Schlumberger Announces First-Quarter 2022 Results and Dividend Increase
- Revenue of $6.0 billion increased 14% year-on-year
- GAAP EPS of $0.36 increased 71% year-on-year
- EPS, excluding charges and credits, of $0.34 increased 62% year-on-year
- Cash flow from operations was $131 million, reflecting the seasonal increase in working capital
- Board approved a 40% increase in cash dividend to $0.175 per share
OSLO, Norway–(BUSINESS WIRE)–Schlumberger Limited (NYSE: SLB) today reported financial results for the first-quarter 2022.
| First-Quarter Results | (Stated in millions, except per share amounts) | ||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue |
$5,962 |
$6,225 |
$5,223 |
-4% |
|
14% |
|||
| Income before taxes – GAAP basis |
$638 |
$755 |
$386 |
-16% |
|
65% |
|||
| Net income – GAAP basis |
$510 |
$601 |
$299 |
-15% |
|
70% |
|||
| Diluted EPS – GAAP basis |
$0.36 |
$0.42 |
$0.21 |
-14% |
|
71% |
|||
|
|
|
|
|||||||
| Adjusted EBITDA* |
$1,254 |
$1,381 |
$1,049 |
-9% |
|
19% |
|||
| Adjusted EBITDA margin* |
21.0% |
22.2% |
20.1% |
-115 bps |
|
94 bps |
|||
| Pretax segment operating income* |
$894 |
$986 |
$664 |
-9% |
|
35% |
|||
| Pretax segment operating margin* |
15.0% |
15.8% |
12.7% |
-84 bps |
|
229 bps |
|||
| Net income, excluding charges & credits* |
$488 |
$587 |
$299 |
-17% |
|
63% |
|||
| Diluted EPS, excluding charges & credits* |
$0.34 |
$0.41 |
$0.21 |
-17% |
|
62% |
|||
|
|
|
|
|||||||
| Revenue by Geography |
|
|
|
||||||
| International |
$4,632 |
$4,898 |
$4,211 |
-5% |
|
10% |
|||
| North America |
1,282 |
1,281 |
972 |
– |
|
32% |
|||
| Other |
48 |
46 |
40 |
n/m |
|
n/m |
|||
|
$5,962 |
$6,225 |
$5,223 |
-4% |
|
14% |
||||
| *These are non-GAAP financial measures. See sections titled “Charges & Credits”, “Divisions”, and “Supplemental Information” for details. | |||||||||
| n/m = not meaningful | |||||||||
|
(Stated in millions) |
|||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue by Division | |||||||||
| Digital & Integration |
$857 |
$889 |
$772 |
-4% |
|
11% |
|||
| Reservoir Performance |
1,210 |
1,287 |
1,002 |
-6% |
|
21% |
|||
| Well Construction |
2,398 |
2,388 |
1,936 |
– |
|
24% |
|||
| Production Systems |
1,604 |
1,765 |
1,590 |
-9% |
|
1% |
|||
| Other |
(107) |
(104) |
(77) |
n/m |
|
n/m |
|||
|
$5,962 |
$6,225 |
$5,223 |
-4% |
|
14% |
||||
|
|
|
|
|||||||
| Pretax Operating Income by Division |
|
|
|
||||||
| Digital & Integration |
$292 |
$335 |
$247 |
-13% |
|
18% |
|||
| Reservoir Performance |
160 |
200 |
102 |
-20% |
|
56% |
|||
| Well Construction |
388 |
368 |
210 |
5% |
|
85% |
|||
| Production Systems |
114 |
159 |
138 |
-28% |
|
-18% |
|||
| Other |
(60) |
(76) |
(33) |
n/m |
|
n/m |
|||
|
$894 |
$986 |
$664 |
-9% |
|
35% |
||||
|
|
|
|
|||||||
| Pretax Operating Margin by Division |
|
|
|
||||||
| Digital & Integration |
34.0% |
37.7% |
32.0% |
-372 bps |
|
201 bps |
|||
| Reservoir Performance |
13.2% |
15.5% |
10.2% |
-232 bps |
|
299 bps |
|||
| Well Construction |
16.2% |
15.4% |
10.8% |
77 bps |
|
534 bps |
|||
| Production Systems |
7.1% |
9.0% |
8.7% |
-192 bps |
|
-159 bps |
|||
| Other |
n/m |
n/m |
n/m |
n/m |
|
n/m |
|||
|
15.0% |
15.8% |
12.7% |
-84 bps |
|
229 bps |
||||
| n/m = not meaningful | |||||||||
Schlumberger CEO Olivier Le Peuch commented, “Our first-quarter results set us firmly on the path to deliver full-year revenue growth in the mid-teens and another year with a significant increase in earnings. Compared to the same quarter last year, revenue grew 14%; EPS—excluding charges and credits—increased 62%; and pretax segment operating margin expanded 229 basis points (bps), led by Well Construction and Reservoir Performance. These results reflect the strength of our core services Divisions, the broad-based activity increase, and the continued realization of our improved operating leverage.
