Schlumberger Announces Third-Quarter 2006 Results.HOUSTON -- 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) ) today reported third-quarter 2006 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 $4.95 billion versus $4.69 billion in the second quarter of 2006 and $3.70 billion in the third quarter of 2005. 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 , before charges and credits, reached $1.00 billionCoan increase of 11% sequentially and 91% year-on-year. Earnings-per-share diluted, before charges and credits, were $0.81 versus $0.73 in the previous quarter and $0.43 in the third quarter of 2005. Income from continuing operations, including charges and credits, was $1.00 billion or $0.81 per-share diluted versus $0.69 in the previous quarter and $0.44 in the third quarter of 2005. Oilfield Services revenue of $4.30 billion increased 4% sequentially and 32% year-on-year. Pretax business segment 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. of $1.21 billion increased 8% sequentially and 68% year-on-year. WesternGeco revenue of $659 million increased 17% sequentially and 51% year-on-year. Pretax business segment operating income of $242 million increased 35% sequentially and 183% year-on-year. 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, "Continuing strength in seismic activity and increased demand for drilling services and well placement technologies were the highlights of the robust performance in the third quarter. The outstanding results at WesternGeco, where revenues grew 17% sequentially, were due to significant strength in multiclient data sales and high marine utilization. With more than 85% of WesternGeco acquisition activity now focused on exploration and appraisal operations, the industry's effort to replace and increase reserves is now clearly underway. Growth in the quarter was broad based, with significant strength in Canada following the spring break-up, and on land in the US where pricing remained strong and pressure-pumping backlogs were unchanged. These improvements were supported by growth in the Caspian, the North Sea and the Arabian GeoMarkets. Burgeoning exploration activity in Vietnam and Eastern Russia Eastern Russia is the region of Russia between the Ural Mountains and the Pacific Ocean.
Drilling & Measurements PowerDrive and Scope technologies saw further growth backed by strong technical and operational performance. The range of both product lines is unmatched in the industry and their combination enables increasingly complex well profiles to be drilled. As a result these services continue to expand their range and reach as the industry seeks to improve performance and mitigate risk. Other Schlumberger Technologies that benefited from the quarter's overall activity pattern included 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 , Completion Systems and Data & Consulting Services. High levels of natural gas storage 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. with consequent volatility in the price of natural gas have recently begun to impact activity, particularly in areas of higher-cost coal bed methane and shallow gas production in Canada. This has not yet materially impacted our activity, however if the coming winter fails to stimulate strong natural gas demand there is a growing likelihood of excess equipment capacity in the pressure pumping business at some point in 2007. Activity growth elsewhere for both oil and gas will remain strong as our customers continue to fight decline curves and bring in new fields." Other Events * As part of the current 40 million-share buy-back program announced in the first quarter of 2006, Schlumberger repurchased 8.1 million shares during the quarter for a total amount of $482 million, at an average price of $59 per share. Under this buy-back program 11.7 million shares have been repurchased to date. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] There were no charges or credits in the third quarter of 2006. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] In addition to financial results determined in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) this Third-Quarter Earnings Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures: [TABLE OMITTED] [TABLE OMITTED] Pretax operating income represents the Segments' income before taxes and minority interest. The pretax operating income excludes corporate expenses, interest income, interest expense, amortization of certain intangible assets, interest on post-retirement benefits, stock-based compensation costs and the charges and credits described on page 4, as these items are not allocated to the segments. Oilfield Services Third-quarter revenue of $4.30 billion was 4% higher sequentially and 32% higher year-on-year. Overall sequential revenue increases were highest in the Canada, US Land, Arabian and Caspian GeoMarkets. Marked increases were also experienced in the Eastern Russia and Thailand/Vietnam GeoMarkets. Demand was particularly strong for Drilling & Measurements, Well Services, Completion Systems and Data & Consulting Services technologies. Pretax operating income increased 8% sequentially and 68% year-on-year, driven mainly by higher activity in the US Land and Canada GeoMarkets; strengthening activity in the North Sea, Caspian, Arabian, Thailand/Vietnam, Indonesia and India GeoMarkets; and