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Emerging markets keep Schlumberger in the black according to first-quarter report

17th April 2014

The US-based oil and gas technology and services giant, Schlumberger, sees a boost in year-on-year profit as new technologies make headway in emerging markets.

Success in emerging markets helping keep Schlumberger in the black according to first-quarter report
First-quarter revenue of USD 11.24bn increased six per cent year-on-year with international revenue up USD 322m. The Middle East and Asia area led with revenue of USD 2.84bn growing 19 per cent, mainly from strong activity in Saudi Arabia and the United Arab Emirates and by robust drilling activity and technology uptake in Southeast Asia and deepwater Australia.

Schlumberger has today released its first quarter report which shows a year-on-year increase of 23 per cent, despite a slight decreased compared to last quarter 2013 figures.

Schlumberger CEO Paal Kibsgaard commented, “Growing new technology sales and expanding integration activity drove our first-quarter results despite the severe winter weather that impacted operations in Russia, China and North America.

“Internationally, performance was led by further growth in key markets in Saudi Arabia, the United Arab Emirates and the deepwaters of Australia, as well as by strength in sub-Saharan Africa, project work in Ecuador and shale-related activity in Argentina.

“As a result, we continue to believe that our customers’ well-related spend will increase north of 6% in 2014, and that the spend growth rates will be relatively evenly split between the international and North American markets, driven by the  independent and national oil companies.

“We therefore remain positive on the year to come, with our broad geographical footprint, balanced technology portfolio and agile organization providing both protection from potential market disturbances, and the ability to capitalize on market opportunities.”

First-quarter revenue of USD 11.24bn increased six per cent year-on-year with international revenue up USD 322m. The Middle East and Asia area led with revenue of USD 2.84bn growing 19 per cent, mainly from strong activity in Saudi Arabia and the United Arab Emirates and by robust drilling activity and technology uptake in Southeast Asia and deepwater Australia.

 

Global performance

Europe/CIS/Africa area revenue of USD 2.88bn increased only one per cent, led by the Central West Africa GeoMarket on strong development and exploration activity and by Norway from market share gains in drilling services.  Russia and Central Asia region revenue increased slightly as growing activity in the Arctic and the Caspian Sea was offset by activity disruption from the severe winter weather and the impact of the weaker Russian ruble.  The area revenue for the first quarter reflects the absence of the results of the Framo subsea business that was transferred to the OneSubsea joint venture at the end of the second quarter of 2013.  Excluding the effect of this business transfer, the revenue for the Europe/CIS/Africa Area grew three per cent.

Latin America area revenue of USD 1.76bn declined eight per cent, mainly due to significantly lower activity and pricing in Brazil coupled with reduced rig count in Mexico due to budgetary spend. These effects, however, were partially offset by increased work in the Schlumberger Project Management (SPM) Shushufindi project in Ecuador and strong activity in the Vaca Muerta shale in Argentina.

In China, Drilling Group Technologies were deployed for ConocoPhillips China to improve drilling efficiency and obtain reliable reservoir pressure measurements in an offshore well in the Peng Lai 19-3 oilfield in the Bohai Bay. The combination of drilling and measurements PowerDrive Xceed and PowerDrive vortex rotary steerable technologies with the C-Link IMAG communication system delivered precise well trajectory control, increased rate of penetration (ROP), and improved hole cleaning. In addition, the M-I Swaco Ultradril high performance water-based fluid system was used to enhance shale stability and ROP, which further improved overall drilling efficiency. As a result, record ROPs were achieved for both 12 1/4-in and 8 1/2-in sections with an overall 22 per cent improvement from the previous record. Also, in the 8 1/2-in section, StethoScope formation pressure-while-drilling technology secured real-time pressure measurements to predict pore pressure trends in the reservoir. Overall, this combination of Schlumberger technologies provided the customer with enhanced formation evaluation, high quality execution with zero NPT, and a total AFE savings of four days.

In Mexico, Pemex has awarded Schlumberger three multiyear integrated project contracts valued collectively at over USD 1.9bn, representing the largest combined award in the recently concluded Mega Tender. Schlumberger is the only service provider to secure a contract in each project including the ongoing integrated project activity in the South Region, and continued activity in Pemex North Region. The award was based on commercial terms, QHSE, and the Schlumberger proven technology track record in Mexico in the deep complex well environments in the south, along with efficient drilling processes and associated services in past projects. In addition, Schlumberger has started executing a four-year contract for deepwater integrated services, offshore Mexico, valued at over USD 240m. The first deepwater well under this contract started in March 2014.

Offshore Thailand, Schlumberger conducted an industry first seismic-while-drilling survey for Salamander Energy. Drilling and measurements seismicVISION seismic-while-drilling technology was used in a walkabove seismic survey to obtain real-time velocity information and seismic imaging. A combination of Wireline Q-Borehole integrated borehole seismic, SWINGS seismic navigation and positioning, and WesternGeco TRISOR acoustic source technologies was deployed with remote shooting from the drilling rig using radio technology to fire the guns and transmit data from the boat source. A total of 53 consecutive real-time seismic levels were used to update the time-depth conversion, enabling the drillbit to be placed on the seismic map. In addition, memory data provided over 100 consecutive seismic levels for final seismic imaging. The Schlumberger technologies provided operational efficiency and helped the operator reduce drilling uncertainty, which facilitated the successful drilling of the well to the planned total depth.

In Russia, PetroStim, a Schlumberger company, conducted a Microseismic Services StimMAP hydraulic fracture mapping service for a major Russian oil company in West Siberia. Four hydraulic fracturing stages were conducted in a horizontal treatment well and monitored from a nearby observation well, using Wireline VSI versatile seismic imager technology with 3-component downhole sensors. The directions of fracture growth were clearly detected for all stages, despite low formation permeability and reduced pumping rates. Overall, more than 400 microseismic events were detected with the statistical confidence required for good microseismic interpretation, enabling the customer to reduce uncertainty in drilling and field development planning, and potentially saving significant cost.

 

Sectors

Breaking it down into spheres of activity, Reservoir Characterization Group revenue of USD 2.85bn increased USD 51m, or two per cent, led by Wireline and Testing Services driven by offshore exploration and by Schlumberger Information Solutions (SIS) on increased software sales across all International Areas.  WesternGeco declined on lower marine vessel fleet utilization and reduced multiclient sales.  Drilling Group revenue of USD 4.33bn increased USD 269m, or seven per cent, led by robust demand for drilling, measurements and M-I SWACO technologies in Saudi Arabia, Australia and in the Southeast Asia region.  Production Group revenue of USD 4.12bn increased USD 357m, or 10 per cent, with double-digit growth posted by Well Services pressure pumping technologies in North America land and increased SPM activity.

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