01—Abstract
Summary
Summary of the 10-K filed January 23, 2019. Cited figures are marked; the original filing is the authoritative source.
SLB LIMITED/NV (SLB) reported a robust increase in revenue for the fiscal year 2018, reaching $32.8 billiona, an 8% rise from the previous year.
This growth was primarily fueled by a significant 26%b surge in North America revenue, driven by increased land activity and strong performance in its OneStim business. Despite a challenging fourth quarter marked by a steep decline in oil prices and a subsequent slowdown in US land well completion activity, the company demonstrated resilience. International revenue remained relatively flat year-over-year, but showed signs of a positive trend reversal with increased activity from national oil companies investing in longer-term resource development.
Looking ahead to 2019, SLB anticipates a gradual recovery in oil prices, supported by production cuts from OPEC and Russia, and a more balanced global supply and demand dynamic. While North America faces uncertainty due to increased capital costs and a focus on free cash flow, the company expects solid, single-digit growth in international markets. The company's financial performance in 2018 also saw a notable $215 millionc gain from the sale of its marine seismic acquisition business.
02—Key points
Key Highlights
- 2018 Revenue grew 8% year-over-year to $32.8 billion, driven by strong North America performance.
- North America revenue increased by 26%, largely due to higher land activity and the OneStim business.
- International revenue was flat year-over-year but showed signs of improvement, indicating a positive activity trend.
- The company recorded a $215 million gain from the sale of its marine seismic acquisition business in Q4 2018.
- Despite a Q4 oil price plunge and activity slowdown in North America, the company maintained operational performance.
- SLB anticipates a gradual recovery in oil prices and solid single-digit growth in international markets for 2019.
- The company reported full-year 2018 pretax operating income of $4.2 billion, a 7% increase from 2017.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed January 23, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $32.81B$30.44B | +7.8% |
| R&D Expenses | $702.00M$787.00M | −10.8% |
| Operating Income | $4.19B$3.92B | +6.8% |
| Interest Expense | $575.00M$566.00M | +1.6% |
| Net Income | $2.14B-$1.50B | +242.1% |
| EPS (Basic) | $1.54$-1.08 | +242.6% |
| EPS (Diluted) | $1.53$-1.08 | +241.7% |
| Shares Outstanding (Basic) | 1.39B1.39B | −0.2% |
| Shares Outstanding (Diluted) | 1.39B1.39B | +0.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of SLB's revenue growth in 2018?
SLB's revenue growth in 2018 was primarily driven by increased activity and investment in North America, particularly in land-based operations, highlighted by the strong performance of its OneStim business. Higher oil prices for most of the year also supported customer spending.
How did the company address the significant oil price drop in the fourth quarter of 2018?
The company experienced a steep fall in US land well completion activity due to plummeting oil prices in Q4 2018. In response, SLB indicated that a number of OneStim fleets were warm-stacked, and the company focused on securing dedicated contracts for the first half of 2019. Internationally, activity remained resilient.
What is SLB's outlook for 2019, considering the market volatility?
SLB expects a more positive supply and demand balance for oil, leading to a gradual price recovery in 2019. While acknowledging uncertainty in North America due to capital cost and free cash flow focus, the company anticipates solid, single-digit growth in its international markets.
Did SLB undertake any significant divestitures in 2018?
Yes, in the fourth quarter of 2018, SLB completed the divestiture of its marine seismic acquisition business, recognizing a gain of $215 million from the transaction.
06—Continue