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EX-95 - EX-95 - SCHLUMBERGER LIMITED/NVslb-ex95_7.htm
EX-31.1 - EX-31.1 - SCHLUMBERGER LIMITED/NVslb-ex311_6.htm
EX-31.2 - EX-31.2 - SCHLUMBERGER LIMITED/NVslb-ex312_8.htm
EX-32.1 - EX-32.1 - SCHLUMBERGER LIMITED/NVslb-ex321_9.htm
EX-32.2 - EX-32.2 - SCHLUMBERGER LIMITED/NVslb-ex322_10.htm
EX-10.1 - EX-10.1 - SCHLUMBERGER LIMITED/NVslb-ex101_169.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2016

Commission file No.: 1-4601

 

SCHLUMBERGER N.V.

(SCHLUMBERGER LIMITED)

(Exact name of registrant as specified in its charter)

 

 

CURAÇAO

 

52-0684746

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

42 RUE SAINT-DOMINIQUE

 

 

PARIS, FRANCE

 

75007

 

 

 

5599 SAN FELIPE, 17th FLOOR

 

 

HOUSTON, TEXAS, U.S.A.

 

77056

 

 

 

62 BUCKINGHAM GATE

 

 

LONDON, UNITED KINGDOM

 

SW1E 6AJ

 

 

 

PARKSTRAAT 83 THE HAGUE,

 

 

THE NETHERLANDS

 

2514 JG

(Addresses of principal executive offices)

 

(Zip Codes)

Registrant’s telephone number in the United States, including area code, is:

(713) 513-2000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

x

Accelerated filer

¨

 

 

 

 

Non-accelerated filer

¨  (Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

Outstanding at March 31, 2016

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,252,334,169

 

 

 


SCHLUMBERGER LIMITED

First Quarter 2016 Form 10-Q

Table of Contents

 

 

 

 

Page

 PART I

 

Financial Information

 

 

 

 

 

Item 1.

 

Financial Statements

3

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

23

 

 

 

 

Item 4.

 

Controls and Procedures

23

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

23

 

 

 

 

Item 1A.

 

Risk Factors

24

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

24

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

24

 

 

 

 

Item 4.

 

Mine Safety Disclosures

24

 

 

 

 

Item 5.

 

Other Information

24

 

 

 

 

Item 6.

 

Exhibits

25

 

 

 

 

 

 

Certifications

 

 

 

 

2


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

 

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

 

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Revenue

$

6,520

 

 

$

10,248

 

Interest & other income

 

45

 

 

 

49

 

Expenses

 

 

 

 

 

 

 

Cost of revenue

 

5,460

 

 

 

8,096

 

Research & engineering

 

240

 

 

 

267

 

General & administrative

 

110

 

 

 

119

 

Restructuring & other

 

-

 

 

 

439

 

Interest

 

133

 

 

 

82

 

Income before taxes

 

622

 

 

 

1,294

 

Taxes on income

 

99

 

 

 

306

 

Net income

 

523

 

 

 

988

 

Net income attributable to noncontrolling interests

 

22

 

 

 

13

 

Net income attributable to Schlumberger

$

501

 

 

$

975

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

$

0.40

 

 

$

0.76

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

$

0.40

 

 

$

0.76

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

1,254

 

 

 

1,276

 

Assuming dilution

 

1,259

 

 

 

1,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Net income

$

523

 

 

$

988

 

Currency translation adjustments

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

17

 

 

 

(113

)

Marketable securities

 

 

 

 

 

 

 

Unrealized gain (loss) arising during the period

 

3

 

 

 

(18

)

Cash flow hedges

 

 

 

 

 

 

 

Net loss on cash flow hedges

 

(85

)

 

 

(152

)

Reclassification to net income of net realized loss

 

94

 

 

 

118

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

45

 

 

 

74

 

Prior service cost

 

 

 

 

 

 

 

Amortization to net income of net prior service cost

 

25

 

 

 

27

 

Income taxes on pension and other postretirement benefit plans

 

(7

)

 

 

(15

)

Comprehensive income

 

615

 

 

 

909

 

Comprehensive income attributable to noncontrolling interests

 

22

 

 

 

13

 

Comprehensive income attributable to Schlumberger

$

593

 

 

$

896

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

 

 

 

 

2016

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

2,080

 

 

$

2,793

 

Short-term investments

 

12,352

 

 

 

10,241

 

Receivables less allowance for doubtful accounts (2016 - $333; 2015 - $333)

 

8,382

 

 

 

8,780

 

Inventories

 

3,612

 

 

 

3,756

 

Deferred taxes

 

208

 

 

 

208

 

Other current assets

 

1,066

 

 

 

1,134

 

 

 

27,700

 

 

 

26,912

 

Fixed Income Investments, held to maturity

 

401

 

 

 

418

 

Investments in Affiliated Companies

 

3,341

 

 

 

3,311

 

Fixed Assets less accumulated depreciation

 

13,259

 

 

 

13,415

 

Multiclient Seismic Data

 

1,108

 

 

 

1,026

 

Goodwill

 

15,649

 

 

 

15,605

 

Intangible Assets

 

4,551

 

 

 

4,569

 

Other Assets

 

3,132

 

 

 

2,749

 

 

$

69,141

 

 

$

68,005

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

6,725

 

 

 

7,727

 

Estimated liability for taxes on income

 

1,269

 

 

 

1,203

 

Long-term debt - current portion

 

3,267

 

 

 

3,011

 

Short-term borrowings

 

987

 

 

 

1,546

 

Dividends payable

 

632

 

 

 

634

 

 

 

12,880

 

 

 

14,121

 

Long-term Debt

 

17,233

 

 

 

14,442

 

Postretirement Benefits

 

1,392

 

 

 

1,434

 

Deferred Taxes

 

923

 

 

 

1,075

 

Other Liabilities

 

1,051

 

 

 

1,028

 

 

 

33,479

 

 

 

32,100

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,700

 

 

 

12,693

 

Treasury stock

 

(13,620

)

 

 

(13,372

)

Retained earnings

 

40,745

 

 

 

40,870

 

Accumulated other comprehensive loss

 

(4,466

)

 

 

(4,558

)

Schlumberger stockholders' equity

 

35,359

 

 

 

35,633

 

Noncontrolling interests

 

303

 

 

 

272

 

 

 

35,662

 

 

 

35,905

 

 

$

69,141

 

 

$

68,005

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

523

 

 

$

988

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

Restructuring and other charges

 

-

 

 

 

439

 

Depreciation and amortization (1)

 

967

 

 

 

1,042

 

Pension and other postretirement benefits expense

 

60

 

 

 

114

 

Stock-based compensation expense

 

61

 

 

 

80

 

Pension and other postretirement benefits funding

 

(45

)

 

 

(120

)

Earnings of equity method investments, less dividends received

 

(25

)

 

 

(35

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Decrease in receivables

 

414

 

 

 

793

 

Decrease (increase) in inventories

 

125

 

 

 

(52

)

Decrease (increase) in other current assets

 

85

 

 

 

(97

)

Decrease (increase) in other assets

 

