01—Abstract
Summary
Summary of the 10-K filed January 27, 2021. Cited figures are marked; the original filing is the authoritative source.
SLB LIMITED/NV (SLB) filed its 2020 10-K on January 26, 2021, reporting significant impacts from the COVID-19 pandemic and a challenging oil and gas market.
The company experienced a substantial revenue decline of 28% year-over-year to $23.6 billiona, primarily driven by a sharp 48% drop in North American revenue due to reduced customer spending and activity. International revenue showed more resilience, declining 19% year-over-year. SLB implemented significant restructuring and cost-saving measures throughout 2020, including workforce reductions and asset impairments totaling $12.5 billion in charges and credits.
The company also strategically repositioned its business, notably contributing its North American onshore hydraulic fracturing business (OneStim) to Liberty Oilfield Services in exchange for a 37%b equity stake, signaling a shift towards increasing its international revenue mix. Despite the downturn, SLB maintains a strong liquidity position and a commitment to capital stewardship, including a reduced dividend policy.
02—Key points
Key Highlights
- Revenue decreased by 28% to $23.6 billion in 2020, heavily impacted by the COVID-19 pandemic and low oil prices.
- North American revenue saw a significant decline of 48%, while international revenue decreased by 19%, demonstrating greater resilience.
- The company recorded substantial charges and credits of $12.5 billion in 2020, primarily related to goodwill and asset impairments, and workforce reductions.
- SLB restructured its organization into four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
- A significant strategic move in Q4 2020 was the contribution of the OneStim business to Liberty Oilfield Services in exchange for a 37% equity stake, increasing the focus on international markets.
- Despite significant revenue and profitability challenges, the company maintained a strong liquidity position with $3.0 billion in cash and short-term investments as of December 31, 2020.
- Capital expenditures were reduced to $1.5 billion in 2020 from $2.7 billion in 2019, reflecting a focus on capital discipline.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed January 27, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $23.60B$32.92B | −28.3% |
| R&D Expenses | $580.00M$717.00M | −19.1% |
| Operating Income | $2.40B$3.98B | −39.6% |
| Interest Expense | $563.00M$609.00M | −7.6% |
| Net Income | -$10.52B-$10.14B | −3.8% |
| EPS (Basic) | $-7.57$-7.32 | −3.4% |
| EPS (Diluted) | $-7.57$-7.32 | −3.4% |
| Shares Outstanding (Basic) | 1.39B1.39B | +0.4% |
| Shares Outstanding (Diluted) | 1.39B1.39B | +0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of SLB's financial performance in 2020?
The primary driver was the unprecedented impact of the COVID-19 pandemic, which led to a significant and swift reduction in global oil and gas demand and prices. This resulted in substantially reduced customer spending and activity levels, leading to a 28% year-over-year decline in SLB's revenue.
How did SLB manage the financial challenges posed by the 2020 downturn?
SLB implemented a comprehensive strategy including significant cost reductions, workforce reductions (over 21,000 employees), asset impairments, and a strategic review of its business portfolio. They also reduced capital expenditures and announced a 75% reduction in its quarterly cash dividend to conserve cash and protect its balance sheet.
What is the significance of the OneStim contribution to Liberty Oilfield Services?
The contribution of SLB's North American onshore hydraulic fracturing business (OneStim) to Liberty Oilfield Services in exchange for a 37% equity stake is a key strategic move. It allows SLB to reduce its exposure to the highly cyclical North American land market and increases its revenue derived from international operations, aligning with the company's 'fit-for-basin' strategy and anticipated global market shifts.
What are SLB's future growth areas and strategies?
SLB is focusing on three strategic themes: strengthening its core business through technology and customer collaboration, expanding its go-to-market strategies with a 'fit-for-basin' approach, and pursuing next horizons of growth in digital innovation and new energy technologies (low carbon and carbon-neutral solutions).
06—Continue