UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 20192021
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number 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) |
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42 rue Saint-Dominique |
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5599 San Felipe, 17th Floor |
| 77056 |
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62 Buckingham Gate London, United Kingdom |
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Parkstraat 83 |
| 2514 JG |
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Registrant’s telephone number in the United States, including area code, is: (713) 513-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | SLB | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YESYes ☑ NONo ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YESYes ☐ NONo ☑
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. YESYes ☑ NO No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files.) YESYes ☑ NONo ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☑
As of June 30, 2019,2021, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $54.89$44.72 billion.
As of December 31, 2019,2021, the number of shares of common stock outstanding was 1,384,515,345.
1,403,381,685.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be furnished pursuant to Part III of this Form 10-K is set forth in, and is incorporated by reference from, Schlumberger’s definitive proxy statement for its 20202022 Annual General Meeting of Stockholders, to be filed by Schlumberger with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A within 120 days after December 31, 20192021 (the “2020“2022 Proxy Statement”).
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SCHLUMBERGER LIMITED
Table of Contents
Form 10-K
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PART I |
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Item 1A. |
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PART II |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 8. |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
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Item 9B. |
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Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 68 |
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PART III |
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Item 10. | Directors, Executive Officers and Corporate Governance of Schlumberger |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
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PART IV |
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Item 16. |
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PART I
Item 1. Business.
All references in this report to “Registrant,” “Company,” “Schlumberger,” “we” or “our” are to Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao)) and its consolidated subsidiaries.
Founded in 1926, Schlumberger is a technology company that partners with customers to access energy by providing leading digital solutions and deploying innovative technologies to enable performance and sustainability for the world’s leading providerglobal energy industry. Schlumberger collaborates to create technology that unlocks access to energy for the benefit of technology for reservoir characterization, drilling, production and processing to the oil and gas industry. Having invented wireline logging as a technique for obtaining downhole data in oil and gas wells, today Schlumberger supplies the industry’s most comprehensive range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance sustainably. As of December 31, 2019, the Company employed approximately 105,000 people representing over 170 nationalities. Schlumberger, which generates revenue in more than 120 countries, has executive offices in Paris, Houston, London and The Hague.all.
Schlumberger operatesis organized under four Divisions operating in five distinct Basins that are aligned with critical hubs of activity. These Divisions combine and integrate Schlumberger’s technologies, enhancing our ability to support the emerging long-term growth opportunities in each of the major oilfield service markets through four segments: Reservoir Characterization, Drilling, Production and Cameron. Each segment consists of a number of technology-based service and product lines, or Technologies. These Technologies cover the entire life cycle of the reservoir and correspond to a number of markets in which Schlumberger holds leading positions. The role of the Technologies is to support Schlumberger in providing the best possible service to customers and to ensure that Schlumberger remains at the forefront of technology development and services integration. The Technologies are collectively responsible for driving performance throughout their businesses; overseeing operational processes, resource allocation and personnel; and delivering superior financial results.these market segments.
The segments are as follows:
Reservoir Characterization – Consists of the principal Technologies involved in finding and defining hydrocarbon resources. These include WesternGeco®, Wireline, Testing Services, Software Integrated Solutions (“SIS”), OneSurface® and Integrated Services Management (“ISM”).
four Divisions are:
| • | Digital & Integration |
• | Reservoir Performance |
• | Well Construction |
• | Production Systems |
Digital & Integration – Combines Schlumberger’s digital workflow solutions and seismic data interpretation and management businesses with its integrated offering of Asset Performance Solutions (“APS”). Through digital solutions and technologies, supported by the future of software, digital, infrastructure, connected assets, and data, this Division enhances efficiency to improve asset and enterprise-wide performance for customers. APS helps develop or redevelop fields while increasing production, improving cash flow, and extending recovery for customers by providing fit-for-purpose solutions.
The primary offerings comprising this Division are:
• | Digital solutions: Includes proprietary software, an expanding digital ecosystem, consulting services, information management and IT infrastructure services to customers in the energy industry. Offers expert consulting services for reservoir characterization, field development planning and production enhancement, as well as industry-leading petrotechnical data services and training solutions. |
• | Multiclient seismic surveys and data processing: WesternGeco® is a leading geophysical services supplier, providing comprehensive worldwide reservoir interpretation and data processing services. It provides a highly efficient and scientifically advanced imaging platform |
• | Asset Performance Solutions: APS offers an integrated business model for field production projects. This model combines Schlumberger’s services and products with drilling rig management and specialized engineering and project management expertise, to provide a complete solution to well construction and production improvement. |
APS creates alignment between Schlumberger and the asset holder and/or the operator utilizing a commercial model whereby Schlumberger receives remuneration in line with the value it creates. These projects are generally focused on developing and co-managing production of customer assets under long-term agreements. Schlumberger invests its services and products into the field development activities and operations and is compensated on a fee-per-barrel basis or based on cash flow generated. This includes certain arrangements whereby Schlumberger is only compensated based on incremental production that it helps deliver above a mutually agreed baseline. As of December 31, 2021, Schlumberger’s APS portfolio primarily consisted of three field production projects in Ecuador and one in Canada.
Reservoir Performance – Consists of reservoir-centric technologies and services that are critical to optimizing reservoir productivity and performance. Reservoir Performance develops and deploys innovative technologies and services to evaluate, intervene, and stimulate reservoirs that help customers understand subsurface assets and maximize their value.
The primary offerings comprising this Division are:
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• | Stimulation and Intervention: Provides services used during well completions, as well as those used to maintain optimal production throughout the life of a well. Includes pressure pumping, well stimulation, and coiled tubing equipment for downhole mechanical well intervention, reservoir monitoring, and downhole data acquisition. |
On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada (“OneStim®”), including its pressure pumping, pumpdown perforating, and Permian frac sand businesses, to Liberty Oilfield Services Inc. (“Liberty”), in exchange for a 37% equity interest in Liberty. OneStim’s historical results were reported as part of the Reservoir Performance Division through the closing of the transaction. As of December 31, 2021, Schlumberger had a 31% equity interest in Liberty.
Well Construction – Combines the full portfolio of products and services to optimize well placement and performance, maximize drilling efficiency, and improve wellbore assurance. Well Construction provides operators and drilling rig manufacturers with services and products related to designing and constructing a well.
The primary offerings comprising this Division are:
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Drilling – Consists of the principal Technologies involved in the drilling and positioning of oil and gas wells and comprises Bits & Drilling Tools, M-I SWACO, Drilling & Measurements, Land Rigs and Integrated Drilling Services (“IDS”).
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| • | Drill Bits: Designs, manufactures and markets roller cone and fixed cutter drill bits for all drilling environments. |
• | Drilling Tools: Includes a wide variety of bottom-hole-assembly and borehole enlargement technologies for drilling operations. |
• | Well Cementing: Provides products and services that secure and protect well casings while isolating fluid zones and maximizing wellbore activity. |
• | Integrated |
• | Rigs and Equipment: Provides drilling equipment and services for shipyards, drilling contractors, energy companies and rental tool companies, as well as land drilling rigs and related services. Drilling equipment falls into two broad categories: pressure control equipment and rotary drilling equipment. These products are designed for either onshore or offshore applications and include drilling equipment packages, blowout preventers, blowout preventer control systems, connectors, riser systems, valves and choke manifold systems, top drives, mud pumps, pipe handling equipment, rig designs and rig kits. |
Production Systems– ConsistsDevelops technologies and provides expertise that enhance production and recovery from subsurface reservoirs to the surface, into pipelines, and to refineries. Production Systems provides a comprehensive portfolio of the principal Technologies involved in the lifetimeequipment and services including subsurface production of oilsystems, subsea and gas reservoirssurface equipment and includes Well Services, OneStim®, Completions, Artificial Lift,services, and Asset Performance Solutions (“APS”).midstream production systems.
The primary offerings comprising this Division are:
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APS creates alignment between Schlumberger and the asset holder and/or the operator whereby Schlumberger receives remuneration in line with its value creation. These projects are generally focused on developing and co-managing production of customer assets under long-term agreements. Schlumberger invests its own services and products, and historically, cash in certain cases, into the field development activities and operations. Although in certain arrangements Schlumberger is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger is generally compensated based upon cash flow generated or on a fee-per-barrel basis. This includes certain arrangements whereby Schlumberger is only compensated based upon incremental production that it helps deliver above a mutually agreed baseline. APS represented less than 5% of Schlumberger’s consolidated revenue during each of 2019, 2018 and 2017.
Cameron – Consists of the principal Technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities, and includes OneSubsea®, Surface Systems, Drilling Systems, and Valves & Process Systems.
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• | Processing: Enables efficient monetization of subsurface assets using standard and custom-designed onshore, offshore and downstream processing and treatment |
Supporting the TechnologiesDivisions is a global network of research and engineering centers. Through this organization,these centers Schlumberger is committed to advancedadvances its technology programs thatto safely and sustainably enhance oilfieldindustry efficiency, lower finding and producing costs, improve productivity, maximize reserve recovery and increase asset value while accomplishing these goals invalue.
The Divisions are deployed around a safe and environmentally sound manner.
A network of GeoMarket* regions,geographical structure within each of four major geographic areas of North America, Latin America, Europe/CIS/Africa andfive Basins: Americas Land, Offshore Atlantic, Middle East & North Africa, Asia, provides logistical, technical and commercial coordination.Russia & Central Asia. The Basins are configured around common regional characteristics to deploy fit-for-purpose technologies, operating models and skills and are focused on agility, responsiveness and competitiveness. The Basins are comprised of GeoUnits, which can be a single country or made up of several countries. With a strong focus on the customers, Basins identify opportunities for local growth.
Corporate Strategy
Schlumberger’s strategy is designed to adapt the Company to an evolving industry landscape shaped by emerging drivers, including capital discipline, regionalization of supply and demand, an efficiency imperative, and resilience—defined by sustainability and lower carbon footprint. This strategy is designed to magnify Schlumberger’s ability to improve customer performance, which is the differentiating factor that will help our industry meet higher stakeholder expectations.
Oil and gas will remain critical to economic activity and prosperity. According to the most recent International Energy Agency Sustainable Development Scenario, oil and gas are expected to represent approximately 45% of the global energy mix through 2040. Schlumberger’s role is twofold: to enable customers to produce these resources efficiently, cost effectively and with the lowest carbon footprint and to support the world’s transition to a more diversified energy mix.
Schlumberger’s strategy is structured around three major themes, all of which are focused on customer performance: (i) strengthen the core; (ii) go-to-market; and (iii) horizons of growth.
Strengthen the Core
The GeoMarket structure offerscore of Schlumberger is how we work with customers a single pointand execute our business. The elements in this theme—which include customer collaboration, the integrity and efficiency of contact at the local level for fieldour operations, and brings together geographically focused teamscapital stewardship—are enabled by our people and technology.
As a service company, Schlumberger has always worked closely with customers. We are exploring new ways to collaborate and help them overcome their challenges and improve performance.
Operations integrity and efficiency—core to Schlumberger’s culture—are enhanced by the digitization of our operations. Just as Schlumberger is delivering digital solutions to our customers, we are advancing them in our own operations to capture value from our equipment and services businesses by integrating them into our digital structure.
Capital stewardship is a crucial factor for our industry. Schlumberger has implemented a capital allocation framework that governs all investments, whether related to capital expenditures, mergers and acquisitions, or research and engineering. The underlying principle behind this framework is that investment opportunities are prioritized based on returns and cash flow. Our focus on capital stewardship also includes evolving certain businesses into innovative, less capital-intensive commercial models.
Go-to-Market
Industry markets have evolved into multiple, diverse regional markets that are increasingly competing with each other to meet localglobal, regional, and domestic oil and gas demand. Each of these regions has a set of resource plays—or basins—with localized economics and operational drivers. As a result, the industry is witnessing a decoupling of the activity characteristics of each major region, resulting in a unique set of dynamics for each oil and gas basin across the world. This presents Schlumberger with opportunities that can be optimally addressed with a basin-specific approach.
A key differentiator for Schlumberger is its “fit-for-basin” approach and ability. Fit-for-basin describes the mindset Schlumberger has adopted toward technology development, in-country value, and market access. Schlumberger is developing and deploying basin-specific technology that helps its customers overcome the challenges of their respective regions. At the same time, in-country value enables regional efficiency and performance, while creating opportunity and aligning with the strategic priorities of our clients.
In addition, technology access and performance models are highly strategic elements of our go-to-market strategy. Technology access is fundamentally about making the right decisions with respect to our technology portfolio and how we go to market. Performance models are focused on commercial and contractual innovations.
The elements of our go-to-market strategy enable Schlumberger to develop deeper partnerships with customers, expanding on their needs and challenges from a basin-specific perspective to provide technology and business models tailored to regional or individual customer requirements. These elements allow us to share in the performance improvement we deliver customized solutions. for customers and partners.
Horizons of Growth
The GeoMarketsthird strategic element positions Schlumberger to increase its share in existing markets and expand into new long-term markets in digital, production and recovery, and energy transition, including Schlumberger New Energy and Transition Technologies.
Digital capabilities are responsible for providingcrucial to long-term performance and resilience. Through its industry-leading digital platform, Schlumberger will enable digital transformation at scale, unlocking significant value, and leading innovation across the digital domain in the industry.
Schlumberger seeks to define the future of digital technology in the energy industry and has designed and built a secure and flexible digital industry platform centered around differentiated digital technologies. Enabled by key partnerships with companies such as Google, IBM, Microsoft, Amazon Web Services, AVEVA and NOV, Schlumberger provides an open digital platform that takes advantage of on-demand, high-performance computing and makes digital capabilities such as embedded artificial intelligence or machine learning readily accessible to customers.
The application of digital technology across the entire E&P value chain—from subsurface to drilling to production—has the potential to deliver a step-change in operational workflows that will significantly elevate our customers’ performance sustainably. Digital technology can move technical workflows from the desktop to the cloud, creating data structures that enable artificial intelligence and machine learning to provide insights at scale across our customers’ operations.
Production and recovery is about positioning Schlumberger to take advantage of two key trends shaping the market. The first trend relates to accelerating gas discovery, development and production, as Schlumberger expects to see significant growth in gas demand over the next two decades as the world seeks to decarbonize its energy mix. The second trend relates to operators’ increased focus on improving recovery from their existing wells, fields and infrastructure—ultimately achieving the most capital efficient production. As a result and cost-effective support possiblebased on our deep domain knowledge from the subsurface to midstream production facilities, we are positioning our technology portfolio to participate and lead in these growing markets.
Finally, Schlumberger recognizes that its future will expand beyond oil and gas with energy transition, and the Company is positioning itself for long-term growth opportunities. In this regard, in 2020 the Company created Schlumberger New Energy to develop businesses in low-carbon or carbon-neutral energy technologies, and in 2021 it announced its commitment to reach net-zero emissions by 2050 and launched its Transition Technologies portfolio to reduce emissions from oil and gas operations.
Schlumberger New Energy is using partnership models and Schlumberger’s experience in technology industrialization to expand into energy verticals beyond oil and gas. Schlumberger’s approach is to apply its domain expertise in areas adjacent to its existing activities where it can use its global footprint and execution platform to deliver at scale.
The Schlumberger New Energy portfolio consists of ventures in the domains of hydrogen, lithium, energy storage, carbon capture and sequestration (“CCS”), geothermal power and geoenergy for heating and cooling buildings. While many of these investments are in new energy emerging sectors, Schlumberger New Energy has leveraged Schlumberger’s extensive experience in both the CCS and geothermal sectors. For more than two decades, Schlumberger has participated in CCS projects providing consulting, technology services and project management. In geothermal, Schlumberger provides the full spectrum of geothermal resource development services through GeothermEx, a consulting and services company we acquired in 2010. Schlumberger New Energy has extended Schlumberger’s geothermal reach by exploring opportunities in the development of geothermal power projects.
Schlumberger New Energy activities currently include the following ventures and strategic partnerships:
• | Celsius Energy is a Schlumberger start-up that combines in-house technology, proprietary design optimization and modern digital control systems to offer a fit-for-purpose solution that uses low-heat geothermal energy for heating and cooling buildings. Celsius Energy reduces overall building energy consumption from conventional sources, resulting in reduced carbon emissions. |
• | Genvia is a clean hydrogen production technology venture with the French Alternative Energies and Atomic Energy Commission and partners. This unique private-public partnership aims to deliver the most efficient and cost-effective technology for producing clean hydrogen, a versatile energy carrier and key component of the energy transition. |
• | NeoLith Energy is a Schlumberger New Energy venture to enable a sustainable, efficient and flexible lithium production ecosystem using a differentiated direct lithium extraction process. NeoLith Energy has a strategic collaboration agreement with Panasonic Energy of North America for the validation and optimization of its pilot plant in Nevada. |
• | In CCS, Schlumberger New Energy is developing capabilities and forging partnerships to provide integrated solutions and technologies to CCS projects in selected markets and geographies where existing policies and regulations can make projects attractive. Schlumberger New Energy has partnered with Chevron, Microsoft and Clean Energy Systems to utilize biomass fuel that consumes CO2over its lifetime to produce power and then safely and permanently sequestrates the produced CO2. This process results in net-negative carbon emissions, effectively removing greenhouse gas from the atmosphere. |
• | Schlumberger invested in EnerVenue and entered into a collaboration agreement to deploy EnerVenue’s uniquely differentiated nickel-hydrogen battery technology, which is a key enabler of stationary energy storage solutions. Schlumberger New Energy and EnerVenue will work together to progress large-scale deployment of nickel-hydrogen battery technology across selected global markets. |
In June 2021, Schlumberger announced its commitment to achieve net-zero greenhouse gas (“GHG”) emissions by 2050. Guided by climate science and GHG Protocol, Schlumberger spent 18 months conducting extensive analysis and working with experts to produce its decarbonization plan, which is aligned with the Paris Agreement ambition of limiting global warming to 1.5 degrees Celsius. Schlumberger was the first energy services company to set a net-zero target inclusive of all three emission scopes. By setting targets with respect to the operations.Company’s total 2019 baseline GHG footprint of approximately 54 million metric tons of CO2 equivalent (which consisted of 52 million metric tons of Scope 3 emissions and two million metric tons of Scope 1 and Scope 2 emissions), and not just its Scope 1 and 2 footprint, Schlumberger’s comprehensive emissions reduction roadmap addresses the entire oil and gas value chain.
Schlumberger’s 2050 net zero target is supported by the following interim milestones, using 2019 as the baseline year:
• | by 2025, a 30% reduction in Scope 1 and Scope 2 emissions; |
• | by 2030, a 50% reduction in Scope 1 and Scope 2 emissions; and |
• | by 2030, a 30% reduction in Scope 3 emissions. |
There are three key components to Schlumberger achieving its net-zero target: reducing operational emissions, reducing customer emissions that occur while using Schlumberger technology, and taking carbon-negative actions of sufficient scale to offset any residual operational and technology emissions that the Company may have in 2050.
Schlumberger’s Scope 1 and 2 emissions primarily come from its fuel use and electricity consumption, whereas its Scope 3 emissions are indirect, such as customer emissions related to the use of Schlumberger technology and operational emissions related to purchased goods and services. In 2021, Schlumberger launched its Transition Technologies portfolio. This portfolio is focused on addressing fugitive emissions, flaring reduction, electrification, well construction emissions, and full field development solutions. Comprised of proprietary technologies and solutions, the Transition Technologies portfolio will help reduce direct and indirect emissions along with other environmental attributes, while simultaneously driving efficiency, reliability and performance for our customers.
Human Capital
At December 31, 2021, Schlumberger’s workforce consisted of approximately 92,000 people representing more than 160 nationalities.
Schlumberger primarily usesbelieves that the diversity of its own personnelworkforce is one of its greatest strengths and its ambition is to marketmaintain a workforce nationality mix that is aligned to its offerings. The customer base, business risksgeographical revenue mix.
Schlumberger recognizes that its ability to attract, develop, motivate and retain a highly competent and diverse workforce has been key to its success for many decades. As a global company focused on creating and optimizing value for its customers, Schlumberger believes it is critical for its people to communicate with customers in their native languages and to share the values of the people in the countries where it works. Furthermore, Schlumberger’s diverse workforce positions the Company to effectively deliver services and products that meet the unique expectations and requirements of, its stakeholders, including customers, suppliers and shareholders. Schlumberger’s long-standing commitment to national and cultural diversity fosters a culture that is global in outlook, yet local in practice, which permeates every layer of the Company.
In addition to national and cultural diversity, gender balance is another important pillar of our diversity and inclusion strategy. Schlumberger is committed to lead our industry in gender diversity. Schlumberger has made significant progress towards achieving its gender balance goal of having women comprise 25% of the Company’s salaried workforce by 2025. In this regard, in 2021, Schlumberger set its next goal which is for women to comprise 30% of the Company’s salaried workforce by 2030. As of December 31, 2021, women made up approximately 23% of the Company’s salaried workforce. Additionally, approximately 22% of management roles were held by women in 2021 and women represented approximately 48% of our 2021 new hires of salaried employees with science, technology, engineering and mathematics backgrounds.
Schlumberger is proud to provide a career platform that enables a culture of lifelong learning for all employees. Schlumberger is committed to offering borderless careers and making career decisions based on merit. Schlumberger’s borderless careers philosophy is powered by its internal mobility practices, which offer employees multiple, flexible, career paths to help them acquire the required skills to reach their ambition. We seek to provide continuous growth opportunities through a combination of training and experience. Schlumberger strives to identify talent early and to provide opportunities for growth are essentially uniform across all servicesthose employees who demonstrate exceptional performance and products. Manufacturing and engineering facilities as well as research centers are shared,potential to progress to higher levels within the organization. These opportunities accelerate career development while fostering an agile workforce and the labor force,next generation of business leaders.
Competition
The principal methods of competition within certain limitations, is interchangeable. Technologicalthe energy services industry are technological innovation, quality of service and price differentiation are the principal methods of competition, whichdifferentiation. These factors vary geographically with respect toand are dependent upon the different services and products offered. Whilethat Schlumberger offers. Schlumberger has numerous competitors, both large and small, Schlumberger believes it is an industry leader in providing wireline logging, well production testing, exploration and production software, rig equipment, surface equipment, artificial lift, hydraulic fracturing, cementing, coiled-tubing services, drilling and completion fluids, solids control and waste management, drilling pressure control, drill bits, measurement-while-drilling, logging-while-drilling, directional-drilling services, and surface data (mud) logging.small.
* Mark of Schlumberger
GENERAL
Intellectual Property
Schlumberger owns and controls a variety of intellectual property, including but not limited to patents, proprietary information, trade secrets and software tools and applications that, in the aggregate, are material to Schlumberger’s business. While Schlumberger seeks and holds numerous patents covering various products and processes, no particular patent or group of patents is material to Schlumberger’s business.
Seasonality
Seasonal changes in weather and significant weather events can temporarily affect the delivery of oilfieldSchlumberger’s products and services. For example, the spring thaw in Canada and consequent road restrictions can affect activity levels, while the winter months in the North Sea, Russia and China can produce severe weather conditions that can temporarily reduce levels of activity. In addition, hurricanes and typhoons can disrupt coastal and offshore operations. Furthermore, customer spending patterns for multiclient data, software and other oilfield services and products may result in higher activity in the fourth quarter of eachthe year as clients seek to fully utilize their annual budgets. Conversely, customer budget constraints in North America may lead to lower demand for our services and products in the fourth quarter of eachthe year.
Customers
Schlumberger’s primary customers are national oil companies, large integrated oil companies and Backlog of Orders
For the year ended December 31, 2019, noindependent operators. No single customer exceeded 10% of Schlumberger’s consolidated revenue. Other than the OneSubsea, Drilling Systems and WesternGeco businesses, Schlumberger has no significant backlog due to the nature of its businesses. The combined backlog of these businesses was $3.0 billion at December 31, 2019 (of which approximately 50% is expected to be recognized as revenue during 2020)each of 2021, 2020 and $2.7 billion at December 31, 2018.2019.
5Governmental Regulations
Information About Our Executive OfficersSchlumberger is subject to numerous environmental and other governmental and regulatory requirements related to its operations worldwide. For additional details, see “Item 1(a). Risk Factors – Legal and Regulatory Risks”, which is incorporated by reference in this Item 1.
Corporate Information
Schlumberger was founded in 1926. The following table sets forth, asCompany is incorporated under the laws of January 21, 2020, the namesCuraçao and ages of thehas executive officers of Schlumberger, including all offices in Paris, Houston, London and positions held by each for the past five years.
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The Hague.
Available Information
The Schlumberger website is www.slb.com. Schlumberger uses its Investor Relations website, www.slb.com/ir, as a routine channel for distribution of important information, including news releases, analyst presentations, and financial information. Schlumberger makes available free of charge through its Investor Relations website at www.slb.com/ir, access to its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, and amendments to each of those reports, as soon as reasonably practicable after such material is filed with or furnished to the SEC. Alternatively, you may access these reports at the SEC’s website at www.sec.gov. Copies are also available, without charge, from Schlumberger Investor Relations, 5599 San Felipe, 17th Floor, Houston, Texas 77056. Unless expressly noted, the information on ourits website or any other website is not incorporated by reference in this Form 10-K and should not be considered part of this Form 10-K or any other filing Schlumberger makes with the SEC.
Information About Our Executive Officers
The following table sets forth, as of January 26, 2022, the names and ages of the executive officers of Schlumberger, including all offices and positions held by each for the past five years.
Name | Age | Current Position and Five-Year Business Experience |
Olivier Le Peuch | 58 | Chief Executive Officer and Director, since August 2019; Chief Operating Officer, February 2019 to July 2019; Executive Vice President, Reservoir and Infrastructure, May 2018 to February 2019; President, Cameron Group, February 2017 to May 2018; and President, Completions, October 2014 to January 2017. |
Khaled Al Mogharbel | 51 | Executive Vice President, Geographies, since July 2020; Executive Vice President, Operations, April 2019 to June 2020; Executive Vice President, Eastern Hemisphere, February 2019 to March 2019; President, Eastern Hemisphere, May 2017 to January 2019; and President, Drilling Group, July 2013 to April 2017. |
Ashok Belani | 63 | Executive Vice President, Schlumberger New Energy, since February 2020; and Executive Vice President, Technology, January 2011 to January 2020. |
Stephane Biguet | 53 | Executive Vice President and Chief Financial Officer, since January 2020; Vice President, Finance, December 2017 to January 2020; and Vice President, Treasurer, December 2016 to November 2017. |
Hinda Gharbi | 51 | Executive Vice President, Services and Equipment, since July 2020; Executive Vice President, Reservoir and Infrastructure, February 2019 to June 2020; Vice President, Human Resources, May 2018 to January 2019; President, Reservoir Characterization Group, June 2017 to May 2018; and President, Wireline, July 2013 to May 2017. |
Abdellah Merad | 48 | Executive Vice President, Performance Management, since May 2019; President NAL Production Group, May 2018 to April 2019; President, Production Group, October 2017 to May 2018; and Vice President, Controller, Operations, December 2016 to September 2017. |
Katharina Beumelburg | 45 | Chief Strategy and Sustainability Officer, since May 2021; Senior Vice President, Transmission Service, Siemens Energy, Siemens AG (a multinational industrial manufacturing company), April 2020 to May 2021; Executive Vice President, Strategy, Siemens Gas and Power, Siemens AG, November 2016 to April 2020. |
Demosthenis Pafitis | 54 | Chief Technology Officer, since February 2020; Senior Vice President, Schlumberger 4.0 Platforms, from December 2017 to January 2020; and Vice President, Engineering, Manufacturing and Sustaining, September 2014 to December 2017. |
Dianne Ralston | 55 | Chief Legal Officer, since December 2020; and Executive Vice President, Chief Legal Officer and Secretary, TechnipFMC plc (a global oilfield services company), January 2017 to October 2020. |
Gavin Rennick | 47 | Vice President, Human Resources, since February 2019; and President, Software Integrated Solutions, January 2017 to February 2019. |
Pierre Chereque | 67 | Vice President and Director of Taxes, since June 2017; and Director of Taxes, Operations, July 2004 to May 2017. |
Kevin Fyfe | 48 | Vice President and Controller, since October 2017; and Controller, Cameron Group, April 2016 to October 2017. |
Howard Guild | 50 | Chief Accounting Officer, since July 2005. |
Claudia Jaramillo | 49 | Vice President and Treasurer, since December 2017; ERM and Treasury Projects Manager, July 2017 to November 2017; and Controller, North America Area, July 2014 to July 2017. |
Vijay Kasibhatla | 58 | Director, Mergers and Acquisitions, since January 2013. |
Item 1A. Risk Factors.
The following discussion of risk factors known to us contains important information for the understanding of our “forward-looking statements,” which are discussed immediately following Item 7A. of this Form 10-K and elsewhere. These risk factors should also be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements and related notes included in this Form 10-K.
We urge you to consider carefully the risks described below, which discuss the material factors that make an investment in our securities speculative or risky, as well as in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our business, reputation, financial condition, results of operations, cash flows and prospects.
Business and Operational Risks
Demand for our products and services is substantially dependent on the levels of expenditures by our customers. The recentRecent oil and gas industry downturn has (and current market conditions have)downturns have resulted in reduced demand for oilfield products and services and lower expenditures by our customers, which havehas in the past had, and may in the future have, a material adverse impacteffect on our financial condition, results of operations and cash flows.
Demand for our products and services depends substantially on expenditures by our customers for the exploration, development and production of oil and natural gas reserves. These expenditures are generally dependent on our customers’ views of future oil and natural gas prices and are sensitive to our customers’ views of future economic growth and the resulting impact on demand for oil and natural gas.
Declines,gas and future oil and gas prices, as well as our customers’ ability to access capital. In addition, the transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers’ levels of expenditures.
Actual and anticipated declines in oil and gas prices have in the past resulted in, and may in the future result in, lower capital expenditures, project modifications, delays or cancellations, general business disruptions, and delays in payment of, or nonpayment of, amounts that are owed to us. These effects have had, and may in the future have, a material adverse effect on our financial condition, results of operations and cash flows.
Historically, oil and natural gas prices have experienced significant volatility and can be affected by a variety of factors, including:
| • | changes in the supply of and demand for hydrocarbons, which |
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| the costs of exploring for, producing and delivering oil and gas; |
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• | the level of oil and gas exploration and production activity; |
• | the level of excess production capacity; |
• | the level of oil and gas inventories; |
• | access to potential resources; |
• | political and economic uncertainty and geopolitical unrest; |
• | governmental laws, policies, regulations and subsidies, including initiatives to promote the use of renewable energy |
| • | speculation as to the future price of oil and the speculative trading of oil and gas futures contracts; |
• | technological advances affecting energy consumption; and |
| • | extreme weather |
There can be no assurance that the demand or pricing for oil and natural gas or for our products and services will follow historic patterns or recover meaningfully in the near term. The oil and gas industry has historically experienced periodic downturns, which have been characterized by diminished demand for our products and services and downward pressure on the prices that we are able to charge. Sustained market uncertainty can also result in lower demand and pricing for our products and services. A futuresignificant industry downturn, or sustained market uncertainty, or increased availability of economical alternative energy sourcescould again result in a reduction in demand for oilfieldour products and services, andwhich could have a material adverse effect onadversely affect our business, financial condition, results of operations, cash flows and prospects.
A significant portionDisruptions in the political, regulatory, economic, and social environments of our revenue is derived from our non-United States operations, which exposes us to risks inherent in doing business in each of the over 120 countries in which we operate.operate could adversely affect our financial condition, results of operations and cash flows.
We generate revenue in more than 120 countries across the world. Our non-United Statesnon-US operations accounted for approximately 72%85% of our consolidated revenue in 2019, 68%2021, 81% in 20182020 and 74%72% in 2017. In addition2019. Instability and unforeseen changes in any of the markets in which we operate could result in business disruptions that may have an adverse effect on the demand for our products and services or our financial condition, results of operations or cash flows. These factors include, but are not limited to, the risks addressed elsewhere in this section, our operations in countries other than the United States are subject to various risks, including:following:
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| • | exposure to expropriation, nationalization, deprivation or confiscation of our assets or the assets of our customers, or other governmental actions; |
| • | social unrest, acts of terrorism, war or other armed conflict; |
| • | public health crises and other catastrophic events, such as the COVID-19 pandemic; |
• | confiscatory taxation or other adverse tax policies; |
| • | theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; |
• | deprivation of contract rights; |
| • | trade and economic sanctions or other restrictions imposed by the European Union, the United States or other |
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| restrictions on the repatriation of income or capital; |
| • | currency exchange controls; |
| • | inflation; and |
| • | currency exchange, rate fluctuations and devaluations. |
Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
Our failurelong-term success depends on our ability to effectively address the energy transition, which will require adapting our technology portfolio to potentially changing government requirements and customer preferences, as well as engaging with our customers to develop solutions to decarbonize oil and gas operations. If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our products and services could be adversely affected. Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted.
We operate in a highly competitive environment. If we are unable to maintain technology leadership, this could adversely affect any competitive advantage we hold.
The energy industry is highly competitive. Our business may be adversely affected if we fail to continue developing and producing innovative technologies in response to changes in the market, including customer and government requirements, or if we fail to deliver such technologies to our customers in a timely and cost-competitive manner. If we are unable to maintain technology leadership in our industry, our ability to maintain market share, defend, maintain or increase prices for our products and services, and negotiate acceptable contract terms with our customers could be adversely affected. Furthermore, if competing technology accelerates the obsolescence of any of our products or services, the value of our intellectual property may be reduced, which could adversely affect our financial condition, results of operations and cash flows.
Limitations on our ability to obtain, maintain, protect or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenue and any competitive advantage we hold.
There can be no assurance that the steps we take to obtain, maintain, protect and enforce our intellectual property rights will be adequate. Some of our products or services, and the processes we use to produce or provide them, have been granted patent protection, have patent applications pending, or are trade secrets. Our business may be adversely affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected. Patent protection on some types of technology, such as software or machine learning processes, may not be available in certain countries in which we operate. Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, which could adversely affect our financial condition, results of operations and cash flows.
