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EXCEL - IDEA: XBRL DOCUMENT - SCHLUMBERGER LIMITED/NVFinancial_Report.xls

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, 2015

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, 2015

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,269,726,824

 

 

 


SCHLUMBERGER LIMITED

First Quarter 2015 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

16

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

24

 

 

 

 

Item 4.

 

Controls and Procedures

24

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

25

 

 

 

 

Item 1A.

 

Risk Factors

25

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

25

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

25

 

 

 

 

Item 4.

 

Mine Safety Disclosures

25

 

 

 

 

Item 5.

 

Other Information

25

 

 

 

 

Item 6.

 

Exhibits

26

 

 

 

 

 

 

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,

 

 

2015

 

 

2014

 

Revenue

$

10,248

 

 

$

11,239

 

Interest & other income

 

49

 

 

 

76

 

Expenses

 

 

 

 

 

 

 

Cost of revenue

 

8,096

 

 

 

8,745

 

Research & engineering

 

267

 

 

 

284

 

General & administrative

 

119

 

 

 

106

 

Restructuring & other

 

439

 

 

 

 

Interest

 

82

 

 

 

103

 

Income before taxes

 

1,294

 

 

 

2,077

 

Taxes on income

 

306

 

 

 

469

 

Net income

 

988

 

 

 

1,608

 

Net income attributable to noncontrolling interests

 

13

 

 

 

16

 

Net income attributable to Schlumberger

$

975

 

 

$

1,592

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

$

0.76

 

 

$

1.22

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

$

0.76

 

 

$

1.21

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

1,276

 

 

 

1,306

 

Assuming dilution

 

1,285

 

 

 

1,318

 

    

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,

 

 

2015

 

 

2014

 

Net income

$

988

 

 

$

1,608

 

Currency translation adjustments

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

(113

)

 

 

(88

)

Marketable securities

 

 

 

 

 

 

 

Unrealized (loss) gain arising during the period

 

(18

)

 

 

11

 

Cash flow hedges

 

 

 

 

 

 

 

Net (loss) gain on cash flow hedges

 

(152

)

 

 

16

 

Reclassification to net income of net realized loss (gain)

 

118

 

 

 

(3

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

74

 

 

 

41

 

Prior service cost

 

 

 

 

 

 

 

Amortization to net income of net prior service cost

 

27

 

 

 

32

 

Income taxes on pension and other postretirement benefit plans

 

(15

)

 

 

(10

)

Comprehensive income

 

909

 

 

 

1,607

 

Comprehensive income attributable to noncontrolling interests

 

13

 

 

 

16

 

Comprehensive income attributable to Schlumberger

$

896

 

 

$

1,591

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

Mar. 31,

 

 

 

 

 

 

2015

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2014

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

2,121

 

 

$

3,130

 

Short-term investments

 

4,682

 

 

 

4,371

 

Receivables less allowance for doubtful accounts (2015 - $292; 2014 - $275)

 

10,443

 

 

 

11,171

 

Inventories

 

4,666

 

 

 

4,628

 

Deferred taxes

 

156

 

 

 

144

 

Other current assets

 

1,326

 

 

 

1,250

 

 

 

23,394

 

 

 

24,694

 

Fixed Income Investments, held to maturity

 

436

 

 

 

442

 

Investments in Affiliated Companies

 

3,272

 

 

 

3,235

 

Fixed Assets less accumulated depreciation

 

15,135

 

 

 

15,396

 

Multiclient Seismic Data

 

850

 

 

 

793

 

Goodwill

 

15,512

 

 

 

15,487

 

Intangible Assets

 

4,575

 

 

 

4,654

 

Other Assets

 

2,237

 

 

 

2,203

 

 

$

65,411

 

 

$

66,904

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

8,469

 

 

$

9,246

 

Estimated liability for taxes on income

 

1,631

 

 

 

1,647

 

Long-term debt - current portion

 

3,180

 

 

 

1,244

 

Short-term borrowings

 

648

 

 

 

1,521

 

Dividends payable

 

644

 

 

 

518

 

 

 

14,572

 

 

 

14,176

 

Long-term Debt

 

8,898

 

 

 

10,565

 

Postretirement Benefits

 

1,419

 

 

 

1,501

 

Deferred Taxes

 

1,363

 

 

 

1,296

 

Other Liabilities

 

1,293

 

 

 

1,317

 

 

 

27,545

 

 

 

28,855

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,535

 

 

 

12,495

 

Treasury stock

 

(12,263

)

 

 

(11,772

)

Retained earnings

 

41,669

 

 

 

41,333

 

Accumulated other comprehensive loss

 

(4,285

)

 

 

(4,206

)

Schlumberger stockholders' equity

 

37,656

 

 

 

37,850

 

Noncontrolling interests

 

210

 

 

 

199

 

 

 

37,866

 

 

 

38,049

 

 

$

65,411

 

 

$

66,904

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

Three Months Ended Mar. 31,

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

988

 

 

$

1,608

 

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

 

 

 

 

 

 

 

Restructuring and other charges

 

439

 

 

 

 

Depreciation and amortization (1)

 

1,042

 

 

 

1,001

 

Pension and other postretirement benefits expense

 

114

 

 

 

86

 

Stock-based compensation expense

 

80

 

 

 

77

 

Pension and other postretirement benefits funding

 

(120

)

 

 

(72

)

Earnings of equity method investments, less dividends received

 

(35

)

 

 

(61

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Decrease (increase) in receivables

 

793

 

 

 

(202

)

Increase in inventories

 

(52

)

 

 

(137

)

Increase in other current assets

 

(97

)

 

 

(181

)

Increase in other assets

 

(60

)

 

 

(31

)

Decrease in accounts payable and accrued liabilities

 

(1,348

)

 

 

(592

)

(Decrease) increase in estimated liability for taxes on income

 

(66

)

 

 

242

 

Decrease in other liabilities

 

(57

)

 

 

(20

)

Other

 

149

 

 

 

119

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

1,770

 

 

 

1,837

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(606

)

 

 

(864

)

SPM investments

 

(109

)

 

 

(202

)

Multiclient seismic data capitalized

 

