Schlumberger Announces Second-Quarter 2022 Results and Raises Full-Year Outlook
- Revenue of $6.8 billion increased 14% sequentially and 20% year on year
- GAAP EPS of $0.67 increased 86% sequentially and 123% year on year
- EPS, excluding charges and credits, of $0.50 increased 47% sequentially and 67% year on year
- Cash flow from operations was $408 million
- Board approved quarterly cash dividend of $0.175 per share
- Full-year revenue outlook revised upward to at least $27 billion
PARIS–(BUSINESS WIRE)–Schlumberger Limited (NYSE: SLB) today announced results for the second-quarter 2022.
| Second-Quarter Results | (Stated in millions, except per share amounts) | ||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue |
$6,773 |
$5,962 |
$5,634 |
14% |
|
20% |
|||
| Income before taxes – GAAP basis |
$1,152 |
$638 |
$542 |
81% |
|
113% |
|||
| Net income – GAAP basis |
$959 |
$510 |
$431 |
88% |
|
123% |
|||
| Diluted EPS – GAAP basis |
$0.67 |
$0.36 |
$0.30 |
86% |
|
123% |
|||
|
|
|
|
|||||||
| Adjusted EBITDA* |
$1,530 |
$1,254 |
$1,198 |
22% |
|
28% |
|||
| Adjusted EBITDA margin* |
22.6% |
21.0% |
21.3% |
157 bps |
|
132 bps |
|||
| Pretax segment operating income* |
$1,159 |
$894 |
$807 |
30% |
|
44% |
|||
| Pretax segment operating margin* |
17.1% |
15.0% |
14.3% |
212 bps |
|
279 bps |
|||
| Net income, excluding charges & credits* |
$715 |
$488 |
$431 |
47% |
|
66% |
|||
| Diluted EPS, excluding charges & credits* |
$0.50 |
$0.34 |
$0.30 |
47% |
|
67% |
|||
|
|
|
|
|||||||
| Revenue by Geography |
|
|
|
||||||
| International |
$5,188 |
$4,632 |
$4,511 |
12% |
|
15% |
|||
| North America |
1,537 |
1,282 |
1,083 |
20% |
|
42% |
|||
| Other |
48 |
48 |
40 |
n/m |
|
n/m |
|||
|
$6,773 |
$5,962 |
$5,634 |
14% |
|
20% |
||||
| *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 | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue by Division | |||||||||
| Digital & Integration |
$955 |
$857 |
$817 |
11% |
|
17% |
|||
| Reservoir Performance |
1,333 |
1,210 |
1,117 |
10% |
|
19% |
|||
| Well Construction |
2,686 |
2,398 |
2,110 |
12% |
|
27% |
|||
| Production Systems |
1,893 |
1,604 |
1,681 |
18% |
|
13% |
|||
| Other |
(94) |
(107) |
(91) |
n/m |
|
n/m |
|||
|
$6,773 |
$5,962 |
$5,634 |
14% |
|
20% |
||||
|
|
|
|
|||||||
| Pretax Operating Income by Division |
|
|
|
||||||
| Digital & Integration |
$379 |
$292 |
$274 |
30% |
|
39% |
|||
| Reservoir Performance |
195 |
160 |
156 |
22% |
|
25% |
|||
| Well Construction |
470 |
388 |
272 |
21% |
|
73% |
|||
| Production Systems |
171 |
114 |
171 |
50% |
|
0% |
|||
| Other |
(56) |
(60) |
(66) |
n/m |
|
n/m |
|||
|
$1,159 |
$894 |
$807 |
30% |
|
44% |
||||
|
|
|
|
|||||||
| Pretax Operating Margin by Division |
|
|
|
||||||
| Digital & Integration |
39.7% |
34.0% |
33.5% |
570 bps |
|
621 bps |
|||
| Reservoir Performance |
14.6% |
13.2% |
13.9% |
143 bps |
|
69 bps |
|||
| Well Construction |
17.5% |
16.2% |
12.9% |
134 bps |
|
462 bps |
|||
| Production Systems |
9.0% |
7.1% |
10.2% |
190 bps |
|
-114 bps |
|||
| Other |
n/m |
n/m |
n/m |
n/m |
|
n/m |
|||
|
17.1% |
15.0% |
14.3% |
212 bps |
279 bps |
|||||
| n/m = not meaningful | |||||||||
Schlumberger CEO Olivier Le Peuch commented, “The second quarter marked a significant inflection point for Schlumberger with a strong acceleration of revenue and earnings growth. Sequentially, revenue grew 14%, by more than $800 million; EPS—excluding charges and credits—increased 47%; and pretax segment operating margin expanded 212 basis points (bps). Growth was broad-based, driven by an increase in activity internationally, in North America, and across all Divisions. The quarter was also characterized by a favorable mix of exploration and offshore activity and the increasing impact of improved pricing, resulting in the largest sequential quarterly growth since 2010.