Third parties may claim that we have infringed upon or otherwise violated their intellectual property rights.
The tools, techniques, methodologies, programs and components we use to provide our services and products may infringe upon or otherwise violate the intellectual property rights of others or be challenged on that basis. Regardless of the merits, any such claims generally result in significant legal and other costs, including reputational harm, and may distract management from running our business. Resolving such claims could increase our costs, including through royalty payments to acquire licenses, if available, from third parties and through the development of replacement technologies. If a license to resolve a claim were not available, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows.
Legal and Regulatory Risks
Our operations require us to comply with complex US and foreignnumerous laws and regulations, violations of which could have a material adverse effect on our financial condition, results of operations or financial condition.cash flows.
WeOur operations are subject to international, regional, national, and local laws and regulations in every place where we operate, relating to matters such as environmental protection, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, data privacy and cybersecurity, intellectual property, immigration, and taxation. These laws and regulations are complex, USfrequently change, and foreignhave tended to become more stringent over time. In the event the scope of these laws and regulations expands in the future, the incremental cost of compliance could adversely affect our financial condition, results of operations, or cash flows.
Our operations are subject to anti-corruption and anti-bribery laws and regulations, such as the FCPA,Foreign Corrupt Practices Act, the U.K. Bribery Act and various other anti-bribery and anti-corruptionsimilar laws. We are also subject to trade control regulations and trade sanctions laws that restrict the movement of certain goods to, and certain operations in, various countries or with certain persons. Our ability to transfer people, products and data among certain countries is subject to maintaining required licenses and complying with these laws and regulations.
The internal controls, policies and procedures, and employee training and compliance programs we have implemented to deter prohibited practices may not be effective in preventing employees, contractors or agents from violating or circumventing such internal policies or from material violations of applicable laws and regulations. Any determination that we have violated or are responsible for violations of anti-bribery, trade control, trade sanctions or anti-corruption laws could have a material adverse effect on our financial condition. Violations of international and US laws and regulations or the loss of any required licenses may result in fines and penalties, criminal sanctions, administrative remedies or restrictions on business conduct, and could have a material adverse effect on our reputation and our business, operating resultsoperations and financial condition. In addition, any major violations could have a significant effect on our reputation and consequently on our ability to win future business and maintain existing customer and supplier relationships.
8Existing or future laws, regulations, court orders or other initiatives to limit greenhouse gas emissions or relating to climate change may reduce demand for our products and services.
DemandContinuing political and social attention to the issue of climate change has resulted in both existing and proposed international agreements and national, regional and local legislation and regulatory measures to limit GHG emissions. The implementation of these agreements, including the Paris Agreement, the Europe Climate Law, and other existing or future regulatory mandates, may adversely affect the demand for our products and services, could be reducedimpose taxes on us or our customers, require us or our customers to reduce GHG emissions from our technologies or operations, or accelerate the obsolescence of our products or services.
In addition, increasing attention to the risks of climate change has resulted in an increased possibility of litigation or investigations brought by existingpublic and future legislation, regulationsprivate entities against oil and public sentiment.gas companies in connection with their GHG emissions. As a result, we or our customers may become subject to court orders compelling a reduction of GHG emissions or requiring mitigation of the effects of climate change.
Environmental advocacy groupsThere is also increased focus by governments and regulatory agencies in the European Union, the United Statesour customers, investors and other regionsstakeholders on climate change, sustainability and energy transition matters. Negative attitudes toward or countries have been focusing considerable attention on the emissionsperceptions of carbon dioxide, methane and other greenhouse gasesour industry or fossil fuel products and their potential role in climate change. Existing or future legislationrelationship to the environment have led governments, non-governmental organizations, and regulations relatedcompanies to greenhouse gas emissions and climate change, as well as governmentimplement initiatives to conserve energy orand promote the use of alternative energy sources, which may significantly curtailreduce the demand for and production of fossil fuels such as oil and gas in areas of the world where our customers operate, and thus reduce future demand for our products and services. ThisIn addition, initiatives by investors and financial institutions to limit funding to companies in fossil fuel-related industries may adversely affect our liquidity or access to capital. Any of these initiatives may, in turn, adversely affect our financial condition, results of operations and cash flows.
New or additional legal or regulatory requirements regarding climate change could adversely affect our business, reputation or demand for our stock. There is also increased focus, including by governmental and non-governmental organizations, investors and other stakeholders, on these and other sustainability matters. Additionally, some international, national, state and local governments and agencies have adopted laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic fracturing. Future hydraulic fracturing-related legislation or regulations could limit or ban hydraulic fracturing, or lead to operational delays and increased costs, and therefore reduce demand for our pressure pumping services. Enactment of additional international, national, state or local legislation or regulations can adversely affect our financial condition, results of operations and cash flows and could be material.
Environmental compliance costs and liabilities arising as a result of environmental laws and regulations could reducehave a material adverse effect on our earningsbusiness, financial condition and cash available forresults of operations.
We are subject to increasingly stringentnumerous laws and regulations relating to environmental protection, including those governing air and GHG emissions, water discharges and waste management, as well as the importation and use of hazardous materials, radioactive materials, chemicals and explosives and to environmental protection, including laws and regulations governing air emissions, hydraulic fracturing, water discharges and waste management. We incur, and expect to continue to incur, significant capital and operating costs to comply with environmental laws and regulations.explosives. The technical requirements of these laws and regulations are becoming increasingly complex, stringent and expensive to implement. These laws maysometimes provide for “strict liability” for remediation costs, damages to natural resources or threats to public health and safety. Strict liability can render us liable for damages without regard to our degree of care or fault. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances, and, as a result, we could be liable for the actions of others.
We use and generate hazardous substances and wastes in our operations. In addition, many of our current and former properties are, or have been, used for industrial purposes. Accordingly, we could become subject to material liabilities relating to the investigation
and cleanup of potentially contaminated properties, and to claims alleging personal injury or property damage as thea result of exposures to, or releases of, hazardous substances. In addition, stricter enforcement or changing interpretations of existing laws and regulations, the enactment of new laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis for new or increased liabilities that could reducehave a material adverse effect on our earningsbusiness, operations and our cash available for operations.financial condition.
We could be subject to substantial liability claims, including catastrophicas a result of well incidents, which could adversely affect our reputation, financial condition, results of operations and cash flows.
The technical complexities of our operations expose us to a wide range of significant health, safety and environmental risks. Our operations involve production-related activities, radioactive materials, chemicals, explosives and other equipment and services that are deployed in challenging exploration, development and production environments. Accidents or acts of malfeasance involving these services or equipment, or a failure of a product (including as a result of a cyberattack), could cause personal injury, loss of life, damage to or destruction of property, equipment or the environment, or suspension of operations, which could materially adversely affect us. Any catastrophic well incidents, including blowouts at a well site or any loss of containment or well control, may expose us to additional liabilities, which could be material. Generally, we rely on contractual indemnities, releases, and limitations on liability with our customers and insurance to protect us from potential liability related to such events. However, our insurance may not protect us against liability for certain kinds of events, including events involving pollution, or against losses resulting from business interruption. Moreover, we may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate. Any damages caused by our services or products that are not covered by insurance or are in excess of policy limits or subject to substantial deductibles, could adversely affect our financial condition, results of operations and cash flows.
If we are unable to maintain technology leadership, this could adversely affect any competitive advantage we hold.General Risk Factors
The oilfield service industry is highly competitive. Our ability to continually provide competitive technologyCOVID-19 pandemic and services can impact our ability to defend, maintain or increase prices for our productsresulting adverse economic conditions have had, and services, maintain market share, and negotiate acceptable contract terms with our customers. Failuremay to continue to develop and produce competitive technology or deliver it to our clients inhave, a timely and cost-competitive manner in the various markets we serve, could adversely affectmaterial adverse effect on our financial condition, results of operations and cash flows.
LimitationsThe COVID-19 pandemic caused a significant and swift reduction in global economic activity during 2020, which significantly weakened demand for oil and gas, and in turn, for our products and services. Other effects of the pandemic included, and may continue to include, significant volatility and disruption of the global financial markets; adverse revenue and net income effects; disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets; limitations on access to sources of liquidity; supply chain disruptions; limitations on access to raw materials; employee impacts from illness, school closures and other community response measures; and temporary closures of our facilities or the facilities of our customers and suppliers. The pandemic is continuously evolving, and the extent to which our operating and financial results will continue to be affected will depend on various factors beyond our control, such as the ultimate duration, severity and sustained geographic resurgence of the virus; the emergence of new variants and strains of the virus; and the success of actions to contain the virus and its variants, or treat its impact, such as the availability and acceptance of vaccines. COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate our other risk factors described in this Form 10-K.
Our operations are subject to cyber incidents that could have a material adverse effect on our business, financial condition and results of operations.
We are highly dependent on digital technologies and services to conduct our business. We use these technologies for internal purposes, including data storage, processing and transmission, as well as in our interactions with our business associates, such as customers and suppliers. In addition, we develop software and other digital products and services that store, retrieve, manipulate and manage our customers’ information and data, external data, personal data, and our own data. Our digital technologies and services, and those of our business associates, are subject to the risk of cyberattacks and, given the nature of such attacks, some incidents can remain undetected for a period of time despite efforts to detect and respond to them in a timely manner. There can be no assurance that the systems we have designed to prevent or limit the effects of cyber incidents or attacks will be sufficient to prevent or detect material consequences arising from such incidents or attacks, or to avoid a material adverse impact on our systems after such incidents or attacks do occur. We have experienced and will continue to experience varying degrees of cyber incidents in the normal conduct of our business, including attacks resulting from phishing emails and ransomware infections. Even if we successfully defend our own digital technologies and services, we also rely on third-party business associates, with whom we may share data and services, to defend their digital technologies and services against attack.
We could suffer significant damage to our reputation if a cyber incident or attack were to allow unauthorized access to or modification of our customers’ data, other external data, personal data, or our own data, or if the services we provide to our customers were disrupted, or if our digital products or services were reported to have or were perceived as having security vulnerabilities. This could lead to fewer customers using our digital products and services, which could have a material adverse impact on our financial condition and results of operations. In addition, if our systems, or our third-party business associates’ systems, for protecting against cybersecurity risks prove to be insufficient, we could be adversely affected by, among other things, loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data; breach of personal data; interruption of our business operations; increased legal and regulatory exposure, including fines and remediation costs; and increased costs required to
prevent, respond to, or mitigate cybersecurity attacks. These risks could harm our reputation and our relationships with our employees, business associates and other third parties, and may result in claims against us. The occurrence of any of these risks could have a material adverse effect on our business, financial condition and results of operations.
Our aspirations, goals, and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks.
We have developed, and will continue to develop and set, goals, targets, and other objectives related to sustainability matters, including our net-zero target and our energy transition strategy. Statements related to these goals, targets and objectives reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals, targets, and objectives expose us to numerous operational, reputational, financial, legal, and other risks. Our ability to achieve any stated goal, target, or objective, including with respect to emissions reduction, is subject to numerous factors and conditions, some of which are outside of our control.
Our business may face increased scrutiny from investors and other stakeholders related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. ��If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to protectattract or retain employees, and our intellectual property rights, includingattractiveness as an investment or business partner could be negatively affected. Similarly, our trade secrets, could cause a loss in revenuefailure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and any competitive advantageobjectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we hold.
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Some of our productsannounce, or services, and the processes we use to produce or provide them, have been granted patent protection, have patent applications pending, or are trade secrets. Our business may be adversely affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied or our trade secrets are not adequately protected. Our competitors may be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, whichat all, could adversely affect our financial condition, results of operationsbusiness or reputation, as well as expose us to government enforcement actions and cash flows.
Third parties may claim that we have infringed upon their intellectual property rights.
The tools, techniques, methodologies, programs and components we use to provide our services and products may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs, and may distract management from running our business. Royalty payments under licenses from third parties, if available, would increase our costs. If a license were not available, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows. Additionally, developing non-infringing technologies would increase our costs.private litigation.
Failure to obtainattract and retain skilled technicalqualified personnel could impede our operations.
Our future success depends on our ability to recruit, train, and retain qualified personnel. We require highly skilled personnel to operate and provide technical services and support for our business. Competition for the personnel requirednecessary for our businesses intensifies as activity increases and technology evolves. In periods of high utilization, it is often more difficult to find and retain qualified individuals. This could increase our costs or have other material adverse effects on our operations.
Severe weather, including extreme weather conditions associated with climate change, has in the past and may in the future adversely affect our operations.operations and financial results.
Our business has been, and in the future will be, affected by severe weather in areas where we operate, which could materially impactaffect our operations and financial results Thisresults. Extreme weather conditions such as hurricanes, flooding and landslides have in the past resulted in, and may entailin the future result in, the evacuation of personnel, and stoppage of services. In addition, particularlyservices and activity disruptions at our facilities, in our supply chain, or at well-sites, or result in disruptions of our customers’ operations. Particularly severe weather affectsevents affecting platforms or structures which may result in a suspension of activities. In addition, acute or chronic physical impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall and hurricane-strength winds may damage our facilities. Any of thesesuch extreme weather events may result in increased operating costs or decreases in revenue, which could adversely affect our financial condition, results of operations and cash flows.
Cyberattacks could have a material adverse impact on our business and results of operation.
We rely heavily on information systems to conduct our business, including systems operated by or under the control of third parties. Although we devote significant resources to protect our systems and proprietary data, we have experienced and will continue to experience varying degrees of cyber incidents in the normal conduct of our business. There can be no assurance that the systems we have designed to prevent or limit the effects of cyber incidents or attacks will be sufficient to prevent or detect such incidents or attacks, or to avoid a material adverse impact on our systems after such incidents or attacks do occur. Breaches or circumvention of our systems, or the systems of third parties, including by ransomware or other attacks, result in disruptions to our business operations; unauthorized access to (or the loss of Company access to) competitively sensitive, confidential or other critical data or systems; loss of customers; financial losses; regulatory fines; and misuse or corruption of critical data and proprietary information, any of which could be material.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Schlumberger owns or leases numerous manufacturing facilities, administrative offices, service centers, research centers, data processing centers, mines, and other facilities throughout the world, none of which are individually material.
Item 3. Legal Proceedings.
The information with respect to this Item 3. Legal Proceedings is set forth in Note 15 of14 – Contingencies, in the accompanying Consolidated Financial Statements.
Item 4. Mine Safety Disclosures.
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 Form 10-K.
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PART II
Item 5. Market for Schlumberger’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of December 31, 2019,2021, there were 25,46423,753 stockholders of record. The principal United StatesUS market for Schlumberger’s common stock is the New York Stock Exchange (“NYSE”), where it is traded under the symbol “SLB.”
The following graph compares the cumulative total stockholder return on Schlumberger common stock with the cumulative total return on the Standard & Poor’s 500 Index (“S&P 500 Index”) and the cumulative total return on the Philadelphia Oil Service Index. It assumes $100 was invested on December 31, 20142016 in Schlumberger common stock, in the S&P 500 Index and in the Philadelphia Oil Service Index, as well as the reinvestment of dividends on the last day of the month of payment. The stockholder return set forth below is not necessarily indicative of future performance. The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Schlumberger specifically incorporates it by reference into such filing.
Comparison of Five-Year Cumulative Total Return Among
Schlumberger Common Stock, the S&P 500 Index and the
Philadelphia Oil Service Index
Share Repurchases
On January 21, 2016, the Schlumberger Board of Directors approved a $10 billion share repurchase program for Schlumberger common stock.
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Schlumberger’sSchlumberger had repurchased $1.0 billion of its common stock repurchaseunder this program activity for the three months endedas of December 31, 2019 was as follows:2021. Schlumberger did not repurchase any of its common stock during 2021.
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| Total Number of Shares Purchased |
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Unregistered Sales of Equity Securities
None.
Item 6. Selected Financial Data.[Reserved].
The following selected consolidated financial data should be read in conjunction with both “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” of this Form 10-K in order to understand factors, such as business combinations and charges and credits, which may affect the comparability of the Selected Financial Data.
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|
| Year Ended December 31, |
| |||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||
Revenue | $ | 32,917 |
|
| $ | 32,815 |
|
| $ | 30,440 |
|
| $ | 27,810 |
|
| $ | 35,475 |
|
Income (loss) from continuing operations | $ | (10,137 | ) |
| $ | 2,138 |
|
| $ | (1,505 | ) |
| $ | (1,687 | ) |
| $ | 2,072 |
|
Diluted earnings (loss) per share from continuing operations | $ | (7.32 | ) |
| $ | 1.53 |
|
| $ | (1.08 | ) |
| $ | (1.24 | ) |
| $ | 1.63 |
|
Cash | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,799 |
|
| $ | 2,929 |
|
| $ | 2,793 |
|
Short-term investments | $ | 1,030 |
|
| $ | 1,344 |
|
| $ | 3,290 |
|
| $ | 6,328 |
|
| $ | 10,241 |
|
Working capital | $ | 2,432 |
|
| $ | 2,245 |
|
| $ | 3,215 |
|
| $ | 8,868 |
|
| $ | 12,791 |
|
Fixed income investments, held to maturity | $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 238 |
|
| $ | 418 |
|
Total assets | $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 71,987 |
|
| $ | 77,956 |
|
| $ | 68,005 |
|
Long-term debt | $ | 14,770 |
|
| $ | 14,644 |
|
| $ | 14,875 |
|
| $ | 16,463 |
|
| $ | 14,442 |
|
Total debt | $ | 15,294 |
|
| $ | 16,051 |
|
| $ | 18,199 |
|
| $ | 19,616 |
|
| $ | 18,999 |
|
Schlumberger stockholders' equity | $ | 23,760 |
|
| $ | 36,162 |
|
| $ | 36,842 |
|
| $ | 41,078 |
|
| $ | 35,633 |
|
Cash dividends declared per share | $ | 2.00 |
|
| $ | 2.00 |
|
| $ | 2.00 |
|
| $ | 2.00 |
|
| $ | 2.00 |
|
During 2018, Schlumberger adopted ASU No. 2016-02, Leases. Prior year amounts reflected in the table above have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. Refer to Note 14 to the Consolidated Financial Statements for further details.
12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources. Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A. Risk Factors” of this Form 10-K.
This section of thisthe Form 10-K generally discusses 20192021 and 20182020 items and year-to-year comparisons between 20192021 and 2018.2020. Discussions of 20172019 items and year-to-year comparisonscomparison between 20182020 and 20172019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2020.
20192021 Executive Overview
Schlumberger full-year 2019 revenue of $32.9 billion was essentially flat with 2018. International revenue, however, grewContinuing a broad recovery that began in the high single-digits as anticipated.
In the2020, oil markets sentiment was stable andwere generally positive forthroughout the first four months of 2019,year, with the Brent oil price moving from $55starting 2021 at the year’s low of $51 per barrel, at the beginning of the year toreaching a high of $75 per barrel$85 in late April. OECDNovember. Sentiment in oil markets was largely positive as global demand recovered and supply was managed by a combination of the reassurance of continued intervention from OPEC+, and ongoing capital discipline by publicly traded operators in North America.
Within the context of strengthening fundamentals across the year, there were several instances where the potential impact of COVID-19 variants raised concerns regarding demand growth. However, these periods were shorter lived than the prolonged decline in 2020, which was characterized by economic lockdowns, and oil prices soon rebounded. Pricing was initially supported by OPEC+ production agreements that had come into effect in 2020 and remained resilient as those production targets were gradually increased in the second half of 2021, as crude and product stocks continued to increase through much of 2019, reversing a trend that persisted throughoutmultiyear downward trend.
International activity grew broadly across geographies in the firstsecond half of 2018. Internationally, activitythe year, including offshore and investment continueddeepwater, with operators investing in projects to strengthen, particularly offshore.meet long-term objectives and regional demand growth.
Activity in North America land also rebounded, albeit from a very low base in 2020, but did not return to prepandemic levels, as investment and production were subdued as a result of continued capital discipline on the part of larger producers.
International natural gas pricing, while following the traditional seasonal pattern, was strongvolatile, swinging from pandemic-driven lows in 2020 to record highs around the first halfworld. Domestically, US Henry Hub natural gas prices rose dramatically, averaging $3.91 per million British thermal units on a monthly basis—as compared to $2.04 in 2020—and reaching a peak of 2019 but slowed$5.87 in October before ending the year at $3.73.
Against this backdrop, Schlumberger’s full-year 2021 revenue of $22.9 billion decreased 3% year-on-year as a result of the divestitures of the OneStim pressure pumping business and the North America low-flow artificial lift business during the fourth quarter of 2020. These divestitures were consistent with Schlumberger’s strategy to focus on expanding margins, minimizing earnings volatility and focusing on less capital-intensive businesses by high-grading and rationalizing its business portfolio. The divested businesses accounted for approximately 25% of Schlumberger’s North America revenue in 2020. Excluding the impact of these divestitures, which generated $1.3 billion of revenue during 2020 (all of which was in North America), full-year 2021 global revenue grew 3% year-on-year, driven by an 8% increase in North America and a 2% increase in international revenue.
Financial performance in 2021 was driven by global oil and gas activity growth in the second half of the year as a combination of budget exhaustion and cash flow constraints impacted our customers. Although the slowing activityinvestment spending experienced double-digit growth year-on-year. Consequently, Schlumberger’s revenue in the second half of 2021 grew 12% compared to the year was consistent withsame period of 2020, and increased 18% when adjusted for the trend experienced in 2018, activity dropped earlier and steeper ineffects of the divestitures. International revenue increased 12% year-on-year during the second half of 2019 as compared to the previous year.
By midyear, concerns of a recession in the United States2021, and indications of well supplied global oil markets pushed the oil price to its low point for the year. These concerns abated over the latter part of the year as oil demand indicators trended positively. Though trade conflicts persisted, they did not create a significant drag on oil markets for the balance of the year.
The attacks on Saudi Arabia oil infrastructure in September 2019 caused a price increase of only $7 per barrel, and the price of Brent crude retreated to pre-attack levels over the course of the following week, demonstrating that the markets were well supplied. In December 2019, OPEC+ agreed to further production cuts in 2020 to alleviate the projected oversupply.
Global natural gas pricing was consistent with well-supplied markets during 2019. Liquified natural gas (LNG) supply capacity increased by an estimated 10% during 2019, and consequently LNG prices in Asia and Europe were less than half the prices seen in 2018.
Domestically, US Henry Hub natural gas prices showed continued weakness during 2019 as North American gas production increased. Prices averaged $2.56 per million British thermal units (“mmbtu”) for the year, with the peak of $4.25 per mmbtu occurring in March. The price fell to its lowest point of $1.75 per mmbtu in December.
Schlumberger financial performance in 2019 was primarily driven by the international markets. Full-year 2019 international revenue of $21.8 billion increased 7% over 2018, again outpacing North America revenue and continuing a trend which began inincreased 10%, or 44% when adjusted for the third quarter of 2018. This strong international performance was the result of increased activity on the part of operators, as they continued to invest in longer-term resource development following a sustained period of underinvestment and declining production.
In contrast, after two years of strong growth, North American revenue fell sharply by 10% to $10.8 billion. This decrease was largely driven by the land market weakness affecting the OneStim pressure pumping business, as customers reached their budget limits earlier in the year and remained highly disciplined on capital spend.
Additionally, during the fourth quarter of 2019, Schlumberger completed two major milestones: the formationeffects of the Sensia joint venture and the divestituredivestitures (which generated $0.5 billion of the Drilling Tools business. Together these two transactions resulted in Schlumberger receiving net cash proceeds of $586 million.
From a macro perspective, the year ended with sentiment regarding 2020 oil demand growth turning positive as uncertainty reduced following the progress made toward a US-China trade deal. The fall in the North America production growth estimate of between 400,000 to 800,000 barrels-per-day should continue to support the thesis for international investment. The recent escalation of geopolitical risk should set the floor for the oil price going forward. In the near term, Schlumberger expects the OPEC+ production cuts agreed upon in December 2019 to limit investment and activity, particularly in the Middle East and Russia,revenue during the first half of 2020. As the year progresses, the effect of slowing North America production growth is likely to cause tightness in the market and further stimulate international operators to increase their investments in the second half of 2020).
Looking ahead into 2022, we believe the year and beyond.
Based on these factors, the expectation is for the 2020 exploration and production capex spending growth rate in the international markets to be in the mid-single-digit range. Schlumberger therefore expects its international portfolio revenue to grow at the same pace or higher, excluding the effects of the businesses transferredindustry macro fundamentals are very favorable, due to the Sensia joint venturecombination of projected steady demand recovery, an increasingly tight supply market, and supportive oil prices. Schlumberger expects this to result in a material step up in industry capital spending with double-digit growth in both the businesses divested in the Drilling Tools transaction. The businesses included in these transactions accounted for approximately 2% of Schlumberger’s global revenue in 2019. International revenue growth will be more heavily weightedinternational and North American markets. Absent any further significant COVID-related disruption, oil demand is expected to the second half of the year with increasing offshore activity, improving activity mix from the early deepwater growth cycle, and increasing exploration work towardexceed prepandemic levels before the end of the year and into 2021.further strengthen in 2023. We believe these favorable market conditions are similar to those experienced during the last industry supercycle, suggesting that resurgent global demand-led capital spending will result in an exceptional multiyear growth cycle.
In North America,Throughout 2021, Schlumberger continued to strengthen its core portfolio, enhanced its sustainability leadership, successfully advanced its digital journey, and expanded its new energy portfolio. Schlumberger is continuingwell prepared to scale-to-fit its organization and portfolio by repurposing or exiting underperforming business units, focusing on asset-light operations, and expanding its technology access business models. fully seize this growth ahead. Schlumberger is cautiously optimistic thatentering this cycle in a position of strength, having reset its operating leverage, expanded peer-leading margins across multiple quarters, and aligned its technology and business portfolio with the high-grading of its portfolio will promote margin expansion and the improvement of returns in the North America land market.new industry imperatives.
Fourth Quarter 20192021 Results
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fourth Quarter 2019 |
|
| Third Quarter 2019 |
| Fourth Quarter 2021 |
|
| Third Quarter 2021 |
| ||||||||||||||||||||
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| Income (Loss) |
|
|
|
|
| Income |
|
|
|
|
|
| Income |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||||||
Reservoir Characterization | $ | 1,643 |
|
| $ | 368 |
|
| $ | 1,651 |
|
| $ | 360 |
| |||||||||||||||
Drilling |
| 2,442 |
|
|
| 303 |
|
|
| 2,470 |
|
|
| 305 |
| |||||||||||||||
Production |
| 2,867 |
|
|
| 253 |
|
|
| 3,153 |
|
|
| 288 |
| |||||||||||||||
Cameron |
| 1,387 |
|
|
| 126 |
|
|
| 1,363 |
|
|
| 173 |
| |||||||||||||||
Digital & Integration | $ | 889 |
|
| $ | 335 |
|
| $ | 812 |
|
| $ | 284 |
| |||||||||||||||
Reservoir Performance |
| 1,287 |
|
|
| 200 |
|
|
| 1,192 |
|
|
| 190 |
| |||||||||||||||
Well Construction |
| 2,388 |
|
|
| 368 |
|
|
| 2,273 |
|
|
| 345 |
| |||||||||||||||
Production Systems |
| 1,765 |
|
|
| 159 |
|
|
| 1,674 |
|
|
| 166 |
| |||||||||||||||
Eliminations & other |
| (111 | ) |
|
| (44 | ) |
|
| (96 | ) |
|
| (30 | ) |
| (104 | ) |
|
| (76 | ) |
|
| (104 | ) |
|
| (77 | ) |
|
|
|
|
|
| 1,006 |
|
|
|
|
|
|
| 1,096 |
|
|
|
|
|
| 986 |
|
|
|
|
|
|
| 908 |
|
Corporate & other (1) |
|
|
|
|
| (215 | ) |
|
|
|
|
|
| (231 | ) |
|
|
|
|
| (140 | ) |
|
|
|
|
|
| (145 | ) |
Interest income (2) |
|
|
|
|
| 8 |
|
|
|
|
|
|
| 7 |
|
|
|
|
|
| 14 |
|
|
|
|
|
|
| 8 |
|
Interest expense (3) |
|
|
|
|
| (138 | ) |
|
|
|
|
|
| (151 | ) |
|
|
|
|
| (123 | ) |
|
|
|
|
|
| (127 | ) |
Charges & credits (4) |
|
|
|
|
| (209 | ) |
|
|
|
|
|
| (12,692 | ) |
|
|
|
|
| 18 |
|
|
|
|
|
|
| 47 |
|
| $ | 8,228 |
|
| $ | 452 |
|
| $ | 8,541 |
|
| $ | (11,971 | ) | $ | 6,225 |
|
| $ | 755 |
|
| $ | 5,847 |
|
| $ | 691 |
|
(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) | Excludes interest income included in the segments’ income (fourth quarter |
(3) | Excludes interest expense included in the segments’ income (fourth quarter |
(4) | Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
Fourth quarterFourth-quarter revenue of $8.2$6.22 billion was 4% lower sequentially. increased 6% sequentially as a result of broad-based growth across all geographies and Divisions.
International revenue of $5.7$4.90 billion grew 2% sequentially. However, North America5% sequentially, driven primarily by strengthening activity, increased digital sales, and early benefits of pricing improvements. The sequential revenue of $2.5 billion dropped 14% sequentiallyincrease was led by growth in Europe/CIS/Africa largely due to customer budget exhaustion and cash flow constraints.
Sequential internationalstrong offshore activity in Africa. This growth was ledcomplemented by project startups and activity gains in the Middle East & Asia area, where revenue increased 5%.and sustained activity growth in Latin America.
In North America, revenue of $1.28 billion grew 1%, while revenue in13% sequentially, outperforming the Europe/CIS/Africa area only declined 2% given the mild winter slowdown of activity in the Northern Hemisphere.
rig count growth. The fourth quarter of 2019 delivered the first sequential growth in internationalwas driven by strong offshore and land drilling activity and increased exploration data licensing.
Fourth-quarter pretax segment operating margin in any fourth quarterof 16% increased 31 basis points (bps) sequentially, reaching its highest quarterly level since 2014. Schlumberger is therefore confident that it has turned the corner, particularly2015, largely as it has experienced sequential international margin growth in eacha result of the last three quarters. Meanwhile in North America land, margin compression from lower activity was minimized by implementing a scale-to-fit strategy, acting decisively in reducing capacity, and restructuring operations to protect margins.accretive effect of accelerating digital sales.
14
Reservoir CharacterizationDigital & Integration
Fourth-quarter revenue of $1.6 billion decreased 1%$889 million increased 10% sequentially, followingpropelled by accelerated digital sales internationally, particularly in Europe/CIS/Africa and Middle East & Asia, and increased exploration data licensing sales in North America offshore and the endPermian. These increases, however, were partially offset by the effects of the summer campaigns for Wireline and Testing activitya temporary production interruption in the North Sea and Russia, where the mild winter did not significantly disrupt activity.APS projects in Ecuador due to pipeline disruption.
Reservoir CharacterizationDigital & Integration pretax operating margin of 22% increased 59 basis points (“bps”)38% expanded 268 bps sequentially, primarily driven bydue to higher digital and exploration data licensing sales.
Reservoir Performance
Fourth-quarter revenue of $1.3 billion increased high-margin SIS digital software sales.8% sequentially, primarily due to higher intervention activity across the international offshore markets and activity gains in the Middle East & Asia.
DrillingReservoir Performance pretax operating margin of 16% was essentially flat sequentially.
Well Construction
Fourth-quarter revenue of $2.4 billion decreased 1%increased 5% sequentially, primarilydriven by higher measurements and drilling fluids activity and increased drilling equipment sales. North America revenue increased 15% due to the end of the summer drilling campaign in Russiahigher rig count on land and lower drillingincreased well construction activity in North America land.the US Gulf of Mexico. International revenue growth of 3% was driven by growth in Latin America.
DrillingWell Construction pretax operating margin of 12%15% was essentially flat sequentially as margin improvements from drilling projects in the Middle East were offset by the seasonally lower margins in Russia and lower drilling margins in North America land.sequentially.
Production Systems
Fourth-quarter revenue of $2.9$1.8 billion declined 9%increased 5% sequentially driven by lower activity and pricing for OneStima 6% increase in North America land due to expected customer budget limitations and cash flow constraints. Schlumberger continued to right-size its hydraulic fracturing capacity by stacking more fleetsinternational revenue. This growth was mainly in lightEurope/CIS/Africa as a result of lower demand.strong project progress.
Production Systems pretax operating margin of 9% contracted by 32declined 85 bps sequentially due to an unfavorable mix and the lower OneStim activity, partially offset by strength in international margins from higher activity.
Cameron
Fourth-quarter revenueimpact of $1.4 billion increased 2% sequentially from higher OneSubsea, Surface Systems, and Drilling Systems revenue primarily in the international markets. Valves & Process Systems was lower sequentiallydelayed deliveries due to the reduced North America land activityglobal supply and as a result of contributing the Valves & Process Systems measurement business to the Sensia joint venture, which closed on October1, 2019.
Cameron pretax operating margin of 9% contracted by 359 bps sequentially, driven largely by reduced margins in the OneSubsea project portfolio.
logistics constraints.
