UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2016March 31, 2017
Commission file No.: 1-4601
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
(Exact name of registrant as specified in its charter)
CURAÇAO |
| 52-0684746 |
(State or other jurisdiction of |
| (I.R.S. Employer |
|
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42 RUE SAINT-DOMINIQUE |
|
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PARIS, FRANCE |
| 75007 |
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5599 SAN FELIPE |
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HOUSTON, TEXAS, U.S.A. |
| 77056 |
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62 BUCKINGHAM GATE |
|
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LONDON, UNITED KINGDOM |
| SW1E 6AJ |
|
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PARKSTRAAT 83 THE HAGUE, |
|
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THE NETHERLANDS |
| 2514 JG |
(Addresses of principal executive offices) |
| (Zip Codes) |
Registrant’s telephone number in the United States, including area code, is:
(713) 513-2000
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. Yes x☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| ☒ | Accelerated filer |
| ||
| ☐ | |||||
Non-accelerated filer |
| Smaller reporting company |
| ☐ | ||
Emerging growth company | ☐ |
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class | Outstanding at |
COMMON STOCK, $0.01 PAR VALUE PER SHARE |
|
SecondFirst Quarter 20162017 Form 10-Q
Table of Contents
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PART I |
| Financial Information |
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Item 1. |
| 3 | |
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Item 2. |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II |
| Other Information |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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| Certifications |
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2
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
| (Stated in millions, except per share amounts) |
| (Stated in millions, except per share amounts) |
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| Second Quarter |
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| Six Months |
| Three Months Ended March 31, |
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| 2016 |
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| 2015 |
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| 2016 |
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| 2015 |
| 2017 |
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| 2016 |
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Revenue |
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Services | $ | 4,955 |
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| $ | 8,080 |
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| $ | 10,718 |
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| $ | 17,322 |
| $ | 4,937 |
|
| $ | 5,763 |
|
Product sales |
| 2,209 |
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|
| 930 |
|
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| 2,966 |
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|
| 1,936 |
|
| 1,957 |
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|
| 757 |
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Total Revenue |
| 7,164 |
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| 9,010 |
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| 13,684 |
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| 19,258 |
|
| 6,894 |
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|
| 6,520 |
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Interest & other income |
| 54 |
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|
| 47 |
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|
| 98 |
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| 96 |
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| 46 |
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| 45 |
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Expenses |
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Cost of services |
| 4,332 |
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| 6,368 |
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| 9,126 |
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| 13,641 |
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| 4,251 |
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| 4,795 |
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Cost of sales |
| 1,983 |
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| 768 |
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| 2,648 |
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| 1,591 |
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| 1,825 |
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| 665 |
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Research & engineering |
| 257 |
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| 279 |
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| 497 |
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| 546 |
|
| 211 |
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| 240 |
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General & administrative |
| 103 |
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|
| 120 |
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| 213 |
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| 239 |
|
| 98 |
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| 110 |
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Impairments & other |
| 2,573 |
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| - |
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| 2,573 |
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| 439 |
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Merger & integration |
| 335 |
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|
| - |
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| 335 |
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| - |
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| 82 |
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| - |
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Interest |
| 149 |
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|
| 86 |
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|
| 282 |
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| 168 |
|
| 139 |
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| 133 |
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Income (loss) before taxes |
| (2,514 | ) |
|
| 1,436 |
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| (1,892 | ) |
|
| 2,730 |
| |||||||
Taxes on income (loss) |
| (368 | ) |
|
| 302 |
|
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| (269 | ) |
|
| 608 |
| |||||||
Net income (loss) |
| (2,146 | ) |
|
| 1,134 |
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|
| (1,623 | ) |
|
| 2,122 |
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Income before taxes |
| 334 |
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|
| 622 |
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Taxes on income |
| 50 |
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| 99 |
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Net income |
| 284 |
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|
| 523 |
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Net income attributable to noncontrolling interests |
| 14 |
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| 10 |
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| 36 |
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| 23 |
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| 5 |
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| 22 |
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Net income (loss) attributable to Schlumberger | $ | (2,160 | ) |
| $ | 1,124 |
|
| $ | (1,659 | ) |
| $ | 2,099 |
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Net income attributable to Schlumberger | $ | 279 |
|
| $ | 501 |
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Basic earnings (loss) per share of Schlumberger | $ | (1.56 | ) |
| $ | 0.89 |
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| $ | (1.26 | ) |
| $ | 1.65 |
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Basic earnings per share of Schlumberger | $ | 0.20 |
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| $ | 0.40 |
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Diluted earnings (loss) per share of Schlumberger | $ | (1.56 | ) |
| $ | 0.88 |
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| $ | (1.26 | ) |
| $ | 1.64 |
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Diluted earnings per share of Schlumberger | $ | 0.20 |
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| $ | 0.40 |
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Average shares outstanding: |
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Basic |
| 1,389 |
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| 1,269 |
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| 1,321 |
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| 1,273 |
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| 1,393 |
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| 1,254 |
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Assuming dilution |
| 1,389 |
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| 1,280 |
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| 1,321 |
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| 1,282 |
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| 1,402 |
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| 1,259 |
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See Notes to Consolidated Financial Statements
3
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
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| Second Quarter |
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| Six Months |
| Three Months Ended March 31, |
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| 2016 |
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| 2015 |
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| 2016 |
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| 2015 |
| 2017 |
|
| 2016 |
| ||||||
Net income (loss) | $ | (2,146 | ) |
| $ | 1,134 |
|
| $ | (1,623 | ) |
| $ | 2,122 |
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Net income | $ | 284 |
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| $ | 523 |
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Currency translation adjustments |
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Unrealized net change arising during the period |
| (70 | ) |
|
| 19 |
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|
| (51 | ) |
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| (94 | ) |
| 45 |
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| 17 |
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Marketable securities |
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Unrealized gain (loss) arising during the period |
| - |
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| 8 |
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| 3 |
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| (10 | ) |
| (4 | ) |
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| 3 |
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Cash flow hedges |
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Net gain (loss) on cash flow hedges |
| 17 |
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| 42 |
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| (68 | ) |
|
| (110 | ) | |||||||
Reclassification to net income (loss) of net realized loss |
| (14 | ) |
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| 22 |
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| 80 |
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| 140 |
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Net loss on cash flow hedges |
| 11 |
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| (85 | ) | |||||||||||||||
Reclassification to net income of net realized loss |
| - |
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| 94 |
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Pension and other postretirement benefit plans |
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Actuarial loss |
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Amortization to net income (loss) of net actuarial loss |
| 34 |
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| 69 |
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| 79 |
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| 143 |
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Amortization to net income of net actuarial loss |
| 43 |
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| 45 |
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Prior service cost |
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Amortization to net income (loss) of net prior service cost |
| 26 |
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| 24 |
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| 51 |
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| 51 |
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Amortization to net income of net prior service cost |
| 20 |
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| 25 |
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Income taxes on pension and other postretirement benefit plans |
| (7 | ) |
|
| (7 | ) |
|
| (14 | ) |
|
| (22 | ) |
| (1 | ) |
|
| (7 | ) |
Comprehensive income (loss) |
| (2,160 | ) |
|
| 1,311 |
|
|
| (1,543 | ) |
|
| 2,220 |
| |||||||
Comprehensive income |
| 398 |
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|
| 615 |
| |||||||||||||||
Comprehensive income attributable to noncontrolling interests |
| 14 |
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|
| 10 |
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|
| 36 |
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| 23 |
|
| 5 |
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|
| 22 |
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Comprehensive income (loss) attributable to Schlumberger | $ | (2,174 | ) |
| $ | 1,301 |
|
| $ | (1,579 | ) |
| $ | 2,197 |
| |||||||
Comprehensive income attributable to Schlumberger | $ | 393 |
|
| $ | 593 |
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See Notes to Consolidated Financial Statements
4
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
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| Jun. 30, |
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| Mar. 31, |
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| ||
| 2016 |
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| Dec. 31, |
| 2017 |
|
| Dec. 31, |
| ||||
| (Unaudited) |
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| 2015 |
| (Unaudited) |
|
| 2016 |
| ||||
ASSETS |
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Current Assets |
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Cash | $ | 2,947 |
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| $ | 2,793 |
| $ | 1,902 |
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| $ | 2,929 |
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Short-term investments |
| 8,245 |
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|
| 10,241 |
|
| 5,451 |
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|
| 6,328 |
|
Receivables less allowance for doubtful accounts (2016 - $381; 2015 - $333) |
| 9,374 |
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|
| 8,780 |
| |||||||
Receivables less allowance for doubtful accounts (2017 - $356; 2016 - $397) |
| 8,636 |
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|
| 9,387 |
| |||||||
Inventories |
| 5,001 |
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| 3,756 |
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| 4,288 |
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| 4,225 |
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Deferred taxes |
| 391 |
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|
| 208 |
| |||||||
Other current assets |
| 1,237 |
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|
| 1,134 |
|
| 1,606 |
|
|
| 1,058 |
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|
| 27,195 |
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|
| 26,912 |
|
| 21,883 |
|
|
| 23,927 |
|
Fixed Income Investments, held to maturity |
| 386 |
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|
| 418 |
|
| 238 |
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|
| 238 |
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Investments in Affiliated Companies |
| 1,276 |
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|
| 3,311 |
|
| 1,482 |
|
|
| 1,243 |
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Fixed Assets less accumulated depreciation |
| 13,226 |
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|
| 13,415 |
|
| 12,507 |
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|
| 12,821 |
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Multiclient Seismic Data |
| 976 |
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|
| 1,026 |
|
| 1,089 |
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|
| 1,073 |
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Goodwill |
| 24,603 |
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| 15,605 |
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| 25,045 |
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|
| 24,990 |
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Intangible Assets |
| 9,921 |
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|
| 4,569 |
|
| 9,743 |
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|
| 9,855 |
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Other Assets |
| 3,588 |
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|
| 2,749 |
|
| 4,188 |
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|
| 3,809 |
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| $ | 81,171 |
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| $ | 68,005 |
| $ | 76,175 |
|
| $ | 77,956 |
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LIABILITIES AND EQUITY |
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Current Liabilities |
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Accounts payable and accrued liabilities | $ | 9,494 |
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| $ | 7,727 |
| $ | 9,408 |
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| $ | 10,016 |
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Estimated liability for taxes on income |
| 1,043 |
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|
| 1,203 |
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| 1,215 |
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|
| 1,188 |
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Long-term debt - current portion |
| 2,385 |
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|
| 3,011 |
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Short-term borrowings |
| 986 |
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|
| 1,546 |
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Short-term borrowings and current portion of long-term debt |
| 2,449 |
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| 3,153 |
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Dividends payable |
| 701 |
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|
| 634 |
|
| 704 |
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|
| 702 |
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|
| 14,609 |
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|
| 14,121 |
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| 13,776 |
|
|
| 15,059 |
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Long-term Debt |
| 18,252 |
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|
| 14,442 |
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| 16,538 |
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|
| 16,463 |
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Postretirement Benefits |
| 1,341 |
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|
| 1,434 |
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| 1,457 |
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|
| 1,495 |
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Deferred Taxes |
| 2,631 |
|
|
| 1,075 |
|
| 1,908 |
|
|
| 1,880 |
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Other Liabilities |
| 1,359 |
|
|
| 1,028 |
|
| 1,442 |
|
|
| 1,530 |
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|
| 38,192 |
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|
| 32,100 |
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| 35,121 |
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|
| 36,427 |
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Equity |
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Common stock |
| 12,835 |
|
|
| 12,693 |
|
| 12,780 |
|
|
| 12,801 |
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Treasury stock |
| (3,636 | ) |
|
| (13,372 | ) |
| (3,697 | ) |
|
| (3,550 | ) |
Retained earnings |
| 37,889 |
|
|
| 40,870 |
|
| 36,052 |
|
|
| 36,470 |
|
Accumulated other comprehensive loss |
| (4,478 | ) |
|
| (4,558 | ) |
| (4,529 | ) |
|
| (4,643 | ) |
Schlumberger stockholders' equity |
| 42,610 |
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|
| 35,633 |
|
| 40,606 |
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|
| 41,078 |
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Noncontrolling interests |
| 369 |
|
|
| 272 |
|
| 448 |
|
|
| 451 |
|
|
| 42,979 |
|
|
| 35,905 |
|
| 41,054 |
|
|
| 41,529 |
|
| $ | 81,171 |
|
| $ | 68,005 |
| $ | 76,175 |
|
| $ | 77,956 |
|
See Notes to Consolidated Financial Statements
5
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
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| Six Months Ended Jun. 30, |
| Three Months Ended March 31, |
| ||||||||||
| 2016 |
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| 2015 |
| 2017 |
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| 2016 |
| ||||
Cash flows from operating activities: |
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|
|
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|
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|
|
Net income (loss) | $ | (1,623 | ) |
| $ | 2,122 |
| |||||||
Net income | $ | 284 |
|
| $ | 523 |
| |||||||
Adjustments to reconcile net income to cash provided by operating activities: |
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|
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Impairments and other charges |
| 2,908 |
|
|
| 439 |
| |||||||
Merger & integration charges |
| 82 |
|
|
| - |
| |||||||
Depreciation and amortization (1) |
| 2,080 |
|
|
| 2,089 |
|
| 989 |
|
|
| 967 |
|
Pension and other postretirement benefits expense |
| 37 |
|
|
| 60 |
| |||||||
Stock-based compensation expense |
| 145 |
|
|
| 167 |
|
| 88 |
|
|
| 61 |
|
Pension and other postretirement benefits expense |
| 92 |
|
|
| 217 |
| |||||||
Pension and other postretirement benefits funding |
| (83 | ) |
|
| (214 | ) |
| (29 | ) |
|
| (45 | ) |
Earnings of equity method investments, less dividends received |
| (30 | ) |
|
| (65 | ) |
| (10 | ) |
|
| (25 | ) |
Change in assets and liabilities: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in receivables |
| 1,057 |
|
|
| 1,682 |
|
| 58 |
|
|
| 414 |
|
Decrease in inventories |
| 334 |
|
|
| 39 |
| |||||||
Decrease (increase) in other current assets |
| 92 |
|
|
| (13 | ) | |||||||
(Increase) decrease in inventories |
| (33 | ) |
|
| 125 |
| |||||||
(Increase) decrease in other current assets |
| (115 | ) |
|
| 85 |
| |||||||
(Increase) decrease in other assets |
| (247 | ) |
|
| 3 |
|
| (56 | ) |
|
| 5 |
|
Decrease in accounts payable and accrued liabilities |
| (1,491 | ) |
|
| (2,126 | ) |
| (670 | ) |
|
| (983 | ) |
Decrease in estimated liability for taxes on income |
| (242 | ) |
|
| (419 | ) |
| (31 | ) |
|
| (104 | ) |
Increase (decrease) in other liabilities |
| 11 |
|
|
| (86 | ) | |||||||
(Decrease) increase in other liabilities |
| (28 | ) |
|
| 2 |
| |||||||
Other |
| (161 | ) |
|
| 249 |
|
| 90 |
|
|
| 125 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 2,842 |
|
|
| 4,084 |
|
| 656 |
|
|
| 1,210 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
| (998 | ) |
|
| (1,193 | ) |
| (381 | ) |
|
| (549 | ) |
SPM investments |
| (729 | ) |
|
| (222 | ) |
| (144 | ) |
|
| (597 | ) |
Multiclient seismic data costs capitalized |
| (333 | ) |
|
| (221 | ) |
| (116 | ) |
|
| (167 | ) |
Business acquisitions and investments, net of cash acquired |
| (2,220 | ) |
|
| (171 | ) |
| (273 | ) |
|
| (81 | ) |
Sale of investments, net |
| 3,476 |
|
|
| 610 |
| |||||||
Sale (purchase) of investments, net |
| 883 |
|
|
| (2,093 | ) | |||||||
Other |
| 26 |
|
|
| (119 | ) |
| (24 | ) |
|
| (26 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
| (778 | ) |
|
| (1,316 | ) |
| (55 | ) |
|
| (3,513 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
| (1,255 | ) |
|
| (1,151 | ) |
| (696 | ) |
|
| (629 | ) |
Proceeds from employee stock purchase plan |
| 116 |
|
|
| 144 |
|
| 96 |
|
|
| 116 |
|
Proceeds from exercise of stock options |
| 79 |
|
|
| 112 |
|
| 39 |
|
|
| 47 |
|
Stock repurchase program |
| (506 | ) |
|
| (1,239 | ) |
| (372 | ) |
|
| (475 | ) |
Proceeds from issuance of long-term debt |
| 3,560 |
|
|
| 1,779 |
|
| 334 |
|
|
| 3,542 |
|
Repayment of long-term debt |
| (3,401 | ) |
|
| (2,340 | ) |
| (1 | ) |
|
| (500 | ) |
Net (decrease) increase in short-term borrowings |
| (564 | ) |
|
| 586 |
| |||||||
Net decrease in short-term borrowings |
| (1,015 | ) |
|
| (561 | ) | |||||||
Other |
| 48 |
|
|
| (2 | ) |
| (22 | ) |
|
| 47 |
|
NET CASH USED IN FINANCING ACTIVITIES |
| (1,923 | ) |
|
| (2,111 | ) | |||||||
CASH FLOWS USED IN DISCONTINUED OPERATIONS - OPERATING ACTIVITIES |
| - |
|
|
| (233 | ) | |||||||
Net increase in cash before translation effect |
| 141 |
|
|
| 424 |
| |||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
| (1,637 | ) |
|
| 1,587 |
| |||||||
Net decrease in cash before translation effect |
| (1,036 | ) |
|
| (716 | ) | |||||||
Translation effect on cash |
| 13 |
|
|
| (13 | ) |
| 9 |
|
|
| 3 |
|
Cash, beginning of period |
| 2,793 |
|
|
| 3,130 |
|
| 2,929 |
|
|
| 2,793 |
|
Cash, end of period | $ | 2,947 |
|
| $ | 3,541 |
| $ | 1,902 |
|
| $ | 2,080 |
|
(1) Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments.