(101

)

 

 

(82

)

Business acquisitions and investments, net of cash acquired

 

(44

)

 

 

(239

)

(Purchase) sale of investments, net

 

(307

)

 

 

1,576

 

Other

 

(70

)

 

 

(17

)

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

 

(1,237

)

 

 

172

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(512

)

 

 

(410

)

Proceeds from employee stock purchase plan

 

144

 

 

 

134

 

Proceeds from exercise of stock options

 

38

 

 

 

146

 

Stock repurchase program

 

(719

)

 

 

(899

)

Proceeds from issuance of long-term debt

 

1,572

 

 

 

1,110

 

Repayment of long-term debt

 

(1,144

)

 

 

(1,574

)

Net decrease in short-term borrowings

 

(902

)

 

 

(222

)

Other

 

(2

)

 

 

7

 

NET CASH USED IN FINANCING ACTIVITIES

 

(1,525

)

 

 

(1,708

)

Net (decrease) increase in cash before translation effect

 

(992

)

 

 

301

 

Translation effect on cash

 

(17

)

 

 

(21

)

Cash, beginning of period

 

3,130

 

 

 

3,472

 

Cash, end of period

$

2,121

 

 

$

3,752

 

 

(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, 2015 – March 31, 2015

 

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

4

 

Balance, March 31, 2015

 

$

12,535

 

 

$

(12,263

)

 

$

41,669

 

 

$

(4,285

)

 

$

210

 

 

$

37,866

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2014 – March 31, 2014

 

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total

 

Balance, January 1, 2014

 

$

12,192

 

 

$

(8,135

)

 

$

37,966

 

 

$

(2,554

)

 

$

166

 

 

$

39,635

 

Net income

 

 

 

 

 

 

 

 

 

 

1,592

 

 

 

 

 

 

 

16

 

 

 

1,608

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(88

)

 

 

 

 

 

 

(88

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

11

 

Changes in fair value of cash flow hedges.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

13

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

63

 

Shares sold to optionees, less shares exchanged

 

 

(7

)

 

 

153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

146

 

Vesting of restricted stock

 

 

(30

)

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued under employee stock purchase plan

 

 

6

 

 

 

128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

134

 

Stock repurchase program

 

 

 

 

 

 

(899

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(899

)

Stock-based compensation expense

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77

 

Dividends declared ($0.40 per share)

 

 

 

 

 

 

 

 

 

 

(522

)

 

 

 

 

 

 

 

 

 

 

(522

)

Other

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

2

 

Balance, March 31, 2014

 

$

12,246

 

 

$

(8,723

)

 

$

39,036

 

 

$

(2,555

)

 

$

176

 

 

$

40,180

 

SHARES OF COMMON STOCK

(Unaudited)

  

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2015

 

1,434

 

 

 

(159

)

 

 

1,275

 

Shares sold to optionees, less shares exchanged

 

 

 

 

1

 

 

 

1

 

Vesting of restricted stock

 

 

 

 

1

 

 

 

1

 

Shares issued under employee stock purchase plan

 

 

 

 

2

 

 

 

2

 

Stock repurchase program

 

 

 

 

(9

)

 

 

(9

)

Balance, March 31, 2015

 

1,434

 

 

 

(164

)

 

 

1,270

 

 

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, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.  The December 31, 2014 balance sheet information has been derived from the Schlumberger 2014 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, 2014, filed with the Securities and Exchange Commission on January 29, 2015.

New Accounting Pronouncement

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, 2017 and does not expect this ASU to have a material impact on its consolidated financial statements.

 

 

2.   Charges and Credits

Schlumberger recorded the following charges and credits in continuing operations 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 further 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.

 

·

During 2014, Venezuela enacted certain changes to its foreign exchange system such that, in addition to the official rate of 6.3 Venezuelan Bolivares per US dollar, there were two other legal exchange rates that could be obtained via different exchange rate mechanisms.  These changes included the expansion of the SICAD I auction rate and the introduction of what was known as the SICAD II auction process.  The SICAD I and SICAD II exchange rates were approximately 11 and 50 Venezuelan Bolivares to the US dollar, respectively, at December 31, 2014.

Although the functional currency of Schlumberger’s operations in Venezuela is the US dollar, a portion of the transactions are denominated in local currency.  Prior to December 31, 2014, Schlumberger had historically applied the official exchange rate to remeasure local currency transactions and balances into US dollars.

Effective December 31, 2014, Schlumberger concluded that it was appropriate to apply the SICAD II exchange rate as it believed this rate best represented the economics of Schlumberger’s business activity in Venezuela.  As a result, Schlumberger recorded a $472 million devaluation charge during the fourth quarter of 2014.

In February 2015, the Venezuelan government replaced SICAD II with a new foreign exchange market system known as SIMADI.  The SIMADI exchange rate was approximately 192 Venezuela Bolivares 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.  

These changes result 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.  For example, if Schlumberger had applied an exchange rate of 192 Venezuelan Bolivares to the US dollar throughout 2014, it would have reduced Schlumberger earnings by approximately $0.09 per share.

8


The following is a summary of these charges:

 

(Stated in millions)

 

 

 

 

Pretax

 

 

Tax

 

  

Net

 

 

Classification

Workforce reduction

$

390

 

 

 

56

 

 

$

334

 

 

Restructuring & other

Currency devaluation loss in Venezuela

 

49

  

 

 

  

  

 

49

  

 

Restructuring & other

 

$

439

 

 

$

56

  

  

$

383

 

 

 

 There were no charges or credits recorded during the first quarter of 2014.