Full-Year 20192021 Results
|
|
|
|
| (Stated in millions) |
|
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| (Stated in millions) |
| ||||||||||||||||||
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| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||||||||||||||||||
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|
| Income (Loss) |
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|
| Income |
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|
| Income |
|
|
|
|
|
| Income (Loss) |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| ||||
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| Revenue |
|
| Taxes |
|
| Revenue |
|
| Taxes |
| ||||||||
Reservoir Characterization | $ | 6,312 |
|
| $ | 1,327 |
|
| $ | 6,173 |
|
| $ | 1,347 |
| |||||||||||||||
Drilling |
| 9,721 |
|
|
| 1,216 |
|
|
| 9,250 |
|
|
| 1,239 |
| |||||||||||||||
Production |
| 11,987 |
|
|
| 993 |
|
|
| 12,394 |
|
|
| 1,052 |
| |||||||||||||||
Cameron |
| 5,336 |
|
|
| 613 |
|
|
| 5,520 |
|
|
| 653 |
| |||||||||||||||
Digital & Integration | $ | 3,290 |
|
| $ | 1,141 |
|
| $ | 3,067 |
|
| $ | 727 |
| |||||||||||||||
Reservoir Performance |
| 4,599 |
|
|
| 648 |
|
|
| 5,602 |
|
|
| 353 |
| |||||||||||||||
Well Construction |
| 8,706 |
|
|
| 1,195 |
|
|
| 8,614 |
|
|
| 870 |
| |||||||||||||||
Production Systems |
| 6,710 |
|
|
| 634 |
|
|
| 6,650 |
|
|
| 623 |
| |||||||||||||||
Eliminations & other |
| (439 | ) |
|
| (171 | ) |
|
| (522 | ) |
|
| (104 | ) |
| (376 | ) |
|
| (253 | ) |
|
| (332 | ) |
|
| (172 | ) |
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
| 4,187 |
|
|
|
|
|
| 3,365 |
|
|
|
|
|
|
| 2,401 |
|
Corporate & other (1) |
|
|
|
|
| (957 | ) |
|
|
|
|
|
| (937 | ) |
|
|
|
|
| (573 | ) |
|
|
|
|
|
| (681 | ) |
Interest income (2) |
|
|
|
|
| 33 |
|
|
|
|
|
|
| 52 |
|
|
|
|
|
| 31 |
|
|
|
|
|
|
| 31 |
|
Interest expense (3) |
|
|
|
|
| (571 | ) |
|
|
|
|
|
| (537 | ) |
|
|
|
|
| (514 | ) |
|
|
|
|
|
| (534 | ) |
Charges & credits (4) |
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
| (141 | ) |
|
|
|
|
| 65 |
|
|
|
|
|
|
| (12,515 | ) |
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 32,815 |
|
| $ | 2,624 |
| $ | 22,929 |
|
| $ | 2,374 |
|
| $ | 23,601 |
|
| $ | (11,298 | ) |
(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) | Excludes interest income included in the segments’ income |
(3) | Excludes interest expense included in the segments’ income |
(4) | Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
15
Full-year 20192021 revenue of $32.9$22.9 billion decreased 3% year-on-year primarily as a result of the divestitures of theOneStim pressure pumping business and the low-flow artificial lift business during the fourth quarter of 2020. Excluding the impact of these divestitures, whichgenerated $1.3 billion of revenue (all of which was essentially flat year-on-year within North America) during 2020, global revenue increased 3% year-on-year.
In North America revenue decreasing 10%declined 18% year-on-year; however, excluding the impact of the previously described divestitures, full-year revenue increased 8%. International revenue also increased 2%.
The growth in 2021 was driven by strong global oil and internationalgas activity in the second half of the year. Schlumberger’s revenue increasing 7%. The international results were underpinned byin the second half of 2021 grew 12% compared to the same period of 2020 and increased investment levels. In contrast,18% when adjusted for the effects of the divestitures. This growth was pervasive across all geographies and Divisions.
Full-year 2021 pretax operating margin of 15% was 450 bps higher compared to 2020, primarily due to the divestiture of certain businesses in North America, results reflect a slowing production growth rate on land as operators maintained capital disciplinewhich were previously dilutive to margins, combined with reduced depreciation and reduced drillingamortization expense following the asset impairment charges recorded during 2020 and hydraulic fracturing activity.the effects of cost reduction measures.
Digital & Integration
Reservoir Characterization
Full-year 20192021 revenue of $6.3$3.3 billion increased 2%7% year-on-year, primarily driven by increased international activity.robust APS project revenue from higher production and improved oil prices.
Year-on-year, pretax operating margin decreased 79 bpsincreased 11 percentage points to 21%35%. Operating margin increased due to improved profitability from APS projects as a result of higher oil prices and reduced amortization expense following the asset impairment charges that were recorded during 2020 relating to certain APS investments.
DrillingReservoir Performance
Full-year 20192021 revenue of $9.7$4.6 billion decreased 18% year-on-year, largely reflecting the effects of the OneStim divestiture, which generated $1.2 billion of revenue during 2020. Excluding the impact of the OneStim divestiture, revenue increased 5% year-on-year primarily due to higher demand for drilling services, largelydriven by strong activity in the international markets that benefited Drilling & Measurements, M-I SWACO, and Integrated Drilling Services.Latin America.
Year-on-year, pretax operating margin decreased 89increased by 779 bps to 13%14% despite higherthe significant drop in revenue, as margins were affected by competitive pricing and higher costs associated with a numberprimarily due to the divestiture of integrated contracts internationally.the OneStim business, which was previously dilutive to margins.
ProductionWell Construction
Full-year 20192021 revenue of $12.0$8.7 billion decreased 3% year-on-year with mostincreased 1% year-on-year.
Year-on-year, pretax operating margin increased 363 bps to 14% despite the relatively flat revenue, largely as a result of the implementation of cost control measures.
Production Systems
Full-year 2021 revenue of $6.7 billion increased 1% year-on-year, primarily driven by improved international activity that was largely offset by a decline attributable to lower OneStimin completions activity in North America as customers reduced spending due to higher costa result of capital, lower borrowing capacity and expectation of better returns from their shareholders.the pandemic.
Year-on-year, pretax operating margin decreased 20 bps to 8% primarily due to reduced profitability in OneStim in North America.
Cameron
Full-year 2019 revenue of $5.3 billion decreased 3% year-on-year due to lower revenue for OneSubsea and Valves & Process Systems.
Year-on-year, pretax operating margin decreased 35 bps to 11%was essentially flat at 9%.
Interest and Other Income
Interest & other income consisted of the following:
(Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |
| 2019 |
|
| 2018 |
|
|
|
|
|
|
|
| ||
| 2021 |
|
| 2020 |
| |||||||||
Earnings of equity method investments | $ | 40 |
|
| $ | 91 |
| |||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| 33 |
|
|
| 33 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
| |||||||
Unrealized gain on marketable securities |
| 47 |
|
|
| 39 |
| |||||||
Gain on sale of Liberty shares |
| 28 |
|
|
| - |
| |||||||
| $ | 86 |
|
| $ | 149 |
| $ | 148 |
|
| $ | 163 |
|
The decrease in interest incomeearnings of equity method investments in 20192021 as compared to 20182020 is primarily attributable to lower cash and short-term investment balances.
The decrease in earnings from equity income isSchlumberger’s share of net losses associated with Schlumberger’s equity investmentsinvestment in rig-and seismic-related businesses.Liberty. Schlumberger records its share of Liberty’s net income or loss on a one-quarter lag.
During the fourth quarter of 2021 Schlumberger sold 9.5 million of its shares of Liberty and recognized a gain of $28 million. See Note 3 to the Consolidated Financial Statements.
During the third quarter of 2021, a start-up company that Schlumberger previously invested in was acquired. As a result of this transaction, Schlumberger’s ownership interest was converted into shares of a publicly traded company. Schlumberger recognized an unrealized pretax gain of $47 million to increase the carrying value of this investment to its estimated fair value of approximately $55 million. See Note 3 to the Consolidated Financial Statements.
During the fourth quarter of 2020, a start-up company that Schlumberger previously invested in completed an initial public offering. As a result, Schlumberger recognized an unrealized gain of $39 million to increase the carrying value of this investment to its fair
value of $43 million as of December 31, 2020. See Note 3 to the Consolidated Financial Statements. Schlumberger sold this investment during 2021, which did not result in a material gain or loss.
Interest Expense
Interest expense of $609$539 million in 2019 increased $342021 decreased $24 million compared to 2018. This increase is2020 primarily due to an increaseas a result of the $2.7 billion year-on-year reduction in the weighted averagetotal debt balance during 2019 as compared to 2018.outstanding.
Other
Research & engineering and General & administrative expenses, as a percentage of Revenue, were as follows:
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Research & engineering |
| 2.2 | % |
|
| 2.1 | % |
| 2.4 | % |
|
| 2.5 | % |
General & administrative |
| 1.4 | % |
|
| 1.4 | % |
| 1.5 | % |
|
| 1.5 | % |
Income Taxes
The Schlumberger effective tax rate is sensitive to the geographic mix of earnings. When the percentage of pretax earnings generated outside of North America increases, the Schlumberger effective tax rate generally decreases. Conversely, when the percentage of pretax earnings generated outside of North America decreases, the Schlumberger effective tax rate generally increases.
The Schlumberger effective tax rate was 3%19% in 20192021 as compared to 17%7% in 2018.2020. The lowerincrease in the effective tax rate was almost entirelyprimarily due to the charges and credits described in Note 3 to the Consolidated Financial Statements, which primarily related to non-deductible goodwill.. These charges and credits reduced the effective tax rate in 2020 by 12 percentage points as a significant portion of these charges were not tax-effective.
Charges and Credits
Schlumberger recorded significant charges and credits during 20192021 and 2018.2020. These charges and credits, which are summarized below, are more fully described in Note 3 to the Consolidated Financial Statements.
The following is a summary of the 20192021 charges and credits, of which the $247 million gain on the formationcredits.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on marketable securities | $ | (47 | ) |
| $ | (11 | ) |
| $ | (36 | ) |
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (28 | ) |
|
| (4 | ) |
|
| (24 | ) |
Early repayment of bonds |
| 10 |
|
|
| - |
|
|
| 10 |
|
| $ | (65 | ) |
| $ | (15 | ) |
| $ | (50 | ) |
The following is a summary of the Sensia joint venture is classified in Gain on formation of Sensia in the Consolidated Statement of Income (Loss), while the $13.15 billion of2020 charges are classified in Impairments & other.and credits.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
North America restructuring | $ | 225 |
|
| $ | 51 |
|
| $ | 174 |
|
Other restructuring |
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
Workforce reductions |
| 68 |
|
|
| 8 |
|
|
| 60 |
|
Pension settlement accounting |
| 37 |
|
|
| 8 |
|
|
| 29 |
|
Repurchase of bonds |
| 22 |
|
|
| 5 |
|
|
| 17 |
|
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment |
| 8,828 |
|
|
| 43 |
|
|
| 8,785 |
|
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
|
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
|
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
|
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
|
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
|
Asset Performance Solutions |
| 294 |
|
|
| - |
|
|
| 294 |
|
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
|
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill | $ | 3,070 |
|
| $ | - |
|
| $ | 3,070 |
|
Intangible assets impairments |
| 3,321 |
|
|
| 815 |
|
|
| 2,506 |
|
Asset Performance Solutions investments |
| 1,264 |
|
|
| (4 | ) |
|
| 1,268 |
|
North America pressure pumping impairment |
| 587 |
|
|
| 133 |
|
|
| 454 |
|
Workforce reductions |
| 202 |
|
|
| 7 |
|
|
| 195 |
|
Other |
| 79 |
|
|
| 9 |
|
|
| 70 |
|
Valuation allowance |
| - |
|
|
| (164 | ) |
|
| 164 |
|
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Workforce reductions |
| 1,021 |
|
|
| 71 |
|
|
| 950 |
|
Asset Performance Solutions investments |
| 730 |
|
|
| 15 |
|
|
| 715 |
|
Fixed asset impairments |
| 666 |
|
|
| 52 |
|
|
| 614 |
|
Inventory write-downs |
| 603 |
|
|
| 49 |
|
|
| 554 |
|
Right-of-use asset impairments |
| 311 |
|
|
| 67 |
|
|
| 244 |
|
Costs associated with exiting certain activities |
| 205 |
|
|
| (25 | ) |
|
| 230 |
|
Multiclient seismic data impairment |
| 156 |
|
|
| 2 |
|
|
| 154 |
|
Repurchase of bonds |
| 40 |
|
|
| 2 |
|
|
| 38 |
|
Postretirement benefits curtailment gain |
| (69 | ) |
|
| (16 | ) |
|
| (53 | ) |
Other |
| 60 |
|
|
| 4 |
|
|
| 56 |
|
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Facility exit charges |
| 254 |
|
|
| 39 |
|
|
| 215 |
|
Workforce reductions |
| 63 |
|
|
| - |
|
|
| 63 |
|
Other |
| 33 |
|
|
| 1 |
|
|
| 32 |
|
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of OneStim |
| (104 | ) |
|
| (11 | ) |
|
| (93 | ) |
Unrealized gain on marketable securities |
| (39 | ) |
|
| (9 | ) |
|
| (30 | ) |
Other |
| 62 |
|
|
| 4 |
|
|
| 58 |
|
| $ | 12,515 |
|
| $ | 1,041 |
|
| $ | 11,474 |
|
A significant portionAs a result of the third-quarterfirst quarter 2020 impairment charges, were recorded effective August 31, 2019. Accordingly,commencing with the 2019 results reflect a $108 million reduction insecond quarter of 2020, depreciation and amortization expense for the last four months of 2019.was reduced by approximately $95 million on a quarterly basis. Approximately $84$33 million of this amount relates toquarterly reduction is reflected in the Production segment.Digital & Integration Division and $12 million is reflected in the Reservoir Performance Division. The remaining $24$50 million is reflected in the “Corporate & other” line item.
The following isAs a summaryresult of the 2018second quarter 2020 restructuring and impairment charges, commencing with the third quarter of 2020, depreciation and credits,amortization expense was reduced by approximately $80 million and lease expense was reduced by $25 million on a quarterly basis. Approximately $51 million of whichthis quarterly reduction is reflected in the $215Digital & Integration Division and $31 million gain onis reflected in the saleReservoir Performance Division, with the remaining $23 million reflected among the Well Construction Division and Production Systems Division.
As a result of the marine seismic acquisition businessthird quarter 2020 restructuring charges, commencing with the fourth quarter of 2020, depreciation and lease expense was reduced by $15 million on a quarterly basis. This quarterly reduction is classified in Gain on salereflected among all of business in the Consolidated Statement of Income (Loss), while the $356 million of charges are classified in Impairments & other.Divisions.
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Gain on sale of marine seismic acquisition business | $ | (215 | ) |
| $ | (19 | ) |
| $ | (196 | ) |
Workforce reductions |
| 184 |
|
|
| 20 |
|
|
| 164 |
|
Asset impairments |
| 172 |
|
|
| 16 |
|
|
| 156 |
|
| $ | 141 |
|
| $ | 17 |
|
| $ | 124 |
|
Liquidity and Capital Resources
Schlumberger had total Cash and Short-term investments of $2.2 billion and $2.8 billion at December 31, 2019 and 2018, respectively. Total debt was $15.3 billion and $16.1 billion at December 31, 2019 and 2018, respectively.
Details of the components of liquidity as well as changes in liquidity follow:
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dec. 31, |
|
| Dec. 31, |
| Dec. 31, |
|
| Dec. 31, |
| ||||
Components of Liquidity: | 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Cash | $ | 1,137 |
|
| $ | 1,433 |
| $ | 1,757 |
|
| $ | 844 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
| 1,382 |
|
|
| 2,162 |
|
Short-term borrowings and current portion of long-term debt |
| (524 | ) |
|
| (1,407 | ) |
| (909 | ) |
|
| (850 | ) |
Long-term debt |
| (14,770 | ) |
|
| (14,644 | ) |
| (13,286 | ) |
|
| (16,036 | ) |
Net debt (1) | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (11,056 | ) |
| $ | (13,880 | ) |
|
|
|
|
|
|
|
| |||||||
Changes in Liquidity: | 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
| $ | 1,928 |
|
| $ | (10,486 | ) |
Impairments and other charges |
| 13,148 |
|
|
| 356 |
| |||||||
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| - |
| |||||||
Gain on sale of WesternGeco marine seismic business |
| - |
|
|
| (215 | ) | |||||||
Impairments and other charges and credits |
| (65 | ) |
|
| 12,515 |
| |||||||
Depreciation and amortization (2) |
| 3,589 |
|
|
| 3,556 |
|
| 2,120 |
|
|
| 2,566 |
|
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
| (31 | ) |
|
| (1,248 | ) |
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
| 10 |
|
|
| (28 | ) |
Stock-based compensation expense |
| 405 |
|
|
| 345 |
|
| 324 |
|
|
| 397 |
|
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) | |||||||
Increase in working capital and other (3) |
| (327 | ) |
|
| (130 | ) | |||||||
Increase in working capital (3) |
| (45 | ) |
|
| (833 | ) | |||||||
US Federal tax refund |
| 477 |
|
|
| - |
| |||||||
Other |
| (67 | ) |
|
| 61 |
| |||||||
Cash flow from operations |
| 5,431 |
|
|
| 5,713 |
|
| 4,651 |
|
|
| 2,944 |
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
| (1,141 | ) |
|
| (1,116 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
| (474 | ) |
|
| (303 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) |
| (39 | ) |
|
| (101 | ) |
Free cash flow (4) |
| 2,695 |
|
|
| 2,472 |
|
| 2,997 |
|
|
| 1,424 |
|
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
| (699 | ) |
|
| (1,734 | ) |
Stock repurchase program |
| (278 | ) |
|
| (400 | ) |
| - |
|
|
| (26 | ) |
Proceeds from employee stock plans |
| 219 |
|
|
| 261 |
|
| 137 |
|
|
| 146 |
|
Proceeds from sale of WesternGeco marine seismic business, net of cash divested |
| - |
|
|
| 579 |
| |||||||
Net proceeds from divestiture and formation of Sensia joint venture |
| 586 |
|
|
| - |
| |||||||
Proceeds from sale of Liberty shares |
| 109 |
|
|
| - |
| |||||||
Net proceeds from divestitures |
| - |
|
|
| 434 |
| |||||||
Business acquisitions and investments, net of cash acquired plus debt assumed |
| (23 | ) |
|
| (292 | ) |
| (103 | ) |
|
| (33 | ) |
Repayment of finance lease obligations |
| - |
|
|
| (188 | ) | |||||||
Other |
| (283 | ) |
|
| (14 | ) |
| (105 | ) |
|
| (181 | ) |
Change in net debt before impact of changes in foreign exchange rates on net debt |
| 2,336 |
|
|
| (158 | ) | |||||||
Impact of changes in foreign exchange rates on net debt |
| 488 |
|
|
| (595 | ) | |||||||
(Increase) decrease in Net Debt |
| 147 |
|
|
| (164 | ) |
| 2,824 |
|
|
| (753 | ) |
Net Debt, Beginning of period |
| (13,274 | ) |
|
| (13,110 | ) |
| (13,880 | ) |
|
| (13,127 | ) |
Net Debt, End of period | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (11,056 | ) |
| $ | (13,880 | ) |
18
(1) | “Net |
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments. |
(3) | Includes severance payments of |
(4) | “Free cash flow” represents cash flow from operations less capital expenditures, APS investments and multiclient seismic data costs capitalized. Management believes that free cash flow is an important liquidity measure for the |
Key liquidity events during 20192021 and 20182020 included:
| • |
|
| • | Cash flow from operations was $4.7 billion in 2021 and $2.9 billion in 2020. The increase in cash flow from operations in 2021 as compared to 2020 was driven by the sharp increase in earnings excluding non-cash charges and credits and depreciation and amortization expense as a result of the improved business conditions in 2021, as well as the receipt of the $0.5 billion US federal tax refund described below and a $0.6 billion year-on-year reduction in severance payments. |
• | On January 21, 2016, the Schlumberger Board of Directors approved a $10 billion share repurchase program for Schlumberger common stock. Schlumberger had repurchased $1.0 billion of Schlumberger common stock under this program as of December 31, |
The following table summarizes the activity under this share repurchase program during 2019 and 2018:
(Stated in thousands, except per share amounts) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total Cost |
|
| Total Number |
|
| Average Price |
| |||
| of Shares |
|
| of Shares |
|
| Paid per |
| |||
| Purchased |
|
| Purchased |
|
| Share |
| |||
2019 | $ | 278,162 |
|
|
| 6,968.3 |
|
| $ | 39.92 |
|
2018 | $ | 399,786 |
|
|
| 6,495.1 |
|
| $ | 61.55 |
|
| • |
|
| • |
|
| • | During the fourth quarter of |
| • | During the |
| • | During the |
| • | During the fourth quarter of 2020, Schlumberger repaid certain finance lease obligations totaling $188 million as a result of the OneStim transaction. |
• | During the third quarter of |
• | During the second quarter of 2020, Schlumberger issued €1.0 billion of 1.375% Guaranteed Notes due 2026, $900 million of 2.650% Senior Notes due 2030 and €1.0 billion of 2.00% Guaranteed Notes due 2032. |
• | During the second quarter of 2020, Schlumberger repurchased all $600 million of its 4.20% Senior Notes due 2021 and $935 million of its 3.30% Senior Notes due 2021. Schlumberger paid a premium of approximately $40 million in connection with these repurchases. This premium was classified in Impairments & other in the Consolidated Statement of Income (Loss). See Note 3 – Charges and Credits. |
• | During the first quarter of 2020, Schlumberger issued €400 million of 0.25% Notes due 2027 and |
|
|
|
• |
|
| During the first quarter of |
|
|
19
|
|
|
|
Schlumberger’s international defined benefit pension plans were a combined 97% funded at both December 31, 2019 and December 31, 2018 based on their projected benefit obligations.
Schlumberger expects to contribute approximately $20 million to its postretirement benefit plans in 2020, subject to market and business conditions.
As of December 31, 2019,2021, Schlumberger had $2.2$3.14 billion of cash and short-term investments on hand. Schlumberger also has separateand committed credit facility agreements aggregating $6.5 billion with commercial banks aggregating $6.60 billion, all of which $4.3 billion was available and unused as of December 31, 2019. The $6.5 billion of committed credit facility agreements support commercial paper programs.unused. Schlumberger believes these amounts, arealong with cash generated by ongoing operations, will be sufficient to meet future business requirements for at least the next 12 months.
The total outstanding commercial paper borrowings were $2.2 billion as of December 31, 2019months and $2.4 billion as of December 31, 2018.
Summary of Contractual Obligationsbeyond.
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Payment Period |
| |||||||||||||
| Total |
|
| 2020 |
|
| 2021-2022 |
|
| 2023-2024 |
|
| After 2024 |
| |||||
Debt (1) | $ | 15,294 |
|
| $ | 524 |
|
| $ | 4,224 |
|
| $ | 5,149 |
|
| $ | 5,397 |
|
Interest on fixed rate debt obligations (2) |
| 2,532 |
|
|
| 429 |
|
|
| 707 |
|
|
| 500 |
|
|
| 896 |
|
Operating leases |
| 1,582 |
|
|
| 510 |
|
|
| 464 |
|
|
| 275 |
|
|
| 333 |
|
Purchase obligations (3) |
| 4,501 |
|
|
| 4,371 |
|
|
| 110 |
|
|
| 17 |
|
|
| 3 |
|
| $ | 23,909 |
|
| $ | 5,834 |
|
| $ | 5,505 |
|
| $ | 5,941 |
|
| $ | 6,629 |
|
The following table reflects the carrying amounts of Schlumberger’s debt at December 31, 2021 by year of maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| 2028 |
|
| 2029 |
|
| Thereafter |
|
| Total |
| ||||||||||
Fixed rate debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.65% Senior Notes | $ | 600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 600 |
|
3.63% Senior Notes |
| 295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 295 |
|
3.65% Senior Notes |
|
|
|
| $ | 1,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,497 |
|
4.00% Notes |
|
|
|
|
| 80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 80 |
|
3.70% Notes |
|
|
|
|
|
|
|
| $ | 55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
|
3.75% Senior Notes |
|
|
|
|
|
|
|
|
| 748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 748 |
|
0.00% Notes |
|
|
|
|
|
|
|
|
| 563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 563 |
|
1.40% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
| $ | 498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 498 |
|
4.00% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| 930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 930 |
|
1.375% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,125 |
|
1.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 679 |
|
0.25% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,013 |
|
3.90% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,457 |
|
|
|
|
|
|
|
|
|
|
| 1,457 |
|
4.30% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 846 |
|
|
|
|
|
|
| 846 |
|
2.65% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,250 |
|
|
| 1,250 |
|
0.50% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,012 |
|
|
| 1,012 |
|
2.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,118 |
|
|
| 1,118 |
|
7.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 204 |
|
|
| 204 |
|
5.95% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 113 |
|
|
| 113 |
|
5.13% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 98 |
|
|
| 98 |
|
Total fixed rate debt | $ | 895 |
|
| $ | 1,577 |
|
| $ | 1,366 |
|
| $ | 1,428 |
|
| $ | 1,804 |
|
| $ | 1,013 |
|
| $ | 1,457 |
|
| $ | 846 |
|
| $ | 3,795 |
|
| $ | 14,181 |
|
Variable rate debt |
| 14 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 14 |
|
Total | $ | 909 |
|
| $ | 1,577 |
|
| $ | 1,366 |
|
| $ | 1,428 |
|
| $ | 1,804 |
|
| $ | 1,013 |
|
| $ | 1,457 |
|
| $ | 846 |
|
| $ | 3,795 |
|
| $ | 14,195 |
|
Refer to
Interest payments on fixed rate debt obligations by year are as follows:
(Stated in millions) |
| ||
|
|
|
|
2022 | $ | 446 |
|
2023 |
| 418 |
|
2024 |
| 343 |
|
2025 |
| 317 |
|
2026 |
| 265 |
|
Thereafter |
| 941 |
|
| $ | 2,730 |
|
See Note 17,13, Pension and Other Benefit Plans,Leases of the Consolidated Financial Statements for details regarding Schlumberger’s pension and other postretirement benefitlease obligations.
As discussed in Note 13, Income Taxes, of the Consolidated Financial Statements, included in the Schlumberger Consolidated Balance Sheet at December 31, 2019 is approximately $1.3 billion of liabilities associated with uncertain tax positions in the over 100 tax jurisdictions in which Schlumberger conducts business. Due to the uncertain and complex application of tax regulations, combined with the difficulty in predicting when tax audits throughout the world may be concluded, Schlumberger cannot make reliable estimates of the timing of cash outflows relating to these liabilities.
Schlumberger has outstanding letters of credit/guarantees that relate to business performance bonds, custom/excise tax commitments, facility lease/rental obligations, etc. These were entered into in the ordinary course of business and are customary practices in the various countries where Schlumberger operates.
20
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires Schlumberger to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. The following accounting policies involve “critical accounting estimates” because they are particularly dependent on estimates and assumptions made by Schlumberger about matters that are inherently uncertain.
Schlumberger bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Allowance for Doubtful Accounts
Schlumberger maintains an allowance for doubtful accounts in order to record accounts receivable at their net realizable value. Judgment is involved in recording and making adjustments to this reserve. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved, or if the financial condition of Schlumberger’s customers were to deteriorate resulting in an impairment of their ability to make payments.
As a large multinational company with a long history of operating in a cyclical industry, Schlumberger has extensive experience in working with its customers during difficult times to manage its accounts receivable. During weak economic environments or when there is an extended period of weakness in oil and gas prices, Schlumberger typically experiences delays in the payment of its receivables. However, except for a $469 million accounts receivable write-off during the fourth quarter of 2017 as a result of the political and economic conditionscondition in Venezuela, Schlumberger has not historically had material write-offs due to uncollectible accounts receivable over the recent industry downturn.receivable. Schlumberger generates revenue in more than 120 countries. As of December 31, 2019, only three2021, five of those countries individually accounted for greater than 5% of Schlumberger’s net receivablesaccounts receivable balance, of which only one (the United States) accounted for greater than 10% of such receivables.
At times in recent periods, Schlumberger has experienced delays in payments from its primary customer in Mexico. Included in Receivables, less allowance for doubtful accounts in the Consolidated Balance Sheet as of December 30, 2021 is approximately $0.5 billion of receivables relating to Mexico at December 31, 2021 ($0.7 billion at December 31, 2020). Schlumberger’s receivables from its primary customer in Mexico are not in dispute and Schlumberger has not historically had any material write-offs due to uncollectible accounts receivable relating to this customer.
Goodwill, Intangible Assets and Long-Lived Assets
Schlumberger records the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill. The goodwill relating to each of Schlumberger’s reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred.
Under generally accepted accounting principles, Schlumberger has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount. If, after assessing the totality of events or circumstances, Schlumberger determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing. However, if Schlumberger concludes otherwise, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
Schlumberger has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.
Schlumberger elected to perform the qualitative assessment described above for purposes of its annual goodwill impairment test in 2021. Based on this assessment, Schlumberger concluded it was more likely than not that the fair value of each of its reporting units was significantly greater than its carrying amount. Accordingly, no further testing was required.
During 2020 and 2019, Schlumberger recorded angoodwill impairment charges of $3.1 billion and $8.8 billion goodwilland intangible asset impairment charge.charges of $3.3 billion and $1.1 billion, respectively. Refer to Note 3 to the Consolidated Financial Statements for details regarding the facts and circumstances that led to this impairment and how the fair value of each reporting unit was estimated, including the significant assumptions used and other details.
Long-lived assets, including fixed assets, intangible assets and investments in APS projects, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual
disposition. If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value, Schlumberger could be required to recognize impairment charges in the future.
21
Income Taxes
Schlumberger conducts business in more than 100 tax jurisdictions, a number of which have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audits by the tax authorities. These audits may result in assessments for additional taxes that are resolved with the authorities or, potentially, through the courts. Schlumberger recognizes the impact of a tax position in its financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits. Estimates of these tax liabilities are judgmental and are made based upon prior experience, and are updated in light of changes in facts and circumstances. However, due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities that could be materially different from these estimates. In such an event, Schlumberger will record additional tax expense or tax benefit in the period in which such resolution occurs.
Revenue Recognition for Certain Long-livedLong-term Construction-type Contracts
Schlumberger recognizes revenue for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Under this method, revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. Approximately 5%6% of Schlumberger’s revenue in 2021, and 5% in each of 20192020 and 2018,2019, respectively, was recognized under this method.
The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Profits are recognized based on the estimated project profit multiplied by the percentage complete. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs are often required as work progresses. Any expected losses on a project are recorded in full in the period in which they become probable.
Multiclient Seismic Data
Schlumberger capitalizes the costs associated with obtaining multiclient seismic data. The carrying value of the multiclient seismic data library at December 31, 2019 and 2018 was $568 million and $601 million, respectively. Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that Schlumberger expects to receive from the sales of such data. However, under no circumstances will an individual survey carry a net book value greater than a 4-year, straight-line amortized value.
The carrying value of surveys is reviewed for impairment annually as well as when an event or change in circumstance indicates an impairment may have occurred. Adjustments to the carrying value are recorded when it is determined that estimated future revenues, which involve significant judgment on the part of Schlumberger, would not be sufficient to recover the carrying value of the surveys. Significant adverse changes in Schlumberger’s estimated future cash flows could result in impairment charges in a future period. For purposes of performing the annual impairment test of the multiclient library, surveys are primarily analyzed for impairment on a survey-by-survey basis.
Pension and Postretirement Benefits
Schlumberger’s pension and postretirement benefit obligations are described in detail in Note 1716 to the Consolidated Financial Statements. The obligations and related costs are calculated using actuarial concepts, which include critical assumptions related to the discount rate, expected rate of return on plan assets and medical cost trend rates. These assumptions are important elements of expense and/or liability measurement and are updated on an annual basis, or upon the occurrence of significant events.
The discount rate that Schlumberger uses reflects the prevailing market rate of a portfolio of high-quality debt instruments with maturities matching the expected timing of payment of the related benefit obligations. The following summarizes the discount rates utilized by Schlumberger for its various pension and postretirement benefit plans:
| • | The discount rate utilized to determine the liability for Schlumberger’s United States pension plans and postretirement medical plan was |
• |
• |
22
• |
The expected rate of return for Schlumberger’s retirement benefit plans represents the average rate of return expected to be earned on plan assets over the period that benefits included in the benefit obligation are expected to be paid, with consideration given to the distribution of investments by asset class and historical rates of return for each individual asset class. The weighted average expected rate of return on plan assets for the United States pension plans was 6.60% in 2019both 2021 and 7.25% in 2018.2020. The weighted average expected rate of return on plan assets for the international pension plans was 7.22%6.73% in 20192021 and 7.40%6.71% in 2018.2020. A lower expected rate of return would increase pension expense.
Schlumberger’s medical cost trend rate assumptions are developed based on historical cost data, the near-term outlook and an assessment of likely long-term trends. The overall medical cost trend rate assumption utilized to determine the 2019 postretirement medical expense and the postretirement medical liability at December 31, 2019 was 7.50%, graded to 4.5% over the next twelve years.
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for Schlumberger’s United States and international pension plans:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||
|
|
|
|
|
| |||||
|
|
| Effect on |
|
|
| Effect on |
| ||
| Effect on 2019 |
| Dec. 31, 2019 |
| Effect on 2021 |
| Dec. 31, 2021 |
| ||
Change in Assumption | Pretax Expense |
| Liability |
| Pretax Expense |
| Obligation |
| ||
25 basis point decrease in discount rate | +$35 |
| +$567 |
| +$41 |
| +$604 |
| ||
25 basis point increase in discount rate | -$31 |
| -$535 |
| -$38 |
| -$568 |
| ||
25 basis point decrease in expected return on plan assets | +$30 |
|
| - |
| +$34 |
|
| - |
|
25 basis point increase in expected return on plan assets | -$29 |
|
| - |
| -$34 |
|
| - |
|
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for Schlumberger’s United States postretirement medical plans:
(Stated in millions) | |||
|
|
| |
Effect on | |||
| Effect on |
| Dec. 31, |
Change in Assumption | Pretax Expense |
|
|
25 basis point decrease in discount rate | - |
| +$ |
25 basis point increase in discount rate | - |
| -$ |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Schlumberger is subject to market risks primarily associated with changes in foreign currency exchange rates and interest rates.
As a multinational company, Schlumberger generates revenue in more than 120 countries. Schlumberger’s functional currency is primarily the US dollar. Approximately 78%70% of Schlumberger’s revenue in 20192021 was denominated in US dollars. However, outside the United States, a significant portion of Schlumberger’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens in relation to the foreign currencies of the countries in which Schlumberger conducts business, the US dollar-reported expenses will increase.
Schlumberger maintains a foreign-currency risk management strategy that uses derivative instruments to manage the impact of changes in foreign exchange rates on its earnings. Schlumberger enters into foreign currency forward contracts to provide a hedge against currency fluctuations on certain monetary assets and liabilities, and certain expenses denominated in currencies other than the functional currency.
