Schlumberger Announces Second-Quarter 2018 Results

• Revenue of $8.3 billion increased 6% sequentially
• Pretax operating income of $1.1 billion increased 12% sequentially
• Second-quarter GAAP EPS, including charges of $0.12 per share, was $0.31
• Second-quarter EPS, excluding charges, was $0.43
• Cash flow from operations was $987 million

PARIS--(BUSINESS WIRE/AETOSWire)-- Schlumberger Limited (NYSE: SLB) today reported results for the second quarter of 2018.

      
     (Stated in millions, except per share amounts)
     Three Months Ended     Change
     Jun. 30, 2018  Mar. 31, 2018  Jun. 30, 2017  Sequential  Year-on-year
Revenue    $8,303  $7,829  $7,462  6%  11%
Pretax operating income    $1,094  $974  $950  12%  15%
Pretax operating margin    13.2%  12.4%  12.7%  75 bps  45 bps
Net income - GAAP basis    $430  $525  $(74)  -18%  n/m
Net income, excluding charges & credits*    $594  $525  $488  13%  22%
Diluted EPS - GAAP basis    $0.31  $0.38  $(0.05)  -18%  n/m
Diluted EPS, excluding charges & credits*    $0.43  $0.38  $0.35  13%  23%
                  
*These are non-GAAP financial measures. See section below entitled "Charges & Credits" for details.
n/m = not meaningful
 

Schlumberger Chairman and CEO Paal Kibsgaard commented, “The second quarter was both busy and exciting for Schlumberger as we completed a number of major milestones in preparation for the broad-based global activity upturn that is now emerging. We delivered solid top-line growth both in North America and the international markets, building on our strong contract portfolios and our recent tender wins. We mobilized an unprecedented 29 new rigs for our international integrated drilling business, including our first commercial Land Rig of the Future deployment in Saudi Arabia. We successfully rolled out our new, streamlined operations support organization, building on five years of methodical investment to further professionalize all aspects of our work, which will set new standards for internal efficiency, quality, teamwork, and collaboration. As part of this, we made the last adjustment to our organizational setup in the second quarter to conclude the removal of one complete layer of our management and support structure. This will further reduce our cost base, and improve our agility and competitiveness going forward.

“Given the considerable number of new projects we are starting up throughout our international operations, our organization has responded well to both mobilization and project startup challenges. However, the associated costs together with some operational delays impacted our second-quarter pretax operating margins. This resulted in our sequential margin expansion being below our expectations.

“In North America, excluding Cameron, second-quarter revenue of $2.5 billion increased 12% sequentially as we continued our deployment of additional hydraulic fracturing and directional drilling capacity. Despite the impact of the spring breakup in Canada, North America Land revenue grew 9%, driven by market share gains and operational efficiency improvements while pricing remained flat. In the hydraulic fracturing market, we are seeing an accelerating customer trend of separating the procurement of pumping services and sand supply. As our multiyear vertical integration investment program approaches completion, it enables us to bid competitively on integrated or stand-alone sand contracts. North America Offshore activity began to recover during the second quarter with new drilling projects starting up in Eastern Canada, the US Gulf of Mexico, and the Caribbean, resulting in sequential offshore revenue growth of 22%.

“Excluding Cameron, second-quarter revenue in the international markets of $4.4 billion grew 6% sequentially despite flat revenue in Russia, and only nominal growth in the Middle East, where startup and project delays affected our results. Sequential growth was driven by an 18% improvement in Asia and Australia, 9% in Europe and Africa, and 3% in Latin America. These figures confirm that a much broader-based international recovery is now emerging. Pricing improved in the international markets during the second quarter, and while the numbers are not yet material, a trend has been established and customer pricing discussions are continuing both for new and existing contracts. With a number of large-scale project awards absorbing our remaining spare capacity in both drilling and production services, our equipment will be fully deployed during the fourth quarter, after which we expect a further strengthening of the international pricing recovery.