 

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)

 

 

2015

 

 

2014

 

 

Schlumberger Net Income

 

 

Average Shares Outstanding

 

 

Earnings per Share

 

 

Schlumberger Net Income

 

 

Average

Shares Outstanding

 

 

Earnings per Share

 

First Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

975

 

 

 

1,276

 

 

$

0.76

 

 

$

1,592

 

 

 

1,306

 

 

$

1.22

 

Assumed exercise of stock options

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

Unvested restricted stock

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

Diluted

$

975

 

 

 

1,285

 

 

$

0.76

 

 

$

1,592

 

 

 

1,318

 

 

$

1.21

 

    

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)

 

 

2015

 

 

2014

 

First Quarter

 

16

 

 

 

1

 

 

 

 

4.   Inventories

A summary of inventories follows:  

 

(Stated in millions)

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2015

 

 

2014

 

Raw materials & field materials

$

2,835

 

 

$

2,666

 

Work in process

 

240

 

 

 

273

 

Finished goods

 

1,591

 

 

 

1,689

 

 

$

4,666

 

 

$

4,628

 

 

 

5.   Fixed Assets

A summary of fixed assets follows:

(Stated in millions)

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2015

 

 

2014

 

Property, plant & equipment

$

37,174

 

 

$

36,964

 

Less: Accumulated depreciation

 

22,039

 

 

 

21,568

 

 

$

15,135

 

 

$

15,396

 

 

9


Depreciation expense relating to fixed assets was $827 million and $793 million in the first quarter of 2015 and 2014, respectively.

 

 

6.   Multiclient Seismic Data

The change in the carrying amount of multiclient seismic data for the three months ended March 31, 2015 was as follows:

 

(Stated in millions)

 

 

 

 

 

Balance at December 31, 2014

$

793

 

Capitalized in period

 

101

 

Charged to expense

 

(44

)

Balance at March 31, 2015

$

850

 

 

 

7.   Goodwill

The changes in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2015 were as follows:

 

 

(Stated in millions)

 

 

Reservoir

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Characterization

 

 

Drilling

 

 

Production

 

 

Total

 

Balance at December 31, 2014

$

3,812

 

 

$

8,488

 

 

$

3,187

 

 

$

15,487

 

Acquisitions

 

 

 

 

31

 

 

 

20

 

 

 

51

 

Impact of changes in exchange rates

 

(11

)

 

 

(7

)

 

 

(8

)

 

 

(26

)

Balance at March 31, 2015

$

3,801

 

 

$

8,512

 

 

$

3,199

 

 

$

15,512

 

 

 

8.   Intangible Assets

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

 

 

(Stated in millions)

 

 

Mar. 31, 2015

 

 

Dec. 31, 2014

 

 

Gross

 

 

Accumulated

 

 

Net Book

 

 

Gross

 

 

Accumulated

 

 

Net Book

 

 

Book Value

 

 

Amortization

 

 

Value

 

 

Book Value

 

 

Amortization

 

 

Value

 

Technology/Technical Know-How

$

1,744

 

 

$

568

 

 

$

1,176

 

 

$

1,747

 

 

$

535

 

 

$

1,212

 

Tradenames

 

1,640

 

 

 

335

 

 

 

1,305

 

 

 

1,641

 

 

 

319

 

 

 

1,322

 

Customer Relationships

 

2,530

 

 

 

555

 

 

 

1,975

 

 

 

2,531

 

 

 

523

 

 

 

2,008

 

Other

 

377

 

 

 

258

 

 

 

119

 

 

 

380

 

 

 

268

 

 

 

112

 

 

$

6,291

 

 

$

1,716

 

 

$

4,575

 

 

$

6,299

 

 

$

1,645

 

 

$

4,654

 

 

Amortization expense charged to income was $88 million during the first quarter of 2015 and $86 million during the first quarter of 2014.

  

Based on the net book value of intangible assets at March 31, 2015, amortization charged to income for the subsequent five years is estimated to be: remaining three quarters of 2015—$270 million; 2016—$351 million; 2017—$342 million; 2018—$331 million; 2019—$323 million; and 2020—$302 million.

 

 

10


9.   Long-term Debt

A summary of Long-term Debt follows:

 

(Stated in millions)

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2015

 

 

2014

 

3.30% Senior Notes due 2021

$

1,597

 

 

$

1,597

 

3.65% Senior Notes due 2023

 

1,496

 

 

 

1,495

 

1.95% Senior Notes due 2016

 

1,100

 

 

 

1,100

 

4.20% Senior Notes due 2021

 

1,100

 

 

 

1,100

 

1.25% Senior Notes due 2017

 

1,000

 

 

 

1,000

 

2.40% Senior Notes due 2022

 

999

 

 

 

999

 

1.50% Guaranteed Notes due 2019

 

561

 

 

 

628

 

2.65% Senior Notes due 2016

 

 

 

 

500

 

Commercial paper borrowings

 

444

 

 

 

1,538

 

Other

 

601

 

 

 

608

 

 

$

8,898

 

 

$

10,565

 

 

The estimated fair value of Schlumberger’s Long-term Debt at March 31, 2015 and December 31, 2014, based on quoted market prices, was $9.2 billion and $10.7 billion, respectively.

Borrowings under the commercial paper program at March 31, 2015 were $2.0 billion, of which $1.6 billion is classified within Long-term debt – current portion in the Consolidated Balance Sheet.  At December 31, 2014, borrowings under the commercial paper program were $1.5 billion, all of which were classified within Long-term debt in the Consolidated Balance Sheet.  

 

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 will receive interest at a fixed rate of 1.50% on the euro notional amount and pay 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, 2015, Schlumberger had fixed rate debt aggregating $8.9 billion and variable rate debt aggregating $3.8 billion, after taking into account the effect of the swap.

Short-term investments and Fixed income investments, held to maturity, totaled $5.1 billion at March 31, 2015.  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 approximately 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).  

11


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, 2015, Schlumberger recognized a cumulative net $130 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, 2015, contracts were outstanding for the US dollar equivalent of $6.3 billion in various foreign currencies, of which $2.5 billion relate to hedges of debt denominated in currencies other than the functional currency.

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,

 

 

 

 

2015

 

 

2014

 

 

 

Derivative Assets

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

3

 

 

$

3

 

 

Other current assets

Foreign exchange contracts

 

34

 

 

 

32

 

 

Other Assets

 

$

37

 

 

$

35

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

22

 

 

$

5

 

 

Other current assets

 

$

59

 

 

$

40

 

 

 

Derivative Liabilities

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

115

 

 

$

80

 

 

Accounts payable and accrued liabilities

Foreign exchange contracts

 

138

 

 

 

105

 

 

Other Liabilities

Cross currency swap

 

60

 

 

 

42

 

 

Other Liabilities

 

$

313

 

 

$

227

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

43

 

 

$

28

 

 

Accounts payable and accrued liabilities

 

$

356

 

 

$

255

 

 

 

 

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.

