10-QPeriod: Q3 FY2008

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 22, 2008For Securities:SLB

Summary

Schlumberger Limited (SLB) reported strong financial results for the third quarter and the first nine months of 2008, demonstrating significant year-over-year growth in both revenue and net income. Revenue for the third quarter increased by 24% year-over-year to $7.26 billion, while net income rose by 13% to $1.53 billion. For the nine-month period, revenue grew by 19% to $20.29 billion, and net income increased by 13% to $4.28 billion. The company's performance was driven by robust activity in its Oilfield Services segment, which saw a 24% revenue increase in the third quarter, and continued strength in WesternGeco. Despite a challenging macroeconomic environment and concerns about a potential global recession impacting customer spending, particularly in North America, SLB's management expressed confidence in the long-term outlook. The company highlighted the underlying strength of the oil and gas market, characterized by declining reserve replacement and aging production profiles, suggesting that any significant drop in investment would likely lead to a stronger recovery. SLB also continued its commitment to returning value to shareholders through significant share repurchases and an increased quarterly dividend.

Financial Highlights

31 data points
Beta

Revenue

$7.26B

31.6% Gross Margin

Net Income

$1.53B

21.0% Net Margin

EPS (Diluted)

$1.25

Cash & Equivalents

$189.00M

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$7.26B
Cost of Revenue$4.97B
Gross Profit$2.29B
R&D Expenses$208.00M
Operating Income$4.25B
Interest Expense$61.00M
Net Income$1.53B
EPS (Basic)$1.27
EPS (Diluted)$1.25
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Revenue for Q3 2008 reached $7.26 billion, a 24% increase year-over-year.
  • 2Net income for Q3 2008 was $1.53 billion, a 13% increase year-over-year.
  • 3Diluted earnings per share (EPS) for Q3 2008 were $1.25, up from $1.09 in Q3 2007.
  • 4Oilfield Services segment revenue grew 24% year-over-year to $6.36 billion in Q3 2008.
  • 5WesternGeco segment revenue increased 12% year-over-year to $892 million in Q3 2008.
  • 6The company repurchased approximately 18.4 million shares for $1.66 billion during the first nine months of 2008.
  • 7Cash flow from operations for the nine months ended September 30, 2008, was $4.9 billion, an increase from $4.1 billion in the prior year period.

Frequently Asked Questions

Schlumberger's revenue growth in the third quarter of 2008 was primarily driven by strong performance in its Oilfield Services segment, which benefited from increased activity across most geographic areas and growth in key technologies like Well Services, Wireline, and Drilling & Measurements. The WesternGeco segment also contributed with higher revenue from Marine and Multiclient surveys.

Management anticipates that the rapid deterioration in credit markets and global economic slowdown could affect Schlumberger's activity, particularly in North America and some emerging markets. However, they believe that underlying market fundamentals, such as the weakness in the supply base and decreasing reserve replacement, will support a strong recovery even if exploration and production spending temporarily slows.

Schlumberger demonstrated a commitment to shareholder returns by increasing its quarterly dividend by 20% in early 2008 to $0.21 per share. Additionally, the company continued with aggressive share repurchase programs, authorized an $8 billion repurchase program in April 2008, and repurchased a significant number of shares during the first nine months of 2008.

Oilfield Services saw significant year-over-year revenue growth across all areas. Latin America experienced a 32% increase, Europe/CIS/Africa grew by 28%, and Middle East & Asia by 22%. North America revenue increased by 15% year-over-year, though pretax operating margin saw a decrease due to hurricane impacts and cost inflation. WesternGeco also saw revenue growth across its segments.