“The quarter also marked the tragic start of the conflict in Ukraine, which is of grave concern. Accordingly, we established local and global crisis management teams to respond to the crisis and its effect on employees, business, and our operations. In addition to ensuring that our operations are compliant with developing sanctions, we took the step in the quarter to suspend new investment and technology deployment to our Russia operations. We urge the cessation of hostilities and are hopeful that peace will return to Ukraine and the entire region.
Shifting Trends in the Energy Landscape
“Concurrently, a shift in focus is emerging in the energy landscape, exacerbating an already tightly supplied oil and gas market. The dislocation of supply flows from Russia will result in increased global investment across geographies and the entire energy value chain to ensure the diversification and security of the world’s energy supply.
“The confluence of elevated commodity prices, demand-led activity growth, and energy security are resulting in one of the strongest outlooks for the energy services industry in recent times—reinforcing the market fundamentals for a stronger and longer multiyear upcycle—absent a global economic setback.
“In this context, energy has never been more essential to the world. Schlumberger, which uniquely benefits from increasing E&P activity and digital transformation, provides the most comprehensive technology portfolio to help customers deliver diverse, cleaner, and more affordable energy.
First-Quarter Growth Led by Well Construction and Reservoir Performance
“Year-on-year revenue growth by Division was led by Well Construction and Reservoir Performance, our core services Divisions, both of which grew more than 20%—outperforming global rig count growth. Digital & Integration revenue grew 11%, while Production Systems revenue increased 1%. Our core services Divisions experienced double-digit revenue growth in drilling, evaluation, intervention, and stimulation services, both on land and offshore. In Digital & Integration, growth was driven by strong digital sales, increased exploration data license sales, and higher revenue from Asset Performance Solutions (APS) projects. In contrast, Production Systems growth was temporarily hampered by ongoing supply chain and logistics constraints, resulting in lower-than-expected product deliveries. However, we are confident that these constraints will gradually abate, enabling backlog conversion and accelerating revenue growth for Production Systems through the rest of 2022.
“On a geographical basis, revenue growth compared to the same quarter last year was broad-based, with international revenue increasing 10% and North America growing 32%. International growth was widespread across all areas, led by Latin America, due to higher drilling in Mexico, Ecuador, Argentina, and Brazil. Europe/CIS/Africa grew primarily from higher Production Systems sales in Turkey and increased exploration drilling in offshore Africa—particularly in Angola, Namibia, Gabon, and Kenya. These increases, however, were partially offset by revenue decline in Russia & Central Asia. Middle East & Asia revenue increased due to higher drilling, stimulation, and intervention activity in Qatar, Iraq, the United Arab Emirates, Egypt, Australia, and across Southeast Asia. In North America, growth was pervasive across drilling and completions activity, coupled with a strong contribution from our APS project in Canada.
