Release of the 2022 Q1 Income Statement with Financial Statements (PDF, 282 KB) 2022 1st Quarter Income Statement Notes (PDF, 134 KB) 2022 1st Quarter Income Statement Transcript (184 KB) ( Please install Adobe Acrobat Reader to view the PDF file.)
Oslo, April 22, 2022 – Schlumberger Ltd. (NYSE: SLB) today announced its financial results for the first quarter of 2022.
Schlumberger CEO Olivier Le Peche commented: “Our first quarter results put us firmly on track to grow our top line and strong earnings growth next year. Growth in revenue compared to last year by 14%; share, excluding fees and credits, and a 229 basis point increase in pre-tax operating margin driven by Well Construction and Reservoir Performance (b/d). These results reflect the strength of our core services segment, broad-based growth in our operating leverage. .
“This quarter also marked the tragic start of the conflict in Ukraine and is of great concern. As a result, we have established local and global crisis management teams to respond to the crisis and its impact on our people, business and our operations. In addition to ensuring that our business complied In addition to the sanctions in place, we also took steps this quarter to suspend new investment and technology deployments for our operations in Russia. We call for a cessation of hostilities and hope that peace will return to Ukraine and the wider region.
“At the same time, the emphasis in the energy sector is shifting, exacerbating the already tight oil and gas market. The shift in supply flows from Russia will lead to increased global investment in different regions and throughout the energy value chain to provide global energy supply diversity and safety.
“The combination of higher commodity prices, rising demand-driven activity and energy security provides one of the strongest near-term outlook for the energy services sector – strengthening market fundamentals for a stronger and longer multi-year upswing – – Setbacks amid the global economic slowdown.
“In this context, energy has never been more important to the world than it is now. Schlumberger, which uniquely benefits from increasing E&P activity and digital transformation, provides the most comprehensive technology portfolio to help customers deliver diverse, cleaner, and more affordable energy. Schlumberger, which uniquely benefits from increasing E&P activity and digital transformation, provides the most comprehensive technology portfolio to help customers deliver diverse, cleaner, and more affordable energy. Uniquely benefiting from growth in exploration and production and digital transformation, Schlumberger offers the most comprehensive technology portfolio to help customers deliver diverse, cleaner and more affordable energy. Schlumberger is uniquely benefiting from enhanced exploration and production activities and digital transformation by offering the most comprehensive technology portfolio to help customers deliver diverse, cleaner and more affordable energy.
“YoY, segment revenue grew, led by our core service divisions Well Construction and Reservore Performance, both of which grew by more than 20%, outpacing growth in global rig count. Digital & Integration revenue grew 11%, while Production Systems revenue increased 1%. Digital & Integration revenue grew 11%, while Production Systems revenue increased 1%. Digital and integration revenue grew by 11%, while production systems revenue grew by 1%. Digital and integration revenue grew by 11%, while production systems revenue grew by 1%. Our core services segment posted double-digit revenue growth from drilling, appraisal, well intervention and stimulation services onshore and offshore. In Digital & Integration, growth was driven by strong digital sales, increased exploration data license sales, and higher revenue from Asset Performance Solutions (APS) projects. In Digital & Integration, growth was driven by strong digital sales, increased exploration data license sales, and higher revenue from Asset Performance Solutions (APS) projects. In the Digital & Integration segment, growth was driven by strong digital sales, increased sales of exploration data licenses and increased revenue from Asset Performance Solutions (APS) projects. In the Digital & Integration segment, growth was driven by strong digital sales, increased sales of exploration data licenses and higher revenue from the Asset Performance Solutions (APS) program. In contrast, the growth of production systems has been temporarily hampered by current supply chain and logistics constraints, resulting in lower-than-expected product deliveries. However, we believe these restrictions will be gradually eased, allowing backlogs to be converted and revenue growth for production systems to accelerate through the remainder of 2022.
“Geographically, compared to the same period last year, revenue growth was broad, with a 10% increase in international revenue and 32% growth in North America. All regions, led by Latin America, had a broad base due to higher drilling volumes in Mexico, Ecuador, Argentina and Brazil International growth achieved Growth in Europe/CIS/Africa was mainly driven by increased sales of production systems in Turkey and increased exploration drilling offshore Africa, especially in Angola, Namibia, Gabon and Kenya. These increases, however, were partially offset by revenue decline in Russia & Central Asia. These increases, however, were partially offset by revenue decline in Russia & Central Asia. However, this increase was partially offset by lower revenues in Russia and Central Asia. However, this increase was partly offset by lower incomes in Russia and Central Asia. Middle East & Asia revenue increased due to higher drilling, stimulation, and intervention activity in Qatar, Iraq, the United Arab Emirates, Egypt, Australia, and across Southeast Asia. Middle East & Asia revenue increased due to higher drilling, stimulation, and intervention activity in Qatar, Iraq, the United Arab Emirates, Egypt, Australia, and across Southeast Asia. Revenue in the Middle East and Asia increased due to increased drilling, production stimulation and operations in Qatar, Iraq, the United Arab Emirates, Egypt, Australia and throughout Southeast Asia. Revenues in the Middle East and Asia were boosted by increased drilling, stimulation and workover activities in Qatar, Iraq, the United Arab Emirates, Egypt, Australia and across Southeast Asia. In North America, drilling and completions have increased overall, supported by significant contributions from our APS project in Canada.
