- Fourth-quarter revenue of US$12.6 billion increased 6% year-on-year.
- Fourth-quarter EPS of US$1.50, excluding charges and credits, grew 11% year-on-year.
- Board approves 25% increase in dividend, effective April 10, 2015.
- 12.1 million shares repurchased during the quarter for US$1.1 billion.
- Fourth-quarter restructuring, impairment and currency devaluation charges of US$1.27 per share.
Schlumberger CEO Paal Kibsgaard commented, “Full-year 2014 revenue of US$48.6 billion increased 7% year-on-year and grew for the fifth consecutive year. Performance was driven by North America where revenue grew 16%, while International Area growth of 4% was led by a 10% increase in Middle East & Asia Area revenue. Full-year pretax operating income grew by 13%, with pretax operating margin expanding 113 basis points to 21.8%. International margin expanded by 168 basis points to reach 23.9%, reflecting an incremental operating margin of 69%.
“The strength of these results demonstrated the resiliency of our business portfolio in the face of activity challenges in 2014 in Brazil, Mexico, and China; reduced spending in deepwater, exploration and seismic activity; unrest in Libya and Iraq; international sanctions in Russia; and the accelerating fall in the price of oil toward the end of the year. The combination of these headwinds reduced revenue growth by more than US$1 billion, or 2%, yet revenue still increased 7% as a result of strong tailwinds in Argentina, Ecuador, Sub-Saharan Africa, Saudi Arabia, the United Arab Emirates and North America that combined with market share gains, drove overall performance.
“Fourth-quarter results were led by record revenue in North America due to continued efficiency improvements and new technology uptake in pressure pumping land and by the recovery of activity in the US Gulf of Mexico. In the international markets, growth was strongest in the Middle East & Asia Area, driven by record revenue in Saudi Arabia and Bahrain, robust activity in Kuwait and the United Arab Emirates, and year-end increases in product and software sales across the Area. Latin America revenue was slightly higher on increased activity in Venezuela and Colombia, but the effect of this was offset by decreased work scope in Mexico due to budget constraints and weather. Europe/CIS/Africa revenue declined significantly, mainly from weakness in the ruble and seasonal activity declines in Russia, although activity was also lower in the Angola, Norway and United Kingdom GeoMarkets as rig counts fell in response to the dramatic fall in oil prices.
“Among the Technologies, the Production Group grew by 5.5% on pressure pumping services in North America while the Reservoir Characterisation and Drilling Groups declined sequentially by 2.8% and 3.4%, respectively. The lower Reservoir Characterisation Group activity was due to a seasonal decline in marine seismic work while the Drilling Group suffered from currency effects and seasonal declining activity in Russia. As expected, year-end software, product and multiclient license sales of approximately US$260 million mainly benefited the Production and Reservoir Characterisation Groups but were weaker than usual as customers reduced discretionary spend.
“During the quarter, the forecasts for global GDP softened somewhat while growth is still expected to be 3% in 2015, confirming that the global economic recovery is intact. As a result, demand for oil continues to increase but significantly higher marketed supply has led to a dramatic fall in oil price. As E&P investment falls in response, decline rates will impact oil production capacity, while sharply lower E&P activity will delay supply additions. At the same time, markets for natural gas remain comfortably supplied in North America, while new LNG capacity additions in Asia and weaker demand in Europe are putting pressure on prices in these regions.
“In this uncertain environment, we continue to focus on what we can control. We have already taken a number of actions to restructure and resize our organisation that has led us to record a number of charges in the fourth quarter. We are convinced that performance must now be driven by an accelerated change in the way we work through our transformation program. The delivery of new technology that improves the performance of our customers’ reservoirs; the increases in efficiency and reliability that reduce overall finding, development and production costs; and the opportunities for growth from more integration—are all significant drivers of our own and our customers’ performance. Tangible results have already been recorded and, as we accelerate the benefits of the transformation program across both Technologies and GeoMarkets in 2015, we believe we are well-placed to outperform.
“Our considerable financial strength, as demonstrated by a strong cash conversion rate of earnings that generated over US$6 billion in free cash flow in 2014, has led the Board of Directors to approve an increase in our dividend for the fifth consecutive year, resulting in the doubling of our dividend over the five-year period. In combination with our continuing share repurchase program, this clearly underlines the confidence in our ability to generate superior cash flows in spite of the more challenging environment.”
Adapted from a press release by David Bizley