“Year-on-year, first-quarter pretax segment operating income margin expanded due to improved operating leverage from higher activity, favorable offshore activity mix, greater technology adoption, and an improving global pricing environment, which continues to evolve favorably in Well Construction and Reservoir Performance. Digital & Integration margin expanded further, while Production Systems margin was impacted by supply chain constraints.
“Sequentially, the quarter’s revenue primarily reflects the typical seasonal activity decline in the Northern Hemisphere, with the decline in Europe/CIS/Africa more pronounced due to the depreciation of the ruble, as well as global supply chain constraints impacting Production Systems. In contrast, North America and Latin America revenue was essentially flat sequentially. By Division, Well Construction revenue was slightly higher than last quarter as strong drilling activity in North America, Latin America, and the Middle East more than offset the seasonal reductions in Europe/CIS/Africa and Asia. Reservoir Performance, Production Systems, and Digital & Integration were sequentially lower due to seasonal reductions in activity and sales.
“First-quarter cash from operations was $131 million, including a first-quarter build-up of working capital above the usual level, ahead of the anticipated growth for the year. We expect free cash flow generation to accelerate throughout the year, consistent with our historical trend and still expect double-digit free cash flow margin on a full-year basis.
“Moving forward, the outlook for the rest of the year—particularly in the second half—is shaping up very well with both short- and long-cycle investments accelerating. Notably, a number of FIDs for long-cycle development projects have been approved, new contracts were awarded, offshore exploration drilling is resuming, and several customers have announced a significant step-up in their spending plans for this year and over the next few years.
“Consequently, it is our view that increased activity—both on land and offshore—higher technology adoption, and pricing momentum will drive simultaneous growth internationally and in North America. This will result in a sequential seasonal rebound in the second quarter followed by significant growth in the second half of the year, particularly in the international market.
“With this backdrop and despite the uncertainty linked to Russia, we believe the current market dynamics should allow us to maintain our full-year ambitions of year-on-year revenue growth in the mid-teens and adjusted EBITDA margins exiting the year at least 200 basis points higher than the fourth quarter of 2021. Our positive outlook extends further into 2023 and beyond as we anticipate successive years of market growth. As demand continues to strengthen and new investments are committed to diversify energy supply, the duration and scale of this upcycle may potentially prove higher than originally anticipated, absent a setback in the economic recovery.
“Based on these strengthening fundamentals, we made the decision to initiate incremental return to shareholders with a 40% dividend increase. The trajectory of our cashflows affords us the flexibility to accelerate our return of capital program while continuing to deleverage the balance sheet and invest for long-term success.
“At this pivotal moment in energy for the world, Schlumberger is well positioned. Our advantaged market position, technology leadership, and execution differentiation are aligned for significant returns potential throughout the cycle.”
Other Events
On April 21, 2022, Schlumberger’s Board of Directors approved a 40% increase in the quarterly cash dividend from $0.125 per share of outstanding common stock to $0.175 per share, beginning with the dividend payable on July 14, 2022, to stockholders of record on June 1, 2022.
First-Quarter Revenue by Geographical Area
|
(Stated in millions) |
|||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| North America |
$1,282 |
$1,281 |
$972 |
– |
|
32% |
|||
| Latin America |
1,204 |
1,204 |
1,038 |
– |
|
16% |
|||
| Europe/CIS/Africa |
1,404 |
1,587 |
1,256 |
-12% |
|
12% |
|||
| Middle East & Asia |
2,024 |
2,107 |
1,917 |
-4% |
|
6% |
|||
| Eliminations & other |
48 |
46 |
40 |
n/m |
|
n/m |
|||
|
$5,962 |
$6,225 |
$5,223 |
-4% |
|
14% |
||||
|
|
|
|
|||||||
| International |
$4,632 |
$4,898 |
$4,211 |
-5% |
|
10% |
|||
| North America |
$1,282 |
$1,281 |
$972 |
– |
|
32% |
|||
| n/m = not meaningful | |||||||||
North America
North America revenue of $1.3 billion was essentially flat sequentially, as growth on land was offset by seasonally lower sales of exploration data licenses and production systems in the US Gulf of Mexico. Land revenue was driven by the ramp-up of drilling in US land and increased APS revenue in Canada.