“Compared to the same period last year, the segment’s pre-tax operating margin improved in the first quarter, driven by stronger activity, a favorable mix of offshore activities, greater technology adoption and an improved global pricing environment. improved, it concerns well construction and reservoir productivity. Digital & Integration margin expanded further, while Production Systems margin was impacted by supply chain constraints. The Digital & Integration margin expanded further, while the Production Systems margin was impacted by supply chain constraints. Digital technology and integration margins have further increased while manufacturing systems margins have been impacted by supply chain constraints. The digital and integration margins increased further, while the production system margins were affected by supply chain constraints.
“As a result, revenue for the quarter mainly reflects the typical seasonal decline in activity in the Northern Hemisphere, with a more pronounced decline in Europe/CIS/Africa due to the depreciation of the ruble, as well as global supply chain restrictions affecting production. In contrast, revenue in North America and Latin America was consistently flat. Segmentally, well construction revenue was slightly higher quarter-on-quarter as strong drilling activity in North America, Latin America and the Middle East offset seasonal declines in Europe/CIS/Africa and Asia. Reservoir Performance, Production Systems, and Digital & Integration were sequentially lower due to seasonal reductions in activity and sales. Reservoir Performance, Production Systems, and Digital & Integration were sequentially lower due to seasonal reductions in activity and sales. Reservoir Productivity, Production Systems, and Digital Technologies and Integration were consistently declining due to a seasonal decline in activity and sales. Reservoir performance, production systems, quantity and integration have consistently declined due to the seasonal decline in activity and sales.
“Operating cash flow in the first quarter was $131 million, with working capital formation in the first quarter above normal, exceeding expected growth for the year. We expect free cash flow generation to accelerate during the year, in line with our historical trend Constant and we continue to expect full year free cash flow margins to be in the double digits.
“Looking ahead, the outlook for the rest of the year, especially the second half of the year, is very good as investment in both the short and long term is accelerating. It is worth noting that FIDs have been approved for some long-term developments. new contracts, offshore exploration drilling is resuming, and some customers have announced plans to significantly increase spending this year and for several years to come.
“As such, we believe the onshore and offshore intensification, greater technology adoption and pricing momentum will drive concurrent growth internationally and in North America. This will lead to a consistent seasonal recovery in the second quarter, followed by strong growth in the second half a year., especially in international markets.
“Against this backdrop, we believe the current market dynamics should allow us to maintain our mid-range revenue growth targets for the full year and adjusted EBITDA margin for at least this year, despite Russia-related uncertainty. In the fourth quarter of 2021, the figures were 200 basis points higher. , Our positive outlook extends to 2023 and beyond as we expect the market to grow for several years in a row. longer than originally thought.
“Based on these strengthening fundamental principles, we have decided to increase shareholder return by increasing dividends by 40%. Our cash flow trajectory gives us the opportunity to accelerate our capital return plan while continuing to deleverage our balance sheet and build a strong portfolio for long-term investing successfully.
“Schlumberger is well positioned at this critical time for global energy. Our strong market position, technology leadership and performance differentiation match the potential for significant profits throughout the cycle.”
On April 21, 2022, the Schlumberger Board of Directors approved an increase in the quarterly cash dividend from $0.125 per ordinary share outstanding, paid on July 14, 2022 to registered shareholders in June, to $0.175 per share, i.e. 40% increase from January 1st. , 2022.
North American revenue of $1.3 billion was flat as land growth was offset by lower seasonal sales of data exploration licenses and production systems in the US Gulf of Mexico. Land revenues were driven by higher US drilling and higher APS revenues in Canada.
Compared to the same period last year, revenue in North America increased by 32%. A very broad growth in drilling and completion activities coupled with a strong contribution from our APS projects in Canada.
Revenues in Latin America of $1.2 billion were consistently flat, with higher APS revenues in Ecuador and more active drilling activity in Mexico offset by lower revenues in Guyana, Brazil and Argentina due to less work on drilling, intervention and completion of wells, as well as reduced sales of production systems. Higher APS revenue in Ecuador was due to the resumption of production after a pipeline shutdown in the previous quarter.