12


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

 

 

 

 

 

2015

 

 

 

2014

 

 

Consolidated Statement of Income Classification

Derivatives designated as fair value hedges:

 

 

 

 

 

 

 

 

 

Cross currency swap

$

(70

)

 

$

(1

)

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedges:

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

(118

)

 

$

13

 

 

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

 

 

2015

 

 

 

2014

 

United States

$

165

 

 

$

524

 

Outside United States

 

1,129

 

 

 

1,553

 

 

$

1,294

 

 

$

2,077

 

 

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,

 

 

2015

 

 

2014

 

Postretirement benefits

$

314

 

 

$

327

 

Intangible assets

 

(1,484

)

 

 

(1,435

)

Investments in non-US subsidiaries

 

(225

)

 

 

(227

)

Other, net

 

188

 

 

 

183

 

 

$

(1,207

)

 

$

(1,152

)

 

The above deferred tax balances at March 31, 2015 and December 31, 2014 were net of valuation allowances relating to net operating losses in certain countries of $172 million and $190 million, respectively.

The components of consolidated Taxes on income were as follows:

 (Stated in millions)

 

 

 

First Quarter

 

 

 

 

2015

 

 

 

2014

 

 

Current:

 

 

 

 

 

 

 

 

United States-Federal

$

75

 

 

$

147

 

 

United States-State

 

5

 

 

 

7

 

 

Outside United States

 

248

 

 

 

336

 

 

 

$

328

 

 

$

490

 

 

Deferred:

 

 

 

 

 

 

 

 

United States-Federal

$

(26

)

 

$

7

 

 

United States-State

 

 

 

 

(1

)

 

Outside United States

 

4

 

 

 

(27

)

 

 

$

(22

)

 

$

(21

)

 

 

$

306

 

 

$

469

 

 

13


 

 

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

 

 

First Quarter

 

 

 

 

2015

 

 

 

2014

 

 

US federal statutory rate

 

35

%

 

 

35

%

 

Non-US income taxed at different rates

 

(12

)

 

 

(11

)

 

Charges and credits (See Note 2)

 

3

 

 

 

 

 

Other

 

(2

)

 

 

(1

)

 

 

 

24

%

 

 

23

%

 

 

 

12.   Contingencies

On March 25, 2015, Schlumberger resolved a previously disclosed investigation by the U.S. Department of Justice into past violations of US sanctions regarding its historical operations in Iran and Sudan that occurred between 2004 and 2010.  A non-US subsidiary of Schlumberger has agreed to plead guilty to one criminal count of conspiracy to violate the International Emergency Economic Powers Act.  Under the terms of the plea agreement, Schlumberger will pay a total amount of approximately $233 million in fines, penalties and assessments.  This amount, which has been previously accrued for, is expected to be paid during the second quarter of 2015 and will be reflected within Cash flow used in discontinued operations – operating activities in Schlumberger’s Consolidated Statement of Cash Flows when paid.  All terms of the plea agreement are subject to judicial approval.

Schlumberger and its subsidiaries are party to various other 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 these other legal proceedings is remote.  However, litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings.  

 

13.   Segment Information

 

 

(Stated in millions)

 

 

First Quarter 2015

 

 

First Quarter 2014

 

 

Revenue

 

 

Income

before

taxes

 

 

Revenue

 

 

Income

before

taxes

 

Reservoir Characterization

$

2,550

 

 

$

655

 

 

$

2,979

 

 

$

792

 

Drilling

 

3,963

 

 

 

790

 

 

 

4,331

 

 

 

881

 

Production

 

3,769

 

 

 

549

 

 

 

3,989

 

 

 

724

 

Eliminations & other

 

(34

)

 

 

(1

)

 

 

(60

)

 

 

(29

)

      Pretax operating income

 

 

 

 

 

1,993

 

 

 

 

 

 

 

2,368

 

Corporate & other (1)

 

 

 

 

 

(192

)

 

 

 

 

 

 

(201

)

Interest income (2)

 

 

 

 

 

8

 

 

 

 

 

 

 

7

 

Interest expense (3)

 

 

 

 

 

(76

)

 

 

 

 

 

 

(97

)

Charges and credits (4)

 

 

 

 

 

(439

)

 

 

 

 

 

 

 

 

$

10,248

 

 

$

1,294

 

 

$

11,239

 

 

$

2,077

 

 

(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 ($5 million in 2015; $5 million in 2014).

(3)   Interest expense excludes amounts which are included in the segments’ income ($6 million in 2015; $6 million in 2014).

(4) Charges and credits recorded during the first quarter of 2015 are described in detail in Note 2 to the Consolidated Financial Statements.  

 

  

14


14.   Pension and Other Postretirement Benefit Plans

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

 

(Stated in millions)

 

 

 

First Quarter

 

 

 

2015

 

 

2014

 

 

 

US

 

 

Int’l

 

 

US

 

 

Int’l

 

 

Service cost — benefits earned during period

$

22

 

 

$

49

 

 

$

19

 

 

$

31

 

 

Interest cost on projected benefit obligation

 

41

 

 

 

74

 

 

 

41

 

 

 

72

 

 

Expected return on plan assets

 

(56

)

 

 

(128

)

 

 

(52

)

 

 

(113

)

 

Amortization of prior service cost

 

5

 

 

 

30

 

 

 

3

 

 

 

30

 

 

Amortization of net loss

 

31

 

 

 

38

 

 

 

20

 

 

 

20

 

 

 

$

43

 

 

$

63

 

 

$

31

 

 

$

40

 

 

 

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

 

(Stated in millions)

 

First Quarter

 

 

 

2015

 

 

2014

 

 

Service cost — benefits earned during period

$

11

 

 

$

11

 

 

Interest cost on accumulated postretirement benefit obligation

 

13

 

 

 

15

 

 

Expected return on plan assets

 

(13

)

 

 

(11

)

 

