Schlumberger Announces Third-Quarter 2022 Results
- Revenue of $7.5 billion increased 10% sequentially and 28% year on year
- International revenue of $5.9 billion increased 13% sequentially and 26% year on year
- North America revenue of $1.5 billion was flat sequentially and increased 37% year on year
- GAAP EPS of $0.63 decreased 6% sequentially and increased 62% year on year
- EPS, excluding charges and credits, of $0.63 increased 26% sequentially and 75% year on year
- Cash flow from operations was $1.6 billion and free cash flow was $1.1 billion
- Board approved quarterly cash dividend of $0.175 per share
HOUSTON–(BUSINESS WIRE)–Schlumberger Limited (NYSE: SLB) today announced results for the third-quarter 2022.
Third-Quarter Results
|
(Stated in millions, except per share amounts) |
||||||||||
|
Three Months Ended |
Change |
|||||||||
|
Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential |
Year-on-year |
||||||
|
Revenue |
$7,477 |
$6,773 |
$5,847 |
10% |
|
28% |
||||
|
Income before taxes – GAAP basis |
$1,134 |
$1,152 |
$691 |
-2% |
|
64% |
||||
|
Net income – GAAP basis |
$907 |
$959 |
$550 |
-5% |
|
65% |
||||
|
Diluted EPS – GAAP basis |
$0.63 |
$0.67 |
$0.39 |
-6% |
|
62% |
||||
|
|
|
|
|
|||||||
|
Adjusted EBITDA* |
$1,756 |
$1,530 |
|
$1,296 |
|
15% |
|
35% |
||
|
Adjusted EBITDA margin* |
23.5% |
22.6% |
|
22.2% |
|
91 bps |
|
133 bps |
||
|
Pretax segment operating income* |
$1,400 |
$1,159 |
$908 |
21% |
|
54% |
||||
|
Pretax segment operating margin* |
18.7% |
17.1% |
15.5% |
161 bps |
|
320 bps |
||||
|
Net income, excluding charges & credits* |
$907 |
$715 |
$514 |
27% |
|
77% |
||||
|
Diluted EPS, excluding charges & credits* |
$0.63 |
$0.50 |
$0.36 |
26% |
|
75% |
||||
|
|
|
|
||||||||
|
Revenue by Geography |
|
|
|
|||||||
|
International |
$5,881 |
$5,188 |
$4,675 |
13% |
|
26% |
||||
|
North America |
1,543 |
1,537 |
1,129 |
0% |
|
37% |
||||
|
Other |
53 |
48 |
43 |
n/m |
|
n/m |
||||
|
$7,477 |
$6,773 |
$5,847 |
10% |
|
28% |
|||||
|
*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 | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| Revenue by Division | ||||||||||
| Digital & Integration |
$900 |
$955 |
$812 |
-6% |
|
11% |
||||
| Reservoir Performance |
1,456 |
1,333 |
1,192 |
9% |
|
22% |
||||
| Well Construction |
3,084 |
2,686 |
2,273 |
15% |
|
36% |
||||
| Production Systems |
2,150 |
1,893 |
1,674 |
14% |
|
28% |
||||
| Other |
(113) |
(94) |
(104) |
n/m |
|
n/m |
||||
|
$7,477 |
$6,773 |
$5,847 |
10% |
|
28% |
|||||
|
|
|
|
||||||||
| Pretax Operating Income by Division |
|
|
|
|||||||
| Digital & Integration |
$305 |
$379 |
$284 |
-20% |
|
7% |
||||
| Reservoir Performance |
244 |
195 |
190 |
25% |
|
28% |
||||
| Well Construction |
664 |
470 |
345 |
41% |
|
92% |
||||
| Production Systems |
224 |
171 |
166 |
31% |
|
36% |
||||
| Other |
(37) |
(56) |
(77) |
n/m |
|
n/m |
||||
|
$1,400 |
$1,159 |
$908 |
21% |
|
54% |
|||||
|
|
|
|
||||||||
| Pretax Operating Margin by Division |
|
|
|
|||||||
| Digital & Integration |
33.9% |
39.7% |
35.0% |
-586 bps |
|
-119 bps |
||||
| Reservoir Performance |
16.7% |
14.6% |
16.0% |
209 bps |
|
77 bps |
||||
| Well Construction |
21.5% |
17.5% |
15.2% |
403 bps |
|
635 bps |
||||
| Production Systems |
10.4% |
9.0% |
9.9% |
142 bps |
|
55 bps |
||||
| Other |
n/m |
n/m |
n/m |
n/m |
|
n/m |
||||
|
18.7% |
17.1% |
15.5% |
161 bps |
|
320 bps |
|||||
| n/m = not meaningful |
Schlumberger CEO Olivier Le Peuch commented, “The second half of the year is off to a great start with strong third-quarter results that reflect the acceleration of international momentum and solid execution across our Divisions and areas. Sequentially, we delivered another quarter of double-digit revenue growth and margin expansion, as the pace of growth in our international business stepped up significantly, complementing already robust levels of activity in North America.