Revenue rose 16% year-on-year on the back of more active drilling in Mexico, Ecuador, Argentina and Brazil.
Revenue in Europe/CIS/Africa was $1.4 billion, down 12% YoY due to lower seasonal activity and a weaker ruble affecting all segments. Lower earnings were partly offset by higher earnings in Europe, especially in Turkey, thanks to higher sales of production systems.
Revenue increased 12% year-on-year, driven primarily by increased sales of production systems in Turkey and exploration drilling offshore Africa, especially in Angola, Namibia, Gabon and Kenya. These increases, however, were partially offset by the revenue decline in the Russia & Central Asia region. These increases, however, were partially offset by the revenue decline in the Russia & Central Asia region. However, this increase was partially offset by lower revenues in the Russia and Central Asia region. However, this increase was partly offset by lower incomes in Russia and Central Asia.
Revenue in the Middle East & Asia of $2.0 billion decreased 4% sequentially due to seasonally lower activity in China, Southeast Asia, and Australia, coupled with reduced sales of production systems in Saudi Arabia. Revenue in the Middle East & Asia of $2.0 billion decreased 4% sequentially due to seasonally lower activity in China, Southeast Asia, and Australia, coupled with reduced sales of production systems in Saudi Arabia. Revenue in the Middle East and Asia of $2.0 billion fell 4% sequentially due to seasonal declines in activity in China, Southeast Asia and Australia, coupled with lower sales of manufacturing systems in Saudi Arabia. Revenue in the Middle East and Asia was $2.0 billion, down 4% due to lower seasonal activity in China, Southeast Asia and Australia, as well as lower sales of production systems in Saudi Arabia. The decline was partly offset by active drilling activity elsewhere in the Middle East, especially in the United Arab Emirates.
Revenue increased 6% year-over-year due to more active drilling, production stimulation and workover activities at new projects in Qatar, Iraq, the United Arab Emirates, Egypt, as well as in Southeast Asia and Australia.
Digital & Integration revenue of $857 million decreased 4% sequentially due to seasonally lower sales of digital and exploration data licenses, primarily in North America and Europe/CIS/Africa, following the usual year-end sales. Digital & Integration revenue of $857 million decreased 4% sequentially due to seasonally lower sales of digital and exploration data licenses, primarily in North America and Europe/CIS/Africa, following the usual year-end sales. $857 million in digital and integration revenue The US declined sequentially by 4% due to a seasonal decline in digital and research data license sales, mainly in North America and Europe/CIS/Africa, after normal sales at the end of the year. Digital & Integration revenue was $857 million, down 4% due to a seasonal decline in digital and exploration license sales, primarily in North America and Europe/CIS/Africa, after normal sales at the end of the year. This decline was partly offset by a significant contribution from our APS project in Ecuador, which resumed production after a pipeline accident last quarter.
Revenue increased 11% year-over-year driven by strong digital sales, higher sales of exploration data licenses and higher revenue from APS projects, with higher revenue across all segments.
The pre-tax digital and integration operating margin of 34% decreased sequentially by 372 basis points due to lower sales of digital licenses and exploration data licenses, partly offset by improved profitability of the APS project in Ecuador.
Pre-tax operating margin increased 201 basis points year-on-year, driven by improvements across the board driven by increased profitability from digital, exploration data licensing and APS projects (especially in Canada).
Reservoir revenue was US$1.2 billion, down 6% year-over-year due to lower seasonal activity, mainly in the Northern Hemisphere, and lower activity in Latin America. The devaluation of the ruble also affected revenues. The decline was partly offset by strong activity in North America and the Middle East.
Year-on-year, double-digit revenue growth was broad across all regions, except for Russia & Central Asia. Year-on-year, double-digit revenue growth was broad across all regions, except for Russia & Central Asia. On an annualized basis, double-digit revenue growth was observed in all regions except Russia and Central Asia. All regions except Russia and Central Asia posted double-digit revenue growth year-over-year. Onshore and offshore evaluation, intervention and stimulation services posted double-digit growth, with more exploration-related activity during the quarter.
The pre-tax operating margin for the 13% reservoir production decreased sequentially by 232 basis points due to lower profitability due to seasonal downgrading of estimates and stimulation work, mainly in the Northern Hemisphere, partially offset by higher profitability in North America.
Pre-tax operating margin increased by 299 basis points year-over-year due to improved profitability of valuation and intervention operations in all regions except Russia and Central Asia.