(2) Net of the effect of business acquisitions.
See Notes to Consolidated Financial Statements
6
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| ||
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| ||||||||||||||||
January 1, 2016 – June 30, 2016 | Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| |||||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | 12,693 |
|
| $ | (13,372 | ) |
| $ | 40,870 |
|
| $ | (4,558 | ) |
| $ | 272 |
|
| $ | 35,905 |
| |||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| (1,659 | ) |
|
|
|
|
|
| 36 |
|
|
| (1,623 | ) | |||||||||||||||||||||||
January 1, 2017 – March 31, 2017 | Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| |||||||||||||||||||||||||||||
Balance, January 1, 2017 | $ | 12,801 |
|
| $ | (3,550 | ) |
| $ | 36,470 |
|
| $ | (4,643 | ) |
| $ | 451 |
|
| $ | 41,529 |
| |||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
| 279 |
|
|
|
|
|
|
| 5 |
|
|
| 284 |
| |||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (51 | ) |
|
|
|
|
|
| (51 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| 45 |
|
|
|
|
|
|
| 45 |
|
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| 3 |
|
|
|
|
|
|
| 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4 | ) |
|
|
|
|
|
| (4 | ) |
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| 12 |
|
|
|
|
|
|
| 12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11 |
|
|
|
|
|
|
| 11 |
|
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 116 |
|
|
|
|
|
|
| 116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 62 |
|
|
|
|
|
|
| 62 |
|
Shares sold to optionees, less shares exchanged |
| (38 | ) |
|
| 117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 79 |
|
| (29 | ) |
|
| 68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 39 |
|
Vesting of restricted stock |
| (63 | ) |
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
| (49 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
Shares issued under employee stock purchase plan |
| (19 | ) |
|
| 135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 116 |
|
| (12 | ) |
|
| 108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 96 |
|
Stock repurchase program |
|
|
|
|
| (506 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (506 | ) |
|
|
|
|
| (372 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (372 | ) |
Stock-based compensation expense |
| 145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 145 |
|
| 88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 88 |
|
Dividends declared ($1.00 per share) |
|
|
|
|
|
|
|
|
| (1,322 | ) |
|
|
|
|
|
|
|
|
|
| (1,322 | ) | |||||||||||||||||||||||
Acquisition of Cameron International Corporation |
| 103 |
|
|
| 9,924 |
|
|
|
|
|
|
|
|
|
|
| 57 |
|
|
| 10,084 |
| |||||||||||||||||||||||
Dividends declared ($0.50 per share) |
|
|
|
|
|
|
|
|
| (697 | ) |
|
|
|
|
|
|
|
|
|
| (697 | ) | |||||||||||||||||||||||
Other |
| 14 |
|
|
| 3 |
|
|
|
|
|
|
|
|
|
|
| 4 |
|
|
| 21 |
|
| (19 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (8 | ) |
|
| (27 | ) |
Balance, June 30, 2016 | $ | 12,835 |
|
| $ | (3,636 | ) |
| $ | 37,889 |
|
| $ | (4,478 | ) |
| $ | 369 |
|
| $ | 42,979 |
| |||||||||||||||||||||||
Balance, March 31, 2017 | $ | 12,780 |
|
| $ | (3,697 | ) |
| $ | 36,052 |
|
| $ | (4,529 | ) |
| $ | 448 |
|
| $ | 41,054 |
|
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| ||
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| ||||||||||||||||
January 1, 2015 – June 30, 2015 | Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| |||||||||||||||||||||||||||||
Balance, January 1, 2015 | $ | 12,495 |
|
| $ | (11,772 | ) |
| $ | 41,333 |
|
| $ | (4,206 | ) |
| $ | 199 |
|
| $ | 38,049 |
| |||||||||||||||||||||||
January 1, 2016 – March 31, 2016 | Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| |||||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | 12,693 |
|
| $ | (13,372 | ) |
| $ | 40,870 |
|
| $ | (4,558 | ) |
| $ | 272 |
|
| $ | 35,905 |
| |||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
| 2,099 |
|
|
|
|
|
|
| 23 |
|
|
| 2,122 |
|
|
|
|
|
|
|
|
|
| 501 |
|
|
|
|
|
|
| 22 |
|
|
| 523 |
|
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (94 | ) |
|
|
|
|
|
| (94 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| 17 |
|
|
|
|
|
|
| 17 |
|
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| (10 | ) |
|
|
|
|
|
| (10 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| 3 |
|
|
|
|
|
|
| 3 |
|
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| 30 |
|
|
|
|
|
|
| 30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9 |
|
|
| �� |
|
|
| 9 |
|
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 172 |
|
|
|
|
|
|
| 172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 63 |
|
|
|
|
|
|
| 63 |
|
Shares sold to optionees, less shares exchanged |
| (25 | ) |
|
| 137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 112 |
|
| (17 | ) |
|
| 64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 47 |
|
Vesting of restricted stock |
| (67 | ) |
|
| 67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
| (28 | ) |
|
| 28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
Shares issued under employee stock purchase plan |
| 9 |
|
|
| 135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 144 |
|
| (19 | ) |
|
| 135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 116 |
|
Stock repurchase program |
|
|
|
|
| (1,239 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,239 | ) |
|
|
|
|
| (475 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (475 | ) |
Stock-based compensation expense |
| 167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 167 |
|
| 61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 61 |
|
Dividends declared ($1.00 per share) |
|
|
|
|
|
|
|
|
| (1,274 | ) |
|
|
|
|
|
|
|
|
|
| (1,274 | ) | |||||||||||||||||||||||
Dividends declared ($0.50 per share) |
|
|
|
|
|
|
|
|
| (626 | ) |
|
|
|
|
|
|
|
|
|
| (626 | ) | |||||||||||||||||||||||
Other |
| 7 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| (2 | ) |
|
| 6 |
|
| 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9 |
|
|
| 19 |
|
Balance, June 30, 2015 | $ | 12,586 |
|
| $ | (12,671 | ) |
| $ | 42,158 |
|
| $ | (4,108 | ) |
| $ | 220 |
|
| $ | 38,185 |
| |||||||||||||||||||||||
Balance, March 31, 2016 | $ | 12,700 |
|
| $ | (13,620 | ) |
| $ | 40,745 |
|
| $ | (4,466 | ) |
| $ | 303 |
|
| $ | 35,662 |
|
SHARES OF COMMON STOCK
(Unaudited)
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares |
|
|
|
|
|
|
|
|
| Shares |
| ||
| Issued |
|
| In Treasury |
|
| Outstanding |
| Issued |
|
| In Treasury |
|
| Outstanding |
| ||||||
Balance, January 1, 2016 |
| 1,434 |
|
|
| (178 | ) |
|
| 1,256 |
| |||||||||||
Acquisition of Cameron International Corporation |
| - |
|
|
| 138 |
|
|
| 138 |
| |||||||||||
Balance, January 1, 2017 |
| 1,434 |
|
|
| (43 | ) |
|
| 1,391 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 2 |
|
|
| 2 |
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Vesting of restricted stock |
| - |
|
|
| 1 |
|
|
| 1 |
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Shares issued under employee stock purchase plan |
| - |
|
|
| 1 |
|
|
| 1 |
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Stock repurchase program |
| - |
|
|
| (7 | ) |
|
| (7 | ) |
| - |
|
|
| (5 | ) |
|
| (5 | ) |
Balance, June 30, 2016 |
| 1,434 |
|
|
| (43 | ) |
|
| 1,391 |
| |||||||||||
Balance, March 31, 2017 |
| 1,434 |
|
|
| (45 | ) |
|
| 1,389 |
|
See Notes to Consolidated Financial Statements
7
SCHLUMBERGER LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Schlumberger Limited and its subsidiaries (Schlumberger) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Schlumberger management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements. All intercompany transactions and balances have been eliminated in consolidation. Operating results for the six-monththree-month period ended June 30, 2016March 31, 2017 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.2017. The December 31, 20152016 balance sheet information has been derived from the Schlumberger 20152016 audited financial statements. For further information, refer to the Consolidated Financial Statements and notes thereto included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2015,2016, filed with the Securities and Exchange Commission on January 27, 2016.25, 2017.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Schlumberger is required towill adopt this ASU on January 1, 2018, with early adoption permitted on January 1, 2017. Excluding any impact associated with the recently completed acquisition of Cameron International Corporation (Cameron),2018. Schlumberger does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. Schlumberger is evaluating the impact of this ASU on the recently acquired Cameron business.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet. Schlumberger is required to adopt this ASU no later than January 1, 2017, with early adoption permitted, and the guidance may be applied either prospectively or retrospectively. Schlumberger does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of short-term leases. Schlumberger will adopt this ASU on January 1, 2019 and is evaluating the impact2019. Based on its current lease portfolio, Schlumberger estimates that the adoption of this ASU will haveresult in approximately $1.3 billion of additional assets and liabilities being reflected on its consolidated financial statements.Consolidated Balance Sheet.
2. Charges and Credits
In connection with Schlumberger’s acquisition of Cameron (See Note 4 – Acquisition of Cameron), Schlumberger recorded the following$82 million of pretax charges ($68 million after-tax) consisting of employee benefits, facility consolidation and creditsother merger and integration-related costs during the secondfirst quarter of 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of the impaired fixed assets and multiclient seismic data was estimated based on the projected present value of future cash flows that these assets are expected to generate. Such estimates included unobservable inputs that required significant judgments. Additional charges may be required in future periods should industry conditions worsen. The above items are2017. This charge is classified in ImpairmentsMerger & otherintegration in the Consolidated Statement of Income.
8
The following is a summary of these charges:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Workforce reduction | $ | 646 |
|
| $ | 63 |
|
| $ | 583 |
|
North America pressure pumping asset impairments |
| 209 |
|
|
| 67 |
|
|
| 142 |
|
Facilities impairments |
| 165 |
|
|
| 58 |
|
|
| 107 |
|
Other fixed asset impairments |
| 684 |
|
|
| 52 |
|
|
| 632 |
|
Inventory write-downs |
| 616 |
|
|
| 49 |
|
|
| 567 |
|
Multiclient seismic data impairment |
| 198 |
|
|
| 62 |
|
|
| 136 |
|
Other restructuring charges |
| 55 |
|
|
| - |
|
|
| 55 |
|
Amortization of inventory fair value adjustment |
| 150 |
|
|
| 45 |
|
|
| 105 |
|
Merger-related employee benefits |
| 47 |
|
|
| 7 |
|
|
| 40 |
|
Professional fees |
| 45 |
|
|
| 10 |
|
|
| 35 |
|
Facility closure costs |
| 40 |
|
|
| 10 |
|
|
| 30 |
|
Other merger and integration-related |
| 53 |
|
|
| 9 |
|
|
| 44 |
|
| $ | 2,908 |
|
| $ | 432 |
|
| $ | 2,476 |
|
Schlumberger recorded the following charges and credits during the first six monthsquarter of 2015:
|
|
|
|
The following is a summary of these charges, all of which were classified as Impairments & other in the Consolidated Statement of Income:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Workforce reduction | $ | 390 |
|
| $ | 56 |
|
| $ | 334 |
|
Currency devaluation loss in Venezuela |
| 49 |
|
|
| - |
|
|
| 49 |
|
| $ | 439 |
|
| $ | 56 |
|
| $ | 383 |
|
2016.