“On a companywide basis, sequential revenue grew 10%, by more than $700 million; EPS—excluding charges and credits—increased 26%; pretax segment operating margin expanded 161 basis points (bps) to reach 18.7%; and free cash flow was $1.1 billion. Both EPS—excluding charges and credits—and pretax segment operating margin represent their highest levels since 2015, as we continue to execute on our returns-focused strategy with much success.
“Year-over-year comparisons were exceptional with revenue growing by 28%; EPS—excluding charges and credits—increasing 75%; and pretax segment operating margin expanding 320 bps.”
Revenue growth was led by Well Construction and Production Systems as global activity strengthened—particularly in the offshore and international markets. Schlumberger’s leading position in these markets continues to propel strong and profitable growth in the Core. The quarter was also supported by continued backlog conversion, strong technology adoption, and the growing effects of pricing improvements. Reservoir Performance also grew, while Digital & Integration declined as growth in digital solutions was more than offset by the non-repeat of exploration data transfer fees recorded in the previous quarter.
International Torque Ramps Up as Revenue Exceeds Third-Quarter 2019 Level
Le Peuch said, “Third-quarter revenue was driven by International, which posted 13% growth sequentially and 26% year on year. International revenue also exceeded third-quarter 2019 levels, on a rig count that is still approximately 25% lower than in 2019. This comparison highlights the significant gains we have made in strengthening our market participation and our continued growth potential as rigs mobilize internationally in the quarters to come.”
Sequentially, growth was prevalent across all international areas led by Europe/CIS/Africa and Latin America, which increased 21% and 14%, respectively. This was driven by increased activity and higher pricing in Well Construction, in addition to higher Production Systems sales. Middle East & Asia revenue improved 8% sequentially due to increased multidivisional activity across Asia and higher Reservoir Performance revenue in the Middle East.
Outperforming in our Core—Strong Growth in Well Construction and Production Systems
Le Peuch said, “Our Schlumberger Core continues to perform extremely well as we continue to leverage our global breadth, leading technology portfolio, and pricing improvements to drive top- and bottom-line growth momentum.”
Revenue growth by Division was led by Well Construction with revenue increasing 15% sequentially, outperforming global rig count growth due to strong activity and pricing improvements in the Europe/CIS/Africa and Latin America areas. Similarly, Production Systems revenue grew 14% sequentially on higher product deliveries and backlog conversion, mostly in international offshore basins. Reservoir Performance revenue grew 9% due to higher intervention and stimulation activity, both on land and offshore, particularly in the Middle East & Asia and Europe/CIS/Africa areas. Year on year, revenue from all Divisions experienced double-digit growth, led by Well Construction, which grew 36%.
In relation to margin performance, Well Construction and Reservoir Performance led in sequential margin expansion having posted 403 bps and 209 bps growth, respectively. Year on year, Well Construction margin expanded 635 bps to reach 22%, due to broad pricing improvements and improved operating leverage.