Compared to the same quarter last year, North America revenue grew 32%. Growth was extensive across drilling and completions activity, coupled with a strong contribution from our APS project in Canada.
International
Revenue in Latin America of $1.2 billion was flat sequentially, as higher APS revenue in Ecuador and increased drilling activity in Mexico was offset by lower revenue in Guyana, Brazil, and Argentina due to reduced drilling, intervention, and completions activity as well as lower sales of production systems. Increased APS revenue in Ecuador was driven by the resumption of production following the pipeline disruptions in the previous quarter.
Year-on-year, revenue grew 16% due to higher drilling activity in Mexico, Ecuador, Argentina, and Brazil.
Europe/CIS/Africa revenue of $1.4 billion decreased 12% sequentially due to the seasonal activity reduction that impacted all Divisions and the depreciation of the ruble. The revenue decline was partially offset by higher revenue in Europe, particularly in Turkey, due to increased sales of production systems.
Year-on-year, revenue grew 12%, primarily from higher sales of production systems in Turkey and higher exploration drilling in offshore Africa, particularly in Angola, Namibia, Gabon, and Kenya. These increases, however, were partially offset by the revenue decline in the Russia & Central Asia region.
Revenue in the Middle East & Asia of $2.0 billion decreased 4% sequentially due to seasonally lower activity in China, Southeast Asia, and Australia, coupled with reduced sales of production systems in Saudi Arabia. This decline was partially offset by robust drilling activity in the rest of the Middle East, particularly in the United Arab Emirates.
Year-on-year, revenue increased 6% due to higher drilling, stimulation, and intervention activity on new projects in Qatar, Iraq, the United Arab Emirates, Egypt, and across Southeast Asia and Australia.
First-Quarter Results by Division
Digital & Integration
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue |
|
|
|
||||||
| International |
$631 |
$624 |
$610 |
1% |
|
3% |
|||
| North America |
225 |
263 |
161 |
-14% |
|
40% |
|||
| Other |
1 |
2 |
1 |
n/m |
|
n/m |
|||
|
$857 |
$889 |
$772 |
-4% |
|
11% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$292 |
$335 |
$247 |
-13% |
|
18% |
|||
| Pretax operating margin |
34.0% |
37.7% |
32.0% |
-372 bps |
|
201 bps |
|||
| n/m = not meaningful | |||||||||
Digital & Integration revenue of $857 million decreased 4% sequentially due to seasonally lower sales of digital and exploration data licenses, primarily in North America and Europe/CIS/Africa, following the usual year-end sales. This decline was partially offset by strong contribution from our APS projects in Ecuador with the resumption of production following the pipeline disruptions in the previous quarter.
Year-on-year, revenue increased 11% with growth in all areas driven by strong digital sales, increased exploration data license sales, and higher revenue from APS projects.
Digital & Integration pretax operating margin of 34% contracted 372 bps sequentially due to the effects of lower sales of digital and exploration data licenses that were partially offset by improved profitability from Ecuador APS projects.
Year-on-year, pretax operating margin expanded 201 bps with improvement across all areas due to increased profitability in digital, exploration data licenses, and APS projects, particularly in Canada.