“On a year-over-year basis, revenue grew 20%; EPS—excluding charges and credits—increased 67%; and pretax segment operating margin expanded 279 bps.
Raising Full-Year Outlook
“The strength of our second-quarter outperformance highlights a firmly established growth inflection and our ability to comprehensively participate in drilling and completion activity growth globally. The multiyear upcycle continues to gain momentum with upstream activity and service pricing steadily increasing both internationally and in North America, resulting in a strengthened outlook for Schlumberger.
“As a result of this performance and based on our updated outlook for the remainder of the year, 2022 year-on-year revenue growth is now expected to be in the high-teens which translates to full-year revenue of at least $27 billion. “We expect this higher revenue to result in earnings that exceed our previous expectations, given our ambition to exit the year with adjusted EBITDA margins 200 basis points higher than in the fourth quarter of 2021,” Le Peuch said.
Second-Quarter Growth Broad-Based Across All Geographies
Second-quarter sequential revenue growth was broad-based, with international revenue increasing 12% and North America revenue growing 20%. International growth was widespread across all areas with more than 90% of our GeoUnits experiencing revenue growth. Growth was led by Europe/CIS/Africa which experienced 20% sequential growth due to higher Production Systems sales in Europe and Scandinavia, the seasonal drilling activity rebound in the Northern Hemisphere, and offshore activity increases in Sub-Sahara Africa benefitting all Divisions. Latin America sequential revenue growth of 10% was due to higher stimulation activity in Argentina, increased Production Systems sales in Brazil and Mexico, and higher offshore drilling in Guyana. Middle East & Asia revenue increased 7% sequentially due to higher drilling across Asia, particularly in China, Australia, and Indonesia, as well as multidivisional activity increases across the Middle East mainly in Oman, United Arab Emirates, Saudi Arabia, Egypt, and Iraq. In North America, sequential revenue growth of 20% was driven by a significant increase in land and offshore drilling activity and higher exploration data licensing in the US Gulf of Mexico.
Power of the Core—Complemented by Digital
Le Peuch said, “These results demonstrate the power of Schlumberger’s Core, which is performing exceedingly well and benefitting from the effects of improved operating leverage, favorable offshore activity mix, greater technology adoption, and an improving global service pricing environment.”
Sequentially, all Divisions posted double-digit revenue growth—outpacing rig count growth both in North America and internationally. Production Systems led the sequential growth, posting an 18% revenue increase on higher product deliveries and backlog conversion during the quarter, mostly internationally. Well Construction revenue increased 12% sequentially due to higher land and offshore drilling activity both in North America and internationally, in addition to improved pricing. Reservoir Performance revenue grew 10% due to higher intervention, evaluation, and stimulation activity, both on land and offshore along with improved pricing. This solid performance in the Core was complemented by Digital & Integration, which experienced an 11% sequential revenue increase, driven by higher exploration data licensing sales.
Overall, second-quarter pretax segment operating income increased 30% sequentially, and pretax segment operating margin expanded 212 bps to 17.1%—the highest quarterly operating margin level since 2015. All four Divisions expanded their margins sequentially.
Second-quarter cash from operations was $408 million and reflected the build-up of working capital in line with the significant revenue growth. Working capital is expected to improve and, consequently, free cash flow generation will accelerate through the second half of the year, consistent with our historical trends.
A Strengthened Outlook Aligned to Schlumberger’s Strengths
Le Peuch said, “Looking ahead, the second half of the year continues to shape up very well as highlighted in our revised expectations for the full year, encompassing all phases of oil and gas development and all operating environments—from high-volume onshore to deepwater offshore—and firmly establishing digital, decarbonization, and improved pricing as defining characteristics of this upcycle.
“Despite near-term concerns over a global economic slowdown, the combination of energy security, favorable break-even prices, and the urgency to grow oil and gas production capacity is expected to continue to support strong upstream E&P spending growth. Consequently, we are witnessing a decoupling of upstream spending from near-term demand volatility, resulting in resilient global oil and gas activity growth in 2022 and beyond.
“Our second-quarter results were a great demonstration of our revenue, operating margins, and earnings growth potential. I am very pleased with our execution thus far in the year and extend my appreciation to our team for delivering an exceptional quarter.”
Other Events
On July 21, 2022, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.175 per share of outstanding common stock, payable on October 13, 2022, to stockholders of record on September 7, 2022.
