Schlumberger Announces Second Quarter 2003 Results.Energy Editors/Business Editors NEW YORK--(BUSINESS WIRE)--July 22, 2003 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 second quarter 2003 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 $3.52 billion and income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $142 million, which includes a charge of $81 million related to the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of certain Euro denominated debt. Income from continuing operations (including the charge of $0.14 per share) was $0.24 per share. Excluding the charge, income from continuing operations was $0.38 per share, compared to $0.33 per share last year. Oilfield Services revenue of $2.13 billion increased 8% versus the first quarter of 2003, and increased 9% compared to the second quarter of last year. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $382 million, increases of 21% sequentially and 10% year-on-year. WesternGeco revenue of $306 million was flat versus the first quarter of 2003, and decreased 15% compared to the second quarter of last year. Pretax operating results were a loss of $16 million compared to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations in the first quarter of 2003 and income of $18 million in the second quarter of last year. SchlumbergerSema revenue of $840 million increased 6% sequentially and 16% year-on-year. Pretax operating income was $24 million, an increase of 65% sequentially and $21 million year-on-year. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. recorded a loss of $30 million ($0.05 per share) in the quarter. Net income was $112 million ($0.19 per share). Schlumberger Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Andrew Gould Andrew Gould (December 17, 1946) is chairman and chief executive officer of Schlumberger Limited, a global oilfield services company supplying technology, information solutions and integrated project management. commented, "The second quarter results for Oilfield Services showed strong activity trends in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. land gas market, a return to more normal activity levels in Venezuela and high growth in Mexico. Good performance in the North Sea and West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. was helped by strong technology penetration in the completion and directional drilling Directional drilling (sometimes known as slant drilling outside the oil industry) is the science of drilling non-vertical wells. Directional drilling can be broken down into three main groups: Oilfield Directional Drilling, Utility Installation Directional Drilling (commonly markets. Overall, operating results were accompanied by a continuing overhead reduction that led to very satisfactory sequential pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. growth. In spite of the profitability of the Land and Marine product lines, WesternGeco showed a pretax loss pretax loss A loss reported before tax benefits are considered. due to lower sales of multiclient data. Considerable progress was made with the introduction of Q(a) - Marine technology that continues to show remarkable examples of reservoir quality data for which our customers are recognizing the benefits and are prepared to pay premium pricing Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. . SchlumbergerSema had a solid quarter helped by continued cost cutting in what remains a lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" market for IT services in Europe. Good progress was made in booking orders in line with our objective of achieving double-digit growth in Energy IT services. Improved capital discipline coupled with advances in the disposal of certain non-core assets meant that considerable strides were made towards our declared objective of net debt of $4 billion by the end of 2003. Looking forward, gas drilling in 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. is expected to remain strong for the rest of the year, and may continue next year as the rapid decline rates of new wells reduce production capacity. Recent high re-injection rates into storage suggest short-term demand could be falling as a result of the current high gas prices. In international markets, the continued absence of a large excess production capacity should sustain activity at current levels for the remainder of the year." Other highlights were: -- Schlumberger raised $1.425 billion through an offering of its senior convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. due June 1, 2023. -- Between June 12 and July 22, 2003, certain subsidiaries of Schlumberger launched and concluded a tender offer on three of its outstanding European bonds. The companies bought back $1.3 billion of principal of these bonds for a total cost of $1.5 billion, which includes the premium, and issuing and tender costs. The total charge on the tender was $168 million, of which $81 million was recorded in the second quarter when the first tender closed, with the balance to be recorded in the third quarter of this year. The interest savings generated by this re-financing are estimated at $46 million per annum Per annum Yearly. . -- On June 24, 2003, Schlumberger announced that certain of its subsidiaries signed a definitive agreement with a partnership led by Francisco Partners and Shah Management for the sale of the NPTest business unit. Cash proceeds from the sale will be $220 million and the transaction is expected to close in July. Loss on the sale of $12 million has been recorded as discontinued operations in the second quarter. -- On July 16, 2003, certain subsidiaries of Schlumberger Limited signed a definitive agreement with Itron, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ITRI ITRI Industrial Technology Research Institute (Taiwan, ROC) ITRI Information Technology Research Institute ITRI Inhalation Toxicology Research Institute ITRI International Tin Research Institute Ltd ITRI Information Technology Reuse Initiative ) for the sale of its Electricity Metering business unit. Under terms of the agreement, Itron will pay $255 million in cash at closing. The transaction is subject to Hart-Scott-Rodino clearance, financing, and is expected to close before year-end. Schlumberger expects the transaction to result in a net after tax gain, which will be recorded as discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: operations when the transaction closes. -- The second quarter results included the recognition of the deferred gain of $14 million on the sale of the PIGAP II joint venture, which was part of the August 2001 sale of the gas compression business. Additionally, the results also include a $15 million after tax charge for a patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. settlement related to a business unit planned for sale.