5

 

 

 

(60

)

Decrease in accounts payable and accrued liabilities

 

(983

)

 

 

(1,348

)

Decrease in estimated liability for taxes on income

 

(104

)

 

 

(66

)

Increase (decrease) in other liabilities

 

2

 

 

 

(57

)

Other

 

125

 

 

 

149

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

1,210

 

 

 

1,770

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(549

)

 

 

(606

)

SPM investments

 

(597

)

 

 

(109

)

Multiclient seismic data capitalized

 

(167

)

 

 

(101

)

Business acquisitions and investments, net of cash acquired

 

(81

)

 

 

(44

)

Purchase of investments, net

 

(2,093

)

 

 

(307

)

Other

 

(26

)

 

 

(70

)

NET CASH USED IN INVESTING ACTIVITIES

 

(3,513

)

 

 

(1,237

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(629

)

 

 

(512

)

Proceeds from employee stock purchase plan

 

116

 

 

 

144

 

Proceeds from exercise of stock options

 

47

 

 

 

38

 

Stock repurchase program

 

(475

)

 

 

(719

)

Proceeds from issuance of long-term debt

 

3,542

 

 

 

1,572

 

Repayment of long-term debt

 

(500

)

 

 

(1,144

)

Net decrease in short-term borrowings

 

(561

)

 

 

(902

)

Other

 

47

 

 

 

(2

)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

1,587

 

 

 

(1,525

)

Net decrease in cash before translation effect

 

(716

)

 

 

(992

)

Translation effect on cash

 

3

 

 

 

(17

)

Cash, beginning of period

 

2,793

 

 

 

3,130

 

Cash, end of period

$

2,080

 

 

$

2,121

 

 

(1)

Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments.  

(2)

Net of the effect of business acquisitions.

 

See Notes to Consolidated Financial Statements

 

 

 

6


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2016 – March 31, 2016

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interest

 

 

Total

 

Balance, January 1, 2016

$

12,693

 

 

$

(13,372

)

 

$

40,870

 

 

$

(4,558

)

 

$

272

 

 

$

35,905

 

Net income

 

 

 

 

 

 

 

 

 

501

 

 

 

 

 

 

 

22

 

 

 

523

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

17

 

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

3

 

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

9

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

63

 

Shares sold to optionees, less shares exchanged

 

(17

)

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47

 

Vesting of restricted stock

 

(28

)

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(19

)

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Stock repurchase program

 

 

 

 

 

(475

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(475

)

Stock-based compensation expense

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(626

)

 

 

 

 

 

 

 

 

 

 

(626

)

Other

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

19

 

Balance, March 31, 2016

$

12,700

 

 

$

(13,620

)

 

$

40,745

 

 

$

(4,466

)

 

$

303

 

 

$

35,662

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2015 – March 31, 2015

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interest

 

 

Total

 

Balance, January 1, 2015

$

12,495

 

 

$

(11,772

)

 

$

41,333

 

 

$

(4,206

)

 

$

199

 

 

$

38,049

 

Net income

 

 

 

 

 

 

 

 

 

975

 

 

 

 

 

 

 

13

 

 

 

988

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(113

)

 

 

 

 

 

 

(113

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

 

(18

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

(34

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

86

 

Shares sold to optionees, less shares exchanged

 

(16

)

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

Vesting of restricted stock

 

(39

)

 

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

9

 

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

144

 

Stock repurchase program

 

 

 

 

 

(719

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(719

)

Stock-based compensation expense

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(639

)

 

 

 

 

 

 

 

 

 

 

(639

)

Other

 

6

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

7

 

Balance, March 31, 2015

$

12,535

 

 

$

(12,260

)

 

$

41,669

 

 

$

(4,285

)

 

$

210

 

 

$

37,869

 

 

SHARES OF COMMON STOCK

(Unaudited)

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2016

 

1,434

 

 

 

(178

)

 

 

1,256

 

Shares sold to optionees, less shares exchanged

 

-

 

 

 

1

 

 

 

1

 

Vesting of restricted stock

 

-

 

 

 

-

 

 

 

-

 

Shares issued under employee stock purchase plan

 

-

 

 

 

2

 

 

 

2

 

Stock repurchase program

 

-

 

 

 

(7

)

 

 

(7

)

Balance, March 31, 2016

 

1,434

 

 

 

(182

)

 

 

1,252

 

 

See Notes to Consolidated Financial Statements

 

 

7


SCHLUMBERGER LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.    Basis of Presentation

The accompanying unaudited consolidated financial statements of Schlumberger Limited and its subsidiaries (Schlumberger) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of Schlumberger management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements.  All intercompany transactions and balances have been eliminated in consolidation.  Operating results for the three-month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.  The December 31, 2015 balance sheet information has been derived from the Schlumberger 2015 audited financial statements.  For further information, refer to the Consolidated Financial Statements and notes thereto included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on January 27, 2016.

Certain prior period items have been reclassified to conform to the current period presentation.

Merger with Cameron International Corporation

On April 1, 2016, Schlumberger acquired all of the outstanding shares of Cameron International Corporation (Cameron), a leading provider of flow equipment products, systems and services to the oil and gas industry worldwide.  The merger will create technology-driven growth by integrating Schlumberger’s reservoir and well technologies with Cameron wellhead and surface equipment, flow control and processing technology.  The combination of the two complementary technology portfolios provides the industry’s most comprehensive range of products and services, from exploration to production and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance.  Cameron’s revenue for the year ended December 31, 2015 and the three months ended March 31, 2016 was $8.8 billion and $1.6 billion, respectively.

Under the terms of the merger agreement, Cameron became a wholly-owned subsidiary of Schlumberger.  Each share of Cameron common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive 0.716 share of Schlumberger stock and $14.44 in cash.  As a result, Schlumberger issued approximately 138 million shares of its common stock and paid cash of approximately $2.8 billion in connection with this transaction.  Based on the closing price of Schlumberger’s common stock on April 1, 2016, the total fair value of the consideration transferred to effect the acquisition of Cameron was approximately $12.9 billion.  Due to the fact that the acquisition just recently closed, the initial accounting for the transaction has not yet been completed.  Cameron reported net tangible assets of approximately $3.0 billion as of December 31, 2015, consisting of $2.4 billion of cash and short-term investments, $2.0 billion of accounts receivable, $2.4 billion of inventories, $1.7 billion of fixed assets, $2.8 billion of debt and $2.7 billion of other net liabilities.  

As this transaction closed subsequent to the end of the first quarter of 2016, the Consolidated Financial Statements and the related footnotes do not reflect any amounts relating to the acquired Cameron business.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Schlumberger is required to adopt this ASU on January 1, 2018, with early adoption permitted on January 1, 2017, and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet.  Schlumberger is required to adopt this ASU no later than January 1, 2018, with early adoption permitted, and the guidance may be applied either prospectively or retrospectively.  Schlumberger does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU requires lessees to recognize for all leases, with the exception of short-term leases, a liability equal to the present value of lease payments and a corresponding right-of-use asset also

8


based on the present value of lease payments. Schlumberger is evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

2.   Charges and Credits

Schlumberger did not record any charges or credits during the first quarter of 2016.