9
The following is a reconciliation from basic earnings (loss) per share of Schlumberger to diluted earnings (loss) per share of Schlumberger:
(Stated in millions, except per share amounts) | (Stated in millions, except per share amounts) |
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2016 |
|
| 2015 |
| 2017 |
|
| 2016 |
| ||||||||||||||||||||||||||||||||||||
| Schlumberger Net Loss |
|
| Average Shares Outstanding |
|
| Loss per Share |
|
| Schlumberger Net Income |
|
| Average Shares Outstanding |
|
| Earnings per Share |
| Schlumberger Net Income |
|
| Average Shares Outstanding |
|
| Earnings per Share |
|
| Schlumberger Net Income |
|
| Average Shares Outstanding |
|
| Earnings per Share |
| ||||||||||||
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Basic | $ | (2,160 | ) |
|
| 1,389 |
|
| $ | (1.56 | ) |
| $ | 1,124 |
|
|
| 1,269 |
|
| $ | 0.89 |
| $ | 279 |
|
|
| 1,393 |
|
| $ | 0.20 |
|
| $ | 501 |
|
|
| 1,254 |
|
| $ | 0.40 |
|
Assumed exercise of stock options |
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| 7 |
|
|
|
|
|
| - |
|
|
| 4 |
|
|
|
|
|
|
| - |
|
|
| 1 |
|
|
|
|
|
Unvested restricted stock |
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| 4 |
|
|
|
|
|
| - |
|
|
| 5 |
|
|
|
|
|
|
| - |
|
|
| 4 |
|
|
|
|
|
Diluted | $ | (2,160 | ) |
|
| 1,389 |
|
| $ | (1.56 | ) |
| $ | 1,124 |
|
|
| 1,280 |
|
| $ | 0.88 |
| $ | 279 |
|
|
| 1,402 |
|
| $ | 0.20 |
|
| $ | 501 |
|
|
| 1,259 |
|
| $ | 0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
| 2016 |
|
| 2015 |
| |||||||||||||||||||||||||||||||||||||||||
| Schlumberger Net Loss |
|
| Average Shares Outstanding |
|
| Loss per Share |
|
| Schlumberger Net Income |
|
| Average Shares Outstanding |
|
| Earnings per Share |
| |||||||||||||||||||||||||||||
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Basic | $ | (1,659 | ) |
| $ | 1,321 |
|
| $ | (1.26 | ) |
| $ | 2,099 |
|
| $ | 1,273 |
|
| $ | 1.65 |
| |||||||||||||||||||||||
Assumed exercise of stock options |
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| 5 |
|
|
|
|
| |||||||||||||||||||||||
Unvested restricted stock |
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| 4 |
|
|
|
|
| |||||||||||||||||||||||
Diluted | $ | (1,659 | ) |
| $ | 1,321 |
|
| $ | (1.26 | ) |
| $ | 2,099 |
|
| $ | 1,282 |
|
| $ | 1.64 |
|
The number of outstanding options to purchase shares of Schlumberger common stock that were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect, was as follows:
(Stated in millions) |
| ||||||
|
|
|
|
|
| ||
| 2016 |
|
| 2015 |
| ||
Second Quarter |
| 49 |
|
|
| 11 |
|
Six Months |
| 49 |
|
|
| 13 |
|
(Stated in millions) |
| ||||||
|
|
|
|
|
| ||
| 2017 |
|
| 2016 |
| ||
First Quarter |
| 23 |
|
|
| 32 |
|
4. Acquisition of Cameron
On April 1, 2016, Schlumberger acquired all of the outstanding shares of Cameron, a leading provider of flow equipment products, systems and services to the oil and gas industry worldwide. The acquisition is expected to create technology-driven growth by integrating Schlumberger reservoir and well technologies with Cameron wellhead and surface equipment, flow control and processing technology. The combinationissued approximately 138 million shares of the two complementary technology portfolios provides the industry’s most comprehensive range of products and services, from exploration to production and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance.
Under the terms of the merger agreement, Cameron became a wholly-owned subsidiary of Schlumberger. Each share of Cameronits common stock, issued and outstanding immediately prior towhich were valued at $9.9 billion at the effective time of the merger was converted into the right to receive 0.716 sharesclosing, and paid cash of Schlumberger stock and $14.44 in cash.
Calculation of Consideration Transferred
The following details the fair value of the consideration transferred to effect the acquisition of Cameron:
(stated in millions, except exchange ratio and per share amounts) |
| ||||||
|
|
|
|
|
|
|
|
Equity consideration: |
|
|
|
|
|
|
|
Number of shares of Cameron stock outstanding |
| 192 |
|
|
|
| |
Exchange ratio |
| 0.716 |
|
|
|
| |
Schlumberger shares of common stock issued |
|
| 138 |
|
|
|
|
Schlumberger closing stock share price on April 1, 2016 |
| $ | 72.12 |
|
|
|
|
Equity consideration |
|
|
|
| $ | 9,924 |
|
Cash consideration: |
|
|
|
|
|
|
|
Number of shares of Cameron stock outstanding |
| 192 |
|
|
|
| |
Cash consideration per Cameron share |
| $ | 14.44 |
|
|
|
|
Cash consideration |
|
|
|
|
| 2,776 |
|
Other: |
|
|
|
|
|
|
|
Fair value of replacement equity awards |
|
|
|
| 103 |
| |
Total fair value of the consideration transferred |
|
|
|
| $ | 12,803 |
|
Certain amounts reflect rounding adjustments
Preliminary Allocation of Consideration Transferred to Net Assets Acquired
The following amounts represents the preliminary estimates of the fair value of assets acquired and liabilities assumed in the merger. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. These amounts, which may differ materially from these preliminary estimates, will be finalized as soon as possible, but no later than one year from the acquisition date.
(Stated in millions) |
| ||
|
|
|
|
Cash | $ | 785 |
|
Short-term investments |
| 1,448 |
|
Accounts receivable |
| 1,691 |
|
Inventories (1) |
| 2,431 |
|
Fixed assets |
| 1,333 |
|
Intangible assets: |
|
|
|
Customer relationships (weighted-average life of 25 years) |
| 2,371 |
|
Technology/Technical Know-How (weighted-average life of 16 years) |
| 1,736 |
|
Tradenames (weighted-average life of 25 years) |
| 1,225 |
|
Other assets |
| 624 |
|
Accounts payable and accrued liabilities |
| (2,592 | ) |
Long-term debt (2) |
| (3,018 | ) |
Deferred taxes (3) |
| (1,636 | ) |
Other liabilities |
| (310 | ) |
Sub-total | $ | 6,088 |
|
Less: |
|
|
|
Investment in OneSubsea (4) |
| (2,065 | ) |
Noncontrolling interests |
| (57 | ) |
Total identifiable net assets | $ | 3,966 |
|
Goodwill (5) |
| 8,837 |
|
Total consideration transferred | $ | 12,803 |
|
(1) Schlumberger recorded an adjustment of $299 million to write-up the acquired inventory to its estimated fair value. This adjustment will be amortized as the acquired inventory is sold.
(2) In connection with the merger, Schlumberger assumed all of the debt obligations of Cameron, including their $2.75 billion of fixed rate notes. Schlumberger recorded a $244 million adjustment to increase the carrying amount of these notes to their estimated fair value. This adjustment will be amortized as a reduction of interest expense over the remaining term of the respective obligations.
(3) In connection with the acquisition accounting, Schlumberger provided deferred taxes related to, among other items, the estimated fair value adjustments for acquired inventory, intangible assets and assumed debt obligations.
(4)$2.8 billion. Prior to the completion of the merger, Cameron and Schlumberger operated OneSubsea, a joint venture that manufactures and develops products, systems and services for the subsea oil and gas market which was 40% ownedbeing acquired by Schlumberger, and 60% owned by Cameron. OneSubsea is now owned 100% by Schlumberger. As a result of obtaining control of this joint venture, Schlumberger was required to
11
remeasure its previously held equity interest in the joint venture to its acquisition-date fair value. Schlumberger determined that the estimated fair value of its previously held equity interest approximated its carrying value. Accordingly, Schlumberger did not recognize any gain or loss on this transaction.
(5) The goodwill recognized is primarily attributable to expected synergies that will result from combining the operations of Schlumberger and Cameron as well as intangible assets, which do not qualify for separate recognition. The amount of goodwill that is deductible for income tax purposes is not significant.
Supplemental Pro Forma Financial Information
Cameron’s results of operations have been included in Schlumberger’s financial statements for periods subsequent to the closing of the acquisition on April 1, 2016. Businesses acquired from Cameron contributed revenuesreported revenue of approximately $1.5$1.6 billion and pretax operating incomeduring the first quarter of $243 million for the period from April 1, 2016 through June 30, 2016.
The following supplemental pro forma results of operations assume that Cameron had been acquired as of January 1, 2015. The supplemental pro forma financial information was prepared based on the historical financial information of Schlumberger and Cameron and has been adjusted to give effect to pro forma adjustments that are both directly attributable to the transaction and factually supportable. The pro forma amounts reflect certain adjustments to amortization expense, interest expense and income taxes resulting from purchase accounting. The pro forma amounts also reflect adjustments to the 2016 results to exclude merger and integration costs of $254 million, net of taxes, for the three and six months ended June 30, 2016 because such costs are nonrecurring and directly attributable to the acquisition. As required by generally accepted accounting principles, the pro forma results for the six months ended June 30, 2015 have been adjusted to include the $254 million of after-tax merger and integration charges as well as an additional $105 million of after-tax charges relating to the amortization of the inventory fair value adjustment. The pro forma results for the three months ended June 30, 2015 have been adjusted to include the $105 million of after-tax amortization relating to the inventory fair value adjustment.
The supplemental pro forma financial information presented below does not include any anticipated cost savings or the expected realization of other synergies associated with this transaction. Accordingly, this supplemental pro forma financial information is presented for informational purposes only and is not necessarily indicative of what the actual results of operations of the combined company would have been had the acquisition occurred on January 1, 2015, nor is it indicative of future results of operations.
|
|
|
|
| (Stated in millions, except per share amounts) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter |
|
| Six Months |
| ||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| ||||
Revenue | $ | 7,164 |
|
| $ | 11,246 |
|
| $ | 15,312 |
|
| $ | 23,779 |
|
Net income (loss) attributable to Schlumberger | $ | (1,905 | ) |
| $ | 1,152 |
|
| $ | (1,290 | ) |
| $ | 1,883 |
|
Diluted earnings (loss) per share | $ | (1.37 | ) |
| $ | 0.81 |
|
| $ | (0.93 | ) |
| $ | 1.33 |
|
5. Inventories
A summary of inventories, which are stated at the lower of average cost or market, follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jun. 30, |
|
| Dec. 31, |
| Mar. 31, |
|
| Dec. 31, |
| ||||
| 2016 |
|
| 2015 |
| 2017 |
|
| 2016 |
| ||||
Raw materials & field materials | $ | 1,874 |
|
| $ | 2,300 |
| $ | 1,633 |
|
| $ | 1,720 |
|
Work in progress |
| 640 |
|
|
| 178 |
|
| 597 |
|
|
| 610 |
|
Finished goods |
| 2,487 |
|
|
| 1,278 |
|
| 2,058 |
|
|
| 1,895 |
|
| $ | 5,001 |
|
| $ | 3,756 |
| $ | 4,288 |
|
| $ | 4,225 |
|
12
A summary of fixed assets follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jun. 30, |
|
| Dec. 31, |
| Mar. 31, |
|
| Dec. 31, |
| ||||
| 2016 |
|
| 2015 |
| 2017 |
|
| 2016 |
| ||||
Property, plant & equipment | $ | 40,198 |
|
| $ | 37,120 |
| $ | 39,857 |
|
| $ | 40,008 |
|
Less: Accumulated depreciation |
| 26,972 |
|
|
| 23,705 |
|
| 27,350 |
|
|
| 27,187 |
|
| $ | 13,226 |
|
| $ | 13,415 |
| $ | 12,507 |
|
| $ | 12,821 |
|
Depreciation expense relating to fixed assets was as follows:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2016 |
|
| 2015 |
| ||
Second Quarter | $ | 744 |
|
| $ | 819 |
|
Six Months |
| 1,426 |
|
|
| 1,646 |
|
$613 million and $682 million in the first quarter of 2017 and 2016, respectively.
7. Multiclient Seismic Data
The change in the carrying amount of multiclient seismic data for the sixthree months ended June 30, 2016March 31, 2017 was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||
|
|
|
|
|
|
|
Balance at December 31, 2015 | $ | 1,026 |
| |||
Balance at December 31, 2016 | $ | 1,073 |
| |||
Capitalized in period |
| 333 |
|
| 116 |
|
Charged to expense |
| (185 | ) |
| (100 | ) |
Impairment charge (see Note 2) |
| (198 | ) | |||
Balance at June 30, 2016 | $ | 976 |
| |||
Balance at March 31, 2017 | $ | 1,089 |
|
8. Goodwill
The changes in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2016 were as follows:
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reservoir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Characterization |
|
| Drilling |
|
| Production |
|
| Cameron |
|
| Total |
| |||||
Balance at December 31, 2015 | $ | 3,798 |
|
| $ | 8,584 |
|
| $ | 3,223 |
|
| $ | - |
|
| $ | 15,605 |
|
Acquisition of Cameron |
| 790 |
|
|
| 1,490 |
|
|
| 1,170 |
|
|
| 5,387 |
|
|
| 8,837 |
|
Other acquisitions |
| - |
|
|
| 24 |
|
|
| 105 |
|
|
| - |
|
|
| 129 |
|
Impact of changes in exchange rates |
| 13 |
|
|
| 7 |
|
|
| 12 |
|
|
| - |
|
|
| 32 |
|
Balance at June 30, 2016 | $ | 4,601 |
|
| $ | 10,105 |
|
| $ | 4,510 |
|
| $ | 5,387 |
|
| $ | 24,603 |
|
13
The gross book value, accumulated amortization and net book value of intangible assets were as follows:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| Jun. 30, 2016 |
|
| Dec. 31, 2015 |
| Mar. 31, 2017 |
|
| Dec. 31, 2016 |
| ||||||||||||||||||||||||||||||||||||
| 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 | $ | 4,881 |
|
| $ | 747 |
|
| $ | 4,134 |
|
| $ | 2,489 |
|
| $ | 645 |
|
| $ | 1,844 |
| $ | 4,960 |
|
| $ | 927 |
|
| $ | 4,033 |
|
| $ | 4,938 |
|
| $ | 865 |
|
| $ | 4,073 |
|
Technology/technical know-how |
| 3,599 |
|
|
| 716 |
|
|
| 2,883 |
|
|
| 1,864 |
|
|
| 653 |
|
|
| 1,211 |
|
| 3,655 |
|
|
| 896 |
|
|
| 2,759 |
|
|
| 3,655 |
|
|
| 835 |
|
|
| 2,820 |
|
Tradenames |
| 2,848 |
|
|
| 406 |
|
|
| 2,442 |
|
|
| 1,625 |
|
|
| 367 |
|
|
| 1,258 |
|
| 2,847 |
|
|
| 484 |
|
|
| 2,363 |
|
|
| 2,847 |
|
|
| 458 |
|
|
| 2,389 |
|
Other |
| 1,008 |
|
|
| 546 |
|
|
| 462 |
|
|
| 513 |
|
|
| 257 |
|
|
| 256 |
|
| 1,166 |
|
|
| 578 |
|
|
| 588 |
|
|
| 1,122 |
|
|
| 549 |
|
|
| 573 |
|
| $ | 12,336 |
|
| $ | 2,415 |
|
| $ | 9,921 |
|
| $ | 6,491 |
|
| $ | 1,922 |
|
| $ | 4,569 |
| $ | 12,628 |
|
| $ | 2,885 |
|
| $ | 9,743 |
|
| $ | 12,562 |
|
| $ | 2,707 |
|
| $ | 9,855 |
|
Amortization expense charged to income was as follows:$169 million during the first quarter of 2017 and $89 million during the first quarter of 2016.
