Schlumberger 1999 Third Quarter Results.NEW YORK--(BUSINESS WIRE)--October 18, 1999--
Schlumberger Limited [NYSE NYSE
See: New York Stock Exchange :SLB SLB Solomon Islands (ISO Country code)
SLB Schlumberger Ltd. (oil field services firm)
SLB Server Load Balancing
SLB Sport Lisboa e Benfica (soccer) ] reported today that 1999 third quarter operating revenue operating revenue
Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $2.25 billion was 23% below third quarter 1998. Net income and diluted earnings per share diluted earnings per share
An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $139 million and $0.25, both 60% lower than the same period last year before the 1998 third quarter charge.
Oilfield Services revenue decreased 28% year over year as the rig count declined 16%. Compared with the second quarter of 1999, revenue increased 2%.
Resource Management Services revenue was down 4%. Test & Transactions revenue was 10% higher than in the third quarter of 1998, excluding the contribution from Schlumberger Omnes, a joint venture which was 100% acquired during the quarter.
Chairman and Chief Executive Officer Euan Baird commented: "The third-quarter results for our ongoing oilfield businesses confirm that the second quarter of 1999 was the bottom of the cycle. Our new GeoMarket organization, focused on the reservoir, is capable of producing high-margin growth as our clients increase E&P spending to meet the growing demand for oil and gas." -0-
CONSOLIDATED STATEMENT OF INCOME (Unaudited)(1) (Stated in thousands except per share amounts) Third Quarter Nine Months For Periods Ended Sept. 30 1999 1998 1999 1998 Revenue Operating $ 2,249,315 $ 2,932,447 $ 6,730,040 $ 9,040,053 Interest and other income 61,974 48,562 286,534 120,989 2,311,289 2,981,009 7,016,574 9,161,042 Expenses Cost of goods sold and services 1,744,912 2,581,356 5,382,887 6,956,899 Research & engineering 134,051 137,392 398,565 430,884 Marketing 113,252 119,966 324,006 349,081 General 99,065 112,782 300,904 341,439 Interest 47,681 41,665 142,420 92,854 2,138,961 2,993,161 6,548,782 8,171,157 Income (Loss) before taxes 172,328 (12,152) 467,792 989,885 Taxes on income 33,347 17,323 112,357 253,532 Net Income (Loss)(1) $ 138,981 $ (29,475) $ 355,435 $ 736,353 Basic Earnings(Loss) Per Share $ 0.25 $ (0.05) $ 0.64 $ 1.36 Diluted Earnings(Loss) Per Share(1) $ 0.25 $ (0.05) $ 0.64 $ 1.31 Average shares outstanding 548,671 545,110 547,386 543,800 Average shares outstanding assuming dilution 565,551 560,773 562,998 563,137 Depreciation and amortization included in expenses $ 285,229 $ 288,479 $ 848,911 $ 845,088 (1) The 1998 third-quarter results included an after-tax charge of $380 million ($0.68 per share-diluted). The 1999 first-quarter results included an after-tax charge of $90 million ($0.16 per share-diluted). CONDENSED BALANCE SHEET (Unaudited) (Stated in thousands) Assets Sept. 30, 1999 Dec. 31, 1998 Current Assets Cash and short-term investments $ 4,021,531 $ 3,956,694 Other current assets 4,616,465 4,848,530 8,637,996 8,805,224 Long-term investments, held to maturity 694,679 855,172 Fixed assets 4,869,269 4,694,465 Excess of investment over net assets of companies purchased 1,321,744 1,302,678 Deferred taxes on income, and other assets 835,710 420,390 $ 16,359,398 $ 16,077,929 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities $ 2,459,195 $ 2,539,954 Estimated liability for taxes on income 411,502 480,123 Bank loans and current portion of long-term debt 741,727 795,700 Dividend payable 103,590 102,891 3,716,014 3,918,668 Long-term debt 3,563,146 3,285,444 Postretirement benefits 452,629 432,791 Other liabilities 341,497 321,951 8,073,286 7,958,854 Stockholders' Equity 8,286,112 8,119,075 $ 16,359,398 $ 16,077,929 BUSINESS REVIEW (Stated in millions) Resource Oilfield Management Test & Services Services Transactions(2) Third Quarter 1999 1998 %chg 1999 1998 %chg 1999 1998 %chg Operating Revenue $1,607 $2,229 (28)% $ 330 $ 345 (4)% $ 332 $ 272 22% Pretax Operating Income(1)$ 167 $ 445 (63)% $ 6 $ 7 (14)% $ 11 $ 2 358% Nine Months Operating Revenue $4,875 $6,829 (29)% $1,018 $1,070 (5)% $ 859 $ 911 (6)% Pretax Operating Income(1) $ 539 $1,401 (62)% $ 4 $ 38 (89)% $ 21 $ 64 (68)%
(1) Pretax operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. represents income before taxes, excluding
