Schlumberger Announces Second-Quarter 2021 Results

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  • Global revenue of $5.6 billion increased 8% sequentially
  • International revenue was $4.5 billion and North America revenue was $1.1 billion
  • EPS of $0.30 increased 43% sequentially
  • Cash flow from operations was $1.2 billion and free cash flow was $869 million
  • Board approved a quarterly cash dividend of $0.125 per share

July 23, 2021, 06:50 AM Eastern Daylight Time

PARIS--(BUSINESS WIRE)--Regulatory News:

“Overall, the second-quarter performance and the progress we made on our strategic targets align very well with our long-term financial ambition. We will seize the industry upcycle with strength in our core, will leverage the accretive impact of digital, and will continue building our portfolio of low-carbon energy ventures. ”

Schlumberger Limited (NYSE: SLB) today reported results for the second quarter 2021.

Second-Quarter Results

  (Stated in millions, except per share amounts)
    Three Months Ended   Change
    Jun. 30, 2021   Mar. 31, 2021   Jun. 30, 2020   Sequential   Year-on-year
Revenue*  

$5,634

 

$5,223

 

$5,356

 

8%

 

5%

Income (loss) before taxes - GAAP basis  

$542

 

$386

 

$(3,627)

 

40%

 

n/m

Net income (loss) - GAAP basis  

$431

 

$299

 

$(3,434)

 

44%

 

n/m

Diluted EPS (loss per share) - GAAP basis  

$0.30

 

$0.21

 

$(2.47)

 

43%

 

n/m

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA**  

$1,198

 

$1,049

 

$838

 

14%

 

43%

Adjusted EBITDA margin**  

21.3%

 

20.1%

 

15.6%

 

118 bps

 

561 bps

Pretax segment operating income**  

$807

 

$664

 

$396

 

22%

 

104%

Pretax segment operating margin**  

14.3%

 

12.7%

 

7.4%

 

162 bps

 

694 bps

Net income, excluding charges & credits**  

$431

 

$299

 

$69

 

44%

 

525%

Diluted EPS, excluding charges & credits**  

$0.30

 

$0.21

 

$0.05

 

43%

 

500%

   

 

 

 

 

 

 

 

 

 

Revenue by Geography  

 

 

 

 

 

 

 

 

 

International  

$4,511

 

$4,211

 

$4,224

 

7%

 

7%

North America*  

1,083

 

972

 

1,097

 

11%

 

-1%

Other  

40

 

40

 

35

 

n/m

 

n/m

   

$5,634

 

$5,223

 

$5,356

 

8%

 

5%

                     
*Schlumberger divested certain businesses in North America during the fourth quarter of 2020. These businesses generated revenue of $159 million during the second quarter of 2020. Excluding the impact of these divestitures, global second-quarter 2021 revenue increased 8% year on year. North America's second-quarter 2021 revenue, excluding the impact of these divestitures, increased 15% year-on-year.
**These are non-GAAP financial measures. See sections titled "Charges & Credits," "Divisions," and "Supplemental Information" for details.
n/m = not meaningful
                     
    (Stated in millions)
    Three Months Ended   Change
    Jun. 30, 2021   Mar. 31, 2021   Jun. 30, 2020   Sequential   Year-on-year
Revenue by Division                    
Digital & Integration  

$817

 

$773

 

$619

 

6%

 

32%

Reservoir Performance*  

1,117

 

1,002

 

1,170

 

12%

 

-4%

Well Construction  

2,110

 

1,935

 

2,089

 

9%

 

1%

Production Systems**  

1,681

 

1,590

 

1,557

 

6%

 

8%

Other  

(91)

 

(77)

 

(79)

 

n/m

 

n/m

   

$5,634

 

$5,223

 

$5,356

 

8%

 

5%

               

 

 

 

Pretax Operating Income by Division              

 

 

 

Digital & Integration  

$274

 

$247

 

$108

 

11%

 

154%

Reservoir Performance  

156

 

102

 

22

 

52%

 

609%

Well Construction  

272

 

209

 

180

 

30%

 

51%

Production Systems  

171

 

138

 

145

 

24%

 

18%

Other  

(66)

 

(32)

 

(59)

 

n/m

 

n/m

   

$807

 

$664

 

$396

 

22%

 

104%

               

 

 

 

Pretax Operating Margin by Division              

 

 

 

Digital & Integration  

33.5%

 

32.0%

 

17.4%

 

147 bps

 

1,606 bps

Reservoir Performance  

14.0%

 

10.2%

 

1.9%

 

373 bps

 

1,206 bps

Well Construction  

12.9%

 

10.8%

 

8.6%

 

209 bps

 

427 bps

Production Systems  

10.2%

 

8.7%

 

9.3%

 

146 bps

 

