Schlumberger Reports 3Q Earnings of $5.43B

Schlumberger has reported third-quarter revenue of $5.43 billion versus $5.53 billion in the second quarter of 2009, and $7.26 billion in the third quarter of 2008.

Income from continuing operations attributable to Schlumberger was $787 million -- a decrease of 4% sequentially, excluding $207 million of charges in the second quarter of 2009, and 48% lower year-on-year. Diluted earnings-per-share from continuing operations was $0.65 versus $0.68, excluding charges of $0.17 per share in the previous quarter, and $1.25 in the third quarter of 2008.

Oilfield Services revenue of $4.95 billion was flat sequentially but down 22% year-on-year. Pretax segment operating income of $1.04 billion was up 2% sequentially but down 39% year-on-year.

WesternGeco revenue of $463 million was down 17% sequentially and 48% year-on-year. Pretax segment operating income of $61 million was down 37% sequentially and 83% year-on-year.

Schlumberger Chairman and CEO Andrew Gould commented, "Oilfield Services revenue was flat with the second quarter as increases in both North and South America offset a further decline in the Middle East and Asia. As a result of this, coupled with the implementation of cost-cutting programs earlier in the year, overall margins slightly increased.

"At WesternGeco, sequential revenue declines were due to lower Multiclient revenues in the quarter and the rollover of Marine contracts from higher-priced legacy backlog into new lower-priced activity. These factors resulted in lower margins.

"Our outlook for the remainder of 2009 assumes a continued modest recovery in North American gas drilling but no significant improvement in service pricing. Overseas, while rig activity is stabilizing, seasonal factors and pricing concessions made in the first half year that are still being implemented leave some risk of further small revenue declines. At WesternGeco, improvement will depend on the level of fourth-quarter multiclient sales.

"Looking further ahead, we said in our second-quarter outlook that the shape of the economic recovery beyond 2009 and the subsequent recovery in oil and gas demand remained the determining factors for future activity increases. Since then, indications of inventory rebuilding across many industries together with help from government stimuli have helped to strengthen demand for both oil and gas. While uncertainties remain, notably the transition from current stimuli to industrial and consumer demand and the extent to which the recovery will be limited by high unemployment, the demand for oil and gas will increase somewhat over the coming months.

"As a result, we see continuing stabilization of activity around the world. However, this will not be uniform across either geographies or for services by commodity type.

"We consider that world gas markets are oversupplied and will remain so for some time absent any strong recovery in industrial demand. Both new LNG capacity coming on stream, as well as ample storage and pent-up supply in North America, will serve to keep prices and activity low. In North America we feel the current slight recovery in drilling is fragile and not likely to significantly improve service activity and pricing until late 2010.

"For oil, the current robust price will lead to operators maintaining their spending levels, and this, coupled with the lowering of their cost structures, may produce some modest increases in activity. We see continued strength in deepwater areas and some increases in selected land markets. We also feel that a more robust commodity price will lead to some increase in seismic activity, although new marine capacity will continue to depress pricing.

"The worst, provided the economy continues to show signs of recovery, is behind us."

Other Event:

On September 8, 2009, Schlumberger issued $450 million of Guaranteed Notes due 2013 at an interest rate of 3.0%. The proceeds from this issuance were used to refinance existing debt obligations.




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