interest expense, interest and other income, and the
third-quarter 1998 and first-quarter 1999 charges. (2) Test & Transactions results include Schlumberger Omnes, formally
a joint venture which was 100% acquired during the quarter, and
exclude the Retail Petroleum Systems business sold on October 1,
During the third quarter, Oilfield Services operating revenue increased 2% sequentially and declined 28% year over year. The rig count declined 16%. Pretax operating income grew 4% sequentially and fell 63% versus the third quarter of 1998. Compared with last year, revenue decreased in all major geographic regions and across all of the oilfield services, except integrated project management. Geographical comments below exclude Camco and Sedco Forex Forex
See: Foreign exchange Offshore, which are reported separately.
On July 14, Schlumberger and Smith International announced the completion of the combination of their drilling fluids operations under a joint venture agreement. The joint venture is the world's largest drilling and completions fluids business. Smith contributed its M-I LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control operations, including M-I SWACO SWACO Solid Waste Authority of Central Ohio (Grove City, OH) , and Schlumberger contributed its non-US drilling fluids business. In addition, Schlumberger paid cash consideration of $280 million to Smith. Smith and Schlumberger own a respective 60% and 40% interest in the combined operations For the department of the British War Office during World War II, see .
In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. in Washington, DC, alleging that the transaction violated a 1994 Consent Decree A settlement of a lawsuit or criminal case in which a person or company agrees to take specific actions without admitting fault or guilt for the situation that led to the lawsuit.
A consent decree is a settlement that is contained in a court order. entered in US v. Baroid Corporation. The parties strongly believe that the transaction does not violate the Decree and are vigorously defending their position.
On October 7, 1999, Schlumberger agreed to purchase Secure Oil Tools from Stellarton Corporation / Calgary, Alberta. Secure Oil Tools is an oil and gas service company offering advanced products in the areas of enhanced production technology (primarily plunger lift), Multi Lateral Production Systems (MLPS MLPS Modern Languages in the Primary School (Scottish primary education)
MLPS Manual Lever Position Sensor
MLPS Martin Luther Preparatory School (Prairie du Chien, Wisconsin) ), sand filters (MeshRite) and production and thermal tools. This acquisition will advance the long-term Schlumberger strategy to be the leading service provider in optimizing reservoir performance.
North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere.
In North America, quarterly revenue of $375 million increased 18% sequentially and declined 23% year over year as the rig count declined 11%. Pretax operating income tripled sequentially and decreased 13% year over year. Compared with last year, revenue declined across all oilfield services except integrated project management. Improved production from PowerJet(a) perforating technology has produced pricing premiums of over 20%. The combination with ClearFRAC(a) polymer-free fracturing fluid is having a positive impact in a market focusing on productivity of reservoirs.
The use of ClearFRAC fluid helped BP Amoco in Wyoming to reduce costs and improve production. The fracturing fluid volume was greatly reduced and the initial gas production increased 2.5 times compared to conventional systems. In Canada, the CoilFRAC(a) coiled tubing Coiled tubing refers to metal piping, normally 1" to 2" in diameter, used for interventions in oil and gas wells, which comes spooled on a large drum. The main benefits over wireline are the ability to pump chemicals through the coil and the ability to push it into hole rather than fracturing system was used to stimulate 27 wells, resulting in cost savings of 60% and an average production increase of 190%.
Agip Petroleum Company, Inc. signed a five-year contract for PowerHouse(a) center-based E&P data management services and Finder(a) data management software.
Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies.
In Latin America, quarterly revenue of $212 million remained flat sequentially and declined 19% year over year as the rig count declined 20%. Pretax operating income decreased 13% sequentially and declined 77% year over year. Revenue for all services in all regions declined, with the exception of 62% growth from multipurpose mul·ti·pur·pose
Designed or used for several purposes: a multipurpose room; multipurpose software.
Adjective service vessel (MPSV MPSV Microsoft Public Security Virus ) activity and 58% growth in marine third-party and nonexclusive proprietary seismic surveys in Brazil.
officially Petróleos Mexicanos
Mexico's state-owned oil company. In 1938 Pres. Lázaro Cárdenas nationalized 17 foreign oil companies to create Pemex, the largest Latin American petroleum company and a major world exporter of fossil fuel. has selected Holditch-Reservoir Technologies to conduct two integrated reservoir studies of six fields to revitalize re·vi·tal·ize
tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es
To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. production and increase total recovery.
Quarterly revenue of $335 million decreased 2% sequentially and 34% year over year as the rig count declined 28%. Pretax operating income grew 24% sequentially and fell 69% year over year.
The new GHOST(a) sensor was introduced in the North Sea. This innovative technology allows clients to directly measure the flow of gas, oil and water at any point in a producing well.
In Norway, Statoil awarded Schlumberger Scandinavia 100% of its wireline logging Wireline Logging consists of measuring and recording the physical properties of the rocks in oil wells. "Logging" consists of introducing sensors in a borehole via a "wireline", an electromechanical cable. projects. The scope of work includes 17 installations on fixed platforms and rigs, as well as additional future installations. The initial two-year contract can be extended up to a total of six years.
In North Africa, the LiteCRETE(a) slurry slurry,
n a thin mixture of insoluble material floating in liquid.
solids in suspension. Used as a method of feeding pigs—slurry is pumped through fixed lines and delivered to troughs by hoses equipped with gasoline pump fittings. system saved our client an average of 20 hours rig time and approximately $40,000 per cementing job. During another drilling operation, a damaged well facing costly abandonment was saved with InstanSeal(b) lost circulation sealant Sealant
A thin plastic substance that is painted over teeth as an anti-cavity measure to seal out food particles and acids produced by bacteria.
Mentioned in: Tooth Decay
see bone sealant. , designed to stop fluid loss while drilling.
Other Eastern Hemisphere Eastern Hemisphere
Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries.
Quarterly revenue of $321 million decreased 8% sequentially and 31% year over year, while the rig count declined 22%. Pretax operating income decreased 21% sequentially and 62% year over year. Activity fell across the region, except in integrated project management, which continued to grow in Asia.
Working closely with the client, a Schlumberger premium fracturing service team-a seamless integration An addition of a new application, routine or device that works smoothly with the existing system. It implies that the new feature or program can be installed and used without problems. Contrast with "transparent," which implies that there is no discernible change after installation. of Holditch-Reservoir Technologies, wireline, data management, fluids management, and testing services-delivered customer savings of $48 million for the development of a major gas field in Egypt.
Saudi Aramco Saudi Aramco, the state-owned national oil company of Saudi Arabia, is the largest oil corporation in the world and the world's largest in terms of proven crude oil reserves and production. awarded Schlumberger two separate land seismic acquisition contracts with a combined duration of up to five years. The contracts will utilize the Olympus-FRS(a) field recording system, a fully integrated component of the Olympus(a) suite of seismic acquisition services, along with the new 80,000-lb. Desert Explorer(a) vibrator vibrator /vi·bra·tor/ (vi´bra-tor) an instrument for producing vibrations.
an apparatus used in vibratory treatment. source.
Quarterly revenue of $189 million increased 7% sequentially and declined 12% year over year, as pretax operating income increased 44% sequentially and decreased 19% year over year.
Schlumberger successfully installed remote flow-control devices in a dual-lateral well in Wytch Farm Wytch Farm is an oil field and oil and natural gas processing facility in the Purbeck district of Dorset, England, the largest onshore oil field in Europe. The facility, operated by BP, is hidden in a coniferous forest on Wytch Heath on the southern shore of Poole Harbour, two for BP Amoco. These devices allowed the client to manage the production of each lateral well from the surface without costly interventions. In addition to saving considerable future operational costs, production gains from the well were estimated at more than 500,000 barrels. To date, Schlumberger has successfully installed seven of these intelligent completions with no downhole failures.
