January 17, 2020 - 6:50 AM EST
Print Email Article Font Down Font Up Charts

Schlumberger Announces Full-Year and Fourth-Quarter 2019 Results

HOUSTON

  • Full-year worldwide revenue of $32.9 billion was flat year-on-year, with international revenue growth of 7%
  • Full-year GAAP loss per share, including charges & credits, was $7.32
  • Full-year EPS, excluding charges & credits, was $1.47
  • Full-year cash flow from operations and free cash flow were $5.4 billion and $2.7 billion, respectively
  • Fourth-quarter revenue of $8.2 billion decreased 4% sequentially, with international revenue growth of 2%
  • Fourth-quarter GAAP EPS, including charges & credits, was $0.24
  • Fourth-quarter EPS, excluding charges & credits, was $0.39
  • Fourth-quarter cash flow from operations and free cash flow were $2.3 billion and $1.5 billion, respectively
  • Board approves quarterly cash dividend of $0.50 per share

Schlumberger Limited (NYSE: SLB) today reported results for full-year 2019 and the fourth quarter of 2019.

Full-Year Results (Stated in millions, except per share amounts)

Twelve Months Ended

 

Change

Dec. 31, 2019

 

Dec. 31, 2018

 

Year-on-year

Revenue

$32,917

 

$32,815

 

0%

Income (loss) before taxes - GAAP basis

$(10,418

)

$2,624

 

n/m

Pretax segment operating income*

$3,978

 

$4,187

 

-5%

Pretax segment operating margin*

12.1

%

12.8

%

-68 bps

Net income (loss) - GAAP basis

$(10,137

)

$2,138

 

n/m

Net income, excluding charges & credits*

$2,054

 

$2,261

 

-9%

Diluted EPS (loss per share) - GAAP basis

$(7.32

)

$1.53

 

n/m

Diluted EPS, excluding charges and credits*

$1.47

 

$1.62

 

-9%

 

Full-Year Revenue by Area

 

 

North America

$10,843

 

11,984

 

-10%

Latin America

4,149

 

3,745

 

11%

Europe/CIS/Africa

7,683

 

7,158

 

7%

Middle East & Asia

10,017

 

9,543

 

5%

Other

225

 

385

 

n/m

$32,917

 

$32,815

 

0%

 

North America revenue

$10,843

 

$11,984

 

-10%

International revenue

$21,849

 

$20,446

 

7%

 

North America revenue, excluding Cameron

$8,525

 

$9,556

 

-11%

International revenue, excluding Cameron

$18,874

 

$17,439

 

8%

 
*These are non-GAAP financial measures. See section titled "Charges & Credits" for details.
n/m = not meaningful

Schlumberger CEO Olivier Le Peuch commented, “Full-year revenue for 2019 was $32.9 billion, a level essentially flat with 2018. Overall performance was positive—particularly in the international markets—and we generated $2.7 billion in free cash flow, which was a remarkable achievement under these market conditions. Full-year pretax segment operating margin of 12%, however, was slightly down year-on-year.

“International revenue, excluding Cameron, grew 8% and was consistent with our expectations of high single-digit growth. Most of our international GeoMarkets benefited from these favorable market conditions, and almost half of them registered double-digit, year-on-year revenue growth driven by exploration activity, offshore operations, and acceleration of the industry’s digital transformation. Compared with the first half of 2019, international pretax segment operating margin improved by 100 basis points (bps) in the second half of the year—a firm step toward our strategic target of margin expansion.

“In contrast, after two years of strong growth, North American revenue fell sharply, driven largely by the land market weakness affecting our OneStim® pressure pumping business, as customers reached their budget limits earlier in the year and remained highly disciplined on capital spend.

(Stated in millions)
Full-Year Revenue by Segment

Twelve Months Ended

 

Change

Dec. 31, 2019

 

Dec. 31, 2018

 

Year-on-year

Reservoir Characterization

$6,312

 

6,173

 

2%

Drilling

9,721

 

9,250

 

5%

Production

11,987

 

12,394

 

-3%

Cameron

5,336

 

5,520

 

-3%

Other

(439

)

(522

)

n/m

$32,917

 

$32,815

 

0%

n/m = not meaningful

“Among the business segments, Drilling and Reservoir Characterization revenue benefited from their international market exposure, while Production and Cameron contracted year-on-year due to weakness in the North America land market.

“During the year, we recognized material pretax charges driven by market conditions, particularly in North America. As these charges were largely noncash and primarily related to goodwill, intangible assets, and fixed assets, they did not impede our ability to generate strong cash flow as we demonstrated in the second half of the year.

“We ended the year building on the strength of our international franchise, driven by the breadth of the international recovery, after four consecutive years of declining revenue. We initiated our scale-to-fit strategy in North America land amid continued challenging market conditions, removed structural costs to protect margins, and accelerated technology-access business models and asset-light operations transformation.

“The year 2019 marked the beginning of a new chapter for Schlumberger. As we move forward, our vision is to define and drive high performance sustainably—operationally and financially. Simply put, we want to be the performance partner of choice for the benefit of our customers and our industry. Our strategy has favorably positioned Schlumberger to achieve margin expansion, increase return on capital, and grow free cash flow.

Fourth-Quarter Results (Stated in millions, except per share amounts)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Revenue

$8,228

 

$8,541

 

$8,180

 

-4%

 

1%

Income (loss) before taxes - GAAP basis

$452

 

$(11,971

)

$648

 

n/m

 

-30%

Pretax segment operating income*

$1,006

 

$1,096

 

$967

 

-8%

 

4%

Pretax segment operating margin*

12.2

%

12.8

%

11.8

%

-60 bps

 

40 bps

Net income (loss) - GAAP basis

$333

 

$(11,383

)

$538

 

n/m

 

-38%

Net income, excluding charges & credits*

$545

 

$596

 

$498

 

-9%

 

9%

Diluted EPS (loss per share) - GAAP basis

$0.24

 

$(8.22

)

$0.39

 

n/m

 

-38%

Diluted EPS, excluding charges & credits*

$0.39

 

$0.43

 

$0.36

 

-9%

 

8%

 

 

 

North America revenue

$2,454

 

$2,850

 

$2,820

 

-14%

 

-13%

International revenue

$5,721

 

$5,629

 

$5,284

 

2%

 

8%

 

 

 

North America revenue, excluding Cameron

$1,907

 

$2,261

 

$2,235

 

-16%

 

-15%

International revenue, excluding Cameron

$4,892

 

$4,857

 

$4,526

 

1%

 

8%

 
*These are non-GAAP financial measures. See sections titled "Charges & Credits" and "Segments" for details.
n/m = not meaningful

“Fourth quarter revenue of $8.2 billion was 4% lower sequentially. International revenue of $5.7 billion grew 2% sequentially and 8% year-on-year. North America revenue of $2.5 billion, however, dropped 14% sequentially due to customer budget exhaustion and cash flow constraints.

“Sequential international growth was led by the Middle East & Asia area, where revenue increased 5% driven by higher year-end product sales in Kuwait, Iraq, and Oman; delivery of additional lump-sum-turnkey (LSTK) wells in Saudi Arabia; and increased Well Services activity in Qatar. Latin America revenue grew 1% due to stronger WesternGeco® multiclient seismic license sales in the Mexico Bay of Campeche, while revenue in the Europe/CIS/Africa area only declined 2% given the mild winter slowdown of activity in the Northern Hemisphere that was partially mitigated by strong year-end product sales and Software Integrated Solutions (SIS) digital software sales.

