Schlumberger Limited reported first quarter operating revenue of $2.91
a 36% increase over the same period last year.
Net income for the first quarter was $261 million ($0.45 per share-diluted)
before a $25 million ($0.04 per share-diluted) charge for in-process
development related to the Bull CP8 acquisition, compared with $136 million
($0.24 per share – diluted) last year.
Earnings per share, excluding acquisition related costs (in-process R&D,
amortization of goodwill and amortization of identifiable intangibles) was
$0.51 per share (diluted) compared with $0.27 per share (diluted) for the same
period last year.
Oilfield Services revenue increased 49% versus the first quarter of 2000 as
worldwide M-I rig count grew 30%. Compared with the fourth quarter of 2000,
revenue increased 13%.
Resource Management Services revenue was 5% lower than in the first quarter
last year. Test & Transactions revenue increased 14% versus the same period
Chairman and Chief Executive Officer Euan Baird commented:
“The continued surge in North American activity coupled with the start of
growth elsewhere, is clearly reflected in the results of Oilfield Services
quarter. Our efficient GeoMarket(a) organization has allowed us to maximize
performance in terms of year-on-year revenue growth and operating margin
improvements. These bullish trends appear set to continue unless a global
economic slowdown reduces growth in oil demand.
The acquisition of Sema was completed on April 6, 2001, less than two months
after the transaction was first announced, and the integration process is
already underway. Schlumberger Sema is an Information Technology products and
service company for the 21st century, which combines in-depth knowledge of
certain industries with world-class IT and networking skills. This unique mix
of expertise will allow our customers to e-transform their businesses and
realize substantial savings as they turn data into real-time decisions.”
Oilfield Services operating revenue in the first quarter increased 49%
year-over-year, with all four reporting Areas experiencing double-digit
Revenue increased 13% versus the prior quarter led by North America.
Year-over-year and sequential growth was driven by WesternGeco (formed late in
the prior quarter), increased activity, improved pricing levels, and
productivity gains from the use of advanced technologies. Worldwide, revenue
showed strong double-digit year-over-year growth in all product segments, and
grew sequentially in all product segments except Well Completions &
Productivity, which remained flat. The worldwide M-I rig count increased 30%
year-over-year and 8% sequentially. Pretax operating income in the first
quarter grew 134% compared to the same period last year and 21% sequentially.
In North America, first quarter revenue of $924 million increased 81% compared
with the same quarter last year and 28% sequentially. The M-I rig count of
1,801 increased 37% year-over-year and 13% sequentially. Pretax operating
income of $226 million was 267% higher than the first quarter last year and
increased 57% sequentially.
Year-over-year revenue growth was led by strong double-digit growth in all
product segments except Integrated Project Management which remained flat.
Sequential revenue growth was led by WesternGeco, with strong contributions
from Wireline, Drilling & Measurements and Well Services.
Sequentially and year-over-year, all GeoMarkets recorded strong revenue and
pretax operating income growth well in excess of the increases in rig count.
This growth was driven by pricing improvements, the introduction of new
technologies and services, and increased non-rig related activity.
In Latin America, first quarter revenue of $365 million increased 46%
year-over-year and 7% sequentially. The M-I rig count at 317 increased 36%
year-over-year and 1% sequentially. Pretax operating income in the first
quarter was $43 million, an increase of more than four-fold over last year and
an increase of 41% sequentially.
Year-over-year revenue growth was strong across all product segments.
Sequential revenue growth was led by Wireline and by Drilling Services, which
is primarily comprised of six Lake Maracaibo based Multi-Purpose Service
Vessels (MPSV). Resulting pull-through of other Schlumberger services by the
MPSV activity also contributed to the growth in the quarter.
Strong year-over-year revenue and pretax operating income growth was seen in
all GeoMarkets. Sequentially, the strongest revenue growth was in the
Venezuela/Trinidad /Tobago and Latin America South GeoMarkets, with pricing
improvements in most product segments contributing to the increase in results.
First quarter revenue of $464 million in the Europe/CIS/West Africa Area
increased 37% compared with the same quarter last year and 1% sequentially.
M-I rig count at 273, excluding the CIS, was up 25% over the same period last
year and 2% sequentially. Pretax operating income of $57 million increased
year-over-year and decreased 26% sequentially.
Strong year-over-year revenue and pretax operating income growth was recorded
in all product segments except Drilling Services, which remained flat.
Sequentially, while revenue increased modestly, several factors led to a
decline in pretax operating income during the quarter. These factors included
adverse weather conditions in the North Sea and Russia, which affected most
product groups, a reduction in well testing operations and lower seismic
results in several GeoMarkets.
Other Eastern Hemisphere
First quarter revenue of $468 million in the Other Eastern Hemisphere Area
increased 23% year-over-year and 7% sequentially. The M-I rig count at 437
increased 9% year-over-year and was flat sequentially. Pretax operating income
of $92 million increased 43% compared with last year and 17% sequentially.
Compared to the same period last year, revenue and pretax operating income
growth was led by Well Completions & Productivity, WesternGeco and Drilling &
Year-over-year growth saw a strong improvement in the Australasia GeoMarket
most GeoMarkets in the Middle East. Sequentially, while most GeoMarkets in the
Middle East showed good growth, as did the Australasia and the
Brunei/Malaysia/Philippines GeoMarkets, those gains were partially offset by a
sequential decline in the China and the Japan/Korea/Taiwan/Sakhalin
— The PowerDrive(a)900 steerable rotary drilling system set two new-world
records. In the Gulf of Mexico, more than 8,000 feet was drilled in one run
on a separate run the system functioned for a continuous period of 262 hours
below the rotary table. Since commercialization at the end of 2000, the
PowerDrive900 has completed 50 successful runs. It is the only rotary
system that provides full 3D directional control at all inclinations from
vertical to horizontal while rotary drilling in 12- 1/4 inch hole. This new
tool complements the existing PowerDrive*675 system for 8-1/2 inch hole and
extends the range to include hole sizes up to 17-inches.
