Schlumberger Announces Full-Year and Fourth-Quarter 2015 Results
Fourth-quarter revenue of $7.7 billion decreased 9% sequentially
• Fourth-quarter EPS of $0.65, excluding charges and credits, declined 17% sequentially
• Fourth-quarter restructuring and asset impairment charges totaled $1.46 per share
• Full-year free cash flow of $5 billion represented 114% of earnings
• New share repurchase program of $10 billion approved
• Quarterly cash dividend of $0.50 per share approved
Schlumberger Chairman and CEO Paal Kibsgaard commented,
“Full-year 2015 revenue of $35.5 billion decreased 27% year-on-year in line with upstream capex spending cuts that resulted in significantly lower E&P investment levels. North America revenue declined 39%, with land falling 45% while offshore was down 17%. The decrease in land activity was the sharpest seen since 1986, as capex spending by North American customers declined by more than 40%. With the year-end US land rig count 68% lower than the 2014 peak, at less than 700 rigs, the massive over-capacity in the land services market offers no signs of pricing recovery in the short to medium term.
“Full-year revenue for the International Areas declined 21% due to customer budget cuts of more than 20%, as international and national oil companies responded to lower commodity prices. This effect was exacerbated by service company pricing concessions.
More than one-third of the revenue decline was the result of the fall of certain currencies against the US dollar. Performance among the Areas was led by a 26% decrease in Europe/CIS & Africa, mainly due to weakness in the Russian ruble. Exploration activities in the UK and Norway fell as customer spending decelerated.
In Sub-Saharan Africa, offshore rigs demobilized as exploration work decreased, and in North Africa work progressed slowly, partly because activity in Libya remained muted as onshore operations were limited by security concerns. Full-year revenue in the Latin America Area declined 22% due to significantly decreased activity in Mexico, Brazil and Colombia as a result of sustained budget cuts that led to rig count reductions. Devaluation of the Venezuela bolivar impacted revenue in the Venezuela, Trinidad & Tobago GeoMarket.
Middle East & Asia Area full-year revenue decreased 17% due to a significant activity drop in the Asia-Pacific region, particularly in Australia. This decrease was partially offset, however, by robust activity in the Gulf Cooperation Council countries in the Middle East, particularly Saudi Arabia, Kuwait and Oman, although the effect of this was offset by pricing concessions. Activity in Iraq continued to decline.
“Full-year Schlumberger pretax operating income declined 38%, with pretax operating margin contracting 342 basis points to 18.4%. North America margin declined 874 basis points to 10.2% on decreased pressure pumping activity and pricing weakness on land. International margin was essentially flat with 2014 at 23.6% despite the revenue decline from pricing concessions, and from an increasingly unfavorable shift in revenue mix from offshore exploration to development.
While revenues in North America and in the International Areas have declined by 39% and 21%, respectively, decremental operating margins have been limited to 32% in North America, and 25% internationally. These figures are substantially better than those we delivered in the 2009 downturn.
“The strength of these results demonstrates the resiliency of our business portfolio in the face of the activity, pricing and foreign currency challenges of 2015. Our performance was driven by excellence in execution, prompt and proactive cost and resource management, and the growing impact of our transformation program.
See Full Report: Full-Year Results
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