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2016 |
|
| 2015 |
| ||
Second Quarter | $ | 160 |
|
| $ | 93 |
|
Six Months | $ | 249 |
|
| $ | 179 |
|
Based on the net book value of intangible assets at June 30, 2016,March 31, 2017, amortization charged to income for the subsequent five years is estimated to be: remaining twothree quarters of 2016—$335 million; 2017—$672526 million; 2018—$651668 million; 2019—$611627 million; 2020—$587599 million; 2021—$576 million; and 2021—2022—$565571 million.
10.9. Long-term Debt
A summary of Long-term Debt follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jun. 30, |
|
| Dec. 31, |
| Mar. 31, |
|
| Dec. 31, |
| ||||
| 2016 |
|
| 2015 |
| 2017 |
|
| 2016 |
| ||||
4.00% Senior Notes due 2025 | $ | 1,739 |
|
| $ | 1,741 |
| $ | 1,740 |
|
| $ | 1,740 |
|
3.30% Senior Notes due 2021 |
| 1,593 |
|
|
| 1,597 |
|
| 1,594 |
|
|
| 1,594 |
|
3.00% Senior Notes due 2020 |
| 1,590 |
|
|
| 1,591 |
|
| 1,591 |
|
|
| 1,591 |
|
3.65% Senior Notes due 2023 |
| 1,490 |
|
|
| 1,496 |
|
| 1,491 |
|
|
| 1,491 |
|
2.35% Senior Notes due 2018 |
| 1,296 |
|
|
| 1,297 |
|
| 1,297 |
|
|
| 1,297 |
|
4.20% Senior Notes due 2021 |
| 1,099 |
|
|
| 1,100 |
|
| 1,100 |
|
|
| 1,100 |
|
1.25% Senior Notes due 2017 |
| 999 |
|
|
| 1,000 |
| |||||||
2.40% Senior Notes due 2022 |
| 995 |
|
|
| 999 |
|
| 996 |
|
|
| 996 |
|
3.63% Senior Notes due 2022 |
| 845 |
|
|
| 845 |
|
| 845 |
|
|
| 845 |
|
0.63% Guaranteed Notes due 2019 |
| 662 |
|
|
| - |
|
| 645 |
|
|
| 622 |
|
1.50% Guaranteed Notes due 2019 |
| 575 |
|
|
| 566 |
|
| 551 |
|
|
| 536 |
|
1.90% Senior Notes due 2017 |
| 498 |
|
|
| 499 |
| |||||||
6.38% Notes due 2018 (1) |
| 304 |
|
|
| - |
| |||||||
7.00% Notes due 2038 (1) |
| 216 |
|
|
| - |
| |||||||
4.50% Notes due 2021 (1) |
| 139 |
|
|
| - |
| |||||||
5.95% Notes due 2041 (1) |
| 116 |
|
|
| - |
| |||||||
3.60% Notes due 2022 (1) |
| 111 |
|
|
| - |
| |||||||
5.13% Notes due 2043 (1) |
| 99 |
|
|
| - |
| |||||||
4.00% Notes due 2023 (1) |
| 83 |
|
|
| - |
| |||||||
3.70% Notes due 2024 (1) |
| 56 |
|
|
| - |
| |||||||
6.38% Notes due 2018 |
| 294 |
|
|
| 297 |
| |||||||
7.00% Notes due 2038 |
| 214 |
|
|
| 214 |
| |||||||
4.50% Notes due 2021 |
| 137 |
|
|
| 137 |
| |||||||
5.95% Notes due 2041 |
| 116 |
|
|
| 116 |
| |||||||
3.60% Notes due 2022 |
| 110 |
|
|
| 110 |
| |||||||
5.13% Notes due 2043 |
| 99 |
|
|
| 99 |
| |||||||
4.00% Notes due 2023 |
| 82 |
|
|
| 83 |
| |||||||
3.70% Notes due 2024 |
| 56 |
|
|
| 56 |
| |||||||
Commercial paper borrowings |
| 2,500 |
|
|
| 1,000 |
|
| 2,503 |
|
|
| 2,421 |
|
Other |
| 1,247 |
|
|
| 711 |
|
| 1,077 |
|
|
| 1,118 |
|
| $ | 18,252 |
|
| $ | 14,442 |
| $ | 16,538 |
|
| $ | 16,463 |
|
14
(1)Represents long-term fixed rate debt obligations assumed in connection with the acquisition of Cameron, net of amounts repurchased subsequent to the closing of the transaction.
The estimated fair value of Schlumberger’s Long-term Debt, at June 30, 2016 and December 31, 2015, based on quoted market prices, was $19.0$16.8 billion at both March 31, 2017 and $14.4 billion, respectively.December 31, 2016.
Borrowings under the commercial paper program at June 30, 2016March 31, 2017 were $3.2$2.9 billion, of which $2.5 billion was classified within Long-term debtDebt and $0.7$0.4 billion was classified within Long-term debt –Short-term borrowings and current portion of long-term debt in the
Consolidated Balance Sheet. At December 31, 2015,2016, borrowings under the commercial paper program were $2.4$2.6 billion, of which $1.0$2.4 billion was classified within Long-term debt and $1.4$0.2 billion was classified within in Long-term debt –Short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet.
11.10. Derivative Instruments and Hedging Activities
Schlumberger is exposed to market risks related to fluctuations in foreign currency exchange rates and interest rates. To mitigate these risks, Schlumberger utilizes derivative instruments. Schlumberger does not enter into derivative transactions for speculative purposes.
Interest Rate Risk
Schlumberger is subject to interest rate risk on its debt and its investment portfolio. Schlumberger maintains an interest rate risk management strategy that uses a mix of variable and fixed rate debt combined with its investment portfolio, and occasionally interest rate swaps, to mitigate the exposure to changes in interest rates.
During the fourth quarter of 2013, Schlumberger entered into a cross currency swap for a notional amount of €0.5 billion in order to hedge changes in the fair value of Schlumberger’s €0.5 billion 1.50% Guaranteed Notes due 2019. Under the terms of this swap, Schlumberger receiveswill receive interest at a fixed rate of 1.50% on the euro notional amount and payspay interest at a floating rate of three-month LIBOR plus approximately 64 basis points on the US dollar notional amount.
This cross currency swap is designated as a fair value hedge of the underlying debt. This derivative instrument is marked to market with gains and losses recognized currently in income to largely offset the respective gains and losses recognized on changes in the fair value of the hedged debt.
At June 30, 2016,March 31, 2017, Schlumberger had fixed rate debt of $15.5$14.2 billion and variable rate debt of $6.1$4.8 billion after taking into account the effect of the swap.
Short-term investments and Fixed income investments, held to maturity totaled $8.6$5.7 billion at June 30, 2016.March 31, 2017. The carrying value of these investments approximated fair value, which was estimated using quoted market prices for those or similar investments.
Foreign Currency Exchange Rate Risk
As a multinational company, Schlumberger conducts its business in more thanover 85 countries. Schlumberger’s functional currency is primarily the US dollar. However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens (strengthens) in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar–reported expenses will increase (decrease).
Schlumberger is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency. Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt that is denominated in currencies other than the functional currency. Schlumberger uses foreign currency forward contracts and foreign currency options to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in Accumulated other comprehensive loss.Other Comprehensive Loss. Amounts recorded in Accumulated other comprehensive lossOther Comprehensive Loss are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of hedging instruments, if any, is recorded directly to earnings.
At June 30, 2016,March 31, 2017, Schlumberger recognized a cumulative net $27loss of $8 million loss in Accumulated other comprehensive loss relating to revaluation of foreign currency forward contracts and foreign currency options designated as cash flow hedges, the majority of which is expected to be reclassified into earnings within the next 12 months.
15
Schlumberger is exposed to changes in the fair value of assets and liabilities that are denominated in currencies other than the functional currency. While Schlumberger uses foreign currency forward contracts and foreign currency options to economically hedge this exposure as it relates to certain currencies, these contracts are not designated as hedges for accounting purposes. Instead, the fair value of the contracts is recorded on the Consolidated Balance Sheet, and changes in the fair value are recognized in the Consolidated Statement of Income as are changes in fair value of the hedged item.
At June 30, 2016,March 31, 2017, contracts were outstanding for the US dollar equivalent of $5.8$3.8 billion in various foreign currencies, of which $0.7 billion related to hedges of debt denominated in currencies other than the functional currency.
The fair values of outstanding derivative instruments were as follows:
|
|
|
|
| (Stated in millions) |
|
|
|
|
|
|
| (Stated in millions) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair Value of Derivatives |
|
| Consolidated Balance Sheet Classification | Fair Value of Derivatives |
|
| Consolidated Balance Sheet Classification | ||||||||||
| Jun. 30, |
|
| Dec. 31, |
|
|
| Mar. 31, |
|
| Dec. 31, |
|
|
| ||||
| 2016 |
|
| 2015 |
|
|
| 2017 |
|
| 2016 |
|
|
| ||||
Derivative Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | 15 |
|
| $ | 4 |
|
| Other current assets | $ | 2 |
|
| $ | 1 |
|
| Other current assets |
Foreign exchange contracts |
| - |
|
|
| 6 |
|
| Other Assets | |||||||||
| $ | 15 |
|
| $ | 10 |
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | 50 |
|
| $ | 15 |
|
| Other current assets | |||||||||
Foreign exchange contracts |
| 2 |
|
|
| - |
|
| Other Assets | $ | 35 |
|
| $ | 42 |
|
| Other current assets |
| $ | 67 |
|
| $ | 25 |
|
|
| $ | 37 |
|
| $ | 43 |
|
|
|
Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | 44 |
|
| $ | 37 |
|
| Accounts payable and accrued liabilities | |||||||||
Foreign exchange contracts |
| 2 |
|
|
| 3 |
|
| Other Liabilities | $ | 7 |
|
| $ | 18 |
|
| Accounts payable and accrued liabilities |
Cross currency swap |
| 35 |
|
|
| 22 |
|
| Other Liabilities |
| 37 |
|
|
| 49 |
|
| Other Liabilities |
| $ | 81 |
|
| $ | 62 |
|
|
| $ | 44 |
|
| $ | 67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | 95 |
|
| $ | 25 |
|
| Accounts payable and accrued liabilities | $ | 21 |
|
| $ | 59 |
|
| Accounts payable and accrued liabilities |
Foreign exchange contracts |
| 2 |
|
|
| - |
|
| Other Liabilities | |||||||||
| $ | 178 |
|
| $ | 87 |
|
|
| $ | 65 |
|
| $ | 126 |
|
|
|
The fair value of all outstanding derivatives was determined using a model with inputs that are observable in the market or that can be derived from, or corroborated by, observable data.
The effect of derivative instruments designated as fair value hedges and those not designated as hedges on the Consolidated Statement of Income was as follows:
|
|
|
|
|
|
|
|
| (Stated in millions) |
|
|
| (Stated in millions) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gain (Loss) Recognized in Income |
|
|
| Gain (Loss) Recognized in Income |
|
|
| ||||||||||||||||||
| Second Quarter |
|
| Six Months |
|
|
| First Quarter |
|
|
| |||||||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
|
| Consolidated Statement of Income Classification | 2017 |
|
| 2016 |
|
| Consolidated Statement of Income Classification | ||||||
Derivatives designated as fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swap | $ | (6 | ) |
| $ | 19 |
|
| $ | 4 |
|
| $ | (51 | ) |
| Interest | $ | 18 |
|
| $ | 10 |
|
| Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts | $ | (57 | ) |
| $ | 57 |
|
| $ | (138 | ) |
| $ | (61 | ) |
| Cost of service/sales | $ | 6 |
|
| $ | (81 | ) |
| Cost of services/sales |
16
A reconciliation of the US statutory federal tax rate (35%) to the consolidated effective income tax rate follows:
| Second Quarter |
|
| Six Months |
|
| ||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
|
| ||||
US federal statutory rate |
| 35 | % |
|
| 35 | % |
|
| 35 | % |
|
| 35 | % |
|
State tax |
| - |
|
|
| - |
|
|
| 1 |
|
|
| - |
|
|
Non-US income taxed at different rates |
| (18 | ) |
|
| (13 | ) |
|
| (20 | ) |
|
| (12 | ) |
|
Charges and credits (See Note 2) |
| (2 | ) |
|
| - |
|
|
| (2 | ) |
|
| 1 |
|
|
Other |
| - |
|
|
| (1 | ) |
|
| - |
|
|
| (2 | ) |
|
|
| 15 | % |
|
| 21 | % |
|
| 14 | % |
|
| 22 | % |
|
The components of net deferred tax assets (liabilities) were as follows:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| Jun. 30, |
|
| Dec. 31, |
| ||
| 2016 |
|
| 2015 |
| ||
Postretirement benefits | $ | 265 |
|
| $ | 266 |
|
Intangible assets |
| (3,203 | ) |
|
| (1,418 | ) |
Investments in non-US subsidiaries |
| (149 | ) |
|
| (152 | ) |
Fixed assets, net |
| (163 | ) |
|
| (176 | ) |
Inventories |
| 289 |
|
|
| 159 |
|
Other, net |
| 721 |
|
|
| 454 |
|
| $ | (2,240 | ) |
| $ | (867 | ) |
The above deferred tax balances at June 30, 2016 and December 31, 2015 were net of valuation allowances relating to net operating losses in certain countries of $151 million and $162 million, respectively.
13.11. Contingencies
Schlumberger and its subsidiaries are 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 proceedingsproceeding is remote. However, litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings.