— The Commander(a) telemetry control and monitoring system, in conjunction
with the SenTREE(a)7 subsea completion and test tree, successfully performed
its first operation from a dynamically positioned vessel in the Gulf of
This technology, the only proven deep water subsea completion telemetry
and monitoring system in the industry, allows the development of fields in
water that use cost-effective horizontal subsea xmas trees, and enables a
dynamically positioned rig to safely disconnect within 15 seconds from a well
in an emergency situation.
— IndigoPool.com signed an agreement with Veritas DGC Inc. and WesternGeco to
develop e-commerce standards and new technology to publish, market and license
multi-client seismic data online. Sellers will be able to create and manage a
private Seismic Storefront(TM) where they can reach a global pool of buyers,
exchange highly technical information with their clients and conduct secure
business transactions online. Together, Veritas DGC and WesternGeco own and
market multi-client seismic libraries totaling 3 million linear km of 2D data
and 540,000 sq. km of 3D data.
Resource Management Services
Resource Management Services (RMS) operating revenue decreased 5% compared
the same quarter last year and increased 6% sequentially. The majority of the
year-over-year revenue decline was due to the divestiture of the Gas Service
businesses in Europe during 2000. First quarter orders decreased 8% over the
same period last year and increased 13% sequentially. The pretax operating
in the first quarter was attributable to the amortization of acquisition
In North America, first quarter revenue increased 57% year-over-year and 21%
sequentially, driven by increased communication module sales and automated
meter reading fees. Higher CENTRON* meter shipments, particularly to the PECO
Energy Company automated meter reading project, accounted for an
electricity metering revenue. Orders during the quarter increased 30%
year-over-year and 38% sequentially due mainly to higher electricity metering
and automated meter-reading activities.
In Europe, first quarter revenue showed a 14% improvement sequentially, when
adjusted for the divestiture of the Gas Service businesses, driven by order
increases in Germany and France. Orders in the first quarter decreased 12%
year-over-year and increased 14% sequentially led by strong demand for gas
In Asia, revenue for the first quarter declined 4% year-over-year and 28%
sequentially due to lower exports of electromechanical electricity products
lower gas meter deliveries in China. Orders decreased 63% year-over-year and
45% sequentially due mainly to lower demand for electricity meters in Taiwan,
Sri Lanka and Malaysia.
In South America, first quarter revenue declined 10% year-over-year and 12%
sequentially due primarily to lower demand for electricity products in
Colombia, Uruguay and Peru. Orders in the quarter were down by 36% compared to
the same period last year reflecting the lower demand for electricity products
and the general slowdown in Brazil.
Test & Transactions
Test & Transactions operating revenue in the first quarter increased 14%
compared with the same quarter last year and fell 13% sequentially. The
sequential decline in activity was mostly due to the continuing down cycle in
the semiconductor industry. Orders were down 10% compared with the same
last year and up 9% sequentially.
In March, Test & Transactions acquired Bull CP8, a market leader in
microprocessor-based smart cards and associated systems applications for the
banking, mobile communications and network security industries. This
acquisition makes Schlumberger the clear leader in smart cards and adds unique
R&D and smart card technology capabilities in the banking segment where Bull
CP8 holds a strong, globally recognized position.
Cards revenue grew 20% year-over-year and declined 4% sequentially. The main
drivers of year-over-year growth were strong demand and increased volume of
high-end Java(TM)-based products for mobile communications and banking
applications. The anticipated seasonal volume decline in GSM cards was
partially offset by strong average sales price improvement due to the
mix of high-end and new products. Orders declined 21% year-over-year and 23%
sequentially, reflecting the current inventory of GSM cards held by mobile
telecom operators. Sequentially, orders for prepaid cards were up 12% and
banking card orders were up 55%. In North America, the increasing adoption of
the GSM standard, which provides mobile phone users with seamless roaming
across GSM networks worldwide, has generated significant opportunities for
product and service applications. Schlumberger signed a memorandum of
understanding with AT&T Wireless (NYSE: AWE) in March to provide SIM
(subscriber identity module) smart cards and related OTA (over-the-air)
technology to support AT&T Wireless’ new GSM network platform.
Network Solutions revenue grew 43% year-over-year driven by growth in Network
Services and Wireless Applications Services. Strong sequential growth in the
Network Services and Wireless Applications Services markets was mostly offset
by a decline in Public Telecom activity. Orders grew 31% year-over-year and
grew 69% sequentially on continuing higher activity for both Network Services
and the recently acquired Data Marine Services.
eTransactions Solutions revenue grew 47% year-over-year and increased 15%
sequentially, driven primarily by increased worldwide deliveries of MagIC*
e-payment point of sale terminals. In addition, European customers began
accepting previously postponed deliveries of new euro-compatible Pay &
on-street parking meters. Orders rose 48% over the first quarter of 2000 and
grew 25% sequentially. The growth came primarily from improved activity in the
off-street parking, e-Payment Terminals & Systems, and parking services
Semiconductor Solutions revenue was down 31% year-over-year and down 49%
last quarter as conditions in the semiconductor industry deteriorated.
Semiconductor manufacturers have implemented widespread cost control measures
and delayed capital spending and deliveries. Orders decreased 41%
year-over-year while the sequential increase of 13% was driven by seasonal
customer services contract bookings. During the quarter Schlumberger shipped
the first IDS(R) PICA revolutionary probing equipment for semiconductor design
validation and characterization. In addition, the new Schlumberger test
platform was selected by a leading microprocessor manufacturing company to
their latest generation of high volume processors.