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, 20192022
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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 (Schlumberger Limited)
(Exact name of registrant as specified in its charter)
Curaçao |
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(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 |
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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, 2019,2022, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $54.89$50.51 billion.
As of December 31, 2019,2022, the number of shares of common stock outstanding was 1,384,515,345.
1,420,188,492.
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’sthe registrant’s definitive proxy statement for its 20202023 Annual General Meeting of Stockholders, to be filed by Schlumbergerthe registrant with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A within 120 days after December 31, 20192022 (the “2020“2023 Proxy Statement”).
1
SCHLUMBERGER LIMITED
Table of Contents
Form 10-K
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PART I |
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Item 1. | 3 | |
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Item 1A. |
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PART II |
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Item 5. |
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Item 6. |
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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 | 60 |
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PART III |
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Item 10. | Directors, Executive Officers and Corporate Governance |
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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 15. |
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Item 16. |
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PART I
Item 1. Business.
All references in this report to “Registrant,” “Company,” “Schlumberger,“SLB,” “we” or “our” are to Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao)) and its consolidated subsidiaries.
Founded in 1926, Schlumberger
We are SLB. In October 2022, we announced our brand which is built around a new name—SLB—and a logo that underscores our vision for a decarbonized energy future. This move affirmed our transformation from the world’s leading providerlargest oilfield services company to a global technology company focused on driving energy innovation. The SLB brand builds on nearly a century of technology for reservoir characterization, drilling, productioninnovation and processingindustrialization expertise in the energy services industry—continuing to drive innovation, decarbonization and performance for the oil and gas industry. Having invented wireline loggingindustry while increasing our focus on low- and zero-carbon energy technology solutions. Our new identity symbolizes SLB's commitment to moving farther and faster in facilitating the world's energy needs today and forging the road ahead for a sustainable future.
SLB is a global technology company driving energy innovation for a balanced planet. With a global presence in more than 100 countries and employees representing almost twice as a technique for obtaining downhole data inmany nationalities, we work each day on innovating oil and gas, wells, today Schlumberger suppliesdelivering digital at scale, decarbonizing industries, and developing and scaling new energy systems that accelerate the industry’s most comprehensive range of productsenergy transition.
SLB is organized under four Divisions that combine and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recoveryintegrate SLB’s technologies, enhancing our ability to deliver reservoir performance sustainably. As of December 31, 2019, support 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.
Schlumberger operatesemerging long-term growth opportunities in each of these market segments. The Divisions operate through the major oilfield service markets throughgeographical structure of four segments: Reservoir Characterization, Drilling, ProductionBasins that are aligned with critical concentrations of activity: Americas Land, Offshore Atlantic, Middle East & North Africa, and Cameron. Each segment consistsAsia. The Basins are configured around common regional characteristics that enable us to deploy fit-for-purpose technologies, operating models and skills to meet the specific customer needs in each Basin and are focused on agility, responsiveness, and competitiveness. The Basins are organized into GeoUnits, which can be a single country or made up of several countries. With a numberstrong focus on customers, the Basins identify opportunities for growth.
Supporting the Divisions is a global network of technology-based serviceresearch and product lines, or Technologies. These Technologies cover the entire life cycle of the reservoirdevelopment centers. Through these centers we advance SLB’s technology programs to enhance industry efficiency, lower finding 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 customersproducing costs, improve productivity, maximize reserve recovery, and to ensure that Schlumberger remains at the forefront of technology developmentincrease asset value safely, securely, 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.sustainably.
The segments are as follows:four Divisions are:
• | Digital & Integration |
• | Reservoir Performance |
• | Well Construction |
• | Production Systems |
Reservoir Characterization Digital & Integration– ConsistsCombines SLB’s industry-leading digital solutions and data products with its integrated offering of the principal Technologies involved in finding and defining hydrocarbon resources. These include WesternGeco®, Wireline, Testing Services, Software IntegratedAsset Performance Solutions (“SIS”APS”), OneSurface®. This Division enables greater performance for our customers by reducing cycle times and Integrated Services Management (“ISM”).risk, accelerating returns, increasing productivity, and lowering costs and carbon emissions.
The primary offerings comprising this Division are:
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• | Exploration data and data processing: Provides comprehensive worldwide reservoir interpretation and data processing |
• | Asset Performance Solutions: Offers an integrated business model for field production projects, by combining SLB’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. As of December 31, 2022, SLB’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, including pressure pumping, well stimulation, and coiled tubing equipment for downhole mechanical well intervention, reservoir monitoring, and downhole data acquisition. |
On December 31, 2020, SLB 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 Energy 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, 2022, SLB had a 5% 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, operators, 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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• | Completions Equipment: |
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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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• | OneSubsea®: Provides integrated solutions, products, systems, and services for the subsea |
During the third quarter of 2022, SLB, Aker Solutions, and Subsea 7 announced an agreement to form a joint venture to drive innovation and efficiency in subsea production by helping customers unlock reserves and reduce cycle time. The agreement
will bring together a portfolio of innovative technologies such as subsea gas compression, all-electric subsea production systems and other electrification capabilities that help customers meet their decarbonization goals. The proposed joint venture will combine SLB’s and Aker Solutions’ subsea businesses. Subsea 7 will be an equity partner in the new joint venture.
In addition to contributing its subsea business to the joint venture, at closing SLB will issue to Aker Solutions shares of SLB common stock valued at $306.5 million. Concurrently, Subsea 7 will purchase its 10% interest in exchange for $306.5 million in cash to Aker Solutions. The joint venture also will issue a promissory note to Aker Solutions for $87.5 million. At closing of the joint venture, SLB will own 70%, with Aker Solutions owning 20% and Subsea 7 owning 10%. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2023.
Corporate Strategy
SLB is committed to addressing the most difficult challenges in the energy industry by pushing the limits of innovation while remaining the performance partner of choice for our customers across the globe. This commitment is underscored by a bold corporate vision: to drive energy innovation for a balanced planet.
At the core of our vision is a returns-focused strategy designed to meet the current and future needs of customers while returning value to shareholders. Since launching the strategy in 2019, it has delivered impressive results, which include:
• | Strengthening our core business by high-grading the Company’s portfolio, choosing to exit certain margin-dilutive, commoditized and |
• | Optimizing operations by executing the largest restructuring in the Company’s history, creating a more agile, leaner organization that is better aligned with customer workflows. |
• | Enhancing the go-to-market approach through our Basin organization and the launch of fit-for-basin and technology access initiatives. |
• | Investing in long-term, resilient growth opportunities in gas, offshore, digital and decarbonization resulting in a stronger footing in gas and offshore development projects. |
• | Developing an industry-leading digital platform and launching SLB’s New Energy business to grow lower-carbon or carbon-neutral technologies beyond oil and gas. |
Today, the world faces the trilemma of providing secure and affordable energy to meet growing demand, while rapidly decarbonizing for a sustainable future.With nearly a century of market and technology leadership, SLB is well positioned to be a leader in providing solutions to address this trilemma. The evolving marketplace will require bold new technologies and ideas, digital transformation and a deep commitment to sustainability. With a balanced transition in mind, we are focused on three engines of growth: Core, Digital and New Energy.
Core
Consisting of Reservoir Performance, WeIl Construction and Production Systems, Core remains the Company’s largest engine of growth. Building on decades of technology advancement, we will continue innovating new products, services and technologies that make the exploration, development and production of oil and gas assets cleaner, more resilient, and more efficient, with lower carbon and less impact on the environment.
We will continue to build on our fit-for-basin approach and technology access initiatives, developing bespoke and custom technology tailored to the regions and environments in which we operate. This strategy will allow us to address the rapid evolution of our industry into more regional markets, each with distinct resource plays and economics.
With the continued growth of digitally enabled technologies that improve efficiency and performance, including our Transition Technologies™ portfolio (which is further described below) and our SLB End-to-End Emissions Solution (SEES) methane elimination business, the Company will provide solutions that enable customers to increase production from their reserves at a competitive cost and low carbon intensity per barrel equivalent.
Digital
Digital capabilities continue to grow throughout the energy industry as a key enabler to manage the complex systems required to meet current energy demands and to harness the promise of a lower carbon future. SLB is uniquely positioned to support customers on their digital journeys by managing data migration, workflow redesign and transition to the cloud.
SLB’s customers have access to leading digital products and services that help to meet their sustainability goals by driving transparency, better measurement, more effective planning and more impactful and reliable outcomes. To continue elevating customer offerings, we will accelerate the adoption of our proprietary cloud offering DELFI, enabling enterprise data management, delivering autonomous operations, and innovating through domain-driven artificial intelligence.
As customers transition from our established software applications to our DELFI digital platform, they will shift from a user-based license model to software-as-a-service (SaaS) subscriptions. This will enable them to evolve from legacy infrastructure and deliver new levels of value creation, with access to key resources such as storage and computing from our cloud partners and access to our industry-leading simulators.
New Energy
New Energy offers a significant opportunity to use our experience and scale to drive innovation for a low-carbon economy spanning many industries. We are building a broad, diverse portfolio across New Energy sectors, selected for their materiality and adjacency to existing SLB market strengths and our ability to offer differentiated technology.
Our New Energy portfolio builds on three fundamental SLB strengths: our unique subsurface domain expertise, applicable beyond oil and gas; our differentiated track record for innovation and industrialization; and our ability to deploy at scale in any region of the world with local knowledge and talent.
SLB will continue forging partnerships across various industries to focus on five emerging technologies: carbon solutions, hydrogen, geothermal and geoenergy, stationary energy storage, and critical minerals. Our ambition is to seed technology capabilities in each of these domains and grow throughout the decade, ultimately scaling our New Energy offering into the Company’s fastest growing and largest division.
• | Carbon Solutions:Carbon capture, utilization, and sequestration (“CCUS”) is critical to advancing decarbonization and achieving the goals of the |
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• | Stationary Energy Storage: Stationary energy storage is a key enabler to make variable renewable energy sources (solar or wind) a larger component of the world’s electricity systems, via energy shifting—enabling power to be delivered in the right place, at the right time, to meet demand. As renewables penetration increases, so does the need for additional storage to ensure the efficiency of the renewable assets and reliability of electricity systems. Large-scale, long-duration energy storage is key, and this market is growing rapidly. SLB is investing in storage technologies including EnerVenue, a start-up that delivers nickel-hydrogen, non-lithium based, economic, safe battery technology that targets the 10-hour storage market. |
• | Critical Minerals: SLB is applying its knowledge of extraction technologies and processing to the location and sources of critical minerals that will be required to support alternative energy sources. An example of this is our NeoLith Energy technology venture, which uses a differentiated direct lithium extraction process to produce high-purity, battery-grade lithium material while reducing the production time from over a year to just weeks. This unique process is in sharp contrast to conventional evaporative methods of extracting lithium, with significantly reduced water consumption and physical footprint. |
Sustainability
SLB’s emissions reduction strategy is at the center of our identity and vision, and our commitment to a sustainable future is underscored by bold science-backed targets aligned with the Paris Agreement. In 2021, SLB became the first company in the energy services industry to commit to a 2050 net-zero greenhouse gas (“GHG”) emissions target including all three emission scopes. By setting targets based on SLB’s total 2019 baseline GHG footprint—inclusive of Scope 3 emissions (which accounted for approximately 95% of SLB’s baseline)—and not just its Scope 1 and 2 footprint, SLB’s comprehensive emissions reduction roadmap addressees the entire oil and gas value chain.
SLB’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 SLB achieving the 2050 net-zero target: reducing operational emissions, reducing customer emissions that occur while using SLB technology, and taking carbon-negative actions of sufficient scale to offset any residual operating and technology emissions that the Company may have in 2050. SLB’s Scope 1 and 2 emissions primarily come from fuel use and
electricity consumption: Scope 3 emissions are indirect, such as emissions from customers’ use of SLB technology and emissions from our use of third-party goods and services.
In tandem with our 2050 net-zero commitment, SLB introduced a portfolio of Transition Technologies in 2021. This portfolio includes a select group of products and services that quantifiably reduce our customers’ GHG emissions footprint, while continuing to drive high performance, reliability and efficiency. This portfolio will be supported by an industry-leading impact quantification framework and is a global network ofset to grow as sustainability is further embedded in the Company’s research and engineering centers. Through this organization, Schlumbergerdevelopment process.
While there is an ambitious path ahead, we are cementing our position as a sustainability leader today. SLB continues to be one of the highest-ranked companies in the energy industry across key environmental, social, and governance ratings agencies as of December 31, 2022. This recognition confirms the strategy we have in place and our commitment to leading change in the industry.
Human Capital
As a leading global technology company, with a workforce consisting of approximately 99,000 people in more than 100 countries, one of SLB’s greatest strengths is the diversity of our people. We believe that our ability to attract, develop, motivate, and retain a highly competent and diverse workforce has been paramount to our success for many decades. We recognize that cultivating diversity and promoting inclusion are essential to attracting the best talent from around the world and enabling creativity and innovation to drive business success.
Energy transition and changing geopolitics are increasingly impacting our people and customers. SLB is competitively well-positioned from both a people and technology perspective to manage these factors and capture the opportunity that it represents for SLB and the countries where we work.
Our national and cultural diversity is based in our philosophy to recruit and develop people from the communities where we work. As a result, we maintain a workforce nationality mix aligned to the revenue derived from the countries in which we work, as reflected in the charts below. Our long-standing commitment to national and cultural diversity, which is seen throughout every layer of SLB, fosters a culture that is global in outlook, yet local in practice.
In additionto national and cultural diversity, gender balance is an important part of our diversity, equity, and inclusion strategy. We are committed to leading our industry in gender diversity, and we are on track to reach our interim milestone of having women represent 25% of our salaried employees by 2025. Our next milestone is for women to comprise 30% of our salaried employees by 2030.
SLB is proud to provide a career platform that enables a culture of lifelong learning for all employees and is committed to advanced technology programs that enhance oilfield efficiency, lower findingoffering borderless careers and producing costs, improve productivity, maximize reserve recoverymaking career decisions based on merit. SLB’s borderless career philosophy is powered by its talent and increase asset valuemobility practices, which offer employees multiple, flexible career paths to help them acquire the required skills to reach their potential. We provide continuous growth opportunities through a combination of learning and experience. SLB strives to identify talent early and to provide opportunities for those employees who demonstrate exceptional performance and the ability to progress to higher levels within the organization. These opportunities accelerate career development while accomplishing these goals in a safefostering an agile workforce and environmentally sound manner.the next generation of business leaders.
A network of GeoMarket* regions, within each of four major geographic areas of North America, Latin America, Europe/CIS/Africa and Middle East & Asia, provides logistical, technical and commercial coordination.Competition
The GeoMarket structure offers customers a single pointprincipal methods of contact atcompetition within the local level for field operations and brings together geographically focused teams to meet local needs and deliver customized solutions. The GeoMarketsenergy services industry are responsible for providing the most efficient and cost-effective support possible to the operations.
Schlumberger primarily uses its own personnel to market its offerings. The customer base, business risks and opportunities for growth are essentially uniform across all services and products. Manufacturing and engineering facilities as well as research centers are shared, and the labor force, within certain limitations, is interchangeable. Technologicaltechnological 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. While Schlumbergerthat SLB offers. SLB 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
SchlumbergerSLB owns andor controls a varietythe industry’s leading portfolio 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’sSLB’s business. While SchlumbergerSLB seeks and holds numerous patents covering various products and processes, no particular patent or group of patents is material to Schlumberger’sSLB’s business.