A 10% appreciation in the US dollar from the December 31, 20192021 market rates would increase the unrealized value of Schlumberger’s forward contracts by $5 million. Conversely, a 10% depreciation in the US dollar from the December 31, 2021 market rates would decrease the unrealized value of Schlumberger’s forward contracts by $8 million. Conversely, a 10% depreciation in the US dollar from the December 31, 2019 market rates would increase the unrealized value of Schlumberger’s forward contracts by $9 million. In either scenario, the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future earnings.
23
At December 31, 2019,2021, contracts were outstanding for the US dollar equivalent of $7.7 billion in various foreign currencies, of which $3.0$6.0 billion related to hedges of debt balances denominated in currencies other than the functional currency.
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. At December 31, 2019, Schlumberger had fixed rate debt aggregating approximately $12.9 billion and variable rate debt aggregating approximately $2.4 billion, before considering the effects of cross currency swaps.
Schlumberger’s exposure to interest rate risk associated with its debt is also partially mitigated by its investment portfolio. Short-term investments, which totaled approximately $1.0 billion at December 31, 2019, are comprised primarily of money market funds, time deposits, certificates of deposit, commercial paper, bonds and notes, substantially all of which are denominated in US dollars. The average return on investments was 3.0% in 2019.
The following table reflects the carrying amounts of Schlumberger’s debt at December 31, 2019 by year of maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
| 2020 |
|
| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| Thereafter |
|
| Total |
| ||||||||||
Fixed rate debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.20% Senior Notes | $ | 499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 499 |
|
3.30% Senior Notes |
|
|
|
| $ | 1,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,597 |
|
4.20% Senior Notes |
|
|
|
|
| 600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 600 |
|
2.40% Senior Notes |
|
|
|
|
|
|
|
| $ | 998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 998 |
|
2.65% Senior Notes |
|
|
|
|
|
|
|
|
| 598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 598 |
|
3.63% Senior Notes |
|
|
|
|
|
|
|
|
| 294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 294 |
|
3.65% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,495 |
|
4.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| 81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 81 |
|
3.75% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 746 |
|
0.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 551 |
|
3.70% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 55 |
|
4.00% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 929 |
|
1.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 665 |
|
|
|
|
|
|
|
|
|
|
| 665 |
|
0.25% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 550 |
|
|
|
|
|
|
| 550 |
|
3.90% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,444 |
|
|
| 1,444 |
|
4.30% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 845 |
|
|
| 845 |
|
0.50% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 544 |
|
|
| 544 |
|
7.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 208 |
|
|
| 208 |
|
5.95% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 114 |
|
|
| 114 |
|
5.13% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 99 |
|
|
| 99 |
|
Total fixed rate debt | $ | 499 |
|
| $ | 2,197 |
|
| $ | 1,890 |
|
| $ | 1,576 |
|
| $ | 1,352 |
|
| $ | 929 |
|
| $ | 665 |
|
| $ | 550 |
|
| $ | 3,254 |
|
| $ | 12,912 |
|
Variable rate debt |
| 25 |
|
|
| 135 |
|
|
| - |
|
|
| 347 |
|
|
| 1,875 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,382 |
|
Total | $ | 524 |
|
| $ | 2,332 |
|
| $ | 1,890 |
|
| $ | 1,923 |
|
| $ | 3,227 |
|
| $ | 929 |
|
| $ | 665 |
|
| $ | 550 |
|
| $ | 3,254 |
|
| $ | 15,294 |
|
The fair market value of the outstanding fixed rate debt was approximately $13.4 billion as of December 31, 2019. The weighted average interest rate on the variable rate debt as of December 31, 2019 was 2.3%.
Schlumberger does not enter into derivatives for speculative purposes.
Forward-lookingForward-Looking Statements
This Form 10-K, as well as other statements we make, containcontains “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts,facts. Such statements often contain words such as our“expect,” “may,” “can,” “believe,” “predict,” “plan,” “potential,” “projected,” “projections,” “forecast,” “estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,” “think,” “should,” “could,” “would,” “will,” “see,” “likely,” and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about Schlumberger’s financial and performance targets and other forecasts or expectations regarding, or dependent on, its business outlook; growth for Schlumberger as a whole and for each of its segmentsDivisions (and for specified products orbusiness lines, geographic areas or technologies within each segment)Division); oil and natural gas demand and production growth; oil and natural gas prices; forecasts or expectations regarding energy transition and global climate change; improvements in operating procedures and technology, including our transformation program;technology; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger, including digital and “fit for basin,” as well as the strategies of Schlumberger’s customers; ourSchlumberger’s effective tax rate; Schlumberger’s APS projects, joint ventures, and other alliances; Schlumberger’s response to the COVID-19 pandemic and its preparedness for other widespread health emergencies; access to raw materials; future global economic and geopolitical conditions; future liquidity; and future results of operations.
24
operations, such as margin levels. These statements are subject to risks and uncertainties, including, but not limited to, changing 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; the results of operations and financial condition of Schlumberger’s customers and suppliers; Schlumberger’s inability to achieve its financial and performance targets and other forecasts and expectations; Schlumberger’s inability to achieve net-zero carbon emissions goals or interim emissions reduction goals; general economic, politicalgeopolitical and business conditions in key regions of the world; foreign currency risk; pricing pressure; inflation; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays or cancellations; challenges in Schlumberger’s supply chain; production declines; Schlumberger’s inability to recognize efficiencies and other intended benefits from its business strategies and initiatives, such as digital or Schlumberger New Energy, as well as its cost reduction strategies; 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 competitiveness of alternative energy sources or product substitutes; and other risks and uncertainties detailed in this Form 10-K and other filings that we make with the SEC. 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 results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-K regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this Form 10-K are made as of January 26, 2022, and Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
25
Item 8. Financial Statements and Supplementary Data.
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (LOSS)
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions, except per share amounts) |
| |||||||||
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services | $ | 24,358 |
|
| $ | 24,296 |
|
| $ | 21,927 |
| $ | 15,602 |
|
| $ | 16,533 |
|
| $ | 24,358 |
|
Product sales |
| 8,559 |
|
|
| 8,519 |
|
|
| 8,513 |
|
| 7,327 |
|
|
| 7,068 |
|
|
| 8,559 |
|
Total Revenue |
| 32,917 |
|
|
| 32,815 |
|
|
| 30,440 |
|
| 22,929 |
|
|
| 23,601 |
|
|
| 32,917 |
|
Interest & other income |
| 86 |
|
|
| 149 |
|
|
| 224 |
|
| 148 |
|
|
| 163 |
|
|
| 86 |
|
Gain on sale of business |
| - |
|
|
| 215 |
|
|
| - |
| |||||||||||
Gain on formation of Sensia joint venture |
| 247 |
|
|
| - |
|
|
| - |
| |||||||||||
Gains on sales of businesses |
| - |
|
|
| 104 |
|
|
| 247 |
| |||||||||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
| 20,828 |
|
|
| 20,618 |
|
|
| 18,206 |
|
| 13,129 |
|
|
| 14,675 |
|
|
| 20,828 |
|
Cost of sales |
| 7,892 |
|
|
| 7,860 |
|
|
| 8,337 |
|
| 6,142 |
|
|
| 6,325 |
|
|
| 7,892 |
|
Research & engineering |
| 717 |
|
|
| 702 |
|
|
| 787 |
|
| 554 |
|
|
| 580 |
|
|
| 717 |
|
General & administrative |
| 474 |
|
|
| 444 |
|
|
| 432 |
|
| 339 |
|
|
| 365 |
|
|
| 474 |
|
Impairments & other |
| 13,148 |
|
|
| 356 |
|
|
| 3,211 |
|
| - |
|
|
| 12,658 |
|
|
| 13,148 |
|
Merger & integration |
| - |
|
|
| - |
|
|
| 308 |
| |||||||||||
Interest |
| 609 |
|
|
| 575 |
|
|
| 566 |
|
| 539 |
|
|
| 563 |
|
|
| 609 |
|
Income (loss) before taxes |
| (10,418 | ) |
|
| 2,624 |
|
|
| (1,183 | ) |
| 2,374 |
|
|
| (11,298 | ) |
|
| (10,418 | ) |
Tax expense (benefit) |
| (311 | ) |
|
| 447 |
|
|
| 330 |
|
| 446 |
|
|
| (812 | ) |
|
| (311 | ) |
Net income (loss) |
| (10,107 | ) |
|
| 2,177 |
|
|
| (1,513 | ) |
| 1,928 |
|
|
| (10,486 | ) |
|
| (10,107 | ) |
Net income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Net income attributable to noncontrolling interests |
| 47 |
|
|
| 32 |
|
|
| 30 |
| |||||||||||
Net income (loss) attributable to Schlumberger | $ | (10,137 | ) |
| $ | 2,138 |
|
| $ | (1,505 | ) | $ | 1,881 |
|
| $ | (10,518 | ) |
| $ | (10,137 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.54 |
|
| $ | (1.08 | ) | $ | 1.34 |
|
| $ | (7.57 | ) |
| $ | (7.32 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.53 |
|
| $ | (1.08 | ) | $ | 1.32 |
|
| $ | (7.57 | ) |
| $ | (7.32 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| 1,385 |
|
|
| 1,385 |
|
|
| 1,388 |
|
| 1,400 |
|
|
| 1,390 |
|
|
| 1,385 |
|
Assuming dilution |
| 1,385 |
|
|
| 1,393 |
|
|
| 1,388 |
|
| 1,427 |
|
|
| 1,390 |
|
|
| 1,385 |
|
See the Notes to Consolidated Financial Statements
26
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | 1,928 |
|
| $ | (10,486 | ) |
| $ | (10,107 | ) |
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change arising during the period |
| 67 |
|
|
| (191 | ) |
|
| (3 | ) |
| 83 |
|
|
| (239 | ) |
|
| 67 |
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Unrealized loss arising during the period |
| - |
|
|
| (11 | ) |
|
| (8 | ) | |||||||||||
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on cash flow hedges |
| (32 | ) |
|
| (16 | ) |
|
| 22 |
| |||||||||||
Reclassification to net income (loss) of net realized loss |
| 10 |
|
|
| 1 |
|
|
| - |
| |||||||||||
Net loss on cash flow hedges |
| (12 | ) |
|
| (90 | ) |
|
| (32 | ) | |||||||||||
Reclassification to net income (loss) of net realized (income) loss |
| (3 | ) |
|
| 54 |
|
|
| 10 |
| |||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gain (loss) arising during the period |
| 127 |
|
|
| (186 | ) |
|
| 134 |
|
| 1,075 |
|
|
| (247 | ) |
|
| 127 |
|
Amortization to net income (loss) of net actuarial loss |
| 94 |
|
|
| 187 |
|
|
| 159 |
|
| 271 |
|
|
| 200 |
|
|
| 94 |
|
Amortization to net income (loss) of net prior service (credit) cost |
| (11 | ) |
|
| (5 | ) |
|
| 80 |
|
| (23 | ) |
|
| (17 | ) |
|
| (11 | ) |
Impact of curtailment |
| - |
|
|
| (69 | ) |
|
| - |
| |||||||||||
Income taxes on pension and other postretirement benefit plans |
| (71 | ) |
|
| (18 | ) |
|
| (15 | ) |
| (74 | ) |
|
| (38 | ) |
|
| (71 | ) |
Other |
| (3 | ) |
|
| - |
|
|
| - |
| |||||||||||
Comprehensive income (loss) |
| (9,923 | ) |
|
| 1,938 |
|
|
| (1,144 | ) |
| 3,242 |
|
|
| (10,932 | ) |
|
| (9,923 | ) |
Comprehensive income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Comprehensive income attributable to noncontrolling interests |
| 47 |
|
|
| 32 |
|
|
| 30 |
| |||||||||||
Comprehensive income (loss) attributable to Schlumberger | $ | (9,953 | ) |
| $ | 1,899 |
|
| $ | (1,136 | ) | $ | 3,195 |
|
| $ | (10,964 | ) |
| $ | (9,953 | ) |
See the Notes to Consolidated Financial Statements
27
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| |||||||||||
|
|
|
|
|
|
|
| ||||||||
December 31, | 2019 |
|
| 2018 |
|
| 2021 |
|
| 2020 |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,757 |
|
| $ | 844 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
|
| 1,382 |
|
|
| 2,162 |
|
Receivables less allowance for doubtful accounts (2019 - $255; 2018 - $249) |
| 7,747 |
|
|
| 7,881 |
| ||||||||
Receivables less allowance for doubtful accounts (2021 - $319; 2020 - $301) |
|
| 5,315 |
|
|
| 5,247 |
| |||||||
Inventories |
| 4,130 |
|
|
| 4,010 |
|
|
| 3,272 |
|
|
| 3,354 |
|
Other current assets |
| 1,486 |
|
|
| 1,063 |
|
|
| 928 |
|
|
| 1,312 |
|
|
| 15,530 |
|
|
| 15,731 |
|
|
| 12,654 |
|
|
| 12,919 |
|
Investments in Affiliated Companies |
| 1,565 |
|
|
| 1,538 |
|
|
| 2,044 |
|
|
| 2,061 |
|
Fixed Assets less accumulated depreciation |
| 9,270 |
|
|
| 11,679 |
|
|
| 6,429 |
|
|
| 6,826 |
|
Multiclient Seismic Data |
| 568 |
|
|
| 601 |
| ||||||||
Goodwill |
| 16,042 |
|
|
| 24,931 |
|
|
| 12,990 |
|
|
| 12,980 |
|
Intangible Assets |
| 7,089 |
|
|
| 8,727 |
|
|
| 3,211 |
|
|
| 3,455 |
|
Other Assets |
| 6,248 |
|
|
| 7,300 |
|
|
| 4,183 |
|
|
| 4,193 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 41,511 |
|
| $ | 42,434 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| 10,663 |
|
|
| 10,223 |
|
|
| 8,382 |
|
|
| 8,442 |
|
Estimated liability for taxes on income |
| 1,209 |
|
|
| 1,155 |
|
|
| 879 |
|
|
| 1,015 |
|
Short-term borrowings and current portion of long-term debt |
| 524 |
|
|
| 1,407 |
|
|
| 909 |
|
|
| 850 |
|
Dividends payable |
| 702 |
|
|
| 701 |
|
|
| 189 |
|
|
| 184 |
|
|
| 13,098 |
|
|
| 13,486 |
|
|
| 10,359 |
|
|
| 10,491 |
|
Long-term Debt |
| 14,770 |
|
|
| 14,644 |
|
|
| 13,286 |
|
|
| 16,036 |
|
Postretirement Benefits |
| 967 |
|
|
| 1,153 |
|
|
| 231 |
|
|
| 1,049 |
|
Deferred Taxes |
| 491 |
|
|
| 1,441 |
|
|
| 94 |
|
|
| 19 |
|
Other Liabilities |
| 2,810 |
|
|
| 3,197 |
|
|
| 2,255 |
|
|
| 2,350 |
|
|
| 32,136 |
|
|
| 33,921 |
|
|
| 26,225 |
|
|
| 29,945 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
| 13,078 |
|
|
| 13,132 |
|
|
| 12,608 |
|
|
| 12,970 |
|
Treasury stock |
| (3,631 | ) |
|
| (4,006 | ) |
|
| (2,233 | ) |
|
| (3,033 | ) |
Retained earnings |
| 18,751 |
|
|
| 31,658 |
|
|
| 8,199 |
|
|
| 7,018 |
|
Accumulated other comprehensive loss |
| (4,438 | ) |
|
| (4,622 | ) |
|
| (3,570 | ) |
|
| (4,884 | ) |
Schlumberger stockholders' equity |
| 23,760 |
|
|
| 36,162 |
|
|
| 15,004 |
|
|
| 12,071 |
|
Noncontrolling interests |
| 416 |
|
|
| 424 |
|
|
| 282 |
|
|
| 418 |
|
|
| 24,176 |
|
|
| 36,586 |
|
|
| 15,286 |
|
|
| 12,489 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 41,511 |
|
| $ | 42,434 |
|
See the Notes to Consolidated Financial Statements
28
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | 1,928 |
|
| $ | (10,486 | ) |
| $ | (10,107 | ) |
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairments and other charges |
| 13,148 |
|
|
| 356 |
|
|
| 3,764 |
| |||||||||||
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| - |
|
|
| - |
| |||||||||||
Gain on sale of WesternGeco marine seismic acquisition business |
| - |
|
|
| (215 | ) |
|
| - |
| |||||||||||
Impairments and other charges and credits |
| (65 | ) |
|
| 12,515 |
|
|
| 12,901 |
| |||||||||||
Depreciation and amortization (1) |
| 3,589 |
|
|
| 3,556 |
|
|
| 3,837 |
|
| 2,120 |
|
|
| 2,566 |
|
|
| 3,589 |
|
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (31 | ) |
|
| (1,248 | ) |
|
| (1,011 | ) |
Stock-based compensation expense |
| 405 |
|
|
| 345 |
|
|
| 343 |
|
| 324 |
|
|
| 397 |
|
|
| 405 |
|
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) |
|
| (133 | ) | |||||||||||
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
|
| (56 | ) |
| 10 |
|
|
| (28 | ) |
|
| 6 |
|
Change in assets and liabilities: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in receivables |
| 142 |
|
|
| 430 |
|
|
| (124 | ) | |||||||||||
(Increase) decrease in inventories |
| (314 | ) |
|
| (10 | ) |
|
| 108 |
| |||||||||||
(Increase) decrease in other current assets |
| (68 | ) |
|
| 121 |
|
|
| (174 | ) | |||||||||||
Decrease (increase) in other assets |
| 22 |
|
|
| (58 | ) |
|
| 402 |
| |||||||||||
Decrease in accounts payable and accrued liabilities |
| (161 | ) |
|
| (824 | ) |
|
| (737 | ) | |||||||||||
(Increase) decrease in receivables |
| (36 | ) |
|
| 2,345 |
|
|
| 142 |
| |||||||||||
Decrease (increase) in inventories |
| 75 |
|
|
| 86 |
|
|
| (314 | ) | |||||||||||
Decrease (increase) in other current assets |
| 387 |
|
|
| 267 |
|
|
| (68 | ) | |||||||||||
(Increase) decrease in other assets |
| (2 | ) |
|
| (25 | ) |
|
| 22 |
| |||||||||||
Increase (decrease) in accounts payable and accrued liabilities |
| 160 |
|
|
| (3,330 | ) |
|
| (161 | ) | |||||||||||
(Decrease) increase in estimated liability for taxes on income |
| 6 |
|
|
| (103 | ) |
|
| 115 |
|
| (154 | ) |
|
| (201 | ) |
|
| 6 |
|
(Decrease) increase in other liabilities |
| (52 | ) |
|
| 69 |
|
|
| (28 | ) |
| (26 | ) |
|
| 19 |
|
|
| (52 | ) |
Other |
| 98 |
|
|
| 245 |
|
|
| 119 |
|
| (39 | ) |
|
| 67 |
|
|
| 73 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 5,431 |
|
|
| 5,713 |
|
|
| 5,663 |
|
| 4,651 |
|
|
| 2,944 |
|
|
| 5,431 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
|
| (2,107 | ) |
| (1,141 | ) |
|
| (1,116 | ) |
|
| (1,724 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
|
| (1,609 | ) |
| (474 | ) |
|
| (303 | ) |
|
| (781 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) |
|
| (276 | ) |
| (39 | ) |
|
| (101 | ) |
|
| (231 | ) |
Net proceeds from divestitures |
| - |
|
|
| 434 |
|
|
| 348 |
| |||||||||||
Proceeds from sale of Liberty shares |
| 109 |
|
|
| - |
|
|
| - |
| |||||||||||
Proceeds from formation of Sensia joint venture |
| - |
|
|
| - |
|
|
| 238 |
| |||||||||||
Business acquisitions and investments, net of cash acquired |
| (23 | ) |
|
| (292 | ) |
|
| (847 | ) |
| (103 | ) |
|
| (33 | ) |
|
| (23 | ) |
Net proceeds from divestiture and formation of Sensia joint venture |
| 586 |
|
|
| - |
|
|
| - |
| |||||||||||
Proceeds from sale of WesternGeco marine seismic business, net of cash divested |
| - |
|
|
| 579 |
|
|
| - |
| |||||||||||
Sale of investments, net |
| 317 |
|
|
| 1,943 |
|
|
| 3,277 |
| |||||||||||
Sale (purchase) of short-term investments, net |
| 787 |
|
|
| (1,141 | ) |
|
| 317 |
| |||||||||||
Other |
| (155 | ) |
|
| (29 | ) |
|
| (217 | ) |
| (58 | ) |
|
| (93 | ) |
|
| (155 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
| (2,011 | ) |
|
| (1,040 | ) |
|
| (1,779 | ) |
| (919 | ) |
|
| (2,353 | ) |
|
| (2,011 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
|
| (2,778 | ) |
| (699 | ) |
|
| (1,734 | ) |
|
| (2,769 | ) |
Proceeds from employee stock purchase plan |
| 196 |
|
|
| 227 |
|
|
| 212 |
|
| 137 |
|
|
| 146 |
|
|
| 196 |
|
Proceeds from exercise of stock options |
| 23 |
|
|
| 34 |
|
|
| 85 |
|
| - |
|
|
| - |
|
|
| 23 |
|
Stock repurchase program |
| (278 | ) |
|
| (400 | ) |
|
| (969 | ) |
| - |
|
|
| (26 | ) |
|
| (278 | ) |
Proceeds from issuance of long-term debt |
| 4,004 |
|
|
| 898 |
|
|
| 2,371 |
|
| 34 |
|
|
| 5,837 |
|
|
| 4,004 |
|
Repayment of long-term debt |
| (4,799 | ) |
|
| (2,861 | ) |
|
| (2,961 | ) |
| (2,076 | ) |
|
| (4,975 | ) |
|
| (4,799 | ) |
Net decrease in short-term borrowings |
| (44 | ) |
|
| (85 | ) |
|
| (1,022 | ) | |||||||||||
Net (decrease) increase in short-term borrowings |
| (105 | ) |
|
| 156 |
|
|
| (44 | ) | |||||||||||
Repayment of finance lease-related obligations |
| - |
|
|
| (188 | ) |
|
| - |
| |||||||||||
Other |
| (51 | ) |
|
| (63 | ) |
|
| 29 |
|
| (115 | ) |
|
| (89 | ) |
|
| (51 | ) |
NET CASH USED IN FINANCING ACTIVITIES |
| (3,718 | ) |
|
| (5,020 | ) |
|
| (5,033 | ) |
| (2,824 | ) |
|
| (873 | ) |
|
| (3,718 | ) |
Net decrease in cash before translation effect |
| (298 | ) |
|
| (347 | ) |
|
| (1,149 | ) | |||||||||||
Net increase (decrease) in cash before translation effect |
| 908 |
|
|
| (282 | ) |
|
| (298 | ) | |||||||||||
Translation effect on cash |
| 2 |
|
|
| (19 | ) |
|
| 19 |
|
| 5 |
|
|
| (11 | ) |
|
| 2 |
|
Cash, beginning of period |
| 1,433 |
|
|
| 1,799 |
|
|
| 2,929 |
|
| 844 |
|
|
| 1,137 |
|
|
| 1,433 |
|
Cash, end of period | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,799 |
| $ | 1,757 |
|
| $ | 844 |
|
| $ | 1,137 |
|
(1) | Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments. |
(2) | Net of the effect of business acquisitions and divestitures. |
See the Notes to Consolidated Financial Statements
29
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
| (Stated in millions) |
|
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
|
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| |||||||||||
| Common Stock |
|
| Retained |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
|
| Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| ||||||||||||||||
| Issued |
|
| In Treasury |
|
| Earnings |
|
| Loss |
|
| Interests |
|
| Total |
| ||||||||||||||||||||||||||||||||
Balance, January 1, 2017 | $ | 12,801 |
|
| $ | (3,550 | ) |
| $ | 36,470 |
|
| $ | (4,643 | ) |
| $ | 451 |
|
| $ | 41,529 |
| ||||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| (1,505 | ) |
|
|
|
|
|
| (8 | ) |
|
| (1,513 | ) | ||||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (3 | ) |
|
|
|
|
|
| (3 | ) | ||||||||||||||||||||||||||
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| (8 | ) |
|
|
|
|
|
| (8 | ) | ||||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| 22 |
|
|
|
|
|
|
| 22 |
| ||||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 358 |
|
|
|
|
|
|
| 358 |
| ||||||||||||||||||||||||||
Shares sold to optionees, less shares exchanged |
| (10 | ) |
|
| 95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 85 |
| ||||||||||||||||||||||||||
Vesting of restricted stock |
| (110 | ) |
|
| 110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
| (52 | ) |
|
| 264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 212 |
| ||||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
| (969 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (969 | ) | ||||||||||||||||||||||||||
Stock-based compensation expense |
| 343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 343 |
| ||||||||||||||||||||||||||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,775 | ) |
|
|
|
|
|
|
|
|
|
| (2,775 | ) | ||||||||||||||||||||||||||
Other |
| 3 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| (24 | ) |
|
| (20 | ) | ||||||||||||||||||||||||||
Balance, December 31, 2017 |
| 12,975 |
|
|
| (4,049 | ) |
|
| 32,190 |
|
|
| (4,274 | ) |
|
| 419 |
|
|
| 37,261 |
| ||||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
| 2,138 |
|
|
|
|
|
|
| 39 |
|
|
| 2,177 |
| ||||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| (191 | ) |
|
| (5 | ) |
|
| (196 | ) | ||||||||||||||||||||||||||
Changes in unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
| (11 | ) |
|
|
|
|
|
| (11 | ) | ||||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| (15 | ) |
|
|
|
|
|
| (15 | ) | ||||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) | ||||||||||||||||||||||||||
Shares sold to optionees, less shares exchanged |
| (41 | ) |
|
| 75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34 |
| ||||||||||||||||||||||||||
Vesting of restricted stock |
| (72 | ) |
|
| 72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
| (67 | ) |
|
| 294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 227 |
| ||||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
| (400 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (400 | ) | ||||||||||||||||||||||||||
Stock-based compensation expense |
| 345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 345 |
| ||||||||||||||||||||||||||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) | ||||||||||||||||||||||||||
Stranded tax related to US pension |
|
|
|
|
|
|
|
|
| 109 |
|
|
| (109 | ) |
|
|
|
|
|
| - |
| ||||||||||||||||||||||||||
Other |
| (8 | ) |
|
| 2 |
|
|
| (9 | ) |
|
|
|
|
|
| (29 | ) |
|
| (44 | ) | ||||||||||||||||||||||||||
Balance, December 31, 2018 |
| 13,132 |
|
|
| (4,006 | ) |
|
| 31,658 |
|
|
| (4,622 | ) |
|
| 424 |
|
|
| 36,586 |
| ||||||||||||||||||||||||||
Balance, January 1, 2019 |
| $ | 13,132 |
|
| $ | (4,006 | ) |
| $ | 31,658 |
|
| $ | (4,622 | ) |
| $ | 424 |
|
| $ | 36,586 |
| |||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| (10,137 | ) |
|
|
|
|
|
| 30 |
|
|
| (10,107 | ) |
|
|
|
|
|
|
|
|
|
| (10,137 | ) |
|
|
|
|
|
| 30 |
|
|
| (10,107 | ) | ||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
|
| (1 | ) |
|
| 66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
|
| (1 | ) |
|
| 66 |
| ||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) | ||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
| 139 |
| ||
Shares sold to optionees, less shares exchanged |
| (26 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
|
|
| (26 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
| ||
Vesting of restricted stock |
| (155 | ) |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| (155 | ) |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||
Shares issued under employee stock purchase plan |
| (249 | ) |
|
| 445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 196 |
|
|
| (249 | ) |
|
| 445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 196 |
| ||
Stock repurchase program |
|
|
|
|
| (278 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (278 | ) |
|
|
|
|
|
| (278 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (278 | ) | ||
Stock-based compensation expense |
| 405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 405 |
|
|
| 405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 405 |
| ||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) | ||
Other |
| (29 | ) |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (62 | ) |
|
| (29 | ) |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (62 | ) | ||
Balance, December 31, 2019 | $ | 13,078 |
|
| $ | (3,631 | ) |
| $ | 18,751 |
|
| $ | (4,438 | ) |
| $ | 416 |
|
| $ | 24,176 |
|
|
| 13,078 |
|
|
| (3,631 | ) |
|
| 18,751 |
|
|
| (4,438 | ) |
|
| 416 |
|
|
| 24,176 |
| ||
Net loss |
|
|
|
|
|
|
|
|
|
| (10,518 | ) |
|
|
|
|
|
| 32 |
|
|
| (10,486 | ) | |||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (239 | ) |
|
| 7 |
|
|
| (232 | ) | |||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36 | ) |
|
|
|
|
|
| (36 | ) | |||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (171 | ) |
|
|
|
|
|
| (171 | ) | |||||||||||||||||||||||||
Vesting of restricted stock |
|
| (173 | ) |
|
| 173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| |||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
|
| (298 | ) |
|
| 444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 146 |
| |||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
|
| (26 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (26 | ) | |||||||||||||||||||||||||
Stock-based compensation expense |
|
| 397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 397 |
| |||||||||||||||||||||||||
Dividends declared ($0.875 per share) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) | |||||||||||||||||||||||||
Other |
|
| (34 | ) |
|
| 7 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (64 | ) | |||||||||||||||||||||||||
Balance, December 31, 2020 |
|
| 12,970 |
|
|
| (3,033 | ) |
|
| 7,018 |
|
|
| (4,884 | ) |
|
| 418 |
|
|
| 12,489 |
| |||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
| 1,881 |
|
|
|
|
|
|
| 47 |
|
|
| 1,928 |
| |||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 83 |
|
|
| (2 | ) |
|
| 81 |
| |||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (15 | ) |
|
|
|
|
|
| (15 | ) | |||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,249 |
|
|
|
|
|
|
| 1,249 |
| |||||||||||||||||||||||||
Vesting of restricted stock |
|
| (281 | ) |
|
| 281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| |||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
|
| (377 | ) |
|
| 514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 137 |
| |||||||||||||||||||||||||
Stock-based compensation expense |
|
| 324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 324 |
| |||||||||||||||||||||||||
Dividends declared ($0.50 per share) |
|
|
|
|
|
|
|
|
|
| (700 | ) |
|
|
|
|
|
|
|
|
|
| (700 | ) | |||||||||||||||||||||||||
Deconsolidation of subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (123 | ) |
|
| (123 | ) | |||||||||||||||||||||||||
Other |
|
| (28 | ) |
|
| 5 |
|
|
|
|
|
|
| (3 | ) |
|
| (58 | ) |
|
| (84 | ) | |||||||||||||||||||||||||
Balance, December 31, 2021 |
| $ | 12,608 |
|
| $ | (2,233 | ) |
| $ | 8,199 |
|
| $ | (3,570 | ) |
| $ | 282 |
|
| $ | 15,286 |
|
See the Notes to Consolidated Financial Statements
30
SCHLUMBERGER LIMITED AND SUBSIDIARIES
SHARES OF COMMON STOCK
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares |
|
|
|
|
|
|
|
|
| Shares |
| ||
| Issued |
|
| In Treasury |
|
| Outstanding |
| Issued |
|
| In Treasury |
|
| Outstanding |
| ||||||
Balance, January 1, 2017 |
| 1,434 |
|
|
| (43 | ) |
|
| 1,391 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
| |||||||||||
Shares issued under employee stock purchase plan |
| - |
|
|
| 3 |
|
|
| 3 |
| |||||||||||
Stock repurchase program |
| - |
|
|
| (13 | ) |
|
| (13 | ) | |||||||||||
Balance, December 31, 2017 |
| 1,434 |
|
|
| (50 | ) |
|
| 1,384 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 1 |
|
|
| 1 |
| |||||||||||
Shares issued under employee stock purchase plan |
| - |
|
|
| 3 |
|
|
| 3 |
| |||||||||||
Stock repurchase program |
| - |
|
|
| (6 | ) |
|
| (6 | ) | |||||||||||
Balance, December 31, 2018 |
| 1,434 |
|
|
| (51 | ) |
|
| 1,383 |
| |||||||||||
Balance, January 1, 2019 |
| 1,434 |
|
|
| (51 | ) |
|
| 1,383 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
|
| - |
|
|
| 1 |
|
|
| 1 |
|
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
|
| - |
|
|
| 2 |
|
|
| 2 |
|
Shares issued under employee stock purchase plan |
| - |
|
|
| 6 |
|
|
| 6 |
|
| - |
|
|
| 6 |
|
|
| 6 |
|
Stock repurchase program |
| - |
|
|
| (7 | ) |
|
| (7 | ) |
| - |
|
|
| (7 | ) |
|
| (7 | ) |
Balance, December 31, 2019 |
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
|
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
|
Shares issued under employee stock purchase plan |
| - |
|
|
| 6 |
|
|
| 6 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
| |||||||||||
Stock repurchase program |
| - |
|
|
| (1 | ) |
|
| (1 | ) | |||||||||||
Balance, December 31, 2020 |
| 1,434 |
|
|
| (42 | ) |
|
| 1,392 |
| |||||||||||
Shares issued under employee stock purchase plan |
| - |
|
|
| 7 |
|
|
| 7 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 4 |
|
|
| 4 |
| |||||||||||
Balance, December 31, 2021 |
| 1,434 |
|
|
| (31 | ) |
|
| 1,403 |
|
See the Notes to Consolidated Financial Statements
31
Notes to Consolidated Financial Statements
1. Business Description
Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao) and its consolidated subsidiaries (collectively, “Schlumberger”) compriseform a technology company that partners with customers to access energy. Schlumberger provides leading digital solutions and deploys innovative technologies to enable performance and sustainability for the world’s leading supplierglobal energy industry. Schlumberger collaborates to create technology that unlocks access to energy for the benefit of technology for reservoir characterization, drilling, production and processing to the oil and gas industry.all.