Reservoir Performance
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$1,105 |
$1,194 |
$922 |
-7% |
|
20% |
|||
| North America |
103 |
92 |
78 |
12% |
|
31% |
|||
| Other |
2 |
1 |
2 |
n/m |
|
n/m |
|||
|
$1,210 |
$1,287 |
$1,002 |
-6% |
|
21% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$160 |
$200 |
$102 |
-20% |
|
56% |
|||
| Pretax operating margin |
13.2% |
15.5% |
10.2% |
-232 bps |
|
299 bps |
|||
| n/m = not meaningful | |||||||||
Reservoir Performance revenue of $1.2 billion decreased 6% sequentially due to seasonal activity reductions, primarily in the Northern Hemisphere as well as reduced intervention and stimulation activity in Latin America. Revenue was also impacted by the depreciation of the ruble. The decline was partially offset by strong activity in North America and in the Middle East.
Year-on-year, double-digit revenue growth was broad across all regions, except for Russia & Central Asia. Double-digit growth was posted in evaluation, intervention, and stimulation services both on land and offshore, with more exploration-related activity during the quarter.
Reservoir Performance pretax operating margin of 13% contracted 232 bps sequentially due to reduced profitability from seasonally lower evaluation and stimulation activity, primarily in the Northern Hemisphere—partially offset by improved profitability in North America.
Year-on-year, pretax operating margin expanded 299 bps with profitability improving in evaluation and intervention activity across all regions, except for Russia & Central Asia.
Well Construction
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue |
|
|
|
||||||
| International |
$1,865 |
$1,901 |
$1,577 |
-2% |
|
18% |
|||
| North America |
485 |
441 |
310 |
10% |
|
56% |
|||
| Other |
48 |
46 |
49 |
n/m |
|
n/m |
|||
|
$2,398 |
$2,388 |
$1,936 |
– |
|
24% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$388 |
$368 |
$210 |
5% |
|
85% |
|||
| Pretax operating margin |
16.2% |
15.4% |
10.8% |
77 bps |
|
534 bps |
|||
| n/m = not meaningful | |||||||||
Well Construction revenue of $2.4 billion was slightly higher sequentially driven by increased integrated drilling activity and drilling fluids revenue, partially offset by reduced measurements and drilling equipment sales. Strong drilling activity in North America, Latin America, and the Middle East was partially offset by seasonal reductions in Europe/CIS/Africa and Asia, as well as the effects of the depreciation of the ruble.
Year-on-year, double-digit revenue growth was across all regions, except for Russia & Central Asia. Double-digit growth was recorded in drilling fluids, measurements, and in integrated drilling activity—both on land and offshore.
Well Construction pretax operating margin of 16% expanded 77 bps sequentially due to improved profitability in integrated drilling, impacting all areas, particularly in North America, Latin America, and the Middle East. This was partially offset by reduced margins in the Northern Hemisphere and Asia due to seasonality.
Year-on-year, pretax operating margin expanded 534 bps with profitability improving in integrated drilling, equipment sales, and measurements services across most regions.
Production Systems
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Sequential | Year-on-year | |||||
| Revenue |
|
|
|
||||||
| International |
$1,127 |
$1,278 |
$1,161 |
-12% |
|
-3% |
|||
| North America |
473 |
484 |
420 |
-2% |
|
13% |
|||
| Other |
4 |
3 |
9 |
n/m |
|
n/m |
|||
|
$1,604 |
$1,765 |
$1,590 |
-9% |
|
1% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$114 |
$159 |
$138 |
-28% |
|
-18% |
|||
| Pretax operating margin |
7.1% |
9.0% |
8.7% |
-192 bps |
|
-159 bps |
|||
| n/m = not meaningful | |||||||||
Production Systems revenue of $1.6 billion declined 9% sequentially due to lower sales of well production systems across all areas and reduced revenue from subsea projects. Revenue was temporarily impacted by supply chain and logistics constraints, resulting in lower-than-expected product deliveries.
Year-on-year, double-digit growth in North America and Europe & Africa was driven by new projects in contrast to reductions in Middle East & Asia and Latin America resulting from the end of projects and temporary supply chain constraints. As these constraints gradually abate, enabling backlog conversion, revenue growth for Production Systems will accelerate through the rest of 2022.