Seasonality
Seasonal changes in weather and significant weather events can temporarily affect the delivery of oilfieldSLB’s products and services. For example, the spring thaw in Canada and other Northern climates 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 multiclientexploration 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
SLB’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 SLB’s consolidated revenue. Other thanrevenue during each of 2022, 2021 and 2020.
Governmental Regulations
SLB 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
SLB was founded in 1926. Schlumberger Limited, the OneSubsea, Drilling SystemsNYSE-listed parent of the SLB family of companies, is incorporated under the laws of Curaçao and WesternGeco businesses, Schlumberger has no significant backlog dueexecutive offices in Paris, Houston, London, and The Hague. The Company changed its brand name to SLB in 2022 but did not change the naturelegal name of its businesses. The combined backlog of these businesses was $3.0 billion at December 31, 2019 (oflisted parent company, which approximately 50% is expected to be recognized as revenue during 2020) and $2.7 billion at December 31, 2018.
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Information About Our Executive Officers
The following table sets forth, as of January 21, 2020, the names and ages of the executive officers ofremains Schlumberger including all offices and positions held by each for the past five years.
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Limited.
Available Information
The SchlumbergerSLB website is www.slb.com. SchlumbergerSLB uses its Investor Relations website, www.slb.com/irhttps://investorcenter.slb.com/, as a routine channel for distribution of important information, including news releases, analyst presentations, and financial information. SchlumbergerSLB makes available free of charge through its Investor Relations website at www.slb.com/ir,https://investorcenter.slb.com/, 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 SchlumbergerSLB 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 SchlumbergerSLB makes with the SEC.
Information About Our Executive Officers
The following table sets forth, as of January 25, 2023, the names and ages of SLB’s executive officers, including all offices and positions held by each executive officer during the past five years.
Name | Age | Current Position and Five-Year Business Experience |
Olivier Le Peuch | 59 | 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; and President, Cameron Group, February 2017 to May 2018. |
Khaled Al Mogharbel | 52 | 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; and President, Eastern Hemisphere, May 2017 to January 2019. |
Stephane Biguet | 54 | Executive Vice President and Chief Financial Officer, since January 2020; and Vice President, Finance, December 2017 to January 2020. |
Abdellah Merad | 49 | Executive Vice President, Core Services and Equipment, since April 2022; Executive Vice President, Performance Management, May 2019 to March 2022; and President, Production Group, October 2017 to April 2019. |
Katharina Beumelburg | 46 | 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; and Executive Vice President, Strategy, Siemens Gas and Power, Siemens AG, November 2016 to April 2020. |
Demosthenis Pafitis | 55 | Chief Technology Officer, since February 2020; and Senior Vice President, SLB 4.0 Platforms, from December 2017 to January 2020. |
Dianne Ralston | 56 | Chief Legal Officer, since December 2020, and Secretary, since April 2021; and Executive Vice President, Chief Legal Officer, and Secretary, TechnipFMC plc (a global oilfield services company), January 2017 to September 2020. |
Carmen Rando Bejar | 45 | Chief People Officer, since April 2022; Vice President, Global Business Services, September 2019 to March 2022; Operational Planning and Resource Manager, Drilling and Measurements, April 2018 to August 2019; and Operations Systems Manager, Drilling and Measurements, August 2016 to March 2018. |
Gavin Rennick | 48 | President, New Energy, since April 2022; Vice President, Human Resources, February 2019 to March 2022; and President, Software Integrated Solutions, January 2017 to February 2019. |
Rajeev Sonthalia | 54 | President, Digital & Integration, since July 2020; President, Integrated Performance Management, October 2019 to June 2020; Vice President, Marketing, Wells, May 2018 to September 2019; and Vice President, Eastern Hemisphere, Reservoir Characterization Group, October 2017 to April 2018. |
Kevin Fyfe | 49 | Vice President and Treasurer, since July 2022; and Vice President and Controller, October 2017 to June 2022. |
Howard Guild | 51 | Chief Accounting Officer, since July 2005. |
Ugo Prechner | 45 | Vice President and Controller, since August 2022; Well Construction Controller, July 2020 to July 2022; Controller Operations, August 2019 to June 2020; and M-I Swaco Controller, October 2017 to August 2019. |
Vijay Kasibhatla | 59 | 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.10-K, any of which could materially adversely affect our financial condition, results of operations and cash flows. 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 are affected by general economic and business conditions; the costs of exploring for, producing, and delivering oil and gas; the ability or willingness of the Organization of Petroleum Exporting Countries and the expanded alliance known as OPEC+ to set and maintain production levels for oil; the level of oil and gas exploration and production activity;
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There can be no assurance that
the demand or pricing forlevel of oil and gas inventories;
access to potential resources;
political and economic uncertainty and geopolitical unrest;
governmental laws, policies, regulations, subsidies, and other actions, including initiatives to promote the use of renewable energy sources;
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 conditions, natural gasdisasters, and public health or for our productssimilar issues, such as pandemics and services will follow historic patterns or recover meaningfully in the near term. epidemics.
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, which could adversely affect our business, financial condition, results of operations, cash flows and prospects.
Disruptions in the political, regulatory, economic, and social environments of the countries in which we operate could adversely affect our reputation, financial condition, results of operations and cash flows.
We are a global technology company, and our non-US operations accounted for approximately 84% of our consolidated revenue in 2022, 85% in 2021 and 81% in 2020. Instability and unforeseen changes in any of the markets in which we operate could result in business disruptions or operational challenges that may adversely affect the demand for our products and services, or our reputation, financial condition, results of operations or cash flows. These factors include, but are not limited to, the following:
• | uncertain or volatile political, social, and economic conditions; | |
• | 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, the United Kingdom, China, or other regions or countries that could restrict or curtail our ability to operate in certain markets;
unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws;
restrictions on the repatriation of income or capital;
currency exchange controls;
inflation; and
currency exchange, rate fluctuations and devaluations.
As an example of a risk resulting from our global operations, in March 2022 we decided to immediately suspend new investment and technology deployment to our Russia operations. Russia represented approximately 6% of our worldwide revenue during 2022. The carrying value of our net assets in Russia was approximately $0.7 billion as of December 31, 2022. This consisted of $0.3 billion of receivables, $0.3 billion of fixed assets, $0.5 billion of current assets, and $0.4 billion of current liabilities.
We continue to actively monitor the dynamic situation in Ukraine and applicable laws, sanctions and trade control restrictions resulting from the conflict. The extent to which our operations and financial results may be affected by the ongoing conflict in Ukraine will depend on various factors, including the extent and duration of the conflict; the effects of the conflict on regional and global economic and geopolitical conditions; the effect of further laws, sanctions and trade control restrictions on our business, the global economy and global supply chains; and the impact of fluctuations in the exchange rate of the ruble. Continuation or escalation of the conflict may also aggravate this and other risk factors identified in this Form 10-K, including cybersecurity, regulatory, and reputational risks.
Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
Our long-term success depends on our ability to effectively address the energy transition, which will require adapting our technology portfolio to changing customer preferences and government requirements, developing solutions to decarbonize oil and gas operations, and scaling innovative low-carbon and carbon-neutral technologies. 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.
Our operations are subject to cyber incidents that could have a material adverse effect on our business, financial condition, and results of operations.
Our success depends in part on our ability to provide effective data security protection in connection with our digital technologies and services. We rely on information technology networks and systems for internal purposes, including secure data storage, processing, and transmission, as well as in our interactions with our business associates, such as customers and suppliers. We also 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.
Unauthorized access to or modification of, or actions disabling our ability to obtain authorized access to, our customers’ data, other external data, personal data, or our own data, as a result of a cyber incident, attack or exploitation of a security vulnerability, could result in significant damage to our reputation or disruption of the services we provide to our customers. In addition, allegations, reports, or concerns regarding vulnerabilities affecting our digital products or services could damage our reputation. This could lead to fewer customers using our digital products and services, which could have a material adverse impact on our financial condition, results of operations cash flows andor prospects.
A significant portion 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.
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 and rapidly evolving. 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, competing or new technologies may accelerate the obsolescence of our products or services and reduce the value of our intellectual property.
Limitations on our ability to obtain, maintain, protect, or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenue is derived fromand any competitive advantage we hold.
There can be no assurance that the steps we take to obtain, maintain, protect, and enforce our non-United States operations, which exposes usintellectual property rights will be adequate. Some of our products or services, and the processes we use to risks inherentproduce 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 doing business in each of the over 120certain 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.
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.
Legal and Regulatory Risks
Our non-United States operations accounted for approximately 72% of our consolidated revenue in 2019, 68% in 2018 and 74% in 2017. In addition to the risks addressed elsewhere in this section, our operations in countries other than the United States are subject to various risks, including:
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Our failurerequire us to comply with complex US and foreignnumerous laws and regulations, violations of which could have a material adverse effect on our reputation, 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, human rights, 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.UK 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 and services 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 applicable laws, including 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 business, operations, 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 operating results and financial condition.
8maintain existing customer and supplier relationships.
DemandExisting or future laws, regulations, court orders or other public- or private-sector initiatives to limit greenhouse gas emissions or relating to climate change may reduce demand for our products and services.
Continuing 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 groups and regulatory agencies in the European Union, the United States
There is also increased focus by our customers, investors and other regionsstakeholders on climate change, sustainability, and energy transition matters. Actions to address these concerns or countries have been focusing considerable attention on the emissionsnegative perceptions of carbon dioxide, methane and other greenhouse gasesour industry or fossil fuel products and their potential role in climate change. Existing or future legislation and regulations relatedrelationship to greenhouse gas emissions and climate change, as well as governmentthe environment have led to 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. Failure tomay 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, and any resurgence of the pandemic could again cause, a significant reduction in global economic activity, significantly weakening 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; and local and regional closures or lockdowns, including temporary closures of our facilities and the facilities of our customers and suppliers. The extent to which our operating and financial results will continue to be affected by the pandemic will depend on various factors beyond our control, such as the continued severity of the pandemic, including any sustained geographic resurgence; the emergence of new variants and strains of the COVID-19 virus; and the success of actions to contain or treat the virus. COVID-19, and volatile regional and global economic conditions stemming from the pandemic, could also aggravate our other risk factors described in this Form 10-K.
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 aspirations 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 targets are based on empirical data and estimates that reflect the current best practices for measuring or estimating emissions, but we anticipate that future innovations in both measurement technologies and estimation methodologies could cause us to revise our baseline as well as re-calculate progress toward our targets.
Our business faces increased scrutiny from certain 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.
9
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.private litigation.
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.
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, technology evolves and technology evolves.customer demands change. 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 events, including extreme weather conditions associated with climate change, have 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 events in areas where we operate, which could materially impactaffect our operations and financial results Thisresults. Extreme weather conditions such as hurricanes, flooding, landslides, and heat waves 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 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,may result in disruptions to our business operations; unauthorized access to (or the loss of Company access to) competitively sensitive, confidentialincreased operating costs 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.decreases in revenue.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
SchlumbergerSLB 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’sSLB’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of December 31, 2019,2022, there were 25,46422,341 stockholders of record. The principal United StatesUS market for Schlumberger’sSLB’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 SchlumbergerSLB 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, 20142017 in SchlumbergerSLB 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 SchlumbergerSLB specifically incorporates it by reference into such filing.
Comparison of Five-Year Cumulative Total Return Among
SchlumbergerSLB Common Stock, the S&P 500 Index and the
Philadelphia Oil Service Index
Share Repurchases
On January 21, 2016, the SchlumbergerSLB Board of Directors approved a $10 billion share repurchase program for SchlumbergerSLB common stock.
11
Schlumberger’sSLB 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:
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| $ | - |
|
|
| - |
|
|
|
|
|
2022. SLB did not repurchase any of its common stock during 2022.
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.
(Stated in millions, except per share amounts) |
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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 20192022 and 20182021 items and year-to-year comparisons between 20192022 and 2018.2021. Discussions of 20172020 items and year-to-year comparisonscomparison between 20182021 and 20172020 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’sSLB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2021.
20192022 Executive Overview
Schlumberger full-year 2019We delivered strong fourth quarter results and concluded a remarkable year for SLB with great success. Full-year 2022 revenue of $32.9$28.1 billion increased 23% year on year. All Divisions and geographical areas experienced double digit revenue growth.
2022 was essentially flat with 2018. International revenue, however, grewtransformative for SLB as we set new safety, operational, and performance benchmarks for our customers and strengthened our market position both internationally and in North America. We launched our bold new brand identity, reinforcing our leadership position in energy technology, digital, and sustainability, and demonstrated our ability to deliver superior earnings in this early phase of a structural upcycle in energy.
In North America, we seized the growth cycle throughout the year, increased our pretax operating margins close to 600 basis points (“bps”), and almost doubled our pretax operating income. We effectively harnessed our refocused portfolio, fit-for-basin technology, and performance differentiation to gain greater market access and improved pricing, particularly in the high single-digits as anticipated.drilling markets where we significantly outperformed rig count growth. Today, we have built one of the highest-quality oilfield services and equipment businesses in North America through the implementation of our returns-focused strategy.
In the oilinternational markets, sentiment was stable and positive for theafter a first four months of 2019, with the Brent oil price moving from $55 per barrel at the beginninghalf of the year that was impacted by geopolitical conflict and supply chain bottlenecks, activity began to a high of $75 per barrel in late April. OECD crude and product stocks continued to increase through much of 2019, reversing a trend that persisted throughout the first half of 2018. Internationally, activity and investment continued to strengthen, particularly offshore.
Activity in North America land was strong in the first half of 2019 but slowedvisibly expand in the second half of the year, asresulting in full year revenue growth of 20% and margin expansion of more than 150 bps. We laid the foundation for further growth and margin expansion through pricing improvements and a combinationsolid pipeline of budget exhaustionincremental contract awards. In the Middle East, SLB is well positioned to be a key beneficiary of this visible market expansion, and cash flow constraints impactedwe expect record levels of upstream investment by national oil companies to continue in the next few years. During the year, we secured a sizeable share of tender awards in the region, driven by our customers. Althoughdifferentiated performance, fit-for-purpose technology, and best-in-class local content. Similarly, across offshore basins, we continue to consolidate our advantaged position with new contract awards, particularly in Latin America and Africa.
Beyond our financial results, we made significant progress in our sustainability initiatives during the slowingyear, including launching several new Transition Technologies to support the decarbonization of oil and gas. Our Transition Technologies portfolio revenue grew more than 30% year-on-year, and we project it will cross the $1 billion revenue mark in 2023.
Finally, we initiated increased returns to shareholders, demonstrating confidence in our strategy, our financial outperformance, and our commitment to superior returns. We increased our dividend by 40% in April 2022, followed by a further 43% increase in January 2023, and we resumed our share buyback program in the first quarter of 2023.
The fourth quarter affirmed a distinctive new phase in the upcycle with the much-anticipated acceleration of activity in the second half of the year was consistent with the trend experienced in 2018, activity dropped earlier and steeperMiddle East, as revenue in the second half of 2019 as comparedregion increased by double digits. Offshore activity continued to the previous year.
By midyear, concerns of a recessionstrengthen, partially offset by seasonality in the United StatesNorthern Hemisphere. In North America, the US land rig count remains at robust levels, although the pace of growth is moderating. Additionally, pricing continues to trend favorably, extending beyond North America 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 byinto the international markets. Full-year 2019 international revenue of $21.8 billion increased 7% over 2018, again outpacing North America revenueregions, supported by new technology and continuing a trend which beganvery tight equipment and service capacity in the third quarter of 2018. This strong international performance was the result of increasedcertain markets.