2. Summary of Accounting Policies
The Consolidated Financial Statements of Schlumberger have been prepared in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, Schlumberger evaluates its estimates, including those related to collectibility of accounts receivable; revenue recognized for certain long-term construction-type contracts over time; recoverability of fixed assets, goodwill, intangible assets, Asset Performance Solutions investments and investments in affiliates; income taxes; multiclient seismic data; contingencies and actuarial assumptions for employee benefit plans. Schlumberger bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Schlumberger adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers on January 1, 2018. This ASU amended the existing accounting standards for revenue recognition and requires companies to recognize revenue when control of the promised goods or services is transferred to a customer at an amount that reflects the considerationa company expects to receive in exchange for those goods or services. Under the transition method selected by Schlumberger, this ASU was applied only to those contracts which were not completed as of January 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. The adoption of this ASU did not have a material impact on Schlumberger’s Consolidated Financial Statements.
Schlumberger recognizes revenue upon the transfer of control of promised products or services to customers at an amount that reflects the consideration it expects to receive in exchange for these products or services. The vast majority of Schlumberger’s services and product offerings are short-term in nature. The time between invoicing and when payment is due under these arrangements is generally between 30 to 60 days.
Revenue is occasionally generated from contractual arrangements that include multiple performance obligations. Revenue from these arrangements is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected costs plus margin.
Revenue is recognized for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs may be required as work progresses. Progress billings are generally issued upon completion of certain phases of work as stipulated in the contract. Any expected losses on a project are recorded in full in the period in which they become probable.
Due to the nature of its businesses, Schlumberger does not have significant backlog. Total backlog was $3.0$2.8 billion at December 31, 2019,2021, of which approximately 50% is expected to be recognized as revenue during 2020.2022.
32
Short-term Investments
Short-term investments are comprised primarily of money market funds, time deposits, certificates of deposit, commercial paper, bonds and notes, substantially all of which are denominated in US dollars and are stated at cost plus accrued interest, which approximates fair value.
For purposes of the Consolidated Statement of Cash Flows, Schlumberger does not consider Short-term investments to be cash equivalents.
Investments in Affiliated Companies
Investments in companies in which Schlumberger does not have a controlling financial interest, but over which it has significant influence, are accounted for using the equity method. Schlumberger’s share of the after-tax earnings of equity method investees is included in Interest and& other income. Investments in privately held companies in which Schlumberger does not have the ability to exercise significant influence are accounted for using the cost method.
Equity and cost method investments are classified as Investments in Affiliated Companiespublicly traded companies in which Schlumberger does not have the ability to exercise significant influence are reported at fair value, with unrealized gains and losses reported as a component of Consolidated Balance SheetInterest & other income.
Multiclient Seismic Data
Schlumberger’s multiclient library consists of completed and in-process seismic surveys that are licensed on a nonexclusive basis. Schlumberger capitalizes costs directly incurred in acquiring and processing the multiclient seismic data. Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that Schlumberger expects to receive from the sales of such data. However, under no circumstance will an individual survey generally will not carry a net book value greater than a 4-year, straight-line amortized value.
The carrying value of the multiclient library is reviewed for impairment annually as well as when an event or change in circumstance indicating impairment may have occurred. Adjustments to the carrying value are recorded when it is determined that estimated future cash flows, which involve significant judgment on the part of Schlumberger, would not be sufficient to recover the carrying value of the surveys. Significant adverse changes in Schlumberger’s estimated future cash flows could result in impairment charges in a future period.
Asset Performance Solutions
Asset Performance Solutions (“APS”), formerly Schlumberger Production Management, projects are generally focused on developing and managingco-managing production on behalf of Schlumberger’s clientscustomers’ assets under long-term agreements. Schlumberger will investinvests its own services and products and historically, cash in certain cases, into the field development activities and operations. Although in certain arrangements Schlumbergeroperations and is paid for a portion of the services or products it provides, generally Schlumberger will not be paid at the time of providing its services or upon delivery of its products. Instead, Schlumberger is compensated based upon cash flow generated or on a fee-per-barrel basis.basis or based on cash flow generated. This includes certain arrangements whereby Schlumberger is only compensated based uponon incremental production that it helps deliver above a mutually agreed baseline. Revenue from APS arrangements, which is recognized as the related production is achieved, represented less than 5% of Schlumberger’s consolidated revenue during each of 2019, 2018 and 2017.
Schlumberger capitalizes its cash investments in a project as well asincluding the direct costs associated with providing its services or products for which Schlumberger will be compensated when the related production is achieved.products. These capitalized investments are amortized to the Consolidated Statement of Income (Loss) as the related production is achieved based on the units of production method, whereby each unit produced is assigned a pro-rata portion of the unamortized costs based on estimated total production, resulting in a matching of revenue with the applicable costs. Amortization expense relating to these capitalized investments was $731 million, $568 million and $465 million in 2019, 2018 and 2017, respectively.
The unamortized portion of Schlumberger’s investments in APS projects was $3.724 billion and $4.201 billion at December 31, 2019 and 2018, respectively. These amounts are included within Other Assets in Schlumberger’s Consolidated Balance Sheet.
33
Concentration of Credit Risk
Schlumberger’s assets that are exposed to concentrations of credit risk consist primarily of cash, short-term investments, receivables from clients and derivative financial instruments. Schlumberger places its cash and short-term investments with financial institutions and corporations and limits the amount of credit exposure with any one of them. Schlumberger regularly evaluates the creditworthiness of the issuers in which it invests. By using derivative financial instruments to hedge certain exposures, Schlumberger exposes itself to some credit risk. Schlumberger minimizes this credit risk by entering into transactions with high-quality counterparties, limiting the exposure to each counterparty and monitoring the financial condition of its counterparties.
Schlumberger generates revenue in more than 120 countries and as such, its accounts receivable are spread over many countries and customers. Accounts receivable in theThe United States represented 18%12% of Schlumberger’s net accounts receivable balance at December 31, 2019.2021. NaN other country accounted for greater than 10% of Schlumberger’s accounts receivable balance. Schlumberger maintains an allowance for uncollectible accounts receivable based on expected collectability and performs ongoing credit evaluations of its customers’ financial condition. If the financial condition of Schlumberger’s customers were to deteriorate resulting in an impairment of their ability to make payments, adjustments to the allowance may be required.
Earnings per Share
The following is a reconciliation from basic to diluted earnings (loss) per share of Schlumberger for each of the last three years:
(Stated in millions, except per share amounts) | (Stated in millions, except per share amounts) |
| (Stated in millions, except per share amounts) |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) Attributable to Schlumberger |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
|
| Net Income (Loss) Attributable to Schlumberger |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
| ||||||
2021: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | 1,881 |
|
|
| 1,400 |
|
| $ | 1.34 |
| ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| 27 |
|
|
|
|
| ||||||||||||
Diluted |
| $ | 1,881 |
|
|
| 1,427 |
|
| $ | 1.32 |
| ||||||||||||
2020: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) | ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Diluted |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) | ||||||||||||
2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
Diluted |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
2018: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | 2,138 |
|
|
| 1,385 |
|
| $ | 1.54 |
| ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| 8 |
|
|
|
|
| ||||||||||||
Diluted |
| $ | 2,138 |
|
|
| 1,393 |
|
| $ | 1.53 |
| ||||||||||||
2017: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Basic |
| $ | (1,505 | ) |
|
| 1,388 |
|
| $ | (1.08 | ) | ||||||||||||
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
| ||||||||||||
Diluted |
| $ | (1,505 | ) |
|
| 1,388 |
|
| $ | (1.08 | ) |
The number of outstanding employee stock options to purchase shares of Schlumberger common stock and unvested restricted stock units that were not included in the computation of diluted earnings/loss per share, because to do so would have had an anti-dilutive effect, were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Employee stock options |
| 46 |
|
|
| 40 |
|
|
| 47 |
|
| 42 |
|
|
| 48 |
|
|
| 46 |
|
Unvested restricted stock |
| 12 |
|
|
| - |
|
|
| 5 |
|
| - |
|
|
| 19 |
|
|
| 12 |
|
34
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation.
3. Charges and Credits
2021
Schlumberger recorded the following charges and credits during 2019, 20182021:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on marketable securities | $ | (47 | ) |
| $ | (11 | ) |
| $ | (36 | ) |
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (28 | ) |
|
| (4 | ) |
|
| (24 | ) |
Early repayment of bonds |
| 10 |
|
|
| - |
|
|
| 10 |
|
| $ | (65 | ) |
| $ | (15 | ) |
| $ | (50 | ) |
Third quarter 2021:
• | During the third quarter of 2021, a start-up company that Schlumberger previously invested in was acquired. As a result of this transaction, Schlumberger’s ownership interest was converted into shares of a publicly traded company. Schlumberger recognized an unrealized pretax gain of $47 million to increase the carrying value of this investment to its estimated fair |
value of approximately $55 million. This unrealized gain is reflected in Interest & other income in the ConsolidatedStatement of Income (Loss). |
Fourth quarter 2021:
• | On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada (“OneStim”), including its pressure pumping, pumpdown perforating and Permian frac sand business to Liberty Oilfield Services Inc. (“Liberty”) in exchange for a 37% equity interest in Liberty. During the fourth quarter of 2021, Schlumberger sold 9.5 million of its shares of Liberty and received proceeds of $109 million. As a result of this transaction Schlumberger recognized a gain of $28 million. This gain is classified in Interest & other income in the Consolidated Statement of Income (Loss). |
As of December 31, 2021, Schlumberger had a 31% equity interest in Liberty. Based on the quoted market prices of Liberty’s shares, the fair value of Schlumberger’s investment in Liberty was approximately $550 million as of December 31, 2021. Schlumberger accounts for its investment in Liberty under the equity method of accounting and 2017:records its share of Liberty’s net income or loss on a one-quarter lag.
• | On November 30, 2021, Schlumberger deposited sufficient funds with the trustee for its $1.0 billion of 2.40% Senior Notes due 2022 (including payment of the February 1, 2022 interest payment) to satisfy and discharge all of its obligations relating to such notes. As a result of this transaction, Schlumberger recorded a charge of $10 million. This charge is reflected in Interest in the Consolidated Statement of Income (Loss). |
2020
Schlumberger recorded the following charges and credits during 2020, all of which, unless otherwise noted, are classified in Impairments & other in the Consolidated Statement of Income (Loss):
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill | $ | 3,070 |
|
| $ | - |
|
| $ | 3,070 |
|
Intangible assets impairments |
| 3,321 |
|
|
| 815 |
|
|
| 2,506 |
|
Asset Performance Solutions investments |
| 1,264 |
|
|
| (4 | ) |
|
| 1,268 |
|
North America pressure pumping impairment |
| 587 |
|
|
| 133 |
|
|
| 454 |
|
Workforce reductions |
| 202 |
|
|
| 7 |
|
|
| 195 |
|
Other |
| 79 |
|
|
| 9 |
|
|
| 70 |
|
Valuation allowance |
| - |
|
|
| (164 | ) |
|
| 164 |
|
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Workforce reductions |
| 1,021 |
|
|
| 71 |
|
|
| 950 |
|
Asset Performance Solutions investments |
| 730 |
|
|
| 15 |
|
|
| 715 |
|
Fixed asset impairments |
| 666 |
|
|
| 52 |
|
|
| 614 |
|
Inventory write-downs |
| 603 |
|
|
| 49 |
|
|
| 554 |
|
Right-of-use asset impairments |
| 311 |
|
|
| 67 |
|
|
| 244 |
|
Costs associated with exiting certain activities |
| 205 |
|
|
| (25 | ) |
|
| 230 |
|
Multiclient seismic data impairment |
| 156 |
|
|
| 2 |
|
|
| 154 |
|
Repurchase of bonds |
| 40 |
|
|
| 2 |
|
|
| 38 |
|
Postretirement benefits curtailment gain |
| (69 | ) |
|
| (16 | ) |
|
| (53 | ) |
Other |
| 60 |
|
|
| 4 |
|
|
| 56 |
|
Third quarter: |
|
|
|
|
|
|
|
|
|
|
|
Facility exit charges |
| 254 |
|
|
| 39 |
|
|
| 215 |
|
Workforce reductions |
| 63 |
|
|
| - |
|
|
| 63 |
|
Other |
| 33 |
|
|
| 1 |
|
|
| 32 |
|
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of OneStim |
| (104 | ) |
|
| (11 | ) |
|
| (93 | ) |
Unrealized gain on marketable securities |
| (39 | ) |
|
| (9 | ) |
|
| (30 | ) |
Other |
| 62 |
|
|
| 4 |
|
|
| 58 |
|
| $ | 12,515 |
|
| $ | 1,041 |
|
| $ | 11,474 |
|
First quarter 2020:
• | Geopolitical events that increased the supply of low-priced oil to the global market occurred at the same time that demand weakened due to the worldwide effects of the COVID-19 pandemic, leading to a collapse in oil prices during March 2020. As a result, Schlumberger’s market capitalization deteriorated significantly compared to the end of 2019. Schlumberger’s stock price reached a low during the first quarter of 2020 not seen since 1995. Additionally, the Philadelphia Oil Services Sector index (“OSX”), which is comprised of companies involved in the oil services sector, reached an all-time low. As a result of these facts, Schlumberger determined that it was more likely than not that the fair value of certain of its reporting units was less than their carrying value. Therefore, Schlumberger performed an interim goodwill impairment test. |
Schlumberger had 11 reporting units with goodwill balances aggregating $16.0 billion. Schlumberger determined that the fair value of 4 of its reporting units, representing $4.5 billion of goodwill, was substantially in excess of their carrying value. Schlumberger performed a detailed quantitative impairment assessment of the remaining 7 reporting units, which represented $11.5 billion of goodwill. As a result of this assessment, Schlumberger concluded that the goodwill associated with each of these seven reporting units was impaired, resulting in a $3.1 billion goodwill impairment charge.
Following the $3.1 billion goodwill impairment charge relating to these seven reporting units,6 of these reporting units had a remaining goodwill balance. These goodwill balances ranged between $0.2 billion and $5.0 billion and aggregated to $8.4 billion as of March 31, 2020.
Schlumberger used the income approach to estimate the fair value of its reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting each reporting unit’s estimated future cash flows using Schlumberger’s estimate of the discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results. The market approach involves significant judgement involved in the selection of the appropriate peer group companies and valuation multiples.
Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. Schlumberger selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. Schlumberger’s estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, particularly in a volatile market, actual results may differ from those used in Schlumberger’s valuations which could result in additional impairment charges in the future.
The discount rates utilized to value Schlumberger’s reporting units were between 12.0% and 13.5%, depending on the risks and uncertainty inherent in the respective reporting unit as well as the size of the reporting unit. Assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50-basis point increase or decrease in the discount rate assumptions would have changed the fair value of the 7 reporting units, on average, by less than 5%.
• | The negative market indicators described above were triggering events that indicated that certain of Schlumberger’s long-lived intangible and tangible assets may have been impaired. Recoverability testing indicated that certain long-lived assets were impaired. The estimated fair value of these assets was determined to be below their carrying value. As a result, Schlumberger recorded the following impairment charges: |
- | $3.3 billion relating to intangible assets, of which $2.2 billion relates to Schlumberger’s 2016 acquisition of Cameron International Corporation and $1.1 billion relates to Schlumberger’s 2010 acquisition of Smith International, Inc. Following this impairment charge, the carrying value of the impaired intangible assets was approximately $0.9 billion. |
- | $1.3 billion relating to the carrying value of certain APS projects in North America. |
- | $0.6 billion of fixed assets associated with the pressure pumping business in North America. |
• | $202 million of severance. |
• | $79 million of other restructuring charges, primarily consisting of the impairment of an equity method investment that was determined to be other-than-temporarily impaired. |
• | $164 million relating to a valuation allowance against certain deferred tax assets. |
Second quarter 2020:
• | As previously noted, late in the first quarter of 2020 geopolitical events that increased the supply of low-priced oil to the global market occurred at the same time as demand weakened due to the worldwide effects of the COVID-19 pandemic, which led to a collapse in oil prices. As a result, the second quarter of 2020 was the most challenging quarter in decades. Schlumberger responded to these market conditions by taking actions to restructure its business and rationalize its asset base during the second quarter of 2020. These actions included reducing headcount, closing facilities and exiting business lines in certain countries. Additionally, due to the resulting activity decline, Schlumberger had assets that would no longer be utilized. As a consequence of these circumstances and decisions, Schlumberger recorded the following restructuring and asset impairment charges: |
- | $1.021 billion of severance associated with reducing its workforce by more than 21,000 employees. |
- | $730 million relating to the carrying value of certain APS projects in Latin America. |
- | $666 million of fixed asset impairments primarily relating to equipment that would no longer be utilized and facilities it exited. |
- | $603 million write-down of the carrying value of inventory to its net realizable value. |
- | $311 million write-down of right-of-use assets under operating leases associated with leased facilities Schlumberger exited and excess equipment. |
- | $205 million of costs associated with exiting certain activities. |
- | $156 million impairment of certain multiclient seismic data. |
- | $60 million of other costs, including a $42 million increase in the allowance for the doubtful accounts. |
• | Schlumberger repurchased all $600 million of its 4.20% Senior Notes due 2021 and $935 million of its 3.30% Senior Notes due 2021. Schlumberger paid a premium of $40 million in connection with these repurchases. |
• | As a consequence of the workforce reductions described above, Schlumberger recorded a curtailment gain of $69 million relating to its US postretirement medical plan. See Note 16 – Pension and Other Postretirement Benefit Plans for further details. |
Third quarter 2020:
• | Schlumberger recorded the following restructuring charges: |
- | $254 million of facility exit charges as Schlumberger continued to rationalize its real estate footprint relating to both leased and owned facilities. |
- | $63 million of severance. |
- | $33 million of other charges. |
Fourth quarter 2020:
• | On December 31, 2020, Schlumberger contributed its OneStim business to Liberty in exchange for a 37% equity interest in Liberty. As a result of this transaction, Schlumberger recognized a gain of $104 million. This gain is classified in Gains on sales of businesses in the Consolidated Statement of Income (Loss). |
• | During the fourth quarter of 2020, a start-up company that Schlumberger previously invested in completed an initial public offering. As a result, Schlumberger recognized an unrealized gain of $39 million to increase the carrying value of this investment to its fair value of approximately $43 million. This unrealized gain is reflected in Interest & other income in the Consolidated Statement of Income (Loss). Schlumberger sold its interest in this company during 2021. |
• | During the fourth quarter of 2020, Schlumberger entered into an agreement to purchase new software licenses. This transaction rendered certain previously purchased licenses obsolete. As a result, Schlumberger wrote off the remaining $62 million of net book value associated with the obsolete software licenses. |
2019
Schlumberger recorded the following charges and credits during 2019, all of which are classified as Impairments & other in the Consolidated Statement of Income (Loss), except for the gain on the formation of the Sensia joint venture:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| Pretax |
|
| Tax |
|
| Net |
| ||||||
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment | $ | 8,828 |
|
| $ | 43 |
|
| $ | 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions investments |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America restructuring | $ | 225 |
|
| $ | 51 |
|
| $ | 174 |
|
| 225 |
|
|
| 51 |
|
|
| 174 |
|
Other restructuring |
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
| 104 |
|
|
| (33 | ) |
|
| 137 |
|
Workforce reductions |
| 68 |
|
|
| 8 |
|
|
| 60 |
|
| 68 |
|
|
| 8 |
|
|
| 60 |
|
Pension settlement accounting |
| 37 |
|
|
| 8 |
|
|
| 29 |
|
| 37 |
|
|
| 8 |
|
|
| 29 |
|
Repurchase of bonds |
| 22 |
|
|
| 5 |
|
|
| 17 |
|
| 22 |
|
|
| 5 |
|
|
| 17 |
|
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
| (247 | ) |
|
| (42 | ) |
|
| (205 | ) |
Third quarter: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Goodwill impairment |
| 8,828 |
|
|
| 43 |
|
|
| 8,785 |
| |||||||||||
Intangible assets impairment |
| 1,085 |
|
|
| 248 |
|
|
| 837 |
| |||||||||||
North America pressure pumping |
| 1,575 |
|
|
| 344 |
|
|
| 1,231 |
| |||||||||||
Other North America-related |
| 310 |
|
|
| 53 |
|
|
| 257 |
| |||||||||||
Argentina |
| 127 |
|
|
| - |
|
|
| 127 |
| |||||||||||
Equity-method investments |
| 231 |
|
|
| 12 |
|
|
| 219 |
| |||||||||||
Asset Performance Solutions |
| 294 |
|
|
| - |
|
|
| 294 |
| |||||||||||
Other |
| 242 |
|
|
| 13 |
|
|
| 229 |
| |||||||||||
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
| $ | 12,901 |
|
| $ | 710 |
|
| $ | 12,191 |
|
Fourth quarter of 2019:
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
Third quarter of 2019:
| • | During August 2019, Schlumberger’s market capitalization deteriorated significantly compared to the end of the second quarter of 2019. Schlumberger’s stock price reached a low not seen since 2005. Additionally, the |
As a result of these facts, Schlumberger determined that it was more likely than not that the fair value of certain of its reporting units werewas less than their carrying value. Therefore, Schlumberger performed an interim goodwill impairment test as of August 31, 2019.
As of August 31, 2019, Schlumberger had 17 reporting units with goodwill balances aggregating $25.0 billion. Schlumberger determined that the fair value of 7 of its reporting units, representing approximately $13.8 billion of the goodwill, was substantially in excess of their carrying value. Schlumberger performed a detailed quantitative impairment assessment of the remaining 10 reporting units, which represented $11.2 billion of goodwill. As a result of this assessment, Schlumberger concluded that the goodwill associated with 9 of the 10 reporting units was impaired, resulting in an $8.8 billion goodwill impairment charge. This charge primarily relates to Schlumberger’s Drilling and Cameron segments.
Following the $8.8 billion goodwill impairment charge relating to these nine reporting units, only 3 had a remaining goodwill balance. These three reporting units had goodwill balances which ranged between $0.4 billion and $0.6 billion and aggregated to $1.5 billion as of August 31, 2019. The 10th reporting unit, which was determined not to be impaired, had $0.9 billion of goodwill.
Schlumberger primarily used the income approach to estimate the fair value of its reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting each reporting unit’s estimated future cash flows using Schlumberger’s estimate of the discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results. The market approach involves significant judgement involved in the selection of the appropriate peer group companies and valuation multiples.
Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. Schlumberger selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. Schlumberger’s estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, actual results may differ from those used in Schlumberger’s valuations which could result in additional impairment charges in the future.
The discount rates utilized to value Schlumberger’s reporting units were between 12.5% and 14.0%, depending on the risks and uncertainty inherent in the respective reporting unit. Assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50 basis point increase in the discount rate assumption would have increased the goodwill impairment charge by approximately $0.3 billion. Conversely, assuming all other assumptions and inputs used in each of the respective discounted cash flow analysis were held constant, a 50 basis point decrease in the discount rate assumption would have decreased the goodwill impairment charge by approximately $0.4 billion.
| • | The negative market indicators described above combined with deteriorating market conditions in North America, as well as the results of the previously mentioned fair value determinations of certain of Schlumberger’s reporting units and the appointment of a new Chief Executive Officer, |
36
Recoverability testing, which was performed as of August 31, 2019, indicated that long-lived assets associated with certain asset groups were impaired. The estimated fair value of these asset groups was determined to be below their carrying value. As a result, Schlumberger recorded the following impairment and related charges:
| - | $1.085 billion of intangible assets, of which $842 million relates to Schlumberger’s 2010 acquisition of Smith International, Inc. The remaining $243 million primarily relates to other acquisitions in North America. |
| - | $1.575 billion of charges relating to Schlumberger’s pressure pumping business in North America. This amount consists of $1.324 billion of pressure pumping equipment and related assets; $98 million of right-of-use assets under operating leases; $121 million relating to a supply contract; $19 million of inventory; and $13 million of severance. |
| - | $310 million of charges primarily relating to other businesses in North America, consisting of $230 million of fixed asset impairments, $70 million of inventory write-downs and $10 million of severance. |
| • | As a result of the |
| • | Schlumberger |
| - | $231 million relating to certain equity method investments that were determined to be other-than-temporarily impaired. |
| - | $294 million impairment relating to the carrying value of certain smaller APS projects. |
| - | $242 million of restructuring charges consisting of: $62 million of severance; $57 million relating to the acceleration of stock-based compensation expense associated with certain individuals; $49 million of business divestiture costs; $29 million relating to the repurchase of certain Senior |
Fourth quarter of 2019:
• | Schlumberger recorded the following restructuring charges: |
- | $225 million associated with facility closures and costs to exit certain activities in North America. These charges included $123 million relating to fixed assets; $55 million of right-of-use assets under operating leases; and $47 million of other exit costs. |
- | $104 million primarily relating to restructuring certain activities outside of North America, which included $68 million associated with assets to be divested and $36 million of facility closure costs. |
- | $68 million of severance associated with streamlining its operations and exiting certain activities. |
• | Certain of Schlumberger’s defined benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit which resulted in Schlumberger recording a pension settlement charge of $37 million. See Note 16 – Pension and Other Postretirement Benefit Plans for further details. |
• | Schlumberger repurchased the remaining $416 million of its 3.00% Senior Notes due 2020; $126 million of its 4.50% Senior Notes due 2021; $500 million of its 4.20% Senior Notes due 2021; and $106 million of its 3.60% Senior Notes due 2022. These transactions resulted in a $22 million charge. |
• | On October 1, 2019, Schlumberger and Rockwell completed the formation of Sensia, a joint venture that is the oil and gas industry’s first digitally enabled integrated automation solutions provider. Rockwell Automation owns 53% of the joint venture and Schlumberger owns 47%. In connection with this transaction, Schlumberger received a cash payment of $238 million. Schlumberger will account for its investment under the equity method of accounting. Schlumberger recorded a $247 million gain as a result of the deconsolidation of certain of its businesses in connection with the formation of the joint venture. This gain, which is equal to the sum of the $238 million of cash proceeds received and the fair value of Schlumberger’s retained noncontrolling investment in the businesses it contributed less the carrying amount of the assets and liabilities of such businesses at the time of the closing, is classified as Gains on sale of businesses in the Consolidated Statement of Income (Loss). |
The fair value of certain of the assets impaired during 2020 and 2019 was estimated based on the present value of projected future cash flows that the underlying assets are expected to generate. Such estimates included unobservable inputs that required significant judgment.
During the third quarter of 2019, Schlumberger’s Board of Directors announced the appointment of a new Chief Executive Officer. As the new Chief Executive Officer further develops and implements his strategy, it may result in additional restructuring charges in future periods. Furthermore, Schlumberger may be required to record additional impairment charges if industry conditions deteriorate.
2018
During 2018, Schlumberger recorded the following charges and credits:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax |
|
| Net |
| |||
Gain on sale of marine seismic acquisition business | $ | (215 | ) |
| $ | (19 | ) |
| $ | (196 | ) |
Workforce reductions |
| 184 |
|
|
| 20 |
|
|
| 164 |
|
Asset impairments |
| 172 |
|
|
| 16 |
|
|
| 156 |
|
| $ | 141 |
|
| $ | 17 |
|
| $ | 124 |
|
|
|
|
|
|
|
37
2017
Schlumberger recorded the following charges and credits during 2017, of which $3.211 billion were classified as Impairments & other, $245 million were classified in Cost of sales and $308 million were classified as Merger & integration in the Consolidated Statement of Income (Loss):
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncontrolling |
|
|
|
|
| |
| Pretax |
|
| Tax |
|
| Interests |
|
| Net |
| ||||
Impairment & other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WesternGeco seismic restructuring charges | $ | 1,114 |
|
| $ | 20 |
|
| $ | - |
|
| $ | 1,094 |
|
Venezuela investment write-down |
| 938 |
|
|
| - |
|
|
| - |
|
|
| 938 |
|
Promissory note fair value adjustment and other |
| 510 |
|
|
| - |
|
|
| 12 |
|
|
| 498 |
|
Workforce reductions |
| 247 |
|
|
| 13 |
|
|
| - |
|
|
| 234 |
|
Multiclient seismic data impairment |
| 246 |
|
|
| 81 |
|
|
| - |
|
|
| 165 |
|
Other restructuring charges |
| 156 |
|
|
| 10 |
|
|
| 22 |
|
|
| 124 |
|
Cost of sales |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
Provision for loss on long-term construction project |
| 245 |
|
|
| 22 |
|
|
| - |
|
|
| 223 |
|
Merger & integration |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
Merger and integration-related costs |
| 308 |
|
|
| 70 |
|
|
| - |
|
|
| 238 |
|
US tax reform charge |
| - |
|
|
| (76 | ) |
|
| - |
|
|
| 76 |
|
| $ | 3,764 |
|
| $ | 140 |
|
| $ | 34 |
|
| $ | 3,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
4. Inventories
Inventories, which are stated at the lower of average cost or net realizable value, consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Raw materials & field materials | $ | 1,857 |
|
| $ | 1,803 |
| $ | 1,594 |
|
| $ | 1,573 |
|
Work in progress |
| 515 |
|
|
| 519 |
|
| 425 |
|
|
| 464 |
|
Finished goods |
| 1,758 |
|
|
| 1,688 |
|
| 1,253 |
|
|
| 1,317 |
|
| $ | 4,130 |
|
| $ | 4,010 |
| $ | 3,272 |
|
| $ | 3,354 |
|
5. Fixed Assets
Fixed assets consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Land | $ | 483 |
|
| $ | 462 |
| $ | 372 |
|
| $ | 362 |
|
Buildings & improvements |
| 5,156 |
|
|
| 5,534 |
|
| 4,371 |
|
|
| 3,757 |
|
Machinery & equipment |
| 29,370 |
|
|
| 32,668 |
|
| 24,334 |
|
|
| 25,625 |
|
|
| 35,009 |
|
|
| 38,664 |
|
| 29,077 |
|
|
| 29,744 |
|
Less: Accumulated depreciation |
| 25,739 |
|
|
| 26,985 |
|
| 22,648 |
|
|
| 22,918 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,429 |
|
| $ | 6,826 |
|
The estimated useful lives of Buildings & improvements are primarily 25 to 30 years. The estimated useful lives of Machinery & equipment are primarily 5 to 10 years.
Depreciation expense, which is recorded on a straight-line basis, was $1.4 billion, $1.6 billion and $2.0 billion $2.1 billionin 2021, 2020 and $2.3 billion in 2019, 2018 and 2017, respectively.
39
6.Multiclient Seismic Data
The change in the carrying amount of multiclient seismic data is as follows:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| ||
Balance at beginning of year | $ | 601 |
|
| $ | 727 |
|
Capitalized in period |
| 231 |
|
|
| 100 |
|
Charged to expense |
| (264 | ) |
|
| (226 | ) |
| $ | 568 |
|
| $ | 601 |
|
7. Goodwill
The changes in the carrying amount of goodwill by segment were as follows:
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reservoir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Characterization |
|
| Drilling |
|
| Production |
|
| Cameron |
|
| Total |
| |||||
Balance, January 1, 2018 | $ | 4,848 |
|
| $ | 10,126 |
|
| $ | 4,697 |
|
| $ | 5,447 |
|
| $ | 25,118 |
|
Acquisitions |
| 39 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 39 |
|
Business divestiture |
| (175 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (175 | ) |
Impact of changes in exchange rates |
| (9 | ) |
|
| (15 | ) |
|
| (19 | ) |
|
| (8 | ) |
|
| (51 | ) |
Balance, December 31, 2018 |
| 4,703 |
|
|
| 10,111 |
|
|
| 4,678 |
|
|
| 5,439 |
|
|
| 24,931 |
|
Impairment |
| (97 | ) |
|
| (3,025 | ) |
|
| (705 | ) |
|
| (5,001 | ) |
|
| (8,828 | ) |
Impact of changes in exchange rates and other |
| (46 | ) |
|
| 6 |
|
|
| (24 | ) |
|
| 3 |
|
|
| (61 | ) |
Balance, December 31, 2019 | $ | 4,560 |
|
| $ | 7,092 |
|
| $ | 3,949 |
|
| $ | 441 |
|
| $ | 16,042 |
|
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reservoir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Characterization |
|
| Drilling |
|
| Production |
|
| Cameron |
|
| Total |
| |||||
Balance, December 31, 2019 | $ | 4,560 |
|
| $ | 7,092 |
|
| $ | 3,949 |
|
| $ | 441 |
|
| $ | 16,042 |
|
Impairment (see Note 3) |
| - |
|
|
| (1,659 | ) |
|
| (1,228 | ) |
|
| (183 | ) |
|
| (3,070 | ) |
Impact of changes in exchange rates and other |
| - |
|
|
| 10 |
|
|
| (17 | ) |
|
| 3 |
|
|
| (4 | ) |
Balance, September 30, 2020 | $ | 4,560 |
|
| $ | 5,443 |
|
| $ | 2,704 |
|
| $ | 261 |
|
| $ | 12,968 |
|
8.In connection with a change in reportable segments, Schlumberger reallocated its goodwill as of September 30, 2020 to its new segments on a relative fair value basis:
| (Stated in millions) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Digital & |
|
| Reservoir |
|
| Well |
|
| Production |
|
|
|
|
| ||||
| Integration |
|
| Performance |
|
| Construction |
|
| Systems |
|
| Total |
| |||||
Balance, October 1, 2020 | $ | 2,041 |
|
| $ | 3,806 |
|
| $ | 6,267 |
|
| $ | 854 |
|
| $ | 12,968 |
|
Impact of changes in exchange rates and other |
| 6 |
|
|
| (4 | ) |
|
| 11 |
|
|
| (1 | ) |
|
| 12 |
|
Balance, December 31, 2020 |
| 2,047 |
|
|
| 3,802 |
|
|
| 6,278 |
|
|
| 853 |
|
|
| 12,980 |
|
Acquisitions |
| 18 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 18 |
|
Impact of changes in exchange rates and other |
| (13 | ) |
|
| 2 |
|
|
| 3 |
|
|
| - |
|
|
| (8 | ) |
Balance, December 31, 2021 | $ | 2,052 |
|
| $ | 3,804 |
|
| $ | 6,281 |
|
| $ | 853 |
|
| $ | 12,990 |
|
7. Intangible Assets
Intangible assets consist of the following:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||||||||||||||
| Gross |
|
| Accumulated |
|
| Net Book |
|
| Gross |
|
| Accumulated |
|
| Net Book |
| Gross |
|
| Accumulated |
|
| Net Book |
|
| Gross |
|
| Accumulated |
|
| Net Book |
| ||||||||||||
| Book Value |
|
| Amortization |
|
| Value |
|
| Book Value |
|
| Amortization |
|
| Value |
| Book Value |
|
| Amortization |
|
| Value |
|
| Book Value |
|
| Amortization |
|
| Value |
| ||||||||||||
Customer Relationships | $ | 3,779 |
|
| $ | 868 |
|
| $ | 2,911 |
|
| $ | 4,768 |
|
| $ | 1,243 |
|
| $ | 3,525 |
| $ | 1,681 |
|
| $ | 551 |
|
| $ | 1,130 |
|
| $ | 1,744 |
|
| $ | 485 |
|
| $ | 1,259 |
|
Technology/Technical Know-How |
| 2,498 |
|
|
| 779 |
|
|
| 1,719 |
|
|
| 3,494 |
|
|
| 1,246 |
|
|
| 2,248 |
|
| 1,264 |
|
|
| 562 |
|
|
| 702 |
|
|
| 1,284 |
|
|
| 488 |
|
|
| 796 |
|
Tradenames |
| 1,885 |
|
|
| 264 |
|
|
| 1,621 |
|
|
| 2,799 |
|
|
| 628 |
|
|
| 2,171 |
|
| 766 |
|
|
| 191 |
|
|
| 575 |
|
|
| 767 |
|
|
| 166 |
|
|
| 601 |
|
Other |
| 1,514 |
|
|
| 676 |
|
|
| 838 |
|
|
| 1,404 |
|
|
| 621 |
|
|
| 783 |
|
| 1,529 |
|
|
| 725 |
|
|
| 804 |
|
|
| 1,488 |
|
|
| 689 |
|
|
| 799 |
|
| $ | 9,676 |
|
| $ | 2,587 |
|
| $ | 7,089 |
|
| $ | 12,465 |
|
| $ | 3,738 |
|
| $ | 8,727 |
| $ | 5,240 |
|
| $ | 2,029 |
|
| $ | 3,211 |
|
| $ | 5,283 |
|
| $ | 1,828 |
|
| $ | 3,455 |
|
Customer relationships are generally amortized over periods ranging from 18 to 28 years, technology/technical know-how are generally amortized over periods ranging from 10 to 18 years, and tradenames are generally amortized over periods ranging from 15 to 30 years.