a more favorable mix of activity in 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. . These factors resulted in sequential growth of 99 basis points (bps) in pretax operating margins to reach 28.2%. Advanced Schlumberger technologies saw continued demand during the quarter. Since its launch in 2000, the PowerDrive(a) rotary-steerable system has experienced rapid success, as demonstrated by total footage drilled and year-on-year increase in reliability, which has doubled since the end of last year. Continuing this rapid technology uptake, Schlumberger recently commercialized PowerDrive Xceed(a) 900, which provides "point-the-bit" rotary steerable capability in hole sizes ranging from 12 1/4" to 17 1/2". This complements the existing Xceed(a) 675 "point-the-bit" technology that has been available for hole sizes from 8 1/2" to 9 7/8" for several years. In addition, the next-generation Drilling & Measurements Scope(a) family of logging-while-drilling services, which offer improved drilling efficiency and enhanced formation evaluation In petroleum exploration and development, formation evaluation is used to determine whether a potential oil or gas field is commercially viable. Essentially, it is the process of "recognizing a commercial well when you drill one". , continues to gain industry acceptance as customers realize step changes in well-placement accuracy. Since its launch in late 2004, Scope technology has been deployed in 20 of our 28 GeoMarkets and is now utilized by 14 of the top 20 Schlumberger customers. During the quarter, Schlumberger entered into an agreement with Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation). Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. and Intel to develop a "first mile" wireless service for oilfield operations. "First mile" refers to the critical connectivity of drilling sites or producing fields into a wider network. The service will help operators better manage drilling and production operations through an innovative wireless fabric of sensors, distributed computing (1) The use of multiple computers networked throughout a wide geographical area, or the world via the Internet, in order to solve a single problem. See grid computing. (2) The use of multiple computers in an enterprise rather than one centralized system. networks and service-oriented applications. North America Revenue of $1.35 billion increased 6% sequentially and 42% year-on-year. Pretax operating income of $410 million increased 9% sequentially and 88% year-on-year. Sequentially, Canada recorded strong revenue growth from higher activity following the spring break-up, and growth in US Land resulted from sustained demand for Well Services, Drilling & Measurements and Wireline technologies. This was partially offset by slightly reduced activity in the US Gulf Coast due to operator caution in anticipation of the hurricane season Hurricane season refers to a period in a year when hurricanes usually form. For more information see: Tropical cyclone#Times of formation. For a lists of past seasons, see:
Sequential Area pretax operating margins expanded by 81 bps, primarily driven by higher operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. , sustained pricing levels and a favorable mix of higher-margin activity in Canada and US Land. This growth was partially offset by operator caution in the US Gulf Coast in anticipation of the hurricane season and by reduced activity in Alaska. In US Land, a West Texas operator awarded Schlumberger a contract for advanced lifting services to optimize production on more than 100 wells. The espWatcher(a) surveillance system for electrical submersible pumps (ESPs) was deployed, allowing surveillance engineers at the Schlumberger Production Center of Excellence in Oklahoma City Oklahoma City (1990 pop. 444,719), state capital, and seat of Oklahoma co., central Okla., on the North Canadian River; inc. 1890. The state's largest city, it is an important livestock market, a wholesale, distribution, industrial, and financial center, and a farm to monitor and analyze flow rates of underperforming wells. Data acquired by the espWatcher enabled real-time performance diagnosis resulting in a remedial acid stimulation program that increased production rates by nearly 30% to reach 580 bbl/d. Elsewhere in US Land, a South Texas operator deployed the Schlumberger resistivity-while-drilling service mcrVISION(a) in combination with the SlimPulse(a) slim MWD MWD Metropolitan Water District of Southern California MWD Measurement While Drilling (oil drilling) MWD Morgan Stanley Dean Witter (stock symbol) MWD Molecular Weight Distribution MWD Military Working Dog tool on their horizontal-drilling campaign. Designed specifically to enable retrieval and reconnection without pulling the bottom hole assembly (BHA BHA butylated hydroxyanisole, an antioxidant used in foods, cosmetics, and pharmaceuticals that contain fats or oils. BHA n. A white, waxy phenolic antioxidant used to preserve fats and oils, especially in foods. ) from the well, this tool combination helped mitigate operational risk by reducing the operator's lost-in-hole costs by 75% when the BHA became stuck. In the deepwater 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 , Schlumberger successfully completed the world's most extensive 3D vertical seismic profile In