These activity on the part of operators, as they continued to invest in longer-term resource development following a sustained period of underinvestmentdynamics, improved pricing, 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 formation of the Sensia joint venture and the divestiture 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, our commercial success—particularly in the Middle East, offshore, and Russia,North American markets—combine to set a very strong foundation for outperformance in 2023.
We strengthened our balance by reducing our net debt by $1.7 billion to $9.3 billion, its lowest level since the second quarter of 2016, and repaid approximately $1.7 billion of gross debt during the first halfyear.
Looking ahead, we believe the macro backdrop and market fundamentals that underpin a strong multi-year upcycle for energy remain very compelling in both oil and gas and in low-carbon energy resources. First, oil and gas demand is forecasted by the International Energy Agency (“IEA”) to grow by 1.7 million barrels per day in 2023 despite concerns for a potential economic slowdown in certain regions. In parallel, markets remain very tightly supplied. Second, energy security is prompting a sense of 2020. Asurgency to make further investments to ensure capacity expansion and diversity of supply. And third, the year progresses, the effectsecular trends of slowing North America production growth is likelydigital and decarbonization are set to cause tightness in the marketaccelerate with significant digital technology advancements, favorable government policy support, and further stimulate international operators to increase their investments in the second half of the yearincreased spending on low-carbon initiatives and beyond.resources.
Based on these factors, the expectationglobal upstream spending projections continue to trend positively. Activity growth is for the 2020 exploration and production capex spending growth rate in the international marketsexpected to be broad-based, marked by an acceleration 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 transferred to the Sensia joint venture and 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 growthbasins. These positive activity dynamics will be more heavily weighted toamplified by higher service pricing
and tighter service sector capacity. The impact of loosening COVID-19 restrictions and an earlier than expected reopening of China could support further upside potential over 2023.
Overall, the second halfcombination of thethese effects will result in a very favorable mix for SLB with significant growth opportunities in our Core, Digital, and New Energy and we expect another year with increasing offshore activity, improving activity mix from the early deepwaterof very strong growth cycle, and increasing exploration work toward the end of the year and into 2021.
In North America, Schlumberger is continuing 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. Schlumberger is cautiously optimistic that the high-grading of its portfolio will promote margin expansion and the improvement of returns in the North America land market.
expansion.
Fourth Quarter 20192022 Results
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fourth Quarter 2019 |
|
| Third Quarter 2019 |
| Fourth Quarter 2022 |
|
| Third Quarter 2022 |
| ||||||||||||||||||||
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| Income (Loss) |
|
|
|
|
| Pretax |
|
|
|
|
|
| Pretax |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| Revenue |
|
| Income |
|
| Revenue |
|
| Income |
| ||||||
| 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 | $ | 1,012 |
|
| $ | 382 |
|
| $ | 900 |
|
| $ | 305 |
| |||||||||||||||
Reservoir Performance |
| 1,554 |
|
|
| 282 |
|
|
| 1,456 |
|
|
| 244 |
| |||||||||||||||
Well Construction |
| 3,229 |
|
|
| 679 |
|
|
| 3,084 |
|
|
| 664 |
| |||||||||||||||
Production Systems |
| 2,215 |
|
|
| 238 |
|
|
| 2,150 |
|
|
| 224 |
| |||||||||||||||
Eliminations & other |
| (111 | ) |
|
| (44 | ) |
|
| (96 | ) |
|
| (30 | ) |
| (131 | ) |
|
| (24 | ) |
|
| (113 | ) |
|
| (37 | ) |
|
|
|
|
|
| 1,006 |
|
|
|
|
|
|
| 1,096 |
| |||||||||||||||
Pretax segment operating income |
|
|
|
|
| 1,557 |
|
|
|
|
|
|
| 1,400 |
| |||||||||||||||
Corporate & other (1) |
|
|
|
|
| (215 | ) |
|
|
|
|
|
| (231 | ) |
|
|
|
|
| (169 | ) |
|
|
|
|
|
| (155 | ) |
Interest income (2) |
|
|
|
|
| 8 |
|
|
|
|
|
|
| 7 |
|
|
|
|
|
| 14 |
|
|
|
|
|
|
| 8 |
|
Interest expense (3) |
|
|
|
|
| (138 | ) |
|
|
|
|
|
| (151 | ) |
|
|
|
|
| (118 | ) |
|
|
|
|
|
| (119 | ) |
Charges & credits (4) |
|
|
|
|
| (209 | ) |
|
|
|
|
|
| (12,692 | ) |
|
|
|
|
| 63 |
|
|
|
|
|
|
| - |
|
| $ | 8,228 |
|
| $ | 452 |
|
| $ | 8,541 |
|
| $ | (11,971 | ) | $ | 7,879 |
|
| $ | 1,347 |
|
| $ | 7,477 |
|
| $ | 1,134 |
|
(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 |
Fourth quarter
Fourth-quarter revenue of $8.2$7.9 billion increased 5% sequentially. Revenue grew across all Divisions and geographical areas, with robust year-end sales in digital and particularly strong service activity offshore and in the Middle East where a significant inflection was 4% lower sequentially. witnessed as capacity expansion projects mobilized.
International revenue of $5.7$6.2 billion grew 2% sequentially. However, North America5% sequentially, driven by continued strengthening activity. This revenue of $2.5 billion dropped 14% sequentially due to customer budget exhaustion and cash flow constraints.
Sequential international growthincrease was led by the Middle East & Asia area, whereand Latin America, both of which grew 7%. In North America, revenue of $1.6 billion increased 6% sequentially driven by strong year-end exploration data licensing sales in the US Gulf of Mexico boosting North America offshore revenue. US land revenue increased 4% sequentially due to drilling revenue growth, which outperformed the rig count growth.
Fourth-quarter pretax segment operating margin of 19.8% was the highest since 2015.
Digital & Integration
Digital & Integration fourth-quarter revenue of $1.0 billion increased 12% sequentially, propelled by the year-end exploration data licensing sales in the US Gulf of Mexico and Africa; increased Asset Performance Solutions (“APS”) project activity in Ecuador and higher digital sales internationally.
Digital & Integration pretax operating margin of 38% expanded 386 bps sequentially, due to improved profitability in exploration data licensing and digital solutions.
Reservoir Performance
Reservoir Performance revenue of $1.6 billion increased 7% sequentially from new projects and activity gains internationally, particularly in the Middle East and Africa.
Reservoir Performance pretax operating margin of 18% expanded 146 bps sequentially. Profitability was boosted by higher offshore and exploration activity, mainly in Africa, and strong development activity, particularly in US land and Middle East & Asia.
Well Construction
Well Construction revenue of $3.2 billion increased 5%. sequentially, outperforming global rig count growth due to strong activity from new projects and solid pricing improvements internationally, particularly in the Middle East & Asia and Latin America.
Well Construction pretax operating margin of 21% contracted 50 bps sequentially, as improved profitability from increasing activity in the Middle East & Asia, North America, and Latin America revenue grew 1%, while revenue inwas more than offset by the Europe/CIS/Africa area only declined 2% given the mild winter slowdownonset of activityseasonal effects in the Northern Hemisphere.
The fourth quarterProduction Systems
Production Systems revenue of 2019 delivered the first sequential growth in$2.2 billion increased 3% sequentially primarily due to higher international margin in any fourth quarter since 2014. Schlumberger is therefore confident that it has turned the corner, particularlyas it has experienced sequential international margin growth in eachsales 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,artificial lift, completions, and restructuring operations to protect margins.
14midstream productions systems.
Reservoir Characterization
Fourth-quarter revenue of $1.6 billion decreased 1% sequentially following the end of the summer campaigns for Wireline and Testing activity in the North Sea and Russia, where the mild winter did not significantly disrupt activity.
Reservoir CharacterizationProduction Systems pretax operating margin of 22% increased 59 basis points (“bps”) sequentially primarily driven by increased high-margin SIS digital software sales.
Drilling
Fourth-quarter revenue of $2.4 billion decreased 1%11% expanded 32 bps sequentially primarily due to the end of the summer drilling campaign in Russia and lower drilling activity in North America land.
Drilling pretax operating margin of 12% was 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.
Production
Fourth-quarteran improved revenue of $2.9 billion declined 9% sequentially driven by lower activity and pricing for OneStim 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 fleets in light of lower demand.
Production pretax operating margin of 9% contracted by 32 bps sequentially due to the lower OneStim activity, partially offset by strength in international margins from higher activity.
Cameron
Fourth-quarter revenue 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 sequentially due to the reduced North America land activity 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.
mix.
Full-Year 20192022 Results
|
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| (Stated in millions) |
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| (Stated in millions) |
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|
|
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||||||||||||||||||
|
|
|
|
| Income (Loss) |
|
|
|
|
|
| Income |
|
|
|
|
| Pretax |
|
|
|
|
|
| Pretax |
| ||||
|
|
|
|
| Before |
|
|
|
|
|
| Before |
| Revenue |
|
| Income |
|
| Revenue |
|
| Income |
| ||||||
| 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 | $ | 3,725 |
|
| $ | 1,357 |
|
| $ | 3,290 |
|
| $ | 1,141 |
| |||||||||||||||
Reservoir Performance |
| 5,553 |
|
|
| 881 |
|
|
| 4,599 |
|
|
| 648 |
| |||||||||||||||
Well Construction |
| 11,397 |
|
|
| 2,202 |
|
|
| 8,706 |
|
|
| 1,195 |
| |||||||||||||||
Production Systems |
| 7,862 |
|
|
| 748 |
|
|
| 6,710 |
|
|
| 634 |
| |||||||||||||||
Eliminations & other |
| (439 | ) |
|
| (171 | ) |
|
| (522 | ) |
|
| (104 | ) |
| (446 | ) |
|
| (177 | ) |
|
| (376 | ) |
|
| (253 | ) |
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
| 4,187 |
| |||||||||||||||
Pretax segment operating income |
|
|
|
|
| 5,011 |
|
|
|
|
|
|
| 3,365 |
| |||||||||||||||
Corporate & other (1) |
|
|
|
|
| (957 | ) |
|
|
|
|
|
| (937 | ) |
|
|
|
|
| (637 | ) |
|
|
|
|
|
| (573 | ) |
Interest income (2) |
|
|
|
|
| 33 |
|
|
|
|
|
|
| 52 |
|
|
|
|
|
| 27 |
|
|
|
|
|
|
| 31 |
|
Interest expense (3) |
|
|
|
|
| (571 | ) |
|
|
|
|
|
| (537 | ) |
|
|
|
|
| (477 | ) |
|
|
|
|
|
| (514 | ) |
Charges & credits (4) |
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
| (141 | ) |
|
|
|
|
| 347 |
|
|
|
|
|
|
| 65 |
|
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 32,815 |
|
| $ | 2,624 |
| $ | 28,091 |
|
| $ | 4,271 |
|
| $ | 22,929 |
|
| $ | 2,374 |
|
(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 |
| Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements. |
15
Full-year 2022 revenue of $28.1 billion increased 23% year-on-year driven by activity increases internationally, in North America and across all Divisions.
Full-year 2019International revenue increased 20% to $21.9 billion led by Latin America and Europe/CIS/Africa with revenue growth of $32.9 billion was essentially flat year-on-year with27% and 25%, respectively, while revenue in the Middle East & Asia increased 12%. In North America, revenue decreasing 10%increased 34% to $6.0 billion primarily driven by robust onshore drilling activity; higher sales of production systems; a strong contribution from the APS project in Canada; and international revenue increasing 7%. The international results were underpinned by increased investment levels. In contrast,exploration data licensing in the North America results reflect a slowing production growth rate on land as operators maintained capital discipline and reduced drilling and hydraulic fracturing activity.US Gulf of Mexico.
Reservoir Characterization
Full-year 2019pretax operating margin of 18% increased 316 bps due to improved operating leverage from higher activity, a favorable activity mix, and an improving pricing environment.
Digital & Integration
Digital & Integration full-year revenue of $6.3$3.7 billion increased 2% year-on-year13% year on year, primarily driven by increased international activity.APS project activity in Ecuador and Canada and higher exploration data licensing sales in the US Gulf of Mexico.
Year-on-year,
Digital & Integration pretax operating margin decreased 79of 36% expanded 177 bps year on year largely due to 21%.improved profitability in exploration data licensing.
DrillingReservoir Performance
Full-year 2019Reservoir Performance full-year revenue of $9.7$5.6 billion increased 5% year-on-year21% year on year as a result of strong international activity led by the Middle East & Asia and Latin America on higher activity and improved pricing.
Reservoir Performance pretax operating margin of 16% increased 177 bps year on year primarily due to improved profitability in intervention activity.
Well Construction
Well Construction full-year revenue of $11.4 billion grew 31% year on year with strong growth across all geographical areas led by North America and Latin America, which grew 56% and 53%, respectively. This growth was driven by higher demand for drilling services, largely in the international markets that benefited Drilling & Measurements, M-I SWACO,land and Integrated Drilling Services.offshore activity along with improved pricing.
Year-on-year,
Well Construction pretax operating margin decreased 89of 19% expanded 560 bps to 13% despiteyear on year driven by the higher revenue as margins were affected by competitive pricingactivity and higher costs associated with a number of integrated contracts internationally.improved pricing.
Production Systems
Full-year 2019Production Systems full-year revenue of $12.0$7.9 billion decreased 3% year-on-year with most of the revenue decline attributable to lower OneStimincreased 17% year on year driven by new projects and increased sales activity primarily in Europe, Africa, and North America as customers reduced spending due to higher cost of capital, lower borrowing capacityAmerica. Double digit growth was posted in midstream, artificial lift, surface production systems and expectation of better returns from their shareholders.subsea production systems.
Year-on-year,
Production Systems pretax operating margin decreased 20 bps to 8%of 10% was essentially flat primarily due to reduced profitability in OneStim in North America.
Cameron
Full-year 2019as a result of higher logistics costs and a less favorable 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%.mix.
Interest and& Other Income, Net
Interest & other income, net consisted of the following:
(Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |
| 2019 |
|
| 2018 |
|
|
|
|
|
|
|
| ||
| 2022 |
|
| 2021 |
| |||||||||
Gain on sale of Liberty shares | $ | 325 |
|
| $ | 28 |
| |||||||
Loss on Blue Chip Swap transactions |
| (139 | ) |
|
| - |
| |||||||
Gain on ADC equity investment |
| 107 |
|
|
| - |
| |||||||
Earnings of equity method investments |
| 164 |
|
|
| 40 |
| |||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| 99 |
|
|
| 33 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
| |||||||
Gain on sale of real estate |
| 43 |
|
|
| - |
| |||||||
Gain on repurchase of bonds |
| 11 |
|
|
| - |
| |||||||
Unrealized gain on marketable securities |
| - |
|
|
| 47 |
| |||||||
| $ | 86 |
|
| $ | 149 |
| $ | 610 |
|
| $ | 148 |
|
During 2022, SLB sold 47.8 million of its shares of Liberty and recognized a gain of $325 million. During 2021, SLB sold 9.5 million of its shares of Liberty and recognized a gain of $28 million.