Revenue by Geographical Area
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| North America |
$1,537 |
$1,282 |
$1,083 |
20% |
|
42% |
|||
| Latin America |
1,329 |
1,204 |
1,057 |
10% |
|
26% |
|||
| Europe/CIS/Africa |
1,691 |
1,404 |
1,453 |
20% |
|
16% |
|||
| Middle East & Asia |
2,168 |
2,024 |
2,001 |
7% |
|
8% |
|||
| Eliminations & other |
48 |
48 |
40 |
n/m |
|
n/m |
|||
|
$6,773 |
$5,962 |
$5,634 |
14% |
|
20% |
||||
|
|
|
|
|||||||
| International |
$5,188 |
$4,632 |
$4,511 |
12% |
|
15% |
|||
| North America |
$1,537 |
$1,282 |
$1,083 |
20% |
|
42% |
|||
| n/m = not meaningful | |||||||||
International
Revenue in Latin America of $1.3 billion increased 10% sequentially due to higher stimulation activity in Argentina, higher Production Systems sales in Brazil and Mexico, and higher offshore drilling in Guyana.
Year on year, revenue grew 26% due to higher drilling activity in Mexico, Ecuador, and Brazil as well as increased stimulation activity in Argentina.
Europe/CIS/Africa revenue of $1.7 billion increased 20% sequentially. This significant growth was driven by activity that strengthened beyond the impact of the seasonal drilling activity recovery in the Northern Hemisphere with higher Production Systems sales in Europe and Scandinavia and multidivisional activity increases in Sub-Sahara Africa.
Year on year, revenue grew 16%, primarily from higher Production Systems sales in Europe and higher exploration drilling in offshore Sub-Sahara Africa, partially offset by the revenue decline in Russia.
Revenue in the Middle East & Asia of $2.2 billion increased 7% sequentially due to higher drilling across Asia, particularly in China, Australia, and Indonesia as well as multidivisional activity increases across the Middle East mainly in Oman, United Arab Emirates, Saudi Arabia, Egypt, and Iraq.
Year on year, revenue increased 8% due to higher drilling, stimulation, and intervention activity on new projects in Iraq, Oman, Egypt, Qatar and across Southeast Asia and Australia.
North America
North America revenue of $1.5 billion increased 20% sequentially and represented the highest sequential quarterly growth rate since 2017. US land revenue growth outperformed the rig count increase sequentially, while offshore revenue growth was more than double the pace of US land—boosted by increased exploration data licensing in the US Gulf of Mexico and higher drilling activity. US land revenue increased due to higher drilling activity and increased sales of surface production systems, while Canada land revenue increased despite the spring breakup due to higher Asset Performance Solutions (APS) project revenue.
Compared to the same quarter last year, North America revenue grew 42%. All Divisions experienced significant growth primarily from higher drilling and intervention activity, increased sales of production systems, increased exploration data licensing, and strong contribution from the APS project in Canada.
Second-Quarter Results by Division
Digital & Integration
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$627 |
$631 |
$625 |
-1% |
|
0% |
|||
| North America |
327 |
225 |
191 |
45% |
|
71% |
|||
| Other |
1 |
1 |
1 |
n/m |
|
n/m |
|||
|
$955 |
$857 |
$817 |
11% |
|
17% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$379 |
$292 |
$274 |
30% |
|
39% |
|||
| Pretax operating margin |
39.7% |
34.0% |
33.5% |
570 bps |
|
621 bps |
|||
| n/m = not meaningful | |||||||||
Digital & Integration revenue of $955 million increased 11% sequentially and 17% year on year primarily due to higher exploration data licensing sales, including $95 million in transfer fees.
Digital & Integration pretax operating margin of 40% expanded 570 bps sequentially and 621 bps year on year, due to higher exploration data licensing sales in the US Gulf of Mexico and increased profitability in APS projects, particularly in Canada.
Reservoir Performance
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$1,222 |
$1,105 |
$1,038 |
11% |
|
18% |
|||
| North America |
111 |
103 |
79 |
8% |
|
41% |
|||
| Other |
– |
2 |
– |
n/m |
|
n/m |
|||
|
$1,333 |
$1,210 |
$1,117 |
10% |
|
19% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$195 |
$160 |
$156 |
22% |
|
25% |
|||
| Pretax operating margin |
14.6% |
13.2% |
13.9% |
143 bps |
|
69 bps |
|||
| n/m = not meaningful | |||||||||
Reservoir Performance revenue of $1.3 billion increased 10% sequentially due to higher activity on land and offshore beyond the impact of the seasonal rebound in the Northern Hemisphere, along with improved pricing. International growth was driven by the seasonal rebound of activity in Scandinavia and China; higher offshore activity in Sub-Sahara Africa; increased evaluation, intervention, and stimulation work in Latin America; and increased evaluation and intervention work in the Middle East & Asia. North America growth was due to higher intervention activity in the US Gulf of Mexico.