Consolidated Statement of Income (Unaudited)
(Stated in thousands except per share amounts)
Second Quarter Six Months
-----------------------------------------------
For Periods Ended
June 30 2003 2002 2003(5) 2002
----------------------------------------------------------------------
Revenue
Operating $3,515,653 $3,270,547 $6,801,864 $6,468,593
Interest and
other income(1) 39,088 38,176 68,746 72,013
----------------------------------------------------------------------
3,554,741 3,308,723 6,870,610 6,540,606
----------------------------------------------------------------------
Expenses
Cost of goods
sold and
services(2) 2,772,300 2,556,526 5,381,520 5,083,804
Research &
engineering 149,051 154,631 299,002 304,156
Marketing 89,929 86,177 176,685 172,767
General 168,220 158,912 331,867 315,731
Debt
extinguishment
costs(3) 81,473 - 81,473 -
Interest 92,301 96,413 185,164 178,666
----------------------------------------------------------------------
3,353,274 3,052,659 6,455,711 6,055,124
----------------------------------------------------------------------
Income from
continuing
operations
before taxes and
minority interest 201,467 256,064 414,899 485,482
Taxes on income 61,783 65,396 131,502 130,513
----------------------------------------------------------------------
Income from
continuing
operations
before minority
interest 139,684 190,668 283,397 354,969
Minority interest(2) 2,671 (643) 6,920 (7,137)
----------------------------------------------------------------------
Income from
Continuing
Operations 142,355 190,025 290,317 347,832
Income (Loss) from
Discontinued
Operations (30,233) 6,010 (29,033) 20,675
----------------------------------------------------------------------
Net Income $112,122 $196,035 $261,284 $368,507
----------------------------------------------------------------------
Diluted Earnings Per
Share:
Income from
Continuing
Operations $0.24 $0.33 $0.50 $0.60
Income (Loss)
from
Discontinued
Operations (0.05) 0.01 (0.05) 0.04
----- ----- ----- -----
Net Income $0.19 $0.34 $0.45 $0.64
===== ===== ===== =====
Average shares
outstanding 582,475 577,242 582,342 576,774
Average shares
outstanding
assuming dilution 589,024 581,445 586,502 581,275
Depreciation and
amortization
included in
expenses(4) $416,728 $387,680 $801,118 $746,599
----------------------------------------------------------------------
1) Includes interest income of:
-- Second quarter 2003 - $13 million (2002 - $20 million).
-- Six months 2003 - $28 million (2002 - $38 million).
2) The first quarter of 2002 includes a $29 million charge (pretax
$30 million and minority interest credit of $1 million) related to
the financial/economic crisis in Argentina ($0.05 per share -
diluted).
3) Related to the repurchase of Euro denominated bonds ($0.14 per
share - diluted).
4) Including multiclient seismic data costs.
5) Reclassified, in part, for comparative purposes.