geophysics, Vertical Seismic Profile (VSP) is a technique of borehole seismic measurements used for correlation with surface seismic data. Hydrophones in the borehole record reflected seismic energy originating from a seismic source at the surface. (VSP VSP - Very Simple Prolog+. ) survey for Hess Corporation The Hess Corporation (NYSE: HES) is an integrated oil company based in New York City. The company changed its name from Amerada Hess as of May 8, 2006. The company explores, produces, transports, and refines oil. in their lower Tertiary Pony exploration well. The well was drilled in 3,497 ft of water and the 3D VSP was recorded at more than 18,000 ft beneath the sea floor to image the reservoir below the saltCoa key technical challenge. The 3D VSP was acquired using the 40-shuttle VSI VSI Vinyl Siding Institute VSI Voltage Source Inverter VSI Virtual Switch Interface VSI Vertical Speed Indicator VSI Voluntary Separation Incentive VSI Virtual Socket Interface VSI Vision Systems International VSI Vertical Shaft Impactor (a) Versatile Seismic Imager tool. Also in the deepwater Gulf of Mexico, BP extended their contract for well testing services. The extension awarded Schlumberger the operations and maintenance of the well test facility permanently installed onboard the drillship Discoverer Enterprise. The facility has the capacity to handle production rates up to 18,000 bbl/d or 60 MMcf/d. Latin America Revenue of $629 million decreased 6% sequentially but increased 11% year-on-year. Pretax operating income of $130 million increased 1% sequentially and 41% year-on-year. Sequentially, revenue declined in the Area as the positive effects of higher Drilling & Measurements and Wireline activity and stronger product sales in the Venezuela/Trinidad & Tobago GeoMarket, together with higher demand for Well Services and Well Testing technologies in the Peru/Colombia/Ecuador GeoMarket, were unable to counter client budget-related activity declines in the Mexico GeoMarket. Reduced drilling activity, coupled with the completion of an IPM (1) (Impressions Per Minute) Generally refers to document scanners that scan both sides of the page at the same time. Thus, a scanner that scans at 100 ppm (pages per minute) can provide 200 ipm. See ppm and document scanner. project in the Latin America South GeoMarket also contributed to the overall revenue decline. In Venezuela, discussions regarding new contracts for the drilling barges work and the settlement of certain outstanding receivables had progressed at the end of the quarter. Pending finalization of these new contracts, revenue recognition was deferred on certain work performed during the quarter. The strong sequential gain in pretax operating margins of 135 bps was driven by a more favorable activity mix in both the Latin America South and Venezuela/Trinidad & Tobago GeoMarkets and improved margins on integrated projects in Mexico, primarily as a result of reduced levels of lower margin third-party billings. In Reynosa, Mexico, remote 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 operations were directed simultaneously on five wells from the Operations Support Center(a), which opened in March of this year, to support the Burgos IPM development project. With the decision-making process centralized at the facility, more efficient assignments of personnel improved the level of operational support and reduced the number of directional drilling engineers required on site. Offshore Brazil, the QuickSilver quicksilver: see mercury. (1) (QuickSilver Technology, Inc., San Jose, CA, www.qstech.com) A mobile communications company that specializes in a reconfigurable logic chip for cellphones and PDAs. See adaptive computing. Probe(a) focused sampling technology successfully collected multiple oil samples from a zone of medium permeability in a deepwater exploration well for Petrobras. The laboratory results showed less than 0.2% contamination. Europe/CIS/Africa Revenue of $1.27 billion increased 7% sequentially and 34% year-on-year. Pretax operating income of $335 million increased 14% sequentially and 67% year-on-year. Sequential revenue growth in the Area was driven by higher activity in the Caspian and Eastern Russia GeoMarkets, and strong demand for higher-margin technologies in the North Sea. Overall growth in Russia resulted from higher land drilling activity and the seasonal pick-up in offshore activity in Sakhalin. Sequential growth was further boosted by higher rig count in Nigeria and pricing gains and extended Wireline activities in the West and South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. GeoMarket. Sequential gains in pretax operating margin of 156 bps resulted from a more favorable mix of technologies offshore in the Caspian, pricing and technology gains in the North Sea and stronger returns on higher-margin offshore activities in the Eastern Russia GeoMarket. In Sakhalin, Russia, EcoScope(a) multifunction logging-while-drilling, TeleScope(a) high-speed telemetry telemetry Highly automated communications process by which data are collected from instruments located at remote or inaccessible points and transmitted to receiving equipment for measurement, monitoring, display, and recording. and VISION(a) imaging-while-drilling services enabled faster rate-of-penetration and acquired high-quality LWD LWD Labor and