Constructive Energy Fundamentals and a Supply-Led Decoupling of Upstream Investment
Le Peuch said, “While concerns remain over the broader economic climate, the energy industry fundamentals continue to be very constructive. Against the backdrop of the energy crisis and limited spare global capacity, the world faces an urgent need for increased investment to rebalance markets, create supply redundancies, and rebuild spare capacity. All of these are exacerbated by geopolitics and increasing instances of supply disruptions.
“These dynamics and the urgency to restore balance are resulting in a supply-led upcycle, characterized by the decoupling of upstream investment from near-term demand volatility. Furthermore, the need for sustained investments is reinforced by the long-term demand trajectory through the end of the decade and by OPEC+ decisions that are keeping commodity prices at supportive levels.
“Concurrently, we are witnessing a significant commitment from the industry to decarbonize oil and gas, with E&P operators all over the world deploying capital and adopting technologies—including digital—at scale, to reduce emissions. Taken together, we expect these constructive fundamentals and secular trends to support multiple years of growth.”
A Strong Finish in the Making for an Outstanding Year
Le Peuch said, “On a companywide basis, year-to-date revenue increased more than 20%; EPS on a GAAP basis grew 83%; EPS—excluding charges and credits—grew 67%; and pretax segment operating margin expanded 285 bps. I am very proud of these exceptional results delivered by the Schlumberger team as we approach the end of an outstanding year.
“As we close the year, we expect to deliver sequential revenue growth and margin expansion in the fourth quarter.
“To conclude, we have stronger conviction in our strategy and the opportunities across our three engines of growth—the Core, Digital, and New Energy. Constructive market fundamentals for oil and gas, energy security, and the urgency to accelerate the energy transition will support increased investment—in both clean energy technology development and lower carbon oil and gas production. We have positioned the company for long-term outperformance, with a diverse set of opportunities across the entire energy value chain. These technology-led opportunities cover oil and gas, industrial decarbonization, and new energy systems—all supported by digital transformation.
“Recent regulatory decisions and incentives reinforce our view of this compelling investment outlook and our strategic direction. We are prepared to apply our technology, global scale, and industrialization capabilities to lead in this energy landscape and deliver outstanding value for our customers and shareholders.
“I am truly excited about our future as we continue to drive innovation for a resilient and balanced energy system. I look forward to sharing at our upcoming Investor Conference, our views of the industry, revenue growth ambitions, earnings, and returns potential.”
Other Events
On August 30, 2022, Schlumberger, Aker Solutions, and Subsea 7 announced an agreement to form a joint venture to drive innovation and efficiency in subsea production to help customers unlock reserves and reduce cycle time. The agreement will bring together a portfolio of innovative technologies such as subsea gas compression, all-electric subsea production systems, and other electrification capabilities that help customers meet their decarbonization goals. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2023.
In October 2022, Schlumberger redeemed $895 million of its outstanding notes, consisting of $600 million of 2.65% Senior Notes and $295 million of 3.625% Senior Notes, both due 2022.
On October 20, 2022, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.175 per share of outstanding common stock, payable on January 12, 2023, to stockholders of record on December 7, 2022.
Revenue by Geographical Area
| (Stated in millions) | ||||||||||
| Three Months Ended | Change | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| North America |
$1,543 |
$1,537 |
$1,129 |
0% |
|
37% |
||||
| Latin America |
1,508 |
1,329 |
1,160 |
14% |
|
30% |
||||
| Europe/CIS/Africa |
2,039 |
1,691 |
1,481 |
21% |
|
38% |
||||
| Middle East & Asia |
2,334 |
2,168 |
2,034 |
8% |
|
15% |
||||
| Eliminations & other |
53 |
48 |
43 |
n/m |
|
n/m |
||||
|
$7,477 |
$6,773 |
$5,847 |
10% |
|
28% |
|||||
|
|
|
|
||||||||
| International |
$5,881 |
$5,188 |
$4,675 |
13% |
|
26% |
||||
| North America |
$1,543 |
$1,537 |
$1,129 |
0% |
|
37% |
||||
| n/m = not meaningful |
International
Revenue in Latin America of $1.5 billion increased 14% sequentially due to higher Well Construction revenue from increased drilling activity and improved pricing. Increased Production Systems sales in Brazil contributed to the sequential revenue growth. Year on year, revenue grew 30% due to higher drilling activity and increased pricing across the area. Increased stimulation and drilling activity in Argentina as well as higher Production Systems sales in Brazil also contributed to the year-on-year revenue growth.