Amortization of prior service credit

 

(8

)

 

 

(1

)

 

Amortization of net loss

 

5

 

 

 

1

 

 

 

$

8

 

 

$

15

 

 

 

 

15. Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss consists of the following:

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Pension and

 

 

Unrealized

 

 

 

 

 

 

Currency

 

 

 

 

 

Other

 

 

Gain/(Loss) on

 

 

 

 

 

 

Translation

 

 

Cash Flow

 

 

Postretirement

 

 

Marketable

 

 

 

 

 

 

Adjustments

 

 

Hedges

 

 

Benefit Plans

 

 

Securities

 

 

Total

 

Balance, January 1, 2015

$

(1,531

)

 

$

(96

)

 

$

(2,589

)

 

$

10

 

 

$

(4,206

)

Other comprehensive loss before reclassifications

 

(113

)

 

 

(152

)

 

 

 

 

 

(18

)

 

 

(283

)

Amounts reclassified from accumulated other comprehensive loss

 

 

 

 

118

 

 

 

101

 

 

 

 

 

 

219

 

Income taxes

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net other comprehensive income (loss)

 

(113

)

 

 

(34

)

 

 

86

 

 

 

(18

)

 

 

(79

)

Balance, March 31, 2015

$

(1,644

)

 

$

(130

)

 

$

(2,503

)

 

$

(8

)

 

$

(4,285

)

15


 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Pension and

 

 

Unrealized

 

 

 

 

 

 

Currency

 

 

 

 

 

Other

 

 

Gain on

 

 

 

 

 

 

Translation

 

 

Cash Flow

 

 

Postretirement

 

 

Marketable

 

 

 

 

 

 

Adjustments

 

 

Hedges

 

 

Benefit Plans

 

 

Securities

 

 

Total

 

Balance, January 1, 2014

$

(1,068

)

 

$

29

 

 

$

(1,691

)

 

$

176

 

 

$

(2,554

)

Other comprehensive income (loss) before reclassifications

 

(88

)

 

 

16

 

 

 

 

 

 

11

 

 

 

(61

)

Amounts reclassified from accumulated other comprehensive loss

 

 

 

 

(3

)

 

 

73

 

 

 

 

 

 

70

 

Income taxes

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

Net other comprehensive income (loss)

 

(88

)

 

 

13

 

 

 

63

 

 

 

11

 

 

 

(1

)

Balance, March 31, 2014

$

(1,156

)

 

$

42

 

 

$

(1,628

)

 

$

187

 

 

$

(2,555

)

 

 

 

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

First Quarter 2015 Compared to Fourth Quarter 2014

Product Groups

 

 

(Stated in millions)

 

 

First Quarter 2015

 

 

Fourth Quarter 2014

 

 

Revenue

 

 

Income Before Taxes

 

 

Revenue

 

 

Income Before Taxes

 

Reservoir Characterization

$

2,550

 

 

$

655

 

 

$

3,231

 

 

$

974

 

Drilling

 

3,963

 

 

 

790

 

 

 

4,658

 

 

 

966

 

Production

 

3,769

 

 

 

549

 

 

 

4,816

 

 

 

889

 

Eliminations & other

 

(34

)

 

 

(1

)

 

 

(64

)

 

 

(48

)

      Pretax operating income

 

 

 

 

 

1,993

 

 

 

 

 

 

 

2,781

 

Corporate & other (1)

 

 

 

 

 

(192

)

 

 

 

 

 

 

(221

)

Interest income (2)

 

 

 

 

 

8

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(76

)

 

 

 

 

 

 

(80

)

Charges and credits (4)

 

 

 

 

 

(439

)

 

 

 

 

 

 

(1,773

)

 

$

10,248

 

 

$

1,294

 

 

$

12,641

 

 

$

715

 

 

16


Geographic Areas

 

 

(Stated in millions)

 

 

First Quarter 2015

 

 

Fourth Quarter 2014

 

 

Revenue

 

 

Income Before Taxes

 

 

Revenue

 

 

Income Before Taxes

 

North America

$

3,222

 

 

$

416

 

 

$

4,324

 

 

$

849

 

Latin America

 

1,648

 

 

 

354

 

 

 

2,053

 

 

 

429

 

Europe/CIS/Africa

 

2,538

 

 

 

532

 

 

 

3,063

 

 

 

683

 

Middle East & Asia

 

2,703

 

 

 

774

 

 

 

3,094

 

 

 

877

 

Eliminations & other

 

137

 

 

 

(83

)

 

 

107

 

 

 

(57

)

      Pretax operating income

 

 

 

 

 

1,993

 

 

 

 

 

 

 

2,781

 

Corporate & other (1)

 

 

 

 

 

(192

)

 

 

 

 

 

 

(221

)

Interest income (2)

 

 

 

 

 

8

 

 

 

 

 

 

 

8

 

Interest expense (3)

 

 

 

 

 

(76

)

 

 

 

 

 

 

(80

)

Charges and credits (4)

 

 

 

 

 

(439

)

 

 

 

 

 

 

(1,773

)

 

$

10,248

 

 

$

1,294

 

 

$

12,641

 

 

$

715

 

 

(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 ($5 million in the first quarter 2015; $5 million in the fourth quarter in 2014).

(3)   Interest expense excludes amounts which are included in the segments’ income ($6 million in the first quarter 2015; $7 million in the fourth quarter 2014).

(4)   Charges and credits recorded during the first quarter of 2015 are described in detail in Note 2 to the Consolidated Financial Statements.  Refer to Note 3 to the Consolidated Financial Statements included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2014 for details regarding charges and credits during the fourth quarter of 2014.

 

First-quarter 2015 revenue of $10.2 billion was 19% lower sequentially while pretax operating income of $2.0 billion was lower by 28% sequentially.  Pretax operating margin decreased 255 basis points (bps) to 19.4%.  

North America first-quarter revenue of $3.2 billion decreased 25% sequentially. In the US and Western Canada, revenue fell on lower pressure pumping activity and increased pricing pressure, which was precipitated by the sharp drop in the land rig count and the early onset of the Canadian spring break-up. In the US Gulf of Mexico, activity was flat but revenue declined mainly due to lower multiclient sales.

