The world's largest oilfield services provider
) reported adjusted fourth quarter 2012 earnings of $1.08 per
share (excluding special items), which were on par with the Zacks
However, the quarter's results decreased 1.8% from $1.10 per
share earned in the year-earlier quarter. The quarterly results
were adversely impacted by the seasonal slowdown, contract delays
and mobilization, along with project start-up costs.
Income from continuing operations, excluding charges, was $1,439
million in the quarter, down approximately 2.6% year over year.
Full-year 2012 earnings from continuing operations were $5,578
million or $4.17 a share versus $4,915 million or $3.61 per share
earned last year.
Total revenue of $11,174.0 million in the quarter was up 8.5%
from the year-earlier level of $10,301 million. The quarterly
figure surpassed the Zacks Consensus Estimate of $10,843 million.
Total revenue for 2012 was $42,149 million, reflecting an
increase of 14.0% from the year-earlier level of $36,959 million.
Fourth Quarter Segmental Highlights
Segmental revenues were up approximately 8% year over year at
$11,174.0 million in the fourth quarter. Pre-tax operating income
of $2,164 million remained flat year over year.
All groups - Reservoir Characterization, Drilling Group and
Production Group - registered sequential growth based on
increased exploration activities internationally, offshore demand
for Drilling & Measurements and M-I SWACO technologies as
well as strong deepwater activities.
Further, robust sales from Artificial Lift and Completions
products together with strong international end-of-year
Schlumberger Information Solutions (SIS) software sales aided the
sequential growth, which was partly offset by continued pricing
weakness owing to the hydraulic horsepower oversupply.
This group posted revenue of $3,150 million in the fourth
quarter, up 13% year-over-year. Pre-tax operating income was $917
million, which increased 18% from the prior-year quarter.
Fourth quarter revenues recorded by this group was $4,137
million, which improved 9% annually. Pre-tax operating income was
$696 million, up 7% year-on-year.
The revenue for the quarter recorded by this group was $3,924
million, which climbed 6% annually. Pre-tax operating income was
$590 million, down 24% year-over-year.
As of December 31, 2012, the company had approximately $6,274
million in cash and short-term investments and $9,509 million in
long-term debt, representing a debt-to-capitalization ratio of
21.4% (versus 21.5% as reported in the previous quarter).
We maintain our long-term Neutral recommendation on the stock.
Schlumberger remains upbeat about 2013, based on the positive
outlook for the international markets. The company expects its
international spending on exploration and production to climb 10%
this year and activity to increase in the U.S. Gulf of
Schlumberger generates about two-thirds of its revenue
internationally, marking the highest ratio among the biggest
oilfield service providers, which include
Baker Hughes Inc.
). Schlumberger's strength also lies in effective implementation,
strong contracts and new technologies.
BAKER-HUGHES (BHI): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
To read this article on Zacks.com click here.
The oilfield services behemoth believes that strong leverage to
the deepwater segment will help it perform well over the coming
years. While the company makes most of its money outside North
America, it suffers from the industry-wide weakness in U.S.
hydraulic fracturing services as well as weakness in the land
We see Schlumberger performing in line with the broader market
and prefer to remain on the sidelines.
Schlumberger shares currently retain a Zacks Rank #3, which
translates into a short-term Hold rating.