Schlumberger 1Q Earnings Rise on N. America Revenue
Schlumberger Limited reported first-quarter 2012 revenue of $10.61 billion versus $10.97 billion in the fourth quarter of 2011, and $8.72 billion in the first quarter of 2011.
Net income attributable to Schlumberger, excluding charges and credits, was $1.31 billion—a decrease of 12% sequentially but an increase of 35% year-on-year. Diluted earnings-per-share, excluding charges and credits, was $0.98 versus $1.11 in the previous quarter, and $0.71 in the first quarter of 2011.
Schlumberger recorded charges of $0.01 per share in the first quarter of 2012 versus $0.06 per share in the previous quarter, and $0.02 per share in the first quarter of 2011.
Oilfield Services revenue of $9.92 billion decreased 4% sequentially but increased 22% year-on-year. Pretax segment operating income of $1.94 billion was down 10% sequentially but increased 33% year-on-year.
Distribution revenue of $713 million increased 4% sequentially and 19% year-on-year. Pretax segment operating income of $35 million increased 32% sequentially and 56% year-on-year.
Schlumberger CEO Paal Kibsgaard commented, "While revenue fell as a result of the normal seasonal slowdown in product, software and multiclient sales, our first-quarter results showed good progress driven by global exploration and deepwater activity underpinned by strong execution and operational excellence.
"Excluding seasonal sales effects, North America revenue was flat sequentially. On land, the move of rigs and service capacity from gas-rich to liquids-rich basins accelerated. Subsequently, the pricing weakness already experienced in the previous quarters also reached the liquids-rich basins. Offshore, increased drilling and deepwater exploration activity in the US Gulf of Mexico contributed positively to results.
"Internationally, the normal impact of winter weather and year-end sales effects lowered revenue, but growing higher-margin exploration and deepwater activity in a number of regions, as well as strong execution in all parts of the business, kept margins flat sequentially. Land activity remained strong in the Middle East and North Africa.
"Bidding remained competitive on large tenders for standard technology. However, pricing sentiments are starting to move upwards as the majority of the large international contracts have now been re-bid and service capacity is tightening further.
"WesternGeco saw a strong first quarter in marine seismic. Capacity for the coming quarters is filling fast, driven by higher activity in West Africa, the North Sea, the Arctic, and Brazil. Backlog increased during the quarter, and pricing is trending upwards.
"While uncertainties linked to global financial markets and potential geopolitical events remain, the risk of a double-dip global recession has declined. Oil demand in 2012 appears to have stabilized, and supply continues to be limited by weak non-OPEC performance and narrow spare capacity margins. These effects should limit any oil-price decline. In the US, natural gas storage and abundant supply have led to weakening natural gas activity with little likelihood of short-term recovery. International gas prices however, remain solid, driven by strong demand.
"We maintain our positive view on the international markets and expect the rig count to grow by more than 10 percent in 2012 through strength in exploration and deepwater activity as well as in key land markets. Strong execution, solid contracts and rich new technologies provide the foundation upon which we will capitalize. In North America, we remain more cautious until the uncertainties around the dry gas drilling and pressure pumping pricing outlook become clearer. However, with a balanced land portfolio and strong deepwater leverage, we remain favorably positioned to outperform even in this market."
- During the quarter, Schlumberger repurchased 4.4 million shares of its common stock at an average price of $74.01 for a total purchase price of $324 million.
- On March 5, 2012, WesternGeco announced the formation of a new division to sell and lease the UniQ integrated point-receiver land seismic system to other service companies as well as to energy companies that maintain their own crews.
- On March 20, 2012, Schlumberger announced that it had entered into a purchase agreement to acquire SPT Group—a privately owned software company based in Norway specializing in dynamic modeling for the oil and gas industry. The acquisition is subject to various conditions, including customary regulatory approvals, and is expected to close in the second quarter of 2012.
- On April 10, 2012, Schlumberger announced that it had entered into an agreement with National Oilwell Varco, Inc. to sell its Wilson distribution business. Closing of the transaction is subject to various conditions, including customary regulatory approvals.
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