SLB’s functional currency in Argentina is the US dollar and it uses Argentina’s official exchange rate to remeasure its Argentine peso-denominated net assets into US dollars. The Central Bank of Argentina maintains certain currency controls that limit SLB’s ability to access US dollars in Argentina and remit cash from its Argentine operations. A legal indirect foreign exchange mechanism exists-in the form of capital market transactions known as Blue Chip Swaps, which effectively results in a parallel US dollar exchange rate. This parallel rate, which cannot be used as the basis to remeasure SLB’s net monetary assets in US dollars under US GAAP, was approximately 93% higher than Argentina’s official exchange rate at December 31, 2022. During the fourth quarter of 2022, SLB entered into Blue Chip Swap transactions that resulted in a loss of $139 million.
SLB’s peso-denominated net assets in Argentina were approximately $40 million at December 31, 2022 (as compared to approximately $270 million at September 30, 2022), primarily consisting of cash. If Argentina’s official exchange rate converges with the parallel rate, SLB would incur a loss on its peso-denominated net assets in Argentina. Additionally, SLB may enter into further Blue Chip Swap transactions in the future. Argentina represented less than 5% of SLB’s consolidated revenue in 2022.
SLB has an investment in the Arabian Drilling Company (“ADC”), an onshore and offshore gas and oil rig drilling company in Saudi Arabia, that it accounts for under the equity method. During the fourth quarter of 2022, ADC completed an initial public offering (“IPO”). In connection with the IPO, SLB sold a portion of its interest in a secondary offering that resulted in SLB receiving net proceeds of $223 million. As a result of these transactions, SLB’s ownership interest in ADC decreased from 49% to approximately 34%. SLB recognized a gain of $107 million, representing the gain on the sale of a portion of its interest as well as the effect of the ownership dilution of its equity investment due to the IPO.
The decreaseincrease in earnings of equity method investments in 2022 as compared to 2021 is primarily due to SLB’s investment in Liberty, as Liberty experienced net losses in 2021 as compared to net income in 2022, as well as higher earnings from SLB’s investment in ADC.
The increase in interest income in 2019 compared to 2018 iswas primarily attributable to lowerdriven by the effect of higher cash and short-term investment balances.balances and interest rates in Argentina. This increase was more than offset by approximately $100 million of foreign exchange losses recorded during 2022 ($13
million during 2021) relating to the remeasurement of Argentine peso-denominated net monetary assets as the official Argentine peso exchange rate devalued compared to the US dollar throughout 2022.
The decrease
During 2022, SLB sold certain real estate and recognized a gain of $43 million.
During the fourth quarter of 2022, SLB repurchased $395 million of its 3.75% Senior Notes due 2024 and $409 million of its 4.00% Senior Notes due 2025 for $790 million, resulting in earnings from equity income is associated with Schlumberger’s equity investmentsa gain of $11 million after considering the write-off of the related deferred financing fees and other costs.
During 2021, a start-up company that SLB previously invested in rig-and seismic-related businesses.was acquired. As a result of this transaction, SLB’s ownership interest was converted into shares of a publicly traded company. SLB 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.
Interest Expense
Interest expense of $609$490 million in 2019 increased $342022 decreased $49 million compared to 2018. This increase is2021 primarily due to an increase inas a result of the weighted averagerepayment of $1.7 billion and $2.1 billion of debt balance during 2019 as compared to 2018.2022 and 2021, respectively.
Other
Research & engineering and General & administrative expenses, as a percentage of Revenue, were as follows:
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||
Research & engineering |
| 2.2 | % |
|
| 2.1 | % |
| 2.3 | % |
|
| 2.4 | % |
General & administrative |
| 1.4 | % |
|
| 1.4 | % |
| 1.3 | % |
|
| 1.5 | % |
Income Taxes
The SchlumbergerSLB effective tax rate is sensitive to the geographic mix of earnings. When the percentage of pretax earnings generated outside of North America increases, the SchlumbergerSLB effective tax rate generally decreases. Conversely, when the percentage of pretax earnings generated outside of North America decreases, the SchlumbergerSLB effective tax rate generally increases.
The Schlumberger effective tax rate was 3%18% in 20192022 as compared to 17%19% in 2018.2021. The lowerdecrease 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 2022 by approximately one percentage point.
Charges and Credits
SchlumbergerSLB recorded significant charges and credits during 20192022 and 2018.2021. 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 2019 charges and credits, of which the $247 million gain on the formation 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 of charges are classified in Impairments & other.
| (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 |
|
A significant portion of the third-quarter impairment charges were recorded effective August 31, 2019. Accordingly, the 2019 results reflect a $108 million reduction in depreciation and amortization expense for the last four months of 2019. Approximately $84 million of this amount relates to the Production segment. The remaining $24 million is reflected in the “Corporate & other” line item.
The following is a summary of the 20182022 charges and credits, of which the $215 million gain on the salecredits:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax Benefit |
|
|
|
|
| ||
| Charge (Credit) |
|
| (Expense) |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares | $ | (26 | ) |
| $ | (4 | ) |
| $ | (22 | ) |
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (215 | ) |
|
| (14 | ) |
|
| (201 | ) |
Gain on sale of real estate |
| (43 | ) |
|
| (2 | ) |
|
| (41 | ) |
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (84 | ) |
|
| (19 | ) |
|
| (65 | ) |
Loss on Blue Chip Swap transactions |
| 139 |
|
|
| - |
|
|
| 139 |
|
Gain on ADC equity investment |
| (107 | ) |
|
| (3 | ) |
|
| (104 | ) |
Gain on repurchase of bonds |
| (11 | ) |
|
| (2 | ) |
|
| (9 | ) |
| $ | (347 | ) |
| $ | (44 | ) |
| $ | (303 | ) |
The following is a summary of the marine seismic acquisition business is classified in Gain on sale of business in the Consolidated Statement of Income (Loss), while the $356 million of2021 charges are classified in Impairments & other.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 |
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax Benefit |
|
|
|
|
| ||
| Charge (Credit) |
|
| (Expense) |
|
| 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 | ) |
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 |
| 2022 |
|
| 2021 |
| ||||
Cash | $ | 1,137 |
|
| $ | 1,433 |
| $ | 1,655 |
|
| $ | 1,757 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
| 1,239 |
|
|
| 1,382 |
|
Short-term borrowings and current portion of long-term debt |
| (524 | ) |
|
| (1,407 | ) |
| (1,632 | ) |
|
| (909 | ) |
Long-term debt |
| (14,770 | ) |
|
| (14,644 | ) |
| (10,594 | ) |
|
| (13,286 | ) |
Net debt (1) | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (9,332 | ) |
| $ | (11,056 | ) |
|
|
|
|
|
|
|
| |||||||
Changes in Liquidity: | 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
| |||||||
Impairments and other charges |
| 13,148 |
|
|
| 356 |
| |||||||
Gain on formation of Sensia joint venture |
| (247 | ) |
|
| - |
| |||||||
Gain on sale of WesternGeco marine seismic business |
| - |
|
|
| (215 | ) | |||||||
Net income | $ | 3,492 |
|
| $ | 1,928 |
| |||||||
Charges and credits |
| (347 | ) |
|
| (65 | ) | |||||||
Depreciation and amortization (2) |
| 3,589 |
|
|
| 3,556 |
|
| 2,147 |
|
|
| 2,120 |
|
Stock-based compensation expense |
| 313 |
|
|
| 324 |
| |||||||
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
| (39 | ) |
|
| (31 | ) |
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
| (96 | ) |
|
| 10 |
|
Stock-based compensation expense |
| 405 |
|
|
| 345 |
| |||||||
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) | |||||||
Increase in working capital and other (3) |
| (327 | ) |
|
| (130 | ) | |||||||
Increase in working capital |
| (1,709 | ) |
|
| (45 | ) | |||||||
US Federal tax refund |
| - |
|
|
| 477 |
| |||||||
Other |
| (41 | ) |
|
| (67 | ) | |||||||
Cash flow from operations |
| 5,431 |
|
|
| 5,713 |
|
| 3,720 |
|
|
| 4,651 |
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
| (1,618 | ) |
|
| (1,141 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
| (587 | ) |
|
| (474 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) | |||||||
Free cash flow (4) |
| 2,695 |
|
|
| 2,472 |
| |||||||
Exploration data capitalized |
| (97 | ) |
|
| (39 | ) | |||||||
Free cash flow (3) |
| 1,418 |
|
|
| 2,997 |
| |||||||
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
| (848 | ) |
|
| (699 | ) |
Stock repurchase program |
| (278 | ) |
|
| (400 | ) | |||||||
Proceeds from employee stock plans |
| 219 |
|
|
| 261 |
| |||||||
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 employee stock purchase plan |
| 141 |
|
|
| 137 |
| |||||||
Proceeds from exercise of stock options |
| 81 |
|
|
| - |
| |||||||
Taxes paid on net-settled stock-based compensation awards |
| (93 | ) |
|
| (24 | ) | |||||||
Business acquisitions and investments, net of cash acquired plus debt assumed |
| (23 | ) |
|
| (292 | ) |
| (58 | ) |
|
| (103 | ) |
Proceeds from sale of Liberty shares |
| 732 |
|
|
| 109 |
| |||||||
Proceeds from sale of ADC shares |
| 223 |
|
|
| - |
| |||||||
Proceeds from sale of real estate |
| 120 |
|
|
| - |
| |||||||
Purchases of Blue Chip Swap securities |
| (259 | ) |
|
| - |
| |||||||
Proceeds from sales of Blue Chip Swap securities |
| 111 |
|
|
| - |
| |||||||
Other |
| (283 | ) |
|
| (14 | ) |
| (105 | ) |
|
| (81 | ) |
(Increase) decrease in Net Debt |
| 147 |
|
|
| (164 | ) | |||||||
Change in net debt before impact of changes in foreign exchange rates on net debt |
| 1,463 |
|
|
| 2,336 |
| |||||||
Impact of changes in foreign exchange rates on net debt |
| 261 |
|
|
| 488 |
| |||||||
Decrease in Net Debt |
| 1,724 |
|
|
| 2,824 |
| |||||||
Net Debt, Beginning of period |
| (13,274 | ) |
|
| (13,110 | ) |
| (11,056 | ) |
|
| (13,880 | ) |
Net Debt, End of period | $ | (13,127 | ) |
| $ | (13,274 | ) | $ | (9,332 | ) |
| $ | (11,056 | ) |
18
(1) | “Net |
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets, |
(3 |
|
| “Free cash flow” represents cash flow from operations less capital expenditures, APS investments and |
Key liquidity events during 20192022 and 20182021 included:
| • | Cash flow from operations |
The increase in working capital in 2022 was partially offset by the effects of a $1.3 billion increase in net income, excluding the effects of the previously mentioned charges and credits (which had no impact on cash flow from operations), in 2022 as compared to 2021. In addition, cash flow from operations in 2021 benefited from a federal tax refund of $477 million relating to the carryback of US net operating losses pursuant to the Coronavirus Aid, Relief and Economic Security Act.
• | In April 2022, SLB announced a 40% increase to its quarterly cash dividend from $0.125 per share of outstanding common stock to $0.175 per share, beginning with the dividend payable in July 2022. Dividends paid during 2022 and 2021 were $0.8 billion and $0.7 billion, respectively. In January 2023, SLB announced a further 43% increase to its quarterly cash dividend from $0.175 per share of outstanding common stock to $0.25 per share, beginning with the dividend payable in April 2023. |
| • | On January 21, 2016, the SLB Board of Directors approved a $10 billion share repurchase program for |
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 |
|
|
|
| • | Capital investments (consisting of capital expenditures, APS investments and exploration data capitalized) were $2.3 billion in 2022 and $1.7 billion in |
| • | During |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
• | During the fourth quarter of |
| • | During |
• | During the second quarter of 2022, SLB sold certain real estate and |
• | During the fourth quarter of 2021, SLB deposited sufficient funds with the trustee for its $1.0 billion of 2.40% Senior Notes due 2022 to satisfy and discharge all of its obligations relating to such notes. |
• | During the second quarter of 2021, SLB repurchased all $665 million |
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, Schlumberger2022, SLB had $2.2$2.89 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 $6.55 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. Schlumbergerunused. SLB 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.months and beyond.
The total outstanding commercial paper borrowings were $2.2 billion asfollowing table reflects the carrying amounts of SLB’s debt at December 31, 2019 and $2.4 billion as2022 by year of December 31, 2018.
Summary of Contractual Obligationsmaturity:
| (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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Stated in millions) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| After |
|
|
|
|
| |
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| 2028 |
|
| 2029 |
|
| 2030 |
|
| 2031 |
|
| Total |
| ||||||||||
Fixed rate debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.65% Senior Notes | $ | 1,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,499 |
|
4.00% Notes |
| 79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 79 |
|
0.00% Notes |
|
|
|
| $ | 531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 531 |
|
3.75% Senior Notes |
|
|
|
|
| 355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 355 |
|
3.70% Notes |
|
|
|
|
| 54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 54 |
|
4.00% Senior Notes |
|
|
|
|
|
|
|
| $ | 522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 522 |
|
1.40% Senior Notes |
|
|
|
|
|
|
|
|
| 499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 499 |
|
1.375% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,060 |
|
1.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| 636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 636 |
|
0.25% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 955 |
|
3.90% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,464 |
|
4.30% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 847 |
|
|
|
|
|
|
|
|
|
|
| 847 |
|
2.65% Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,250 |
|
|
|
|
|
|
| 1,250 |
|
2.00% Guaranteed Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,055 |
|
|
| 1,055 |
|
0.50% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 954 |
|
|
| 954 |
|
7.00% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 202 |
|
|
| 202 |
|
5.95% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 112 |
|
|
| 112 |
|
5.13% Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 98 |
|
|
| 98 |
|
Total fixed rate debt | $ | 1,578 |
|
| $ | 940 |
|
| $ | 1,021 |
|
| $ | 1,696 |
|
| $ | 955 |
|
| $ | 1,464 |
|
| $ | 847 |
|
| $ | 1,250 |
|
| $ | 2,421 |
|
| $ | 12,172 |
|
Variable rate debt |
| 54 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 54 |
|
Total | $ | 1,632 |
|
| $ | 940 |
|
| $ | 1,021 |
|
| $ | 1,696 |
|
| $ | 955 |
|
| $ | 1,464 |
|
| $ | 847 |
|
| $ | 1,250 |
|
| $ | 2,421 |
|
| $ | 12,226 |
|
Interest payments on fixed rate debt obligations by year are as follows:
(Stated in millions) |
| ||
|
|
|
|
2023 | $ | 386 |
|
2024 |
| 320 |
|
2025 |
| 301 |
|
2026 |
| 265 |
|
2027 |
| 235 |
|
Thereafter |
| 706 |
|
| $ | 2,213 |
|
|
|
|
|
|
|
Refer toSee Note 17,13, Pension and Other Benefit Plans,Leases of the Consolidated Financial Statements for details regarding Schlumberger’s pension and other postretirement benefitSLB’s lease 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.
SchlumbergerSLB 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 SchlumbergerSLB 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 SchlumbergerSLB 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 SchlumbergerSLB about matters that are inherently uncertain.
Schlumberger
SLB 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
SchlumbergerSLB 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’sSLB’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, SchlumbergerSLB 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, SchlumbergerSLB 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, SchlumbergerSLB has not historically had material write-offs due to uncollectible accounts receivable over the recent industry downturn. Schlumberger generates revenuereceivable. SLB has a global footprint in more than 120100 countries. As of December 31, 2019, only2022, three of those countries individually accounted for greater than 5% of Schlumberger’sSLB’s net receivablesaccounts receivable balance, of which only onetwo (the United States)States and Mexico) accounted for greater than 10% of such receivables.
