
In addition to providing defined pension benefits and a postretirement medical plan, Schlumberger has other deferred benefit programs, primarily profit sharing and defined contribution pension plans. Expenses for these programs were $410 million, $435 million and $413 million in 2019, 2018 and 2017, respectively.
58
18. Supplementary Information
Cash paid (refunded) for interest and income taxes was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Interest | $ | 558 |
|
| $ | 592 |
|
| $ | 572 |
| $ | 598 |
|
| $ | 558 |
|
| $ | 592 |
|
Income tax | $ | 739 |
|
| $ | 628 |
|
| $ | (44 | ) | $ | 582 |
|
| $ | 739 |
|
| $ | 628 |
|
Interest and other income includes the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Earnings of equity method investments | $ | 91 |
|
| $ | 45 |
|
| $ | 89 |
| |||||||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| $ | 128 |
|
| 33 |
|
|
| 41 |
|
|
| 60 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
|
|
| 96 |
| |||||||||||
Unrealized gain on marketable securities (see Note 3) |
| 39 |
|
|
| - |
|
|
| - |
| |||||||||||
| $ | 86 |
|
| $ | 149 |
|
| $ | 224 |
| $ | 163 |
|
| $ | 86 |
|
| $ | 149 |
|
The change in Allowance for doubtful accounts is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
|
| 2018 |
| ||||||
Balance at beginning of year | $ | 249 |
|
| $ | 241 |
|
| $ | 397 |
| $ | 255 |
|
| $ | 249 |
|
| $ | 241 |
|
Additions |
| 5 |
|
|
| 15 |
|
|
| 7 |
|
| 58 |
|
|
| 5 |
|
|
| 15 |
|
Amounts written off |
| 1 |
|
|
| (7 | ) |
|
| (163 | ) |
| (12 | ) |
|
| 1 |
|
|
| (7 | ) |
Balance at end of year | $ | 255 |
|
| $ | 249 |
|
| $ | 241 |
| $ | 301 |
|
| $ | 255 |
|
| $ | 249 |
|
Revenue in excess of billings related to contracts where revenue is recognized over time was $0.2 billion at both December 31, 20192020 and 2018.2019. Such amounts are included within Receivables less allowance for doubtful accounts in the Consolidated Balance Sheet.
Accounts payable and accrued liabilities consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2020 |
|
| 2019 |
| ||||
Trade | $ | 4,790 |
|
| $ | 4,709 |
| $ | 2,937 |
|
| $ | 4,790 |
|
Payroll, vacation and employee benefits |
| 1,293 |
|
|
| 1,244 |
|
| 1,524 |
|
|
| 1,445 |
|
Billings and cash collections in excess of revenue |
| 910 |
|
|
| 877 |
|
| 941 |
|
|
| 910 |
|
Other |
| 3,670 |
|
|
| 3,393 |
|
| 3,040 |
|
|
| 3,518 |
|
| $ | 10,663 |
|
| $ | 10,223 |
| $ | 8,442 |
|
| $ | 10,663 |
|
Management’s Report on Internal Control Over Financial Reporting
Schlumberger management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a–15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Schlumberger’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Schlumberger management assessed the effectiveness of its internal control over financial reporting as of December 31, 2019.2020. In making this assessment, it used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on this assessment Schlumberger’s management has concluded that, as of December 31, 2019,2020, its internal control over financial reporting is effective based on those criteria.
The effectiveness of Schlumberger’s internal control over financial reporting as of December 31, 20192020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
60
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
of Schlumberger Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheetssheet of Schlumberger Limited and its subsidiaries (the “Company”) as of December 31, 20192020 and 2018,2019, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019,2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192020 and 20182019 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control overOver Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
61
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill & Intangible Asset Impairment
As described in Note 3 to the consolidated financial statements, the Company recorded charges to goodwill associated with certain reporting units and certain intangible assets during the thirdfirst quarter of 2019. The2020. As described by management, the goodwill relating to each of the Company’s reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred. As a result of these facts, managementIntangible assets are assessed for impairment whenever events or changes in circumstances indicate their carrying values may not be recoverable. Management determined that it was more likely than not that the fair value of certain of its reporting units and asset groups were less than their carrying value. Therefore, management performed an interim goodwill impairment testtests as of AugustMarch 31, 2019.2020. Management primarily used the income approach to estimate the fair value of its reporting units and asset groups, but also considered the market approach to validate the results. The market approach involves significant judgement involvedjudgment in the selection of the appropriate peer group companies and valuation multiples. Some of the more significant assumptions inherent in the income approach include the estimateestimated future net annual cash flows for each reporting unit and the discount rate.