84 bps

Other  

n/m

 

n/m

 

n/m

 

n/m

 

n/m

   

14.3%

 

12.7%

 

7.4%

 

162 bps

 

694 bps

                     
*Schlumberger divested its OneStim® pressure pumping business in North America during the fourth quarter of 2020. This business generated revenue of $140 million during the second quarter of 2020. Excluding the impact of this divestiture, second-quarter 2021 revenue increased 8% year-on-year.
**Schlumberger divested its low-flow artificial lift business in North America during the fourth quarter of 2020. This business generated revenue of $19 million during the second quarter of 2020. Excluding the impact of this divestiture, second-quarter 2021 revenue increased 9% year-on-year.
n/m = not meaningful

Schlumberger CEO Olivier Le Peuch commented, “Our second-quarter results demonstrate the broad strength of our portfolio, the extent of our market participation—both in North America and internationally—and our enhanced ability to capture and translate activity growth into sustained margin expansion and strong free cash flow. The quarter marks a leap forward in achieving our full-year financial targets with the potential for further upside given the right conditions. As I reflect on the progress we have made since last year, I want to acknowledge the entire Schlumberger team whose exemplary commitment to safety and performance has not wavered despite the challenges. Once again, I am extremely proud of our people for their dedication and resilience, and for delivering a strong quarter, clearly seizing the beginning of the upcycle.

“Second-quarter global revenue grew 8% sequentially, outperforming the rig count growth in both North America and the international markets. All four Divisions grew, resulting in the highest sequential quarterly revenue growth rate since the second quarter of 2017.

“In North America, revenue grew 11% sequentially, representing the highest sequential quarterly growth rate for this area since the third quarter of 2017. This performance was driven by US land revenue, which increased 19% due to higher drilling activity and increased sales of well and surface production systems. Well Construction revenue in US land grew more than 30% sequentially, significantly outperforming the rig count growth of 16%. In addition, Canada's land revenue increased despite the spring breakup, due to higher Asset Performance Solutions (APS) project revenue, while North America offshore revenue was slightly higher due to sales of subsea production systems.

“International revenue grew 7% sequentially with all four Divisions registering growth. The revenue growth outpaced the international rig count increase—reflecting the depth and diversity of our portfolio—as activity surpassed the impact of the seasonal recovery in the Northern Hemisphere. Many countries posted double-digit sequential revenue growth.

“Globally, the second-quarter revenue growth was led by Reservoir Performance and Well Construction, where activity intensified beyond the seasonal recovery. Reservoir Performance revenue increased 12% sequentially due to the seasonal activity rebound in the Northern Hemisphere, in addition to higher exploration and appraisal activity. Well Construction revenue increased 9% sequentially from increased drilling activity in US land and broadly across the international markets, particularly offshore. Digital & Integration revenue increased 6% sequentially due to higher sales of digital solutions and higher APS project revenue. Production Systems revenue grew 6%, primarily due to higher sales of well, surface, and subsea production systems.

“Sequentially, second-quarter pretax segment operating income increased 22%. Pretax segment operating margin expanded by 162 basis points (bps) to 14% while adjusted EBITDA margin grew 118 bps to 21%. Adjusted EBITDA margin was the highest since 2018 and pretax segment operating margin reached its highest level since 2015. This performance highlights the impact of our capital stewardship and cost-out measures, which are providing us with significant operating leverage.

“Second-quarter cash flow from operations was $1.2 billion and free cash flow was $869 million. These amounts include a $477 million US federal tax refund. We are very pleased with our cash flow performance which is on track with our full-year target and enabled us to begin deleveraging the balance sheet during the quarter.

“While the rise of the COVID-19 Delta variant and resurgence of related disruptions could impact the pace of economic reopening, industry projections of oil demand reflect the anticipation of a wider vaccine-enabled recovery, improving road mobility, and the impact of various economic stimulus programs. Under this scenario, we believe the momentum of international activity growth that we experienced in the second quarter will continue as the cyclical recovery unfolds. This view is supported by rig count trends, capital spending signals, and customer feedback. In North America, we anticipate the growth rate to moderate; however, drilling activity could still surprise to the upside due to private E&P operator spending.

“Consequently, absent any further setback in the recovery, we continue to see our international revenue growing in the second half of 2021 by double-digits when compared to the second half of last year. This translates into full-year 2021 international revenue growth, setting the stage for a strong baseline as we move into 2022 and beyond.

“During the quarter, we also continued to execute our long-term strategy with advances in Digital and New Energy through our technology and unique partnerships. In addition, we accelerated our commitment to sustainability and decarbonization of our industry. In particular, we took definitive climate change action during the quarter and launched our Transition Technologies portfolio which will aid our clients in meeting their climate change ambitions. Finally, I am very proud that we announced our commitment to achieve net-zero emissions by 2050. Our net-zero emissions target is based on a verifiable, science-based approach that is aligned with the 1.5 degrees Celsius target of the Paris Agreement and includes our Scope 3 emissions.