2015

Schlumberger recorded the following charges and credits during the first quarter of 2015:

 

·

As a result of the severe fall in activity in North America, combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, Schlumberger decided to reduce its headcount during the first quarter of 2015.  Schlumberger recorded a $390 million charge during the first quarter associated with this headcount reduction as well as an incentivized leave of absence program.

 

 

·

In February 2015, the Venezuelan government replaced the SICAD II exchange rate with a new foreign exchange market system known as SIMADI. The SIMADI exchange rate was approximately 192 Venezuelan Bolivares fuertes to the US dollar as of March 31, 2015. As a result, Schlumberger recorded a $49 million devaluation charge during the first quarter of 2015, reflecting the adoption of the SIMADI exchange rate.  This change resulted in a reduction in the US dollar reported amount of local currency denominated revenues, expenses and, consequently, income before taxes and net income in Venezuela.  

The following is a summary of these charges, all of which were classified as Restructuring & other in the Consolidated Statement of Income:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax

 

 

Tax

 

 

Net

 

Workforce reduction

$

390

 

 

$

56

 

 

$

334

 

Currency devaluation loss in Venezuela

 

49

 

 

 

-

 

 

 

49

 

 

$

439

 

 

$

56

 

 

$

383

 

 

 

 

3.   Earnings Per Share

The following is a reconciliation from basic earnings per share of Schlumberger to diluted earnings per share of Schlumberger:

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

2015

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

First Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

501

 

 

 

1,254

 

 

$

0.40

 

 

$

975

 

 

 

1,276

 

 

$

0.76

 

Assumed exercise of stock options

 

-

 

 

 

1

 

 

 

 

 

 

 

-

 

 

 

5

 

 

 

 

 

Unvested restricted stock

 

-

 

 

 

4

 

 

 

 

 

 

 

-

 

 

 

4

 

 

 

 

 

Diluted

$

501

 

 

 

1,259

 

 

$

0.40

 

 

$

975

 

 

 

1,285

 

 

$

0.76

 

 

    

The number of outstanding options to purchase shares of Schlumberger common stock which were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect, was as follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

2016

 

 

2015

 

First Quarter

 

32

 

 

 

16

 

 

 

9


4.   Inventories

A summary of inventories follows:  

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2016

 

 

2015

 

Raw materials & field materials

$

2,355

 

 

$

2,300

 

Work in progress

 

155

 

 

 

178

 

Finished goods

 

1,102

 

 

 

1,278

 

 

$

3,612

 

 

$

3,756

 

 

 

 

5.   Fixed Assets

A summary of fixed assets follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2016

 

 

2015

 

Property, plant & equipment

$

37,275

 

 

$

37,120

 

Less: Accumulated depreciation

 

24,016

 

 

 

23,705

 

 

$

13,259

 

 

$

13,415

 

 

Depreciation expense relating to fixed assets was $682 million and $827 million in the first quarter of 2016 and 2015, respectively.

 

 

 

6.   Multiclient Seismic Data

The change in the carrying amount of multiclient seismic data for the three months ended March 31, 2016 was as follows:

 

(Stated in millions)

 

 

 

 

 

Balance at December 31, 2015

$

1,026

 

Capitalized in period

 

167

 

Charged to expense

 

(85

)

Balance at March 31, 2016

$

1,108

 

 

 

 

7.   Goodwill

The changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2016 were as follows:

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reservoir

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Characterization

 

 

Drilling

 

 

Production

 

 

Total

 

Balance at December 31, 2015

$

3,798

 

 

$

8,584

 

 

$

3,223

 

 

$

15,605

 

Acquisitions

 

-

 

 

 

-

 

 

 

24

 

 

 

24

 

Impact of changes in exchange rates

 

9

 

 

 

4

 

 

 

7

 

 

 

20

 

Balance at March 31, 2016

$

3,807

 

 

$

8,588

 

 

$

3,254

 

 

$

15,649

 

 

 

 

10


8.   Intangible Assets

The gross book value, accumulated amortization and net book value of intangible assets were as follows:

 

 

(Stated in millions)

 

 

 

 

 

Mar. 31, 2016

 

 

Dec. 31, 2015

 

 

Gross

 

 

Accumulated

 

 

Net Book

 

 

Gross

 

 

Accumulated

 

 

Net Book

 

 

Book Value

 

 

Amortization

 

 

Value

 

 

Book Value

 

 

Amortization

 

 

Value

 

Customer Relationships

$

2,503

 

 

$

686

 

 

$

1,817

 

 

$

2,489

 

 

$

645

 

 

$

1,844

 

Technology/Technical Know-How

 

1,866

 

 

 

681

 

 

 

1,185

 

 

 

1,864

 

 

 

653

 

 

 

1,211

 

Tradenames

 

1,623

 

 

 

380

 

 

 

1,243

 

 

 

1,625

 

 

 

367

 

 

 

1,258

 

Other

 

557

 

 

 

251

 

 

 

306

 

 

 

513

 

 

 

257

 

 

 

256

 

 

$

6,549

 

 

$

1,998

 

 

$

4,551

 

 

$

6,491

 

 

$

1,922

 

 

$

4,569

 

 

Amortization expense charged to income was $89 million during the first quarter of 2016 and $88 million during the first quarter of 2015

Based on the net book value of intangible assets at March 31, 2016, amortization charged to income for the subsequent five years is estimated to be: remaining three quarters of 2016—$287 million; 2017—$372 million; 2018—$364 million; 2019—$351 million; 2020—$330 million; and 2021—$307 million.

 

 

9.   Long-term Debt

A summary of Long-term Debt follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2016

 

 

2015

 

4.00% Senior Notes due 2025

$

1,739

 

 

$

1,741

 

3.30% Senior Notes due 2021

 

1,593

 

 

 

1,597

 

3.00% Senior Notes due 2020

 

1,590

 

 

 

1,591

 

3.65% Senior Notes due 2023

 

1,490

 

 

 

1,496

 

2.35% Senior Notes due 2018

 

1,296

 

 

 

1,297

 

4.20% Senior Notes due 2021

 

1,099

 

 

 

1,100

 

1.25% Senior Notes due 2017

 

999

 

 

 

1,000

 

2.40% Senior Notes due 2022

 

995

 

 

 

999

 

3.63% Senior Notes due 2022

 

845

 

 

 

845

 

0.63% Guaranteed Notes due 2019

 

669

 

 

 

-

 

1.50% Guaranteed Notes due 2019

 

581

 

 

 

566

 

1.90% Senior Notes due 2017

 

498

 

 

 

499

 

Commercial paper borrowings

 

2,624

 

 

 

1,000

 

Other

 

1,215

 

 

 

711

 

 

$

17,233

 

 

$

14,442

 

 

The estimated fair value of Schlumberger’s Long-term Debt at March 31, 2016 and December 31, 2015, based on quoted market prices, was $17.5 billion and $14.4 billion, respectively.