Fourth-Quarter Revenue by Segment (Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Reservoir Characterization

$1,643

 

$1,651

 

$1,571

 

-1%

 

5%

Drilling

2,442

 

2,470

 

2,461

 

-1%

 

-1%

Production

2,867

 

3,153

 

2,936

 

-9%

 

-2%

Cameron

1,387

 

1,363

 

1,345

 

2%

 

3%

Other

(110

)

(96

)

(133

)

n/m

 

n/m

$8,228

 

$8,541

 

$8,180

 

-4%

 

1%

n/m = not meaningful

“Production revenue declined 9% sequentially primarily due to the 33% sequential drop in OneStim revenue as we continued to right-size our hydraulic fracturing capacity by stacking more fleets in the face of lower demand. This is part of the scale-to-fit strategy we are deploying in North America land—rationalizing our business portfolio to achieve improved returns and better profitability. Drilling and Reservoir Characterization revenue each decreased 1% sequentially due to the end of summer campaigns in the North Sea and Russia. These effects, however, were partially offset by increased drilling activity in the Middle East & Asia area and stronger SIS digital software sales across several GeoMarkets. Cameron revenue increased 2% sequentially from higher OneSubsea®, Surface Systems, and Drilling Systems sales—primarily in the international markets.

“I’m very pleased with our operational and financial results as we closed 2019, and I’m encouraged by the sustained international activity growth, although conditions in North America land became more challenging. Fourth-quarter EPS of $0.39, excluding charges and credits, was sequentially lower, but was 8% higher than the same quarter last year. Pretax segment operating margin declined sequentially on seasonal effects but improved when compared to the same quarter last year. This quarter delivered the first sequential growth in international margin in any fourth quarter since 2014. We are therefore confident we have turned the corner, particularly as we have now seen sequential international margin growth for the last three quarters as a result of our discipline and focus on execution performance. Meanwhile, in North America land, we minimized the margin dilution from lower activity by implementing our scale-to-fit strategy, acting decisively in reducing capacity, and restructuring our operations.

“In addition, we generated significant cashflow from operations as we ended the year, leveraging our capital stewardship program. We also completed two major milestones during the quarter: the formation of the Sensia joint venture and the divestiture of our Drilling Tools business. The proceeds from these transactions further supported the significant reduction of our net debt during the quarter.

“From a macro perspective, we ended the year with 2020 oil demand growth sentiment turning positive as uncertainty reduced following the progress made toward a US-China trade deal. The fall in the North America production growth estimate of between 400,000 to 800,000 bpd should continue to support the thesis for international investment. The recent escalation of geopolitical risk should set the floor for the oil price going forward. In the near term, we expect the OPEC+ production cuts agreed upon in December 2019 to limit investment and activity, particularly in the Middle East and Russia, during the first half of 2020. As the year progresses, the effect of slowing North America production growth is likely to cause tightness in the market and further stimulate international operators to step up their investments in the second half of the year and beyond.

“Based on this, we expect 2020 E&P capex spending growth rate in the international markets to be in the mid-single-digit range. We would therefore expect our international portfolio revenue to grow at the same pace or higher, excluding the effects of the Sensia and Drilling Tools transactions. The carved-out businesses in these transactions accounted for approximately 2% of our global revenue in 2019. International revenue growth will be more heavily weighted to the second half of the year with increasing offshore activity, improving activity mix from the early deepwater growth cycle, and increasing exploration work toward the end of the year and into 2021.

“In North America, we are continuing to scale-to-fit our organization and portfolio by repurposing or exiting underperforming business units, focusing on asset-light operations, and expanding our technology access business models. In alignment with our stated strategy, we are cautiously optimistic that the high-grading of our portfolio will promote margin expansion and the improvement of returns in the North America land market. It has also led to the closing of a significant number of facilities and, unfortunately, workforce reductions.

“After a strong free cash flow performance in the second half of 2019, we are confident in our ability to further improve cash flow generation in 2020. Our focus on improved margins, capital stewardship, and careful management of working capital will continue to underpin our ability to generate improved free cash flow.

“All in all, we finished the year with a very solid quarter, aligned with our performance vision and our focus on returns. I am very pleased with the results, and I’m proud of the Schlumberger team that delivered this performance.”

Other Events

On December 10, 2019, Schlumberger announced that Simon Ayat, Executive Vice President and Chief Financial Officer, will step down effective January 22, 2020. Mr. Ayat, who joined the Company in 1982, will remain with Schlumberger as Senior Strategic Advisor to the Chief Executive Officer for a period of two years. Mr. Stephane Biguet, our current Vice President of Finance and a 24-year Schlumberger veteran, will succeed Mr. Ayat as Executive Vice President and Chief Financial Officer.

On October 1, 2019, Schlumberger and Rockwell Automation closed Sensia, their previously announced joint venture. Rockwell Automation owns 53% of the joint venture and Schlumberger owns 47%. At closing, Rockwell Automation made a $238 million cash payment, net of working capital adjustments, to Schlumberger.

On December 31, 2019, Schlumberger completed the sale of the businesses and associated assets of DRILCO, Thomas Tools, and Fishing & Remedial Services and received net cash proceeds of $348 million.

During the fourth quarter, Schlumberger repurchased $1.1 billion of its outstanding notes, which comprise $416 million of its outstanding 3.00% Notes due 2020; $126 million of its outstanding 4.50% Notes due 2021; $500 million of its outstanding 4.20% Notes due 2021; and $106 million of its 3.60% Senior Notes due 2022.

On January 17, 2020, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.50 per share of outstanding common stock, payable on April 9, 2020 to stockholders of record on February 12, 2020.

Consolidated Revenue by Area

(Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

North America

$2,454

$2,850

$2,820

-14%

 

-13%

Latin America

1,028

1,014

978

1%

 

5%

Europe/CIS/Africa

2,018

2,062

1,842

-2%

 

10%

Middle East & Asia

2,675

2,553

2,464

5%

 

9%

Other

53

62

76

n/m

 

n/m

$8,228

$8,541

$8,180

-4%

 

1%

 

 

 

North America revenue

$2,454

$2,850

$2,820

-14%

 

-13%

International revenue

$5,721

$5,629

$5,284

2%

 

8%

 

 

 

North America revenue, excluding Cameron

$1,907

$2,261

$2,235

-16%

 

-15%

International revenue, excluding Cameron

$4,892

$4,857

$4,526

1%

 

8%

n/m = not meaningful
Certain prior period amounts have been reclassified to conform to the current period presentation.

Fourth-quarter revenue of $8.2 billion decreased 4% sequentially. North America revenue of $2.5 billion decreased 14% while international revenue of $5.7 billion increased 2%.

North America

North America area consolidated revenue of $2.5 billion was 14% lower sequentially. The sequential decline was driven by lower activity and pricing for our OneStim and Drilling businesses in North America land due to expected customer budget limitations and cash flow constraints. North America land revenue declined 19% sequentially while North America offshore revenue grew by 3%. OneStim revenue dropped 33% sequentially as we continued to right-size our hydraulic fracturing capacity by stacking more fleets in the face of lower demand. This is part of the scale-to-fit strategy we are deploying in North America land—rationalizing our business portfolio to achieve improved returns and better profitability.