Working with a drilling company in Venezuela, Schlumberger established a new standard for drill bit performance, dramatically reducing costs while extending a well. The operation was conducted using a single Reed-Hycalog 8-3/8" 345GMT (Greenwich Mean Time) See UTC.
GMT - Universal Time 1 DuraDiamond(a) bit, instead of multiple conventional bits, thereby avoiding unproductive rig time.
Offshore Contract Drilling Activity
The Sedco Forex Offshore rig utilization rate was 76.4% compared with 94.2% in the third quarter of 1998. The semisubmersible sem·i·sub·mers·i·ble
A seagoing, self-propelled barge that rides at anchor, stands on partially submerged vertical legs on submerged pontoons, and serves as living quarters and a base of operations in offshore drilling. utilization rate decreased from 95% to 72.2%, while the jackup utilization declined from 100% to 90%. The industry offshore rig utilization was 69% versus 88% in the third quarter last year.
At the end of September, the Sedco Forex Offshore fleet consisted of 24 semisubmersibles, 10 jackups, 2 drillships, 4 tenders, 6 swamp barges and 2 land rigs. In addition, 3 semisubmersibles and 1 jackup are under construction. Sedco Forex Offshore revenue and pretax operating income in the quarter were $165 million and $29 million, respectively, compared with $292 million and $132 million, respectively, last year.
The merger transaction in which the offshore contract drilling business of Schlumberger will be spun off and combined with Transocean Offshore is expected to be completed by year-end 1999.
RESOURCE MANAGEMENT SERVICES
Resource Management Services recorded a 4% decline in revenue in the third quarter compared with last year. Orders grew 2%. Pretax operating income fell 14%. On October 12, Schlumberger signed a 15-year agreement with PECO PECO Países da Europa Central e Oriental (Portugal)
PECO Philadelphia Electric Company
PECO Public Education Capital Outlay
PECO Pelagic Cormorant (phalacrocorax pelagicus) Energy of Philadelphia, Pennsylvania, whereby RMS (1) (Record Management Services) A file management system used in VAXs.
(2) (Root Mean Square) A method used to measure electrical output in volts and watts.
1. RMS - Record Management Services.
2. will provide metering data and asset management services to PECO. This agreement represents the largest of its kind in the utility market.
In North America, revenue was up 2% compared with last year, while orders increased 26%. Growth in the US and Canada was mostly driven by a still-buoyant housing market and by aggressive infrastructure upgrades by utilities preparing for deregulated markets. Overall water meter sales were strong, notably for products including automatic reading and billing features. Demand was also strong for electricity meters, particularly for the state-of-the-art Centron(a) static meter with built-in AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. (automatic meter reading Automatic meter reading, or AMR, is the technology of automatically collecting data from water meter or energy metering devices (water, gas, electric) and transferring that data to a central database for billing and/or analyzing. ) capabilities.
In Europe, revenue decreased 7% year over year, while orders fell 9% over the same period, mostly due to declines in the German electricity and gas businesses, lower demand for electricity products and services in the UK and continued adverse business conditions in the CIS Cis (sĭs), same as Kish (1.)
(1) (CompuServe Information Service) See CompuServe.
(2) (Card Information S . In France, water activity grew on firmer demand from domestic utilities, offsetting softer demand for gas products. A major energy data management system was begun for the extensive heating network in Stockholm, Sweden. Orders remained high in the electricity market in Spain, in the water market in France and in the gas market in Italy.
In South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , third-quarter revenue fell 18% compared with last year, while orders decreased 7%, reflecting continuing adverse economic conditions in Brazil.
In Asia, revenue grew 91% year over year, and orders rose 39% as a result of renewed growth in the region combined with higher export deliveries. Significant shipments included electricity meters for India, Thailand and Taiwan, and water meters for the Malaysian market.