Borrowings under the commercial paper program at March 31, 2016 were $4.8 billion, of which $2.6 billion was classified within Long-term debt and $2.2 billion was classified within Long-term debt – current portion in the Consolidated Balance Sheet.  At December 31, 2015, borrowings under the commercial paper program were $2.4 billion, of which $1.0 billion was classified within Long-term debt and $1.4 billion was classified within Long-term debt – current portion in the Consolidated Balance Sheet.

 

 

11


10.   Derivative Instruments and Hedging Activities

Schlumberger is exposed to market risks related to fluctuations in foreign currency exchange rates and interest rates.  To mitigate these risks, Schlumberger utilizes derivative instruments.  Schlumberger does not enter into derivative transactions for speculative purposes.

Interest Rate Risk

Schlumberger is subject to interest rate risk on its debt and its investment portfolio.  Schlumberger maintains an interest rate risk management strategy that uses a mix of variable and fixed rate debt combined with its investment portfolio and occasionally interest rate swaps to mitigate the exposure to changes in interest rates.

During the fourth quarter of 2013, Schlumberger entered into a cross currency swap for a notional amount of €0.5 billion in order to hedge changes in the fair value of Schlumberger’s €0.5 billion 1.50% Guaranteed Notes due 2019.  Under the terms of this swap, Schlumberger receives interest at a fixed rate of 1.50% on the euro notional amount and pays interest at a floating rate of three-month LIBOR plus approximately 64 basis points on the US dollar notional amount.

This cross currency swap is designated as a fair value hedge of the underlying debt.  This derivative instrument is marked to market with gains and losses recognized in income to largely offset the respective gains and losses recognized on changes in the fair value of the hedged debt.  

At March 31, 2016, Schlumberger had fixed rate debt of $13.9 billion and variable rate debt of $7.6 billion after taking into account the effect of the swap.

Short-term investments and Fixed income investments, held to maturity totaled $12.8 billion at March 31, 2016.  The carrying value of these investments approximated fair value, which was estimated using quoted market prices for those or similar investments.

Foreign Currency Exchange Rate Risk

As a multinational company, Schlumberger conducts its business in more than 85 countries. Schlumberger’s functional currency is primarily the US dollar.  However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies.  Therefore, when the US dollar weakens (strengthens) in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar–reported expenses will increase (decrease).  

Schlumberger is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency.  Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt which is denominated in currencies other than the functional currency. Schlumberger uses foreign currency forward contracts and foreign currency options to provide a hedge against a portion of these cash flow risks.  These contracts are accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in Accumulated other comprehensive loss.  Amounts recorded in Accumulated other comprehensive loss are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of hedging instruments, if any, is recorded directly to earnings.

At March 31, 2016, Schlumberger recognized a cumulative net $30 million loss in Accumulated other comprehensive loss relating to revaluation of foreign currency forward contracts and foreign currency options designated as cash flow hedges, the majority of which is expected to be reclassified into earnings within the next 12 months.

Schlumberger is exposed to changes in the fair value of assets and liabilities which are denominated in currencies other than the functional currency.  While Schlumberger uses foreign currency forward contracts and foreign currency options to economically hedge this exposure as it relates to certain currencies, these contracts are not designated as hedges for accounting purposes.  Instead, the fair value of the contracts is recorded on the Consolidated Balance Sheet, and changes in the fair value are recognized in the Consolidated Statement of Income as are changes in fair value of the hedged item.

At March 31, 2016, contracts were outstanding for the US dollar equivalent of $4.1 billion in various foreign currencies, of which $0.7 billion relate to hedges of debt denominated in currencies other than the functional currency.

12


The fair values of outstanding derivative instruments were as follows:

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value of Derivatives

 

 

Consolidated Balance Sheet Classification

 

Mar. 31,

 

 

Dec. 31,

 

 

 

 

2016

 

 

2015

 

 

 

Derivative Assets

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

5

 

 

$

4

 

 

Other current assets

Foreign exchange contracts

 

1

 

 

 

6

 

 

Other Assets

 

$

6

 

 

$

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

11

 

 

$

15

 

 

Other current assets

 

$

17

 

 

$

25

 

 

 

Derivative Liabilities

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

27

 

 

$

37

 

 

Accounts payable and accrued liabilities

Foreign exchange contracts

 

3

 

 

 

3

 

 

Other Liabilities

Cross currency swap

 

27

 

 

 

22

 

 

Other Liabilities

 

$

57

 

 

$

62

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

6

 

 

$

25

 

 

Accounts payable and accrued liabilities

 

$

63

 

 

$

87

 

 

 

 

The fair value of all outstanding derivatives was determined using a model with inputs that are observable in the market or that can be derived from, or corroborated by, observable data.

The effect of derivative instruments designated as fair value hedges and those not designated as hedges on the Consolidated Statement of Income was as follows:

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Recognized in Income

 

 

 

 

First Quarter

 

 

 

 

2016

 

 

2015

 

 

Consolidated Statement

 of Income Classification

Derivatives designated as fair value hedges:

 

 

 

 

 

 

 

 

 

Cross currency swap

$

10

 

 

$

(70

)

 

Interest

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

(81

)

 

$

(118

)

 

Cost of revenue

 

 

 

11.   Income Taxes

Income before taxes subject to US and non-US income taxes was as follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

2016

 

 

2015

 

United States

$

(203

)

 

$

165

 

Outside United States

 

825

 

 

 

1,129

 

 

$

622

 

 

$

1,294

 

 

13


Schlumberger recorded pretax charges of $439 million during the three months ended March 31, 2015 ($93 million of charges in the US and $346 million of charges outside the US). See Note 2 – Charges and Credits.

The components of net deferred tax assets (liabilities) were as follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2016

 

 

2015

 

Postretirement benefits

$

264

 

 

$

266

 

Intangible assets

 

(1,414

)

 

 

(1,418

)

Investments in non-US subsidiaries

 

(149

)

 

 

(152

)

Fixed assets, net

 

(173

)

 

 

(176

)

Inventories

 

144

 

 

 

159

 

Other, net

 

613

 

 

 

454

 

 

$

(715

)

 

$

(867

)

 

The above deferred tax balances at March 31, 2016 and December 31, 2015 were net of valuation allowances relating to net operating losses in certain countries of $155 million and $162 million, respectively.

The components of Taxes on income were as follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

2016

 

 

2015

 

Current:

 

 

 

 

 

 

 

United States-Federal

$

40

 

 

$

75

 

United States-State

 

1

 

 

 

5

 

Outside United States

 

217

 

 

 

248

 

 

 

258

 

 

 

328

 

Deferred:

 

 

 

 

 

 

 

United States-Federal

$

(116

)

 

$

(26

)

United States-State

 

(7

)

 

 

-

 

Outside United States

 

(35

)

 

 

4

 

Valuation Allowance

 

(1

)

 

 

-

 

 

 

(159

)

 

 

(22

)

 

$

99

 

 

$

306

 

 

A reconciliation of the US statutory federal tax rate (35%) to the consolidated effective income tax rate follows:

 

 

First Quarter

 

 

 

2016

 

 

2015

 

 

US federal statutory rate

 

35

%

 

 

35

%

 

State tax

 

(1

)

 

 

-

 

 

Non-US income taxed at different rates

 

(16

)

 

 

(12

)

 

Charges and credits (See Note 2)

 

-

 

 

 

3

 

 

Other

 

(2

)

 

 

(2

)

 

 

 

16

%

 

 

24

%

 

 

 

12.   Contingencies

Schlumberger and its subsidiaries are party to various legal proceedings from time to time.  A liability is accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss with respect to any currently pending legal proceedings is remote.  However, litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings.  

