01—Abstract
Summary
Summary of the 10-K filed February 1, 2012. Cited figures are marked; the original filing is the authoritative source.
Schlumberger Limited (SLB) reported strong financial performance for the fiscal year 2011, driven by significant revenue growth and improved operational efficiency.
The company's strategy to integrate recent acquisitions, particularly Smith International and Geoservices, has broadened its service portfolio and enhanced its market position across all major oilfield service segments: Reservoir Characterization, Drilling, and Reservoir Production. Despite global economic uncertainties and modest oil demand growth, Schlumberger leveraged increased exploration and production (E&P) expenditures by oil and gas companies, particularly in North America's liquids-rich plays and international deepwater areas. The company's proactive approach to technology development and adoption, coupled with strategic acquisitions and operational integration, has positioned it well to capitalize on market opportunities.
While facing risks associated with international operations, commodity price volatility, and regulatory changes, Schlumberger demonstrated resilience and growth. The company's robust cash flow generation and commitment to returning value to shareholders through dividends and share repurchases underscore its financial strength and strategic execution.
02—Key points
Key Highlights
- Significant revenue growth of 39% year-over-year, reaching $39.5 billion, largely driven by the full-year impact of acquisitions (Smith International and Geoservices) and improved market conditions.
- Oilfield Services segment revenue increased by 39% to $37 billion, reflecting broad-based growth across Reservoir Characterization, Drilling, and Reservoir Production groups.
- North America region showed substantial growth (82% year-over-year), fueled by increased activity, stronger pricing, and a shift towards liquids-rich plays and deepwater work.
- International revenue grew by 24%, supported by strengthening activity in deepwater and exploration basins, along with signs of pricing traction.
- The company continued to invest in technology and innovation, with research and engineering expenses increasing in absolute dollars, supporting new product and service introductions.
- Shareholder returns were maintained through consistent dividend payments and an active share repurchase program, extending the program through December 31, 2013.
- The company's robust balance sheet and cash flow generation provide financial flexibility to navigate market dynamics and pursue strategic growth initiatives.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, SLB kept $0.14.
- Revenue$36.58B100.0%
- Cost of revenue−$28.80B78.7%
- Gross profit$7.78B21.3%
- Operating costs−$3.26B8.9%
- Operating income$4.52B12.3%
- Interest, other & tax$481.0M1.3%
- Net income$5.00B13.7%
Where FY2011 revenue went
$36.58B- Cost of revenue: $28.80B, 79% of revenue
- Operating income: $4.52B, 12% of revenue
- R&D: $1.06B, 2.9% of revenue
- Other operating costs: $2.20B, 6.0% of revenue
Kept 12% as operating incomeOperating income $4.52B · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 1, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $36.58B$26.67B | +37.1% |
| Cost of Revenue | $28.80B$21.10B | +36.5% |
| Gross Profit | $7.78B$5.58B | +39.5% |
| R&D Expenses | $1.06B$919.00M | +15.5% |
| Operating Income | $4.52B$4.25B | +6.1% |
| Interest Expense | $298.00M$207.00M | +44.0% |
| Net Income | $5.00B$4.27B | +17.1% |
| EPS (Basic) | $3.70$3.41 | +8.5% |
| EPS (Diluted) | $3.67$3.38 | +8.6% |
| Shares Outstanding (Basic) | 1.35B1.25B | +7.9% |
| Shares Outstanding (Diluted) | 1.36B1.26B | +7.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of Schlumberger's revenue growth in 2011?
Schlumberger's revenue growth in 2011 was primarily driven by the full-year contribution from its 2010 acquisitions of Smith International and Geoservices, combined with significantly improved market conditions and increased E&P spending, particularly in North America and international deepwater areas.
How did Schlumberger's geographical segments perform in 2011?
North America experienced the strongest growth at 82%, benefiting from increased activity, better pricing, and a focus on liquids-rich horizontal wells. International revenue increased by 24%, supported by strong activity in deepwater exploration and developing basins. Latin America grew by 29%, and Europe/CIS/Africa saw 22% revenue growth despite geopolitical challenges in North Africa.
What are the main risks Schlumberger identified for its business?
Key risks identified include the dependence of demand for services on oil and gas industry expenditures, which are sensitive to commodity prices and economic conditions. Other significant risks include exposure to geopolitical and economic conditions in the approximately 85 countries of operation, potential environmental liabilities and costs, substantial liability claims from operations, changes in government regulations (including climate-related policies), and the need to maintain technology leadership and skilled personnel.
How is Schlumberger managing its debt and liquidity?
Schlumberger maintained a strong liquidity position with approximately $4.8 billion in cash and short-term investments at year-end 2011. The company also had significant committed debt facilities available. During 2011, it issued new senior notes and repurchased existing debt, actively managing its capital structure. Dividends were increased and share repurchases continued, indicating a commitment to returning capital to shareholders.
06—Continue