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter 2016 |
|
| Second Quarter 2015 |
| First Quarter 2017 |
|
| First Quarter 2016 |
| ||||||||||||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||||||
Reservoir Characterization | $ | 1,593 |
|
| $ | 266 |
|
| $ | 2,510 |
|
| $ | 655 |
| $ | 1,618 |
|
| $ | 281 |
|
| $ | 1,719 |
|
| $ | 334 |
|
Drilling |
| 2,034 |
|
|
| 171 |
|
|
| 3,469 |
|
|
| 672 |
|
| 1,985 |
|
|
| 229 |
|
|
| 2,493 |
|
|
| 371 |
|
Production |
| 2,099 |
|
|
| 90 |
|
|
| 3,059 |
|
|
| 397 |
|
| 2,187 |
|
|
| 110 |
|
|
| 2,376 |
|
|
| 206 |
|
Cameron |
| 1,536 |
|
|
| 243 |
|
|
| - |
|
|
| - |
|
| 1,229 |
|
|
| 162 |
|
|
| - |
|
|
| - |
|
Eliminations & other |
| (98 | ) |
|
| (23 | ) |
|
| (28 | ) |
|
| (16 | ) |
| (125 | ) |
|
| (25 | ) |
|
| (68 | ) |
|
| (10 | ) |
Pretax operating income |
|
|
|
|
| 747 |
|
|
|
|
|
|
| 1,708 |
|
|
|
|
|
| 757 |
|
|
|
|
|
|
| 901 |
|
Corporate & other (1) |
|
|
|
|
| (241 | ) |
|
|
|
|
|
| (199 | ) |
|
|
|
|
| (239 | ) |
|
|
|
|
|
| (172 | ) |
Interest income (2) |
|
|
|
|
| 24 |
|
|
|
|
|
|
| 6 |
|
|
|
|
|
| 24 |
|
|
|
|
|
|
| 13 |
|
Interest expense (3) |
|
|
|
|
| (136 | ) |
|
|
|
|
|
| (79 | ) |
|
|
|
|
| (126 | ) |
|
|
|
|
|
| (120 | ) |
Charges and credits (4) |
|
|
|
|
| (2,908 | ) |
|
|
|
|
|
| - |
|
|
|
|
|
| (82 | ) |
|
|
|
|
|
| - |
|
| $ | 7,164 |
|
| $ | (2,514 | ) |
| $ | 9,010 |
|
| $ | 1,436 |
| $ | 6,894 |
|
| $ | 334 |
|
| $ | 6,520 |
|
| $ | 622 |
|
17
(1)Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets (including intangible asset amortization expense resulting from the acquisition of Cameron), certain centrally managed initiatives and other nonoperating items.
(2)Interest income excludes amounts which are included in the segments’ income ($6 million in 2016; $6 million in 2015).
(3) Interest expense excludes amounts which are included in the segments’ income ($13 million in 2016; $7 million in 2015).
(4) See Note 2 – Charges and Credits.
|
|
|
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months 2016 |
|
| Six Months 2015 |
| ||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||
Reservoir Characterization | $ | 3,339 |
|
| $ | 597 |
|
| $ | 5,165 |
|
| $ | 1,327 |
|
Drilling |
| 4,527 |
|
|
| 542 |
|
|
| 7,391 |
|
|
| 1,450 |
|
Production |
| 4,447 |
|
|
| 298 |
|
|
| 6,764 |
|
|
| 941 |
|
Cameron |
| 1,536 |
|
|
| 243 |
|
|
| - |
|
|
| - |
|
Eliminations & other |
| (165 | ) |
|
| (32 | ) |
|
| (62 | ) |
|
| (17 | ) |
Pretax operating income |
|
|
|
|
| 1,648 |
|
|
|
|
|
|
| 3,701 |
|
Corporate & other (1) |
|
|
|
|
| (413 | ) |
|
|
|
|
|
| (390 | ) |
Interest income (2) |
|
|
|
|
| 37 |
|
|
|
|
|
|
| 14 |
|
Interest expense (3) |
|
|
|
|
| (256 | ) |
|
|
|
|
|
| (156 | ) |
Charges and credits (4) |
|
|
|
|
| (2,908 | ) |
|
|
|
|
|
| (439 | ) |
| $ | 13,684 |
|
| $ | (1,892 | ) |
| $ | 19,258 |
|
| $ | 2,730 |
|
(1) Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, (includingcertain centrally managed initiatives and other nonoperating items. The first quarter of 2017 includes $63 million of intangible asset amortization expense resulting from the April 2016 acquisition of Cameron), certain centrally managed initiatives and other nonoperating items.Cameron.
(2)(2) Interest income excludes amounts which are included in the segments’ income ($125 million in 2016; $112017; $6 million in 2015)2016).
(3) Interest expense excludes amounts which are included in the segments’ income ($2613 million in 2016; $122017; $13 million in 2015)2016).
(4) See Note 2 – Charges and Credits.
Certain prior period items have been reclassified to conform to the current period presentation.
15.
13. Pension and Other Postretirement Benefit Plans
Net pension cost for the Schlumberger pension plans included the following components:
(Stated in millions) | (Stated in millions) |
|
| (Stated in millions) |
|
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter |
|
| Six Months |
|
| First Quarter |
|
| |||||||||||||||||||||||||||||||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
|
| 2017 |
|
| 2016 |
|
| ||||||||||||||||||||||||||||||
| US |
|
| Int'l |
|
| US |
|
| Int'l |
|
| US |
|
| Int'l |
|
| US |
|
| Int'l |
|
| US |
|
| Int'l |
|
| US |
|
| Int'l |
|
| ||||||||||||
Service cost | $ | 13 |
|
| $ | 19 |
|
| $ | 21 |
|
| $ | 50 |
|
| $ | 31 |
|
| $ | 56 |
|
| $ | 43 |
|
| $ | 99 |
|
| $ | 15 |
|
| $ | 29 |
|
| $ | 18 |
|
| $ | 37 |
|
|
Interest cost |
| 45 |
|
|
| 77 |
|
|
| 44 |
|
|
| 75 |
|
|
| 89 |
|
|
| 157 |
|
|
| 85 |
|
|
| 149 |
|
|
| 44 |
|
|
| 78 |
|
|
| 44 |
|
|
| 80 |
|
|
Expected return on plan assets |
| (58 | ) |
|
| (129 | ) |
|
| (59 | ) |
|
| (129 | ) |
|
| (118 | ) |
|
| (263 | ) |
|
| (115 | ) |
|
| (257 | ) |
|
| (60 | ) |
|
| (136 | ) |
|
| (61 | ) |
|
| (134 | ) |
|
Amortization of prior service cost |
| 3 |
|
|
| 31 |
|
|
| 1 |
|
|
| 31 |
|
|
| 6 |
|
|
| 61 |
|
|
| 6 |
|
|
| 61 |
|
|
| 3 |
|
|
| 24 |
|
|
| 3 |
|
|
| 30 |
|
|
Amortization of net loss |
| 17 |
|
|
| 17 |
|
|
| 31 |
|
|
| 36 |
|
|
| 40 |
|
|
| 39 |
|
|
| 62 |
|
|
| 74 |
|
|
| 10 |
|
|
| 33 |
|
|
| 23 |
|
|
| 22 |
|
|
| $ | 20 |
|
| $ | 15 |
|
| $ | 38 |
|
| $ | 63 |
|
| $ | 48 |
|
| $ | 50 |
|
| $ | 81 |
|
| $ | 126 |
|
| $ | 12 |
|
| $ | 28 |
|
| $ | 27 |
|
| $ | 35 |
|
|
18
The net periodic benefit costcredit for the Schlumberger US postretirement medical plan included the following components:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter |
|
| Six Months |
| First Quarter |
| |||||||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| 2017 |
|
| 2016 |
| ||||||
Service cost | $ | 7 |
|
| $ | 10 |
|
| $ | 15 |
|
| $ | 21 |
| $ | 8 |
|
| $ | 8 |
|
Interest cost |
| 12 |
|
|
| 11 |
|
|
| 24 |
|
|
| 24 |
|
| 11 |
|
|
| 12 |
|
Expected return on plan assets |
| (15 | ) |
|
| (13 | ) |
|
| (29 | ) |
|
| (26 | ) |
| (15 | ) |
|
| (14 | ) |
Amortization of prior service credit |
| (8 | ) |
|
| (8 | ) |
|
| (16 | ) |
|
| (16 | ) |
| (7 | ) |
|
| (8 | ) |
Amortization of net loss |
| - |
|
|
| 2 |
|
|
| - |
|
|
| 7 |
| |||||||
| $ | (4 | ) |
| $ | 2 |
|
| $ | (6 | ) |
| $ | 10 |
| $ | (3 | ) |
| $ | (2 | ) |
16.14. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized |
|
|
|
|
|
| Pension and |
|
|
|
|
|
|
|
|
| Unrealized |
|
|
|
|
|
| Pension and |
|
|
|
|
| ||||
| Currency |
|
| Gain on |
|
|
|
|
|
| Other |
|
|
|
|
| Currency |
|
| Gain on |
|
|
|
|
|
| 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, 2016 | $ | (2,053 | ) |
| $ | - |
|
| $ | (39 | ) |
| $ | (2,466 | ) |
| $ | (4,558 | ) | |||||||||||||||||||
Balance, January 1, 2017 | $ | (2,136 | ) |
| $ | 21 |
|
| $ | (19 | ) |
| $ | (2,509 | ) |
| $ | (4,643 | ) | |||||||||||||||||||
Other comprehensive gain (loss) before reclassifications |
| (51 | ) |
|
| 3 |
|
|
| (68 | ) |
|
| - |
|
|
| (116 | ) |
| 45 |
|
|
| (4 | ) |
|
| 11 |
|
|
| - |
|
|
| 52 |
|
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 80 |
|
|
| 130 |
|
|
| 210 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 63 |
|
|
| 63 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (14 | ) |
|
| (14 | ) |
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| (1 | ) |
Net other comprehensive (loss) income |
| (51 | ) |
|
| 3 |
|
|
| 12 |
|
|
| 116 |
|
|
| 80 |
|
| 45 |
|
|
| (4 | ) |
|
| 11 |
|
|
| 62 |
|
|
| 114 |
|
Balance, June 30, 2016 | $ | (2,104 | ) |
| $ | 3 |
|
| $ | (27 | ) |
| $ | (2,350 | ) |
| $ | (4,478 | ) | |||||||||||||||||||
Balance, March 31, 2017 | $ | (2,091 | ) |
| $ | 17 |
|
| $ | (8 | ) |
| $ | (2,447 | ) |
| $ | (4,529 | ) |
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized |
|
|
|
|
|
| Pension and |
|
|
|
|
| ||
| Currency |
|
| Gain/(Loss) on |
|
|
|
|
|
| Other |
|
|
|
|
| |||
| Translation |
|
| Marketable |
|
| Cash Flow |
|
| Postretirement |
|
|
|
|
| ||||
| Adjustments |
|
| Securities |
|
| Hedges |
|
| Benefit Plans |
|
| Total |
| |||||
Balance, January 1, 2015 | $ | (1,531 | ) |
| $ | 10 |
|
| $ | (96 | ) |
| $ | (2,589 | ) |
| $ | (4,206 | ) |
Other comprehensive loss before reclassifications |
| (94 | ) |
|
| (10 | ) |
|
| (110 | ) |
|
| - |
|
|
| (214 | ) |
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 140 |
|
|
| 194 |
|
|
| 334 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (22 | ) |
|
| (22 | ) |
Net other comprehensive (loss) income |
| (94 | ) |
|
| (10 | ) |
|
| 30 |
|
|
| 172 |
|
|
| 98 |
|
Balance, June 30, 2015 | $ | (1,625 | ) |
| $ | - |
|
| $ | (66 | ) |
| $ | (2,417 | ) |
| $ | (4,108 | ) |
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized |
|
|
|
|
|
| Pension and |
|
|
|
|
| ||
| Currency |
|
| Gain on |
|
|
|
|
|
| Other |
|
|
|
|
| |||
| Translation |
|
| Marketable |
|
| Cash Flow |
|
| Postretirement |
|
|
|
|
| ||||
| Adjustments |
|
| Securities |
|
| Hedges |
|
| Benefit Plans |
|
| Total |
| |||||
Balance, January 1, 2016 | $ | (2,053 | ) |
| $ | - |
|
| $ | (39 | ) |
| $ | (2,466 | ) |
| $ | (4,558 | ) |
Other comprehensive gain (loss) before reclassifications |
| 17 |
|
|
| 3 |
|
|
| (85 | ) |
|
| - |
|
|
| (65 | ) |
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 94 |
|
|
| 70 |
|
|
| 164 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (7 | ) |
|
| (7 | ) |
Net other comprehensive income |
| 17 |
|
|
| 3 |
|
|
| 9 |
|
|
| 63 |
|
|
| 92 |
|
Balance, March 31, 2016 | $ | (2,036 | ) |
| $ | 3 |
|
| $ | (30 | ) |
| $ | (2,403 | ) |
| $ | (4,466 | ) |
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
SecondFirst Quarter 2017 Compared to Fourth Quarter 2016
|
|
|
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| First Quarter 2017 |
|
| Fourth Quarter 2016 |
| ||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||
Reservoir Characterization | $ | 1,618 |
|
| $ | 281 |
|
| $ | 1,676 |
|
| $ | 319 |
|
Drilling |
| 1,985 |
|
|
| 229 |
|
|
| 2,013 |
|
|
| 234 |
|
Production |
| 2,187 |
|
|
| 110 |
|
|
| 2,203 |
|
|
| 128 |
|
Cameron |
| 1,229 |
|
|
| 162 |
|
|
| 1,346 |
|
|
| 188 |
|
Eliminations & other |
| (125 | ) |
|
| (25 | ) |
|
| (131 | ) |
|
| (59 | ) |
Pretax operating income |
|
|
|
|
| 757 |
|
|
|
|
|
|
| 810 |
|
Corporate & other (1) |
|
|
|
|
| (239 | ) |
|
|
|
|
|
| (245 | ) |
Interest income (2) |
|
|
|
|
| 24 |
|
|
|
|
|
|
| 23 |
|
Interest expense (3) |
|
|
|
|
| (126 | ) |
|
|
|
|
|
| (126 | ) |
Charges and credits (4) |
|
|
|
|
| (82 | ) |
|
|
|
|
|
| (675 | ) |
| $ | 6,894 |
|
| $ | 334 |
|
| $ | 7,107 |
|
| $ | (213 | ) |
(1)Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.
(2)Interest income excludes amounts which are included in the segments’ income ($5 million in 2017; $7 million in 2016).
(3)Interest expense excludes amounts which are included in the segments’ income ($13 million in 2017; $13 million in 2016).
(4)Charges and credits are described in detail in Note 2 to the Consolidated Financial Statements.
Certain prior period items have been reclassified to conform to the current period presentation.
Reservoir Characterization Group
Reservoir Characterization Group revenue of $1.6 billion decreased 3% sequentially primarily due to project completions in Testing & Process systems and lower SIS software license sales. These decreases were partly offset by Wireline revenue growth as a result of infrastructure-led exploration activity in North America.
Pretax operating margin of 17% decreased 170 basis points (bps) sequentially as the increased contribution from high-margin Wireline exploration activities was more than offset by reduced profitability in WesternGeco and lower contributions from SIS software license sales.