14


13.   Segment Information

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2016

 

 

First Quarter 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

Income

 

 

 

 

 

 

before

 

 

 

 

 

 

before

 

 

Revenue

 

 

Taxes

 

 

Revenue

 

 

Taxes

 

Reservoir Characterization

$

1,747

 

 

$

331

 

 

$

2,655

 

 

$

672

 

Drilling

 

2,493

 

 

 

371

 

 

 

3,922

 

 

 

778

 

Production

 

2,348

 

 

 

208

 

 

 

3,705

 

 

 

544

 

Eliminations & other

 

(68

)

 

 

(9

)

 

 

(34

)

 

 

(1

)

Pretax operating income

 

 

 

 

 

901

 

 

 

 

 

 

 

1,993

 

Corporate & other (1)

 

 

 

 

 

(172

)

 

 

 

 

 

 

(192

)

Interest income (2)

 

 

 

 

 

13

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(120

)

 

 

 

 

 

 

(76

)

Charges and credits (4)

 

 

 

 

 

-

 

 

 

 

 

 

 

(439

)

 

$

6,520

 

 

$

622

 

 

$

10,248

 

 

$

1,294

 

 

 

(1) Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.

(2)  Interest income excludes amounts which are included in the segments’ income ($6 million in 2016; $5 million in 2015).

(3)   Interest expense excludes amounts which are included in the segments’ income ($13 million in 2016; $6 million in 2015).

(4)   See Note 2 – Charges and Credits.

 

 

 

14.   Pension and Other Postretirement Benefit Plans

Net pension cost for the Schlumberger pension plans included the following components:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

 

2016

 

 

2015

 

 

 

US

 

 

Int'l

 

 

US

 

 

Int'l

 

 

Service cost

$

18

 

 

$

37

 

 

$

22

 

 

$

49

 

 

Interest cost

 

44

 

 

 

80

 

 

 

41

 

 

 

74

 

 

Expected return on plan assets

 

(61

)

 

 

(134

)

 

 

(56

)

 

 

(128

)

 

Amortization of prior service cost

 

3

 

 

 

30

 

 

 

5

 

 

 

30

 

 

Amortization of net loss

 

23

 

 

 

22

 

 

 

31

 

 

 

38

 

 

 

$

27

 

 

$

35

 

 

$

43

 

 

$

63

 

 

 

The net periodic benefit cost for the Schlumberger US postretirement medical plan included the following components:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

2016

 

 

2015

 

Service cost

$

8

 

 

$

11

 

Interest cost

 

12

 

 

 

13

 

Expected return on plan assets

 

(14

)

 

 

(13

)

Amortization of prior service credit

 

(8

)

 

 

(8

)

Amortization of net loss (gain)

 

-

 

 

 

5

 

 

$

(2

)

 

$

8

 

 

 

15


15. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following:

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

Pension and

 

 

 

 

 

 

Currency

 

 

Gain/(Loss) on

 

 

 

 

 

 

Other

 

 

 

 

 

 

Translation

 

 

Marketable

 

 

Cash Flow

 

 

Postretirement

 

 

 

 

 

 

Adjustments

 

 

Securities

 

 

Hedges

 

 

Benefit Plans

 

 

Total

 

Balance, January 1, 2016

$

(2,053

)

 

$

-

 

 

$

(39

)

 

$

(2,466

)

 

$

(4,558

)

Other comprehensive gain (loss) before reclassifications

 

17

 

 

 

3

 

 

 

(85

)

 

 

-

 

 

 

(65

)

Amounts reclassified from accumulated other comprehensive loss

 

-

 

 

 

-

 

 

 

94

 

 

 

70

 

 

 

164

 

Income taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

(7

)

 

 

(7

)

Net other comprehensive (loss) income

 

17

 

 

 

3

 

 

 

9

 

 

 

63

 

 

 

92

 

Balance, March 31, 2016

$

(2,036

)

 

$

3

 

 

$

(30

)

 

$

(2,403

)

 

$

(4,466

)

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

Pension and

 

 

 

 

 

 

Currency

 

 

Gain/(Loss) on

 

 

 

 

 

 

Other

 

 

 

 

 

 

Translation

 

 

Marketable

 

 

Cash Flow

 

 

Postretirement

 

 

 

 

 

 

Adjustments

 

 

Securities

 

 

Hedges

 

 

Benefit Plans

 

 

Total

 

Balance, January 1, 2015

$

(1,531

)

 

$

10

 

 

$

(96

)

 

$

(2,589

)

 

$

(4,206

)

Other comprehensive loss before reclassifications

 

(113

)

 

 

(18

)

 

 

(152

)

 

 

-

 

 

 

(283

)

Amounts reclassified from accumulated other comprehensive loss

 

-

 

 

 

-

 

 

 

118

 

 

 

101

 

 

 

219

 

Income taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

(15

)

 

 

(15

)

Net other comprehensive (loss) income

 

(113

)

 

 

(18

)

 

 

(34

)

 

 

86

 

 

 

(79

)

Balance, March 31, 2015

$

(1,644

)

 

$

(8

)

 

$

(130

)

 

$

(2,503

)

 

$

(4,285

)

 

 

 

16


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

First Quarter 2016 Compared to Fourth Quarter 2015

Product Groups

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2016

 

 

Fourth Quarter 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

Income

 

 

 

 

 

 

before

 

 

 

 

 

 

before

 

 

Revenue

 

 

Taxes

 

 

Revenue

 

 

Taxes

 

Reservoir Characterization

$

1,747

 

 

$

331

 

 

$

2,193

 

 

$

521

 

Drilling

 

2,493

 

 

 

371

 

 

 

2,953

 

 

 

494

 

Production

 

2,348

 

 

 

208

 

 

 

2,632

 

 

 

302

 

Eliminations & other

 

(68

)

 

 

(9

)

 

 

(34

)

 

 

(29

)

Pretax operating income

 

 

 

 

 

901

 

 

 

 

 

 

 

1,288

 

Corporate & other (1)

 

 

 

 

 

(172

)

 

 

 

 

 

 

(179

)

Interest income (2)

 

 

 

 

 

13

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(120

)

 

 

 

 

 

 

(83

)

Charges and credits

 

 

 

 

 

-

 

 

 

 

 

 

 

(2,136

)

 

$

6,520

 

 

$

622

 

 

$

7,744

 

 

$

(1,102

)

 

Geographic Areas

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2016

 

 

Fourth Quarter 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

Income

 

 

 

 