Included in Receivables, less allowance for doubtful accounts in the Consolidated Balance Sheet as of December 31, 2022 is approximately $1.0 billion of receivables relating to Mexico. SLB’s receivables from its primary customer in Mexico are not in dispute and SLB has not historically had any material write-offs due to uncollectible accounts receivable relating to this customer.
Goodwill, Intangible Assets and Long-Lived Assets
SchlumbergerSLB 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’sSLB’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, SchlumbergerSLB 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, SchlumbergerSLB 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 SchlumbergerSLB 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
SLB 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.
During 2019, Schlumberger recorded an $8.8 billion
SLB elected to perform the qualitative assessment described above for purposes of its annual goodwill impairment charge. Refer to Note 3 to the Consolidated Financial Statements for details regarding the facts and circumstancestest in 2022. Based on this assessment, SLB concluded it was more likely than not that led to this impairment and how the fair value of each of its reporting unitunits was estimated, including the significant assumptions used and other details.significantly greater than its carrying amount. Accordingly, no further testing was required.
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, SchlumbergerSLB could be required to recognize impairment charges in the future.
21
Income Taxes
SchlumbergerSLB conducts business in more than 100 tax jurisdictions, a number of which have tax laws that are not fully defined and are evolving. Schlumberger’sSLB’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. SchlumbergerSLB 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, SchlumbergerSLB 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
SchlumbergerSLB 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% of Schlumberger’sSLB’s revenue in each of 20192022, 6% in 2021, and 2018, respectively,5% in 2020, 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’sSLB’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 and the expected rate of return on plan assets and medical cost trend rates.assets. 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 SchlumbergerSLB 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 SchlumbergerSLB for its various pension and postretirement benefit plans:
| • | The discount rate utilized to determine the liability for |
| • | The weighted-average discount rate utilized to determine the liability for |
| • | The |
22
| • | The weighted-average discount rate utilized to determine expense for |
The expected rate of return for Schlumberger’sSLB’s retirement benefit plans represents the long-term 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 historicalbased on expectations regarding future rates of return for each individualthe portfolio considering the asset class.allocation and related historical rate of return. The weighted average expected rate of return on plan assets for the United States pension plans was 4.40% in 2022 and 6.60% in 2019 and 7.25% in 2018.2021. The weighted average expected rate of return on plan assets for the international pension plans was 7.22%5.05% in 20192022 and 7.40%6.73% in 2018.2021. A lower expected rate of return would increaseincreases 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’sSLB’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 2022 |
| Dec. 31, 2022 |
| ||
Change in Assumption | Pretax Expense |
| Liability |
| Pretax Expense |
| Obligation |
| ||
25 basis point decrease in discount rate | +$35 |
| +$567 |
| +$31 |
| +$334 |
| ||
25 basis point increase in discount rate | -$31 |
| -$535 |
| -$30 |
| -$321 |
| ||
25 basis point decrease in expected return on plan assets | +$30 |
|
| - |
| +$38 |
|
| - |
|
25 basis point increase in expected return on plan assets | -$29 |
|
| - |
| -$38 |
|
| - |
|
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for Schlumberger’sSLB’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 | -$3 |
| +$ |
25 basis point increase in discount rate |
|
| -$ |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
SchlumbergerSLB 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
SLB’s functional currency is primarily the US dollar. Approximately 78%72% of Schlumberger’sSLB’s revenue in 20192022 was denominated in US dollars. However, outside the United States, a significant portion of Schlumberger’sSLB’s expenses is incurred in foreign currencies. Therefore, when the US dollar weakens in relation to the foreign currencies of the countries in which SchlumbergerSLB conducts business, the US dollar-reported expenses will increase.
Schlumberger
SLB is exposed to risks on future cash flows relating to its fixed rate debt denominated in currencies other than the functional currency. SLB uses cross-currency interest rate swaps to provide a hedge against these cash flow risks and effectively convert the debt to US-dollar denominated fixed rate debt.
SLB maintains a foreign-currency risk management strategy that uses derivative instruments to manage the impact of changes in foreign exchange rates on its earnings. SchlumbergerSLB 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, 20192022 market rates would decreaseincrease the unrealized value of Schlumberger’sSLB’s forward contracts by $8$28 million. Conversely, a 10% depreciation in the US dollar from the December 31, 20192022 market rates would increasedecrease the unrealized value of Schlumberger’sSLB’s forward contracts by $9$36 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, 2019,2022, contracts were outstanding for the US dollar equivalent of $7.7$7.2 billion in various foreign currencies, of which $3.0$5.1 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,” “precursor,” “forecast,” “outlook,” “expectations,” “estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,” “scheduled,” “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 SLB’s financial and performance targets and other forecasts or expectations regarding, or dependent on, its business outlook; growth for SchlumbergerSLB 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 SchlumbergerSLB and the oil and gas industry; the business strategies of Schlumberger’sSLB, including digital and “fit for basin,” as well as the strategies of SLB’s customers; ourSLB’s effective tax rate; SLB’s APS projects, joint ventures, and other alliances; SLB’s response to the COVID-19 pandemic and its preparedness for other widespread health emergencies; the impact of the ongoing conflict in Ukraine on global energy supply; 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 anduncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by Schlumberger’sSLB’s customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of SLB’s customers and suppliers; SLB’s inability to achieve its financial and performance targets and other forecasts and expectations; SLB’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; the ongoing conflict in Ukraine; foreign currency risk; inflation; changes in monetary policy by governments; pricing pressure; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays or cancellations; challenges in SLB’s supply chain; production declines; the extent of future charges; SLB’s inability to recognize efficiencies and other intended benefits from its business strategies and initiatives, such as digital or 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. SchlumbergerForward-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 25, 2023, and SLB 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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services | $ | 24,358 |
|
| $ | 24,296 |
|
| $ | 21,927 |
| $ | 19,552 |
|
| $ | 15,602 |
|
| $ | 16,533 |
|
Product sales |
| 8,559 |
|
|
| 8,519 |
|
|
| 8,513 |
|
| 8,539 |
|
|
| 7,327 |
|
|
| 7,068 |
|
Total Revenue |
| 32,917 |
|
|
| 32,815 |
|
|
| 30,440 |
|
| 28,091 |
|
|
| 22,929 |
|
|
| 23,601 |
|
Interest & other income |
| 86 |
|
|
| 149 |
|
|
| 224 |
| |||||||||||
Gain on sale of business |
| - |
|
|
| 215 |
|
|
| - |
| |||||||||||
Gain on formation of Sensia joint venture |
| 247 |
|
|
| - |
|
|
| - |
| |||||||||||
Interest & other income, net |
| 610 |
|
|
| 148 |
|
|
| 267 |
| |||||||||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
| 20,828 |
|
|
| 20,618 |
|
|
| 18,206 |
|
| 15,233 |
|
|
| 13,129 |
|
|
| 14,675 |
|
Cost of sales |
| 7,892 |
|
|
| 7,860 |
|
|
| 8,337 |
|
| 7,697 |
|
|
| 6,142 |
|
|
| 6,325 |
|
Research & engineering |
| 717 |
|
|
| 702 |
|
|
| 787 |
|
| 634 |
|
|
| 554 |
|
|
| 580 |
|
General & administrative |
| 474 |
|
|
| 444 |
|
|
| 432 |
|
| 376 |
|
|
| 339 |
|
|
| 365 |
|
Impairments & other |
| 13,148 |
|
|
| 356 |
|
|
| 3,211 |
|
| - |
|
|
| - |
|
|
| 12,658 |
|
Merger & integration |
| - |
|
|
| - |
|
|
| 308 |
| |||||||||||
Interest |
| 609 |
|
|
| 575 |
|
|
| 566 |
|
| 490 |
|
|
| 539 |
|
|
| 563 |
|
Income (loss) before taxes |
| (10,418 | ) |
|
| 2,624 |
|
|
| (1,183 | ) |
| 4,271 |
|
|
| 2,374 |
|
|
| (11,298 | ) |
Tax expense (benefit) |
| (311 | ) |
|
| 447 |
|
|
| 330 |
|
| 779 |
|
|
| 446 |
|
|
| (812 | ) |
Net income (loss) |
| (10,107 | ) |
|
| 2,177 |
|
|
| (1,513 | ) |
| 3,492 |
|
|
| 1,928 |
|
|
| (10,486 | ) |
Net income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Net income (loss) attributable to Schlumberger | $ | (10,137 | ) |
| $ | 2,138 |
|
| $ | (1,505 | ) | |||||||||||
Net income attributable to noncontrolling interests |
| 51 |
|
|
| 47 |
|
|
| 32 |
| |||||||||||
Net income (loss) attributable to SLB | $ | 3,441 |
|
| $ | 1,881 |
|
| $ | (10,518 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.54 |
|
| $ | (1.08 | ) | |||||||||||
Basic earnings (loss) per share of SLB | $ | 2.43 |
|
| $ | 1.34 |
|
| $ | (7.57 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share of Schlumberger | $ | (7.32 | ) |
| $ | 1.53 |
|
| $ | (1.08 | ) | |||||||||||
Diluted earnings (loss) per share of SLB | $ | 2.39 |
|
| $ | 1.32 |
|
| $ | (7.57 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| 1,385 |
|
|
| 1,385 |
|
|
| 1,388 |
|
| 1,416 |
|
|
| 1,400 |
|
|
| 1,390 |
|
Assuming dilution |
| 1,385 |
|
|
| 1,393 |
|
|
| 1,388 |
|
| 1,437 |
|
|
| 1,427 |
|
|
| 1,390 |
|
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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | 3,492 |
|
| $ | 1,928 |
|
| $ | (10,486 | ) |
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change arising during the period |
| 67 |
|
|
| (191 | ) |
|
| (3 | ) |
| (26 | ) |
|
| 83 |
|
|
| (239 | ) |
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 |
| (148 | ) |
|
| (12 | ) |
|
| (90 | ) | |||||||||||
Reclassification to net income (loss) of net realized (income) loss |
| 117 |
|
|
| (3 | ) |
|
| 54 |
| |||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gain (loss) arising during the period |
| 127 |
|
|
| (186 | ) |
|
| 134 |
|
| (305 | ) |
|
| 1,075 |
|
|
| (247 | ) |
Amortization to net income (loss) of net actuarial loss |
| 94 |
|
|
| 187 |
|
|
| 159 |
|
| 75 |
|
|
| 271 |
|
|
| 200 |
|
Amortization to net income (loss) of net prior service (credit) cost |
| (11 | ) |
|
| (5 | ) |
|
| 80 |
| |||||||||||
Amortization to net income (loss) of net prior service credit |
| (23 | ) |
|
| (23 | ) |
|
| (17 | ) | |||||||||||
Impact of curtailment |
| - |
|
|
| - |
|
|
| (69 | ) | |||||||||||
Income taxes on pension and other postretirement benefit plans |
| (71 | ) |
|
| (18 | ) |
|
| (15 | ) |
| 24 |
|
|
| (74 | ) |
|
| (38 | ) |
Other |
| 1 |
|
|
| (3 | ) |
|
| - |
| |||||||||||
Comprehensive income (loss) |
| (9,923 | ) |
|
| 1,938 |
|
|
| (1,144 | ) |
| 3,207 |
|
|
| 3,242 |
|
|
| (10,932 | ) |
Comprehensive income (loss) attributable to noncontrolling interests |
| 30 |
|
|
| 39 |
|
|
| (8 | ) | |||||||||||
Comprehensive income (loss) attributable to Schlumberger | $ | (9,953 | ) |
| $ | 1,899 |
|
| $ | (1,136 | ) | |||||||||||
Comprehensive income attributable to noncontrolling interests |
| 51 |
|
|
| 47 |
|
|
| 32 |
| |||||||||||
Comprehensive income (loss) attributable to SLB | $ | 3,156 |
|
| $ | 3,195 |
|
| $ | (10,964 | ) |
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 |
|
| 2022 |
|
| 2021 |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,655 |
|
| $ | 1,757 |
|
Short-term investments |
| 1,030 |
|
|
| 1,344 |
|
|
| 1,239 |
|
|
| 1,382 |
|
Receivables less allowance for doubtful accounts (2019 - $255; 2018 - $249) |
| 7,747 |
|
|
| 7,881 |
| ||||||||
Receivables less allowance for doubtful accounts (2022 - $340; 2021 - $319) |
|
| 7,032 |
|
|
| 5,315 |
| |||||||
Inventories |
| 4,130 |
|
|
| 4,010 |
|
|
| 3,999 |
|
|
| 3,272 |
|
Other current assets |
| 1,486 |
|
|
| 1,063 |
|
|
| 1,078 |
|
|
| 928 |
|
|
| 15,530 |
|
|
| 15,731 |
|
|
| 15,003 |
|
|
| 12,654 |
|
Investments in Affiliated Companies |
| 1,565 |
|
|
| 1,538 |
|
|
| 1,581 |
|
|
| 2,044 |
|
Fixed Assets less accumulated depreciation |
| 9,270 |
|
|
| 11,679 |
|
|
| 6,607 |
|
|
| 6,429 |
|
Multiclient Seismic Data |
| 568 |
|
|
| 601 |
| ||||||||
Goodwill |
| 16,042 |
|
|
| 24,931 |
|
|
| 12,982 |
|
|
| 12,990 |
|
Intangible Assets |
| 7,089 |
|
|
| 8,727 |
|
|
| 2,992 |
|
|
| 3,211 |
|
Other Assets |
| 6,248 |
|
|
| 7,300 |
|
|
| 3,970 |
|
|
| 4,183 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 43,135 |
|
| $ | 41,511 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| 10,663 |
|
|
| 10,223 |
|
|
| 9,121 |
|
|
| 8,382 |
|
Estimated liability for taxes on income |
| 1,209 |
|
|
| 1,155 |
|
|
| 1,002 |
|
|
| 879 |
|
Short-term borrowings and current portion of long-term debt |
| 524 |
|
|
| 1,407 |
|
|
| 1,632 |
|
|
| 909 |
|
Dividends payable |
| 702 |
|
|
| 701 |