Europe/CIS/Africa revenue of $2.0 billion increased 21% sequentially. This significant growth was driven by strong Well Construction activity and improved pricing across the area, higher Production Systems sales in Europe and Scandinavia, and multidivisional activity increases in Sub-Sahara Africa. Year on year, revenue grew 38%, from higher Production Systems sales in Europe and Scandinavia, increased Well Construction activity, and improved pricing.
Revenue in the Middle East & Asia of $2.3 billion increased 8% sequentially due to increased multidivisional activity across Asia and higher Reservoir Performance revenue in the Middle East. Year on year, revenue increased 15% due to increased multidivisional activity across Asia and higher activity from new projects in the Middle East—notably, increased drilling activity in Iraq and the United Arab Emirates and higher stimulation revenue in Oman.
North America
North America revenue of $1.5 billion was essentially flat sequentially as double-digit growth in US land revenue was offset by reduced exploration data sales in the US Gulf of Mexico due to the significant transfer fees recorded in the previous quarter. US land revenue growth outperformed the rig count increase sequentially due to higher drilling activity, increased sales of well and surface production systems, and improved pricing.
Compared to the same quarter last year, North America revenue grew 37%. All Divisions experienced significant year-on-year revenue growth, led by Well Construction and Production Systems, which grew 62% and 23%, respectively.
Third-Quarter Results by Division
Digital & Integration
| (Stated in millions) | ||||||||||
| Three Months Ended | Change | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| Revenue | ||||||||||
| International |
$671 |
$627 |
$615 |
7% |
|
9% |
||||
| North America |
229 |
327 |
196 |
-30% |
|
17% |
||||
| Other |
– |
1 |
1 |
n/m |
|
n/m |
||||
|
$900 |
$955 |
$812 |
-6% |
|
11% |
|||||
|
|
|
|
||||||||
| Pretax operating income |
$305 |
$379 |
$284 |
-20% |
|
7% |
||||
| Pretax operating margin |
33.9% |
39.7% |
35.0% |
-586 bps |
|
-119 bps |
||||
| n/m = not meaningful |
Digital & Integration revenue of $900 million experienced a 6% sequential decline with a change in revenue mix compared to the previous quarter. Revenue grew internationally, driven by higher digital sales in the Middle East & Asia, Europe/CIS/Africa, and Latin America areas while revenue was lower in North America on lower exploration data sales.
Year on year, revenue growth of 11% was driven primarily by higher digital sales across all areas and higher Asset Performance Solutions (APS) project revenue, particularly in Canada.
Digital & Integration pretax operating margin of 34% contracted 586 bps sequentially and 119 bps year on year due to a less favorable revenue mix.
Reservoir Performance
| (Stated in millions) | ||||||||||
| Three Months Ended | Change | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| Revenue | ||||||||||
| International |
$1,335 |
$1,222 |
$1,112 |
9% |
|
20% |
||||
| North America |
119 |
111 |
79 |
7% |
|
49% |
||||
| Other |
2 |
– |
1 |
n/m |
|
n/m |
||||
|
$1,456 |
$1,333 |
$1,192 |
9% |
|
22% |
|||||
|
|
|
|
||||||||
| Pretax operating income |
$244 |
$195 |
$190 |
25% |
|
28% |
||||
| Pretax operating margin |
16.7% |
14.6% |
16.0% |
209 bps |
|
77 bps |
||||
| n/m = not meaningful |
Reservoir Performance revenue of $1.5 billion increased 9% sequentially primarily due to higher intervention and stimulation activity, both on land and offshore, particularly in the Middle East & Asia and Europe/CIS/Africa areas. North America growth was due to higher intervention activity in the US Gulf of Mexico.