 

 

before

 

 

 

 

 

 

before

 

 

Revenue

 

 

Taxes

 

 

Revenue

 

 

Taxes

 

North America

$

1,464

 

 

$

(10

)

 

$

1,955

 

 

$

139

 

Latin America

 

1,280

 

 

 

296

 

 

 

1,407

 

 

 

324

 

Europe/CIS/Africa

 

1,698

 

 

 

320

 

 

 

2,059

 

 

 

428

 

Middle East & Asia

 

2,002

 

 

 

446

 

 

 

2,248

 

 

 

507

 

Eliminations & other

 

76

 

 

 

(151

)

 

 

75

 

 

 

(110

)

Pretax operating income

 

 

 

 

 

901

 

 

 

 

 

 

 

1,288

 

Corporate & other (1)

 

 

 

 

 

(172

)

 

 

 

 

 

 

(179

)

Interest income (2)

 

 

 

 

 

13

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(120

)

 

 

 

 

 

 

(83

)

Charges and credits

 

 

 

 

 

-

 

 

 

 

 

 

 

(2,136

)

 

$

6,520

 

 

$

622

 

 

$

7,744

 

 

$

(1,102

)

 

(1)   Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.

(2)  Interest income excludes amounts which are included in the segments’ income ($6 million in the first quarter 2016; $6 million in the fourth quarter in 2015).

(3)  Interest expense excludes amounts which are included in the segments’ income ($13 million in the first quarter 2016; $8 million in the fourth quarter 2015).

 

During the first quarter of 2016, the decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis.  Budgeted E&P spend fell again and substantially affected Schlumberger’s operating results. This environment is expected to continue deteriorating during the second quarter of 2016 given the magnitude and erratic nature of the disruptions in activity.

17


First-quarter 2016 revenue of $6.5 billion decreased 16% sequentially and was driven by a continuing drop in activity and persistent pricing pressure throughout Schlumberger’s global operations, as well as from project delays, job cancellations and activity disruptions.

North America first-quarter 2016 revenue of $1.5 billion was 25% lower sequentially as the US land rig count declined 31% following customer budget cuts.  By the end of the first quarter, the US land rig count had fallen to approximately 400, representing a drop of 80% from the peak of October 2014.  

Revenue for the International Areas of $5.0 billion decreased 13% sequentially due to a combination of customer budget cuts, activity disruptions, seasonal winter slow-downs and persistent pricing pressure.

First-quarter 2016 pretax operating margins decreased 281 basis point (bps) to 13.8%.  North America pretax operating margin declined 777 bps sequentially to -1% as the downturn deepened causing further customer spending cuts and as widespread operational disruptions prevented prompt cost adjustments.  International Area pretax operating margin of 21% decreased 70 bps sequentially due to project cancellations, job delays and activity disruptions, particularly in the Europe/CIS/Africa Area.

Reservoir Characterization Group

Reservoir Characterization Group revenue of $1.7 billion declined 20% sequentially, primarily due to seasonal winter slowdowns and project cancellations that impacted Wireline activities.  Lower multiclient and SIS software sales and Testing Services revenue also contributed to the decline.

Pretax operating margin of 19% declined 480 bps sequentially primarily due to reduced high-margin Wireline services and SIS software sales.

Drilling Group

Drilling Group revenue of $2.5 billion decreased 16% sequentially as a result of a sharp drop in drilling activity combined with persistent pricing pressure and seasonal winter slowdowns.

Pretax operating margin of 15% declined 183 bps sequentially as a result of the lower activity and pricing pressure.

Production Group

Production Group revenue of $2.3 billion decreased 11% sequentially with 74% of the decrease attributable to a further decline in North America land activity, as additional customer spending cuts led to a further decline in rig count and increased pricing pressure.

Pretax operating margin of 9% decreased 258 bps sequentially primarily from further pricing weakness in pressure pumping services.

 

18


First Quarter 2016 Compared to First Quarter 2015

Product Groups

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2016

 

 

First Quarter 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

Income

 

 

 

 

 

 

before

 

 

 

 

 

 

before

 

 

Revenue

 

 

Taxes

 

 

Revenue

 

 

Taxes

 

Reservoir Characterization

$

1,747

 

 

$

331

 

 

$

2,655

 

 

$

672

 

Drilling

 

2,493

 

 

 

371

 

 

 

3,922

 

 

 

778

 

Production

 

2,348

 

 

 

208

 

 

 

3,705

 

 

 

544

 

Eliminations & other

 

(68

)

 

 

(9

)

 

 

(34

)

 

 

(1

)

Pretax operating income

 

 

 

 

 

901

 

 

 

 

 

 

 

1,993

 

Corporate & other (1)

 

 

 

 

 

(172

)

 

 

 

 

 

 

(192

)

Interest income (2)

 

 

 

 

 

13

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(120

)

 

 

 

 

 

 

(76

)

Charges and credits

 

 

 

 

 

-

 

 

 

 

 

 

 

(439

)

 

$

6,520

 

 

$

622

 

 

$

10,248

 

 

$

1,294

 

 

Geographic Areas

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2016

 

 

First Quarter 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

Income

 

 

 

 

 

 

before

 

 

 

 

 

 

before

 

 

Revenue

 

 

Taxes

 

 

Revenue

 

 

Taxes

 

North America

$

1,464

 

 

$

(10

)

 

$

3,222

 

 

$

416

 

Latin America

 

1,280

 

 

 

296

 

 

 

1,648

 

 

 

354

 

Europe/CIS/Africa

 

1,698

 

 

 

320

 

 

 

2,538

 

 

 

532

 

Middle East & Asia

 

2,002

 

 

 

446

 

 

 

2,703

 

 

 

774

 

Eliminations & other

 

76

 

 

 

(151

)

 

 

137

 

 

 

(83

)

Pretax operating income

 

 

 

 

 

901

 

 

 

 

 

 

 

1,993

 

Corporate & other (1)

 

 

 

 

 

(172

)

 

 

 

 

 

 

(192

)

Interest income (2)

 

 

 

 

 

13

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(120

)

 

 

 

 

 

 

(76

)

Charges and credits

 

 

 

 

 

-

 

 

 

 

 

 

 

(439

)

 

$

6,520

 

 

$

622

 

 

$

10,248

 

 

$

1,294

 

 

(1) Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.

(2) Interest income excludes amounts which are included in the segments’ income ($6 million in 2016; $5 million in 2015).

(3) Interest expense excludes amounts which are included in the segments’ income ($13 million in 2016; $6 million in 2015).

 First-quarter 2016 revenue of $6.5 billion was 36% lower year-on-year, while pretax operating income of $901 million was lower by 55%. Pretax operating margin decreased 563 bps to 13.8%

North America first-quarter 2016 revenue of $1.5 billion decreased 55% year-on-year as the US land rig count declined 62% and customer budgets were significantly reduced.  Land revenue declined 62%, in line with the rig count decline.  Offshore revenue decreased 30% as a result of lower activity, project delays and lower multiclient sales.