|
|
| 263 |
|
|
| 189 |
|
|
| 13,098 |
|
|
| 13,486 |
|
|
| 12,018 |
|
|
| 10,359 |
|
Long-term Debt |
| 14,770 |
|
|
| 14,644 |
|
|
| 10,594 |
|
|
| 13,286 |
|
Postretirement Benefits |
| 967 |
|
|
| 1,153 |
|
|
| 165 |
|
|
| 231 |
|
Deferred Taxes |
| 491 |
|
|
| 1,441 |
|
|
| 61 |
|
|
| 94 |
|
Other Liabilities |
| 2,810 |
|
|
| 3,197 |
|
|
| 2,308 |
|
|
| 2,255 |
|
|
| 32,136 |
|
|
| 33,921 |
|
|
| 25,146 |
|
|
| 26,225 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
| 13,078 |
|
|
| 13,132 |
|
|
| 11,837 |
|
|
| 12,608 |
|
Treasury stock |
| (3,631 | ) |
|
| (4,006 | ) |
|
| (1,016 | ) |
|
| (2,233 | ) |
Retained earnings |
| 18,751 |
|
|
| 31,658 |
|
|
| 10,719 |
|
|
| 8,199 |
|
Accumulated other comprehensive loss |
| (4,438 | ) |
|
| (4,622 | ) |
|
| (3,855 | ) |
|
| (3,570 | ) |
Schlumberger stockholders' equity |
| 23,760 |
|
|
| 36,162 |
| ||||||||
SLB stockholders' equity |
|
| 17,685 |
|
|
| 15,004 |
| |||||||
Noncontrolling interests |
| 416 |
|
|
| 424 |
|
|
| 304 |
|
|
| 282 |
|
|
| 24,176 |
|
|
| 36,586 |
|
|
| 17,989 |
|
|
| 15,286 |
|
| $ | 56,312 |
|
| $ | 70,507 |
|
| $ | 43,135 |
|
| $ | 41,511 |
|
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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (10,107 | ) |
| $ | 2,177 |
|
| $ | (1,513 | ) | $ | 3,492 |
|
| $ | 1,928 |
|
| $ | (10,486 | ) |
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 |
| (347 | ) |
|
| (65 | ) |
|
| 12,515 |
| |||||||||||
Depreciation and amortization (1) |
| 3,589 |
|
|
| 3,556 |
|
|
| 3,837 |
|
| 2,147 |
|
|
| 2,120 |
|
|
| 2,566 |
|
Deferred taxes |
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (39 | ) |
|
| (31 | ) |
|
| (1,248 | ) |
Stock-based compensation expense |
| 405 |
|
|
| 345 |
|
|
| 343 |
|
| 313 |
|
|
| 324 |
|
|
| 397 |
|
Pension and other postretirement benefits funding |
| (25 | ) |
|
| (83 | ) |
|
| (133 | ) | |||||||||||
Earnings of equity method investments, less dividends received |
| 6 |
|
|
| (48 | ) |
|
| (56 | ) |
| (96 | ) |
|
| 10 |
|
|
| (28 | ) |
Change in assets and liabilities: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in receivables |
| 142 |
|
|
| 430 |
|
|
| (124 | ) | |||||||||||
(Increase) decrease in receivables |
| (1,728 | ) |
|
| (36 | ) |
|
| 2,345 |
| |||||||||||
(Increase) decrease in inventories |
| (314 | ) |
|
| (10 | ) |
|
| 108 |
|
| (737 | ) |
|
| 75 |
|
|
| 86 |
|
(Increase) decrease in other current assets |
| (68 | ) |
|
| 121 |
|
|
| (174 | ) |
| (44 | ) |
|
| 387 |
|
|
| 267 |
|
Decrease (increase) in other assets |
| 22 |
|
|
| (58 | ) |
|
| 402 |
| |||||||||||
Decrease in accounts payable and accrued liabilities |
| (161 | ) |
|
| (824 | ) |
|
| (737 | ) | |||||||||||
(Decrease) increase in estimated liability for taxes on income |
| 6 |
|
|
| (103 | ) |
|
| 115 |
| |||||||||||
(Decrease) increase in other liabilities |
| (52 | ) |
|
| 69 |
|
|
| (28 | ) | |||||||||||
Increase in other assets |
| (45 | ) |
|
| (2 | ) |
|
| (25 | ) | |||||||||||
Increase (decrease) in accounts payable and accrued liabilities |
| 704 |
|
|
| 160 |
|
|
| (3,330 | ) | |||||||||||
Increase (decrease) in estimated liability for taxes on income |
| 96 |
|
|
| (154 | ) |
|
| (201 | ) | |||||||||||
Increase (decrease) in other liabilities |
| 23 |
|
|
| (26 | ) |
|
| 19 |
| |||||||||||
Other |
| 98 |
|
|
| 245 |
|
|
| 119 |
|
| (19 | ) |
|
| (39 | ) |
|
| 67 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 5,431 |
|
|
| 5,713 |
|
|
| 5,663 |
|
| 3,720 |
|
|
| 4,651 |
|
|
| 2,944 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
| (1,724 | ) |
|
| (2,160 | ) |
|
| (2,107 | ) |
| (1,618 | ) |
|
| (1,141 | ) |
|
| (1,116 | ) |
APS investments |
| (781 | ) |
|
| (981 | ) |
|
| (1,609 | ) |
| (587 | ) |
|
| (474 | ) |
|
| (303 | ) |
Multiclient seismic data capitalized |
| (231 | ) |
|
| (100 | ) |
|
| (276 | ) | |||||||||||
Exploration data capitalized |
| (97 | ) |
|
| (39 | ) |
|
| (101 | ) | |||||||||||
Net proceeds from divestitures |
| - |
|
|
| - |
|
|
| 434 |
| |||||||||||
Proceeds from sale of Liberty shares |
| 732 |
|
|
| 109 |
|
|
| - |
| |||||||||||
Proceeds from sale of ADC shares |
| 223 |
|
|
| - |
|
|
| - |
| |||||||||||
Proceeds from sale of real estate |
| 120 |
|
|
| - |
|
|
| - |
| |||||||||||
Business acquisitions and investments, net of cash acquired |
| (23 | ) |
|
| (292 | ) |
|
| (847 | ) |
| (58 | ) |
|
| (103 | ) |
|
| (33 | ) |
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 |
| 138 |
|
|
| 787 |
|
|
| (1,141 | ) | |||||||||||
Purchases of Blue Chip Swap securities |
| (259 | ) |
|
| - |
|
|
| - |
| |||||||||||
Proceeds from sales of Blue Chip Swap securities |
| 111 |
|
|
| - |
|
|
| - |
| |||||||||||
Other |
| (155 | ) |
|
| (29 | ) |
|
| (217 | ) |
| (93 | ) |
|
| (58 | ) |
|
| (93 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
| (2,011 | ) |
|
| (1,040 | ) |
|
| (1,779 | ) |
| (1,388 | ) |
|
| (919 | ) |
|
| (2,353 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
| (2,769 | ) |
|
| (2,770 | ) |
|
| (2,778 | ) |
| (848 | ) |
|
| (699 | ) |
|
| (1,734 | ) |
Proceeds from employee stock purchase plan |
| 196 |
|
|
| 227 |
|
|
| 212 |
|
| 142 |
|
|
| 137 |
|
|
| 146 |
|
Proceeds from exercise of stock options |
| 23 |
|
|
| 34 |
|
|
| 85 |
|
| 81 |
|
|
| - |
|
|
| - |
|
Taxes paid on net-settled stock-based compensation awards |
| (93 | ) |
|
| (24 | ) |
|
| (28 | ) | |||||||||||
Stock repurchase program |
| (278 | ) |
|
| (400 | ) |
|
| (969 | ) |
| - |
|
|
| - |
|
|
| (26 | ) |
Proceeds from issuance of long-term debt |
| 4,004 |
|
|
| 898 |
|
|
| 2,371 |
|
| - |
|
|
| 34 |
|
|
| 5,837 |
|
Repayment of long-term debt |
| (4,799 | ) |
|
| (2,861 | ) |
|
| (2,961 | ) |
| (1,650 | ) |
|
| (2,076 | ) |
|
| (4,975 | ) |
Net decrease in short-term borrowings |
| (44 | ) |
|
| (85 | ) |
|
| (1,022 | ) | |||||||||||
Net increase (decrease) in short-term borrowings |
| 37 |
|
|
| (105 | ) |
|
| 156 |
| |||||||||||
Repayment of finance lease-related obligations |
| - |
|
|
| - |
|
|
| (188 | ) | |||||||||||
Other |
| (51 | ) |
|
| (63 | ) |
|
| 29 |
|
| (51 | ) |
|
| (91 | ) |
|
| (61 | ) |
NET CASH USED IN FINANCING ACTIVITIES |
| (3,718 | ) |
|
| (5,020 | ) |
|
| (5,033 | ) |
| (2,382 | ) |
|
| (2,824 | ) |
|
| (873 | ) |
Net decrease in cash before translation effect |
| (298 | ) |
|
| (347 | ) |
|
| (1,149 | ) | |||||||||||
Net increase (decrease) in cash before translation effect |
| (50 | ) |
|
| 908 |
|
|
| (282 | ) | |||||||||||
Translation effect on cash |
| 2 |
|
|
| (19 | ) |
|
| 19 |
|
| (52 | ) |
|
| 5 |
|
|
| (11 | ) |
Cash, beginning of period |
| 1,433 |
|
|
| 1,799 |
|
|
| 2,929 |
|
| 1,757 |
|
|
| 844 |
|
|
| 1,137 |
|
Cash, end of period | $ | 1,137 |
|
| $ | 1,433 |
|
| $ | 1,799 |
| $ | 1,655 |
|
| $ | 1,757 |
|
| $ | 844 |
|
(1) | Includes depreciation of property, plant and equipment and amortization of intangible assets, |
(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, 2020 |
| $ | 13,078 |
|
| $ | (3,631 | ) |
| $ | 18,751 |
|
| $ | (4,438 | ) |
| $ | 416 |
|
| $ | 24,176 |
| |||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| (10,137 | ) |
|
|
|
|
|
| 30 |
|
|
| (10,107 | ) |
|
|
|
|
|
|
|
|
|
| (10,518 | ) |
|
|
|
|
|
| 32 |
|
|
| (10,486 | ) | ||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
|
| (1 | ) |
|
| 66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (239 | ) |
|
| 7 |
|
|
| (232 | ) | ||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
| (22 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36 | ) |
|
|
|
|
|
| (36 | ) | ||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
| 139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (171 | ) |
|
|
|
|
|
| (171 | ) | ||
Shares sold to optionees, less shares exchanged |
| (26 | ) |
|
| 49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
| ||||||||||||||||||||||||||
Vesting of restricted stock |
| (155 | ) |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
| ||||||||||||||||||||||||||
Shares issued under employee stock purchase plan |
| (249 | ) |
|
| 445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 196 |
| ||||||||||||||||||||||||||
Vesting of restricted stock, net of taxes withheld |
|
| (201 | ) |
|
| 173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (28 | ) | |||||||||||||||||||||||||
Employee stock purchase plan |
|
| (298 | ) |
|
| 444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 146 |
| |||||||||||||||||||||||||
Stock repurchase program |
|
|
|
|
| (278 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (278 | ) |
|
|
|
|
|
| (26 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (26 | ) | ||
Stock-based compensation expense |
| 405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 405 |
|
|
| 397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 397 |
| ||
Dividends declared ($2.00 per share) |
|
|
|
|
|
|
|
|
| (2,770 | ) |
|
|
|
|
|
|
|
|
|
| (2,770 | ) | ||||||||||||||||||||||||||
Dividends declared ($0.875 per share) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) |
|
|
|
|
|
|
|
|
|
| (1,215 | ) | |||||||||||||||||||||||||
Other |
| (29 | ) |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (62 | ) |
|
| (6 | ) |
|
| 7 |
|
|
|
|
|
|
|
|
|
|
| (37 | ) |
|
| (36 | ) | ||
Balance, December 31, 2019 | $ | 13,078 |
|
| $ | (3,631 | ) |
| $ | 18,751 |
|
| $ | (4,438 | ) |
| $ | 416 |
|
| $ | 24,176 |
| ||||||||||||||||||||||||||
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, net of taxes withheld |
|
| (305 | ) |
|
| 281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (24 | ) | |||||||||||||||||||||||||
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 |
|
| (4 | ) |
|
| 5 |
|
|
|
|
|
|
| (3 | ) |
|
| (58 | ) |
|
| (60 | ) | |||||||||||||||||||||||||
Balance, December 31, 2021 |
|
| 12,608 |
|
|
| (2,233 | ) |
|
| 8,199 |
|
|
| (3,570 | ) |
|
| 282 |
|
|
| 15,286 |
| |||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
| 3,441 |
|
|
|
|
|
|
| 51 |
|
|
| 3,492 |
| |||||||||||||||||||||||||
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (26 | ) |
|
|
|
|
|
| (26 | ) | |||||||||||||||||||||||||
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (31 | ) |
|
|
|
|
|
| (31 | ) | |||||||||||||||||||||||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (229 | ) |
|
|
|
|
|
| (229 | ) | |||||||||||||||||||||||||
Vesting of restricted stock, net of taxes withheld |
|
| (795 | ) |
|
| 702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (93 | ) | |||||||||||||||||||||||||
Employee stock purchase plan |
|
| (222 | ) |
|
| 364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 142 |
| |||||||||||||||||||||||||
Stock-based compensation expense |
|
| 313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 313 |
| |||||||||||||||||||||||||
Shares sold to optionees, less shares exchanged |
|
| (67 | ) |
|
| 148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 81 |
| |||||||||||||||||||||||||
Dividends declared ($0.65 per share) |
|
|
|
|
|
|
|
|
|
| (921 | ) |
|
|
|
|
|
|
|
|
|
| (921 | ) | |||||||||||||||||||||||||
Other |
|
|
|
|
|
| 3 |
|
|
|
|
|
|
| 1 |
|
|
| (29 | ) |
|
| (25 | ) | |||||||||||||||||||||||||
Balance, December 31, 2022 |
| $ | 11,837 |
|
| $ | (1,016 | ) |
| $ | 10,719 |
|
| $ | (3,855 | ) |
| $ | 304 |
|
| $ | 17,989 |
|
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 |
| |||||||||||
Balance, January 1, 2020 |
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
| |||||||||||
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 |
| |||||||||||
Employee stock purchase plan |
| - |
|
|
| 7 |
|
|
| 7 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 4 |
|
|
| 4 |
| |||||||||||
Balance, December 31, 2021 |
| 1,434 |
|
|
| (31 | ) |
|
| 1,403 |
| |||||||||||
Employee stock purchase plan |
| - |
|
|
| 5 |
|
|
| 5 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 10 |
|
|
| 10 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
|
| - |
|
|
| 2 |
|
|
| 2 |
|
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 |
| |||||||||||
Shares sold to optionees, less shares exchanged |
| - |
|
|
| 1 |
|
|
| 1 |
| |||||||||||
Vesting of restricted stock |
| - |
|
|
| 2 |
|
|
| 2 |
| |||||||||||
Shares issued under employee stock purchase plan |
| - |
|
|
| 6 |
|
|
| 6 |
| |||||||||||
Stock repurchase program |
| - |
|
|
| (7 | ) |
|
| (7 | ) | |||||||||||
Balance, December 31, 2019 |
| 1,434 |
|
|
| (49 | ) |
|
| 1,385 |
| |||||||||||
Balance, December 31, 2022 |
| 1,434 |
|
|
| (14 | ) |
|
| 1,420 |
|
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”“SLB”) comprise the world’s leading supplier ofform a global technology company that drives energy innovation for reservoir characterization, drilling, productiona balanced planet. With a global footprint in more than 100 countries and processing to theemployees representing almost twice as many nationalities, SLB works each day on innovating oil and gas, industry.delivering digital at scale, decarbonizing industries, and developing and scaling new energy systems that accelerate the energy transition.
2. Summary of Accounting Policies
The Consolidated Financial Statements of SchlumbergerSLB 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, SchlumbergerSLB 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 seismicexploration data; contingencies and actuarial assumptions for employee benefit plans. SchlumbergerSLB 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.
SchlumbergerSLB 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’sSLB’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, SchlumbergerSLB does not have significant backlog. Total backlog was $3.0 billion at December 31, 2019,2022, of which approximately 50%60% is expected to be recognized as revenue during 2020.2023.
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, SchlumbergerSLB does not consider Short-term investments to be cash equivalents.