Workforce Development (State of New Jersey) LWD Logging While Drilling (oil drilling industry) LWD Large Woody Debris LWD Little White Dress LWD Life With Derek data for Elvary Neftegaz. The resultant time savings from Scope technology, slimhole well design, bit performance and reduced non-productive time allowed the customer to improve drilling performance by 100% from 2005 to 2006 during the four-month weather window. In the UK sector of the North Sea, Schlumberger was awarded a contract for 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. systems and associated monitoring and control services for the first stage of the CNR See riser card. CNR - Communication and Network Riser International (UK) Ltd. Lyell project. When completed, this artificial lift project will be the largest subsea Subsea is a general term frequently used to refer to equipment, technology, and methods employed to explore, drill, and develop oil and gas fields that exist below the ocean floors. This may be in "shallow" or "deepwater". deployment of dual ESPs in the North Sea. On a Shell Aragorn high-pressure, high-temperature exploration well in the UK sector of the North Sea, Schlumberger deployed a custom-designed FlexSTONE HT(a) cementing system. Due to the hostile nature of this well, the mechanical properties of the cement were optimized to suit the harsh downhole conditions and ensure long-term zonal isolation. In Nigeria, Chevron used the PeriScope periscope (pĕr`ĭskōp) [Gr.,=view around], instrument to enable a person to see objects not in his direct line of vision or concealed by some intervening body. Its essential parts are a tube, prisms, lenses, mirrors, and an eyepiece. 15(a) directional deep electromagnetic imaging-while-drilling service in multiple offshore wells to identify reservoir thickness, oil-water contact and sub-seismic faults while drilling. The deployment of this technology contributed to the addition of three million barrels of recoverable reserves to the field. Middle East & Asia Revenue of $1.02 billion increased 5% sequentially and 32% year-on-year. Pretax operating income of $332 million increased 3% sequentially and 47% year-on-year. The sequential revenue growth resulted from higher rig count and gas exploration in the Arabian GeoMarket; exploration activity in the Thailand/Vietnam GeoMarket; increased drilling activity in the Australia/New Zealand/Papua New Guinea New Guinea (gĭn`ē), island, c.342,000 sq mi (885,780 sq km), SW Pacific, N of Australia; the world's second largest island after Greenland. GeoMarket together with higher artificial lift product sales in the East Mediterranean GeoMarket. Sequential pretax operating income growth was driven by expansion of higher-margin Drilling & Measurements Scope and PowerDrive services, Well Testing activities and Completion Systems product sales. The growth was attenuated Attenuated Alive but weakened; an attenuated microorganism can no longer produce disease. Mentioned in: Tuberculin Skin Test attenuated having undergone a process of attenuation. by lower-margin product sales in China and the end of a deepwater Well Services project in Malaysia. In China, greater acceptance of Wireline ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. (a) Analysis Behind Casing technologies continued during the quarter due to an upsurge of reservoir monitoring operations for PetroChina. Performed initially on the Huabei oilfield, the ABC campaign has widened to other mature fields including Daqing, Xinjiang and Qinghai with 53 wells logged by the end of the quarter. Additionally, PetroChina announced plans to apply ABC technology to its other fields. In the Malaysian-Thailand Joint Development Area, the recently commercialized Isolation Scanner(a) cement evaluation service was run on two highly deviated wells for Carigali Hess Operating Company operating company A business that engages in transactions with outsiders. Sdn. Bhd. The Isolation Scanner was deployed with the MaxTRAC(a) downhole well tractor system and provided a much clearer understanding of the downhole environment. Isolation Scanner is the latest member of the deep-reading Scanner Family(a) of characterization measurements. In Egypt, Schlumberger PowerJet Omega(a) deep-penetrating shaped charges were used on two re-completion wells for Eshpetco, resulting in production rates 50% above operator expectations. Deeper penetration translates into increased well production and improved well efficiencyCodirectly impacting lifting costs. WesternGeco Third-quarter revenue of $659 million was 17% higher sequentially and 51% higher compared to the same period last year. Pretax operating income of $242 million improved 35% sequentially and 183% year-on-year. The sequential revenue increase was driven by significant Multiclient sales arising from the E-Dog survey in North America as well as Multiclient sales in other regions following the seasonal low of the second quarter. Marine revenue increased through higher pricing and utilization, which reached 97% during the quarter, with the bulk of the marine fleet operating in Asia, Europe and North America. Land revenue declined due to weather-related shutdowns 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. and the Middle East coupled with the completion of projects in Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. .