Revenue for the International Areas of $5.0 billion decreased 28% year-on-year due to a combination of customer budget cuts, activity disruptions and continued pricing pressure.

19


North America pretax operating margin declined 1,357 bps year-on-year to -1% while International Area pretax operating margin of 21% decreased 277 bps year-on-year.  These decreases were primarily attributable to the severe activity decline and pricing pressure.  

Reservoir Characterization Group

First-quarter 2016 revenue of $1.7 billion was 34% lower than the same period of 2015 primarily due to lower customer spending on discretionary and exploration activities, which impacted Wireline and Testing Technologies as well as software and multiclient sales.

Year-on-year, pretax operating margin decreased 635 bps to 19% primarily as a result of the unfavorable revenue mix due to the decrease in high-margin exploration activities.

Drilling Group

First-quarter 2016 revenue of $2.5 billion was 36% lower than the same period of 2015, while pretax operating margin decreased 496 bps to 15%.  These declines were primarily due to the sharp drop in drilling activity combined with persistent pricing pressure that mainly affected Drilling & Measurements and M-I SWACO Technologies.

Production Group

First-quarter 2016 revenue of $2.3 billion decreased 37% year-on-year primarily attributable to Well Services pressure pumping technologies driven by the severe activity decline and pricing pressure as the land rig count declined dramatically in North America.

Year-on-year pretax operating margin decreased 580 bps to 9% as lower activity and pricing pressure continued in North America land.

Interest and Other Income

Interest & other income consisted of the following:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

First Quarter

 

 

2016

 

 

2015

 

Equity in net earnings of affiliated companies

$

25

 

 

$

35

 

Interest income

 

20

 

 

 

14

 

 

$

45

 

 

$

49

 

 

Other

Research & engineering and General & administrative expenses, as a percentage of Revenue, for the first quarter ended March 31, 2016 and 2015 were as follows:

 

 

First Quarter

 

 

2016

 

 

2015

 

Research & engineering

 

3.7

%

 

 

2.6

%

General & administrative

 

1.7

%

 

 

1.2

%

 

Although Research & engineering and General & administrative costs have increased as a percentage of Revenue, they have decreased in absolute dollar terms as a result of cost control measures that Schlumberger has implemented.

Interest expense of $133 million for the first quarter of 2016 increased by $51 million compared to the same period of the prior year.  This increase was primarily due to the issuance of $6.0 billion of Senior Notes during the fourth quarter of 2015.

The effective tax rate for the first quarter of 2016 was 15.9% compared to 23.6% for the same period of the prior year.  The effective tax rate for the first quarter of 2015 was significantly impacted by the charges and credits described in Note 2 to the Consolidated Financial Statements.  Excluding the impact of the charges and credits, the effective tax rate for the first quarter of 2015 was 20.9%.  The decrease in the effective tax rate was primarily attributable to the geographic mix of earnings, as Schlumberger generated a smaller portion of its pretax earnings in North America during the first quarter of 2016 as compared to the same period last year.

20


Charges and Credits

Schlumberger recorded charges during the first quarter of 2015, all of which were classified as Restructuring & other in the Consolidated Statement of Income.  These charges, which are summarized below, are more fully described in Note 2 to the Consolidated Financial Statements.

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax

 

 

Tax

 

 

Net

 

Workforce reduction

$

390

 

 

$

56

 

 

$

334

 

Currency devaluation loss in Venezuela

 

49

 

 

 

-

 

 

 

49

 

 

$

439

 

 

$

56

 

 

$

383

 

 

Schlumberger did not record any charges or credits during the first quarter of 2016.

Going forward, Schlumberger will continue to tailor its cost and resource levels to activity in order to protect its financial strength.  This will likely result in charges in future periods.

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 by reflecting cash and investments that could be used to repay debt.

Details of changes in Net Debt follow:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Three Months ended Mar. 31,

 

 

2016

 

 

2015

 

Net income

$

523

 

 

$

988

 

Restructuring and other charges

 

-

 

 

 

439

 

Depreciation and amortization (1)

 

967

 

 

 

1,042

 

Earnings of equity method investments, less dividends received

 

(25

)

 

 

(35

)

Pension and other postretirement benefits expense

 

60

 

 

 

114

 

Stock-based compensation expense

 

61

 

 

 

80

 

Pension and other postretirement benefits funding

 

(45

)

 

 

(120

)

Increase in working capital

 

(463

)

 

 

(770

)

Other

 

132

 

 

 

32

 

Cash flow from operations

 

1,210

 

 

 

1,770

 

Capital expenditures

 

(549

)

 

 

(606

)

SPM investments

 

(597

)

 

 

(109

)

Multiclient seismic data capitalized

 

(167

)

 

 

(101

)

Free cash flow (2)

 

(103

)

 

 

954

 

Dividends paid

 

(629

)

 

 

(512

)

Proceeds from employee stock plans

 

163

 

 

 

182

 

Stock repurchase program

 

(475

)

 

 

(719

)

 

 

(1,044

)

 

 

(95

)

Business acquisitions and investments, net of cash acquired plus debt assumed

 

(81

)

 

 

(79

)

Other

 

18

 

 

 

74

 

Increase in Net Debt

 

(1,107

)

 

 

(100

)

Net Debt, Beginning of period

 

(5,547

)

 

 

(5,387

)

Net Debt, End of period

$

(6,654

)

 

$

(5,487

)

 

(1) 

Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments.

21


(2) 

“Free cash flow” represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data capitalized.  Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value, such as acquisitions and returning cash to shareholders through stock repurchases and dividends.

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Mar. 31,

 

 

Dec. 31,

 

Components of Net Debt

2016

 

 

2015

 

 

2015

 

Cash

$

2,080

 

 

$

2,121

 

 

$

2,793

 

Short-term investments

 

12,352

 

 

 

4,682

 

 

 

10,241

 

Fixed income investments, held to maturity

 

401

 

 

 

436

 

 

 

418

 

Long-term debt – current portion

 

(3,267

)

 

 

(3,180

)

 

 

(3,011

)

Short-term borrowings

 

(987

)

 

 

(648

)

 

 

(1,546

)

Long-term debt

 

(17,233

)

 

 

(8,898

)

 

 

(14,442

)

 

$

(6,654

)

 

$

(5,487

)

 

$

(5,547

)

 

Key liquidity events during the first three months of 2016 and 2015 included:

 

·

On July 18, 2013, the Schlumberger Board of Directors approved a $10 billion share repurchase program to be completed at the latest by June 30, 2018.  Schlumberger had repurchased $9.1 billion of shares under this new share repurchase program as of March 31, 2016.  

The following table summarizes the activity under this share repurchase program:

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost

 

 

Total number

 

 

Average price

 

 

of shares

 

 

of shares

 

 

paid per

 

 

purchased

 

 

purchased

 

 

share

 

Three months ended March 31, 2016

$

475

 

 

 

7.1

 

 

$

67.34

 

Three months ended March 31, 2015

$

719

 

 

 

8.7

 

 

$

82.98

 

 

On January 21, 2016, the Board of directors approved a new $10 billion share repurchase program for Schlumberger common stock.  The new program will take effect once the remaining $0.9 billion authorized to be repurchased under the July 18, 2013 program is exhausted.