Condensed Balance Sheet (Unaudited)
(Stated in
thousands)
Assets June 30, 2003 Dec. 31, 2002
----------------------------------------------------------------------
Current Assets
Cash and short-term investments $3,217,852 $1,736,016
Other current assets 5,790,491 5,449,424
----------------------------------------------------------------------
9,008,343 7,185,440
Fixed income investments, held to maturity 300,000 407,500
Fixed assets 4,448,867 4,663,756
Multiclient seismic data 976,760 1,018,483
Goodwill 4,412,867 4,229,993
Other assets 1,845,869 1,930,023
----------------------------------------------------------------------
$20,992,706 $19,435,195
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued liabilities $4,492,882 $4,580,762
Estimated liability for taxes on income 645,895 625,058
Bank loans and current portion of long-
term debt 2,321,944 1,135,533
Dividend payable 109,891 109,565
----------------------------------------------------------------------
7,570,612 6,450,918
Long-term debt 6,353,471 6,028,549
Postretirement benefits 580,306 544,456
Other liabilities 240,519 251,607
----------------------------------------------------------------------
14,744,908 13,275,530
Minority interest 547,433 553,527
Stockholders' Equity 5,700,365 5,606,138
----------------------------------------------------------------------
$20,992,706 $19,435,195
----------------------------------------------------------------------
Net Debt (Unaudited)
Net Debt represents gross debt less cash, short-term investments
and fixed income investments, held to maturity. Details of the Net
Debt follows:
(Stated in millions)
Six Months 2003
----------------------------------------------------------------------
Net Debt, beginning of period $(5,021)
Net income from continuing operations 290
Debt extinguishment costs 81
Depreciation and amortization 801
Change in working capital (485)
Capital expenditures (550)
Dividends paid (218)
Employee stock plans 100
Sale of Grant Prideco stock 106
Other 58
Translation effect on net debt (320)
---------
Net Debt, end of period $(5,158)
=========
(Stated in millions)
Components of Net Debt June 30, 2003 Dec. 31, 2002
----------------------------------------------------------------------
Cash and short-term investments $3,218 $1,736
Fixed income investments, held to
maturity 300 408
Bank loans and current portion of long-
term debt (2,322) (1,136)
Long-term debt (6,354) (6,029)
-------------- --------------
$(5,158) $(5,021)
============== ==============
At June 30, 2003, both short-term investments and the current
portion of long-term debt were increased by approximately $1.3 billion
as the repurchase of certain European bonds with the proceeds of the
convertible debentures was completed in July.
Business Review
(Stated in millions) Second Quarter Six Months
-------------------- ----------------------
2003(2) 2002 %chg 2003(2) 2002(2) %chg
-------------------- ----------------------
Oilfield Services
-----------------
Operating Revenue $2,127 $1,960 9% $4,104 $3,863 6%
Pretax Operating
Income(1) $382 $347 10% $697 $654 7%
WesternGeco
-----------
Operating Revenue $306 $360 (15)% $613 $745 (18)%
Pretax Operating
Income (Loss)(1) $(16) $18 - $(16) $65 -
SchlumbergerSema
----------------
Operating Revenue $840 $727 16% $1,633 $1,433 14%
Pretax Operating
Income(1) $24 $4 - $39 $4 -
Other(3)
--------
Operating Revenue $316 $291 8% $597 $552 8%
Pretax Operating
Income(1) $14 $5 - $16 $2 -
1) Pretax operating income represents income before taxes and
minority interest, excluding interest income, interest expense and
amortization of intangibles.
2) The second quarter of 2003 excludes $81 million of debt
extinguishment costs. The first quarter of 2002 excludes an
aggregate $30 million charge related to the financial/economic
crisis in Argentina.
3) Principally comprises the Cards, Terminals and Meters North
America activities.