Year on year, revenue growth of 22% was broad across all areas due to increased activity. The revenue growth was led by the Middle East & Asia area, which grew 30%. Intervention and stimulation services experienced double-digit growth, both on land and offshore.
Reservoir Performance pretax operating margin of 17% expanded 209 bps sequentially. Profitability was boosted by higher offshore and development activity, particularly in the North America, Middle East & Asia, and Latin America areas.
Year on year, pretax operating margin expanded 77 bps with profitability improving both in intervention and stimulation, and geographically in the North America and Europe/CIS/Africa areas.
Well Construction
| (Stated in millions) | ||||||||||
| Three Months Ended | Change | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| Revenue | ||||||||||
| International |
$2,406 |
$2,083 |
$1,839 |
16% |
|
31% |
||||
| North America |
621 |
553 |
382 |
12% |
|
62% |
||||
| Other |
57 |
50 |
52 |
n/m |
|
n/m |
||||
|
$3,084 |
$2,686 |
$2,273 |
15% |
|
36% |
|||||
|
|
|
|
||||||||
| Pretax operating income |
$664 |
$470 |
$345 |
41% |
|
92% |
||||
| Pretax operating margin |
21.5% |
17.5% |
15.2% |
403 bps |
|
635 bps |
||||
| n/m = not meaningful |
Well Construction revenue of $3.1 billion increased 15% sequentially, outperforming global rig count growth due to strong activity from new projects and solid pricing improvements internationally, particularly in the Europe/CIS/Africa and Latin America areas. In North America, sequential revenue growth outpaced the rig count increase in both US land and offshore. Double-digit growth was pervasive across its measurement, drilling, fluids, and equipment business lines.
Year on year, revenue growth of 36% was driven by strong activity and solid pricing improvements, led by North America and Latin America, both of which grew more than 60%. Europe/CIS/Africa revenue increased 28% while Middle East & Asia revenue grew 16% year on year. High double-digit growth was recorded across the Division’s business lines led by drilling fluids and measurements—both on land and offshore.
Well Construction pretax operating margin of 22% expanded 403 bps sequentially, due to improved profitability in all business lines and across all areas, most prominently in Latin America. Margin expansion was due to higher offshore and exploration activity, favorable technology mix, and solid pricing improvements.
Year on year, pretax operating margin expanded 635 bps, with profitability improving across all areas, driven by higher activity and boosted by improved pricing.
Production Systems
| (Stated in millions) | ||||||||||
| Three Months Ended | Change | |||||||||
| Sept. 30, 2022 |
Jun. 30, 2022 |
Sept. 30, 2021 |
Sequential | Year-on-year | ||||||
| Revenue | ||||||||||
| International |
$1,569 |
$1,341 |
$1,205 |
17% |
|
30% |
||||
| North America |
578 |
550 |
469 |
5% |
|
23% |
||||
| Other |
3 |
2 |
– |
n/m |
|
n/m |
||||
|
$2,150 |
$1,893 |
$1,674 |
14% |
|
28% |
|||||
|
|
|
|
||||||||
| Pretax operating income |
$224 |
$171 |
$166 |
31% |
|
36% |
||||
| Pretax operating margin |
10.4% |
9.0% |
9.9% |
142 bps |
|
55 bps |
||||
| n/m = not meaningful |
Production Systems revenue of $2.2 billion increased 14% sequentially on higher product deliveries and backlog conversion—mostly offshore internationally as supply chain and logistics constraints continue to ease. The increase was driven by double-digit revenue growth across most business lines: in Europe/CIS/Africa on higher deliveries of subsea and well production systems; in Latin America due to higher sales of subsea and midstream production systems; in Middle East & Asia on higher sales of well, surface, and midstream production systems; and in North America, mainly in US land, on increased sales of well and 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 10% expanded 142 bps sequentially due to improved operating leverage from higher volume of sales.