Investments in Affiliated Companies
Investments in companies in which SchlumbergerSLB does not have a controlling financial interest, but over which it has significant influence, are accounted for using the equity method. Schlumberger’sSLB’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 SchlumbergerSLB 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 SLB 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 SeismicExploration Data
Schlumberger’s multiclientSLB’s exploration data library consists of completed and in-process seismic surveys that are licensed on a nonexclusive basis. SchlumbergerSLB capitalizes costs directly incurred in acquiring and processing the multiclient seismicexploration data. Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that SchlumbergerSLB 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 multiclientexploration data 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,SLB, would not be sufficient to recover the carrying value of the surveys. Significant adverse changes in Schlumberger’sSLB’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 investSLB invests 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 SchlumbergerSLB 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
SLB 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’sSLB’s assets that are exposed to concentrations of credit risk consist primarily of cash, short-term investments, receivables from clients and derivative financial instruments. SchlumbergerSLB places its cash and short-term investments with financial institutions and corporations and limits the amount of credit exposure with any one of them. SchlumbergerSLB regularly evaluates the creditworthiness of the issuers in which it invests. By using derivative financial instruments to hedge certain exposures, SchlumbergerSLB exposes itself to some credit risk. SchlumbergerSLB 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
As a large multinational company, SLB’s accounts receivable are spread over many countries and customers. Accounts receivable in theThe United States and Mexico represented 18%13% and 14%, respectively, of Schlumberger’sSLB’s net accounts receivable balance at December 31, 2019. NaN2022. No other countrycountries accounted for greater than 10% of Schlumberger’sSLB’s accounts receivable balance. SLB 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 SLB’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:SLB:
(Stated in millions, except per share amounts) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) Attributable to Schlumberger |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
| |||
2019: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (10,137 | ) |
|
| 1,385 |
|
| $ | (7.32 | ) |
Assumed exercise of stock options |
|
| - |
|
|
| - |
|
|
|
|
|
Unvested restricted stock |
|
| - |
|
|
| - |
|
|
|
|
|
Diluted |
| $ | (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 | ) |
(Stated in millions, except per share amounts) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) Attributable to SLB |
|
| Average Shares Outstanding |
|
| Earnings (Loss) per Share |
| |||
2022: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 3,441 |
|
|
| 1,416 |
|
| $ | 2.43 |
|
Dilutive impact of stock options and restricted stock |
|
| - |
|
|
| 21 |
|
|
|
|
|
Diluted |
| $ | 3,441 |
|
|
| 1,437 |
|
| $ | 2.39 |
|
2021: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 1,881 |
|
|
| 1,400 |
|
| $ | 1.34 |
|
Dilutive impact of stock options and restricted stock |
|
| - |
|
|
| 27 |
|
|
|
|
|
Diluted |
| $ | 1,881 |
|
|
| 1,427 |
|
| $ | 1.32 |
|
2020: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) |
Dilutive impact of stock options and restricted stock |
|
| - |
|
|
| - |
|
|
|
|
|
Diluted |
| $ | (10,518 | ) |
|
| 1,390 |
|
| $ | (7.57 | ) |
The number of outstanding employee stock options to purchase shares of SchlumbergerSLB 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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Employee stock options |
| 46 |
|
|
| 40 |
|
|
| 47 |
|
| 25 |
|
|
| 42 |
|
|
| 48 |
|
Unvested restricted stock |
| 12 |
|
|
| - |
|
|
| 5 |
|
| - |
|
|
| - |
|
|
| 19 |
|
34
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation.
3. Charges and Credits
Schlumberger2022
SLB recorded the following charges and credits during 2019, 2018 and 2017:
2019
Schlumberger recorded the following charges and credits during 2019,2022, all of which are classified asin ImpairmentsInterest & other income, net in the Consolidated Statement of Income (Loss), except for the gain on the formation of the Sensia joint venture:
:
| (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 |
|
Fourth quarter of 2019:
|
|
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax Benefit |
|
|
|
|
| ||
| Charge (Credit) |
|
| (Expense) |
|
| Net |
| |||
First quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares | $ | (26 | ) |
| $ | (4 | ) |
| $ | (22 | ) |
Second quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (215 | ) |
|
| (14 | ) |
|
| (201 | ) |
Gain on sale of real estate |
| (43 | ) |
|
| (2 | ) |
|
| (41 | ) |
Fourth quarter: |
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Liberty shares |
| (84 | ) |
|
| (19 | ) |
|
| (65 | ) |
Loss on Blue Chip Swap transactions |
| 139 |
|
|
| - |
|
|
| 139 |
|
Gain on ADC equity investment |
| (107 | ) |
|
| (3 | ) |
|
| (104 | ) |
Gain on repurchase of bonds |
| (11 | ) |
|
| (2 | ) |
|
| (9 | ) |
| $ | (347 | ) |
| $ | (44 | ) |
| $ | (303 | ) |
|
|
|
|
|
|
|
| • |
|
| • | During the fourth quarter of |
35
| • |
|
• | During the |
2021
SLB recorded the following charges and credits during 2021:
| (Stated in millions) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pretax |
|
| Tax Benefit |
|
|
|
|
| ||
| Charge (Credit) |
|
| (Expense) |
|
| 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 |
Fourth quarter 2021:
• | SLB sold 9.5 million of its shares of Liberty and received proceeds of $109 million. As a result of this transaction SLB recognized a gain of $28 million, which is classified |
Third quarter of 2019:
| • |
|
2020
SLB 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 Benefit |
|
|
|
|
| ||
| Charge (Credit) |
|
| (Expense) |
|
| 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 |
|
Exploration 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, SLB’s market capitalization deteriorated significantly compared to the end of |
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 were less than their carrying value.
Therefore, SchlumbergerSLB 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 substantiallywhich resulted 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$3.1 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 primarilySLB 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’sSLB’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. SchlumbergerSLB 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’sSLB’s estimates arewere 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’sSLB’s reporting units were between 12.5%12.0% and 14.0%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 basis50-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 or
decrease in the discount rate assumptionassumptions would have decreasedchanged the goodwill impairment chargefair value of the seven reporting units, on average, by approximately $0.4 billion.less than 5%.
| • | The negative market indicators described above |
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:
| - | $ |
- | $1.3 billion relating to |
| - | $ |
• | $202 million of |
• | $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. SLB 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, SLB had assets that would no longer be utilized. As a consequence of these circumstances and decisions, SLB recorded the following restructuring and asset impairment charges: |
- | $1.021 billion of |
- | $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 |
- | $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 |
- | $205 million of costs associated with exiting certain activities. |
- | $156 million impairment of certain exploration data. |
- | $60 million of other costs, including a $42 million increase in the allowance for the doubtful accounts. |
• | SLB repurchased all $600 million of its 4.20% Senior Notes due 2021 and $935 million of its 3.30% Senior Notes due 2021. SLB paid a premium of $40 million in connection with these repurchases. |
• | As a consequence of the workforce reductions described above, SLB recorded a curtailment gain of $69 million relating to |
Third quarter 2020:
• | SLB recorded the following restructuring charges: |
- | $254 million of |
- | $63 million of severance. |
| - | $ |
Fourth quarter 2020:
• | On December 31, 2020, SLB contributed its OneStim business to Liberty in exchange for a 37% equity interest in Liberty. As a result of this transaction, SLB recognized a gain of $104 million. This gain is classified in Interest & other |
| • | During the fourth quarter of 2020, a start-up company that SLB previously invested in completed an initial public offering. As a result, SLB recognized an unrealized gain of $39 million to increase the |
| • |
|
|
|
|
|
|
|
|
The fair value of certain of the assets impaired during 20192020 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 |
| 2022 |
|
| 2021 |
| ||||
Raw materials & field materials | $ | 1,857 |
|
| $ | 1,803 |
| $ | 2,085 |
|
| $ | 1,594 |
|
Work in progress |
| 515 |
|
|
| 519 |
|
| 547 |
|
|
| 425 |
|
Finished goods |
| 1,758 |
|
|
| 1,688 |
|
| 1,367 |
|
|
| 1,253 |
|
| $ | 4,130 |
|
| $ | 4,010 |
| $ | 3,999 |
|
| $ | 3,272 |
|
5. Fixed Assets
Fixed assets consist of the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||
Land | $ | 483 |
|
| $ | 462 |
| $ | 326 |
|
| $ | 372 |
|
Buildings & improvements |
| 5,156 |
|
|
| 5,534 |
|
| 4,328 |
|
|
| 4,371 |
|
Machinery & equipment |
| 29,370 |
|
|
| 32,668 |
|
| 23,732 |
|
|
| 24,334 |
|
|
| 35,009 |
|
|
| 38,664 |
|
| 28,386 |
|
|
| 29,077 |
|
Less: Accumulated depreciation |
| 25,739 |
|
|
| 26,985 |
|
| 21,779 |
|
|
| 22,648 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,607 |
|
| $ | 6,429 |
|
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 $2.0 billion, $2.1 billion and $2.3$1.4 billion in 2019, 2018each of 2022 and 2017, respectively.2021, and $1.6 billion in 2020.
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) |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Digital & |
|
| Reservoir |
|
| Well |
|
| Production |
|
|
|
|
| ||||
| Integration |
|
| Performance |
|
| Construction |
|
| Systems |
|
| Total |
| |||||
Balance, December 31, 2020 | $ | 2,047 |
|
| $ | 3,802 |
|
| $ | 6,278 |
|
| $ | 853 |
|
| $ | 12,980 |
|
Acquisitions |
| 18 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 18 |
|
Translation and other |
| (13 | ) |
|
| 2 |
|
|
| 3 |
|
|
| - |
|
|
| (8 | ) |
Balance, December 31, 2021 |
| 2,052 |
|
|
| 3,804 |
|
|
| 6,281 |
|
|
| 853 |
|
|
| 12,990 |
|
Translation and other |
| (8 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (8 | ) |
Balance, December 31, 2022 | $ | 2,044 |
|
| $ | 3,804 |
|
| $ | 6,281 |
|
| $ | 853 |
|
| $ | 12,982 |
|
8.7. Intangible Assets
Intangible assets consist of the following:
| (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||||||||||||||||||||||||||||||||||
| 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 |
| $ | 1,680 |
|
| $ | 631 |
|
| $ | 1,049 |
|
| $ | 1,681 |
|
| $ | 551 |
|
| $ | 1,130 |
|
Technology/Technical Know-How |
| 2,498 |
|
|
| 779 |
|
|
| 1,719 |
|
|
| 3,494 |
|
|
| 1,246 |
|
|
| 2,248 |
|
| 1,280 |
|
|
| 676 |
|
|
| 604 |
|
|
| 1,264 |
|
|
| 562 |
|
|
| 702 |
|
Tradenames |
| 1,885 |
|
|
| 264 |
|
|
| 1,621 |
|
|
| 2,799 |
|
|
| 628 |
|
|
| 2,171 |
|
| 767 |
|
|
| 222 |
|
|
| 545 |
|
|
| 766 |
|
|
| 191 |
|
|
| 575 |
|
Other |
| 1,514 |
|
|
| 676 |
|
|
| 838 |
|
|
| 1,404 |
|
|
| 621 |
|
|
| 783 |
|
| 1,657 |
|
|
| 863 |
|
|
| 794 |
|
|
| 1,578 |
|
|
| 774 |
|
|
| 804 |
|
| $ | 9,676 |
|
| $ | 2,587 |
|
| $ | 7,089 |
|
| $ | 12,465 |
|
| $ | 3,738 |
|
| $ | 8,727 |
| $ | 5,384 |
|
| $ | 2,392 |
|
| $ | 2,992 |
|
| $ | 5,289 |
|
| $ | 2,078 |
|
| $ | 3,211 |
|
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 $618$301 million in 2019, $6732022, $302 million in 20182021, and $663$371 million in 2017.2020.
Based on the carrying value of intangible assets at December 31, 2019,2022, amortization expense for the subsequent five years is estimated to be as follows: 2020: $5302023: $289 million, 2021: $5212024: $281 million, 2022: $4972025: $265 million, 2023: $4762026: $260 million and 2024: $4722027: $253 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) |
| ||||||
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||
3.90% Senior Notes due 2028 | $ | 1,464 |
|
| $ | 1,457 |
|
2.65% Senior Notes due 2030 |
| 1,250 |
|
|
| 1,250 |
|
1.375% Guaranteed Notes due 2026 |
| 1,061 |
|
|
| 1,125 |
|
2.00% Guaranteed Notes due 2032 |
| 1,055 |
|
|
| 1,118 |
|
0.25% Notes due 2027 |
| 955 |
|
|
| 1,013 |
|
0.50% Notes due 2031 |
| 954 |
|
|
| 1,012 |
|
4.30% Senior Notes due 2029 |
| 847 |
|
|
| 846 |
|
1.00% Guaranteed Notes due 2026 |
| 635 |
|
|
| 679 |
|
0.00% Notes due 2024 |
| 531 |
|
|
| 563 |
|
4.00% Senior Notes due 2025 |
| 522 |
|
|
| 930 |
|
1.40% Senior Notes due 2025 |
| 499 |
|
|
| 498 |
|
3.75% Senior Notes due 2024 |
| 355 |
|
|
| 748 |
|
7.00% Notes due 2038 |
| 202 |
|
|
| 204 |
|
5.95% Notes due 2041 |
| 112 |
|
|
| 113 |
|
5.13% Notes due 2043 |
| 98 |
|
|
| 98 |
|
3.70% Notes due 2024 |
| 54 |
|
|
| 55 |
|
3.65% Senior Notes due 2023 |
| - |
|
|
| 1,497 |
|
4.00% Notes due 2023 |
| - |
|
|
| 80 |
|
| $ | 10,594 |
|
| $ | 13,286 |
|
At December 31, 2019, Schlumberger2022, SLB 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 of which$750 million matures in February 2020, $2.0 billion matures in February 2023,2024, $2.0 billion matures in February 2024 and $1.52025, $1.0 billion matures in July 2026, and $2.0 billion in February 2027. SLB also has a €750 million three-year committed revolving credit facility that matures in June 2024. At December 31, 2022, 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’sSLB’s intent to maintain these obligations for longer than one year. BorrowingsThere were no 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. At2022 and December 31, 2018, borrowings under the commercial paper programs were $2.4 billion, all of which was classified in Long-term debt in the Consolidated Balance Sheet.2021, respectively.
The weighted average interest rate on variable rate debt as of December 31, 2019 was 2.3%.
Long-term Debt as of December 31, 20192022 is due as follows:$2.3 billion in 2021, $1.9 billion in 2022, $1.9 billion in 2023, $3.2 $0.9 billion in 2024, $0.9$1.0 billion in 2025, $0.7$1.7 billion in 2026, $1.0 billion in 2027, $1.5 billion in 2028, $0.8 billion in 2029 and $3.9$3.7 billion thereafter.
The fair value of Schlumberger’sSLB’s Long-term Debt at December 31, 20192022 and December 31, 20182021 was $15.3$9.4 billion and $14.6$13.9 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 indirect 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’sSLB’s functional currency is primarily the US dollar. Approximately 78%72% of Schlumberger’sSLB’s revenues in 20192022 were denominated in US dollars. However, outside the United States, a significant portion of Schlumberger’sSLB’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 SchlumbergerSLB conducts business, the US dollar–reporteddollar-reported expenses will increase (decrease).
Schlumberger
SLB is exposed to risks on future cash flows relating to its fixed rate debt denominated in currencies other than the functional currency. SLB uses cross-currency interest rate swaps to provide a hedge against these cash flow risks. These contracts are accounted for as cash flow hedges, with the fair value of the derivative 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.