International

Consolidated revenue in the Latin America area of $1.0 billion increased 1% sequentially. This was due primarily to higher WesternGeco multiclient seismic license sales in the Mexico Bay of Campeche, partially offset by lower revenue in Argentina on reduced drilling and well services activity. Revenue in Ecuador declined slightly from production shut-ins caused by civil unrest that occurred at the beginning of the quarter. Cameron revenue was higher on increased Surface Systems sales in the Mexico & Central America GeoMarket.

Europe/CIS/Africa area consolidated revenue of $2.0 billion decreased 2% sequentially. This was driven by the winter slowdown of wireline and well services activity following the end of summer campaigns in the North Sea and Russia, partially offset by increased SIS digital software sales and Artificial Lift Solutions product sales across the area. Higher revenue in the Sub-Sahara Africa and North Africa GeoMarkets from new project startups also helped mitigate the seasonal decline of activity in the Northern Hemisphere. Cameron revenue was higher on increased Valves & Process Systems (VPS) sales in Russia and increased OneSubsea project and service activity in Norway.

Consolidated revenue in the Middle East & Asia area of $2.7 billion increased 5% sequentially. This was driven by increased Middle East revenue from higher Completions, Artificial Lift Solutions, and M-I SWACO product sales in Kuwait, Iraq, and Oman; delivery of additional LSTK wells in Saudi Arabia; and increased Well Services activity in Qatar. Revenues in the South & East Asia and Far East Asia & Australia GeoMarkets were also higher sequentially from increased SIS digital software and Completions product sales. Cameron revenue was higher from increased OneSubsea activity in India.

Reservoir Characterization

(Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Revenue

$1,643

 

$1,651

 

$1,571

 

-1%

 

5%

Pretax operating income

$368

 

$360

 

$360

 

2%

 

2%

Pretax operating margin

22.4

%

21.8

%

22.9

%

59 bps

 

-48 bps

Reservoir Characterization revenue of $1.6 billion, 83% of which came from the international markets, decreased 1% sequentially following the end of the summer campaigns for wireline and testing activity in the North Sea and Russia, where the mild winter did not significantly disrupt activity. This decline was partially offset by higher SIS digital software sales across several GeoMarkets. WesternGeco multiclient seismic license sales were also lower as increased sales in the Mexico Bay of Campeche were more than offset by reduced activity in the US Gulf of Mexico.

Reservoir Characterization pretax operating margin of 22% increased 59 bps sequentially due to increased SIS digital software sales. The margin expansion was partially offset by the seasonal decline in Wireline revenue and reduced multiclient seismic licensing activity.

Drilling

(Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Revenue

$2,442

 

$2,470

 

$2,461

 

-1%

 

-1%

Pretax operating income

$303

 

$305

 

$318

 

-1%

 

-5%

Pretax operating margin

12.4

%

12.4

%

12.9

%

5 bps

 

-51 bps

Drilling revenue of $2.4 billion, 76% of which came from the international markets, decreased 1% sequentially due to the end of the summer drilling campaign in Russia and lower drilling activity in North America land largely impacting M-I SWACO and Bits & Drilling Tools. These declines were partially offset by increased drilling activity in the Middle East & Asia area, mainly from the delivery of additional LSTK wells in Saudi Arabia.

Drilling pretax operating margin of 12% was flat sequentially as margin improvements from drilling projects in the Middle East were offset by the seasonally lower margins in Russia and lower drilling margins in North America land.

Production

(Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Revenue

$2,867

 

$3,153

 

$2,936

 

-9%

 

-2%

Pretax operating income

$253

 

$288

 

$198

 

-12%

 

27%

Pretax operating margin

8.8

%

9.1

%

6.8

%

-32 bps

 

205 bps

Production revenue of $2.9 billion, of which 61% came from the international markets, declined 9% sequentially. This was driven by OneStim revenue, which dropped 33% sequentially as we continued to right-size our hydraulic fracturing capacity by stacking more fleets in the face of lower demand. This is part of the deployment of our scale-to-fit strategy in North America land—rationalizing our business portfolio to achieve improved returns and better profitability. In addition, sand and proppant supply revenue also declined. These declines, however, were partially offset by increased international completions activity in Kuwait, Oman, and the South & East Asia GeoMarket. Higher project activity for Asset Performance Solutions (APS), formerly known as Schlumberger Production Management (SPM), contributed positively to the quarter despite the temporary production shut-in issues in Ecuador.

Production pretax operating margin of 9% contracted by 32 bps sequentially due to lower OneStim activity, partially offset by strength in international margins from higher activity.

Cameron

(Stated in millions)

Three Months Ended

 

Change

Dec. 31, 2019

 

Sept. 30, 2019

 

Dec. 31, 2018

 

Sequential

 

Year-on-year

Revenue

$1,387

 

$1,363

 

$1,345

 

2%

 

3%

Pretax operating income

$126

 

$173

 

$131

 

-27%

 

-4%

Pretax operating margin

9.1

%

12.7

%

9.8

%

-359 bps

 

-64 bps

Cameron revenue of $1.4 billion, of which 60% came from international markets, increased 2% sequentially from higher OneSubsea, Surface Systems, and Drilling Systems revenue—primarily in the international markets. VPS was lower sequentially due to the reduced North America land activity and as a result of contributing the VPS measurement business to the Sensia joint venture. By geography, international revenue grew 7% sequentially, primarily on strong growth in the Norway & Denmark and Far East & Australia GeoMarkets, while North America revenue declined by 7% on weak land activity.

Cameron pretax operating margin of 9% contracted by 359 bps sequentially, driven largely by reduced margins in the OneSubsea project portfolio. Lower North America land activity also resulted in reduced margins, particularly for VPS and Surface Systems.

Quarterly Highlights

The combination of unique Schlumberger team and technology performance, centered on customer and industry challenges, delivers the potential for market and financial outperformance. Within this vision, the deployment of fit-for-basin technology and business models creates differentiation for Schlumberger. Examples of this during the quarter include:

  • In Norway, Schlumberger, Aker BP, and StimWell Services created a Well Intervention and Stimulation Alliance, entering into a 5+5-year tripartite agreement. Through collaboration, innovative technologies, and digitization, the newly formed alliance endeavors to completely transform conventional intervention operations with clear targets for propelling hydrocarbon production on new and existing assets on the Norwegian Continental Shelf. The alliance focus will span interventions operations, with Schlumberger as partner for wireline logging, perforation, and well stimulation through digital slickline, coiled tubing, and flowback operations on Aker BP’s fixed installations, and StimWell as partner for the provision of fracturing services, using vessel-based stimulation services. An early success for the alliance was the execution of the single-trip, multifrac operation at the Valhall Field running a world’s-first type of stimulation methodology with coiled tubing in an offshore environment, resulting in significant time savings.
  • In Kuwait and for the first time in the Middle East, Drilling & Measurements deployed GeoSphere HD* reservoir mapping-while-drilling service for Kuwait Oil Company. This service enabled mapping oil/water contact at a 40-ft total vertical depth from the tool measuring point while drilling. The technology has proved that it will reduce operating costs for similar wells by $550,000 per well in the Umm Gudair Field by eliminating the need for drilling pilot holes to confirm the oil/water contact zones.
  • In US land, Bits & Drilling Tools collaborated with Matador Resources to increase the drilling rate of penetration (ROP) in the West Texas Wolfcamp A Formation. Given Matador’s specific directional application needs, Smith Bits designed a 6.75-in SHARC* high-abrasion-resistance PDC drill bit for the lateral section using the IDEAS* integrated dynamic design and analysis platform to ensure a fit-for-basin bit design and provide optimal ROP and durability. This enabled the customer to reduce drilling time in the 2-mile lateral section by more than 50% compared with their average 2-mile lateral section performance.