Year on year, revenue growth was broad across all regions and GeoUnits, except for Russia & Central Asia. Double-digit growth was posted in evaluation, intervention, and stimulation services both on land and offshore, with higher exploration-related activity during the quarter.
Reservoir Performance pretax operating margin of 15% expanded 143 bps sequentially. Profitability was boosted by the seasonal recovery in the Northern Hemisphere, higher offshore and exploration activity, favorable technology mix, and improved pricing.
Year on year, pretax operating margin expanded 69 bps with profitability improving both in evaluation and intervention and geographically in North America, Europe/CIS/Africa, and Latin America.
Well Construction
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$2,083 |
$1,865 |
$1,708 |
12% |
|
22% |
|||
| North America |
553 |
485 |
352 |
14% |
|
57% |
|||
| Other |
50 |
48 |
50 |
n/m |
|
n/m |
|||
|
$2,686 |
$2,398 |
$2,110 |
12% |
|
27% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$470 |
$388 |
$272 |
21% |
|
73% |
|||
| Pretax operating margin |
17.5% |
16.2% |
12.9% |
134 bps |
|
462 bps |
|||
| n/m = not meaningful | |||||||||
Well Construction revenue of $2.7 billion increased 12% sequentially due to higher land and offshore drilling activity both in North America and internationally, beyond the impact of the seasonal rebound in the Northern Hemisphere, in addition to improved pricing. In North America, sequential revenue growth outpaced the rig count increase in US land and offshore, despite the effects of the Canadian spring breakup. In addition to the seasonal rebound, international growth was also driven by improved pricing and new projects, particularly in Guyana, Argentina, and Sub-Sahara Africa, as well as higher drilling activity across Southeast Asia, Australia, and in the Middle East, mainly in Saudi Arabia and Qatar.
Year on year, revenue growth of 27% across all areas was led by North America and Latin America, both of which grew 50% or more. Middle East & Asia grew 17% while Europe/CIS/Africa increased 12% year on year. Double-digit growth was recorded in drilling fluids, measurements, and integrated drilling—both on land and offshore.
Well Construction pretax operating margin of 18% expanded 134 bps sequentially due to improved profitability across most of its business lines, particularly in the Europe/CIS/Africa and Middle East & Asia areas. Margin expansion was due to the seasonal recovery in the Northern Hemisphere, higher offshore and exploration activity, favorable technology mix, and improved pricing.
Year on year, pretax operating margin expanded 462 bps with profitability improving across most regions, driven by higher activity and improved pricing.
Production Systems
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$1,341 |
$1,127 |
$1,220 |
19% |
|
10% |
|||
| North America |
550 |
473 |
458 |
16% |
|
20% |
|||
| Other |
2 |
4 |
3 |
n/m |
|
n/m |
|||
|
$1,893 |
$1,604 |
$1,681 |
18% |
|
13% |
||||
|
|
|
|
|||||||
| Pretax operating income |
$171 |
$114 |
$171 |
50% |
|
0% |
|||
| Pretax operating margin |
9.0% |
7.1% |
10.2% |
190 bps |
|
-114 bps |
|||
| n/m = not meaningful | |||||||||
Production Systems revenue of $1.9 billion increased 18% sequentially as supply chain and logistics constraints abated, facilitating increased product deliveries and backlog conversion, mostly internationally. The increase was driven by double-digit revenue growth across all business lines, led by Europe/CIS/Africa on higher deliveries of midstream and subsea production systems; by Latin America due to higher sales of subsea production systems; and by North America, mainly US Land, on increased sales of surface production systems.
Year on year, double-digit growth was driven by new projects and increased product deliveries mainly in Europe/CIS/Africa, North America, and Latin America.
Production Systems pretax operating margin of 9% expanded 190 bps sequentially due to improved profitability from higher sales of surface, well, and subsea production systems.
Year on year, pretax operating margin contracted 114 bps due to higher logistics costs and unfavorable revenue mix.