“Overall, the second-quarter performance and the progress we made on our strategic targets align very well with our long-term financial ambition. We will seize the industry upcycle with strength in our core, will leverage the accretive impact of digital, and will continue building our portfolio of low-carbon energy ventures.

“I am truly excited about Schlumberger in the new industry landscape and our commitment to higher value and lower carbon for our people, our customers, our shareholders, and the global community.”

Other Events

On June 28, 2021, Schlumberger repurchased $665 million of its outstanding 3.300% Senior Notes due September 2021.

On July 22, 2021, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.125 per share of outstanding common stock, payable on October 7, 2021, to stockholders of record on September 1, 2021.

Revenue by Geographical Area

    (Stated in millions)
    Three Months Ended   Change
    Jun. 30, 2021   Mar. 31, 2021   Jun. 30, 2020   Sequential   Year-on-year
North America*  

$1,083

 

$972

 

$1,097

 

11%

 

-1%

Latin America  

1,057

 

1,038

 

629

 

2%

 

68%

Europe/CIS/Africa  

1,453

 

1,256

 

1,449

 

16%

 

-

Middle East & Asia  

2,001

 

1,917

 

2,146

 

4%

 

-7%

Other  

40

 

40

 

35

 

n/m

 

n/m

   

$5,634

 

$5,223

 

$5,356

 

8%

 

5%

               

 

 

 

International  

$4,511

 

$4,211

 

$4,224

 

7%

 

7%

North America*  

$1,083

 

$972

 

$1,097

 

11%

 

-1%

                     
*Schlumberger divested certain businesses in North America during the fourth quarter of 2020. These businesses generated revenue of $159 million during the second quarter of 2020. Excluding the impact of these divestitures, global second-quarter 2021 revenue increased 8% year-on-year. North America second-quarter 2021 revenue, excluding the impact of these divestitures, increased 15% year-on-year.
n/m = not meaningful
Certain prior period amounts have been reclassified to conform to the current period presentation.

North America

North America's revenue of $1.1 billion increased 11% sequentially, with US land revenue growing 19% due to higher drilling activity and increased sales of well and surface production systems. The North America revenue increase represented the highest sequential quarterly growth rate since the third quarter of 2017. Well Construction revenue in US land grew more than 30% sequentially, outperforming the rig count growth of 16%. In addition, Canada land revenue increased despite the spring breakup due to higher APS project revenue, while offshore revenue was slightly higher due to sales of subsea production systems.

International

International revenue of $4.5 billion grew 7% sequentially outperforming the rig count growth. The revenue increases that all four Divisions experienced was driven by activity that strengthened beyond the impact of the seasonal recovery in the Northern Hemisphere, leading to double-digit sequential revenue growth in several countries.

Revenue in Latin America of $1.1 billion increased 2% sequentially due to double-digit sequential revenue growth in both Argentina and Guyana from higher Reservoir Performance intervention activity. In addition, Ecuador's revenue increased due to higher Well Construction activity, partially offset by reduced drilling in Mexico and lower Production Systems revenue in Brazil following strong sales in the previous quarter.

Europe/CIS/Africa revenue of $1.5 billion increased 16% sequentially. This significant growth was driven by activity that strengthened beyond the impact of the seasonal recovery in the Northern Hemisphere, leading to double-digit sequential growth in most of the countries in the area. All four Divisions posted double-digit sequential revenue growth in the area, primarily from higher activity in digital solutions, stimulation, wireline, wellbore drilling including measurements, and fluids.

Revenue in the Middle East & Asia of $2.0 billion increased 4% sequentially. Growth was posted across all countries in the area except for India, which was impacted by COVID-related disruption. Double-digit sequential revenue growth was posted in Qatar, United Arab Emirates (UAE), and East Asia from higher Reservoir Performance and Well Construction activity. The revenue growth was driven by higher activity in wireline, intervention, stimulation, wellbore drilling including measurements, and fluids.

Results by Division

Digital & Integration

    (Stated in millions)
    Three Months Ended   Change
    Jun. 30, 2021   Mar. 31, 2021   Jun. 30, 2020   Sequential   Year-on-year
Revenue                    
International  

$625

 

$610

 

$470

 

2%

 

33%

North America  

191

 

161

 

145

 

19%

 

32%

Other  

1

 

2

 

4

 

n/m

 

n/m

   

$817

 

$773

 

$619

 

6%

 

32%

               

 

 

 

Pretax operating income  

$274

 

$247

 

$108

 

11%

 

154%

Pretax operating margin  

33.5%

 

32.0%

 

17.4%

 

147 bps

 

1,606 bps

                     
n/m = not meaningful                    
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