To follow-up on its earnings report for second quarter 2008, Schlumberger has issued an update on revenue specifics for the Company's holdings in Europe, Africa, Asia and the Middle East.
Revenue of $2.07 billion increased 9% sequentially and 28% year-on-year. Pretax operating income of $583 million increased 17% sequentially and 26% year-on-year.
Sequential revenue growth was primarily driven by strong demand for all Technologies across the North Sea GeoMarket --in particular for Drilling & Measurements and high-pressure, high-temperature Wireline services. Strong activity for all Technologies in West & South Africa together with increased demand for exploration-related activities in East Russia also contributed to sequential growth. These increases were partially offset by operational delays in the Nigeria & Gulf of Guinea GeoMarket and the seasonal slowdown of activity in the North Russia GeoMarket.
Pretax operating margin increased sequentially by 181 bps to 28.2% due to a more favorable activity mix in the North Sea, East Russia, and West & South Africa GeoMarkets. Strengthened IPM activity in South Russia also contributed to the increase.
During the quarter, Schlumberger completed the first PeriScope operation for Rosneft Sakhalinmoreneftegas on Sakhalin Island, offshore Russia. More than 600 m of horizontal wellbore were geosteered in the target reservoir, maintaining 100% reservoir contact and accurately mapping the top and bottom reservoir boundaries. The wellbore was landed in the target reservoir without the need for a pilot hole, saving Rosneft two weeks of rig time.
In Angola, a joint Sonangol and Schlumberger Completions team has completed seven wells in the Gimboa field since the launch of the project in August 2007. To date, a total of 4,860 m of Schlumberger screens have been installed with zero non-productive time. The installations included the deployment of 1,660 m of sandface completions assembly in the horizontal section of the first producer well — setting a new industry record as the longest horizontal well completed in Angola.
Offshore Ghana, Schlumberger Testing Services helped Kosmos appraise the Mahogany-2 well located in water depths of 3,400 ft. The favorable results validated the geological and reservoir models and confirmed the Turonian turbidite reservoirs of the Jubilee field to be highly productive.
Surgutneftegaz, the third-largest oil producer in Russia, awarded Schlumberger Wireline and Data & Consulting Services a significant project for the provision of formation evaluation services on the Rogozhnikovskoye field, one of the most geologically challenging fields in western Siberia, to improve understanding of the geology and optimize reservoir engineering strategies. Among the key technologies to be deployed on the project are the SonicScanner advanced acoustic scanning platform, the FMI imager, and the CMR Combinable Magnetic Resonance tool.
Elsewhere in Russia, Schlumberger was awarded directional-drilling, MWD and LWD contracts on up to 10 rigs by Vankorneft, a subsidiary of Rosneft. Drilling & Measurements is currently deploying a number of advanced services in support of this work that includes arcVISION array resistivity compensated, adnVISION azimuthal density neutron and PowerDrive technologies. A new base north of the Arctic Circle will be used to support these extremely remote operations.
Schlumberger was awarded a directional-drilling services contract for the next phase of the Exxon Neftegas Limited extended-reach drilling program on Sakhalin Island. Schlumberger commitment to execution through quality management systems and standards, unique equipment offerings, technical knowledge and personnel experience in directional-drilling services will enable a successful effort. Work will commence in 2009.
Middle East & Asia
Revenue of $1.44 billion increased 9% sequentially and 19% year-on-year. Pretax operating income of $525 million increased 14% sequentially and 23% year-on-year.
Sequentially, growth was led by the Arabian GeoMarket with high demand for Well Services and Testing Services technologies together with increased Completions product sales. The China/Japan/Korea GeoMarket experienced a robust rebound in activity following the winter slowdown of the prior quarter, while Australia/Papua New Guinea grew on increased offshore exploration activity that resulted in strong demand for Wireline and Drilling & Measurements services. Growth was also recorded from exploration-related Wireline services in Thailand/Vietnam; from Wireline and Well Services technologies and SIS products sales in the Gulf GeoMarket; and from high demand for Well Services technologies and Artificial Lift Systems products in Indonesia.
These increases were partially offset by activity declines in the India and Qatar GeoMarkets.
Offshore Qatar, Maersk Oil Qatar AS and Schlumberger established several world records by drilling the world’s longest well in the Al Shaheen field. At a total measured depth of 40,320 ft, the BD-04A well broke the previous record by 2,000 ft with an extended-reach ratio of 10.485. The 8 1/2-in horizontal section was drilled in two runs using PowerDrive X5 and PowerDrive Xceed* rotary-steerable systems. A batteryless LWD triple combo of TeleScope, geoVISION imaging-while-drilling and adnVISION technologies provided well placement data to maintain the wellbore within the extremely thin reservoir 95% of the time.
In China, following the success of the first StageFRAC job completed in early 2008 for PetroChina South West Oil & Gas Company, an additional three StageFRAC jobs were completed in the quarter for the same operator. Results have been encouraging with production increasing by an average of 10 to 20 fold. StageFRAC technology has been recognized as a major technical breakthrough for PetroChina horizontal well development and is planned to be introduced in other fields.
In Japan, StimMAP Live was deployed in a 20-degree deviated tubing well for JAPEX. This was the first real-time StimMAP survey performed in a well of this deviation. Due to slimhole limitations, only data from three receivers could be transmitted continuously and the amount of recorded data was limited, leaving little space for errors in the processing. Despite these limitations, real-time processing was successfully performed.
Saudi Aramco awarded Schlumberger a five-year integrated services contract for the Manifa Onshore Project. The contract involves Drilling & Measurements, Wireline and Well Services technologies for both rig and rigless activities. Manifa is one of the most complicated and technically challenging projects in Saudi Arabia to date, with the majority of the extended-reach wells being drilled from the mainland and a custom-built causeway. The Schlumberger Drilling & Measurements technology portfolio, track record of performance and capability to provide integrated services for these complex well profiles were key factors for this award.
The Jordanian Natural Resources Authority awarded Schlumberger a contract to implement a web-enabled National Data Center using leading SIS Information Management technology. The Center will centralize and manage secure natural resource data to share knowledge and promote investment via efficient web-based access and data packaging.
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