The principal considerations for our determination that performing procedures related to goodwill and intangible asset impairment is a critical audit matter are there wasthe significant judgment by management in determining the fair value of the reporting units and asset groups, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures relating to and evaluating significant assumptions related to cash flows to be derived from each reporting unit and asset group, the discount rate and valuation multiples.
Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and intangible asset impairment test.tests. These procedures also included, among others, testing management’s process for developing fair value estimates; which included (i) evaluating the appropriateness of the discounted cash flow analysesincome and market approaches; (ii) testing the completeness, accuracy, and relevance of underlying data used in the approaches; and (iii) evaluating the significant assumptions used by management.management to develop the cash flows to be derived from each reporting unit and asset group. Evaluating management’s assumptions related to the cash flows to be derived from each reporting unit and asset group involved evaluating the reasonableness of the assumptions used considering the Company’s past and anticipated performance, external market and industry data, and evidence obtained through other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s valuation approaches and reasonableness of the discount rate and valuation multiples assumptions.
Uncertain Tax Positions
As described in Note 13 to the consolidated financial statements, the Company’s tax filings are subject to regular audit by tax authorities, and those audits may result in assessments for additional taxes that are resolved with the authorities, or potentially through the courts. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits.
The principal considerations for our determination that performing procedures related to uncertain tax positions is a critical audit matter are there was athe high degree of estimation uncertainty related to these liabilities due to the uncertain and complex application of tax regulations and management applied significant judgment in determining these liabilities, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimates.
Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the identification and recognition of uncertain tax positions. These procedures also included, among others, (i) evaluating management’s process for developing the estimated liabilities for uncertain tax positions, (ii) testing the completeness and reasonableness of uncertain tax positions recorded in the consolidated financial statements, and (iii) evaluating material assessments received from the relevant tax authorities. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of assumptions used by management, including thereasonableness of management’s more-likely-than-not determination under relevant tax laws and regulations in applicable jurisdictions.
/s/ PricewaterhouseCoopers LLP |
|
Houston, Texas |
January |
We have served as the Company’s auditor since 1952.
62
Quarterly Results
(Unaudited)
The following table summarizes Schlumberger’s results by quarter for the years ended December 31, 20192020 and 2018.2019.
(Stated in millions, except per share amounts) | (Stated in millions, except per share amounts) |
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||||||||||||||||
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|
|
|
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|
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|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) |
|
| Earnings (Loss) per Share of |
|
|
|
|
|
|
|
|
| Net Income (Loss) |
|
| Earnings (Loss) per Share of |
| ||||||||||||
|
|
|
|
| Gross |
|
| Attributable to |
|
| Schlumberger (2) |
|
|
|
|
| Gross |
|
| Attributable to |
|
| Schlumberger (2) |
| ||||||||||||||
| Revenue (2) |
|
| Margin (1), (2) |
|
| Schlumberger (2) |
|
| Basic |
|
| Diluted |
| Revenue (2) |
|
| Margin (1), (2) |
|
| Schlumberger (2) |
|
| Basic |
|
| Diluted |
| ||||||||||
Quarters 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
First (3) | $ | 7,455 |
|
| $ | 831 |
|
| $ | (7,376 | ) |
| $ | (5.32 | ) |
| $ | (5.32 | ) | |||||||||||||||||||
Second (4) |
| 5,356 |
|
|
| 431 |
|
|
| (3,434 | ) |
|
| (2.47 | ) |
|
| (2.47 | ) | |||||||||||||||||||
Third (5) |
| 5,258 |
|
|
| 634 |
|
|
| (82 | ) |
|
| (0.06 | ) |
|
| (0.06 | ) | |||||||||||||||||||
Fourth (6) |
| 5,532 |
|
|
| 704 |
|
|
| 374 |
|
|
| 0.27 |
|
|
| 0.27 |
| |||||||||||||||||||
| $ | 23,601 |
|
| $ | 2,601 |
|
| $ | (10,518 | ) |
| $ | (7.57 | ) |
| $ | (7.57 | ) | |||||||||||||||||||
Quarters 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First | $ | 7,879 |
|
| $ | 925 |
|
| $ | 421 |
|
| $ | 0.30 |
|
| $ | 0.30 |
| |||||||||||||||||||
Second |
| 8,269 |
|
|
| 1,016 |
|
|
| 492 |
