Schlumberger (NYSE: SLB) reported results for the second quarter of 2018 highlighted by sequential revenue increases and the mobilization of 29 new rigs for its international drilling business.
The company also said it had removed one complete layer of its management and support structure.
Financial Highlights
- Revenue of $8.3 billion increased 6% sequentially
- Pretax operating income of $1.1 billion increased 12% sequentially
- Second-quarter GAAP EPS, including charges of $0.12 per share, was $0.31
- Second-quarter EPS, excluding charges, was $0.43
- Cash flow from operations was $987 million
- 384 billion shares of common stock outstanding
- Net Debt of $14.6 billion
For North America, SLB said second-quarter revenue increased 12% sequentially to $2.5 billion and excluding Cameron, second-quarter revenue grew 6% sequentially in the international markets to $4.4 billion.
Schlumberger mobilized 29 new rigs for its international integrated drilling business, including its first commercial ‘Land Rig of the Future’ deployment in Saudi Arabia and expects by the fourth quarter of this year to be “fully utilized in the international market. And beyond that, we will look at adding capacity partly through CapEx”, said Chairman and CEO, Paal Kibsgaard.
This high level of mobilization has impacted Schlumberger margins.
CEO Paal Kibsgaard remarked that “There’s been a heavy mobilization burden on them in the first half of the year. It will continue into for sure Q3, and that has impacted margins.”
The company also made the last adjustment to its organizational setup called the Integrated Drilling Services Model, which concluded with the removal of one complete layer of its management and support structure in an effort to improve organizational agility and efficiency.
“With a total of 90 rigs being mobilized over the course of 2018, the Integrated Drilling Services model is one of our many growth drivers in the global upcycle we are now entering,” Kibsgaard said.
Keeping in line with the theme of efficiency, Schlumberger has completed its vertical integration of frac sand services, which has been going on for about three years now.
“Our investment into sand mines will be concluded basically this month. We will then have sufficient sand mine capacity to take care of 100% of our current and projected frac work,” said Kibsgaard.
International development back: expecting double digit growth next year
Kibsgaard also had a very optimistic outlook for SLB’s E&P international spend for 2019 saying that “I can, at least, say from our standpoint that our growth in international for next year will be double digits.”
Schlumberger moving forward is also looking forward to a shift in focus to exploration efforts—instead of strictly development for offshore operations.
Kibsgaard concluded with the company is “starting to see more interest and more discussion with our customers again on formation and valuation, this being either Wireline or LWD” and that “exploration is coming, and it’s also associated with the increased focus on reservoir and formation and valuation.”
Other Events
During the quarter, Schlumberger repurchased 1.5 million shares of its common stock at an average price of $68.45 per share, for a total purchase price of $103 million.
