Summary
SLB LIMITED/NV (SLB) filed an 8-K report on December 2, 2014, detailing a significant restructuring of its WesternGeco marine seismic fleet. This move is a direct response to anticipated lower exploration spending within the oil and gas industry. The company plans to reduce its fleet size by retiring older, less efficient vessels, converting others to source boats, and canceling third-party charters. This strategic adjustment is expected to result in a pretax impairment charge of approximately $800 million in the fourth quarter of 2014. This charge is primarily associated with the acquisition of Eastern Echo Holdings Plc. in 2007 and other seismic assets. Importantly, SLB highlighted that this impairment will not involve significant cash expenditures. Additionally, the report notes that Patrick Schorn, President of Operations & Integration, presented at the Cowen and Company 4th Annual Ultimate Energy Conference on December 2, 2014, providing a financial and operational update. The presentation materials are available on the company's Investor Relations website.
Key Highlights
- 1SLB is restructuring its WesternGeco marine seismic fleet due to expected lower exploration spending.
- 2The company anticipates a pretax impairment charge of approximately $800 million in Q4 2014 related to this restructuring.
- 3The impairment charge is mainly linked to older Explorer-class vessels acquired in 2007 and other seismic assets.
- 4The fleet reduction involves retiring older vessels, converting others to source boats, and reducing third-party charters.
- 5SLB expects to have 9 survey and 6 source vessels by the end of 2014, down from 15 survey and 8 source vessels at the end of 2013.
- 6The impairment charge will not result in significant cash expenditures for the company.
- 7A financial and operational update was presented at the Cowen and Company 4th Annual Energy Conference on December 2, 2014.