|
|
| 0.36 |
|
|
| 0.35 |
| |||||||||||||||||||
Third (3) |
| 8,541 |
|
|
| 1,155 |
|
|
| (11,383 | ) |
|
| (8.22 | ) |
|
| (8.22 | ) | |||||||||||||||||||
Fourth (4) |
| 8,228 |
|
|
| 1,101 |
|
|
| 333 |
|
|
| 0.24 |
|
|
| 0.24 |
| |||||||||||||||||||
| $ | 32,917 |
|
| $ | 4,197 |
|
| $ | (10,137 | ) |
| $ | (7.32 | ) |
| $ | (7.32 | ) | |||||||||||||||||||
Quarters 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
First | $ | 7,829 |
|
| $ | 1,027 |
|
| $ | 525 |
|
| $ | 0.38 |
|
| $ | 0.38 |
| $ | 7,879 |
|
| $ | 925 |
|
| $ | 421 |
|
| $ | 0.30 |
|
| $ | 0.30 |
|
Second |
| 8,303 |
|
|
| 1,124 |
|
|
| 430 |
|
|
| 0.31 |
|
|
| 0.31 |
|
| 8,269 |
|
|
| 1,016 |
|
|
| 492 |
|
|
| 0.36 |
|
|
| 0.35 |
|
Third |
| 8,504 |
|
|
| 1,180 |
|
|
| 644 |
|
|
| 0.46 |
|
|
| 0.46 |
|
| 8,541 |
|
|
| 1,155 |
|
|
| (11,383 | ) |
|
| (8.22 | ) |
|
| (8.22 | ) |
Fourth |
| 8,180 |
|
|
| 1,008 |
|
|
| 538 |
|
|
| 0.39 |
|
|
| 0.39 |
|
| 8,228 |
|
|
| 1,101 |
|
|
| 333 |
|
|
| 0.24 |
|
|
| 0.24 |
|
| $ | 32,815 |
|
| $ | 4,337 |
|
| $ | 2,138 |
|
| $ | 1.54 |
|
| $ | 1.53 |
| $ | 32,917 |
|
| $ | 4,197 |
|
| $ | (10,137 | ) |
| $ | (7.32 | ) |
| $ | (7.32 | ) |
(1) | Gross margin equals Total Revenue less Cost of |
(2) | Amounts may not add due to rounding. |
(3) | Net income (loss) attributable to Schlumberger in the |
(4) | Net income (loss) attributable to Schlumberger in the |
(5) | Net income (loss) attributable to Schlumberger in the |
(6) | Net income (loss) attributable to Schlumberger in the fourth quarter of |
(7) | Net income (loss) attributable to Schlumberger in the third quarter of 2019 includes after-tax charges of $11.979 billion. |
(8) | Net income (loss) attributable to Schlumberger in the fourth quarter of 2019 includes net after-tax charges of $212 million. |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Schlumberger has carried out an evaluation under the supervision and with the participation of Schlumberger’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of Schlumberger’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this report, Schlumberger’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that Schlumberger files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Schlumberger’s disclosure controls and procedures include controls and procedures designed so that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to its management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure. There has been no change in Schlumberger’s internal control over financial reporting that occurred during the fourth quarter of 20192020 that has materially affected, or is reasonably likely to materially affect, Schlumberger’s internal control over financial reporting.
63
Item 9B. Other Information.
In 2013, Schlumberger completed the wind downwind-down of its service operations in Iran. Prior to this, certain non-US subsidiaries provided oilfield services to the National Iranian Oil Company and certain of its affiliates (“NIOC”).
Schlumberger’s residual transactions or dealings with the government of Iran in 20192020 consisted of payments of taxes and other typical governmental charges. Certain non-US subsidiaries of Schlumberger maintainmaintained depository accounts at the Dubai branch of Bank Saderat Iran (“Saderat”), and at Bank Tejarat (“Tejarat”) in Tehran and in Kish for the deposit by NIOC of amounts owed to non-US subsidiaries of Schlumberger for prior services rendered in Iran prior to the wind-down and for the maintenance of such amounts previously received. One non-US subsidiary also maintained an account at Tejarat for payment of local expenses such as taxes. Schlumberger anticipates that it will discontinue dealings with Saderat and Tejarat following the receipt of all amounts owed to Schlumberger for prior services rendered in Iran.
64
PART III
Item 10. Directors, Executive Officers and Corporate Governance of Schlumberger.
See “Item 1. Business—Information About Our Executive Officers” of this Report for Item 10 information regarding executive officers of Schlumberger. The information set forth under the captions “Election of Directors,” “Stock Ownership Information—Delinquent Section 16(a) Reports,” “Corporate Governance—Identifying Candidates for Director Nominations” and “Corporate Governance—Board Responsibilities, Committees and Committees—Board Attendance—Committees—Audit Committee” in Schlumberger’s 20202021 Proxy Statement is incorporated herein by reference.
Schlumberger has a Code of Conduct that applies to all of its directors, officers and employees, including its principal executive, financial and accounting officers, or persons performing similar functions. Schlumberger’s Code of Conduct is posted on its website at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct. Schlumberger intends to disclose future amendments to the Code of Conduct and any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct.
Item 11. Executive Compensation.