Oilfield Services (Excluding WesternGeco) Second quarter operating revenue of $2.13 billion increased 8% sequentially and 9% year-on-year. In comparison, the M-I rig count decreased 2% sequentially, but increased 19% year-on-year. Pretax operating income of $382 million rose 21% sequentially and 10% year-on-year. The combination of increased activity in all Areas and continued cost reduction efforts across the organization resulted in the strong sequential improvement in pretax operating income. North America Revenue of $638 million increased 7% sequentially and 14% year-on-year as the M-I rig count decreased 6% sequentially, but increased 30% year-on-year. Pretax operating income of $92 million grew 26% sequentially and 20% year-on-year. Record low gas storage levels in the US drove significant drilling activity in the US Land GeoMarket, which recorded strong year-on-year and sequential growth, while deep water Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east activity remained relatively flat. An extended winter campaign resulted in higher year-on-year activity in Canada, which decreased sequentially, due to spring break-up. PowerDrive(a) sales continued strong in most GeoMarkets, and field trials of the PowerDrive Xceed(a) fully rotational steerable system in North America indicate that it can reduce drilling time by as much as 50 percent. DeepSTIM III, a fit-for-purpose stimulation vessel equipped with the latest advanced stimulation and information technology, was launched in the Gulf of Mexico in June. Well Services Well services is a department within a petroleum production company through which matters concerning existing wells are handled. Having a shared well services department for all (or at least multiple) assets operated by a company is seen as advantageous as it allows the pooling of introduced Viscoelastic Adj. 1. viscoelastic - having viscous as well as elastic properties natural philosophy, physics - the science of matter and energy and their interactions; "his favorite subject was physics" Diverting di·vert v. di·vert·ed, di·vert·ing, di·verts v.tr. 1. To turn aside from a course or direction: Traffic was diverted around the scene of the accident. 2. Acid(a) (VDA VDA Vendor Driven Architecture VDA Verband Der Automobilindustrie E.V. (German Automobile Industry Association) VDA Virginia Department for the Aging VDA Ovda, Israel (Airport Code) VDA Visual Data Analysis ) treatments, an advanced acidizing system for carbonate carbonate (kär`bənāt', –nət), chemical compound containing the carbonate radical or ion, CO3−2. Most familiar carbonates are salts that are formed by reacting an inorganic base (e.g. formations which provides significantly improved results over previously used diversion-based acid treatment systems. 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. Revenue of $349 million was up 20% sequentially and 12% year-on-year. In contrast, the M-I rig count increased 9% sequentially and 24% year-on-year. Pretax operating income of $59 million rose 74% sequentially and 60% year-on-year. Record growth in Mexico reflected the continuing increase in Integrated Project Management activity in the Burgos basin and Chicontepec project to meet Mexico's heightened demand for gas energy and light oil output. Increased activity in Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. and Latin America South, and the resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of activity focused on restoring production in Venezuela also contributed to the strong second quarter performance. All technology segments contributed to increased revenue during the quarter, with notable success for Drilling & Measurements activity utilizing geosteering and PowerDrive systems. Horizontal wells in Brazil were drilled and logged with GeoVISION(a) imaging tools to provide the unique benefit of steering The process whereby builders, brokers, and rental property managers induce purchasers or lessees of real property to buy land or rent premises in neighborhoods composed of persons of the same race. wells in the optimum productive reservoir layer. Real-time integration of resistivity resistivity Electrical resistance of a conductor of unit cross-sectional area and unit length. The resistivity of a conductor depends on its composition and its temperature. images with PERFORM(a) drilling optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. transmitted via InterAct(a) real-time communication enabled fast, lower risk well placement in complex intervals. Europe/CIS/West Africa Revenue of $615 million increased 5% both sequentially and year-on-year compared with the M-I rig count (excluding Russia) which dropped 1% sequentially and 10% year-on-year. Pretax operating income of $114 million grew 15% sequentially and 3% year-on-year. In the North Sea, increased demand for Integrated Project Management, Well Completions & Productivity and Well Services led to strong sequential growth in the United Kingdom/Ireland GeoMarket. Additionally, Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. , Western and Southern Africa