Production Systems pretax operating margin of 7% declined 192 bps sequentially and 159 bps year-on-year. The margin contraction was primarily due to reduced profitability in well production systems driven primarily by the impact of global supply chain and logistics constraints.
Quarterly Highlights
Investment in oil and gas production continues to grow as Schlumberger customers invest to provide reliable energy to meet increasing and evolving demand. Customers globally are announcing new projects and expanding existing developments, and Schlumberger is increasingly being selected for its performance in execution and innovative technology that enhances customer success. Selected awards this quarter include:
- bp has awarded Schlumberger a three-year contract for comprehensive services on six rigs operating offshore Azerbaijan. The scope of the contract covers drilling and measurement, drilling fluids, cementing, bits, and mud logging—including operations on challenging high-pressure, deepwater gas wells in the Shah Deniz Field. Both companies collaborated closely to design the most efficient technical solutions, supported by innovative operating and commercial models, to achieve a step change in total cost of ownership for bp. The contract will commence in the second quarter of 2022.
- Saudi Aramco has awarded Schlumberger a major contract award for integrated drilling and well construction services in a gas drilling project. The integrated project scope encompasses drilling rigs and technologies and services, including drill bits, measurement while drilling (MWD) and logging while drilling (LWD), drilling fluids, cementing, and completing wells. Schlumberger will leverage digital solutions to enhance integrated drilling performance, including the DrillOps* on-target well delivery solution, which uses data analysis, learning systems, and automation to execute a digital well plan, improving drilling efficiency, consistency, and performance.
- Schlumberger was awarded contracts by BOE Exploration & Production LLC for multiple work scopes in the Gulf of Mexico. The awards include contracts for the supply of services and equipment for high-pressure, high-temperature (HPHT) drilling on the Shenandoah Phase I development project, as well as the supply of advanced completions valve technology—GeoGuard* high-performance deepwater safety valves—for the project. Shenandoah drilling will employ our capability and technology to help maximize value for development of the lower Tertiary formation, which comprises high-pressure reservoirs. Schlumberger will bring years of technical experience and leading HPHT technology to the project in collaboration with the operator. Drilling is slated to commence in 2022.
- Schlumberger has contracts in place with ENI for well construction services covering infill development campaigns in North America, that are expected to commence in April 2022. The campaigns cover numerous onshore and offshore wells, including several deepwater wells where Schlumberger directional drilling and cementing services will be deployed. Key technology across ENI’s campaigns during the drilling phase will include the PowerDrive Xcel* and PowerDrive Orbit* rotary steerable systems to execute demanding 3D trajectories and high-angle wellbores, and Performance Live* digitally connected service to improve operational efficiency while reducing HSE risk and carbon footprint.
- TotalEnergies has awarded Schlumberger an extensive contract for drilling, completions, and production services for its Tilenga onshore oil development in Uganda. The scope of the contract includes the provision of directional drilling services, upper completions, lower completions, artificial lift solutions, and wellheads for the Tilenga development, which comprises six fields with up to 426 wells, which will be developed across 31 wellpads.
- In North Africa, Schlumberger was awarded a three-year contract, valued at more than USD 200 million, for exploration and production services. The contract scope includes wireline, coiled tubing, well testing, slickline, hydraulic fracturing, and stimulation services. Schlumberger will take a fit-for-basin approach to designing and deploying a combination of technologies and solutions across the region, which will support exploration success and improve production performance from existing assets.
- Kuwait Oil Company (KOC) awarded Schlumberger a seven-year contract, for more than 400 installations of progressing cavity pump (PCP) equipment and services.
Contacts
Investor Relations Contacts:
Ndubuisi Maduemezia – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
Media Contacts:
Josh Byerly, Vice President of Communications, Schlumberger Limited
Giles Powell, Director of Communications, Schlumberger Limited
Office +44 7385 402312