Well Construction’s revenue was slightly up $2.4 billion consecutively due to higher consolidated drilling and drilling fluid revenues, partially offset by lower sales of surveying and drilling equipment. High drilling activity in North America, Latin America and the Middle East was partly offset by seasonal declines in production in Europe/CIS/Africa and Asia, as well as the impact of a weaker ruble.
Year-on-year, double-digit revenue growth was across all regions, except for Russia & Central Asia. Year-on-year, double-digit revenue growth was across all regions, except for Russia & Central Asia. Compared to last year, double-digit revenue growth was observed in all regions except Russia and Central Asia. All regions except Russia and Central Asia posted double-digit revenue growth year-over-year. Drilling fluids, geodetic surveys and integrated drilling (onshore and offshore) all recorded double-digit growth.
Well Construction’s pre-tax operating margin was 16%, up 77 basis points sequentially on the back of improved profitability of integrated drilling, impacting all regions, especially North America, Latin America and the Middle East. This was partly offset by lower margins in the Northern Hemisphere and Asia for seasonal reasons.
Pre-tax operating margin increased 534 basis points year-over-year, driven by improved profitability of integrated drilling, equipment sales and surveying services in most regions.
Production systems revenue was $1.6 billion, down 9% due to lower sales of well production systems in all regions and lower revenue from subsea projects. Revenue was temporarily affected by supply chain and logistics restrictions, resulting in lower-than-expected product deliveries.
Year-on-year, double-digit growth in North America and Europe & Africa was driven by new projects in contrast to reductions in Middle East & Asia and Latin America resulting from the end of projects and temporary supply chain constraints. Year-on-year, double-digit growth in North America and Europe & Africa was driven by new projects in contrast to reductions in Middle East & Asia and Latin America resulting from the end of projects and temporary supply chain constraints. On an annualized basis, double-digit growth in North America, Europe and Africa was driven by new projects, in contrast to a contraction in the Middle East, Asia and Latin America as a result of project completions and temporary supply chain constraints. Double-digit annual growth in North America, Europe and Africa was driven by new projects, while declines in the Middle East, Asia and Latin America were driven by project closures and temporary supply chain constraints. Manufacturing systems revenue growth will accelerate over the remainder of 2022 as these restrictions are lifted and backlogs are realized.
Manufacturing Systems’ pre-tax operating margin was 7%, down 192 basis points sequentially and 159 basis points year-on-year. The reduction in margins was primarily due to the impact of global supply chains and logistics constraints, which led to a decrease in the profitability of well production systems.
Oil and gas investments continue to rise as Schlumberger customers invest in providing reliable energy to meet growing and changing demands. Customers around the world are announcing new projects and expanding existing developments, and Schlumberger is increasingly being chosen for its delivery efficiency and innovative technologies that improve customer success rates. This quarter’s featured awards include:
Industry digital adoption continues to gain momentum, evolving ways for customers to access and use data, improve or create new workflows, and use data to make decisions that increase productivity in the field. Customers are adopting our industry-leading digital platforms and edge solutions to meet new challenges and improve operational efficiency. Examples this quarter include:
During the quarter, Schlumberger launched several new technologies and was recognized for innovation in the industry. Customers use our transition technologies* and digital solutions to increase productivity and reduce carbon footprint.
The growth cycle will continue to intensify as customers increasingly invest in finding new supplies and bringing them to market. Well construction is an important part of the process, and Schlumberger continues to introduce technologies that not only increase the efficiency of well construction, but also provide a deeper understanding of the reservoir, allowing customers to create more value. Key indicators of drilling technology for the quarter:
Our industry must increase the sustainability of its operations and reduce its environmental impact, while contributing to the stability of the global energy supply. Schlumberger continues to create and apply technologies to reduce emissions from customer operations and support clean energy production around the world.
1) What is the forecast for capital investments for the whole of 2022? Capital expenditures (including capital expenditures, multi-tenant and APS investments) for the full year of 2022 are expected to be between $190 million and $2 billion. Capital investment in 2021 is $1.7 billion.
2) What are operating cash flow and free cash flow for the first quarter of 2022? Operating cash flow in the first quarter of 2022 was $131 million and free cash flow was negative at $381 million as typical working capital formation in the first quarter exceeded expected growth this year.
3) What does “interest and other income” include in the first quarter of 2022? “Interest and other income” for the first quarter of 2022 was $50 million. This includes a gain of $26 million on the sale of 7.2 million shares of Liberty Oilfield Services (Liberty) (see Question 11), interest income of $14 million, and equity investment income of $10 million. USA.
4) How did interest income and interest expenses change in the first quarter of 2022? Interest income for the first quarter of 2022 was $14 million, down $1 million from the previous quarter. Interest expense was $123 million, down $4 million from the prior period.