Amortization expense was $302 million in 2021, $371 million in 2020 and $618 million in 2019, $673 million in 2018 and $663 million in 2017.2019.
Based on the carrying value of intangible assets at December 31, 2019,2021, amortization expense for the subsequent five years is estimated to be as follows: 2020: $530 million, 2021: $521 million, 2022: $497$291 million, 2023: $476$281 million, 2024: $264 million, 2025: $249 million and 2024: $4722026: $245 million.
40
9.8. Long-term Debt and Debt Facility Agreements
Long-term Debt consists of the following:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| ||
3.30% Senior Notes due 2021 | $ | 1,597 |
|
| $ | 1,596 |
|
3.65% Senior Notes due 2023 |
| 1,495 |
|
|
| 1,493 |
|
3.90% Senior Notes due 2028 |
| 1,444 |
|
|
| - |
|
2.40% Senior Notes due 2022 |
| 998 |
|
|
| 997 |
|
4.00% Senior Notes due 2025 |
| 929 |
|
|
| 1,742 |
|
4.3% Senior Notes due 2029 |
| 845 |
|
|
| - |
|
3.75% Senior Notes due 2024 |
| 746 |
|
|
| - |
|
1.00% Guaranteed Notes due 2026 |
| 665 |
|
|
| 678 |
|
4.20% Senior Notes due 2021 |
| 600 |
|
|
| 1,100 |
|
2.65% Senior Notes due 2022 |
| 598 |
|
|
| 598 |
|
0.00% Notes due 2024 |
| 551 |
|
|
| - |
|
0.25% Notes due 2027 |
| 550 |
|
|
| - |
|
0.50% Notes due 2031 |
| 544 |
|
|
| - |
|
3.63% Senior Notes due 2022 |
| 294 |
|
|
| 847 |
|
7.00% Notes due 2038 |
| 208 |
|
|
| 210 |
|
5.95% Notes due 2041 |
| 114 |
|
|
| 115 |
|
5.13% Notes due 2043 |
| 99 |
|
|
| 99 |
|
4.00% Notes due 2023 |
| 81 |
|
|
| 82 |
|
3.70% Notes due 2024 |
| 55 |
|
|
| 55 |
|
3.00% Senior Notes due 2020 |
| - |
|
|
| 1,596 |
|
2.20% Senior Notes due 2020 |
| - |
|
|
| 499 |
|
4.50% Notes due 2021 |
| - |
|
|
| 132 |
|
3.60% Notes due 2022 |
| - |
|
|
| 109 |
|
Commercial paper borrowings |
| 2,222 |
|
|
| 2,433 |
|
Other |
| 135 |
|
|
| 263 |
|
| $ | 14,770 |
|
| $ | 14,644 |
|
During the fourth quarter of 2019, Schlumberger repurchased the remaining $416 million of its 3.00% Senior Notes due 2020; $126 million of its 4.50% Senior Notes due 2021; $500 million of its 4.20% Senior Notes due 2021; and $106 million of its 3.60% Senior Notes due 2022. Schlumberger paid a premium of $28 million in connection with these repurchases. This premium, net of related credits, was classified as Impairments & other in the Consolidated Statement of Income (Loss). (See Note 3 - Charges and Credits.)
During the third quarter of 2019, Schlumberger issued €500 million of 0.00% Notes due 2024, €500 million of 0.25% Notes due 2027 and €500 million of 0.50% Notes due 2031.
During the third quarter of 2019, Schlumberger repurchased $783 million of its 3.00% Senior Notes due 2020 and $321 million of its 3.625% Senior Notes due 2022. Schlumberger paid a premium of $29 million in connection with these repurchases. This premium was classified as Impairments & other in the Consolidated Statement of Income (Loss). (See Note 3 - Charges and Credits.)
During the second quarter of 2019, Schlumberger completed a debt exchange offer, pursuant to which it issued $1.500 billion in principal of 3.90% Senior Notes due 2028 (the “New Notes”) in exchange for $401 million of 3.00% Senior Notes due 2020, $234 million of 3.63% Senior Notes due 2022 and $817 million of 4.00% Senior Notes due 2025. In connection with the exchange of principal, Schlumberger paid a premium of $48 million, substantially all of which was in the form of New Notes. This premium is being amortized as additional interest expense over the term of the New Notes.
During the first quarter of 2019 Schlumberger issued $750 million of 3.75% Senior Notes due 2024 and $850 million of 4.30% Senior Notes due 2029.
During the fourth quarter of 2018, Schlumberger issued €600 million of 1.00% Guaranteed Notes due 2026.
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2021 |
|
| 2020 |
| ||
3.65% Senior Notes due 2023 | $ | 1,497 |
|
| $ | 1,496 |
|
3.90% Senior Notes due 2028 |
| 1,457 |
|
|
| 1,450 |
|
2.65% Senior Notes due 2030 |
| 1,250 |
|
|
| 1,250 |
|
1.375% Guaranteed Notes due 2026 |
| 1,125 |
|
|
| 1,221 |
|
2.00% Guaranteed Notes due 2032 |
| 1,118 |
|
|
| 1,214 |
|
0.25% Notes due 2027 |
| 1,013 |
|
|
| 1,100 |
|
0.50% Notes due 2031 |
| 1,012 |
|
|
| 1,099 |
|
4.00% Senior Notes due 2025 |
| 930 |
|
|
| 930 |
|
4.30% Senior Notes due 2029 |
| 846 |
|
|
| 846 |
|
3.75% Senior Notes due 2024 |
| 748 |
|
|
| 746 |
|
1.00% Guaranteed Notes due 2026 |
| 679 |
|
|
| 736 |
|
0.00% Notes due 2024 |
| 563 |
|
|
| 611 |
|
1.40% Senior Notes due 2025 |
| 498 |
|
|
| 498 |
|
7.00% Notes due 2038 |
| 204 |
|
|
| 206 |
|
5.95% Notes due 2041 |
| 113 |
|
|
| 114 |
|
5.13% Notes due 2043 |
| 98 |
|
|
| 99 |
|
4.00% Notes due 2023 |
| 80 |
|
|
| 80 |
|
3.70% Notes due 2024 |
| 55 |
|
|
| 55 |
|
3.63% Senior Notes due 2022 |
| - |
|
|
| 295 |
|
2.65% Senior Notes due 2022 |
| - |
|
|
| 598 |
|
2.40% Senior Notes due 2022 |
| - |
|
|
| 999 |
|
Commercial paper borrowings |
| - |
|
|
| 393 |
|
| $ | 13,286 |
|
| $ | 16,036 |
|
At December 31, 2019,2021, Schlumberger had separate committed credit facility agreements aggregating $6.5 billion with commercial banks aggregating $5.75 billion, all of which $4.3 billion was available and unused. These committed facilities support commercial paper programs in the United States and Europe, and $1.0 billion matures in February 2020,
of which $2.02.75 billion matures in February 2023, $2.0 billion matures in February 20242025 and $1.5$1.0 billion matures in July 2024.2026. Schlumberger also has a €750 million three-year committed revolving credit facility that matures in June 2024. At December 31, 2021, no amounts had been drawn under this facility. Interest rates and other terms of borrowing under these lines of credit vary from country to country.
by facility.
Commercial paper borrowings are classified as long-term debt to the extent they are backed up by available and unused committed credit facilities maturing in more than one year and to the extent it is Schlumberger’s intent to maintain these obligations for longer than one year. BorrowingsThere were 0 borrowings under the commercial paper programs at December 31, 2019 were $2.2 billion, all of which was classified in Long-term debtin the Consolidated Balance Sheet.2021. At December 31, 2018,2020, borrowings under the commercial paper programs were $2.4$0.4 billion, all of which was classified in Long-term debtDebt in the Consolidated Balance Sheet.
The weighted average interest rate on variable rate debt as of December 31, 2019 was 2.3%.
Long-term Debt as of December 31, 20192021 is due as follows: $2.3 billion in 2021, $1.9 billion in 2022, $1.91.6 billion in 2023, $3.2$1.4 billion in 2024, $0.9$1.4 billion in 2025, $0.7$1.8 billion in 2026, $1.0 billion in 2027, $1.5 billion in 2028 and $3.9$4.6 billion thereafter.
The fair value of Schlumberger’s Long-term Debt at December 31, 20192021 and December 31, 20182020 was $15.3$13.9 billion and $14.6$17.3 billion, respectively, and was estimated based on quoted market prices.
Schlumberger Limited fully and unconditionally guarantees the securities issued by certain of its subsidiaries, including securities issued by Schlumberger Investment SA aand Schlumberger Finance Canada Ltd., both wholly-owned finance subsidiarysubsidiaries of Schlumberger.Schlumberger Limited.
10.9. Derivative Instruments and Hedging Activities
Schlumberger is exposed to market risks related to fluctuations in interest rates and foreign currency exchange 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 to mitigate the exposure to changes in interest rates.
At December 31, 2019, Schlumberger had fixed rate debt aggregating $12.9 billion and variable rate debt aggregating $2.4 billion.
Foreign Currency Exchange Rate Risk
As a multinational company, Schlumberger conducts its business in over 120 countries. Schlumberger’s functional currency is primarily the US dollar. Approximately 78%70% of Schlumberger’s revenues in 20192021 were denominated in US dollars. 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–reporteddollar-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 uses foreign currency forward contracts to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the 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.
Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt denominated in currencies other than the functional currency. Schlumberger uses cross-currency swaps to provide a hedge against these cash flow risks.
42
During 2017, a Canadian-dollar functional currency subsidiary of Schlumberger issued $1.1 billion of US-dollar denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of $1.1 billion Included in orderOther Assets was $66 million at December 31, 2021 ($427 million at December 31, 2020) and included in Other Liabilities was $78 million at December 31, 2021 ($13 million at December 31, 2020) relating to hedge changes in the fair value of its $0.5 billion of 2.20% Senior Notes due 2020 and its $0.6 billion of 2.65% Senior Notes due 2022. Theseoutstanding cross-currency swaps effectively convertswap derivatives. The fair value was determined using a model with inputs that are observable in the US-dollar denominated notes to Canadian-dollar denominated debt with fixed annual interest rates of 1.97% and 2.52%, respectively.market or can be derived or collaborated by observable data.
During the third quarter of 2019, a US-dollar functional currency subsidiary of Schlumberger issued €1.5 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €1.5 billion in order to hedge changes in the fair value of its €0.5 billion 0.00% Notes due 2024, €0.5 billion 0.25% Notes due 2027 and €0.5 billion 0.50% Notes due 2031. These cross-currency swaps effectively convertedconvert the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 2.29%, 2.51% and 2.76%, respectively.
At December 31, 2019,During 2020, a US-dollar functional currency subsidiary of Schlumberger recognizedissued €0.8 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €0.8 billion in order to hedge changes in the fair value of its €0.4 billion of 0.25% Notes due 2027 and €0.4 billion of 0.50% Notes due 2031. These cross-currency swaps effectively convert the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 1.87% and 2.20%, respectively.
During 2020, a cumulative net $34 million lossUS-dollar functional currency subsidiary of Schlumberger issued €2.0 billion of Euro-denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of €2.0 billion in Accumulated Other Comprehensive Loss relatingorder to revaluationhedge changes in the fair value of foreignits €1.0 billion of 1.375% Guaranteed Notes due 2026 and €1.0 billion of 2.00% Guaranteed Notes due 2032. These cross-currency swaps effectively convert the swapped portion of the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 2.77% and 3.49%, respectively.
During 2020, a Canadian dollar functional currency forward contracts designated as cash flow hedges,subsidiary of Schlumberger issued $0.5 billion of US dollar denominated debt. Schlumberger entered into cross-currency swaps for an aggregate notional amount of $0.5 billion in order to hedge changes in the majorityfair value of which is expectedits $0.5 billion 1.40% Senior Notes due 2025. These cross-currency swaps effectively convert the US dollar notes to be reclassified into earnings within the next 12 months.Canadian dollar denominated debt with a fixed annual interest rate of 1.73%.
Schlumberger is exposed to changes in the fair value of assets and liabilities denominated in currencies other than the functional currency. While Schlumberger uses foreign currency forward contracts 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 (Loss), as are changes in the fair value of the hedged item. Transaction losses of $23 million in 2021 and $21 million in 2020 and transaction gains of $2 million in 2019 transaction gains of $1 million in 2018 and transaction losses of $17 million in 2017 were recognized in the Consolidated Statement of Income (Loss) net of related hedging activities.
During the fourth quarter of 2021, Schlumberger entered into derivative contracts that hedge the price of oil relating to approximately 75% of the projected 2022 oil production of one of its APS projects. These contracts are accounted for as cash flow hedges, with the 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 will be reclassified to earnings in the same period or periods that the hedged item is recognized in earnings. NaN amounts were recognized in the Consolidated Statement of Income (Loss) relating to these hedging activities during 2021.
At December 31, 2019,2021, contracts were outstanding for the US dollar equivalent of $7.7 billion in various foreign currencies, of which $3.0$6.0 billion relates to hedges of debt denominated in currencies other than the functional currency.
TheOther than the previously mentioned cross-currency swaps, the fair value of the other outstanding derivatives was 0t material at December 31, 20192021 and 2018.2020.
The effect of derivative instruments designated as hedges and those not designated as hedges on the Consolidated Statement of Income (Loss) was as follows:
|
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| (Stated in millions) |
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| (Stated in millions) |
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| Gain (Loss) Recognized in Income (Loss) |
|
| Consolidated Statement | Gain (Loss) Recognized in Income (Loss) |
|
| Consolidated Statement | ||||||||||||||||||
| 2019 |
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| 2018 |
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| 2017 |
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| of Income (Loss) Classification | ||||||||||||||||
Derivatives designated as fair value hedges: |
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|
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| |||||||||||||
Cross currency swap | $ | - |
|
| $ | (25 | ) |
| $ | 73 |
|
| Interest expense | |||||||||||||
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| 2021 |
|
| 2020 |
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| 2019 |
|
| of Income (Loss) Classification | |||
Derivatives designated as cash flow hedges: |
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Cross currency swap | $ | (35 | ) |
| $ | 80 |
|
| $ | (8 | ) |
| Interest expense | $ | (422 | ) |
| $ | 493 |
|
| $ | (35 | ) |
| Cost of services/sales |
Foreign exchange contracts |
| (10 | ) |
|
| (1 | ) |
|
| - |
|
| Cost of services/sales |
| 5 |
|
|
| (5 | ) |
|
| (10 | ) |
| Cost of services/sales |
| $ | (45 | ) |
| $ | 79 |
|
| $ | (8 | ) |
|
| $ | (417 | ) |
| $ | 488 |
|
| $ | (45 | ) |
|
|
Derivatives not designated as hedges: |
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|
|
|
|
|
|
|
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|
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|
|
|
|
Foreign exchange contracts | $ | (5 | ) |
| $ | 40 |
|
| $ | (26 | ) |
| Cost of services/sales | $ | (11 | ) |
| $ | (29 | ) |
| $ | (5 | ) |
| Cost of services/sales |
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Schlumberger does not enter into derivative transactions for speculative purposes.
11.10. Stockholders’ Equity
Schlumberger is authorized to issue 4,500,000,000 shares of common stock, par value $0.01 per share, of which 1,384,515,3451,403,381,685 and 1,382,964,3241,392,325,960 shares were outstanding on December 31, 20192021 and 2018,2020, respectively. Holders of common stock are entitled to one vote for each share of stock held. Schlumberger is also authorized to issue 200,000,000 shares of preferred stock, par value $0.01 per share, which may be issued in series with terms and conditions determined by the Schlumberger Board of Directors. NaN shares of preferred stock have been issued.
43
Accumulated Other Comprehensive Loss consists of the following:
| (Stated in millions) |
| |||||||||||||||||
|
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| Pension and |
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| |
| Currency |
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| Other |
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| ||
| Translation |
|
| Marketable |
|
| Cash Flow |
|
| Postretirement |
|
|
|
|
| ||||
| Adjustments |
|
| Securities |
|
| Hedges |
|
| Benefit Plans |
|
| Total |
| |||||
Balance, January 1, 2017 | $ | (2,136 | ) |
| $ | 21 |
|
| $ | (19 | ) |
| $ | (2,509 | ) |
| $ | (4,643 | ) |
Other comprehensive income (loss) before reclassifications |
| (3 | ) |
|
| (8 | ) |
|
| 22 |
|
|
| 134 |
|
|
| 145 |
|
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| - |
|
|
| 239 |
|
|
| 239 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (15 | ) |
|
| (15 | ) |
Balance, December 31, 2017 |
| (2,139 | ) |
|
| 13 |
|
|
| 3 |
|
|
| (2,151 | ) |
|
| (4,274 | ) |
Reclassification to Retained Earnings of stranded tax effects resulting from US tax reform |
| - |
|
|
| - |
|
|
| - |
|
|
| (109 | ) |
|
| (109 | ) |
Other comprehensive loss before reclassifications |
| (191 | ) |
|
| (11 | ) |
|
| (16 | ) |
|
| (186 | ) |
|
| (404 | ) |
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 1 |
|
|
| 182 |
|
|
| 183 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (18 | ) |
|
| (18 | ) |
Balance, December 31, 2018 |
| (2,330 | ) |
|
| 2 |
|
|
| (12 | ) |
|
| (2,282 | ) |
|
| (4,622 | ) |
Other comprehensive loss before reclassifications |
| 67 |
|
|
| - |
|
|
| (32 | ) |
|
| 127 |
|
|
| 162 |
|
Amounts reclassified from accumulated other comprehensive loss |
| - |
|
|
| - |
|
|
| 10 |
|
|
| 83 |
|
|
| 93 |
|
Income taxes |
| - |
|
|
| - |
|
|
| - |
|
|
| (71 | ) |
|
| (71 | ) |
Balance, December 31, 2019 | $ | (2,263 | ) |
| $ | 2 |
|
| $ | (34 | ) |
| $ | (2,143 | ) |
| $ | (4,438 | ) |
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 |
|
| 2020 |
|
| 2019 |
| |||
Currency translation adjustments | $ | (2,419 | ) |
| $ | (2,502 | ) |
| $ | (2,263 | ) |
Pension and other postretirement benefit plans |
| (1,066 | ) |
|
| (2,314 | ) |
|
| (2,143 | ) |
Cash flow hedges |
| (85 | ) |
|
| (70 | ) |
|
| (34 | ) |
Other |
| - |
|
|
| 2 |
|
|
| 2 |
|
| $ | (3,570 | ) |
| $ | (4,884 | ) |
| $ | (4,438 | ) |
Other comprehensive income was $184 million in 2019 and $369 million in 2017. Other comprehensive loss was $239 million in 2018.
12.11. Stock-based Compensation Plans
Schlumberger has three types of stock-based compensation programs: (i) stock options, (ii) a restricted stock, restricted stock unit and performance share unit program (collectively referred to as “restricted stock”), and (iii) a discounted stock purchase plan (“DSPP”).
Stock Options
Key employees aremay be granted stock options under Schlumberger stock option plans. For all stock options granted, theThe exercise price equals the average of the high and low sales prices of Schlumberger stock on the date of grant; thegrant. The maximum term is 10 years, and the options generally vest in increments over five years.
The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions and resulting weighted-average fair value per share:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2020 |
|
| 2019 |
| |||||
Dividend yield |
| 4.8 | % |
|
| 2.6 | % |
|
| 2.3 | % |
| 5.2 | % |
|
| 4.8 | % |
Expected volatility |
| 25 | % |
|
| 26 | % |
|
| 27 | % |
| 26 | % |
|
| 25 | % |
Risk-free interest rate |
| 2.7 | % |
|
| 2.6 | % |
|
| 2.4 | % |
| 1.7 | % |
|
| 2.7 | % |
Expected option life in years |
| 7.0 |
|
|
| 7.0 |
|
|
| 7.0 |
|
| 7.0 |
|
|
| 7.0 |
|
Weighted-average fair value per share | $ | 6.21 |
|
| $ | 17.37 |
|
| $ | 20.85 |
| $ | 5.07 |
|
| $ | 6.21 |
|
44There were 0 stock option grants during 2021.
The following table summarizes information related to options outstanding and options exercisable as of December 31, 2019:2021:
| (Shares stated in thousands) |
| |||||||||||||||||
|
|
| |||||||||||||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Average |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Remaining |
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
| Options |
|
| Contractual Life |
|
| Average |
|
| Options |
|
| Average |
| |||||
Exercise prices range | Outstanding |
|
| (in years) |
|
| Exercise Price |
|
| Exercisable |
|
| Exercise Price |
| |||||
$41.47 - $69.98 |
| 11,307 |
|
|
| 5.6 |
|
| $ | 53.99 |
|
|
| 5,343 |
|
| $ | 65.01 |
|
$70.92 - $76.74 |
| 10,202 |
|
|
| 3.0 |
|
| $ | 72.11 |
|
|
| 9,958 |
|
| $ | 72.17 |
|
$77.10 - $83.15 |
| 7,714 |
|
|
| 6.4 |
|
| $ | 79.32 |
|
|
| 4,257 |
|
| $ | 79.62 |
|
$84.22 - $88.77 |
| 9,210 |
|
|
| 3.8 |
|
| $ | 85.88 |
|
|
| 6,885 |
|
| $ | 85.38 |
|
$91.28 - $114.83 |
| 7,836 |
|
|
| 4.4 |
|
| $ | 95.86 |
|
|
| 7,160 |
|
| $ | 96.25 |
|
|
| 46,269 |
|
|
| 4.6 |
|
| $ | 75.65 |
|
|
| 33,603 |
|
| $ | 77.77 |
|
| (Shares stated in thousands) |
| |||||||||||||||||
|
|
| |||||||||||||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
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|
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| |
|
|
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| Average |
|
|
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|
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|
|
|
|
| |
|
|
|
|
| Remaining |
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
| Options |
|
| Contractual Life |
|
| Average |
|
| Options |
|
| Average |
| |||||
Exercise prices range | Outstanding |
|
| (in years) |
|
| Exercise Price |
|
| Exercisable |
|
| Exercise Price |
| |||||
$38.75 - $41.47 |
| 12,040 |
|
|
| 7.6 |
|
| $ | 39.86 |
|
|
| 3,417 |
|
| $ | 40.33 |
|
$47.55 - $69.98 |
| 2,882 |
|
|
| 3.3 |
|
| $ | 62.42 |
|
|
| 2,838 |
|
| $ | 62.47 |
|
$70.31 - $79.85 |
| 12,276 |
|
|
| 2.1 |
|
| $ | 73.58 |
|
|
| 11,564 |
|
| $ | 73.36 |
|
$80.53 - $88.77 |
| 8,583 |
|
|
| 4.3 |
|
| $ | 84.46 |
|
|
| 7,879 |
|
| $ | 84.19 |
|
$91.28 - $114.83 |
| 6,566 |
|
|
| 2.7 |
|
| $ | 96.25 |
|
|
| 6,566 |
|
| $ | 96.25 |
|
|
| 42,347 |
|
|
| 4.3 |
|
| $ | 68.95 |
|
|
| 32,264 |
|
| $ | 76.21 |
|
The weighted-average remaining contractual life of stock options exercisable as of December 31, 20192021 was 3.473.3 years.
The following table summarizes stock option activity during the years ended December 31, 2019, 20182021, 2020 and 2017:2019:
| (Shares stated in thousands) |
| (Shares stated in thousands) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| ||||||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| ||||||
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
| ||||||
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| ||||||||||||
Outstanding at beginning of year |
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
|
| 46,502 |
|
| $ | 78.31 |
|
| 48,272 |
|
| $ | 70.37 |
|
|
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
Granted |
| 5,604 |
|
| $ | 41.50 |
|
|
| 2,121 |
|
| $ | 76.95 |
|
|
| 5,024 |
|
| $ | 86.55 |
|
| - |
|
| $ | - |
|
|
| 7,468 |
|
| $ | 38.75 |
|
|
| 5,604 |
|
| $ | 41.50 |
|
Exercised |
| (1,045 | ) |
| $ | 38.50 |
|
|
| (936 | ) |
| $ | 54.20 |
|
|
| (1,156 | ) |
| $ | 57.87 |
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| (1,045 | ) |
| $ | 38.50 |
|
Forfeited |
| (1,819 | ) |
| $ | 74.69 |
|
|
| (4,866 | ) |
| $ | 84.19 |
|
|
| (3,160 | ) |
| $ | 86.99 |
| |||||||||||||||||||||||
Forfeited / Expired |
| (5,925 | ) |
| $ | 80.46 |
|
|
| (5,465 | ) |
| $ | 71.86 |
|
|
| (1,819 | ) |
| $ | 74.69 |
| |||||||||||||||||||||||
Outstanding at year-end |
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
| 42,347 |
|
| $ | 68.95 |
|
|
| 48,272 |
|
| $ | 70.37 |
|
|
| 46,269 |
|
| $ | 75.65 |
|
Stock options outstanding and stock options exercisable as of December 31, 20192021 had 0 intrinsic value.
The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $4 million, $15 million and $26 million, respectively.
Restricted Stock
Schlumberger grants performance share units to -its executives officers.certain key employees. The number of shares earned is determined at the end of each performance periodbased on Schlumberger’s achievement of certain predefined targets as defineddescribed in the underlying performance share unit agreement. In the event Schlumberger exceeds the predefined target, shares for up to thea maximum of 250% of the target award may be awarded. In the event Schlumberger falls below the predefined target, a reduced number of shares may be awarded. If Schlumberger falls below the threshold award performance level, 0 shares will be awarded. As of December 31, 2019, 3.62021, 4.9 million performance share unitswere outstanding assuming the achievement of 100% of target.
All other restricted stock awards generally vest at the end of three years.years or vest ratably in equal tranches over a three-year period.
Restricted stock awards generally do not pay dividends or have voting rights prior to vesting. Accordingly, the fair value of a restricted stock award is generally the quoted market price of Schlumberger’s stock on the date of grant less the present value of the expected dividends not received prior to vesting.
45
The following table summarizes information related to restricted stock transactions:
| (Shares stated in thousands) |
| (Shares stated in thousands) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| ||||||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| ||||||
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| ||||||||||||
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
| ||||||||||||
Unvested at beginning of year |
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
|
| 5,112 |
|
| $ | 78.31 |
|
| 18,763 |
|
| $ | 35.24 |
|
|
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
Granted |
| 7,888 |
|
| $ | 35.56 |
|
|
| 3,204 |
|
| $ | 70.54 |
|
|
| 2,495 |
|
| $ | 73.09 |
|
| 8,287 |
|
| $ | 25.16 |
|
|
| 10,637 |
|
| $ | 26.53 |
|
|
| 7,888 |
|
| $ | 35.56 |
|
Vested |
| (2,722 | ) |
| $ | 72.09 |
|
|
| (982 | ) |
| $ | 77.62 |
|
|
| (1,645 | ) |
| $ | 83.03 |
|
| (4,927 | ) |
| $ | 48.44 |
|
|
| (3,059 | ) |
| $ | 71.56 |
|
|
| (2,722 | ) |
| $ | 72.09 |
|
Forfeited |
| (295 | ) |
| $ | 57.41 |
|
|
| (699 | ) |
| $ | 70.67 |
|
|
| (534 | ) |
| $ | 80.17 |
|
| (499 | ) |
| $ | 29.64 |
|
|
| (637 | ) |
| $ | 45.95 |
|
|
| (295 | ) |
| $ | 57.41 |
|
Unvested at year-end |
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
| 21,624 |
|
| $ | 29.03 |
|
|
| 18,763 |
|
| $ | 35.24 |
|
|
| 11,822 |
|
| $ | 49.86 |
|
Discounted Stock Purchase Plan
Under the terms of the DSPP, employees can choose to have a portion of their earnings withheld, subject to certain restrictions, to purchase Schlumberger common stock. The purchase price of the stock is 92.5% of the lower of the stock price at the beginning or end of the plan period at six-month intervals.
The fair value of the employees’ purchase rights under the DSPP was estimated using the Black-Scholes model with the following assumptions and resulting weighted-average fair value per share:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Dividend yield |
| 5.3 | % |
|
| 2.9 | % |
|
| 2.7 | % |
| 2.0 | % |
|
| 4.0 | % |
|
| 5.3 | % |
Expected volatility |
| 30 | % |
|
| 22 | % |
|
| 19 | % |
| 67 | % |
|
| 43 | % |
|
| 30 | % |
Risk-free interest rate |
| 2.3 | % |
|
| 1.6 | % |
|
| 1.0 | % |
| 0.07 | % |
|
| 0.88 | % |
|
| 2.3 | % |
Weighted-average fair value per share | $ | 5.81 |
|
| $ | 9.01 |
|
| $ | 9.46 |
| $ | 6.72 |
|
| $ | 5.38 |
|
| $ | 5.81 |
|
Total Stock-based Compensation Expense
The following summarizes stock-based compensation expense recognized in income:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Stock options | $ | 99 |
|
| $ | 134 |
|
| $ | 161 |
| $ | 36 |
|
| $ | 75 |
|
| $ | 99 |
|
Restricted stock |
| 274 |
|
|
| 179 |
|
|
| 148 |
|
| 254 |
|
|
| 293 |
|
|
| 274 |
|
DSPP |
| 32 |
|
|
| 32 |
|
|
| 34 |
|
| 34 |
|
|
| 29 |
|
|
| 32 |
|
| $ | 405 |
|
| $ | 345 |
|
| $ | 343 |
| $ | 324 |
|
| $ | 397 |
|
| $ | 405 |
|
At December 31, 2019,2021, there was $324$277 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements, of which $191$171 million is expected to be recognized in 2020, $1002022, $90 million in 2021, $272023, $15 million in 2022, $62024, and $1 million in 2023.2025.
As of December 31, 2019,2021, approximately 3544 million shares of Schlumberger common stock were available for future grants under Schlumberger’s stock-based compensation programs.
46
13.12. Income Taxes
Schlumberger operates in more than 100 tax jurisdictions, where statutory tax rates generally vary from 0% to 35%.
Income (loss) before taxes subject to United States and non-United States income taxes was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
United States | $ | (8,991 | ) |
| $ | (55 | ) |
| $ | (841 | ) | $ | 30 |
|
| $ | (4,394 | ) |
| $ | (8,991 | ) |
Outside United States |
| (1,427 | ) |
|
| 2,679 |
|
|
| (342 | ) |
| 2,344 |
|
|
| (6,904 | ) |
|
| (1,427 | ) |
| $ | (10,418 | ) |
| $ | 2,624 |
|
| $ | (1,183 | ) | $ | 2,374 |
|
| $ | (11,298 | ) |
| $ | (10,418 | ) |
Schlumberger recorded net pretax credits of $65 million in 2021 ($75 million of credits in the US and $10 million of charges outside the US). Schlumberger recorded net pretax charges of $12.515 billion in 2020 ($3.961 billion in the US and $8.554 billion outside the US); and $12.901 billion in 2019 ($8.769 billion in the US and $4.132 billion outside the US); $141 million in 2018 ($102 million in the US and $39 million outside the US); and $3.764 billion in 2017 ($533 million in the US and $3.231 billion outside the US). These charges and credits are included in the table above and are more fully described in Note 3 – Charges and Credits.