During the quarter, WesternGeco mobilized a new Q-Land(a) crew in Libya
and relocated the Q-Land crew from Egypt to Qatar following the
completion of projects in the Western Desert. 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 revenue
decreased with a reduction in activity in North America where resources
were focused on the processing of multiclient surveys.Pretax operating margins improved sequentially by 482 bps to reach 36.8%. The higher utilization and improved pricing in Marine drove strong sequential improvement in pretax operating income. Multiclient margins increased on higher revenue following the seasonal reduction in activity during the second quarter. This growth was partially offset by Land due to lower utilization, while Data Processing remained flat. In North America, WesternGeco completed the world's largest and most complex depth migration project. This 20,250 sq km project named E-Dog extends over 800 blocks in the deepwater Gulf of Mexico and dramatically improves the sub-salt imaging in an area that has historically been technically challenging. Contracts awarded during the quarter included a two-year extension of the Q-Marine(a) contract with India's Oil and Natural Gas Corporation Oil and Natural Gas Corporation Limited (ONGC) (incorporated on June 23, 1993) is an Indian public sector petroleum company. It is a Fortune Global 500 company, and contributes 77% of India's crude oil production and 81% of India's natural gas production. Ltd. to include additional exploration and development seismic programs, as well as a new contract with Petronas Carigali to conduct a number of Q-Marine surveys over various fields offshore Malaysia. WesternGeco is conducting the first-ever 3D over/under configuration in the Norwegian sector of the Barents Sea Barents Sea, arm of the Arctic Ocean, N of Norway and European Russia, partially enclosed by Franz Josef Land on the north, Novaya Zemlya on the east, and Svalbard on the west. for Statoil and its partners. This survey design, enabled through the unique capabilities of Q-Marine, extends the frequency bandwidth to better image the complex geology. About Schlumberger Schlumberger is the world's leading oilfield services company supplying technology, information solutions and integrated project management that optimize reservoir performance for customers working in the oil and gas industry. The company employs more than 66,000 people of over 140 nationalities working in more than 80 countries. Schlumberger supplies a wide range of products and services from seismic acquisition and processing; formation evaluation; well testing and directional drilling to well cementing and stimulation; artificial lift and well completions; and consulting, software, and information management. In 2005, Schlumberger operating revenue was $14.31 billion. For more information, visit www.SLB.com. (a) Mark of Schlumberger Notes Schlumberger will hold a conference call to discuss the above announcement on Friday, October 20, 2006, at 9:00am eastern, 8:00am central (2:00pm London time/3:00pm Paris time). To access the call, which is open to the public, please contact the conference call operator at +1-888-428-4471 (toll free) for North America, or +1-612-234-9960 outside of North America, approximately 10 minutes prior to the scheduled start time. Ask for the "Schlumberger Earnings Conference Call." A replay will be available through November 3, 2006, by dialing +1-800-475-6701 in North America, or +1-320-365-3844 outside of North America, and providing the access code 839179. The conference call will be webcast simultaneously at www.SLB.com/irwebcast on a listen-only basis. Please log in 15 minutes ahead of time to test your browser and register for the call. A replay of the webcast will also be available through November 3, 2006 at the above web site. Supplemental information in the form of a question and answer document on this press release and financial schedules are available at www.SLB.com/ir. |
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