Well Completions & Productivity continued to demonstrate its tubing conveyed perforating (TCP (1) (Transmission Control Protocol) The reliable transport protocol within the TCP/IP protocol suite. TCP ensures that all data arrive accurately and 100% intact at the other end. ) expertise by offering highly differentiated solutions, such as the OrientXact(a) TCP gun orientation system that North Sea clients have used to improve productivity and prevent sand production in extended-reach and horizontal wells. OrientXact(a), combined with PowerJet(a) shaped charge A charge shaped so as to concentrate its explosive force in a particular direction. technology, has become a major commercial success in the North Sea. In the UK, multiple Drilling & Measurements contracts were also awarded in the second quarter. Middle East & Asia Revenue of $509 million increased 4% sequentially and 5% year-on-year as the M-I rig count rose 4% sequentially and 8% year-on-year. Pretax operating income of $134 million increased 16% sequentially and 12% year-on-year. The pretax increase partially reflected a gain of $4 million related to the sale of a rig. Almost all GeoMarkets grew year-on-year, notably the Arabia GeoMarket where drilling activity increased. This was partially offset by declines in Brunei, Malaysia, the Philippines and the Persian Gulf Persian Gulf, arm of the Arabian Sea, 90,000 sq mi (233,100 sq km), between the Arabian peninsula and Iran, extending c.600 mi (970 km) from the Shatt al Arab delta to the Strait of Hormuz, which links it with the Gulf of Oman. . Sequential growth was led by China with strong demand for Wireline and Well Services. Well Completions & Productivity displayed impressive growth, including the award of the Cuulong contract, the first completions project for Schlumberger in Vietnam. Several technologies were successfully introduced this quarter, including the Wireline Cased Hole Formation Resistivity tool in the Egypt and India GeoMarkets. Drilling & Measurements introduced PowerDrive Xceed in the Persian Gulf GeoMarket, and Well Services introduced VDA in the Arabia and India GeoMarkets. Drilling & Measurements also introduced PowerDrive Xtra rotary Rotary can refer to:
Highlights -- Shell's BMC-10 deepwater exploration well in Brazil used Schlumberger Directional Drilling, Logging While Drilling Logging While Drilling is a technique of measuring geological formation properties in real-time while drilling an oil well. Description Logging While Drilling (LWD and Measurement While Drilling Measurement while drilling (MWD) tools are used by drilling rigs to transmit information in real time from the tool, located near the drill bit, to the surface. Types of information sent Directional information services in the final section of the well, producing several records including the deepest water depth drilled in Brazil, the deepest water depth drilled by Shell worldwide, and the fourth deepest water depth drilled worldwide. -- Schlumberger Information Solutions Schlumberger Information Solutions (SIS) functions as an operating unit of the global oil services giant Schlumberger Limited. SIS products consist of software developed by Schlumberger itself, as well as products acquired from GeoQuest (GeoFrame), Iron Mountain (eSearch), Merak (SIS) is integrating its advanced Merak Value and Risk management tools with Rose and Associates LLP's risk estimating methodology to provide a seamless exploration and new venture value management workflow that enables customers to make optimum exploration decisions. -- Schlumberger is providing Hocol, S.A. with remote real-time well pump monitoring and control service, including its new espWatcher(a) service, which delivers reliable and secure remote connectivity and viewing of Schlumberger Reda ESP (1) (Enhanced Service Provider) An organization that adds value to basic telephone service by offering such features as call-forwarding, call-detailing and protocol conversion. variable speed drive controllers; remote satellite-based data acquisition; immediate alarm and alert callout notification; and remote pump start-up, speed control and resolution of pump problems. -- Norway's Revus Energy AS contracted SIS to provide Europe's first Living Model(a) workflow solution to integrate new data, rapidly update understanding of the subsurface sub·sur·face adj. Of, relating to, or situated in an area beneath a surface, especially the surface of the earth or of a body of water. Adj. 1. and reduce uncertainty, which are becoming increasingly important as the industry moves toward the true SmartField(a). WesternGeco Revenue of $306 million was flat sequentially and decreased 15% year-on-year. Pretax operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $16 million compared to a break-even in the first quarter of 2003 and a profit of $18 million in the second quarter last year. The continued rationalization rationalization, in psychology: see defense mechanism. of Land seismic operations in North America and lower activity in the Middle East contributed to the year-on-year revenue decline, while sequential results were impacted by increased