The components of net deferred tax assets (liabilities) were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Postretirement benefits | $ | 51 |
|
| $ | 122 |
| |||||||
Intangible assets |
| (1,833 | ) |
|
| (2,110 | ) | $ | (855 | ) |
| $ | (881 | ) |
Investments in non-US subsidiaries |
| (220 | ) |
|
| (223 | ) | |||||||
Net operating losses |
| 427 |
|
|
| 421 |
| |||||||
Research and development credits |
| 118 |
|
|
| 96 |
| |||||||
Fixed assets, net |
| 434 |
|
|
| (140 | ) |
| 151 |
|
|
| 151 |
|
Inventories |
| 155 |
|
|
| 111 |
|
| 58 |
|
|
| 59 |
|
Foreign tax credits |
| 312 |
|
|
| 343 |
| |||||||
Investments in non-US subsidiaries |
| (161 | ) |
|
| (171 | ) | |||||||
Pension and other postretirement benefits |
| (136 | ) |
|
| (31 | ) | |||||||
Other, net |
| 610 |
|
|
| 456 |
|
| 304 |
|
|
| 337 |
|
| $ | (491 | ) |
| $ | (1,441 | ) | $ | (94 | ) |
| $ | (19 | ) |
The above deferred tax balances at December 31, 20192021 and 20182020 were net of valuation allowances relating to net operating losses in certain countries of $82$133 million and $87$127 million, respectively. Additionally, the deferred tax balances were net of valuation allowances relating to the following:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2021 |
|
| 2020 |
| ||
Foreign tax credits | $ | 210 |
|
| $ | 106 |
|
Capital losses | $ | 49 |
|
| $ | 54 |
|
Schlumberger generally does not provide for taxes relatedApproximately $390 million of the $427 million deferred tax asset relating to its undistributed earnings because such earnings either would notnet operating losses at December 31, 2021 can be taxable when remitted or they are considered to be indefinitely reinvested. Taxes that would be incurred ifcarried forward indefinitely. The vast majority of the undistributed earnings of other Schlumberger subsidiaries were distributed to their ultimate parent company would not be material.remaining balance expires at various dates between 2030 and 2040.
The components of Tax expense (benefit) were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (81 | ) |
| $ | 124 |
|
| $ | (170 | ) | $ | (32 | ) |
| $ | 21 |
|
| $ | (81 | ) |
United States-State |
| 11 |
|
|
| (50 | ) |
|
| 57 |
|
| - |
|
|
| 5 |
|
|
| 11 |
|
Outside United States |
| 770 |
|
|
| 618 |
|
|
| 703 |
|
| 509 |
|
|
| 410 |
|
|
| 770 |
|
|
| 700 |
|
|
| 692 |
|
|
| 590 |
|
| 477 |
|
|
| 436 |
|
|
| 700 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (660 | ) |
| $ | (143 | ) |
| $ | (225 | ) | $ | (132 | ) |
| $ | (824 | ) |
| $ | (660 | ) |
United States-State |
| (93 | ) |
|
| (4 | ) |
|
| 4 |
|
| 12 |
|
|
| (67 | ) |
|
| (93 | ) |
Outside United States |
| (257 | ) |
|
| (69 | ) |
|
| (47 | ) |
| (15 | ) |
|
| (563 | ) |
|
| (257 | ) |
Valuation allowance |
| (1 | ) |
|
| (29 | ) |
|
| 8 |
|
| 104 |
|
|
| 206 |
|
|
| (1 | ) |
|
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (31 | ) |
|
| (1,248 | ) |
|
| (1,011 | ) |
| $ | (311 | ) |
| $ | 447 |
|
| $ | 330 |
| $ | 446 |
|
| $ | (812 | ) |
| $ | (311 | ) |
47
A reconciliation of the United States statutory federal tax rate to the consolidated effective tax rate follows:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
US federal statutory rate |
| 21 | % |
|
| 21 | % |
|
| 35 | % |
| 21 | % |
|
| 21 | % |
|
| 21 | % |
State tax |
| - |
|
|
| (2 | ) |
|
| - |
| |||||||||||
Non-US income taxed at different rates |
| - |
|
|
| (2 | ) |
|
| 29 |
| |||||||||||
Charges and credits (See Note 3) |
| (19 | ) |
|
| - |
|
|
| (93 | ) |
| - |
|
|
| (14 | ) |
|
| (19 | ) |
Enactment of US tax reform (See Note 3) |
| - |
|
|
| - |
|
|
| (6 | ) | |||||||||||
Other |
| 1 |
|
|
| - |
|
|
| 7 |
|
| (2 | ) |
|
| - |
|
|
| 1 |
|
|
| 3 | % |
|
| 17 | % |
|
| (28 | )% |
| 19 | % |
|
| 7 | % |
|
| 3 | % |
A number of the jurisdictions in which Schlumberger operates have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audit by the tax authorities. These audits may result in assessments for additional taxes that are resolved with the tax authorities or, potentially, through the courts. Tax liabilities are recorded based on estimates of
additional taxes that will be due upon the conclusion of these audits. Due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities which could be materially different from these estimates.
A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for the years ended December 31, 2019, 20182021, 2020 and 20172019 is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Balance at beginning of year | $ | 1,433 |
|
| $ | 1,393 |
|
| $ | 1,419 |
| $ | 1,271 |
|
| $ | 1,301 |
|
| $ | 1,433 |
|
Additions based on tax positions related to the current year |
| 86 |
|
|
| 88 |
|
|
| 132 |
|
| 38 |
|
|
| 76 |
|
|
| 86 |
|
Additions for tax positions of prior years |
| 65 |
|
|
| 145 |
|
|
| 58 |
|
| 19 |
|
|
| 78 |
|
|
| 65 |
|
Impact of changes in exchange rates |
| 2 |
|
|
| (41 | ) |
|
| 23 |
|
| (24 | ) |
|
| (3 | ) |
|
| 2 |
|
Settlements with tax authorities |
| (50 | ) |
|
| (22 | ) |
|
| (41 | ) |
| (49 | ) |
|
| (15 | ) |
|
| (50 | ) |
Reductions for tax positions of prior years |
| (176 | ) |
|
| (57 | ) |
|
| (157 | ) |
| (228 | ) |
|
| (87 | ) |
|
| (176 | ) |
Reductions due to the lapse of the applicable statute of limitations |
| (59 | ) |
|
| (73 | ) |
|
| (41 | ) |
| (26 | ) |
|
| (79 | ) |
|
| (59 | ) |
| $ | 1,301 |
|
| $ | 1,433 |
|
| $ | 1,393 |
| $ | 1,001 |
|
| $ | 1,271 |
|
| $ | 1,301 |
|
The amounts above exclude accrued interest and penalties of $188$164 million, $205$184 million and $195$188 million at December 31, 2019, 20182021, 2020 and 2017,2019, respectively. Schlumberger classifies interest and penalties relating to uncertain tax positions within Tax expense (benefit) in the Consolidated Statement of Income (Loss).
The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Schlumberger operates:
Canada |
|
Ecuador |
|
Mexico |
|
Norway |
|
Russia | 2016 - |
Saudi Arabia |
|
United Kingdom | 2017 - |
United States | 2017 - |
In certain of the jurisdictions noted above, Schlumberger operates through more than one legal entity, each of which may have different open years subject to examination. The table above presents the open years subject to examination for the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above, the statute of limitations can extend beyond the open years subject to examination.
48
14.13. Leases and Lease Commitments
During the fourth quarter of 2018, Schlumberger adopted ASU No. 2016-02, Leases, effective January 1, 2018. This ASU requires lessees to recognize an operating lease asset and a lease liability on the balance sheet, with the exception of short-term leases.
Under the transition method selected by Schlumberger, leases existing at, or entered into after, January 1, 2018 were required to be recognized and measured. Prior period amounts have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting. The adoption of this standard resulted in the recording of operating lease assets and operating lease liabilities of approximately of $1.3 billion as of January 1, 2018, with no related impact on Schlumberger’s Consolidated Statement of Equity or Consolidated Statement of Income (Loss). Short-term leases have not been recorded on the balance sheet.
Schlumberger elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allows companies to carry forward their historical lease classification.
Schlumberger’s leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities, research centers, service centers, sales offices and certain equipment. Total operating lease expense, which approximates cash paid and includes short-term leases, was $1.2 billion in 2021, $1.4 billion in 2020 and $1.7 billion in each of 2019and 2018, and $1.4 billion in 2017.2019.
Maturities of operating lease liabilities as of December 31, 20192021 were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||
|
|
|
|
|
|
|
2020 | $ | 510 |
| |||
2021 |
| 276 |
| |||
2022 |
| 188 |
| $ | 191 |
|
2023 |
| 152 |
|
| 159 |
|
2024 |
| 124 |
|
| 128 |
|
2025 |
| 99 |
| |||
2026 |
| 73 |
| |||
Thereafter |
| 332 |
|
| 286 |
|
Total lease payments | $ | 1,582 |
| $ | 936 |
|
Less: Interest |
| (171 | ) |
| (122 | ) |
| $ | 1,411 |
| $ | 814 |
|
Amounts recognized in Balance Sheet |
|
|
| |||
Amounts recognized in balance sheet |
|
|
| |||
Accounts payable and accrued liabilities | $ | 494 |
| $ | 186 |
|
Other Liabilities |
| 917 |
|
| 628 |
|
| $ | 1,411 |
| $ | 814 |
|
Operating lease assets of $1.3$0.6 billion and $1.8$0.7 billion as of December 31, 20192021 and 2018,2020, respectively, were included in Other Assets in the Consolidated Balance Sheet. Operating lease liabilities as of December 31, 20182020 were $1.8$1.0 billion, of which $0.6$0.2 billion was classified in Accounts payable and accrued liabilities and $1.2$0.8 billion was classified in Other Liabilities in the Consolidated Balance Sheet.
The weighted-average remaining lease term as of December 31, 20192021 was 710 years. The weighted-average discount rate used to determine the operating lease liability as of December 31, 20192021 was 3.2%3.1%.
15.14. Contingencies
Schlumberger is 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 proceeding is remote. However, litigation is inherently uncertain, and it is not possible to predict the ultimate disposition of any of these proceedings.
49
16.15. Segment Information
Schlumberger is organized under four Divisions that combine and integrate Schlumberger’s technologies, enhancing the Company’s ability to support the emerging long-term growth opportunities in each of these market segments.
The four Divisions, representing Schlumberger’s segments, are as follows:are:
| • |
|
• |
• |
• |
Financial information for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, by segment, is as follows:
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| 2021 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| ||||||||||
Reservoir Characterization | $ | 6,312 |
|
| $ | 1,327 |
|
| $ | 3,909 |
|
| $ | 643 |
|
| $ | 307 |
| |||||||||||||||||||
Drilling |
| 9,721 |
|
|
| 1,216 |
|
|
| 5,724 |
|
|
| 540 |
|
|
| 616 |
| |||||||||||||||||||
Production |
| 11,987 |
|
|
| 993 |
|
|
| 10,289 |
|
|
| 1,540 |
|
|
| 551 |
| |||||||||||||||||||
Cameron |
| 5,336 |
|
|
| 613 |
|
|
| 4,102 |
|
|
| 233 |
|
|
| 166 |
| |||||||||||||||||||
Digital & Integration | $ | 3,290 |
|
| $ | 1,141 |
|
| $ | 3,134 |
|
| $ | 446 |
|
| $ | 516 |
| |||||||||||||||||||
Reservoir Performance |
| 4,599 |
|
|
| 648 |
|
|
| 2,923 |
|
|
| 415 |
|
|
| 348 |
| |||||||||||||||||||
Well Construction |
| 8,706 |
|
|
| 1,195 |
|
|
| 4,714 |
|
|
| 537 |
|
|
| 424 |
| |||||||||||||||||||
Production Systems |
| 6,710 |
|
|
| 634 |
|
|
| 4,684 |
|
|
| 302 |
|
|
| 267 |
| |||||||||||||||||||
Eliminations & other |
| (439 | ) |
|
| (171 | ) |
|
| 1,414 |
|
|
| 216 |
|
|
| 84 |
|
| (376 | ) |
|
| (253 | ) |
|
| 1,501 |
|
|
| 269 |
|
|
| 99 |
|
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 23,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,201 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,167 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 3,139 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 5,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,215 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (957 | ) |
|
|
|
|
|
| 417 |
|
|
|
|
|
|
|
|
|
| (573 | ) |
|
|
|
|
|
| 151 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (571 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (514 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 56,312 |
|
| $ | 3,589 |
|
| $ | 1,724 |
| $ | 22,929 |
|
| $ | 2,374 |
|
| $ | 41,511 |
|
| $ | 2,120 |
|
| $ | 1,654 |
|
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| |||||
Digital & Integration | $ | 3,067 |
|
| $ | 727 |
|
| $ | 3,595 |
|
| $ | 615 |
|
| $ | 413 |
|
Reservoir Performance |
| 5,602 |
|
|
| 353 |
|
|
| 3,489 |
|
|
| 549 |
|
|
| 384 |
|
Well Construction |
| 8,614 |
|
|
| 870 |
|
|
| 4,768 |
|
|
| 580 |
|
|
| 420 |
|
Production Systems |
| 6,650 |
|
|
| 623 |
|
|
| 4,665 |
|
|
| 338 |
|
|
| 240 |
|
Eliminations & other |
| (332 | ) |
|
| (172 | ) |
|
| 940 |
|
|
| 276 |
|
|
| 63 |
|
|
|
|
|
|
| 2,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 16,436 |
|
|
|
|
|
|
|
|
|
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 3,006 |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
|
|
|
|
|
|
| 5,535 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (681 | ) |
|
|
|
|
|
| 208 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (534 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (12,515 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 23,601 |
|
| $ | (11,298 | ) |
| $ | 42,434 |
|
| $ | 2,566 |
|
| $ | 1,520 |
|
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| |||||
Reservoir Characterization | $ | 6,173 |
|
| $ | 1,347 |
|
| $ | 4,306 |
|
| $ | 667 |
|
| $ | 296 |
|
Drilling |
| 9,250 |
|
|
| 1,239 |
|
|
| 5,843 |
|
|
| 597 |
|
|
| 718 |
|
Production |
| 12,394 |
|
|
| 1,052 |
|
|
| 12,625 |
|
|
| 1,417 |
|
|
| 886 |
|
Cameron |
| 5,520 |
|
|
| 653 |
|
|
| 4,138 |
|
|
| 247 |
|
|
| 152 |
|
Eliminations & other |
| (522 | ) |
|
| (104 | ) |
|
| 1,460 |
|
|
| 189 |
|
|
| 108 |
|
|
|
|
|
|
| 4,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 33,658 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,777 |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
|
|
|
|
|
|
| 5,700 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (937 | ) |
|
|
|
|
|
| 439 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (141 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,815 |
|
| $ | 2,624 |
|
| $ | 70,507 |
|
| $ | 3,556 |
|
| $ | 2,160 |
|
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2019 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Investments |
| ||||||||||
Reservoir Characterization | $ | 6,476 |
|
| $ | 1,184 |
|
| $ | 4,714 |
|
| $ | 981 |
|
| $ | 304 |
| |||||||||||||||||||
Drilling |
| 8,392 |
|
|
| 1,151 |
|
|
| 5,513 |
|
|
| 697 |
|
|
| 629 |
| |||||||||||||||||||
Production |
| 10,630 |
|
|
| 936 |
|
|
| 12,450 |
|
|
| 1,240 |
|
|
| 889 |
| |||||||||||||||||||
Cameron |
| 5,524 |
|
|
| 792 |
|
|
| 4,156 |
|
|
| 268 |
|
|
| 151 |
| |||||||||||||||||||
Digital & Integration | $ | 4,145 |
|
| $ | 882 |
|
| $ | 6,388 |
|
| $ | 1,069 |
|
| $ | 1,020 |
| |||||||||||||||||||
Reservoir Performance |
| 9,299 |
|
|
| 992 |
|
|
| 5,198 |
|
|
| 807 |
|
|
| 569 |
| |||||||||||||||||||
Well Construction |
| 11,880 |
|
|
| 1,429 |
|
|
| 6,913 |
|
|
| 656 |
|
|
| 650 |
| |||||||||||||||||||
Production Systems |
| 8,167 |
|
|
| 847 |
|
|
| 5,625 |
|
|
| 390 |
|
|
| 384 |
| |||||||||||||||||||
Eliminations & other |
| (582 | ) |
|
| (142 | ) |
|
| 1,665 |
|
|
| 213 |
|
|
| 134 |
|
| (574 | ) |
|
| (172 | ) |
|
| 1,314 |
|
|
| 250 |
|
|
| 113 |
|
|
|
|
|
|
| 3,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 34,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23,130 |
|
|
|
|
|
|
|
|
|
Cash, short term investments and fixed income investments |
|
|
|
|
|
|
|
|
| 5,089 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 2,167 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 3,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,577 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (934 | ) |
|
|
|
|
|
| 438 |
|
|
|
|
|
|
|
|
|
| (957 | ) |
|
|
|
|
|
| 417 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (513 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (571 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (3,764 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 30,440 |
|
| $ | (1,183 | ) |
| $ | 71,987 |
|
| $ | 3,837 |
|
| $ | 2,107 |
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 56,312 |
|
| $ | 3,589 |
|
| $ | 2,736 |
|
(1) | Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, |
(2) | Interest income excludes amounts which are included in the segments’ income |
(3) | Interest expense excludes amounts which are included in the segments’ income |
(4) | See Note 3 – Charges and Credits. |
Segment assets consist of receivables, inventories, fixed assets, multiclient seismic data and APS investments.
51Capital investments includes capital expenditures, APS investments and multiclient seismic data cost capitalized.
Depreciation and amortization includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and APS investments.
Revenue by geographic area for the years ended December 31, 2019, 20182021, 2020 and 20172019 is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
North America | $ | 10,843 |
|
| $ | 11,984 |
|
| $ | 9,487 |
| $ | 4,466 |
|
| $ | 5,478 |
|
| $ | 10,446 |
|
Latin America |
| 4,149 |
|
|
| 3,745 |
|
|
| 3,976 |
|
| 4,459 |
|
|
| 3,472 |
|
|
| 4,544 |
|
Europe/CIS/Africa |
| 7,683 |
|
|
| 7,158 |
|
|
| 7,072 |
|
| 5,778 |
|
|
| 5,963 |
|
|
| 7,682 |
|
Middle East & Asia |
| 10,017 |
|
|
| 9,543 |
|
|
| 9,394 |
|
| 8,059 |
|
|
| 8,567 |
|
|
| 10,016 |
|
Eliminations & other |
| 225 |
|
|
| 385 |
|
|
| 511 |
|
| 167 |
|
|
| 121 |
|
|
| 229 |
|
| $ | 32,917 |
|
| $ | 32,815 |
|
| $ | 30,440 |
| $ | 22,929 |
|
| $ | 23,601 |
|
| $ | 32,917 |
|
Revenue is based on the location where services are provided and products are sold.
During each of the three years ended December 31, 2019, 20182021, 2020 and 2017,2019, no single customer exceeded 10% of consolidated revenue.
Schlumberger did not have revenue from third-party customers in its country of domicile during the last three years. Revenue in the United States in 2021, 2020 and 2019 2018was $3.4 billion, $4.5 billion and 2017 was $9.3 billion, $10.1 billion and $8.1 billion, respectively.
North America and International revenue disaggregated by segment was as follows:
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Reservoir Characterization | $ | 1,027 |
|
| $ | 5,263 |
|
| $ | 22 |
|
| $ | 6,312 |
|
Drilling |
| 2,220 |
|
|
| 7,294 |
|
|
| 207 |
|
|
| 9,721 |
|
Production |
| 5,336 |
|
|
| 6,647 |
|
|
| 4 |
|
|
| 11,987 |
|
Cameron |
| 2,318 |
|
|
| 2,975 |
|
|
| 43 |
|
|
| 5,336 |
|
Other |
| (58 | ) |
|
| (330 | ) |
|
| (51 | ) |
|
| (439 | ) |
| $ | 10,843 |
|
| $ | 21,849 |
|
| $ | 225 |
|
| $ | 32,917 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 812 |
|
| $ | 2,474 |
|
| $ | 4 |
|
| $ | 3,290 |
|
Reservoir Performance |
| 329 |
|
|
| 4,266 |
|
|
| 4 |
|
|
| 4,599 |
|
Well Construction |
| 1,485 |
|
|
| 7,025 |
|
|
| 196 |
|
|
| 8,706 |
|
Production Systems |
| 1,832 |
|
|
| 4,865 |
|
|
| 13 |
|
|
| 6,710 |
|
Eliminations & other |
| 8 |
|
|
| (334 | ) |
|
| (50 | ) |
|
| (376 | ) |
| $ | 4,466 |
|
| $ | 18,296 |
|
| $ | 167 |
|
| $ | 22,929 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Reservoir Characterization | $ | 992 |
|
| $ | 5,031 |
|
| $ | 150 |
|
| $ | 6,173 |
|
Drilling |
| 2,332 |
|
|
| 6,684 |
|
|
| 234 |
|
|
| 9,250 |
|
Production |
| 6,312 |
|
|
| 6,077 |
|
|
| 5 |
|
|
| 12,394 |
|
Cameron |
| 2,427 |
|
|
| 3,007 |
|
|
| 86 |
|
|
| 5,520 |
|
Other |
| (79 | ) |
|
| (353 | ) |
|
| (90 | ) |
|
| (522 | ) |
| $ | 11,984 |
|
| $ | 20,446 |
|
| $ | 385 |
|
| $ | 32,815 |
|
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 573 |
|
| $ | 2,487 |
|
| $ | 7 |
|
| $ | 3,067 |
|
Reservoir Performance |
| 1,547 |
|
|
| 4,043 |
|
|
| 12 |
|
|
| 5,602 |
|
Well Construction |
| 1,453 |
|
|
| 6,965 |
|
|
| 196 |
|
|
| 8,614 |
|
Production Systems |
| 1,921 |
|
|
| 4,702 |
|
|
| 27 |
|
|
| 6,650 |
|
Eliminations & other |
| (16 | ) |
|
| (195 | ) |
|
| (121 | ) |
|
| (332 | ) |
| $ | 5,478 |
|
| $ | 18,002 |
|
| $ | 121 |
|
| $ | 23,601 |
|
52
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| |||||||||||||
| North America |
|
| International |
|
| Eliminations & other |
|
| Total |
| ||||
Digital & Integration | $ | 865 |
|
| $ | 3,272 |
|
| $ | 8 |
|
| $ | 4,145 |
|
Reservoir Performance |
| 3,779 |
|
|
| 5,508 |
|
|
| 12 |
|
|
| 9,299 |
|
Well Construction |
| 2,814 |
|
|
| 8,809 |
|
|
| 257 |
|
|
| 11,880 |
|
Production Systems |
| 3,053 |
|
|
| 5,060 |
|
|
| 54 |
|
|
| 8,167 |
|
Eliminations & other |
| (65 | ) |
|
| (407 | ) |
|
| (102 | ) |
|
| (574 | ) |
| $ | 10,446 |
|
| $ | 22,242 |
|
| $ | 229 |
|
| $ | 32,917 |
|
Fixed Assets less accumulated depreciation by geographic area are as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
North America | $ | 3,646 |
|
| $ | 5,715 |
| $ | 1,368 |
|
| $ | 1,588 |
|
Latin America |
| 824 |
|
|
| 898 |
|
| 868 |
|
|
| 841 |
|
Europe/CIS/Africa |
| 2,258 |
|
|
| 2,364 |
|
| 1,690 |
|
|
| 1,840 |
|
Middle East & Asia |
| 2,453 |
|
|
| 2,604 |
|
| 2,049 |
|
|
| 2,353 |
|
Unallocated |
| 89 |
|
|
| 98 |
|
| 454 |
|
|
| 204 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,429 |
|
| $ | 6,826 |
|
17.16. Pension and Other Postretirement Benefit Plans
Pension Plans
Schlumberger sponsors several defined benefit pension plans that cover substantially all US employees hired prior to October 1, 2004. The benefits are based on years of service and compensation, on a career-average pay basis.
In addition to the US defined benefit pension plans, Schlumberger sponsors several other international defined benefit pension plans. The most significant of these international plans are the International Staff Pension Plan and the UK pension plan (collectively, the “International plans”). The International Staff Pension Plan covers certain international employees hired prior to July 1, 2014 and is based on years of service and compensation on a career-average pay basis. The UK plan covers employees hired prior to April 1, 1999, and is based on years of service and compensation, on a final salary basis.
The weighted-average assumed discount rate, compensation increases and expected long-term rate of return on plan assets used to determine the net pension cost for the US and International plans were as follows:
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||||||||
Discount rate |
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
|
| 4.00 | % |
|
| 3.55 | % |
|
| 4.13 | % |
| 2.60 | % |
|
| 3.30 | % |
|
| 4.30 | % |
|
| 2.38 | % |
|
| 3.27 | % |
|
| 4.00 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.81 | % |
|
| 4.81 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.82 | % |
|
| 4.83 | % |
|
| 4.83 | % |
Return on plan assets |
| 6.60 | % |
|
| 7.25 | % |
|
| 7.25 | % |
|
| 7.22 | % |
|
| 7.40 | % |
|
| 7.40 | % |
| 6.60 | % |
|
| 6.60 | % |
|
| 6.60 | % |
|
| 6.73 | % |
|
| 6.71 | % |
|
| 7.22 | % |
Net pension cost (credit) for 2019, 2018 and 2017 included the following components:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||||||||
Service cost - benefits earned during the period | $ | 49 |
|
| $ | 59 |
|
| $ | 57 |
|
| $ | 112 |
|
| $ | 138 |
|
| $ | 95 |
| |||||||||||||||||||||||
Interest cost on projected benefit obligation |
| 180 |
|
|
| 167 |
|
|
| 175 |
|
|
| 333 |
|
|
| 304 |
|
|
| 306 |
| |||||||||||||||||||||||
Service cost | $ | 44 |
|
| $ | 55 |
|
| $ | 49 |
|
| $ | 117 |
|
| $ | 140 |
|
| $ | 112 |
| |||||||||||||||||||||||
Interest cost |
| 127 |
|
|
| 148 |
|
|
| 180 |
|
|
| 267 |
|
|
| 301 |
|
|
| 333 |
| |||||||||||||||||||||||
Expected return on plan assets |
| (232 | ) |
|
| (248 | ) |
|
| (242 | ) |
|
| (592 | ) |
|
| (584 | ) |
|
| (541 | ) |
| (254 | ) |
|
| (233 | ) |
|
| (232 | ) |
|
| (640 | ) |
|
| (591 | ) |
|
| (592 | ) |
Amortization of prior service cost |
| 10 |
|
|
| 13 |
|
|
| 12 |
|
|
| 7 |
|
|
| 10 |
|
|
| 97 |
|
| - |
|
|
| 8 |
|
|
| 10 |
|
|
| - |
|
|
| - |
|
|
| 7 |
|
Amortization of net loss |
| 29 |
|
|
| 47 |
|
|
| 39 |
|
|
| 70 |
|
|
| 140 |
|
|
| 120 |
|
| 44 |
|
|
| 41 |
|
|
| 29 |
|
|
| 227 |
|
|
| 159 |
|
|
| 70 |
|
Settlement charge |
| 37 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
|
| - |
|
|
| 37 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 73 |
|
| $ | 38 |
|
| $ | 41 |
|
| $ | (70 | ) |
| $ | 8 |
|
| $ | 77 |
| $ | (39 | ) |
| $ | 19 |
|
| $ | 73 |
|
| $ | (29 | ) |
| $ | 9 |
|
| $ | (70 | ) |
During 2019, certain of Schlumberger’s deferred benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit. Schlumberger’s pension plans paid $257 million from pension plan assets to those who accepted this offer, thereby reducing its pension benefit obligations. These transactions resulted in a non-cash pension settlement charge of $37 million, representing the immediate recognition of the related deferred actuarial losses in Accumulated Other Comprehensive Loss, in the fourth quarter of 2019. See Note 3 -– Charges and Credits for details regarding the 2019 settlement charge..
The weighted-average assumed discount rate and compensation increases used to determine the projected benefit obligations for the US and International plans were as follows:
|
|
|
|
| ||||||||||||||||||||||||||
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 3.27 | % |
|
| 4.00 | % |
| 3.00 | % |
|
| 2.60 | % |
|
| 2.83 | % |
|
| 2.38 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.83 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.82 | % |
The changes in the projected benefit obligation, plan assets and funded status of the plans were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
| International |
| US |
|
| International |
| ||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Change in Projected Benefit Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year | $ | 4,278 |
|
| $ | 4,603 |
|
| $ | 8,111 |
|
| $ | 8,752 |
| $ | 4,940 |
|
| $ | 4,593 |
|
| $ | 11,140 |
|
| $ | 9,647 |
|
Service cost |
| 49 |
|
|
| 59 |
|
|
| 112 |
|
|
| 138 |
|
| 44 |
|
|
| 55 |
|
|
| 117 |
|
|
| 140 |
|
Interest cost |
| 180 |
|
|
| 167 |
|
|
| 333 |
|
|
| 304 |
|
| 127 |
|
|
| 148 |
|
|
| 267 |
|
|
| 301 |
|
Contribution by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 53 |
|
|
| 94 |
|
Actuarial (gains) losses |
| 535 |
|
|
| (349 | ) |
|
| 1,304 |
|
|
| (758 | ) |
| (211 | ) |
|
| 370 |
|
|
| (586 | ) |
|
| 1,228 |
|
Currency effect |
| - |
|
|
| - |
|
|
| 50 |
|
|
| (87 | ) |
| - |
|
|
| - |
|
|
| (18 | ) |
|
| 68 |
|
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
| |||||||||||||||
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (232 | ) |
|
| (226 | ) |
|
| (355 | ) |
|
| (338 | ) |
Projected benefit obligation at end of year | $ | 4,593 |
|
| $ | 4,278 |
|
| $ | 9,647 |
|
| $ | 8,111 |
| $ | 4,668 |
|
| $ | 4,940 |
|
| $ | 10,618 |
|
| $ | 11,140 |
|
Change in Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets at fair value at beginning of year | $ | 3,748 |
|
| $ | 4,058 |
|
| $ | 7,872 |
|
| $ | 8,507 |
| $ | 4,776 |
|
| $ | 4,236 |
|
| $ | 10,493 |
|
| $ | 9,363 |
|
Actual return on plan assets |
| 931 |
|
|
| (112 | ) |
|
| 1,676 |
|
|
| (370 | ) |
| 145 |
|
|
| 760 |
|
|
| 1,040 |
|
|
| 1,282 |
|
Currency effect |
| - |
|
|
| - |
|
|
| 59 |
|
|
| (105 | ) |
| - |
|
|
| - |
|
|
| (28 | ) |
|
| 72 |
|
Company contributions |
| 6 |
|
|
| 4 |
|
|
| 19 |
|
|
| 78 |
|
| 7 |
|
|
| 6 |
|
|
| 18 |
|
|
| 20 |
|
Contributions by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 53 |
|
|
| 94 |
|
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
| |||||||||||||||
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (232 | ) |
|
| (226 | ) |
|
| (355 | ) |
|
| (338 | ) |
Plan assets at fair value at end of year | $ | 4,236 |
|
| $ | 3,748 |
|
| $ | 9,363 |
|
| $ | 7,872 |
| $ | 4,696 |
|
| $ | 4,776 |
|
| $ | 11,221 |
|
| $ | 10,493 |
|
Unfunded Liability | $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | |||||||||||||||
Asset / (Unfunded Liability) | $ | 28 |
|
| $ | (164 | ) |
| $ | 603 |
|
| $ | (647 | ) | |||||||||||||||
Amounts Recognized in Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Benefits | $ | (357 | ) |
| $ | (530 | ) |
| $ | (602 | ) |
| $ | (514 | ) | $ | (212 | ) |
| $ | (199 | ) |
| $ | (19 | ) |
| $ | (849 | ) |
Other Assets |
| - |
|
|
| - |
|
|
| 318 |
|
|
| 275 |
|
| 240 |
|
|
| 35 |
|
|
| 622 |
|
|
| 202 |
|
| $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | $ | 28 |
|
| $ | (164 | ) |
| $ | 603 |
|
| $ | (647 | ) |
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses | $ | 622 |
|
| $ | 852 |
|
| $ | 1,638 |
|
| $ | 1,440 |
| $ | 276 |
|
| $ | 423 |
|
| $ | 1,174 |
|
| $ | 1,981 |
|
Prior service cost |
| 9 |
|
|
| 18 |
|
|
| - |
|
|
| 9 |
|
| - |
|
|
| 1 |
|
|
| - |
|
|
| - |
|
| $ | 631 |
|
| $ | 870 |
|
| $ | 1,638 |
|
| $ | 1,449 |
| $ | 276 |
|
| $ | 424 |
|
| $ | 1,174 |
|
| $ | 1,981 |
|
Accumulated benefit obligation | $ | 4,345 |
|
| $ | 4,070 |
|
| $ | 9,376 |
|
| $ | 7,895 |
| $ | 4,484 |
|
| $ | 4,739 |
|
| $ | 10,370 |
|
| $ | 10,844 |
|
54
The unfunded liabilityasset / (unfunded liability) represents the difference between the plan assets and the projected benefit obligation (“PBO”). The PBO represents the actuarial present value of benefits based on employee service and compensation and includes an assumption about future compensation levels. The accumulated benefit obligation (“ABO”) represents the actuarial present value of benefits based on employee service and compensation but does not include an assumption about future compensation levels.
Actuarial gains arising during 2021 and actuarial losses arising during 2019 are2020 were primarily attributable to the decreasechanges in the discount rate used to determine the PBO. As of December 31, 2019, the PBO and fair value of plan assets for plans with PBOs in excess of plan assets were $12.6 billion and $11.7 billion, respectively. The related ABO for these plans was $12.2 billion at December 31, 2019.