OneSubsea integrated subsea production, multiphase boosting, and gas compression are industry-leading technologies that help improve customer performance. These technologies are also enabling Subsea Integration Alliance (SIA) to expand its global business with awards for engineering, procurement, and construction (EPC) contracts. SIA brings together field development planning, project delivery, and total lifecycle solutions under an extensive technology and services portfolio. Examples of subsea technology and integration for the quarter include:

  • A/S Norske Shell awarded OneSubsea a frame agreement for an engineering, procurement, construction, and installation (EPCI) contract for the supply of a subsea multiphase compression system for the Ormen Lange Field in the Norwegian Sea. Through the EPCI contract, SIA will install a subsea multiphase compression system that uses the industry’s only subsea multiphase compression technology. In the first phase of the project, OneSubsea will do the engineering and design of the complete system. Following the final investment decision by the license group, the complete scope of the EPCI will be executed.
  • Chevron U.S.A. Inc. awarded OneSubsea an EPC contract for the supply of an integrated subsea production and multiphase boosting system for the Anchor Field in the US Gulf of Mexico. The contract includes vertical monobore production trees and multiphase flowmeters rated up to 20,000 psi. Also included are production manifolds and an integrated manifold multiphase pump station rated to 16,500 psi as well as subsea controls and distribution. This is the first 20,000-psi subsea production system contract in the industry.
  • Woodside awarded SIA an EPCI contract for the Sangomar Field Development project offshore Senegal. The project includes the development of the deepwater Sangomar oil field, which is located 100 km south of Dakar. Project work scope includes the EPCI of subsea production systems and a subsea umbilical, riser, and flowline system. The development will include 23 wells in a water depth between 650 m and 1,400 m. Offshore installation activities are scheduled from 2021 to 2023 and first oil production is expected in early 2023. Through this contract, OneSubsea will supply a portfolio of standard systems, including 23 wellhead systems, 11 subsea production trees, 10 water injection trees, two gas injection trees, topside controls, and intervention tools and life-of-field support.

Schlumberger achieved new milestones in the digital transformation of E&P processes and workflows during the quarter. The DELFI* cognitive E&P environment will be further enhanced by best-in-class artificial intelligence, empowering our customers to draw actionable insights and make faster decisions. Examples of this include:

  • Schlumberger and Dataiku entered into an exclusive technology partnership that will enable the E&P industry to build and deploy its own artificial intelligence solutions across the full breadth of its upstream workflows within the DELFI environment. The partnership will deliver unprecedented capabilities to petrotechnical domain experts by bridging the gap between machine learning and domain expertise to enable better insights. As a result, the upstream industry will have access to an innovation platform where customers can accelerate the deployment of new solutions across their organizations.
  • Schlumberger and ExxonMobil are jointly working on the deployment of digital drilling solutions around planning, execution, and continuous improvement through learning. As the first step in this journey, ExxonMobil has agreed to a commercial deployment of DrillPlan* coherent well construction planning solution in ExxonMobil’s unconventional operations. The agreement is expected to enable increased efficiency, procedural adherence, and consistency in well construction through digital well planning in the DELFI environment using the DrillPlan solution workflows.

In December, Schlumberger became the first company in upstream E&P services to commit to setting a science-based target to reduce its greenhouse gas emissions, as defined by the Science Based Targets initiative. Calculated using expertise from Schlumberger’s extensive scientific community, Schlumberger’s science-based target will align with the goals of the United Nations Paris Agreement.

Financial Tables

Condensed Consolidated Statement of Income (Loss)
 

(Stated in millions, except per share amounts)

 

Fourth Quarter

 

Twelve Months

Periods Ended December 31,

2019

 

2018

 

2019

 

 

2018

 
Revenue

$8,228

$8,180

$32,917

 

$32,815

Interest and other income

25

31

86

 

149

Gain on formation of Sensia (1)

247

-

247

 

-

Gain on sale of business (1)

-

215

-

 

215

Expenses
Cost of revenue

7,127

7,172

28,720

 

28,478

Research & engineering

190

178

717

 

702

General & administrative

129

114

474

 

444

Impairments & other (1)

456

172

13,148

 

356

Interest

146

142

609

 

575

Income (loss) before taxes

$452

$648

$(10,418

)

$2,624

Tax (benefit) expense (1)

109

100

(311

)

447

Net income (loss) (1)

$343

$548

$(10,107

)

$2,177

Net income attributable to noncontrolling interests

10

10

30

 

39

Net income (loss) attributable to Schlumberger (1)

$333

$538

$(10,137

)

$2,138

 
Diluted earnings (loss) per share of Schlumberger (1)

$0.24

$0.39

$(7.32

)

$1.53

 
Average shares outstanding

1,384

1,384

1,385

 

1,385

Average shares outstanding assuming dilution

1,396

1,392

1,385

 

1,393

 
Depreciation & amortization included in expenses (2)

$848

$919

$3,589

 

$3,556

(1)

See section entitled “Charges & Credits” for details.

(2)

Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs, and APS investments.

Condensed Consolidated Balance Sheet
 

(Stated in millions)

 

Dec. 31,

Dec. 31,

Assets

2019

2018

Current Assets
Cash and short-term investments

$2,167

$2,777

Receivables

7,747

7,881

Other current assets

5,616

5,073

15,530

15,731

Fixed assets

9,270

11,679

Multiclient seismic data

568

601

Goodwill

16,042

24,931

Intangible assets

7,089

8,727

Other assets

7,813

8,838

$56,312

$70,507

 
Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities

$10,663

$10,223

Estimated liability for taxes on income

1,209

1,155

Short-term borrowings and current portion
of long-term debt

524

1,407

Dividends payable

702

701

13,098

13,486

Long-term debt

14,770

14,644

Deferred taxes

491

1,441

Postretirement benefits

967

1,153

Other liabilities

2,810

3,197

32,136

33,921

Equity

24,176

36,586

$56,312

$70,507

Liquidity

(Stated in millions)

Components of Liquidity

Dec. 31,
2019

Sept. 30,
2019

Dec. 31,
2018

Cash and short-term investments

$2,167

 

$2,292

 

$2,777

 

Short-term borrowings and current portion of long-term debt

(524

)

(340

)

(1,407

)

Long-term debt

(14,770

)

(16,333

)

(14,644

)

Net Debt (1)

$(13,127

)

$(14,381

)

$(13,274

)

 
Details of changes in liquidity follow:
 

Twelve

 

Fourth

 

Twelve

Months

 

Quarter

 

Months

Periods Ended December 31,

2019

 

2019

 

2018

Net income (loss) before noncontrolling interests

$(10,107

)

$343

 

$2,177

 

Impairment and other charges, net of tax

12,396

 

417

 

320

 

Gain on formation of Sensia, net of tax

(205

)

(205

)

-

 

Gain on sale of WesternGeco marine seismic business, net of tax

-

 

-

 

(196

)

$2,084

 

$555

 

$2,301

 