 

North America pretax operating margin declined 670 bps sequentially to 12.9% on decreased pressure pumping activity and pricing weakness in North America land. North America offshore operating margin declined due to an unfavorable revenue mix resulting from a shift from exploration to development activity and reduced high-margin multiclient sales.  

Revenue for the International Areas of $6.9 billion decreased 16% sequentially. Middle East & Asia Area revenue of $2.7 billion declined 13% sequentially due mainly to double-digit drops in China, Asia-Pacific and Australia.  The Middle East GeoMarkets remained robust on new projects and higher activity, but revenue declined on reduced product and software sales following the year-end highs of the previous quarter.  India GeoMarket revenue grew sequentially, while activity in Iraq continued to be muted. Europe/CIS/Africa Area revenue of $2.5 billion fell 17% sequentially due mainly to continued weakness in the Russian ruble and the seasonal activity decline in Russia.  Revenue in the Latin America Area of $1.6 billion dropped 20% due to the exchange rate change in Venezuela and lower activity in Mexico, Brazil and Colombia due to customer budget cuts. These effects, however, were partially offset by slight but steady activity increases in Argentina, Venezuela, Trinidad and the Caribbean.

International Area pretax operating margin of 24.1% was essentially flat sequentially.  Middle East & Asia pretax operating margin increased slightly by 30 bps to 28.6%, Latin America increased 59 bps to 21.5%, and Europe/CIS/Africa fell 133 bps to 21.0%. Despite the severity of the sequential revenue decline and an increasingly unfavorable revenue mix, the impact on margins was minimized by focused execution and prompt action on variable costs.

17


Reservoir Characterization Group

Sequentially, Reservoir Characterization Group revenue of $2.6 billion declined 21%, primarily due to the overall cut in discretionary and exploration spending and lower multiclient and Schlumberger Information Solutions (SIS) software sales following the year-end highs of the previous quarter.  Wireline revenue decreased on lower exploration activity in the international markets and currency declines in Europe, Norway and Russia.

Pretax operating margin of 25.7% was 447 bps lower sequentially as a result of seasonally lower multiclient and SIS software sales and an unfavorable overall revenue mix reflecting the decline in high-margin exploration activity.

 

Drilling Group

Sequentially, Drilling Group revenue of $4.0 billion decreased 15% primarily due to the severe drop in rig count in North America and the unfavorable currency effects in Russia and Venezuela, as well as the seasonal activity declines in Russia that mainly affected Drilling & Measurements and M-I SWACO Technologies.  More than 30% of the sequential decline was in North America land due to lower activity and pricing.  Reduced Integrated Project Management (IPM) work in Australia, Mexico and Iraq also contributed to the decrease.

Pretax operating margin of 19.9% declined 80 bps sequentially.  Despite the revenue decline, prompt action on cost management, and the benefit of our local cost structure which minimized the impact of the unfavorable currency effects on pretax operating income, helped limit the sequential pretax operating margin decline.

 

Production Group

Production Group revenue of $3.8 billion decreased 22% sequentially as a result of lower pressure pumping activity and increased pricing pressure precipitated by the severe drop in land rig count in North America.  More than half of the sequential decrease was attributable to North America land.  Lower Artificial Lift and Completions product sales and unfavorable currency effects also contributed to the sequential decrease.

Pretax operating margin of 14.6% declined 389 bps sequentially as lower activity and increasing pricing pressure took hold during the first quarter of 2015, particularly in the North America land market.  Despite the severe revenue decline, prompt cost management actions, including alignment of resources with activity, limited the sequential pretax operating margin decline.

First Quarter 2015 Compared to First Quarter 2014

Product Groups

 

 

(Stated in millions)

 

 

First Quarter 2015

 

 

First Quarter 2014

 

 

Revenue

 

 

Income Before Taxes

 

 

Revenue

 

 

Income Before Taxes

 

Reservoir Characterization

$

2,550

 

 

$

655

 

 

$

2,979

 

 

$

792

 

Drilling

 

3,963

 

 

 

790

 

 

 

4,331

 

 

 

881

 

Production

 

3,769

 

 

 

549

 

 

 

3,989

 

 

 

724

 

Eliminations & other

 

(34

)

 

 

(1

)

 

 

(60

)

 

 

(29

)

      Pretax operating income

 

 

 

 

 

1,993

 

 

 

 

 

 

 

2,368

 

Corporate & other (1)

 

 

 

 

 

(192

)

 

 

 

 

 

 

(201

)

Interest income (2)

 

 

 

 

 

8

 

 

 

 

 

 

 

7

 

Interest expense (3)

 

 

 

 

 

(76

)

 

 

 

 

 

 

(97

)

Charges and credits (4)

 

 

 

 

 

(439

)

 

 

 

 

 

 

 

 

$

10,248

 

 

$

1,294

 

 

$

11,239

 

 

$

2,077

 

18


Geographic Areas

 

 

(Stated in millions)

 

 

First Quarter 2015

 

 

First Quarter 2014

 

 

Revenue

 

 

Income

Before

Taxes

 

 

Revenue

 

 

Income

Before

Taxes

 

North America

$

3,222

 

 

$

416

 

 

$

3,684

 

 

$

683

 

Latin America

 

1,648

 

 

 

354

 

 

 

1,758

 

 

 

371

 

Europe/CIS/Africa

 

2,538

 

 

 

532

 

 

 

2,881

 

 

 

585

 

Middle East & Asia

 

2,703

 

 

 

774

 

 

 

2,845

 

 

 

749

 

Eliminations & other

 

137

 

 

 

(83

)

 

 

71

 

 

 

(20

)

      Pretax operating income

 

 

 

 

 

1,993

 

 

 

 

 

 

 

2,368

 

Corporate & other (1)

 

 

 

 

 

(192

)

 

 

 

 

 

 

(201

)

Interest income (2)

 

 

 

 

 

8

 

 

 

 

 

 

 

7

 

Interest expense (3)

 

 

 

 

 

(76

)

 

 

 

 

 

 

(97

)

Charges and credits (4)

 

 

 

 

 

(439

)

 

 

 

 

 

 

 

 

$

10,248

 

 

$

1,294

 

 

$

11,239

 

 

$

2,077

 

(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 ($5 million in 2015; $5 million in 2014).

