Schlumberger Ltd : Schlumberger Announces Fourth-Quarter and Full-Year 2006 Results
01/19/2007| 06:00am US/Eastern
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Schlumberger Limited (NYSE:SLB) today reported 2006 operating revenue of
$19.23 billion versus $14.31 billion in 2005.
Income from continuing operations, before charges and credits, of $3.75
billion was 85% higher than in 2005, representing diluted
earnings-per-share of $3.04 versus $1.67 in 2005.
Income from continuing operations, including charges and credits, was
$3.71 billion, representing diluted earnings-per-share of $3.01 versus
$1.81 in 2005, an increase of 66%.
Fourth-Quarter Results
Fourth-quarter operating revenue of $5.35 billion was 8% higher than the
$4.95 billion in the third quarter of 2006, and 33% higher than the
$4.02 billion in the fourth quarter of 2005.
Income from continuing operations, before charges and credits, reached
$1.13 billion ? an increase of 13%
sequentially and 77% year-on-year. Diluted earnings-per-share, before
charges and credits, were $0.92 versus $0.81 in the previous quarter,
and $0.52 in the fourth quarter of 2005.
Income from continuing operations, including charges and credits, was
$1.13 billion or $0.92 per-share diluted versus $0.81 in the previous
quarter and $0.54 in the fourth quarter of 2005.
Oilfield Services revenue of $4.63 billion increased 8% sequentially and
30% year-on-year. Pretax business segment operating income of $1.32
billion increased 9% sequentially and 55% year-on-year.
WesternGeco revenue of $721 million increased 9% sequentially and 55%
year-on-year. Pretax business segment operating income of $273 million
increased 13% sequentially and 149% year-on-year.
Schlumberger Chairman and CEO, Andrew Gould, commented, ?Full-year
2006 revenues grew 34%, far exceeding our original expectations. This
was driven by significant price increases, a rich portfolio of new
technology and stronger activity in almost all GeoMarkets. WesternGeco
performance during the year was particularly impressive being led by the
resurgence of exploration activity and the continued rapid growth of
Q-Technology services.
The fourth-quarter results produced new record levels of revenue and net
income despite seasonal weather-related weakness in the North Sea, parts
of Russia and US Land as well as activity-related weakness in Canada.
WesternGeco achieved further significant progress and strong
performances were recorded by Schlumberger Information Solutions, Well
Testing and Artificial Lift Technologies. Schlumberger Completions was
also a strong contributor to growth and to add further technology to our
products and services in this critical area of reservoir production we
acquired Reslink, a Norwegian-based supplier of advanced completions
solutions.
At our investor meeting in September 2006, we re-iterated our
expectation that, absent any dramatic world economic slowdown that would
reduce hydrocarbon demand, Schlumberger will continue to see high growth
through the end of this decade and well into the next. We also stated
that growth rates would eventually slow from the breakneck pace of 2006
but would remain well above those experienced over the long, slow
post-1986 industry adjustment.
Short-term declines in commodity prices inevitably produce varying
activity growth rates if they are sustained long enough. However,
maintaining the production base for both oil and natural gas in the face
of accelerating decline rates, poorer quality or more difficult
reservoirs and eroding reserve replacement ratios will mean that any
moderation in activity will be short-lived and self-correcting. While we
remain of the opinion that there is no overall shortage of oil and gas
reserves, the world is realizing that the period of cheap hydrocarbon
energy has ended and new and higher sustained levels of investment are
necessary to meet demand and guarantee future supplies.
We therefore expect to continue to see significant growth in 2007
particularly in the Eastern Hemisphere for exploration, development and
production enhancement related services where technology is key to
improving our customers' performance and
reducing their technical risk.
As part of our capital management program we repurchased 13.6 million
shares under the 40 million-share buy-back program authorized by the
Board of Directors in April 2006. I am pleased to report that the Board
has also approved a substantial dividend increase for the third
consecutive year.?
Other Events
As part of the current 40 million-share buy-back program approved in
the second quarter of 2006, Schlumberger repurchased 1.86 million
shares during the fourth quarter for a total amount of $119 million,
at an average price of $64.12 per share. Under this buy-back program
13.6 million shares have been repurchased to date.
The Board of Directors of Schlumberger Limited declared a 40% increase
in the quarterly dividend. The increased dividend of 17.5 cents per
share is payable on April 6, 2007 to stockholders of record on
February 21, 2007.