Year on year, pretax operating margin was slightly higher by 55 bps as higher sales volume was partially offset by increased logistics costs and unfavorable revenue mix.
Quarterly Highlights
As the strong growth cycle in oil and gas advances, Schlumberger continues to secure new contracts in North America and internationally, particularly in the Middle East and in offshore basins. During the quarter, Schlumberger secured the following notable projects:
- In Norway, Equinor awarded Schlumberger a contract for work at up to 11 wells at their challenging, high-temperature Kristin Sor and Halten East fields. The integrated services contract includes electric wireline logging, drilling, measurements, and project management. Work is expected to start in late 2023 and continue until 2025.
- QatarEnergy has awarded Schlumberger a five-year wireline services contract. The contract covers open- and cased-hole wireline logging on land and offshore, as well as tubing-conveyed perforating and data processing and interpretation. Schlumberger technologies, including the 10,000-psi hydraulic frac packer, 3D far-field sonic service, Optiq* Schlumberger fiber-optic solutions, and Pulsar* multifunction spectroscopy service, will be deployed to evaluate new and existing wells in various projects and optimize the production and injection of such wells. Work is expected to start in the fourth quarter of 2022.
- Abu Dhabi National Oil Company (ADNOC) has awarded Schlumberger a five-year framework agreement for drilling-related services, valued at $482 million. With an optional two-year extension, the scope of the award covers drill bits, directional drilling, and logging-while-drilling services. Supporting ADNOC in its drive to improve efficiency while delivering the lowest cost, lowest carbon intensity barrels, Schlumberger will provide advanced directional drilling and logging services to achieve high-quality wellbores with proven trajectory control, for accurate drilling of extended-reach horizontal and complex directional wells.
- In Brazil, Petrobras awarded Schlumberger a contract for the latest-generation MaxFORTE* high-reliability electric submersible pump (ESP) system for the deepwater Jubarte Field. This award also includes a 10-year extension of in-country remote ESP surveillance, intervention, and domain expertise provided by Schlumberger. The first generations of the MaxFORTE ESP systems, developed for Petrobras’ subsea developments in the Campos Basin offshore Brazil, have so far delivered an excellent reliability above four years, despite dramatic pressure and temperature swings—while producing prolific volumes of heavy oil, emulsions, and gas. Run life of this duration is a result of stringent quality from manufacturing to installation, and the extended time between workovers for ESP replacement is a significant value for Petrobras.
- Also in Brazil, Enauta signed contracts with Schlumberger for the development of a holistic subsea production system in the Atlanta Field, Enauta’s main oil production asset in the Santos Basin. The award includes a range of subsea field-proven technologies, including a multiphase subsea boosting system and subsea trees. The agreement represents a robust solution that will integrate existing wells and support future development of the Atlanta Field.
- In Kazakhstan, Schlumberger was awarded a decarbonized production operations contract by Karachaganak Petroleum Operating B.V (KPO). The project will use technology that eliminates flaring—maximizing hydrocarbon monetization and avoiding an estimated 10,000 metric tons of CO2e per well. The production scope of the three-year contract—which also includes wireline—covers well cleanup, production boosting, and well bleedoff packages, which will be delivered using the Production ExPRESS* rapid production response solutions. Schlumberger will use the CleanPhase* well test separator in combination with Transition Technologies*—including the REDA Multiphase HPS* horizontal multistage surface pump, and Vx Spectra* surface multiphase flowmeter—to deliver this project scope with zero flaring.
- In Canada, BP Canada Energy Group ULC (bp) has awarded Schlumberger an integrated well construction and evaluation contract for its Ephesus deepwater exploration well. The contract is scheduled to commence in 2023 and includes well construction and reservoir evaluation products and services.
- In the US, Schlumberger was awarded multiple scopes for an enhanced oil recovery pilot project by Denbury Onshore, LLC.
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