(3)   Interest expense excludes amounts which are included in the segments’ income ($6 million in 2015; $6 million in 2014).

(4)   Charges and credits recorded during the first quarter of 2015 are described in detail in Note 2 to the Consolidated Financial Statements.

    

First-quarter 2015 revenue of $10.2 billion was 9% lower year-on-year. International revenue of $6.9 billion decreased 8% while North America Area revenue of $3.2 billion decreased 13%.

International Area activity was lower as customers cut budgets in response to lower commodity prices and revenue declined due to the fall of certain local currencies against the US dollar. The decrease was most significant in the Europe/CIS/Africa Area where revenue of $2.5 billion was down 12%, mainly due to the weakness in the Russian ruble as well as the deceleration of exploration related customer spending.  In North Africa, work has progressed with slow signs of increasing activity while Libya was limited to offshore locations as onshore operations were largely shutdown for the quarter.  In Latin America, revenue of $1.6 billion decreased 6% due to lower activity in Mexico, as a result of customer budget cuts, and due to the devaluation of the Venezuela bolivar. These effects were partially offset by slight activity increases in Argentina, Ecuador and Venezuela.  In Middle East & Asia, revenue of $2.7 billion decreased 5% due to a double-digit drop in revenue in the Asia-Pacific region including Australia.  This decline was partially offset by robust activity in the Gulf Cooperation Council countries in the Middle East, although Iraq activity continue to be muted. In North America, revenue of $3.2 billion decreased 13% due mainly to land while offshore was flat year-on-year.  The decrease in land was driven by declines in both activity and pricing, as spending by customers was cut and the land rig count declined 30%.  Offshore activity in the US Gulf of Mexico remained resilient despite a steady change in service mix from exploration towards development driven by customer budget cuts.

First-quarter 2015 pretax operating income of $2.0 billion decreased 16% versus the same period last year. International pretax operating income of $1.7 billion decreased 3%, while North America Area pretax operating income of $0.4 billion decreased 39%.

First-quarter 2015 pretax operating margin of 19.4% decreased 162 bps versus the same period last year, as International pretax operating margin expanded 131 bps to 24.1% and the North America Area pretax operating margin contracted 561 bps to 12.9%.  Despite the severity of the revenue decline and an increasingly unfavorable shift in revenue mix, the impact on margins was minimized by focused execution and prompt action on all variable cost categories.  The North America margin contraction was due to the severe declines in both activity and pricing.

Reservoir Characterization Group

First-quarter 2015 revenue of $2.6 billion was 14% lower year-on-year due to customer cuts in discretionary and exploration spending which resulted in weaker wireline activity and lower software and multiclient sales.  Revenue was also impacted by currency declines in Europe, Norway and Russia.

19


Year-on-year, pretax operating margin decreased by 89 bps to 25.7% due to reduced higher-margin multiclient and software sales and an unfavorable overall revenue mix reflecting the decline in high-margin exploration activity.

Drilling Group

First-quarter 2015 revenue of $4.0 billion was 8% lower than the previous year primarily due to the severe drop in rig count in North America land and unfavorable currency effects in Russia and Venezuela that mainly affected Drilling & Measurements and M-I SWACO Technologies.  Reduced IPM work in Australia, Mexico and Iraq also contributed to the decrease.

Year-on-year, pretax operating margin decreased 41 bps to 19.9%.  Despite the revenue decline, prompt action on cost management, and the benefit of our local cost structure, which minimized the impact of the unfavorable currency effects on pretax operating income, helped limit the pretax operating margin decline.

Production Group

First-quarter 2015 revenue of $3.8 billion decreased 6% year-on-year mostly from Well Services pressure pumping technologies driven by activity and pricing declines in all basins in North America land.  This decline, was partially offset by growth in completions and the expanding artificial lift business.

Year-on-year, pretax operating margin decreased 359 bps to 14.6% as a result of lower activity and the impact of pricing pressure, particularly in the North America land market.  

 

20


Interest and Other Income

Interest & other income consisted of the following:

 

(Stated in millions)

 

 

 

First Quarter

 

 

 

2015

 

 

2014

 

Equity in net earnings of affiliated companies

 

$

35

 

 

$

64

 

Interest income

 

 

14

 

 

 

12

 

 

 

$

49

 

 

$

76

 

 

Other

Research & engineering and General & administrative expenses, as a percentage of Revenue, for the first quarter ended March 31, 2015 and 2014 were as follows:

 

 

First Quarter

 

 

 

2015

 

 

2014

 

 

Research & engineering

 

2.5

%

 

 

2.5

%

 

General & administrative

 

1.2

%

 

 

0.9

%

 

 

The effective tax rate for the first quarter of 2015 was 23.6% compared to 22.6% 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, excluding the impact of charges and credits, 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 2015 as compared to the same period last year.  

Charges and Credits

Schlumberger recorded significant charges and credits in continuing operations during the first quarter of 2015.  These charges and credits, which are summarized below, are more fully described in Note 2 to the Consolidated Financial Statements.

The following is a summary of the first quarter 2015 charges and credits:

 

(Stated in millions)

 

 

 

 

Pretax

 

 

Tax

 

  

Net

 

 

Classification

Workforce reduction

$

390

 

 

 

56

 

 

$

334

 

 

Restructuring & other

Currency devaluation loss in Venezuela

 

49

  

 

 

  

  

 

49

  

 

Restructuring & other

 

$

439

 

 

$

56

  

  

$

383

 

 

 

There were no charges or credits recorded during the first quarter of 2014.  

