SCHLUMBERGER Q3 2019 – INCOME STUNG BY MULTIBILLION PRETAX CHARGES

October 18, 2019

Schlumberger worldwide revenue of $8.5 billion increased 3% sequentially and was flat year-on-year. North America revenue of 2.8 billion increased 2% sequentially with a 11% decrease year-on year. The company’s net income (- $11.83 billion) was negatively affected by a $12.7 billion charge. Schlumberger shares have lost about 11.6% since the beginning of the year.
Schlumberger CEO Olivier Le Peuch commented, “We ended the third quarter with revenue of $8.5 billion, a 3% sequential increase while pretax segment operating income of $1.1 billion rose 13%. I am pleased with the results and proud of the team’s performance. Sustained international activity drove overall growth despite mixed results in North America. The North America business saw strong offshore sales with minimal growth on land due to slowing activity and further pricing weakness. Third-quarter EPS of $0.43, excluding charges, was 23% higher than the second quarter.
“Sequential international growth was led by the Europe/CIS/Africa area, where revenue increased 9% sequentially driven by peak summer activity in the Northern Hemisphere as well as the start of new projects in Africa. International revenue was also driven by double-digit growth in Asia. Latin America revenue declined 9% sequentially on lower activity in Argentina and Mexico. Excluding Cameron, third-quarter international revenue increased 8% year-over-year, remaining in line with our expectations of high single-digit international growth. As we enter the fourth quarter, international activity will be affected by the usual winter slowdown, particularly in the Northern Hemisphere.
“In North America, offshore revenue grew sequentially due to higher WesternGeco multiclient seismic license sales. Land revenue was slightly higher, as a modest increase in OneStim® activity was offset by softer pricing while land drilling revenue was essentially flat despite the lower rig count. As we exited the quarter, OneStim activity decelerated as frac programs were either deferred or cancelled due to customer budget and cash flow constraints.
“The third quarter results reflect a $12.7 billion pretax charge driven by market conditions. This charge is almost entirely noncash and primarily relates to goodwill, intangible assets, and fixed assets.
“Last month, we presented four key elements of our new strategy: leading and driving digital transformation; developing fit-for-basin solutions; capturing value from the performance impact for our customers; and fostering capital stewardship. The latter involves more stringent capex allocation and a strategic review of our portfolio—particularly in North America—through the lens of fit-for-basin attributes, customer performance, and return on investment.”

(Source and image: Schlumberger)