10-QPeriod: Q2 FY2008

SLB LIMITED/NV Quarterly Report for Q2 Ended Jun 30, 2008

Filed July 23, 2008For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported strong financial performance for the second quarter and the first six months of 2008, demonstrating robust revenue and income growth. For the second quarter, revenue surged by 22% year-over-year to $6.75 billion, with net income reaching $1.42 billion, a significant increase from $1.26 billion in the prior year period. Diluted earnings per share were $1.16, up from $1.02 in Q2 2007. The company experienced broad-based revenue growth across its Oilfield Services segment, driven by strong demand in various geographic regions and for key technologies. The company's financial health appears solid, with substantial operating cash flow generation. SLB also demonstrated a commitment to shareholder returns through significant dividend payments and a substantial share repurchase program. Management's outlook remains cautiously optimistic, with forward-looking statements highlighting potential risks and uncertainties, but overall, the results indicate a company capitalizing on a strong market environment in the oil and gas services sector.

Financial Highlights

28 data points
Beta

Revenue

$6.75B

31.7% Gross Margin

Net Income

$1.42B

21.0% Net Margin

EPS (Diluted)

$1.16

Cash & Equivalents

$186.00M

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$6.75B
Cost of Revenue$4.61B
Gross Profit$2.14B
R&D Expenses$197.00M
Operating Income$2.72B
Interest Expense$61.00M
Net Income$1.42B
EPS (Basic)$1.19
EPS (Diluted)$1.16
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Revenue for the second quarter of 2008 increased by 22% to $6.75 billion compared to $5.64 billion in the second quarter of 2007.
  • 2Net income for the second quarter of 2008 was $1.42 billion, an increase from $1.26 billion in the same period last year.
  • 3Diluted earnings per share for the second quarter of 2008 rose to $1.16 from $1.02 in the second quarter of 2007.
  • 4Oilfield Services segment revenue grew 22% year-over-year, driven by strong demand across all geographic areas and technologies.
  • 5The company generated strong operating cash flow of $2.73 billion for the first six months of 2008.
  • 6SLB returned significant capital to shareholders through $460 million in dividends paid and substantial share repurchases totaling $1.12 billion in the first six months of 2008.

Frequently Asked Questions

The primary drivers of SLB's revenue growth in the second quarter of 2008 were strong demand for its Oilfield Services, particularly in the Europe/CIS/Africa, Middle East & Asia, and Latin America regions. Specific technologies like Drilling & Measurements, Well Services, and Testing Services saw particularly high demand. Acquisitions and increased activity in key GeoMarkets also contributed significantly.

Profitability improved significantly. Net income for the second quarter of 2008 increased to $1.42 billion from $1.26 billion in the second quarter of 2007. Diluted earnings per share also saw a notable increase to $1.16 from $1.02, indicating enhanced profitability on a per-share basis.

SLB demonstrated a strong commitment to shareholder returns. The company paid $460 million in dividends during the first six months of 2008, representing a 20% increase in the quarterly dividend. Additionally, they repurchased $1.12 billion worth of common stock in the first six months of 2008, indicating confidence in their valuation and a strategy to return excess capital to shareholders.

The report mentions cost inflation across all areas and reduced pricing for certain well-stimulation activities in the US land markets as factors impacting margins. WesternGeco also saw reduced high-margin multiclient data sales. The company also notes ongoing cooperation with the DOJ regarding an investigation into freight forwarding and customs clearance services, though they believe any resulting liability would not be material.