10-KPeriod: FY2020

SLB LIMITED/NV Annual Report, Year Ended Dec 31, 2020

Filed January 27, 2021For Securities:SLB

Summary

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 billion, 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% 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.

Financial Highlights

49 data points
Beta

Revenue

$23.60B

Net Income

-$10.52B

-44.6% Net Margin

EPS (Diluted)

$-7.57

Total Assets

$42.43B

Cash & Equivalents

$844.00M

Free Cash Flow

$1.83B

Financial Statements
Beta
Revenue$23.60B
R&D Expenses$580.00M
Operating Income$2.40B
Interest Expense$563.00M
Net Income-$10.52B
EPS (Basic)$-7.57
EPS (Diluted)$-7.57
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Revenue decreased by 28% to $23.6 billion in 2020, heavily impacted by the COVID-19 pandemic and low oil prices.
  • 2North American revenue saw a significant decline of 48%, while international revenue decreased by 19%, demonstrating greater resilience.
  • 3The company recorded substantial charges and credits of $12.5 billion in 2020, primarily related to goodwill and asset impairments, and workforce reductions.
  • 4SLB restructured its organization into four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
  • 5A 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.
  • 6Despite 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.
  • 7Capital expenditures were reduced to $1.5 billion in 2020 from $2.7 billion in 2019, reflecting a focus on capital discipline.

Frequently Asked Questions

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.

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.

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.

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).