 

 

·

Capital expenditures were $0.5 billion during the first three months of 2016 compared to $0.6 billion during the first three months of 2015.  Capital expenditures for full-year 2016 are expected to be approximately $2.0 billion (including approximately $160 million from the effect of the recently completed Cameron acquisition), as compared to expenditures of $2.4 billion in 2015.

Schlumberger has experienced delays in payment from its customers in Venezuela.  In April 2016, Schlumberger announced that it will reduce its activity in Venezuela to align operations with cash collections as a result of insufficient payments received in recent quarters and a lack of progress in establishing new mechanisms that address past and future accounts receivable.  Schlumberger remains fully committed to supporting the Venezuelan exploration and production industry. The reduction in activity levels will be made in close coordination with all customers in Venezuela to continue servicing those customers with available cash flow, while allowing for a safe and orderly wind down of operations for others.  Venezuela represented less than 5% of Schlumberger’s consolidated revenue during the first quarter of 2016 and for the full-year 2015.

Schlumberger operates in more than 85 countries.  At March 31, 2016, only five of those countries individually accounted for greater than 5% of Schlumberger’s accounts receivable balances, of which only Venezuela accounted for greater than 10%.  Schlumberger’s net receivable balance in Venezuela as of March 31, 2016 was approximately $1.2 billion.

On April 1, 2016, Schlumberger acquired all of the outstanding shares of Cameron International Corporation (Cameron), a leading provider of flow equipment products, systems and services to the oil and gas industry worldwide.   Under the terms of the merger agreement, Cameron became a wholly-owned subsidiary of Schlumberger.  Each share of Cameron common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive 0.716 share of Schlumberger stock and $14.44 in cash.  As a result, Schlumberger issued approximately 138 million shares of its common stock and paid cash of

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approximately $2.8 billion in connection with this transaction.  Based on the closing price of Schlumberger’s common stock on April 1, 2016, the total fair value of the consideration transferred to effect the acquisition of Cameron was approximately $12.9 billion. Cameron’s revenue for the year ended December 31, 2015 and the three months ended March 31, 2016 was $8.8 billion and $1.6 billion, respectively.  

As of March 31, 2016, Schlumberger had $14.4 billion of cash and short-term investments on hand.  Schlumberger had separate committed debt facility agreements aggregating $6.8 billion with commercial banks, of which $2.1 billion was available and unused as of March 31, 2016.  The $6.8 billion of committed debt facility agreements included $6.5 billion of committed facilities that support commercial paper programs.  Schlumberger believes that these amounts are sufficient to meet future business requirements for at least the next 12 months.

Borrowings under the commercial paper programs at March 31, 2016 were $4.8 billion.

FORWARD-LOOKING STATEMENTS

This Form 10-Q and other statements we make contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; the integration of Cameron into our business; the anticipated benefits of the Cameron transaction; the success of Schlumberger’s joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; foreign currency risk; pricing erosion; weather and seasonal factors; operational modifications, delays or cancellations; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; the inability to successfully integrate Cameron and to realize expected synergies; the inability to retain key employees; and other risks and uncertainties detailed in this first-quarter 2016 Form 10-Q and our most recent Form 10-K and other filings that we make with the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For quantitative and qualitative disclosures about market risk affecting Schlumberger, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of the Schlumberger Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Schlumberger’s exposure to market risk has not changed materially since December 31, 2015.

Item 4. Controls and Procedures.

Schlumberger has carried out an evaluation under the supervision and with the participation of Schlumberger’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of Schlumberger’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this report, Schlumberger’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that Schlumberger files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Schlumberger’s disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to its management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure. There was no change in Schlumberger’s internal control over financial reporting during the quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, Schlumberger’s internal control over financial reporting.

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

The information with respect to this Item 1 is set forth under Note 12—Contingencies, in the Consolidated Financial Statements.

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Item 1A. Risk Factors.

As of the date of this filing, there have been no material changes from the risk factors previously disclosed in Part 1, Item 1A, of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Issuer Repurchases of Equity Securities

On July 18, 2013, the Schlumberger Board of Directors (the “Board”) approved a $10 billion share repurchase program for shares of Schlumberger common stock, to be completed at the latest by June 30, 2018.  

Schlumberger’s common stock repurchase program activity for the three months ended March 31, 2016 was as follows:

 

 

(Stated in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total number of shares purchased

 

 

Average price paid per share

 

 

Total number of shares purchased as part of publicly announced program

 

 

Maximum value of shares that may yet be purchased under the program

 

January 1 through January 31, 2016

 

4,333.8

 

 

$

65.66

 

 

 

4,333.8

 

 

$

1,138,481

 

February 1 through February 29, 2016

 

2,261.3

 

 

$

69.66

 

 

 

2,261.3

 

 

$

980,959

 

March 1 through March 31, 2016

 

458.8

 

 

$

71.78

 

 

 

458.8

 

 

$

948,028

 

 

 

7,053.9

 

 

$

67.34

 

 

 

7,053.9

 

 

 

 

 

 

In connection with the exercise of stock options under Schlumberger’s incentive compensation plans, Schlumberger routinely receives shares of its common stock from optionholders in consideration of the exercise price of the stock options. Schlumberger does not view these transactions as requiring disclosure under this Item as the number of shares of Schlumberger common stock received from optionholders is not material.

On January 21, 2016, the Board approved a new $10 billion share repurchase program for Schlumberger common stock.  This new program will take effect once the remaining $0.9 billion authorized to be repurchased under the July 18, 2013 program is exhausted.

 

Item 3. Defaults Upon Senior Securities.

None.

 

Item 4. Mine Safety Disclosures.

The barite and bentonite mining operations of M-I LLC, an indirect wholly-owned subsidiary, are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this report.

 

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit 3.1—Articles of Incorporation of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3.1 to Schlumberger’s Current Report on Form 8-K filed on April 6, 2016)

Exhibit 3.2—Amended and Restated By-laws of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3.1 to Schlumberger’s Current Report on Form 8-K filed on May 14, 2015)

* Exhibit 10.1—Form of 2016 Three Year Performance Share Unit Award Agreement under Schlumberger 2010 Omnibus Stock Incentive Plan

* Exhibit 31.1—Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

* Exhibit 31.2—Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

** Exhibit 32.1—Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

** Exhibit 32.2—Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Exhibit 95—Mine Safety Disclosures

* Exhibit 101—The following materials from Schlumberger Limited’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statement of Income; (ii) Consolidated Statement of Comprehensive Income; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Cash Flows; (v) Consolidated Statement of Equity and (vi) Notes to Consolidated Financial Statements.

* Filed with this Form 10-Q.

** Furnished with this Form 10-Q.

 

 

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and in his capacity as Chief Accounting Officer.

 

 

 

 

Schlumberger Limited

(Registrant)

Date:

April 27, 2016

 

/s/ Howard Guild

 

 

 

Howard Guild

 

 

 

Chief Accounting Officer and Duly Authorized Signatory

 

 

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