Depreciation and amortization (2)

3,589

 

848

 

3,556

 

Stock-based compensation expense

405

 

76

 

345

 

Change in working capital

(551

)

789

 

(442

)

Other

(96

)

(16

)

(47

)

Cash flow from operations (3)

$5,431

 

$2,252

 

$5,713

 

Capital expenditures

(1,724

)

(494

)

(2,160

)

APS investments

(781

)

(255

)

(981

)

Multiclient seismic data capitalized

(231

)

(50

)

(100

)

Free cash flow (4)

2,695

 

1,453

 

2,472

 

Dividends paid

(2,769

)

(692

)

(2,770

)

Stock repurchase program

(278

)

-

 

(400

)

Proceeds from employee stock plans

219

 

-

 

261

 

Net proceeds from divestiture and formation of Sensia

586

 

586

 

579

 

Business acquisitions and investments, net of cash acquired plus debt assumed

(23

)

(2

)

(292

)

Other

(283

)

(91

)

(14

)

Increase (decrease) in Net Debt

147

 

1,254

 

(164

)

Net Debt, beginning of period

(13,274

)

(14,381

)

(13,110

)

Net Debt, end of period

$(13,127

)

$(13,127

)

$(13,274

)

(1)

“Net Debt” represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt. Net Debt is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, total debt.

(2)

Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments.

(3)

Includes severance payments of $128 million and $24 million during the twelve months and fourth quarter ended December 31, 2019, respectively; and $340 million during the twelve months ended December 31, 2018.

(4)

“Free cash flow” represents cash flow from operations less capital expenditures, APS investments and multiclient seismic data costs capitalized. Management believes that free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of Schlumberger’s ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as substitute for or superior to, cash flow from operations.

Charges & Credits

In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this full-year and fourth-quarter 2019 earnings release also includes non-GAAP financial measures (as defined under the SEC’s Regulation G). In addition to the non-GAAP financial measures discussed above under “Liquidity”, net income (loss), excluding charges & credits, as well as measures derived from it (including diluted EPS, excluding charges & credits; Schlumberger net income (loss), excluding charges & credits; and effective tax rate, excluding charges & credits) are non-GAAP financial measures. Management believes that the exclusion of charges & credits from these financial measures enables it to evaluate more effectively Schlumberger’s operations period over period and to identify operating trends that could otherwise be masked by the excluded items. These measures are also used by management as performance measures in determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures.

(Stated in millions, except per share amounts)

 

Fourth Quarter 2019

Pretax

Tax

Noncont.
Interests

Net

Diluted
EPS *

Schlumberger net income (GAAP basis)

$452

 

$109

 

$10

$333

 

$0.24

 

North America restructuring

225

 

51

 

-

174

 

0.12

 

Other restructuring

104

 

(33

)

-

137

 

0.10

 

Workforce reductions

68

 

8

 

-

60

 

0.04

 

Pension settlement accounting

37

 

8

 

-

29

 

0.02

 

Repurchase of Notes

22

 

5

 

-

17

 

0.01

 

Gain on formation of Sensia

(247

)

(42

)

-

(205

)

(0.15

)

Schlumberger net income, excluding charges & credits

$661

 

$106

 

$10

$545

 

$0.39

 

 

Third Quarter 2019

Pretax

Tax

Noncont.
Interests

Net

Diluted
EPS

Schlumberger net income (loss) (GAAP basis)

$(11,971

)

$(598

)

$10

$(11,383

)

$(8.22

)

Goodwill impairment

8,828

 

43

 

-

8,785

 

6.34

 

North America pressure pumping

1,575

 

344

 

-

1,231

 

0.89

 

Intangible assets impairment

1,085

 

248

 

-

837

 

0.60

 

Other North America-related

310

 

53

 

-

257

 

0.19

 

Asset Performance Solutions

294

 

-

 

-

294

 

0.21

 

Equity-method investments

231

 

12

 

-

219

 

0.16

 

Argentina

127

 

-

 

-

127

 

0.09

 

Other

242

 

13

 

-

229

 

0.17

 

Schlumberger net income, excluding charges & credits

$721

 

$115

 

$10

$596

 

$0.43

 

 

Fourth Quarter 2018

Pretax

Tax

Noncont.
Interests

Net

Diluted
EPS

Schlumberger net income (GAAP basis)

$648

 

$100

 

$10

$538

 

$0.39

 

Gain on sale of marine seismic acquisition business

(215

)

(19

)

-

(196

)

(0.14

)

Asset impairments

172

 

16

 

-

156

 

0.11

 

Schlumberger net income, excluding charges & credits

$605

 

$97

 

$10

$498

 

$0.36

 

 

* Does not add due to rounding.

(Stated in millions, except per share amounts)

 

Twelve Months 2019

Pretax

Tax

Noncont.
Interests

Net

 

Diluted
EPS *

Schlumberger net income (loss) (GAAP basis)

$(10,418

)

$(311

)

$30

$(10,137

)

$(7.32

)

Fourth Quarter
North America restructuring

225

 

51

 

-

174

 

0.13

 

Other restructuring

104

 

(33

)

-

137

 

0.10

 

Workforce reductions

68

 

8

 

-

60

 

0.04

 

Pension settlement accounting

37

 

8

 

-

29

 

0.02

 

Repurchase of bonds

22

 

5

 

-

17

 

0.01

 

Gain on formation of Sensia

(247

)

(42

)

-

(205

)

(0.15

)

Third Quarter
Goodwill impairment

8,828

 

43

 

-

8,785

 

6.34

 

North America pressure pumping

1,575

 

344

 

-

1,231

 

0.89

 

Intangible assets impairment

1,085

 

248

 

-

837

 

0.60

 

Other North America-related

310

 

53

 

-

257

 

0.19

 

Asset Performance Solutions

294

 

-

 

-

294

 

0.21

 

Equity-method investments

231

 

12

 

-

219

 

0.16

 

Argentina

127

 

-

 

-

127

 

0.09

 

Other

242

 

13

 

-

229

 

0.17

 

Schlumberger net income, excluding charges & credits

$2,483

 

$399

 

$30

$2,054

 

$1.47

 

 

Twelve Months 2018

Pretax

Tax

Noncont.
Interests

Net *

 

Diluted
EPS

Schlumberger net income (GAAP basis)

$2,624

 

$447

 

$39

$2,138

 

$1.53

 

Gain on sale of marine seismic acquisition business

(215

)

(19

)

-

(196

)

(0.14

)

Impairment & other:
Workforce reductions

184

 

20

 

-

164

 

0.12

 

Asset impairments

172

 

16

 

-

156

 

0.11

 

Schlumberger net income, excluding charges & credits

$2,765

 

$464

 

$39

$2,261

 

$1.62

 

 

* Does not add due to rounding.