Consolidated Statement of Income
(Stated in thousands except per share amounts)
Fourth Quarter
Twelve Months
For Periods Ended December 31
2006
2005
2006
2005
Operating revenue
$ 5,349,868
$ 4,023,346
$ 19,230,478
$ 14,309,182
Interest and other income (1) (3)
86,935
92,895
286,716
407,769
Expenses
Cost of goods sold and services (3)
3,585,393
2,915,617
13,214,043
10,639,377
Research & engineering (3)
169,482
134,392
619,316
505,513
Marketing
26,230
14,645
75,704
53,964
General & administrative
124,720
100,607
425,057
349,277
Interest
63,300
49,454
234,916
197,090
Income from Continuing Operationsbefore taxes and
minority interest
1,467,678
901,526
4,948,158
2,971,730
Taxes on income (3)
337,064
207,155
1,189,568
681,927
Income from Continuing Operationsbefore minority interest
1,130,614
694,371
3,758,590
2,289,803
Minority interest (3)
2
(33,817)
(48,739)
(90,808)
Income from Continuing Operations
1,130,616
660,554
3,709,851
2,198,995
Income from Discontinued Operations
-
-
-
7,972
Net Income
$ 1,130,616
$ 660,554
$ 3,709,851
$ 2,206,967
Diluted Earnings Per Share
Income from Continuing Operations
$ 0.92
$ 0.54
$ 3.01
$ 1.81
Income from Discontinued Operations
-
-
-
0.01
Net Income
$ 0.92
$ 0.54
$ 3.01
$ 1.82
Average shares outstanding
1,178,347
1,178,516
1,181,683
1,178,576
Average shares outstanding assuming dilution
1,238,047
1,233,520
1,242,196
1,229,716
Depreciation & amortization included in expenses
(2)
$ 439,000
$ 358,881
$ 1,561,410
$ 1,350,969
1)
Includes interest income of:
Fourth quarter 2006 - $27 million (2005 - $30 million)
Twelve months 2006 - $117 million (2005 - $100 million)
2)
Including Multiclient seismic data costs.
3)
See page 6 for details of Charges & Credits included above.
Condensed Balance Sheet
(Stated in thousands)
Assets
Dec. 31, 2006
Dec. 31, 2005
Current Assets
Cash and short-term investments
$ 2,998,873
$ 3,495,681
Other current assets
6,186,789
5,058,232
9,185,662
8,553,913
Fixed income investments, held to maturity
153,000
359,750
Fixed assets
5,576,041
4,200,638
Multiclient seismic data
226,681
222,106
Goodwill
4,988,558
2,922,465
Other assets
2,675,654
1,818,620
$ 22,805,596
$ 18,077,492
Liabilities and Stockholder's Equity
Current Liabilities
Accounts payable and accrued liabilities
$ 3,822,094
$ 3,564,854
Estimated liability for taxes on income
1,136,529
946,723
Bank loans and current portion of long-term debt
1,321,529
796,578
Dividend payable
148,720
124,733
6,428,872
5,432,888
Convertible debentures
1,424,990
1,424,993
Other long-term debt
3,238,952
2,166,345
Postretirement benefits
1,036,169
707,040
Other liabilities
283,272
249,459
12,412,255
9,980,725
Minority interest
-
505,182
Stockholders' Equity
10,393,341
7,591,585
$ 22,805,596
$ 18,077,492
Net Debt
?Net Debt?
represents gross debt less cash, short-term investments and
fixed-income investments, held to maturity. Management believes
that Net Debt provides useful information regarding the level of
Schlumberger indebtedness. Details of the Net Debt follow:
(Stated in millions)
Twelve Months
2006
Net Debt, January 1, 2006
$ (532)
Net income
3,710
Depreciation and amortization
1,561
Charges & credits, net of minority interest and tax
43
Excess of equity income over dividends received
(181)
US pension and postretirement benefit contributions
(225)
Increase in working capital requirements
(377)
Capital expenditures (1)
(2,637)
Dividends paid
(568)
Proceeds from employee stock plans
442
Stock repurchase program
(1,068)
Acquisition of minority interest in WesternGeco
(2,406)
Other business acquisitions and related payments
(577)
Distribution to joint venture partner
(60)
Other
107
Translation effect on net debt
(66)
Net Debt, December 31, 2006
$ (2,834)
Components of Net Debt
Dec. 31, 2006
Dec. 31, 2005
Cash and short-term investments
$ 2,999
$ 3,496
Fixed income investments, held to maturity
153
360
Bank loans and current portion of long-term debt
(1,322)
(797)
Convertible debentures
(1,425)
(1,425)
Other long-term debt
(3,239)
(2,166)
$ (2,834)
$ (532)
(1) Including Multiclient seismic data expenditure.
Charges & Credits
In addition to financial results determined in accordance with
generally accepted accounting principles (GAAP) this
Fourth-Quarter and Full-Year 2006 Earnings Press Release also
includes non-GAAP financial measures (as defined under SEC
Regulation G). The following is a reconciliation of these non-GAAP
measures to the comparable GAAP measures:
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