TEST & TRANSACTIONS
Test & Transactions orders, including customer solutions activities, were up 41% compared with the same quarter last year and up 4% over last quarter. Revenue increased 10% compared with last year and 16% versus the second quarter of 1999. Both orders and revenue figures exclude results from Schlumberger Omnes, formally a joint venture which was 100% acquired during the quarter.
Smart Cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. & Terminals revenue was 5% higher than last year and 6% above last quarter, while orders grew 13% versus last year and 8% over last quarter. Orders for cards were led by mobile communications SIM (subscriber identity module (telecommunications, wireless communications) Subscriber Identity Module - (SIM or "SIM card") A component, usually in the form of a miniature smart-card, that is theoretically tamper-proof and is used to associate a mobile subscriber with a mobile network subscription. ) cards in Asia and Europe, including the first Simera(a) Java(c)-programmable SIM cards orders in Malaysia and Taiwan.
Asian smart card sales grew largely due to the shipment of Qianflex(a) smart cards for several Chinese banks. European card sales increased strongly over the same period last year due to growing demand for Simera cards. Municipalities sales also rose strongly, reflecting high activity from the Paris regional transport authority (RATP RATP Régie Autonome des Transports Parisiens
RATP Reliable Asynchronous Transfer Protocol
RATP Reste Assis T'es Payé
RATP Rentre Avec Tes Pieds
RATP Random Anti Terrorist Program ) and first deliveries for London's Docklands Light Railway (DLR DLR Dollar(s)
DLR Deutsches Zentrum für Luft- und Raumfahrt (German Aerospace Center)
DLR Docklands Light Railway (London, UK)
DLR Dynamic Language Runtime ) ticketing project. New York City New York City: see New York, city.
New York City
City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. selected Schlumberger to provide an integrated on- and off-street parking solution that features the nation's first centralized cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. wireless communication capability.
Automated Test Equipment (ATE) revenue rose 9% compared with the third quarter of 1998. Orders rose 212% year over year, and rose 6% sequentially. ATE experienced growth in orders across all businesses. Test Systems orders surged, reflecting strong demand for new system-on-chip (SOC) testers, as well as multiple orders for test systems for RDRAM (Rambus DRAM) Pronounced "r-d-ram." A dynamic RAM chip technology from Rambus, Inc., Los Altos, CA (www.rambus.com). Rambus licensed its memory designs to semiconductor companies, which manufactured the chips. (d) and DDR (Double Data Rate) Refers to an SDRAM memory chip that increases performance by doubling the effective data rate of the frontside bus. For more details, see SDRAM.
DDR - Double Data Rate Random Access Memory (double data rate) memory devices from North America, Asia and Japan. As memory chip manufacturers begin their ramp to RDRAM production, ATE has taken an early leadership position, with orders from three of the world's five leading manufacturers. The strong level of orders for SOC testers was the highest since the introduction of the initial product. In addition, Verification Systems revenue increased significantly compared with the third quarter of 1998, primarily because the front-end business in North America and Taiwan has grown over the last two quarters.
Leveraging ATE leadership in providing value-added business and engineering services worldwide, Schlumberger launched the industry-first Schlumberger Advanced Business Engineering Resources (SABER(a)) Technology Institute to serve as the premier instructional and certifying body for technical and professional semiconductor engineering and operational personnel.
CHANGE IN LIQUIDITY
Liquidity represents cash plus short-term and long-term investments less debt. A summary of the major components of the change in liquidity follows:
(Stated in millions) Nine Months 1999 1998 Funds provided by:
Net income $ 355 $ 736
third-quarter 1998 charge 90 380
Depreciation and amortization 849 845
Employee stock option plan 71 61
Employee stock purchase plan 71 70
Sale of financial instruments 204 - Funds used for:
Fixed asset additions (991) (1,342)
Businesses acquired (94) (30)
Drilling fluids joint venture (325) -
Dividends paid (307) (286)
Working capital and other (243) (521) Change in liquidity
(320) (87) Liquidity, beginning of period 731
527 Liquidity, end of period $ 411 $ 440
(a) Mark of Schlumberger (b) Mark of Statoil (c) Java is a registered trademark of Sun Microsystems, Inc. (d) RDRAM is a registered trademark of Rambus, Inc. This press release is on the Schlumberger Web site at http://www.slb.com/ir