The weighted-average allocation of plan assets and the target allocations by asset category as of December 31, 2021 are as follows:
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| US |
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| International |
| US |
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| International |
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| Target |
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| 2019 |
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| 2018 |
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| Target |
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| 2019 |
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| 2018 |
| Target |
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| 2021 |
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| 2020 |
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| Target |
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| 2021 |
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| 2020 |
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Equity securities | 20 - 30 |
| % |
|
| 22 |
| % |
|
| 21 |
| % |
| 47 - 59 |
| % |
|
| 50 |
| % |
|
| 50 |
| 4 - 8 |
| % |
|
| 5 |
| % |
|
| 15 |
| % |
| 20 - 30 |
| % |
|
| 23 |
| % |
|
| 45 |
| % | ||||
Debt securities | 63 - 77 |
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| 70 |
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| 70 |
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| 27 - 33 |
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| 31 |
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| 32 |
| 80 - 90 |
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| 84 |
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| 76 |
|
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| 50 - 60 |
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| 53 |
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| 35 |
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Cash and cash equivalents | 0 - 3 |
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| 2 |
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| 2 |
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| 0 - 5 |
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| 4 |
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| 2 |
| 0 - 3 |
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| 2 |
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| 3 |
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| 0 - 5 |
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| 3 |
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| 3 |
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Alternative investments | 5 - 10 |
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| 6 |
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| 7 |
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| 15 - 22 |
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| 15 |
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| 16 |
| 8 - 15 |
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| 9 |
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| 6 |
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| 19 - 26 |
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| 21 |
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| 17 |
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|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
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| 100 |
| % |
|
| 100 |
| % |
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| 100 |
|
| 100 |
| % |
|
| 100 |
| % |
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| 100 |
| % |
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| 100 |
| % |
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| 100 |
| % |
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| 100 |
| % |
Asset performance is monitored frequently with an overall expectation that plan assets will meet or exceed the weighted index of its target asset allocation and component benchmark over rolling five-year periods.
The expected rate of return on assets assumptions reflect the long-term average rate of earnings expected on funds invested or to be invested. The assumptions have been determined based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rates of return. The appropriateness of the assumptions is reviewed annually.
The fair value of Schlumberger’s pension plan assets at December 31, 20192021 and 2018,2020, by asset category, is presented below and was determined based on valuation techniques categorized as follows:
| • | Level One: The use of quoted prices in active markets for identical instruments. |
| • | Level Two: The use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or other inputs that are observable in the market or can be corroborated by observable market data. |
| • | Level Three: The use of significant unobservable inputs that typically require the use of management’s estimates of assumptions that market participants would use in pricing. |
55
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
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| US Plan Assets |
| US Plan Assets |
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| 2019 |
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| 2018 |
| 2021 |
|
| 2020 |
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|
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
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| Level |
| ||||||||||||
| Total |
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| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
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Asset Category: |
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 73 |
|
| $ | 59 |
|
| $ | 14 |
|
| $ | - |
|
| $ | 80 |
|
| $ | 44 |
|
| $ | 36 |
|
| $ | - |
| $ | 68 |
|
| $ | 61 |
|
| $ | 7 |
|
| $ | - |
|
| $ | 140 |
|
| $ | 127 |
|
| $ | 13 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
| 605 |
|
|
| 500 |
|
|
| 105 |
|
|
| - |
|
|
| 501 |
|
|
| 416 |
|
|
| 85 |
|
|
| - |
|
| 212 |
|
|
| 196 |
|
|
| 16 |
|
|
| - |
|
|
| 527 |
|
|
| 441 |
|
|
| 86 |
|
|
| - |
|
International |
| 320 |
|
|
| 315 |
|
|
| 5 |
|
|
| - |
|
|
| 267 |
|
|
| 263 |
|
|
| 4 |
|
|
| - |
|
| 49 |
|
|
| 48 |
|
|
| 1 |
|
|
| - |
|
|
| 186 |
|
|
| 182 |
|
|
| 4 |
|
|
| - |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Corporate bonds |
| 1,687 |
|
|
| - |
|
|
| 1,687 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
| 2,583 |
|
|
| - |
|
|
| 2,583 |
|
|
| - |
|
|
| 1,945 |
|
|
| - |
|
|
| 1,945 |
|
|
| - |
|
Government and government-related debt securities |
| 1,256 |
|
|
| 74 |
|
|
| 1,182 |
|
|
| - |
|
|
| 1,072 |
|
|
| 66 |
|
|
| 1,006 |
|
|
| - |
|
| 1,353 |
|
|
| 199 |
|
|
| 1,154 |
|
|
| - |
|
|
| 1,679 |
|
|
| 180 |
|
|
| 1,499 |
|
|
| - |
|
Collateralized mortgage obligations and mortgage backed securities (e) |
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
|
| 40 |
|
|
| - |
|
|
| 40 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity (f) |
| 181 |
|
|
| - |
|
|
| - |
|
|
| 181 |
|
|
| 185 |
|
|
| - |
|
|
| - |
|
|
| 185 |
| |||||||||||||||||||||||||||||||
Real estate (g) |
| 93 |
|
|
| - |
|
|
| - |
|
|
| 93 |
|
|
| 86 |
|
|
| - |
|
|
| - |
|
|
| 86 |
| |||||||||||||||||||||||||||||||
Private equity |
| 293 |
|
|
| - |
|
|
| - |
|
|
| 293 |
|
|
| 204 |
|
|
| - |
|
|
| - |
|
|
| 204 |
| |||||||||||||||||||||||||||||||
Real estate |
| 99 |
|
|
| - |
|
|
| - |
|
|
| 99 |
|
|
| 95 |
|
|
| - |
|
|
| - |
|
|
| 95 |
| |||||||||||||||||||||||||||||||
Private debt |
| 39 |
|
|
| - |
|
|
| - |
|
|
| 39 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |||||||||||||||||||||||||||||||
Total | $ | 4,236 |
|
| $ | 948 |
|
| $ | 3,014 |
|
| $ | 274 |
|
| $ | 3,748 |
|
| $ | 789 |
|
| $ | 2,688 |
|
| $ | 271 |
| $ | 4,696 |
|
| $ | 504 |
|
| $ | 3,761 |
|
| $ | 431 |
|
| $ | 4,776 |
|
| $ | 930 |
|
| $ | 3,547 |
|
| $ | 299 |
|
(Stated in millions) |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| International Plan Assets |
| |||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| ||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 351 |
|
| $ | 166 |
|
| $ | 185 |
|
| $ | - |
|
| $ | 157 |
|
| $ | 75 |
|
| $ | 82 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US (a) |
| 2,834 |
|
|
| 2,347 |
|
|
| 487 |
|
|
| - |
|
|
| 2,421 |
|
|
| 2,028 |
|
|
| 393 |
|
|
| - |
|
International (b) |
| 1,871 |
|
|
| 1,723 |
|
|
| 148 |
|
|
| - |
|
|
| 1,526 |
|
|
| 1,406 |
|
|
| 120 |
|
|
| - |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds (c) |
| 1,105 |
|
|
| - |
|
|
| 1,105 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
Government and government-related debt securities (d) |
| 1,602 |
|
|
| 5 |
|
|
| 1,597 |
|
|
| - |
|
|
| 1,377 |
|
|
| 5 |
|
|
| 1,372 |
|
|
| - |
|
Collateralized mortgage obligations and mortgage backed securities (e) |
| 161 |
|
|
| - |
|
|
| 161 |
|
|
| - |
|
|
| 236 |
|
|
| - |
|
|
| 236 |
|
|
| - |
|
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity (f) |
| 623 |
|
|
| - |
|
|
| - |
|
|
| 623 |
|
|
| 565 |
|
|
| - |
|
|
| - |
|
|
| 565 |
|
Real estate (g) |
| 183 |
|
|
| - |
|
|
| - |
|
|
| 183 |
|
|
| 150 |
|
|
| - |
|
|
| - |
|
|
| 150 |
|
Other |
| 633 |
|
|
| - |
|
|
| - |
|
|
| 633 |
|
|
| 517 |
|
|
| - |
|
|
| - |
|
|
| 517 |
|
Total | $ | 9,363 |
|
| $ | 4,241 |
|
| $ | 3,683 |
|
| $ | 1,439 |
|
| $ | 7,872 |
|
| $ | 3,514 |
|
| $ | 3,126 |
|
| $ | 1,232 |
|
|
|
|
|
|
|
|
|
(Stated in millions) |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| International Plan Assets |
| |||||||||||||||||||||||||||||
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 362 |
|
| $ | 353 |
|
| $ | 9 |
|
| $ | - |
|
| $ | 288 |
|
| $ | 215 |
|
| $ | 73 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
| 1,909 |
|
|
| 1,600 |
|
|
| 309 |
|
|
| - |
|
|
| 3,075 |
|
|
| 2,393 |
|
|
| 682 |
|
|
| - |
|
International |
| 717 |
|
|
| 717 |
|
|
| - |
|
|
| - |
|
|
| 1,711 |
|
|
| 1,615 |
|
|
| 96 |
|
|
| - |
|
Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds |
| 2,859 |
|
|
| - |
|
|
| 2,859 |
|
|
| - |
|
|
| 1,223 |
|
|
| - |
|
|
| 1,223 |
|
|
| - |
|
Government and government-related debt securities |
| 2,390 |
|
|
| 221 |
|
|
| 2,169 |
|
|
| - |
|
|
| 2,371 |
|
|
| 213 |
|
|
| 2,158 |
|
|
| - |
|
Collateralized mortgage obligations and mortgage backed securities |
| 644 |
|
|
| - |
|
|
| 644 |
|
|
| - |
|
|
| 84 |
|
|
| - |
|
|
| 84 |
|
|
| - |
|
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity |
| 1,284 |
|
|
| - |
|
|
| - |
|
|
| 1,284 |
|
|
| 842 |
|
|
| - |
|
|
| - |
|
|
| 842 |
|
Private debt |
| 869 |
|
|
| - |
|
|
| - |
|
|
| 869 |
|
|
| 699 |
|
|
| - |
|
|
| - |
|
|
| 699 |
|
Real estate |
| 187 |
|
|
| - |
|
|
| - |
|
|
| 187 |
|
|
| 200 |
|
|
| - |
|
|
| - |
|
|
| 200 |
|
Total | $ | 11,221 |
|
| $ | 2,891 |
|
| $ | 5,990 |
|
| $ | 2,340 |
|
| $ | 10,493 |
|
| $ | 4,436 |
|
| $ | 4,316 |
|
| $ | 1,741 |
|
56
|
|
|
|
|
|
Schlumberger’s funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial accrued liability, amounts that are deductible for income tax purposes, legal funding requirements and available cash flow. Schlumberger expectsdoes not expect to contribute approximately $20 million make any material contributionsto its postretirement benefit plans in 2020, subject to market and business conditions.2022.
Postretirement Benefits Other Than Pensions
Schlumberger provides certain healthcare benefits to certain former US employees who have retired. Effective April 1, 2015, Schlumberger changed the way it provides healthcare coverage to certain retirees who are age 65 and over. Under the amended plan, these retirees transferred to individual coverage under the Medicare Exchange. Schlumberger subsidizes the cost of the program by providing these retirees with a Health Reimbursement Account. The annual subsidy may be increased based on medical cost inflation, but it will not be increased by more than 5% in any given year.
The actuarial assumptions used to determine the accumulated postretirement benefit obligation and net periodic benefit cost for the US postretirement medical plan were as follows:
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|
| Benefit Obligations |
|
| Net Periodic Benefit |
| Benefit Obligations |
|
| Net Periodic Benefit |
| ||||||||||||||||||||||||||||
| At December 31, |
|
| Cost for the Year |
| At December 31, |
|
| Cost for the Year |
| ||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
| 3.00 | % |
|
| 2.60 | % |
|
| 2.60 | % |
|
| 3.30 | % |
|
| 4.30 | % |
Return on plan assets | - |
|
| - |
|
|
| 7.00 | % |
|
| 7.00 | % |
|
| 7.00 | % | - |
|
| - |
|
|
| 7.00 | % |
|
| 7.00 | % |
|
| 7.00 | % | ||||
Current medical cost trend rate |
| 7.50 | % |
|
| 7.50 | % |
|
| 7.50 | % |
|
| 7.00 | % |
|
| 7.25 | % |
| 6.75 | % |
|
| 7.25 | % |
|
| 7.00 | % |
|
| 7.25 | % |
|
| 7.50 | % |
Ultimate medical cost trend rate |
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 5.00 | % |
|
| 5.00 | % |
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
|
| 4.50 | % |
Year that the rate reaches the ultimate trend rate | 2031 |
|
| 2031 |
|
| 2031 |
|
| 2026 |
|
| 2026 |
| 2031 |
|
| 2031 |
|
| 2031 |
|
| 2031 |
|
| 2031 |
|
The net periodic benefit credit for the US postretirement medical plan included the following components:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Service cost | $ | 29 |
|
| $ | 32 |
|
| $ | 29 |
| $ | 28 |
|
| $ | 31 |
|
| $ | 29 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
|
| 46 |
|
| 32 |
|
|
| 36 |
|
|
| 45 |
|
Expected return on plan assets |
| (64 | ) |
|
| (63 | ) |
|
| (60 | ) |
| (73 | ) |
|
| (70 | ) |
|
| (64 | ) |
Amortization of prior service credit |
| (28 | ) |
|
| (28 | ) |
|
| (29 | ) |
| (23 | ) |
|
| (25 | ) |
|
| (28 | ) |
Curtailment gain |
| - |
|
|
| (69 | ) |
|
| - |
| |||||||||||
| $ | (18 | ) |
| $ | (16 | ) |
| $ | (14 | ) | $ | (36 | ) |
| $ | (97 | ) |
| $ | (18 | ) |
57
Due to the actions taken by Schlumberger to reduce its global workforce during 2020, Schlumberger experienced a significant reduction in the expected aggregate years of future service of its employees in its US postretirement medical plan. Accordingly, Schlumberger recorded a curtailment gain of $69 million during the second quarter of 2020 relating to this plan. The curtailment gain includes recognition of the decrease in the benefit obligation as well as a portion of the previously unrecognized prior service credit, reflecting the reduction in expected years of future service. As a result of the curtailment, Schlumberger performed a remeasurement of the plan, which had an immaterial impact. This gain was classified in Impairments & other in the Consolidated Statement of Income (Loss). See Note 3 – Charges and Credits.
The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Change in Projected Benefit Obligations |
|
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|
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|
|
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|
|
|
Benefit obligation at beginning of year | $ | 1,106 |
|
| $ | 1,213 |
| $ | 1,234 |
|
| $ | 1,193 |
|
Service cost |
| 29 |
|
|
| 32 |
|
| 28 |
|
|
| 31 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
| 32 |
|
|
| 36 |
|
Contribution by plan participants |
| 8 |
|
|
| 8 |
|
| 10 |
|
|
| 8 |
|
Actuarial (gains) losses |
| 65 |
|
|
| (128 | ) |
| (95 | ) |
|
| 64 |
|
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (63 | ) |
|
| (58 | ) |
Curtailment |
| - |
|
|
| (40 | ) | |||||||
Benefit obligation at end of year | $ | 1,193 |
|
| $ | 1,106 |
| $ | 1,146 |
|
| $ | 1,234 |
|
Change in Plan Assets |
|
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|
|
|
|
|
|
|
|
|
Plan assets at fair value at beginning of year | $ | 997 |
|
| $ | 1,094 |
| $ | 1,356 |
|
| $ | 1,185 |
|
Actual return on plan assets |
| 240 |
|
|
| (44 | ) |
| 15 |
|
|
| 221 |
|
Company contributions |
| - |
|
|
| 1 |
| |||||||
Contributions by plan participants |
| 8 |
|
|
| 8 |
|
| 10 |
|
|
| 8 |
|
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (63 | ) |
|
| (58 | ) |
Plan assets at fair value at end of year | $ | 1,185 |
|
| $ | 997 |
| $ | 1,318 |
|
| $ | 1,356 |
|
Unfunded Liability | $ | (8 | ) |
| $ | (109 | ) | |||||||
Asset | $ | 172 |
|
| $ | 122 |
| |||||||
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial (gains) losses | $ | (98 | ) |
| $ | 14 |
| |||||||
Actuarial gains | $ | 225 |
|
| $ | 186 |
| |||||||
Prior service credit |
| (158 | ) |
|
| (186 | ) |
| 81 |
|
|
| 104 |
|
| $ | (256 | ) |
| $ | (172 | ) | $ | 306 |
|
| $ | 290 |
|
The unfunded liability isasset balance relating to this plan was included in Postretirement BenefitsOther Assets in the Consolidated Balance Sheet.
The assets of the US postretirement medical plan are invested 60%13% in equity securities and 40%87% in debt securities at December 31, 2019.2021. The fair value of these assets was primarily determined based on Level Two valuation techniques.
Other Information
The expected benefits to be paid under the US and International pension plans as well as the postretirement medical plan are as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
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| Pension Benefits |
|
| Postretirement |
| Pension Benefits |
|
| Postretirement |
| ||||||||||||
| US |
|
| International |
|
| Medical Plan |
| US |
|
| International |
|
| Medical Plan |
| ||||||
2020 | $ | 218 |
|
| $ | 333 |
|
| $ | 52 |
| |||||||||||
2021 | $ | 221 |
|
| $ | 343 |
|
| $ | 54 |
| |||||||||||
2022 | $ | 225 |
|
| $ | 353 |
|
| $ | 55 |
| $ | 237 |
|
| $ | 370 |
|
| $ | 53 |
|
2023 | $ | 229 |
|
| $ | 365 |
|
| $ | 56 |
| $ | 238 |
|
| $ | 380 |
|
| $ | 53 |
|
2024 | $ | 233 |
|
| $ | 366 |
|
| $ | 57 |
| $ | 239 |
|
| $ | 391 |
|
| $ | 53 |
|
2025-2029 | $ | 1,213 |
|
| $ | 2,057 |
|
| $ | 317 |
| |||||||||||
2025 | $ | 239 |
|
| $ | 403 |
|
| $ | 54 |
| |||||||||||
2026 | $ | 240 |
|
| $ | 407 |
|
| $ | 54 |
| |||||||||||
2027-2031 | $ | 1,213 |
|
| $ | 2,260 |
|
| $ | 294 |
|
In addition to providing defined pension benefits and a postretirement medical plan, Schlumberger has other deferred benefit programs, primarily profit sharing and defined contribution pension plans. Expenses for these programs were $410 million, $435 million and $413 million in 2019, 2018 and 2017, respectively.
58
18.17. Supplementary Information
Cash paid (refunded) for interest and income taxes was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Interest | $ | 558 |
|
| $ | 592 |
|
| $ | 572 |
| $ | 560 |
|
| $ | 598 |
|
| $ | 558 |
|
Income tax | $ | 739 |
|
| $ | 628 |
|
| $ | (44 | ) | $ | 591 |
|
| $ | 582 |
|
| $ | 739 |
|
Interest and other income includes the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Earnings of equity method investments | $ | 40 |
|
| $ | 91 |
|
| $ | 45 |
| |||||||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| $ | 128 |
|
| 33 |
|
|
| 33 |
|
|
| 41 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
|
|
| 96 |
| |||||||||||
Unrealized gain on marketable securities (see Note 3) |
| 47 |
|
|
| 39 |
|
|
| - |
| |||||||||||
Gain on sale of Liberty shares (see Note 3) |
| 28 |
|
|
| - |
|
|
| - |
| |||||||||||
| $ | 86 |
|
| $ | 149 |
|
| $ | 224 |
| $ | 148 |
|
| $ | 163 |
|
| $ | 86 |
|
The components of depreciation and amortization expense are as follows:
(Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 |
|
| 2020 |
|
| 2019 |
| |||
Depreciation of fixed assets | $ | 1,402 |
|
| $ | 1,625 |
|
| $ | 1,976 |
|
Amortization of APS investments |
| 305 |
|
|
| 396 |
|
|
| 731 |
|
Amortization of intangible assets |
| 302 |
|
|
| 371 |
|
|
| 618 |
|
Amortization of multiclient seismic data |
| 111 |
|
|
| 174 |
|
|
| 264 |
|
| $ | 2,120 |
|
| $ | 2,566 |
|
| $ | 3,589 |
|
The change in Allowance for doubtful accounts is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2021 |
|
| 2020 |
|
| 2019 |
| ||||||
Balance at beginning of year | $ | 249 |
|
| $ | 241 |
|
| $ | 397 |
| $ | 301 |
|
| $ | 255 |
|
| $ | 249 |
|
Additions |
| 5 |
|
|
| 15 |
|
|
| 7 |
|
| 47 |
|
|
| 58 |
|
|
| 5 |
|
Amounts written off |
| 1 |
|
|
| (7 | ) |
|
| (163 | ) |
| (29 | ) |
|
| (12 | ) |
|
| 1 |
|
Balance at end of year | $ | 255 |
|
| $ | 249 |
|
| $ | 241 |
| $ | 319 |
|
| $ | 301 |
|
| $ | 255 |
|
Revenue in excess of billings related to contracts where revenue is recognized over time was $0.2 billion at both December 31, 20192021 and 2018.2020. Such amounts are included within Receivables less allowance for doubtful accounts in the Consolidated Balance Sheet.
Other Assets consist of the following:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2021 |
|
| 2020 |
| ||
Investments in APS projects | $ | 1,786 |
|
| $ | 1,713 |
|
Pension and other postretirement |
| 1,034 |
|
|
| 360 |
|
Operating lease assets |
| 553 |
|
|
| 710 |
|
Multiclient seismic data |
| 154 |
|
|
| 317 |
|
Fair value of hedge contracts |
| 66 |
|
|
| 427 |
|
Other |
| 590 |
|
|
| 666 |
|
| $ | 4,183 |
|
| $ | 4,193 |
|
Accounts payable and accrued liabilities consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2021 |
|
| 2020 |
| ||||
Trade | $ | 4,790 |
|
| $ | 4,709 |
| $ | 3,205 |
|
| $ | 2,937 |
|
Payroll, vacation and employee benefits |
| 1,293 |
|
|
| 1,244 |
|
| 1,377 |
|
|
| 1,524 |
|
Billings and cash collections in excess of revenue |
| 910 |
|
|
| 877 |
|
| 1,088 |
|
|
| 941 |
|
Other |
| 3,670 |
|
|
| 3,393 |
|
| 2,712 |
|
|
| 3,040 |
|
| $ | 10,663 |
|
| $ | 10,223 |
| $ | 8,382 |
|
| $ | 8,442 |
|
Management’s Report on Internal Control Over Financial Reporting
Schlumberger management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a–15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Schlumberger’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Schlumberger management assessed the effectiveness of its internal control over financial reporting as of December 31, 2019.2021. In making this assessment, it used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on this assessment Schlumberger’s management has concluded that, as of December 31, 2019,2021, its internal control over financial reporting is effective based on those criteria.
The effectiveness of Schlumberger’s internal control over financial reporting as of December 31, 20192021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
60
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
of Schlumberger Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheetssheet of Schlumberger Limited and its subsidiaries (the “Company”) as of December 31, 20192021 and 2018,2020, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019,2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 20182020 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control overOver Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
61
Critical Audit Matters
The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the consolidated financial statements that werewas communicated or required to be communicated to the audit committee and that (i) relaterelates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.it relates.
Goodwill Impairment
Uncertain Tax Positions
As described in Note 312 to the consolidated financial statements, the CompanyCompany’s tax filings are subject to regular audit by the tax authorities, and those audits may result in assessments for additional taxes that are resolved with the tax authorities or, potentially, through the courts. Tax liabilities are recorded charges to goodwill associated with certain reporting units duringbased on estimates of additional taxes that will be due upon the third quarter of 2019. The goodwill relating to each of the Company’s reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred. As a resultconclusion of these facts, management determined that it was more likely than not that the fair value of certain of its reporting units were less than their carrying value. Therefore, management performed an interim goodwill impairment test as of August 31, 2019. Management primarily used the income approach to estimate the fair value of its reporting units, but also considered the market approach to validate the results. The market approach involves significant judgement involved in the selection of the appropriate peer group companies and valuation multiples. Some of the more significant assumptions inherent in the income approach include the estimate future net annual cash flows for each reporting unit and the discount rate.audits.
The principal considerations for our determination that performing procedures relatedrelating to goodwill impairmentuncertain tax positions is a critical audit matter are there wasthe significant judgment applied by management in determining these liabilities including a high degree of estimation uncertainty due to the fair valueuncertain and complex application of the reporting units,tax regulations, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures relating to and evaluating significant assumptions related to cash flows to be derived from each reporting unit, the discount rate and valuation multiples.evaluate management’s estimates.
Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment test. These procedures also included, among others, testing management’s process for developing fair value estimates; evaluating the appropriatenessidentification and recognition of the discounted cash flow analyses and market approaches; testing the completeness, accuracy, and relevance of underlying data used in the approaches; and evaluating the significant assumptions used by management. Evaluating management’s assumptions related to the cash flows to be derived from each reporting unit involved evaluating the reasonableness of the assumptions used considering the Company’s past and anticipated performance, external market and industry data, and evidence obtained through other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s valuation approaches and reasonableness of the discount rate and valuation multiples assumptions.
Uncertain Tax Positions
As described in Note 13 to the consolidated financial statements, the Company’s tax filings are subject to regular audit by tax authorities, and those audits may result in assessments for additional taxes that are resolved with the authorities or, potentially, through the courts. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits.
The principal considerations for our determination that performing procedures related to uncertain tax positions is a critical audit matter are there was a high degree of estimation uncertainty related to these liabilities due to the uncertain and complex application of tax regulations and management applied significant judgment in determining these liabilities, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimates.
Addressing the matter involved performing subjective procedures and evaluating audit evidence, in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to uncertain tax positions. These procedures also included, among others (i) evaluating management’s process for developingdetermining the estimated liabilities for uncertain tax positions, (ii) testing the completeness and reasonableness of uncertain tax positions recorded in the consolidated financial statements, and (iii) evaluating material assessments received from the relevant tax authorities. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of assumptions used by management, including the reasonablenessmanagement’s assessment of management’swhether tax positions are more-likely-than-not determination under relevant tax laws and regulations in applicable jurisdictions. of being sustained.
/s/ PricewaterhouseCoopers LLP |
|
Houston, Texas |
January |
We have served as the Company’s auditor since 1952.
62
Quarterly Results
(Unaudited)
The following table summarizes Schlumberger’s results by quarter for the years ended December 31, 2019 and 2018.
(Stated in millions, except per share amounts) |
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| Net Income (Loss) |
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| Earnings (Loss) per Share of |
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| Gross |
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| Attributable to |
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| Schlumberger (2) |
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| Revenue (2) |
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| Margin (1), (2) |
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| Schlumberger (2) |
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| Basic |
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| Diluted |
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Quarters 2019 |
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First | $ | 7,879 |
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| $ | 925 |
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| $ | 421 |
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| $ | 0.30 |
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| $ | 0.30 |
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Second |
| 8,269 |
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| 1,016 |
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| 492 |
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| 0.36 |
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| 0.35 |
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Third (3) |
| 8,541 |
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| 1,155 |
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| (11,383 | ) |
|
| (8.22 | ) |
|
| (8.22 | ) |
Fourth (4) |
| 8,228 |
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| 1,101 |
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| 333 |
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| 0.24 |
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| 0.24 |
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| $ | 32,917 |
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| $ | 4,197 |
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| $ | (10,137 | ) |
| $ | (7.32 | ) |
| $ | (7.32 | ) |
Quarters 2018 |
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First | $ | 7,829 |
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| $ | 1,027 |
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| $ | 525 |
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| $ | 0.38 |
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| $ | 0.38 |
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Second (5) |
| 8,303 |
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| 1,124 |
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| 430 |
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| 0.31 |
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| 0.31 |
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Third |
| 8,504 |
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| 1,180 |
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| 644 |
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| 0.46 |
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| 0.46 |
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Fourth (6) |
| 8,180 |
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| 1,008 |
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| 538 |
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| 0.39 |
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| 0.39 |
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| $ | 32,815 |
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| $ | 4,337 |
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| $ | 2,138 |
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| $ | 1.54 |
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| $ | 1.53 |
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. 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 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 so 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 fourth quarter of 20192021 that has materially affected, or is reasonably likely to materially affect, Schlumberger’s internal control over financial reporting.
63
Item 9B. Other Information.
In 2013, Schlumberger completed the wind downwind-down of its service operations in Iran. Prior to this, certain non-US subsidiaries provided oilfield services to the National Iranian Oil Company and certain of its affiliates (“NIOC”).
Schlumberger’s residual transactions or dealings with the government of Iran in 20192021 consisted of payments of taxes and other typical governmental charges. Certain non-US subsidiaries of Schlumberger maintainmaintained depository accounts at the Dubai branch of Bank Saderat Iran (“Saderat”), and at Bank Tejarat (“Tejarat”) in Tehran and in Kish for the deposit by NIOC of amounts owed to non-US subsidiaries of Schlumberger for prior services rendered in Iran prior to the wind-down and for the maintenance of such amounts previously received. One non-US subsidiary also maintained an account at Tejarat for payment of local expenses such as taxes. Schlumberger anticipates that it will discontinue dealings with Saderat and Tejarat following the receipt of all amounts owed to Schlumberger for prior services rendered in Iran.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
64None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance of Schlumberger.
See “Item 1. Business—Information About Our Executive Officers” of this Report for Item 10 information regarding the executive officers of Schlumberger. The information set forth under the captions “Election of Directors,” “Stock Ownership Information— Delinquent Section 16(a) Reports,” “Corporate Governance—Director Nominations”Process for Selecting New Directors” and “Corporate Governance—Board Responsibilities and Committees—Board Committees—Audit Committee”Committees” in Schlumberger’s 20202022 Proxy Statement is incorporated herein by reference. The information set forth under the caption “Stock Ownership Information—Delinquent Section 16(a) Reports” in Schlumberger’s 2022 Proxy Statement is incorporated herein by reference to the extent any disclosure is required.
Schlumberger has a Code of Conduct that applies to all of its directors, officers and employees, including its principal executive, financial and accounting officers, or persons performing similar functions. Schlumberger’s Code of Conduct is posted on its website at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct. Schlumberger intends to disclose future amendments to the Code of Conduct and any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct.
Item 11. Executive Compensation.
The information set forth under the captions “Compensation Committee Report,” “Compensation Discussion and Analysis,” “Executive Compensation Tables and Accompanying Narrative,” “Compensation Discussion and Analysis—Compensation Committee Report”Tables” and “Director Compensation in Fiscal Year 2019”Compensation” in Schlumberger’s 20202022 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information under the captions “Stock Ownership Information—Security Ownership by Certain Beneficial Owners,Management and Our Board,” “Stock Ownership Information—Security Ownership by Management”Certain Beneficial Owners” and “Equity“Executive Compensation Tables—Equity Compensation Plan Information” in Schlumberger’s 20202022 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information under the captions “Corporate Governance—BoardDirector Independence” and “Corporate Governance—PoliciesCertain Relationships and Procedures for Approval of Related Person Transactions” in Schlumberger’s 20202022 Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information under the caption “Ratification of Appointment of Independent Auditors for 2020”2022” in Schlumberger’s 20202022 Proxy Statement is incorporated herein by reference.
65
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) | The following documents are filed as part of this Report: |
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| Page(s) |
(1) | Financial Statements |
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| Consolidated Statement of Income (Loss) for the three years ended December 31, |
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| |
| Consolidated Balance Sheet at December 31, |
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| Consolidated Statement of Cash Flows for the three years ended December 31, |
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| Consolidated Statement of Stockholders’ Equity for the three years ended December 31, |
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| |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 238) |
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Financial statements of companies accounted for under the equity method and unconsolidated subsidiaries have been omitted because they do not meet the materiality tests for assets or income.
(2) | Financial Statement Schedules not |
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(3) | Exhibits: See exhibits listed under Part (b) below. |
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(b) | Exhibits |
66
INDEX TO EXHIBITS
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| Exhibit | |
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| 3.1 | ||
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| 3.2 | ||
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| 4.1 | ||
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| 4.3 | ||
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4.4 | |||
4.5 | |||
4.6 | |||
4.7 | |||
4.8 | |||
4.9 | |||
4.10 | |||
4.11 | |||
| 10.1 | |
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10.6 | ||
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10.14 | ||
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10.17 | ||
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10.20 | ||
10.21 | ||
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| 21 | |
22 | ||
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Consent of Independent Registered Public Accounting Firm (*) |
| 23 |
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| 24 | |
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| 31.1 | |
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| 31.2 | |
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| 32.1 | |
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| 32.2 | |
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| 95 | |
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Inline XBRL Instance Document (*) |
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Inline XBRL Taxonomy Extension Schema Document (*) |
| 101.SCH |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document (*) |
| 101.CAL |
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Inline XBRL Taxonomy Extension Definition Linkbase Document (*) |
| 101.DEF |
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Inline XBRL Taxonomy Extension Label Linkbase Document (*) |
| 101.LAB |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document (*) |
| 101.PRE |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 104 |
(*) Filed with this Form |
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(**) Furnished with this Form 10-K |
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(+) Management contracts or compensatory plans or |
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The Exhibits filed herewith do not include certain instruments with respect to long-term debt of Schlumberger Limited and its subsidiaries, inasmuch as the total amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of Schlumberger Limited and its subsidiaries on a consolidated basis. Schlumberger agrees, pursuant to Item 601(b)(4)(iii) of Regulation S-K, that it will furnish a copy of any such instrument to the SEC upon request. |
Item 16. Form 10-K Summary.
None.
69
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: |
| January |
|
| SCHLUMBERGER LIMITED |
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| By: |
| /S/ HOWARD GUILD |
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| Howard Guild |
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| Chief Accounting Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name |
| Title |
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* |
| Chief Executive Officer and Director (Principal Executive Officer) |
Olivier Le Peuch |
| |
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/S/ |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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/S/ HOWARD GUILD |
| Chief Accounting Officer (Principal Accounting Officer) |
Howard Guild |
| |
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* |
| Director |
Peter |
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* |
| Director |
Patrick de La Chevardière |
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* |
| Director |
Miguel M. Galuccio |
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* |
| Director |
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* |
| Director |
Tatiana A. Mitrova |
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* |
| Director |
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* |
| Director |
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* |
| Chairman of the Board |
Mark G. Papa | ||
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* |
| Director |
Henri Seydoux |
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* |
| Director |
Jeff W. Sheets |
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* | Director | |
Ulrich Spiesshofer | ||
/s/ |
| January |
*By |
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7075