Marine activity in Europe, Caspian and Middle East, offset by seasonal declines in multiclient sales in North and 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. and West Africa, and the end of the Land acquisition winter season in Alaska. Both sequential and year-on-year pretax results were negatively impacted by lower sales of the multiclient library in North America, partially offset by the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and cost-cutting initiatives that were implemented in the second quarter. Including multiclient pre-commitments, the total backlog at the end of the second quarter stood at $291 million. The Marine seismic backlog is strong in Mexico, Asia/Pacific and Europe, with the North Sea fully booked for the 2003 season. Land backlog is still strong in the Middle East, and Data Processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a remains steady. Q-Marine utilization will increase during Q3, with the majority of the working Q-equipped fleet employed on third-party contract work. Q technology revenue increased in the second quarter, with several new contracts underway, including a multiproject Q-Marine contract covering three ExxonMobil assets in West Africa, the Gulf of Mexico and the North Sea. WesternGeco has begun to license reservoir quality Q data - which show details invisible on conventional 3D seismic - as part of a highly focused multiclient program over some of the most prospective acreage in the Gulf of Mexico. SchlumbergerSema Operating revenue of $840 million in the second quarter increased 6% sequentially and 16% year-on-year. The improvements are mainly due to the strengthening of the European currencies against the US dollar, with a positive impact of $15 million sequentially and $94 million year-on-year. Besides the currency impact, the year-on-year growth was mainly due to expanding activity in the Public Sector in the UK. Consulting & Systems Integration revenue was 8% higher sequentially and 16% higher year-on-year, reflecting the stronger currencies in Europe. Network Information Solutions revenue improved 3% sequentially and 22% year-on-year. The year-on-year increase was mainly due to the effect of the strengthened Euro coupled with a new contract in UK for the Department of Work and Pensions. The Energy segment revenue of $197 million grew 4% sequentially, demonstrating progress that SchlumbergerSema is making in this industry. Illustrating this breakthrough is the signature of a strategic contract with a leading electricity/utility company in France; the selection by Perenco, an independent upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger oil and gas company based in London and Paris, of the Schlumberger DeXa.Net Remote Connectivity solution to link all its offshore and land-based facilities across West Africa; and the award by Petrobras Rio of a two-year desktop support outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. contract. Additionally, a partnership was signed with Hewlett-Packard to jointly pursue opportunities in the Americas for Oil & Gas. Pretax operating income of $24 million increased $10 million, or 65%, sequentially and $21 million year-on-year. The year-on-year improvement reflected significant indirect cost reduction programs carried out throughout 2002 particularly in North America and Asia, coupled with higher profitability on North American contracts. Europe, Middle East and Africa Revenue of $658 million increased 9% sequentially and 19% year-on-year. Both year-on-year and sequential revenue growths reflected the positive impact of the European currencies strongly appreciating against the US dollar. Additionally, the UK also contributed to the overall improvement due to new Public Sector contracts such as Department of Work and Pensions, Department of Trade and Industry The Department of Trade and Industry was a United Kingdom government department which was disbanded with the announcement of the creation of the Department for Business, Enterprise and Regulatory Reform on 28 June 2007[1]. , and in the Transport segment in the UK for the Government Vehicle and Operator Services Agency The Vehicle and Operator Services Agency (VOSA) provides a range of licensing, testing and enforcement services with the aim of improving the roadworthiness standards of vehicles, ensuring the compliance of operators and drivers, and supporting the independent Traffic Commissioners. , and the Network Rail. Lackluster activity in France, mostly due to the decline in the French IT services industry leading to an overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. of consulting and systems integration specialists, coupled with a depressed market Depressed market Market in which supply overwhelms demand, leading to weak and lower prices. in Germany and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , principally in Telecom, partially offset the Area's yearly improvement. Furthermore, due to overcapacity in the IT market, Sweden GeoMarket activity decreased significantly, mainly in Telecom and Systems Integration. Pretax operating income of $25 million