Drilling Group
Drilling Group revenue of $2.0 billion decreased 1% sequentially as strong directional drilling activity in North America land was more than offset by lower drilling activity and pricing pressure in the International Areas.
Pretax operating margin of 12% was essentially flat sequentially despite the slight revenue decline. This was due to pricing improvements in the US offset by pricing pressure in the international markets.
Production Group
Production Group revenue of $2.2 billion was 1% lower sequentially primarily due to a combination of decreased revenue on SPM projects in Ecuador, reduced hydraulic fracturing activity on land in the Middle East and lower Completions product sales. These decreases were partially mitigated by strong hydraulic fracturing activity and pricing recovery that led to a 19% growth in revenue in North America land.
Pretax operating margin of 5% decreased 78 bps sequentially as the positive effects of increased activity and pricing recovery on land in North America were more than offset by margin contraction from lower SPM revenue.
Cameron Group revenue of $1.2 billion decreased 9% sequentially driven by declining project volumes in OneSubsea and reduced product sales in Surface Systems. The revenue decline for OneSubsea was due to falling project volumes in Brazil and reduced activity in the US Gulf of Mexico. Surface Systems sales were lower in the Europe/CIS/Africa and Latin America Areas, which more than offset the double-digit revenue growth in North America land.
Pretax operating margin of 13% declined 80 bps sequentially as continued strong project execution in OneSubsea and tight cost control in Drilling Systems limited the impact of lower product volume in Surface Systems.
First Quarter 2017 Compared to First Quarter 2016
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter 2016 |
|
| First Quarter 2016 |
| First Quarter 2017 |
|
| First Quarter 2016 |
| ||||||||||||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
|
|
|
|
| Before |
|
|
|
|
|
| before |
| ||||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||||||
Reservoir Characterization | $ | 1,593 |
|
| $ | 266 |
|
| $ | 1,747 |
|
| $ | 331 |
| $ | 1,618 |
|
| $ | 281 |
|
| $ | 1,719 |
|
| $ | 334 |
|
Drilling |
| 2,034 |
|
|
| 171 |
|
|
| 2,493 |
|
|
| 371 |
|
| 1,985 |
|
|
| 229 |
|
|
| 2,493 |
|
|
| 371 |
|
Production |
| 2,099 |
|
|
| 90 |
|
|
| 2,348 |
|
|
| 208 |
|
| 2,187 |
|
|
| 110 |
|
|
| 2,376 |
|
|
| 206 |
|
Cameron |
| 1,536 |
|
|
| 243 |
|
|
| - |
|
|
| - |
|
| 1,229 |
|
|
| 162 |
|
|
| - |
|
|
| - |
|
Eliminations & other |
| (98 | ) |
|
| (23 | ) |
|
| (68 | ) |
|
| (9 | ) |
| (125 | ) |
|
| (25 | ) |
|
| (68 | ) |
|
| (10 | ) |
Pretax operating income |
|
|
|
|
| 747 |
|
|
|
|
|
|
| 901 |
|
|
|
|
|
| 757 |
|
|
|
|
|
|
| 901 |
|
Corporate & other (1) |
|
|
|
|
| (241 | ) |
|
|
|
|
|
| (172 | ) |
|
|
|
|
| (239 | ) |
|
|
|
|
|
| (172 | ) |
Interest income (2) |
|
|
|
|
| 24 |
|
|
|
|
|
|
| 13 |
|
|
|
|
|
| 24 |
|
|
|
|
|
|
| 13 |
|
Interest expense (3) |
|
|
|
|
| (136 | ) |
|
|
|
|
|
| (120 | ) |
|
|
|
|
| (126 | ) |
|
|
|
|
|
| (120 | ) |
Charges and credits (4) |
|
|
|
|
| (2,908 | ) |
|
|
|
|
|
| - |
|
|
|
|
|
| (82 | ) |
|
|
|
|
|
| - |
|
| $ | 7,164 |
|
| $ | (2,514 | ) |
| $ | 6,520 |
|
| $ | 622 |
| $ | 6,894 |
|
| $ | 334 |
|
| $ | 6,520 |
|
| $ | 622 |
|
(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. The secondfirst quarter of 20162017 includes $63 million of intangible asset amortization expense associated with intangible assets recorded as a result ofresulting from the April 2016 acquisition of Cameron, which was completed on April 1, 2016.Cameron.
(2) Interest income excludes amounts which are included in the segments’ income ($65 million in the second quarter of 2016;2017; $6 million in the first quarter of 2016).
(3) Interest expense excludes amounts which are included in the segments’ income ($13 million in the second quarter of 2016;2017; $13 million in the first quarter of 2016).
(4) Charges and credits recorded during the second quarter of 2016 are described in detail in Note 2 to the Consolidated Financial Statements.
Certain prior period items have been reclassified to conform to the current period presentation.
First-quarter 2017 revenue of $6.9 billion increased 6% year-on-year. This included a full quarter of activity from the acquired Cameron businesses, which contributed revenue of $1.2 billion. Excluding the impact of the Cameron acquisition, revenue declined 13% year-on-year. During the first-quarter of 2017 the North America land rig count returned to prior year levels. However, the international land rig count was lower by 8%, the North America offshore rig count was lower by 25%, and the International offshore rig count was lower by 18%. As a result, Drilling Group revenue decreased 20% while Production Group and Reservoir Characterization Group were lower by 8% and 6%, respectively. In addition to the impact of the rig count, revenue also declined year-on-year as a result of reduced activity levels in Venezuela following Schlumberger’s decision in April 2016 to align activity with cash collections.
First-quarter 2017 pretax operating margin decreased 284 bps to 11%, as a result of the overall decline in activity and pervasive pricing pressure internationally. The margin decrease was the highest in the Production Group, which contracted by 365 bps to 5%. Drilling Group pretax operating margin fell 334 bps to 12%, while the Reservoir Characterization Group decreased 206 bps to 17%, and the Cameron Group posted a pretax margin of 13%.
Reservoir Characterization Group
First-quarter 2017 revenue of $1.6 billion decreased 6% year-on-year primarily due to lower exploration and reduced discretionary spending by customers in the offshore markets which impacted Wireline and SIS software license sales as well as reduced activity in Venezuela. These decreases were partly offset by higher revenue from increased land seismic and multiclient activity in WesternGeco and increased revenue in Testing & Process relating to progress on early production facilities in the Middle East & Asia Area.
Year-on-year pretax operating margin decreased 206 bps to 17% due to reduced higher-margin Wireline activities partly offset by improved profitability in WesternGeco.
Drilling Group
First-quarter 2017 revenue of $2.0 billion decreased 20% year-on-year primarily due to the decline in the international and offshore North America rig counts and lower activity in Venezuela combined with pricing pressure.
Year-on-year pretax operating margin decreased 334 bps to 12% primarily due to a decline in higher-margin activities of Drilling & Measurements combined with the impact of pricing pressure.
Production Group
First-quarter 2017 revenue of $2.2 billion decreased 8% year-on-year due primarily to the decline in international activity as well as decreased revenue on SPM projects in Ecuador. These decreases were partially offset by increased hydraulic fracturing activity in North America land.
Year-on-year pretax operating margin decreased 365 bps to 5% as a result of lower international activity and increased pricing pressure.
Cameron Group
On April 1, 2016, Schlumberger acquired all of the outstanding shares of Cameron, International Corporation (Cameron), a leading provider of flow equipment products, systems and services to the oil and gas industry worldwide. The acquisition is expected to create technology-driven growth by integrating Schlumberger reservoir and well technologies with Cameron wellhead and surface equipment, flow control and processing technology. The combination of the two complementary technology portfolios provides the industry’s most comprehensive range of products and services, from exploration to production and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance.
Under the terms of the merger agreement, Cameron became a wholly-owned subsidiary of Schlumberger. Each share of Cameron common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive 0.716 shares of Schlumberger stock and $14.44 in cash. As a result, Schlumberger issued approximately 138 million shares of its common stock, which were valued at $9.9 billion at the time of closing, and paid cash of $2.8 billion. Prior to being acquired by Schlumberger, Cameron reported revenue of approximately $2.8$1.6 billion during the first quarter of 2016.
Interest and Other Income
Interest & other income consisted of the following:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| First Quarter |
| |||||
| 2017 |
|
| 2016 |
| ||
Equity in net earnings of affiliated companies | $ | 17 |
|
| $ | 25 |
|
Interest income |
| 29 |
|
|
| 20 |
|
| $ | 46 |
|
| $ | 45 |
|
The decrease in connection with this transaction. Based onearnings of equity method investments primarily reflects the closing priceeffects of the downturn in the oil and gas industry, which has negatively impacted the majority of Schlumberger’s common stock on April 1, 2016, the total fair valueinvestments in affiliates, particularly those in North America.
Other
Research & engineering and General & administrative expenses, as a percentage of the consideration transferred to effect the acquisition of Cameron was approximately $12.8 billion. Cameron’s revenueRevenue, for the yearfirst quarter ended DecemberMarch 31, 2015 was $8.8 billion. 2017 and 2016 were as follows:
Second-quarter 2016 revenue
| First Quarter |
| |||||
| 2017 |
|
| 2016 |
| ||
Research & engineering |
| 3.1 | % |
|
| 3.7 | % |
General & administrative |
| 1.4 | % |
|
| 1.7 | % |
Research & engineering and General & administrative costs have decreased $29 million and $12 million, respectively, as a result of $7.2 billion increased 10% sequentially. This included a full quarter of activity from the acquired Cameron businesses, which contributed revenue of $1.5 billion. Excludingcost control measures, offset in part by the impact of the Cameron acquisition.
The effective tax rate for the first quarter of 2017 was 15% compared to 16% for the same period of the prior year. The charges described in Note 2 to the Consolidated Financial Statements reduced the first-quarter 2017 effective tax rate by 0.4 percentage points. There were no charges or credits recorded during the first quarter of 2016.
Charges and Credits
In connection with Schlumberger’s acquisition revenue declined 14% sequentially.of Cameron (See Note 4 – Acquisition of Cameron), Schlumberger recorded $82 million of pretax charges ($68 million after-tax) consisting of employee benefits, facility consolidation, and other merger and integration-related costs during the first quarter of 2017. This charge is classified in Merger & integration in the Consolidated Statement of Income.
InThere were no charges or credits recorded during the first quarter of 2016.
Liquidity and Capital Resources
Details of the components of liquidity as well as changes in liquidity follows:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Mar. 31, |
|
| Mar. 31, |
|
| Dec. 31, |
| |||
Components of Liquidity | 2017 |
|
| 2016 |
|
| 2016 |
| |||
Cash | $ | 1,902 |
|
| $ | 2,080 |
|
| $ | 2,929 |
|
Short-term investments |
| 5,451 |
|
|
| 12,352 |
|
|
| 6,328 |
|
Fixed income investments, held to maturity |
| 238 |
|
|
| 401 |
|
|
| 238 |
|
Short-term borrowings and current portion of long-term debt |
| (2,449 | ) |
|
| (4,254 | ) |
|
| (3,153 | ) |
Long-term debt |
| (16,538 | ) |
|
| (17,233 | ) |
|
| (16,463 | ) |
Net debt (1) | $ | (11,396 | ) |
| $ | (6,654 | ) |
| $ | (10,121 | ) |
Changes in Liquidity: | Three Months Ended Mar. 31, |
| |||||
| 2017 |
|
| 2016 |
| ||
Net income | $ | 284 |
|
| $ | 523 |
|
Depreciation and amortization (2) |
| 989 |
|
|
| 967 |
|
Earnings of equity method investments, less dividends received |
| (10 | ) |
|
| (25 | ) |
Pension and other postretirement benefits expense |
| 37 |
|
|
| 60 |
|
Stock-based compensation expense |
| 88 |
|
|
| 61 |
|
Pension and other postretirement benefits funding |
| (29 | ) |
|
| (45 | ) |
Increase in working capital (3) |
| (791 | ) |
|
| (463 | ) |
Other |
| 88 |
|
|
| 132 |
|
Cash flow from operations |
| 656 |
|
|
| 1,210 |
|
Capital expenditures |
| (381 | ) |
|
| (549 | ) |
SPM investments |
| (144 | ) |
|
| (597 | ) |
Multiclient seismic data costs capitalized |
| (116 | ) |
|
| (167 | ) |
Free cash flow (4) |
| 15 |
|
|
| (103 | ) |
Dividends paid |
| (696 | ) |
|
| (629 | ) |
Proceeds from employee stock plans |
| 135 |
|
|
| 163 |
|
Stock repurchase program |
| (372 | ) |
|
| (475 | ) |
|
| (918 | ) |
|
| (1,044 | ) |
Business acquisitions and investments, net of cash acquired plus debt assumed |
| (273 | ) |
|
| (81 | ) |
Other |
| (84 | ) |
|
| 18 |
|
Increase in net debt |
| (1,275 | ) |
|
| (1,107 | ) |
Net debt, beginning of period |
| (10,121 | ) |
|
| (5,547 | ) |
Net debt, end of period | $ | (11,396 | ) |
| $ | (6,654 | ) |
(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 SPM investments. |
(3) | Includes severance payments of approximately $140 million and $260 million during the three months ended March 31, 2017 and 2016, respectively. |
(4) | “Free cash flow” represents cash flow from operations less capital expenditures, SPM 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 our ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as substitute for or superior to, cash flow from operations. |
Key liquidity events during the first three months of 2017 and 2016 included:
On July 18, 2013, the Schlumberger Board of Directors (the “Board”) approved a $10 billion share repurchase program to be completed at the latest by June 30, 2018. Schlumberger had repurchased $9.7 billion of shares under this new share repurchase program as of March 31, 2017.
The following table summarizes the activity under this share repurchase program:
(Stated in millions, except per share amounts) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total cost |
|
| Total number |
|
| Average price |
| |||
| of shares |
|
| of shares |
|
| paid per |
| |||
| purchased |
|
| purchased |
|
| share |
| |||
Three months ended March 31, 2017 | $ | 372 |
|
|
| 4.7 |
|
| $ | 78.97 |
|
Three months ended March 31, 2016 | $ | 475 |
|
|
| 7.1 |
|
| $ | 67.34 |
|
On January 21, 2016, the Board approved a new $10 billion share repurchase program for Schlumberger common stock. The new program will take effect once the remaining $0.3 billion authorized to be repurchased under the July 18, 2013 program is exhausted.
Capital expenditures were $0.4 billion during the first three months of 2017 compared to $0.5 billion during the first three months of 2016. Capital expenditures for full-year 2017 are expected to be approximately $2.2 billion as compared to expenditures of $2.1 billion in 2016.
On March 24, 2017, Schlumberger and Weatherford announced an agreement to create OneStimSM, a joint venture to deliver completions products and services for the development of unconventional resource plays in the United States and Canada land markets. The joint venture will offer one of the broadest multistage completions portfolios in the market combined with one of the largest hydraulic fracturing fleets in the industry. Schlumberger and Weatherford will have a 70%/30% ownership of the joint venture, respectively. The transaction is expected to close in the second half of 2017 and is subject to regulatory approvals and other customary closing conditions. Under the terms of the formation agreement, Schlumberger and Weatherford will contribute all their respective North America land hydraulic fracturing pressure pumping assets, multistage completions, and pump-down perforating businesses. Schlumberger will also make a $535 million cash payment to Weatherford. Schlumberger will manage the joint venture and consolidate it for financial reporting purposes.
In April 2016, Schlumberger announced that it would reduce its activity in Venezuela to align operations with cash collections as a result of insufficient payments received in recent quarters and a lack of progress in establishing new mechanisms that address past and future accounts receivable. The reduction in activity levelsSchlumberger’s total net receivable balance in Venezuela accountedas of March 31, 2017 was approximately $1.2 billion. During the first quarter of 2017, Schlumberger reclassified $700 million of this balance from Receivables less allowance for approximately 25% ofdoubtful accounts to long-term within Other Assets in the previously mentioned 14% sequential revenue decline (excluding the impact of Cameron)Consolidated Balance Sheet. Venezuela represented less than 5% of Schlumberger’s consolidated revenue for the year ended December 31, 2015.
20
North America second-quarter revenue of $1.7 billion increased 19% sequentially dueSchlumberger continues to the addition of the Cameron businesses, which contributed $0.6 billion of second-quarter revenue. Excluding the impact of Cameron, North America revenue decreased 20%experience payment delays from certain other customers as well, primarily as a result of the Canadian spring break-up and the US land rig count declineimpact of 25%. Excluding Cameron, North America land revenue fell 23% on lower Drilling Group activity and continuing pricing pressureoil prices in the Production Group. While fracturing stage counts and active pressure pumping fleets increased more than 15% sequentially, an unfavorable job and technology mix, combined with pricing pressure, more than offset the increase in volume. North America offshore revenue, excluding the impact of Cameron, decreased 15%, mainly due to lower Drilling Group activity, althoughindustry. In this was partially offset by higher WesternGeco multiclient seismic license fees.
Revenue for the International Areas of $5.4 billion increased 8% sequentially, including the effect of the acquired Cameron businesses, which contributed $1.0 billion in second-quarter revenue. Excluding the impact of Cameron, international revenue declined 12% sequentially due to customer budget cuts, continued pricing pressure and the scaling back of operations in Venezuela.
From a segment perspective, second-quarter revenue from the Reservoir Characterization and Production Groups declined sequentially by 9% and 11%, respectively, on continued lower demand for exploration- and development-related products and services as E&P budgets were further reduced. Drilling Group revenue fell by 18%, impacted by the steep drop in rig count, particularly in North America and Latin America.
Second-quarter 2016 pretax operating margin decreased 155 bps to 10% primarily from the overall decline in activity and pricing concessions. The margin decrease was the highest in the Drilling Group, which contracted by 649 bps to 8%. The Production Group pretax operating margin fell 459 bps to 4% while the Reservoir Characterization Group decreased 228 bps to 17%, and the Cameron Group posted a pretax operating margin of 16%.
Reservoir Characterization Group
Second-quarter revenue of $1.6 billion was 9% lower sequentially, primarily due to the scaling back of operations in Venezuela and project cancellations that impacted Wireline activity internationally. Testing Services revenue and Software Integrated Solutions (SIS) software sales also declined, particularly in Latin America. These declines were partially offset by higher multiclient seismic license sales, including transfer fees, which increased $68 million.
Pretax operating margin of 17% declined 228 basis points (bps) sequentially primarily due to reduced high-margin Wireline and Testing Services activities, particularly in Latin America.
Drilling Group
Second-quarter revenue of $2.0 billion declined 18% sequentially. This was mainly the result of a sharp drop in drilling activity from a combination of the spring break-up in Canada, lower rig counts on land in the US and Latin America, and the scaling back of operations in Venezuela. In addition, continued and persistent pricing pressure negatively impacted Drilling & Measurements and M-I SWACO results across all of the Areas.
Pretax operating margin of 8% contracted 649 bps sequentially, driven by pricing pressure, lower rig counts in North America and the scaling back of operations in Venezuela.
Production Group
Second-quarter revenue of $2.1 billion decreased 11% sequentially with more than one-half of the revenue decrease attributable to a decline in North America from the Canadian spring break-up and increased pricing pressure.
Pretax operating margin of 4% decreased 459 bps sequentially, primarily from lower activity and increased pricing weakness in pressure pumping services in North America land.
Cameron Group
Cameron Group contributed second-quarter revenue of $1.5 billion and pretax operating margin of 16%. Revenue was impacted by a declining project backlog as well as a further slowdown in activity on land in the US that mainly affected the short-cycle businesses of the Valves & Measurement and Surface product lines.
Pretax operating margin of 16% was robust despite the market downturn. This was driven by strong project execution from the OneSubsea, Drilling, and Process Systems product lines.
21
Second Quarter 2016 Compared to Second Quarter 2015
|
|
|
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter 2016 |
|
| Second Quarter 2015 |
| ||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||
Reservoir Characterization | $ | 1,593 |
|
| $ | 266 |
|
| $ | 2,510 |
|
| $ | 655 |
|
Drilling |
| 2,034 |
|
|
| 171 |
|
|
| 3,469 |
|
|
| 672 |
|
Production |
| 2,099 |
|
|
| 90 |
|
|
| 3,059 |
|
|
| 397 |
|
Cameron |
| 1,536 |
|
|
| 243 |
|
|
| - |
|
|
| - |
|
Eliminations & other |
| (98 | ) |
|
| (23 | ) |
|
| (28 | ) |
|
| (16 | ) |
Pretax operating income |
|
|
|
|
| 747 |
|
|
|
|
|
|
| 1,708 |
|
Corporate & other (1) |
|
|
|
|
| (241 | ) |
|
|
|
|
|
| (199 | ) |
Interest income (2) |
|
|
|
|
| 24 |
|
|
|
|
|
|
| 6 |
|
Interest expense (3) |
|
|
|
|
| (136 | ) |
|
|
|
|
|
| (79 | ) |
Charges and credits (4) |
|
|
|
|
| (2,908 | ) |
|
|
|
|
|
| - |
|
| $ | 7,164 |
|
| $ | (2,514 | ) |
| $ | 9,010 |
|
| $ | 1,436 |
|
(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. The second quarter of 2016 includes $63 million of amortization expense associated with intangible assets recorded as a result of the acquisition of Cameron, which was completed on April 1, 2016.
(2)Interest income excludes amounts which areregard, included in the segments’ income ($6 million in 2016; $6 million in 2015).
(3)Interest expense excludes amounts which are included in the segments’ income ($13 million in 2016; $7 million in 2015).
(4)Charges and credits recorded during the second quarter of 2016 are described in detail in Note 2 to the Consolidated Financial Statements.
Second-quarter 2016 revenue of $7.2 billion decreased 21% year-on-year. This included a full quarter of activity from the acquired Cameron businesses, which contributed revenue of $1.5 billion. Excluding the impact of the Cameron acquisition, revenue declined 38% year-on-year.
Second-quarter 2016 revenue from the Reservoir Characterization and Production Groups declined year-on-year by 37% and 31%, respectively, on lower demandReceivables less allowance for exploration- and development-related products and services as E&P budgets were further reduced. Drilling Group revenue fell by 41% due to the rig count decline in both North America and internationally.
Second-quarter 2016 pretax operating margin decreased 854 bps to 10%, as a result of the overall decline in activity and pervasive pricing concessions. The margin decrease was the highest in the Drilling Group, which contracted by 1,096 bps to 8%. Reservoir Characterization Group pretax operating margin fell 943 bps to 17%, while the Production Group decreased 871 bps to 4%, and the Cameron Group posted a pretax margin of 16%.
Reservoir Characterization Group
Second-quarter 2016 revenue of $1.6 billion decreased 37% year-on-year primarily due to sustained cuts in exploration and discretionary spending that impacted Wireline, Testing Services and SIS software sales. Revenue also decreased due to lower WesternGeco marine vessel utilization and reduced multiclient sales.
Year-on-year, pretax operating margin decreased 943 bps to 17% due to reduced high-margin Wireline and Testing Services activities.
Drilling Group
Second-quarter 2016 revenue of $2.0 billion decreased 41% year-on-year primarily due to the severe drop in rig count in both North America and internationally combined with pricing pressure that mainly affected the Drilling & Measurements and M-I SWACO Technologies.
Year-on-year, pretax operating margin decreased 1,096 bps to 8% primarily due to the significant decline in higher-margin activities of Drilling & Measurements combined with pricing weakness.
22
Second-quarter 2016 revenue of $2.1 billion decreased 31% year-on-year with most of the revenue decrease attributable to a decline in North America, particularly on Well Services pressure pumping technologies driven by activity declines and pricing pressure as the land rig count declined dramatically.
Year-on-year, pretax operating margin decreased 871 bps to 4% as a result of lower activity and increasing pricing pressure, which continued in North America land.
Cameron Group
Cameron Group contributed second-quarter revenue of $1.5 billion and pretax operating margin of 16%. Revenue was impacted by a declining project backlog as well as a further slowdown in activity on land in the US that mainly affected the short-cycle businesses of the Valves & Measurement and Surface product lines.
Pretax operating margin of 16% was robust despite the market downturn. This was driven by strong project execution from the OneSubsea, Drilling, and Process Systems product lines.
Six Months 2016 Compared to Six Months 2015
|
|
|
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months 2016 |
|
| Six Months 2015 |
| ||||||||||
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||
Reservoir Characterization | $ | 3,339 |
|
| $ | 597 |
|
| $ | 5,165 |
|
| $ | 1,327 |
|
Drilling |
| 4,527 |
|
|
| 542 |
|
|
| 7,391 |
|
|
| 1,450 |
|
Production |
| 4,447 |
|
|
| 298 |
|
|
| 6,764 |
|
|
| 941 |
|
Cameron |
| 1,536 |
|
|
| 243 |
|
|
| - |
|
|
| - |
|
Eliminations & other |
| (165 | ) |
|
| (32 | ) |
|
| (62 | ) |
|
| (17 | ) |
Pretax operating income |
|
|
|
|
| 1,648 |
|
|
|
|
|
|
| 3,701 |
|
Corporate & other (1) |
|
|
|
|
| (413 | ) |
|
|
|
|
|
| (390 | ) |
Interest income (2) |
|
|
|
|
| 37 |
|
|
|
|
|
|
| 14 |
|
Interest expense (3) |
|
|
|
|
| (256 | ) |
|
|
|
|
|
| (156 | ) |
Charges and credits (4) |
|
|
|
|
| (2,908 | ) |
|
|
|
|
|
| (439 | ) |
| $ | 13,684 |
|
| $ | (1,892 | ) |
| $ | 19,258 |
|
| $ | 2,730 |
|
(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. The six months ended June 30, 2016 includes $63 million of amortization expense associated with intangible assets recorded as a result of the acquisition of Cameron, which was completed on April 1, 2016.
(2)Interest income excludes amounts which are included in the segments’ income ($12 million in 2016; $11 million in 2015).
(3)Interest expense excludes amounts which are included in the segments’ income ($26 million in 2016; $12 million in 2015).
(4)Charges and credits recorded during the first six months of 2016 and 2015 are described in detail in Note 2 to the Consolidated Financial Statements.
Six-month 2016 revenue of $13.7 billion decreased 29% year-on-year. This included a full quarter of activity from the acquired Cameron businesses, which contributed revenue of $1.5 billion. Excluding the impact of Cameron, revenue declined 37% year-on-year.
Six-month 2016 revenue from the Reservoir Characterization and Production Groups declined year-on-year by 35% and 34%, respectively, on lower demand for exploration- and development-related products and services as E&P budgets were further reduced. Drilling Group revenue fell by 39% due to the rig count decline in both North America and internationally.
23
Six-month 2016 pretax operating margin decreased 718 bps to 12%, as a result of the overall decline in activity and pervasive pricing concessions. The margin decrease was highest in the Reservoir Characterization Group, which contracted by 783 bps to 18%. Drilling Group pretax operating margin fell 765 bps to 12%, while the Production Group decreased 721 bps to 7%, and the Cameron Group posted a pretax operating margin of 16%.
Reservoir Characterization Group
Six-month 2016 revenue of $3.3 billion decreased 35% year-on-year primarily due to sustained cuts in exploration and discretionary spending that impacted Wireline, Testing Services and SIS software sales. Revenue also decreased due to lower WesternGeco marine vessel utilization and reduced multiclient sales.
Year-on-year, pretax operating margin decreased 783 bps to 18% due to reduced high-margin Wireline and Testing Services activities.
Drilling Group
Six-month 2016 revenue of $4.5 billion decreased 39% year-on-year primarily due to the severe drop in rig count in both North America and internationally combined with pricing pressure that mainly affected Drilling & Measurements and M-I SWACO Technologies.
Year-on-year, pretax operating margin decreased 765 bps to 12% primarily due to the significant decline in higher-margin activities of Drilling & Measurements combined with pricing weakness.
Production Group
Six-month 2016 revenue of $4.4 billion decreased 34% year-on-year with most of the revenue decrease attributable to a decline in North America, particularly on Well Services pressure pumping technologies driven by activity declines and pricing pressure as the land rig count declined dramatically.
Year-on-year, pretax operating margin decreased 721 bps to 7% as a result of lower activity and increasing pricing pressure, which continued in North America land.
Interest and Other Income
Interest & other income consisted of the following:
(Stated in millions) |
| ||||||||||||||
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|
|
|
|
|
|
|
|
|
| Second Quarter |
|
| Six Months |
| ||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| ||||
Equity in net earnings of affiliated companies | $ | 24 |
|
| $ | 35 |
|
| $ | 49 |
|
| $ | 71 |
|
Interest income |
| 30 |
|
|
| 12 |
|
|
| 49 |
|
|
| 25 |
|
| $ | 54 |
|
| $ | 47 |
|
| $ | 98 |
|
| $ | 96 |
|
Other
Research & engineering and General & administrative expenses, as a percentage of Revenue, for the second quarter and six months ended June 30, 2016 and 2015 were as follows:
| Second Quarter |
|
| Six Months |
| ||||||||||
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| ||||
Research & engineering |
| 3.6 | % |
|
| 3.1 | % |
|
| 3.6 | % |
|
| 2.8 | % |
General & administrative |
| 1.4 | % |
|
| 1.3 | % |
|
| 1.6 | % |
|
| 1.2 | % |
Although Research & engineering and General & administrative costs have increased as a percentage of Revenue, they have decreased in absolute dollar terms as a result of cost control measures that Schlumberger has implemented, offset in part by the impact of the Cameron acquisition.
