What were the key drivers of SLB's strong financial performance in Q3 2010?

SLB's strong performance was driven by a significant increase in oilfield services activity and pricing, particularly in the North American market. The successful integration of the recently acquired Smith International, Inc. and Geoservices businesses also contributed substantially to revenue and operational expansion. Additionally, a one-time gain from the remeasurement of the M-I SWACO investment boosted net income.

How did the acquisitions of Smith International and Geoservices impact SLB's financial statements?

The acquisitions significantly increased SLB's assets, including substantial goodwill and intangible assets. Revenue and operating income from these businesses are now consolidated into SLB's financial results. The Smith merger, in particular, resulted in a large gain from the remeasurement of the previously held M-I SWACO stake and added significant balance sheet items. The acquisitions are expected to contribute to future growth and synergies, though they also introduced merger and integration costs.

What is the outlook for SLB's business moving forward, based on this report?

Schlumberger anticipates continued strong activity in North America land operations. While the deepwater drilling moratorium in the US Gulf of Mexico has been lifted, a rapid return to significant activity is not expected until new rules and liabilities are clarified. Overseas markets are showing signs of acceleration due to higher oil prices. The company expects its restructuring efforts to continue improving margins. Overall, the outlook is cautiously optimistic, supported by rising oil prices and demand, though dependent on broader economic conditions and natural gas demand sustaining North American activity.

Were there any significant charges or one-time items impacting net income in Q3 2010?

Yes, the company recorded significant charges and credits. A substantial gain of $1.27 billion from the M-I SWACO investment remeasurement was recognized. This was partially offset by restructuring and merger-related charges totaling $434 million (pretax), including severance, impairments, professional fees, and inventory adjustments. These items significantly impacted the net income calculation.

SLB 10-Q Quarterly Report Q3 FY2010 — Revenue, Net Income, EPS

Summary

SLB LIMITED/NV (SLB) reported strong third-quarter and nine-month results for 2010, significantly outpacing the same periods in 2009. This performance was largely driven by a robust recovery in oilfield services activity and pricing, particularly in North America, and augmented by the strategic acquisitions of Smith International, Inc. and Geoservices. The company's net income attributable to Schlumberger surged to $1.734 billion ($1.38 diluted EPS) for the third quarter of 2010, up from $787 million ($0.65 diluted EPS) in the prior year's quarter. For the nine months, net income rose to $3.224 billion ($2.63 diluted EPS) from $2.338 billion ($1.93 diluted EPS) in 2009. A notable non-recurring gain of $1.27 billion from the remeasurement of its investment in M-I SWACO post-acquisition also significantly boosted earnings. Despite various restructuring and merger-related charges, the underlying operational performance demonstrates a strong rebound and successful integration of acquired businesses.

Financial Highlights

54 data points

Beta

Revenue

$6.84B

0.2% Gross Margin

Net Income

$1.73B

0.3% Net Margin

EPS (Diluted)

$1.38

Total Assets

$49.85B

Cash & Equivalents

$1.11B

Free Cash Flow

-$14.00M

Financial Statements

Beta

Revenue	$6.84B
Cost of Revenue	$5.38B
Gross Profit	$1.47B
R&D Expenses	$240.00M
Operating Income	$3.22B
Interest Expense	$47.00M
Net Income	$1.73B
EPS (Basic)	$1.39
EPS (Diluted)	$1.38
Shares Outstanding (Basic)	1.25B
Shares Outstanding (Diluted)	1.26B

Key Highlights

1Significant increase in revenue and net income year-over-year, with Q3 2010 revenue at $6.85 billion (up 26% from Q3 2009) and net income attributable to Schlumberger at $1.73 billion.
2Successful completion and integration of the Smith International, Inc. merger, adding significant goodwill and intangible assets, and expanding service offerings.
3Acquisition of Geoservices for $915 million, enhancing capabilities in mud logging, slickline, and production surveillance.
4Gain on investment in M-I SWACO of $1.27 billion recognized following the acquisition of full control.
5Strong performance in North America Oilfield Services, with revenue up 53% year-over-year driven by increased activity and pricing in US land operations.
6Earnings per share showed substantial improvement, with diluted EPS of $1.38 for Q3 2010 compared to $0.65 in Q3 2009.
7The company executed a significant stock repurchase program, repurchasing $1.27 billion of its shares during the nine months ended September 30, 2010.

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2010

Summary

Financial Highlights

Key Highlights

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