Schlumberger Announces Fourth-Quarter and Full-Year 2020 Results
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HOUSTON -Monday 25 January 2021 [ AETOS Wire ]
Fourth-quarter worldwide revenue of $5.5 billion increased 5% sequentially
Fourth-quarter GAAP EPS, including charges and credits, was $0.27
Fourth-quarter EPS, excluding charges and credits, of $0.22 increased 37% sequentially
Fourth-quarter cash flow from operations was $878 million and free cash flow was $554 million
Quarterly cash dividend of $0.125 per share approved
(BUSINESS WIRE)-- Schlumberger Limited (NYSE: SLB) today reported results for the fourth-quarter and full-year 2020.
Fourth-Quarter Results (Stated in millions, except per share amounts)
Three Months Ended Change
Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 Sequential Year-on-year
Revenue
$5,532
$5,258
$8,228
5%
-33%
Income (loss) before taxes - GAAP basis
$471
$(54)
$452
n/m
4%
Net income (loss) - GAAP basis
$374
$(82)
$333
n/m
12%
Diluted EPS (loss per share) - GAAP basis
$0.27
$(0.06)
$0.24
n/m
12%
Adjusted EBITDA*
$1,112
$1,018
$1,648
9%
-33%
Adjusted EBITDA margin*
20.1%
19.4%
20.0%
73 bps
6 bps
Pretax segment operating income*
$654
$575
$1,006
14%
-35%
Pretax segment operating margin*
11.8%
10.9%
12.2%
90 bps
-40 bps
Net income, excluding charges & credits*
$309
$228
$545
35%
-43%
Diluted EPS, excluding charges & credits*
$0.22
$0.16
$0.39
37%
-44%
Revenue by Geography
International
$4,343
$4,210
$5,834
3%
-26%
North America
1,167
1,034
2,339
13%
-50%
Other
22
14
55
n/m
n/m
$5,532
$5,258
$8,228
5%
-33%
*These are non-GAAP financial measures. See sections titled "Charges & Credits", "Divisions", "Geographical", and "Supplemental Information" for details.
n/m = not meaningful
Schlumberger CEO Olivier Le Peuch commented, “We concluded the year posting very strong fourth-quarter results, as we leveraged the industry recovery, which has now commenced. Fourth-quarter revenue grew 5% sequentially, driven by strong activity and solid execution both in North America and in the international markets. Despite seasonality, revenue grew sequentially in all four Divisions for the first time since the third quarter of 2019. I stand very proudly behind the performance of the entire Schlumberger team during the quarter, closing an exceptional year of operational resilience and performance for our customers.
“Sequentially, international revenue growth visibly outpaced rig count and was led by Latin America and a global rebound of activity in most offshore deepwater markets. In the Middle East & Asia, growth was mostly in China, India, and Oman while Saudi Arabia remained resilient. In Europe/CIS/Africa, activity increased significantly in the offshore markets of Africa and several countries in Europe offset by the seasonal winter slowdown in Russia. In North America, offshore activity in the US Gulf of Mexico grew, and on land, increased horizontal drilling and pressure pumping activity contributed to higher revenue.
(Stated in millions)
Three Months Ended Change
Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 Sequential Year-on-year
Revenue by Division
Digital & Integration
$833
$740
$1,112
13%
-25%
Reservoir Performance
1,247
1,215
2,122
3%
-41%
Well Construction
1,866
1,835
3,009
2%
-38%
Production Systems
1,649
1,532
2,131
8%
-23%
Other
(63)
(64)
(146)
n/m
n/m
$5,532
$5,258
$8,228
5%
-33%
Pretax Operating Income by Division
Digital & Integration
$270
$202
$259
33%
4%
Reservoir Performance
95
103
227
-8%
-58%
Well Construction
183
172
373
6%
-51%
Production Systems
155
132
206
18%
-24%
Other
(49)
(34)
(59)
n/m
n/m
$654
$575
$1,006
14%
-35%
Pretax Operating Margin by Division
Digital & Integration
32.4%
27.3%
23.2%
507 bps
914 bps
Reservoir Performance
7.6%
8.4%
10.7%
-84 bps
-307 bps
Well Construction
9.8%
9.4%
12.4%
42 bps
-261 bps
Production Systems
9.4%
8.6%
9.6%
82 bps
-23 bps
Other
n/m
n/m
n/m
n/m
n/m
11.8%
10.9%
12.2%
90 bps
-39 bps
n/m = not meaningful
“Digital & Integration revenue increased 13% sequentially driven by Asset Performance Solutions (APS) projects, increased multiclient seismic license sales, and higher digital solutions and software sales internationally. Reservoir Performance and Well Construction revenue increased 3% and 2%, respectively, due to higher activity in North America, Latin America, and in Middle East & Asia partially offset by the seasonal winter slowdown in Russia. Production Systems revenue increased 8% sequentially and grew in North America and internationally.
“Sequentially, fourth-quarter pretax operating income and adjusted EBITDA increased 14% and 9%, respectively. Pretax operating income margin and adjusted EBITDA margin expanded to reach 12% and 20%, respectively, achieving the same level as the fourth quarter of 2019 despite a 33% decline in revenue year-on-year. Sequentially, incremental EBITDA margin was 34%, demonstrating the ability of our new Divisions to enhance operating leverage, fully preparing us for the growth cycle ahead.