Interest expense of $149 million for the second quarter of 2016 increased by $63 million compared to the same period of the prior year. Interest expense of $282 million for the six months ended June 30, 2016 increased by $114 million compared to the same period of the
24
prior year. These increases were primarily due to the issuance of $6.0 billion of Senior Notes during the fourth quarter of 2015 and the impact of debt assumed in the acquisition of Cameron.
The effective tax rate for the second quarter of 2016 was 14.6% compared to 21.1% for the same period of the prior year. The charges described in Note 2 to the Consolidated Financial Statements reduced the second quarter 2016 effective tax rate by 1.6 percentage points. The remaining decrease in the effective tax rate was primarily attributable to the geographic mix of earnings, as Schlumberger generated a smaller portion of its pretax income/loss in North America during the second quarter of 2016 as compared to the same period last year.
The effective tax rate for the six months ended June 30, 2016 was 14.2% compared to 22.3% for the same period of the prior year. The charges described in Note 2 to the Consolidated Financial Statements reduced the effective tax rate for the six months ended June 30, 2016 by 1.8 percentage points and increased the effective tax for the six months ended June 30, 2015 by 1.3 percentage points. Excluding the impact of the charges, the effective tax rate for the first six months of 2016 was 16.0% and 21.0% for the same period in the prior year. This decrease was primarily attributable to the fact that Schlumberger generated a smaller portion of its pretax income/loss in North America during the six months ended June 30, 2016 as compared to the same period last year.
Charges and Credits
During the second quarter of 2016, Schlumberger recorded $2.573 billion of asset impairment and workforce reduction charges and $335 million of merger and integration-related charges associated with the acquisition of Cameron which are classified as Impairments & other and Merger & integration, respectively, in the Consolidated Statement of Income. These charges, which are summarized below, are more fully described in Note 2 to the Consolidated Financial Statements.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Workforce reduction | $ | 646 |
|
| $ | 63 |
|
| $ | 583 |
|
North America pressure pumping asset impairments |
| 209 |
|
|
| 67 |
|
|
| 142 |
|
Facilities impairments |
| 165 |
|
|
| 58 |
|
|
| 107 |
|
Other fixed asset impairments |
| 684 |
|
|
| 52 |
|
|
| 632 |
|
Inventory write-downs |
| 616 |
|
|
| 49 |
|
|
| 567 |
|
Multiclient seismic data impairment |
| 198 |
|
|
| 62 |
|
|
| 136 |
|
Other restructuring charges |
| 55 |
|
|
| - |
|
|
| 55 |
|
Amortization of inventory fair value adjustment |
| 150 |
|
|
| 45 |
|
|
| 105 |
|
Merger-related employee benefits |
| 47 |
|
|
| 7 |
|
|
| 40 |
|
Professional fees |
| 45 |
|
|
| 10 |
|
|
| 35 |
|
Facility closure costs |
| 40 |
|
|
| 10 |
|
|
| 30 |
|
Other merger and integration-related |
| 53 |
|
|
| 9 |
|
|
| 44 |
|
| $ | 2,908 |
|
| $ | 432 |
|
| $ | 2,476 |
|
Schlumberger recorded charges during the first quarter of 2015, all of which were classified as Impairments & otherdoubtful accounts in the Consolidated StatementBalance Sheet at March 31, 2017, is approximately $1.2 billion of Income. These charges, which are summarized below, are more fully described in Note 2receivables relating to the Consolidated Financial Statements.
Ecuador.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Workforce reduction | $ | 390 |
|
| $ | 56 |
|
| $ | 334 |
|
Currency devaluation loss in Venezuela |
| 49 |
|
|
| - |
|
|
| 49 |
|
| $ | 439 |
|
| $ | 56 |
|
| $ | 383 |
|
25
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 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.
Details of changes in Net Debt follow:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| Six Months ended Jun. 30, |
| |||||
| 2016 |
|
| 2015 |
| ||
Net income (loss) | $ | (1,623 | ) |
| $ | 2,122 |
|
Impairment and other charges |
| 2,908 |
|
|
| 439 |
|
Depreciation and amortization (1) |
| 2,080 |
|
|
| 2,089 |
|
Stock-based compensation expense |
| 145 |
|
|
| 167 |
|
Pension and other postretirement benefits expense |
| 92 |
|
|
| 217 |
|
Pension and other postretirement benefits funding |
| (83 | ) |
|
| (214 | ) |
Earnings of equity method investments, less dividends received |
| (30 | ) |
|
| (65 | ) |
Increase in working capital |
| (250 | ) |
|
| (837 | ) |
Other |
| (397 | ) |
|
| 166 |
|
Cash flow from operations |
| 2,842 |
|
|
| 4,084 |
|
Capital expenditures |
| (998 | ) |
|
| (1,193 | ) |
SPM investments |
| (729 | ) |
|
| (222 | ) |
Multiclient seismic data costs capitalized |
| (333 | ) |
|
| (221 | ) |
Free cash flow (2) |
| 782 |
|
|
| 2,448 |
|
Dividends paid |
| (1,255 | ) |
|
| (1,151 | ) |
Proceeds from employee stock plans |
| 195 |
|
|
| 256 |
|
Stock repurchase program |
| (506 | ) |
|
| (1,239 | ) |
|
| (784 | ) |
|
| 314 |
|
Business acquisitions and investments, net of cash acquired plus debt assumed |
| (3,790 | ) |
|
| (206 | ) |
Discontinued operations - settlement with U.S. Department of Justice |
| - |
|
|
| (233 | ) |
Other |
| 76 |
|
|
| (86 | ) |
Increase in Net Debt |
| (4,498 | ) |
|
| (211 | ) |
Net Debt, Beginning of period |
| (5,547 | ) |
|
| (5,387 | ) |
Net Debt, End of period | $ | (10,045 | ) |
| $ | (5,598 | ) |
|
|
(2) “Free cash flow” represents cash flow from operations less capital expenditures, SPM 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 company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as substitute for, or superior to, cash flow from operations.
26
(Stated in millions) |
| ||||||||||
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|
|
|
|
|
| Jun. 30, |
|
| Jun. 30, |
|
| Dec. 31, |
| |||
Components of Net Debt | 2016 |
|
| 2015 |
|
| 2015 |
| |||
Cash | $ | 2,947 |
|
| $ | 3,541 |
|
| $ | 2,793 |
|
Short-term investments |
| 8,245 |
|
|
| 3,733 |
|
|
| 10,241 |
|
Fixed income investments, held to maturity |
| 386 |
|
|
| 469 |
|
|
| 418 |
|
Long-term debt – current portion |
| (2,385 | ) |
|
| (2,092 | ) |
|
| (3,011 | ) |
Short-term borrowings |
| (986 | ) |
|
| (2,139 | ) |
|
| (1,546 | ) |
Long-term debt |
| (18,252 | ) |
|
| (9,110 | ) |
|
| (14,442 | ) |
| $ | (10,045 | ) |
| $ | (5,598 | ) |
| $ | (5,547 | ) |
Key liquidity events during the first six months of 2016 and 2015 included:
|
|
|
|
|
|
The following table summarizes the activity under this share repurchase program:
(Stated in millions, except per share amounts) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total cost |
|
| Total number |
|
| Average price |
| |||
| of shares |
|
| of shares |
|
| paid per |
| |||
| purchased |
|
| purchased |
|
| share |
| |||
Six months ended June 30, 2016 | $ | 506 |
|
|
| 7.5 |
|
| $ | 67.65 |
|
Six months ended June 30, 2015 | $ | 1,239 |
|
|
| 14.4 |
|
| $ | 85.80 |
|
On January 21, 2016, the Board of Directors approved a new $10 billion share repurchase program for Schlumberger common stock. The new program will take effect once the remaining $0.9 billion authorized to be repurchased under the July 18, 2013 program is exhausted.
|
|
Schlumberger operates in more than 85 countries. At June 30, 2016,March 31, 2017, only five of those countries individually accounted for greater than 5% of Schlumberger’s accountsnet receivable balances,balance, of which only three (the United States, Venezuela where Schlumberger has experienced delays in payment from its customers,and Ecuador) accounted for greater than 10%. Schlumberger’s net receivable balance in Venezuela as of June 30, 2016 was approximately $1.2 billion.
As of June 30, 2016,March 31, 2017, Schlumberger had $11.2$7.4 billion of cash and short-term investments on hand. Schlumberger had separate committed debt facility agreements aggregating $6.8$6.6 billion with commercial banks, of which $3.6$3.7 billion was available and unused as of June 30, 2016.March 31, 2017. The $6.8$6.6 billion of committed debt facility agreements included $6.5$6.3 billion of committed facilities that support commercial paper programs. Schlumberger believes that these amounts are sufficient to meet future business requirements for at least the next 12 months.
Borrowings under the commercial paper programs at June 30, 2016March 31, 2017 were $3.2$2.9 billion.
27
This Form 10-Q and other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its Groups and segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; the anticipated benefits of the Cameron transaction; the success of Schlumberger’s joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, 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; demand for our integrated services and new technologies; our future cash flows; the success of our transformation efforts; general economic, political and business conditions in key regions of the world; foreign currency risk; payment delays; pricing pressure; weather and seasonal factors; operational modifications, delays or cancellations; production declines; 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 inability to integrate the Cameron business and to realize expected synergies; the inability to retain key employees; and other risks and uncertainties detailed in this second-quarter 2016first-quarter 2017 Form 10-Q and our most recent FormsForm 10-K, 10-Q and Forms 8-K filed with or furnished to the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
For quantitative and qualitative disclosures about market risk affecting Schlumberger, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of the Schlumberger Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2016. Schlumberger’s exposure to market risk has not changed materially since December 31, 2015.2016.
Item 4. 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 Securities Exchange Act of 1934 (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 to ensure 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 was no change in Schlumberger’s internal control over financial reporting during the quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, Schlumberger’s internal control over financial reporting.
The information with respect to this Item 1 is set forth under Note 13—11—Contingencies, in the Consolidated Financial Statements.
On April 1, 2016, Schlumberger completed the acquisition of Cameron and therefore no longer faces risks associated with the ability to complete the Cameron Merger. Except as described in the foregoing sentence, asAs of the date of this filing, there have been no material changes from the risk factors previously disclosed in Part 1, Item 1A, of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2016.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
28
Issuer Repurchases of Equity Securities
On July 18, 2013, the Schlumberger Board of Directors (the “Board”) approved a $10 billion share repurchase program for shares of Schlumberger common stock, to be completed at the latest by June 30, 2018.
Schlumberger’s common stock repurchase program activity for the three months ended June 30, 2016March 31, 2017 was as follows:
| (Stated in thousands, except per share amounts) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total number of shares purchased |
|
| Average price paid per share |
|
| Total number of shares purchased as part of publicly announced program |
|
| Maximum value of shares that may yet be purchased under the program |
| ||||
April 1 through April 30, 2016 |
| 265.2 |
|
| $ | 72.06 |
|
|
| 265.2 |
|
| $ | 928,918 |
|
May 1 through May 31, 2016 |
| 57.0 |
|
| $ | 72.32 |
|
|
| 57.0 |
|
| $ | 924,795 |
|
June 1 through June 30, 2016 |
| 106.0 |
|
| $ | 74.78 |
|
|
| 106.0 |
|
| $ | 916,872 |
|
|
| 428.2 |
|
| $ | 72.77 |
|
|
| 428.2 |
|
|
|
|
|
| (Stated in thousands, except per share amounts) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total number of shares purchased |
|
| Average price paid per share |
|
| Total number of shares purchased as part of publicly announced program |
|
| Maximum value of shares that may yet be purchased under the program |
| ||||
January 1 through January 1, 2017 |
| - |
|
| $ | - |
|
|
| - |
|
| $ | 645,040 |
|
February 1 through February 28, 2017 |
| 638.3 |
|
| $ | 80.76 |
|
|
| 638.3 |
|
| $ | 593,491 |
|
March 1 through March 31, 2017 |
| 4,076.1 |
|
| $ | 78.69 |
|
|
| 4,076.1 |
|
| $ | 272,727 |
|
|
| 4,714.4 |
|
| $ | 78.97 |
|
|
| 4,714.4 |
|
|
|
|
|
In connection with the exercise of stock options under Schlumberger’s incentive compensation plans, Schlumberger routinely receives shares of its common stock from optionholders in consideration of the exercise price of the stock options. Schlumberger does not view these transactions as requiring disclosure under this Item as the number of shares of Schlumberger common stock received from optionholders is not material.
On January 21, 2016, the Board approved a new $10 billion share repurchase program for Schlumberger common stock. This new program will take effect once the remaining $0.9$0.3 billion authorized to be repurchased under the July 18, 2013 program is exhausted.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
The barite and bentoniteOur mining operations of M-I LLC, an indirect wholly-owned subsidiary, are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. 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 report.
ItemItem 5. Other Information.
Schlumberger completed the wind down of its service operations in Iran during the second quarter of 2013. Prior to this, certain non-US subsidiaries of Schlumberger 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 the secondfirst quarter of 20162017 consisted of payments of taxes and other typical governmental charges. Certain non-US subsidiaries of Schlumberger maintain 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 and for the maintenance of such amounts previously received. One non-US subsidiary also maintains 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.
29During the fourth quarter of 2016, a non-US subsidiary entered into a memorandum of understanding (“MOU”) with NIOC relating to the non-disclosure of data required for the technical evaluation of an oilfield project. In the first quarter of 2017, the Schlumberger subsidiary provided NIOC with written notice that it was terminating the MOU, effective March 11, 2017. The MOU did not involve the provision of services.
Exhibit 3.1—Articles of Incorporation of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3.1 to Schlumberger’s Current Report on Form 8-K filed on April 6, 2016) |
|
Exhibit 3.2—Amended and Restated By-laws of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3.1 to Schlumberger’s Current Report on Form 8-K filed on |
|
*Exhibit 10.1— |
|
*Exhibit 10.2— |
*Exhibit 10.3—Form of Schlumberger Omnibus Stock Incentive Plan Restricted Stock Unit Award Agreement for France (+) |
*Exhibit 10.4—Form of Schlumberger Omnibus Stock Incentive Plan Restricted |
*Exhibit |
*Exhibit 10.6—Form |
|
* Exhibit 31.1—Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
* Exhibit 31.2—Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
** Exhibit 32.1—Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
** Exhibit 32.2—Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
* Exhibit 95—Mine Safety Disclosures |
|
* Exhibit 101—The following materials from Schlumberger Limited’s Quarterly Report on Form 10-Q for the quarter ended |
|
* Filed with this Form 10-Q. |
** Furnished with this Form 10-Q. |
(+) Compensatory plan or arrangement. |
30
Pursuant to the requirements 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 and in his capacity as Chief Accounting Officer.
|
|
| Schlumberger Limited (Registrant) |
Date: |
|
| /s/ Howard Guild |
|
|
| Howard Guild |
|
|
| Chief Accounting Officer and Duly Authorized Signatory |
3124