Quarterly Highlights
Schlumberger continues to secure a pipeline of new contract awards as customers announce new projects and with the expansion of existing developments globally. Schlumberger is increasingly being selected for its superior performance and execution and its innovative technology that enhances customer success. Examples of awards from the quarter include the following:
- In Norway, Aker BP ASA has awarded a frame agreement to Cameron, a Schlumberger company, for surface wellheads and production trees for up to 64 wells on the North of Alvheim, King Lear, and Valhall New Central Platform projects in the Norwegian sector of the North Sea. The ten-year agreement contains optional extensions for the life of the field and covers engineering, qualification, and manufacture of digitalized wellhead equipment and production trees capable of up to 15,000-psi operation and condition-based monitoring, as well as a new 21-in metal-to-metal Fontus* configurable production wellhead system. Installation is scheduled to begin in 2024.
- In Brazil, Petrobras awarded Schlumberger a contract for integrated intelligent completions for wells in the presalt area. The advanced completion design selected for these wells includes premium interval flow control valves, an inductive coupling downhole wet disconnect tool and a wireless real-time running tool, GeoGuard* high-performance deepwater safety valves, and Metris* permanent monitoring systems. This intelligent completion technology package will enable Petrobras to more accurately monitor and control production—enhancing ultimate recovery. This contract, for which work is expected to commence in the first quarter of 2023, is a precursor to the development of an all-electric completion, currently underway in Brazil at the Schlumberger Taubaté Engineering Center.
- OneSubsea®, the subsea technologies, production, and processing systems business of Schlumberger, has been awarded an engineering, procurement, construction, and installation (EPCI) contract by OKEA for the supply of three subsea high-boost pumps to increase production from the Draugen Field, located in the southern part of the Norwegian Sea. Under the contract, which is part of a frame agreement signed in 2017 by OKEA and Subsea Integration Alliance, OneSubsea will deliver a new high-boost pump module and modify two existing pump modules into high-boost pumps capable of handling higher differential pressure and throughput to maximize production from this asset. Delivery of the pump modules is scheduled for 2023.
- Sarawak Shell Berhad has awarded Schlumberger a contract for integrated drilling services on seven exploration wells offshore Malaysia. The scope of the contract includes drilling and measurement, electrical wireline, drilling fluids, solids control, cementing, casing drilling, bits, and mud logging. Schlumberger will apply a variety of technologies, including the Allegro CD* directional casing-while-drilling service with the sonicVISION* sonic-while-drilling service to enhance performance of this operation, which commenced during the second quarter of 2022.
- Equinor has made a direct award to Schlumberger for downhole completion and artificial lift equipment to extend the life of the Statfjord Field in the North Sea. Supporting Equinor’s dual objective of increasing recovery from the field while significantly reducing the carbon intensity of incremental production, the award includes a Shuttle* rigless electric submersible pump (ESP) using a REDA* pump powered through a completion-integrated downhole wet-mate docking station. Because an ESP can more completely drain the reservoir using less electricity per barrel than compressor-driven gas lift, this solution will increase annual production and lower carbon intensity. Installation of the completions using the Shuttle rigless ESP technology is expected to commence in the first quarter of 2023.
- Chariot, the African-focused transitional energy company, has signed a front-end engineering and design (FEED) contract with Schlumberger and Subsea 7, as part of a consortium, for the Anchois gas development project offshore Morocco. The scope of the agreement incorporates offshore components including well completions; subsea production systems; and subsea umbilicals, risers, and flowlines (SURF) that will be delivered by Subsea Integration Alliance. Onshore components include a central processing facility (CPF) and flowlines and controls from the CPF to the shore crossing that will be delivered by Schlumberger.
- Talos Energy has awarded Schlumberger contracts for well construction services including drilling fluids, directional drilling, bits and reamers, and logging while drilling in the deepwater Gulf of Mexico. This adds to previous awards on ongoing Talos projects, including developmental drilling from the Pompano platform on the Continental Shelf. The new awards include technologies that will deliver demanding 3D directional drilling profiles and high-quality data with superior logging-while-drilling technology. Talos is scheduled to deploy a semisubmersible rig in August 2022 for this multiwell, deepwater campaign—the latest project in a collaboration between the two companies that has developed over years to deliver best-in-class wells.
- The Abu Dhabi National Oil Company (ADNOC) has awarded Schlumberger a five-year wireline services contract. The contract, which includes an optional two-year extension, covers open- and cased-hole wireline logging, as well as perforating and coiled tubing logging services. Schlumberger technologies, including the Pulsar* multifunction spectroscopy service and Saturn* 3D radial probe, will be deployed to maximize the production of existing wells and appraise new fields for production expansion. Work is expected to commence in the third quarter of 2022.
Digital adoption across the industry continues to gather momentum, expanding how customers access their data, improve existing or create new workflows, and use data to guide decisions that boost performance in the field.
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
Moira Duff, Director of External Communications, Schlumberger Limited
Office +1 (713) 375-3407