The information set forth under the captions “Compensation Discussion and Analysis,” “Executive Compensation Tables and Accompanying Narrative,” “Compensation Discussion and Analysis—Compensation Committee Report” and “Director Compensation in Fiscal Year 2019”2020” in Schlumberger’s 20202021 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information under the captions “Stock Ownership Information—Security Ownership by Certain Beneficial Owners,” “Stock Ownership Information—Security Ownership by Management” and “Equity Compensation Plan Information” in Schlumberger’s 20202021 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information under the captions “Corporate Governance—BoardDirector Independence” and “Corporate Governance—Other Key Governance Policies and Practices—Policies and Procedures for Approval of Related Person Transactions” in Schlumberger’s 20202021 Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information under the caption “Ratification of Appointment of Independent Auditors for 2020”2021” in Schlumberger’s 20202021 Proxy Statement is incorporated herein by reference.
65
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) | The following documents are filed as part of this Report: |
|
| Page(s) |
(1) | Financial Statements |
|
| Consolidated Statement of Income (Loss) for the three years ended December 31, |
|
|
| |
| Consolidated Balance Sheet at December 31, |
|
| Consolidated Statement of Cash Flows for the three years ended December 31, |
|
| Consolidated Statement of Stockholders’ Equity for the three years ended December 31, |
|
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| |
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| |
|
|
Financial statements of companies accounted for under the equity method and unconsolidated subsidiaries have been omitted because they do not meet the materiality tests for assets or income.
(2) | Financial Statement Schedules not required |
|
(3) | Exhibits: See exhibits listed under Part (b) below. |
|
(b) | Exhibits |
66
INDEX TO EXHIBITS
|
| Exhibit |
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| 3.1 | |
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| 3.2 | |
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| 4.1 | |
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| 4.2 | |
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| 4.3 | |
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
4.10 | ||
4.11 | ||
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| 10.1 | |
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| 10.2 | |
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| 10.3 |
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Exhibit | ||
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10.26 | ||
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| |
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| |
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| |
10.30 | ||
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| 10.31 | |
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|
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| 21 | |
22 | ||
|
|
|
Consent of Independent Registered Public Accounting Firm (*) |
| 23 |
|
|
|
| 24 | |
|
|
|
| 31.1 | |
|
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| 31.2 | |
|
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| 32.1 | |
|
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| 32.2 | |
|
|
|
| 95 | |
|
|
|
Inline XBRL Instance Document (*) |
| 101.INS |
Exhibit | |||||
|
|
| |||
Inline XBRL Taxonomy Extension Schema Document (*) |
| 101.SCH | |||
|
|
| |||
Inline XBRL Taxonomy Extension Calculation Linkbase Document (*) |
| 101.CAL | |||
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|
| |||
Inline XBRL Taxonomy Extension Definition Linkbase Document (*) |
| 101.DEF | |||
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| |||
Inline XBRL Taxonomy Extension Label Linkbase Document (*) |
| 101.LAB | |||
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|
| |||
Inline XBRL Taxonomy Extension Presentation Linkbase Document (*) |
| 101.PRE | |||
|
|
| |||
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 104 | |||
| |||||
(*) Filed with this Form 10-K. |
|
| |||
(**) Furnished with this Form 10-K |
|
| |||
(+) Management contracts or compensatory plans or arrangements. |
|
| |||
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|
| |||
The Exhibits filed herewith do not include certain instruments with respect to long-term debt of Schlumberger Limited and its subsidiaries, inasmuch as the total amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of Schlumberger Limited and its subsidiaries on a consolidated basis. Schlumberger agrees, pursuant to Item 601(b)(4)(iii) of Regulation S-K, that it will furnish a copy of any such instrument to the SEC upon request. |
Item 16. Form 10-K Summary.
None.
69
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: |
| January |
|
| SCHLUMBERGER LIMITED |
|
|
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|
|
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| By: |
| /S/ HOWARD GUILD |
|
|
|
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| Howard Guild |
|
|
|
|
| Chief Accounting Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name |
| Title |
|
|
|
* |
| Chief Executive Officer and Director (Principal Executive Officer) |
Olivier Le Peuch |
| |
|
|
|
/S/ |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|
| |
|
|
|
/S/ HOWARD GUILD |
| Chief Accounting Officer (Principal Accounting Officer) |
Howard Guild |
| |
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* |
| Director |
| ||
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| |
Patrick de La Chevardière |
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* |
| Director |
Miguel M. Galuccio | ||
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* |
| Director |
Tatiana A. Mitrova |
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* |
| Director |
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* |
| Director |
Lubna S. Olayan |
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* |
| Chairman of the Board |
Mark G. Papa |
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* |
| Director |
Leo Rafael Reif |
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* |
| Director |
Henri Seydoux |
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* |
| Director |
Jeff W. Sheets |
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/s/ |
| January |
*By |
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|
7083