increased $12 million, or 87%, sequentially, but decreased 25% year-on-year. Despite revenue increasing over last year, pretax operating income decreased mainly in Sweden and France, suffering from lower daily fee rates on System Integration contracts and overcapacity. The sequential profitability increase was primarily due to contracts in the UK, and in Nigeria for the African Games. North and South America Revenue of $132 million decreased 3% sequentially and 7% year-on-year, mostly due to an overall sluggish IT services environment, as well as the deliberate exiting of certain unprofitable segments, principally in Telecom. Energy remained the main Area contributor, and there was strong growth in the Public Sector. Pretax operating income of $4 million decreased $1 million sequentially, but increased $17 million from a loss of $14 million year-on-year. Despite revenue decreasing year-on-year, pretax operating income increased mainly due to systematic cost cutting programs carried out in North America. In addition, the Area experienced gross margins improvement year-on-year as a result of an intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: focus on profitable projects. Asia Revenue of $51 million decreased 3% sequentially and 2% year-on-year. The decreases are mainly due to the impact of SARS, which significantly affected the activity during the quarter with project reductions and postponements, and partially due to lower activity in Japan. Pretax operating income of $7 million decreased $3 million sequentially, but increased $4 million year-on-year. Despite the decline in revenue year-on-year, Asia operating income increased mainly due to indirect cost savings and improved gross margins. The sequential decline is mainly due to lower activity in Japan and the exceptional release of employee-related cost accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. during the first quarter. Telecom Products Revenue of $17 million increased 34% sequentially, but decreased 25% year-on-year. Sequentially, the revenue increase was mainly due to higher billing systems maintenance and support contracts coupled with higher messaging contracts. Pretax operating loss of $3 million improved by $2 million sequentially and $3 million year-on-year. Despite a lower activity level, the improvement came as a consequence of reductions in R&E centers in France and North America. Highlights -- As a result of the energy market deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. in Belgium, SchlumbergerSema and INTER-REGIES have set up an innovative IT-based clearing house system that will provide secure exchange and processing of information between key energy market players. -- SchlumbergerSema signed an agreement with Sprint to provide systems integration, data migration and network inventory management services over the next four years to support Sprint's migration from a circuit-switched telephone network to a packet network. -- Gartner, Inc. ranked SchlumbergerSema among the fastest growing companies in its "Worldwide Top 25 IT Management Services Vendors" report, with SchlumbergerSema emerging as the second-fastest growing company among the leading ten companies on the list. Other Revenue for Cards of $162 million increased 10% sequentially and was flat year-on-year. The sequential increase was mostly due to Mobile Telecom activity in Asia, with over 28 million cards shipped during the quarter, and higher banking cards deliveries in the UK and in Belgium. Pretax operating income for Cards was $8 million compared to $500,000 in the first quarter 2003 and $7 million last year. About Schlumberger Schlumberger is a global oilfield and information services See Information Systems. company with major activity in the energy industry. The company employs 78,000 people of more than 140 nationalities working in 100 countries and comprises three primary business segments. Schlumberger Oilfield Services Schlumberger Oilfield Services, a division of Schlumberger Limited, is the world’s largest supplier of exploration and production (E&P) services, solutions and technology to the international petroleum industry. is the world's premier oilfield services company supplying a wide range of technology services and solutions to the international oil and gas industry. WesternGeco, jointly owned with Baker Hughes Baker Hughes NYSE: BHI is the world's third-largest oilfield services company behind Schlumberger & Halliburton, its main competitors. Baker Hughes provides the world's oil & gas industry with products and services for drilling, formation evaluation, completion and production. , is the world's largest and most advanced surface seismic company. SchlumbergerSema is a leading supplier of IT consulting, systems integration, and network and infrastructure services to the energy industry, as well as to the public sector, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and finance markets. In 2002, Schlumberger operating revenue was $13.2 billion. For more information, visit www.slb.com. (a) Mark of Schlumberger |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion