10-KPeriod: FY2009

SLB LIMITED/NV Annual Report, Year Ended Dec 31, 2009

Filed February 5, 2010For Securities:SLB

Summary

SLB Limited (SLB) reported its 2009 annual results, highlighting a challenging year marked by the global economic downturn which significantly impacted oil and gas exploration and production spending. Total revenue for the year decreased by 16% to $22.7 billion compared to 2008. The Oilfield Services segment, the company's largest, saw a 16% revenue decline, primarily driven by reduced activity and pricing pressure in North America due to lower natural gas prices. WesternGeco, the seismic services segment, experienced a more substantial revenue drop of 25% as customers reduced discretionary spending. Despite the revenue decline and increased expenses such as workforce reductions and pension curtailments, SLB demonstrated resilience by maintaining its technological leadership and investing in infrastructure and strategic acquisitions. The company ended the year with a strengthened balance sheet, including a significant cash position. Management expressed cautious optimism for 2010, anticipating a gradual recovery in oil prices and customer confidence, though natural gas markets remained oversupplied. The company remains committed to long-term growth and capital deployment strategies, including share repurchases and dividends.

Financial Highlights

54 data points
Beta

Revenue

$22.70B

24.0% Gross Margin

Net Income

$3.13B

13.8% Net Margin

EPS (Diluted)

$2.59

Total Assets

$33.47B

Cash & Equivalents

$617.00M

Free Cash Flow

$2.92B

Financial Statements
Beta
Revenue$22.70B
Cost of Revenue$17.25B
Gross Profit$5.46B
R&D Expenses$802.00M
Operating Income$3.16B
Interest Expense$221.00M
Net Income$3.13B
EPS (Basic)$2.62
EPS (Diluted)$2.59
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Full-year 2009 revenue declined 16% to $22.7 billion, reflecting the impact of the global economic downturn on oilfield services spending.
  • 2Oilfield Services revenue decreased 16% to $20.5 billion, with North America experiencing a significant 37% drop due to lower natural gas prices and market fundamentals.
  • 3WesternGeco revenue fell 25% to $2.1 billion, impacted by reduced discretionary spending from customers, particularly in North America.
  • 4The company incurred $238 million in pretax charges during 2009 related to workforce reductions and pension curtailments.
  • 5Schlumberger maintained a strong liquidity position, ending the year with $4.6 billion in cash and short-term investments.
  • 6WesternGeco's backlog decreased to $1.0 billion at year-end 2009 from $1.8 billion at year-end 2008.
  • 7The company returned $1.0 billion to shareholders through dividends paid in 2009.

Frequently Asked Questions

The global economic downturn significantly impacted SLB's financial performance in 2009. This led to reduced oil and gas prices, causing customers to cut exploration and production spending, which directly translated into lower demand and pricing for SLB's services and products. Consequently, total revenue for 2009 decreased by 16% to $22.7 billion compared to the previous year, with a notable 37% decline in North American revenue for the Oilfield Services segment.

The primary drivers for the revenue decline in Oilfield Services were lower natural gas prices and unfavorable market fundamentals, particularly in North America, leading to a 37% decrease in that region. Additionally, reduced customer spending, weakening local currencies against the US dollar, and lower activity in various GeoMarkets across Europe/CIS/Africa and Middle East & Asia contributed to the overall 16% revenue decrease for the segment.

The WesternGeco segment experienced a significant revenue decline of 25% in 2009, reaching $2.1 billion. This was primarily due to customers reducing discretionary spending, which particularly impacted Multiclient seismic activity in North America. Marine revenue also fell due to lower activity and reduced pricing amid weak market conditions. Land and Data Processing revenues also saw decreases reflecting lower utilization and activity.

SLB's outlook for 2010 is cautiously optimistic, anticipating a better year driven by expected increases in oil demand, particularly in developing nations, and a potential rise in customer E&P budgets. However, key uncertainties remain. The natural gas market is expected to stay oversupplied, and while some recovery in industrial demand is noted, increased LNG flows and uncertainty around unconventional gas production could limit the growth in North American gas drilling. The company's overall performance in 2010 will remain largely dependent on global economic prospects and continued economic growth.