10-QPeriod: Q2 FY2009

SLB LIMITED/NV Quarterly Report for Q2 Ended Jun 30, 2009

Filed July 29, 2009For Securities:SLB

Summary

Schlumberger Limited (SLB) reported its second quarter 2009 financial results, showing a significant year-over-year decline in revenue and net income, reflecting the challenging economic environment and reduced oil and gas exploration and production spending. Revenue for the quarter decreased by 18% to $5.53 billion compared to $6.75 billion in the second quarter of 2008. Net income attributable to Schlumberger also fell substantially to $613 million ($0.51 diluted EPS) from $1.42 billion ($1.16 diluted EPS) in the prior year period. The company incurred pre-tax charges of $238 million related to workforce reductions and postretirement benefit curtailments, impacting profitability. Despite the downturn, Schlumberger maintained a strong liquidity position with $4.9 billion in cash and investments at quarter-end.

Financial Highlights

50 data points
Beta

Revenue

$5.53B

19.8% Gross Margin

Net Income

$613.00M

11.1% Net Margin

EPS (Diluted)

$0.51

Total Assets

$32.96B

Cash & Equivalents

$216.00M

Free Cash Flow

$1.01B

Financial Statements
Beta
Revenue$5.53B
Cost of Revenue$4.43B
Gross Profit$1.10B
R&D Expenses$197.00M
Operating Income$1.55B
Interest Expense$61.00M
Net Income$613.00M
EPS (Basic)$0.51
EPS (Diluted)$0.51
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Revenue declined 18% year-over-year to $5.53 billion, driven by reduced activity and pricing pressure, particularly in North America.
  • 2Net income attributable to Schlumberger decreased to $613 million, or $0.51 per diluted share, down from $1.42 billion, or $1.16 per diluted share, in Q2 2008.
  • 3The company incurred significant charges of $238 million (pre-tax) related to workforce reductions and postretirement benefit curtailments, impacting reported earnings.
  • 4Oilfield Services segment revenue was down 18% year-over-year, with North America experiencing a sharp 43% decline.
  • 5WesternGeco segment revenue decreased 17% year-over-year, reflecting lower activity in Marine and Multiclient sales.
  • 6Schlumberger ended the quarter with a strong liquidity position, holding $4.9 billion in cash and investments and had $2.3 billion available under committed debt facilities.
  • 7The company temporarily suspended its share repurchase program due to the current economic environment.

Frequently Asked Questions

The primary drivers for the decline were the challenging global economic environment and a significant slowdown in oil and gas exploration and production spending by customers. This led to reduced activity levels and increased pricing pressure across most of Schlumberger's operating segments, especially in North America.

These charges amounted to $238 million pre-tax ($207 million after-tax) and were primarily related to workforce reductions in response to the industry downturn and postretirement benefit curtailments resulting from those reductions. These charges negatively impacted the company's reported net income for the quarter.

Schlumberger anticipates some stability but no major increase in the North American natural gas rig count, expecting service pricing to remain depressed. Internationally, further activity declines are expected but to be limited, with pricing concessions impacting revenues. The company expects that customer expenditures will not see major increases due to oil price volatility and the overall economic uncertainty. The shape of the economic recovery beyond 2009 and its impact on oil and gas demand are seen as key determinants for future activity increases.

Schlumberger maintained a strong liquidity position with approximately $4.9 billion in cash and investments as of June 30, 2009. The company also had $2.3 billion available under committed debt facilities. Total outstanding debt was $5.9 billion, an increase of approximately $0.6 billion from December 31, 2008, primarily due to new debt issuance, partially offset by debt repayments. The company believes its liquidity is sufficient to meet its business requirements for at least the next twelve months.