“Fourth-quarter cash flow from operations was $878 million and free cash flow was $554 million despite severance payments of $144 million. We are confident in our ability to further improve cash flow generation in 2021, which will allow for debt reduction.
“Regarding the macro outlook, oil prices have risen, buoyed by recent supply-led OPEC+ policy, the ongoing COVID-19 vaccine rollout, and multinational economic stimulus actions—driving optimism for an oil demand recovery throughout 2021. We believe this sets the stage for oil demand to recover to 2019 levels no later than 2023, or earlier as per recent industry analysts’ reports, reinforcing a multiyear cycle recovery as the global economy strengthens. Absent a setback in these macro assumptions, this will translate to meaningful activity increases both in North America and internationally.
“In North America, spending and activity momentum will continue in the first half of 2021 towards maintenance levels, albeit moderated by capital discipline and industry consolidation. Internationally, following the seasonal effects of the first quarter of 2021, and as OPEC+ responds to strengthening oil demand, higher spending is expected from the second quarter of 2021 onwards. Accelerated activity will extend beyond the short-cycle markets and will be broad, including offshore, as witnessed during the fourth quarter.
“The quality of our results in the fourth quarter of 2020 validates the progress of our performance strategy and the reinvention of Schlumberger in this new chapter for the industry. Building from the swift execution and scale of our cost-out program, we exited the year with quarterly margins reset to 2019 levels as the upcycle begins. On the back of our high-graded and restructured business portfolio, we see a clear path to achieve double-digit margins in North America and visible international margin improvement in 2021. Given the depth, diversity, and executional capability of our international business, we are uniquely positioned to benefit as international spending accelerates in the near- and midterm.
“By leveraging our new Basin and Division structure, we are fully set to capitalize on the growth drivers of the future of our industry, particularly as we accelerate our digital growth ambition and lead in the production and recovery market. Finally, to meet our long-term ambition to bring lower carbon and carbon-neutral energy sources and technology to market, we are visibly expanding our New Energy portfolio, to contribute to the transformation of a more resilient, sustainable, and investable energy services industry.”
Other Events
On December 31, 2020, Schlumberger closed the contribution to Liberty Oilfield Services Inc. (Liberty) of OneStim®, Schlumberger’s onshore hydraulic fracturing business in the United States and Canada, including its pressure pumping, pumpdown perforating, and Permian frac sand businesses, in exchange for a 37% equity interest in Liberty.
On January 21, 2021, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.125 per share of outstanding common stock, payable on April 8, 2021 to stockholders of record on February 17, 2021.
Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change
Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 Sequential Year-on-year
North America
$1,167
$1,034
$2,339
13%
-50%
Latin America
969
828
1,142
17%
-15%
Europe/CIS/Africa
1,366
1,397
2,018
-2%
-32%
Middle East & Asia
2,008
1,985
2,674
1%
-25%
Other
22
14
55
n/m
n/m
$5,532
$5,258
$8,228
5%
-33%
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to the current period presentation.
North America
North America area revenue of $1.2 billion increased 13% sequentially with strong growth both on land and offshore. Land revenue increased driven by Well Construction activity on higher rig count and OneStim activity through additional fleet redeployments. Offshore revenue grew due to higher sales of subsea production systems and year-end multiclient seismic licenses.
International
Revenue in the Latin America area of $969 million increased 17% sequentially with continued strength in Ecuador, Colombia, offshore Brazil, Guyana, and Argentina. Ecuador revenue increased on APS projects, higher sales of well production systems, increased intervention services, and a rebound in drilling activity. Revenue increased in Colombia from drilling project startups, in Brazil from the resumption of offshore drilling and sales of production systems, in Guyana from increased intervention and stimulation activity, and in Argentina from higher drilling activity.
Europe/CIS/Africa area revenue of $1.4 billion decreased 2% sequentially mainly due to the seasonal winter activity slowdown in Russia & Central Asia while activity increased significantly in Angola, Nigeria, Gabon, and several countries in Europe. Revenue increased in Angola from drilling project startups, in Scandinavia from increased sales of subsea and well production systems, in Gabon and Nigeria from new project startups, and in Mozambique from multiclient seismic license sales. Significant digital solutions and software sales were made in Russia, Scandinavia, Romania, Ukraine, and Turkey.
Revenue in the Middle East & Asia area of $2.0 billion increased 1% sequentially. Revenue growth was mainly in China, India, and Oman, partially offset by declines in Egypt, East Asia, and Kuwait. Revenue in China increased from sales of production systems and digital solutions and higher drilling and measurement activity. Production Systems sales drove growth in India and Oman but declined in Egypt, East Asia, and Kuwait. Revenue in Saudi Arabia was resilient as reduced stimulation, logging, and drilling activity was offset by higher sales of production systems. Qatar revenue was also resilient as reduced stimulation activity was offset by higher drilling activity.
Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 Sequential Year-on-year
View source version on businesswire.com: https://www.businesswire.com/news/home/20210122005175/en/
Contacts
Ndubuisi Maduemezia – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
investor-relations@slb.com
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