Segments

(Stated in millions)
 
Three Months Ended
Dec. 31, 2019 Sept. 30, 2019 Dec. 31, 2018
Revenue Income
Before
Taxes
Revenue Income
(Loss)
Before
Taxes
Revenue Income
Before
Taxes
Reservoir Characterization

$1,643

 

$368

 

$1,651

 

$360

 

$1,571

 

$360

 

Drilling

2,442

 

303

 

2,470

 

305

 

2,461

 

318

 

Production

2,867

 

253

 

3,153

 

288

 

2,936

 

198

 

Cameron

1,387

 

126

 

1,363

 

173

 

1,345

 

131

 

Eliminations & other

(111

)

(44

)

(96

)

(30

)

(133

)

(40

)

Pretax segment operating income

1,006

 

1,096

 

967

 

Corporate & other

(215

)

(231

)

(238

)

Interest income(1)

8

 

7

 

8

 

Interest expense(1)

(138

)

(151

)

(132

)

Charges & credits(2)

(209

)

(12,692

)

43

 

$8,228

 

$452

 

$8,541

 

$(11,971

)

$8,180

 

$648

 

(Stated in millions)
 

Twelve Months Ended

Dec. 31, 2019

Dec. 31, 2018

Revenue

Income
(Loss)
Before
Taxes

Revenue

Income
Before
Taxes

Reservoir Characterization

$6,312

 

$1,327

 

$6,173

 

$1,347

 

Drilling

9,721

 

1,216

 

9,250

 

1,239

 

Production

11,987

 

993

 

12,394

 

1,052

 

Cameron

5,336

 

613

 

5,520

 

653

 

Eliminations & other

(439

)

(171

)

(522

)

(104

)

Pretax segment operating income

3,978

 

4,187

 

Corporate & other

(957

)

(937

)

Interest income(1)

33

 

52

 

Interest expense(1)

(571

)

(537

)

Charges & credits(2)

(12,901

)

(141

)

$32,917

 

$(10,418

)

$32,815

 

$2,624

 

(1) Excludes interest included in the segment results.

(2) See section entitled “Charges & Credits” for details.

Certain prior period amounts have been reclassified to the current period presentation.

Supplemental Information

 

1)

What is the capex guidance for the full year 2020?

Capex (excluding multiclient and APS investments) for the full year 2020 is expected to be approximately $1.7 billion, the same level as in 2019.

 

2)

What were the cash flow from operations and free cash flow for the fourth quarter of 2019?

Cash flow from operations for the fourth quarter of 2019 was $2.3 billion. Free cash flow for the fourth quarter of 2019 was $1.5 billion.

 

3)

What were the cash flow from operations and free cash flow for the full year of 2019?

Cash flow from operations for the full year of 2019 was $5.4 billion. Free cash flow for the full year of 2019 was $2.7 billion, including $128 million of severance payments. However, this excludes $238 million of net cash proceeds that were received in connection with the formation of the Sensia joint venture and $348 million of net cash proceeds received from the divestiture of the businesses and associated assets of DRILCO, Thomas Tools, and Fishing & Remedial Services.

 

4)

What was included in “Interest and other income” for the fourth quarter of 2019?

“Interest and other income” for the fourth quarter of 2019 was $25 million. This amount consisted of earnings of equity method investments of $15 million and interest income of $10 million.

 

5)

How did interest income and interest expense change during the fourth quarter of 2019?

Interest income of $10 million for the fourth quarter of 2019 increased $2 million sequentially. Interest expense of $146 million decreased $14 million sequentially.

 

6)

What is the difference between Schlumberger’s consolidated income (loss) before taxes and pretax segment operating income?

The difference principally consists of corporate items, charges and credits, and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets, certain centrally managed initiatives, and other nonoperating items.

 

7)

What was the effective tax rate (ETR) for the fourth quarter of 2019?

The ETR for the fourth quarter of 2019, calculated in accordance with GAAP, was 24.0% as compared to 5.0% for the third quarter of 2019. Excluding charges and credits, the ETR for both the fourth quarter and third quarter of 2019 was 16.0%.

 

8)

How many shares of common stock were outstanding as of December 31, 2019 and how did this change from the end of the previous quarter?

There were 1.385 billion shares of common stock outstanding as of December 31, 2019. The following table shows the change in the number of shares outstanding from September 30, 2019 to December 31, 2019.

 

(Stated in millions)

Shares outstanding at September 30, 2019

1,384

Shares issued under employee stock purchase plan

-

Vesting of restricted stock

1

Stock repurchase program

-

Shares outstanding at December 31, 2019

1,385

9)

What was the weighted average number of shares outstanding during the fourth quarter of 2019 and third quarter of 2019? How does this reconcile to the average number of shares outstanding, assuming dilution, used in the calculation of diluted earnings per share, excluding charges and credits?

The weighted average number of shares outstanding was 1.384 billion during the fourth quarter of 2019 and 1.385 billion during the third quarter of 2019.

 

The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution, used in the calculation of diluted earnings per share, excluding charges and credits.

(Stated in millions)

Fourth Quarter
2019

Third Quarter
2019

Weighted average shares outstanding

1,384

1,385

Assumed exercise of stock options

-

-

Unvested restricted stock

12

11

Average shares outstanding, assuming dilution

1,396

1,396

10)

What was the unamortized balance of Schlumberger’s investment in APS projects at December 31, 2019 and how did it change in terms of investment and amortization when compared to September 30, 2019?

The unamortized balance of Schlumberger’s investments in APS projects was approximately $3.7 billion at December 31, 2019 and $3.9 billion at September 30, 2019. These amounts are included within Other Assets in Schlumberger’s Condensed Consolidated Balance Sheet. The change in the unamortized balance of Schlumberger’s investment in APS projects was as follows:

(Stated in millions)

Balance at September 30, 2019

$3,903

 

APS investments

255

 

Impairment

-

 

Amortization of APS investment

(184

)

Other

(250

)

Balance at December 31, 2019

$3,724

 

11)

What was the amount of WesternGeco multiclient sales in the fourth quarter of 2019?

Multiclient sales, including transfer fees, were $175 million in the fourth quarter of 2019 and $200 million in the third quarter of 2019.

 

12)

What was the WesternGeco backlog at the end of the fourth quarter of 2019?

The WesternGeco backlog, which is based on signed contracts with customers, was $324 million at the end of the fourth quarter of 2019. It was $321 million at the end of the third quarter of 2019.

 

13)

What were the orders and backlog for Cameron’s OneSubsea and Drilling Systems businesses?

The OneSubsea and Drilling Systems orders and backlog were as follows:

(Stated in millions)
Orders

Fourth Quarter
2019

Third Quarter
2019

OneSubsea

$785

$320

Drilling Systems

$170

$163

 
Backlog (at the end of period)
OneSubsea

$2,222

$1,822

Drilling Systems

$433

$496

14)

What are the components of the $209 million of charges and credits recorded during the fourth quarter of 2019?

The components of the $209 million net pretax charge are as follows (in millions):

North America-related (a)

$225

Other restructuring(b)

104

Workforce reductions (c)

68

Pension settlement accounting (d)

37

Repurchase of Notes (e)

22

Gain on formation of Sensia (f)

(247)

$209

(a)

Consists of $225 million associated with facility closures and costs to exit certain activities in North America. These charges included $123 million relating to fixed assets; $55 million of right-of-use assets under operating leases; and $47 million of other exit costs.

(b)

Primarily relates to restructuring certain activities outside of North America. Includes $68 million associated with assets to be divested and $36 million of facility closure costs.

(c)

Represents severance associated with streamlining Schlumberger’s operations and exiting certain activities.

(d)

Certain of Schlumberger’s defined benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit. These transactions had no cash impact on Schlumberger but did result in a non-cash pension settlement charge of $37 million in the fourth quarter of 2019.

(e)

Schlumberger repurchased certain Senior Notes which resulted in a $22 million charge.