 

 

 

 

21


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 Net Debt follow:

 

(Stated in millions)

 

 

Three Months ended Mar. 31,

 

 

2015

 

 

2014

 

Net income

$

988

 

 

$

1,608

 

Restructuring and other charges

 

439

 

 

 

 

Depreciation and amortization (1)

 

1,042

 

 

 

1,001

 

Earnings of equity method investments, less dividends received

 

(35

)

 

 

(61

)

Pension and other postretirement benefits expense

 

114

 

 

 

86

 

Stock-based compensation expense

 

80

 

 

 

77

 

Pension and other postretirement benefits funding

 

(120

)

 

 

(72

)

Increase in working capital

 

(770

)

 

 

(870

)

Other

 

32

 

 

 

68

 

Cash flow from operations

 

1,770

 

 

 

1,837

 

Capital expenditures

 

(606

)

 

 

(864

)

SPM investments

 

(109

)

 

 

(202

)

Multiclient seismic data capitalized

 

(101

)

 

 

(82

)

Free cash flow (2)

 

954

 

 

 

689

 

Stock repurchase program

 

(719

)

 

 

(899

)

Dividends paid

 

(512

)

 

 

(410

)

Proceeds from employee stock plans

 

182

 

 

 

280

 

 

 

(95

)

 

 

(340

)

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

 

(79

)

 

 

(239

)

Other

 

74

 

 

 

(31

)

Increase in Net Debt

 

(100

)

 

 

(610

)

Net Debt, Beginning of period

 

(5,387

)

 

 

(4,443

)

Net Debt, End of period

$

(5,487

)

 

$

(5,053

)

(1) 

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

(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

2015

 

 

2014

 

 

2014

 

Cash

$

2,121

 

 

$

3,752

 

 

$

3,130

 

Short-term investments

 

4,682

 

 

 

3,326

 

 

 

4,371

 

Fixed income investments, held to maturity

 

436

 

 

 

358

 

 

 

442

 

Long-term debt – current portion

 

(3,180

)

 

 

(628

)

 

 

(1,244

)

Short-term borrowings

 

(648

)

 

 

(741

)

 

 

(1,521

)

Long-term debt

 

(8,898

)

 

 

(11,120

)

 

 

(10,565

)

 

$

(5,487

)

 

$

(5,053

)

 

$

(5,387

)

 

Key liquidity events during the first three months of 2015 and 2014 included:

·

On July 18, 2013, the Board approved a $10 billion share repurchase program to be completed at the latest by June 30, 2018.  Schlumberger had repurchased $7.1 billion of shares under this new share repurchase program as of March 31, 2015.  

22


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

 

First quarter 2015

$

719

 

 

 

8.7

 

 

$

82.98

 

First quarter 2014

$

899

 

 

 

10.0

 

 

$

90.31

 

·

Capital expenditures were $0.6 billion during the first quarter of 2015 compared to $0.9 billion during the first quarter of 2014.  Capital expenditures for full-year 2015 are expected to be approximately $2.5 billion, as compared to expenditures of $4.0 billion in 2014.

At times in recent years, Schlumberger has experienced delays in payments from its national oil company customer in Venezuela. Schlumberger operates in more than 85 countries.  At March 31, 2015, only four of those countries (including Venezuela) individually accounted for greater than 5% of Schlumberger’s accounts receivable balance, of which only one (the United States), represented greater than 10%.  

On January 20, 2015, Schlumberger announced that it has entered into an agreement to acquire a minority ownership of approximately 46% in Eurasia Drilling Company Limited, the largest provider of onshore drilling services in Russia.  The total cost of this transaction, including an option which will allow Schlumberger, at its election, to purchase the remaining shares during a two-year period commencing on the third anniversary of the closing of the transaction, is approximately $1.7 billion in cash.  This transaction is expected to close during the second quarter of 2015.

As disclosed in Note 12 to the Consolidated Financial Statements, Schlumberger expects to make a $233 million payment to the Department of Justice during the second quarter of 2015.

As of March 31, 2015, Schlumberger had $6.8 billion of cash and short-term investments on hand.  Schlumberger had separate committed debt facility agreements aggregating $3.8 billion with commercial banks, of which $1.8 billion was available and unused as of March 31, 2015.  The $3.8 billion of committed debt facility agreements included $3.5 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, 2015 were $2.0 billion.

Other Matters

As previously disclosed, during the second quarter of 2013, Schlumberger completed the wind down of its service operations in Iran.  Prior to this, certain non-U.S. subsidiaries of Schlumberger provided oilfield services to the National Iranian Oil Company and certain of its affiliates (“NIOC”).  The results of this business were classified as a discontinued operations.

Schlumberger’s residual transactions or dealings with the government of Iran in the quarter consisted of payments of taxes and other typical governmental charges.  Two non-U.S. subsidiaries of Schlumberger have depository accounts at the Dubai branch of Bank Saderat Iran (“Saderat”) and at Bank Tejarat (“Tejarat”) in Tehran for the deposit by NIOC of amounts owed to non-US subsidiaries of Schlumberger for prior services rendered in Iran.  One non-U.S. subsidiary also maintains an account at Tejarat for payment of local expenses such as taxes and utilities.  Schlumberger anticipates that it will discontinue its dealings with Saderat and Tejarat following the receipt of all amounts owed to Schlumberger for prior services rendered in Iran.

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 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, including in Russia and the Ukraine; pricing erosion; weather and seasonal factors; operational delays; 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; and other risks and uncertainties detailed in our

23


first-quarter 2015 earnings release, 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, 2014. Schlumberger’s exposure to market risk has not changed materially since December 31, 2014.

 

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 has been no change in Schlumberger’s internal control over financial reporting that occurred 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.

 

 

 

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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.

 

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, 2014.

 

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 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, 2015 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, 2015

 

 

 

$

 

 

 

 

 

$

3,605,238

 

February 1 through February 28, 2015

 

1,136.6

 

 

$

85.82

 

 

 

1,136.6

 

 

$

3,507,690

 

March 1 through March 31, 2015

 

7,525.0

 

 

$

82.55

 

 

 

7,525.0

 

 

$

2,886,467

 

 

 

8,661.6

 

 

$

82.98

 

 

 

8,661.6

 

 

 

 

 

 

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.

 

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 to Schlumberger’s Current Report on Form 8-K filed on April 7, 2011)

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 July 20, 2012)

* 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, 2015, 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 22, 2015

 

/s/ Howard Guild

 

 

 

Howard Guild

 

 

 

Chief Accounting Officer and Duly Authorized Signatory

 

 

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