(f)

Schlumberger recorded a $247 million gain in connection with the formation of the Sensia joint venture.

About Schlumberger

Schlumberger is the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. With product sales and services in more than 120 countries and employing approximately 105,000 people who represent over 170 nationalities, Schlumberger supplies the industry’s most comprehensive range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance sustainably.

Schlumberger Limited has executive offices in Paris, Houston, London, and The Hague, and reported revenues of $32.92 billion in 2019. For more information, visit www.slb.com.

*Mark of Schlumberger or Schlumberger companies.

Notes

Schlumberger will hold a conference call to discuss the earnings press release and business outlook on Friday, January 17, 2020. The call is scheduled to begin at 8:30 a.m. US Eastern Time. To access the call, which is open to the public, please contact the conference call operator at +1 (844) 721-7241 within North America, or +1 (409) 207-6955 outside North America, approximately 10 minutes prior to the call’s scheduled start time, and provide the access code 4013483. At the conclusion of the conference call, an audio replay will be available until February 17, 2020 by dialing +1 (866) 207-1041 within North America, or +1 (402) 970-0847 outside North America, and providing the access code 5581807. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same web site until February 17, 2020.

This full-year and fourth-quarter 2019 earnings release, as well as other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology, including our transformation program; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger and Schlumberger’s customers; our effective tax rate; Schlumberger’s APS projects, joint ventures and alliances; Schlumberger’s greenhouse gas emissions targets and progress against those targets; future global economic and geopolitical conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; foreign currency risk; pricing pressure; weather and seasonal factors; operational modifications, delays or cancellations; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; and other risks and uncertainties detailed in this full-year and fourth-quarter 2019 earnings release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

Simon Farrant – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
[email protected]


Source: Business Wire (January 17, 2020 - 6:50 AM EST)

News by QuoteMedia
www.quotemedia.com

Recent Company Earnings:


February 20, 2020

Shell Midstream Partners, L.P. (NYSE: SHLX) reported net income attributable to the Partnership of $140 million for the fourth quarter of 2019, which equated to $0.37 per common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $187 million.

February 19, 2020

HOUSTON, Feb. 19, 2020 (GLOBE NEWSWIRE) — Hi-Crush Inc. (NYSE: HCR) (the “Company”), a fully-integrated provider of proppant logistics solutions, today reported fourth quarter and full year 2019 results. Revenues during the fourth quarter of 2019 totaled $125.5 million compared to $173.0 million during the third quarter of 2019.

DENVERFeb. 19, 2020 /PRNewswire/ —

  • Fourth quarter oil production averaged 92.0 MBbls per day
    • Full year oil production averaged 86.2 MBbls per day
  • 2019 capital investment (including midstream) totaled $1.32 billion; below guidance range
    • Lower D&C costs drove the beat
  • Generated $1.34 billion of net cash from operating activities
    • $141 million of free cash flow1 in 2019; $59 million after dividend

February 14, 2020

Enbridge Files 2019 Year End Disclosure Documents

February 13, 2020

Houston Chronicle


Houston exploration and production company Marathon Oil has cut its drilling budget by about 10 percent amid an ongoing shale slump that caused revenue and profits to decline in 2019.

Marathon Oil cuts drilling budget amid 56 percent drop in profit- oil and gas 360

Source: Houston Chronicle

In a Wednesday afternoon statement, Marathon said the company is cutting capital expenditures by 10 percent, to $2.4 billion from $2.6 billion in 2019.

The company plans to spend $2.2 billion of its capital expenditure budget on drilling, hydraulic fracturing and other activities in the field while the remain $200 million will go to secure new oil leases and exploratory work looking for new geological formations with oil and natural gas.

Marathon remains in the black, but like other companies in the exploration and production sector, more than a year of crude oil prices in the $50 range is taking its toll on profit and drilling activity.

Active in the Eagle Ford Shale, Permian Basin, Oklahoma and Bakken Shale, Marathon reported a $20 million loss during the fourth quarter of 2019 compared with a $165 million profit a year earlier and revenue fell to $1.2 billion from $1.3 billion.

For the year, the company reported a $480 million profit, a 56 percent drop from the $1.1 billion profit in 2018; revenue of $5.2 billion was 21 percent off the $6.6 billion in 2018.

“We’ll continue to be guided by our unwavering commitment to capital discipline and sustainability,” Marathon Oil CEO Lee Tillman said in a statement.

 

Precision Drilling Corporation Announces 2019 Fourth Quarter and Year End Unaudited Financial Results

February 7, 2020

Houston Chronicle


Houston oilfield service company National Oilwell Varco finished up a year of losses $6.1 billion in the red.

NOV finishes year of losses $6.1 billion in the red- oil and gas 360

Source: Houston Chronicle

In a statement released on Thursday evening, the company reported closing 2019 with a $6.1 billion loss, a dramatic drop from the $31 million end-of-year loss in 2018. The company’s annual revenue remained flat at $8.5 billion.

Most of the company’s end-of-year loss came from writing down the value of $5.4 billion of assets during the second quarter. Crude oil prices stuck in the $50 per barrel range for most of past year have dramatically cut demand for drilling and hydraulic fracturing services in the United States. The shale slump has created eye-popping losses for oilfield services companies, which have written down billions of dollars of assets in response.

“The fourth quarter saw continued improvements in international and offshore markets, partially offset by another sequential decline in spending by our customers in North America,” National Oilwell Varco CEO Clay Williams said in a statement.

Looking at the company’s fourth quarter performance, NOV posted a $385 million loss, which was a dramatic swing from the $15 million profit during the fourth quarter of 2018.

The company’s fourth quarter revenue also slipped by 5 percent year-over-year. NOV reported making $2.3 billion during the fourth quarter, compared to $2.4 billion during the fourth quarter one year earlier.

With historical roots going back to 1862, NOV is headquartered in Houston and has more than 35,000 employees in 65 nations.

The company has not made an annual profit since 2014.

 

February 6, 2020

Reuters


ABERDEEN, Scotland – Total (TOTF.PA) beat forecasts on Thursday by keeping net adjusted fourth-quarter profit steady at $3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.

Total beats quarterly forecasts despite low oil price, raises payout- oil and gas 360

Source: Reuters

The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to $2.7 billion.

“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to 0.68 euros per share.

“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.

Total bought back $1.75 billion in shares in 2019 and plans to buy back $2 billion more in 2020.

Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of $7.4 billion, up more than 20% from a year earlier.

“While some peers buckled last week to a synchronized slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.

The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.

LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices LCOc1 have tumbled to around $55 per barrel from last year’s peak in April of almost $75.

Rivals have seen fourth-quarter profits slide on lower prices. BP (BP.L) reported a 26% drop on Tuesday while Royal Dutch Shell (RDSa.L) last month said its profits had halved.

(Graphic: Majors cashflow Total, here)

Reuters Graphic

LNG OUTPUT

Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.

“One of the reasons our results resisted the low oil environment was because of the strong LNG output which grew 50%,” Pouyanne said.

He said exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2% to 4%, a more typical level in the industry.

The chief executive said Total was expanding in the low carbon energy business and was on track to meet its goal of producing 25 gigawatts (GW) of renewable electricity by 2025, helped by solar projects in Qatar and India.

Total, which kept its capital expenditure target steady for 2020 at $18 billion, said it was on track to achieve its target of $5 billion in divestments during 2019 and 2020.

Total said it had sold its 27.5% interest in Fosmax LNG, which operates France’s Fos Cavaou LNG terminal, to Engie (ENGIE.PA) unit Elengy for about $260 million.

Total is on track to achieve its divestment target with transactions worth $3 billion so far, Jefferies analysts said.

(Graphic: Total Results, here)

Reuters Graphic

Houston Chronicle


Black Stone Minerals said it will cut its quarterly payouts to investors by almost 20 percent because of falling oil and gas prices.

Black Stone Minerals cuts investor payouts by almost 20%- oil and gas 360

Source: Houston Chronicle

In another sign of the weakening energy sector, the Houston oil and gas royalties firm will reduce its distributions to 30 cents per unit from 37 cents. This is the first time Black Stone has reduced its payout since going public in 2015.

Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.

“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.

“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.

February 4, 2020

CNBC


Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.

BP full-year net profit falls 21% on weak oil and gas prices- oil and gas 360

Source: Reuters

The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.

Analysts had expected full-year net profit to come in at $9.7 billion in 2019, according to data from Refinitiv.

Shares of BP were up more than 4%.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.

“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.

Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.

In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.

Here are the key highlights:

  • Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
  • Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
  • A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.

The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.

Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.

France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.

All roads lead to OPEC decision

International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.

Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.

Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.

The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.

“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.

OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.

A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.

Houston Chronicle


ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.

ConocoPhillips' fourth-quarter profit plunges by 60%-oil and gas 360

Source: Houston Chronicle

Revenue during the quarter dropped by more than 20 percent to $8.1 billion.

For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.

The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.

“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”

Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.

The company’s production output is expected to dip a little in 2020 because of some recent asset sales.

Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.

The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.

Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.

The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.

 

January 31, 2020

Houston Chronicle


Houston refining and pipeline company Phillips 66 on Friday reported a $689 million fourth-quarter profit, 51 percent less than the same period in 2018.

Imperial Oil's quarterly profit beats estimates on higher crude prices- oil and gas 360

Source: Houston Chronicle

The fourth quarter performance resulted in Phillips 66 closing 2019 with a nearly $3.7 billion profit, a 35 percent drop from the previous year when favorable margins in the refining of domestic crude oil swelled profits. The

West Texas Intermediate crude oil prices fell by 40 percent during the fourth quarter of 2018 and entered the $40 per barrel range, creating losses for exploration and production companies and services companies but windfalls for refining companies that were able to process domestic crude.

Crude oil prices have since settled in the $50 per range, which are still beneficial to refining companies but not as profitable.

Phillips 66’s pipeline business took a $900 million hit during the third quarter for impairments related to writing down the value of DCP Midstream, a gathering and processing plant joint venture with Canadian pipeline operator Enbridge.

In a statement, Phillips 66 Greg Garland focused on future growth. The company placed its Gray Oak Pipeline into service in November. When in full service early this year it will move 900,000 barrels of crude oil per day from Texas’ Permian Basin and Eagle Ford Shale to the company’s refinery in Brazoria County and the Port of Corpus Christi.

“As we begin 2020, we are focused on operating excellence, executing our growth projects, enhancing returns on existing assets and exercising disciplined capital allocation,” Garland said.

 

CNBC


Chevron on Friday posted a $6.6 billion loss in the fourth quarter due to $10.4 billion worth of write-offs related to shale gas production in Appalachia and deep-water projects in the Gulf of Mexico. In December, the company warned that this charge would be $10 billion to $11 billion.

Chevron posts $6.6 billion loss in the fourth quarter-oil and gas 360

Source: CNBC

Shares slid 3.4% on Friday after the company reported $36.35 billion in revenue for the period, which missed analyst expectations and was down 14% year over year, hurt by weakness in the company’s upstream division.

Chevron said it earned $1.49 per share excluding items, down from $1.95 per share a year earlier.

Here’s how the energy giant’s results fared on an adjusted basis relative to Wall Street expectations:
  • Adjusted earnings: $1.49 cents per share vs. $1.45 expected by a Refinitiv survey of analysts
  • Revenue: $36.35 billion vs. $38.639 billion expected by Refinitiv

A year earlier, the company earned $3.7 billion. Total earnings for 2019 slid 80%, to $2.924 billion, compared with $14.824 billion in 2018.

Oil-equivalent production at 3.08 million barrels per day was unchanged year over year, although the company said its annual daily production exceeded 3 million barrels per day for the first time.

The company’s upstream operations in the U.S. lost $7.5 billion in the quarter, down from earnings of $964 million a year earlier. That was primarily due to $8.2 billion in write-offs related to Appalachia and Gulf of Mexico operations, as well as lower crude and natural gas prices.

Chevron said the average sale price per barrel of oil and natural gas liquids was $47, a 16% decrease from 2018.

“Cash flow from operations remained strong in 2019, allowing the company to deliver on all our financial priorities,“
Chairman and CEO Michael Wirth said in a statement. “We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion. Earlier this week, we announced a quarterly dividend increase of $0.10 per share, reinforcing our commitment to growing shareholder returns.”

In the same quarter a year earlier the company reported EPS of $1.95 and revenue of $42.35 billion. Last quarter, the company earned $1.36 per share, and brought in $36.12 billion in revenue.

U.S. West Texas Intermediate crude prices are down more than 15% this month, while international benchmark Brent crude has shed roughly 12%.

Houston Chronicle


Exxon Mobil’s fourth-quarter profit declined by 5 percent, capping a year in which earnings plunged by more than 30 percent.

Exxon Mobil's profit tumbled 30% in 2019, 5% in final quarter-oil and gas 360

Source: Houston Chronicle

The company’s $5.7 billion profit in the fourth quarter lagged the previous year on weaker sales and pricing in its petrochemical and refining divisions.

For the year, Exxon earned $14.3 billion, down from $20.8 billion in 2018, despite the sale of its Norwegian North Sea assets and the beginning of oil production in the waters off Guyana in December.

The company’s bottom line in 2019 showed the effects of pumping billions of dollars into oil-production from Guyana’s coastal waters and West Texas’ Permian Basin, where Exxon is the most active driller. Exxon’s capital spending jumped more than 20 percent to $31 billion last year from nearly $26 billion in 2018.

Despite short-term declines in refining and chemicals profit margins, Exxon Chief Executive Darren Woods said the company had a positive quarter overall. Exxon last month had warned that weakness in those segments would drag down its profits.
“Growth in demand for the products that underpin our businesses remains strong,” Woods said. “We remain focused on improving our base businesses, driving efficiencies, and optimizing the value of our investment portfolio.”

Exxon Mobil’s oil and gas production remained essentially flat in the fourth quarter. A nearly 5 percent dip in natural gas production was offset by a 4 percent jump in crude oil volumes, driven by growth in the Permian.

One other factor for weaker refining profits was additional downtime at Exxon’s refining and petrochemical complex in Beaumont, which is undergoing a major expansion.

Despite Exxon Mobil’s growth, the company has been punished on Wall Street with its stock near its lowest value since 2010 as the nation’s largest energy company deals with weaker oil and gas and petrochemical prices, increased spending and a souring investment sentiment on the broader energy sector.

Last year, Exxon fell out of the S&P 500 stock index’s list of 10 largest companies for the first time.

The company still has a market value of about $275 billion. Rivals Chevron and Royal Dutch Shell still lag behind with values of more than $210 billion.

 


Legal Notice