Details regarding SLB’s outstanding cross-currency interest rate swaps as of December 31, 2022, were as follows:
• | During 2019, a US-dollar functional currency subsidiary of SLB issued €1.5 billion of Euro-denominated debt. SLB entered into cross-currency interest rate swaps 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 interest rate swaps effectively convert the Euro-denominated notes to US-dollar denominated debt with fixed annual interest rates of 2.29%, 2.51% and 2.76%, respectively. |
• | During 2020, a US-dollar functional currency subsidiary of SLB issued €0.8 billion of Euro-denominated debt. SLB entered into cross-currency interest rate swaps 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 interest rate 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 US-dollar functional currency subsidiary of SLB issued €2.0 billion of Euro-denominated debt. SLB entered into cross-currency interest rate swaps to hedge changes in the fair value of its €1.0 billion of 1.375% Guaranteed Notes due 2026 and €1.0 billion of 2.00% Guaranteed Notes due 2032. These cross-currency interest rate swaps effectively convert 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 subsidiary of SLB issued $0.5 billion of US dollar denominated debt. SLB entered into cross-currency interest rate swaps to hedge changes in the fair value of its $0.5 billion 1.40% Senior Notes due 2025. These cross-currency interest rate swaps effectively convert the US dollar notes to Canadian dollar denominated debt with a fixed annual interest rate of 1.73%. |
A summary of the amounts included in the Consolidated Balance Sheet relating to cross currency interest rate swaps follows:
| (Stated in millions) |
| |||||
|
|
|
|
|
|
|
|
| Dec. 31, 2022 |
|
| Dec. 31, 2021 |
| ||
Other Assets | $ | 1 |
|
| $ | 66 |
|
Other Liabilities | $ | 326 |
|
| $ | 78 |
|
The fair values were determined using a model with inputs that are observable in the market or can be derived or corroborated by observable data.
SLB had derivative contracts in place that hedged the price of oil related to approximately 75% of the projected oil production for 2022 for one of its APS projects. During 2022, SLB entered into derivative contracts that hedge the price of oil relating to approximately 70% of the projected oil production for the first six months of 2023 and approximately 30% of the projected oil production for the last six months of 2023 for the same project. These contracts are accounted for as cash flow hedges.
SLB 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. SchlumbergerSLB 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.
42hedges.
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 in order 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. These cross-currency swaps effectively convert the US-dollar denominated notes to Canadian-dollar denominated debt with fixed annual interest rates of 1.97% and 2.52%, respectively.
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 Notes due 2031. These cross-currency swaps effectively converted 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, Schlumberger recognized a cumulative net $34 million loss in Accumulated Other Comprehensive Loss relating to revaluation of foreign currency forward contracts designated as cash flow hedges, the majority of whichSLB is expected to be reclassified into earnings within the next 12 months.
Schlumberger isalso exposed to changes in the fair value of assets and liabilities denominated in currencies other than the functional currency. While SchlumbergerSLB 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 contractsderivative 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 gainslosses of $2$96 million in 2019, transaction gains of $12022, $23 million in 20182021, and transaction losses of $17$21 million in 20172020 were recognized in the Consolidated Statement of Income (Loss)net of related hedging activities.
At December 31, 2019,Foreign currency forward contracts were outstanding for the US dollar equivalent of $7.7$2.1 billion and $1.7 billion in various foreign currencies as of which $3.0 billion relates to hedges of debt denominated in currencies otherDecember 31, 2022 and 2021, respectively.
Other than the functional currency.
Thepreviously mentioned cross-currency interest rate swaps, the fair value of the other outstanding derivatives was 0tnot material atas of December 31, 20192022 and 2018.2021.
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) |
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| Consolidated Statement | ||||||||||||||||||
| 2019 |
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| 2018 |
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| 2017 |
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| of Income (Loss) Classification | 2022 |
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| 2021 |
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| 2020 |
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| of Income (Loss) Classification | ||||||
Derivatives designated as fair value hedges: |
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| |||||||||||||
Cross currency swap | $ | - |
|
| $ | (25 | ) |
| $ | 73 |
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| Interest expense | |||||||||||||
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Derivatives designated as cash flow hedges: |
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Cross currency swap | $ | (35 | ) |
| $ | 80 |
|
| $ | (8 | ) |
| Interest expense | |||||||||||||
Cross-currency interest rate swaps | $ | (254 | ) |
| $ | (422 | ) |
| $ | 493 |
|
| Cost of services/sales | |||||||||||||
Cross-currency interest rate swaps |
| (88 | ) |
|
| (83 | ) |
|
| (63 | ) |
| Interest expense | |||||||||||||
Commodity contracts |
| (87 | ) |
|
| - |
|
|
| - |
|
| Revenue | |||||||||||||
Foreign exchange contracts |
| (10 | ) |
|
| (1 | ) |
|
| - |
|
| Cost of services/sales |
| (30 | ) |
|
| 5 |
|
|
| (5 | ) |
| Cost of services/sales |
| $ | (45 | ) |
| $ | 79 |
|
| $ | (8 | ) |
|
| $ | (459 | ) |
| $ | (500 | ) |
| $ | 425 |
|
|
|
Derivatives not designated as hedges: |
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Foreign exchange contracts | $ | (5 | ) |
| $ | 40 |
|
| $ | (26 | ) |
| Cost of services/sales | $ | 42 |
|
| $ | (11 | ) |
| $ | (29 | ) |
| Cost of services/sales |
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SLB does not enter into derivative transactions for speculative purposes.
11.10. Stockholders’ Equity
SchlumbergerSLB is authorized to issue 4,500,000,000 shares of common stock, par value $0.01 per share, of which 1,384,515,3451,420,188,492 and 1,382,964,3241,403,381,685 shares were outstanding on December 31, 20192022 and 2018,2021, respectively. Holders of common stock are entitled to one vote for each share of stock held. SchlumbergerSLB 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 SchlumbergerSLB Board of Directors. NaNNo 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 |
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| Marketable |
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| Cash Flow |
|
| Postretirement |
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|
|
| ||||
| 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 | ) |
|
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| (Stated in millions) |
| |
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| 2022 |
|
| 2021 |
|
| 2020 |
| |||
Currency translation adjustments | $ | (2,444 | ) |
| $ | (2,419 | ) |
| $ | (2,502 | ) |
Pension and other postretirement benefit plans |
| (1,295 | ) |
|
| (1,066 | ) |
|
| (2,314 | ) |
Cash flow hedges |
| (116 | ) |
|
| (85 | ) |
|
| (70 | ) |
Other |
| - |
|
|
| - |
|
|
| 2 |
|
| $ | (3,855 | ) |
| $ | (3,570 | ) |
| $ | (4,884 | ) |
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
SchlumbergerSLB 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)(ii) a discounted stock purchase plan (“DSPP”)., and (iii) stock options.
Restricted Stock
SLB grants performance share units to certain key employees. The number of shares earned is determined at the end of each performance period based on SLB’s achievement of certain predefined targets as described in the underlying performance share unit agreement. In the event SLB exceeds the predefined target, shares for up to a maximum of 250% of the target award may be awarded. In the event SLB falls below the predefined target, a reduced number of shares may be awarded. If SLB falls below the threshold award performance level, no shares will be awarded. As of December 31, 2022, 3.9 million performance share units were outstanding assuming the achievement of 100% of target.
All other restricted stock awards generally vest at the end of three years or vest ratably in equal tranches over a three-year period.
Restricted stock awards 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 SLB’s stock on the date of grant less the present value of the expected dividends not received prior to vesting.
The following table summarizes information related to restricted stock activity:
| (Shares stated in millions) |
| |||||||||||||||||||||
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| |||||||||||||||||||||
| 2022 |
|
| 2021 |
|
| 2020 |
| |||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
|
|
|
|
| Average |
|
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|
|
|
| Average |
|
|
|
|
|
| Average |
| |||
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| ||||||
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
|
| Stock |
|
| Fair Value |
| ||||||
Unvested at beginning of year |
| 22 |
|
| $ | 29.03 |
|
|
| 19 |
|
| $ | 35.24 |
|
|
| 12 |
|
| $ | 49.86 |
|
Granted |
| 7 |
|
| $ | 36.16 |
|
|
| 8 |
|
| $ | 25.16 |
|
|
| 11 |
|
| $ | 26.53 |
|
Adjustments for performance achieved |
| 2 |
|
| $ | 35.55 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
Vested |
| (13 | ) |
| $ | 32.42 |
|
|
| (5 | ) |
| $ | 48.44 |
|
|
| (3 | ) |
| $ | 71.56 |
|
Forfeited |
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| (1 | ) |
| $ | 45.95 |
|
Unvested at year-end |
| 18 |
|
| $ | 30.24 |
|
|
| 22 |
|
| $ | 29.03 |
|
|
| 19 |
|
| $ | 35.24 |
|
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 SLB common stock. Until July 1, 2022, the purchase price of the stock was 92.5% of the lower of the stock price at the beginning or end of the plan period at six-month intervals. Effective July 1, 2022, the purchase price of the stock was changed to 85% 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:
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
Dividend yield |
| 1.8 | % |
|
| 2.0 | % |
|
| 4.0 | % |
Expected volatility |
| 47 | % |
|
| 67 | % |
|
| 43 | % |
Risk-free interest rate |
| 1.32 | % |
|
| 0.07 | % |
|
| 0.88 | % |
Weighted-average fair value per share | $ | 8.05 |
|
| $ | 6.72 |
|
| $ | 5.38 |
|
Stock Options
Key employees aremay be granted stock options under SchlumbergerSLB stock option plans. For all stock options granted, theThe exercise price equals the average of the high and low sales prices of SchlumbergerSLB 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 eachfollowing table summarizes 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:activity:
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Dividend yield |
| 4.8 | % |
|
| 2.6 | % |
|
| 2.3 | % |
Expected volatility |
| 25 | % |
|
| 26 | % |
|
| 27 | % |
Risk-free interest rate |
| 2.7 | % |
|
| 2.6 | % |
|
| 2.4 | % |
Expected option life in years |
| 7.0 |
|
|
| 7.0 |
|
|
| 7.0 |
|
Weighted-average fair value per share | $ | 6.21 |
|
| $ | 17.37 |
|
| $ | 20.85 |
|
| (Shares stated in millions) |
| |||||||||||||||||||||
|
|
| |||||||||||||||||||||
| 2022 |
|
| 2021 |
|
| 2020 |
| |||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| |||
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
| |||
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| ||||||
Outstanding at beginning of year |
| 42 |
|
| $ | 68.95 |
|
|
| 48 |
|
| $ | 70.37 |
|
|
| 46 |
|
| $ | 75.65 |
|
Granted |
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| 7 |
|
| $ | 38.75 |
|
Exercised |
| (2 | ) |
| $ | 40.04 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
Forfeited / Expired |
| (5 | ) |
| $ | 71.45 |
|
|
| (6 | ) |
| $ | 80.46 |
|
|
| (5 | ) |
| $ | 71.86 |
|
Outstanding at year-end |
| 35 |
|
| $ | 70.31 |
|
|
| 42 |
|
| $ | 68.95 |
|
|
| 48 |
|
| $ | 70.37 |
|
44
The following table summarizes information related to options outstanding and options exercisable as of December 31, 2019:2022:
| (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 millions) |
| |||||||||||||||||||
|
|
| |||||||||||||||||||
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
| Average |
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||||
| Options |
|
| Remaining Life |
|
| Average |
|
| Options |
|
| Average |
| |||||||
Exercise prices range | Outstanding |
|
| (in years) |
|
| Exercise Price |
|
| Exercisable |
|
| Exercise Price |
| |||||||
$38.75 - $41.47 |
| 10 |
|
|
| 6.6 |
|
| $ | 39.82 |
|
|
| 5 |
|
| $ | 40.19 |
| ||
$47.55 - $69.98 |
| 2 |
|
|
| 2.8 |
|
| $ | 62.30 |
|
|
| 2 |
|
| $ | 62.36 |
| ||
$70.31 - $79.85 |
| 9 |
|
|
| 2.0 |
|
| $ | 74.27 |
|
|
| 8 |
|
| $ | 74.15 |
| ||
$80.53 - $88.77 |
| 8 |
|
|
| 3.3 |
|
| $ | 84.44 |
|
|
| 8 |
|
| $ | 84.45 |
| ||
$91.28 - $114.83 |
| 6 |
|
|
| 1.7 |
|
| $ | 96.22 |
|
|
| 6 |
|
| $ | 96.21 |
| ||
|
| 35 |
|
|
| 3.6 |
|
| $ | 70.31 |
|
|
| 29 |
|
| $ | 76.70 |
|
The weighted-average remaining contractual life of stock options exercisable as of December 31, 20192022 was 3.472.9 years.
The following table summarizesaggregate intrinsic value of stock option activity during the years ended December 31, 2019, 2018 and 2017:
| (Shares stated in thousands) |
| |||||||||||||||||||||
|
|
| |||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| |||
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
|
|
|
|
|
| Exercise |
| |||
| Shares |
|
| Price |
|
| Shares |
|
| Price |
|
| Shares |
|
| Price |
| ||||||
Outstanding at beginning of year |
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
|
| 46,502 |
|
| $ | 78.31 |
|
Granted |
| 5,604 |
|
| $ | 41.50 |
|
|
| 2,121 |
|
| $ | 76.95 |
|
|
| 5,024 |
|
| $ | 86.55 |
|
Exercised |
| (1,045 | ) |
| $ | 38.50 |
|
|
| (936 | ) |
| $ | 54.20 |
|
|
| (1,156 | ) |
| $ | 57.87 |
|
Forfeited |
| (1,819 | ) |
| $ | 74.69 |
|
|
| (4,866 | ) |
| $ | 84.19 |
|
|
| (3,160 | ) |
| $ | 86.99 |
|
Outstanding at year-end |
| 46,269 |
|
| $ | 75.65 |
|
|
| 43,529 |
|
| $ | 79.36 |
|
|
| 47,210 |
|
| $ | 79.13 |
|
Stock options outstanding and stock options exercisable as of December 31, 2019 had 0 intrinsic value.
The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 20172022 was $4 million, $15$133 million and $26$49 million, respectively.
Restricted Stock
Schlumberger grants performance share units to -its executives officers. The number of shares earned is determined at the end of each performance periodbased on Schlumberger’s achievement of certain predefined targets as defined in the underlying performance share unit agreement. In the event Schlumberger exceeds the predefined target, shares for up to the 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, 3.6 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.
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 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) |
| |||||||||||||||||||||
|
|
| |||||||||||||||||||||
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
|
|
|
|
|
| Weighted- |
| |||
|
|
|
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| Average |
| |||
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
|
| Restricted |
|
| Grant Date |
| ||||||
| 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 |
|
Granted |
| 7,888 |
|
| $ | 35.56 |
|
|
| 3,204 |
|
| $ | 70.54 |
|
|
| 2,495 |
|
| $ | 73.09 |
|
Vested |
| (2,722 | ) |
| $ | 72.09 |
|
|
| (982 | ) |
| $ | 77.62 |
|
|
| (1,645 | ) |
| $ | 83.03 |
|
Forfeited |
| (295 | ) |
| $ | 57.41 |
|
|
| (699 | ) |
| $ | 70.67 |
|
|
| (534 | ) |
| $ | 80.17 |
|
Unvested at year-end |
| 11,822 |
|
| $ | 49.86 |
|
|
| 6,951 |
|
| $ | 70.13 |
|
|
| 5,428 |
|
| $ | 72.33 |
|
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 |
| |||
Dividend yield |
| 5.3 | % |
|
| 2.9 | % |
|
| 2.7 | % |
Expected volatility |
| 30 | % |
|
| 22 | % |
|
| 19 | % |
Risk-free interest rate |
| 2.3 | % |
|
| 1.6 | % |
|
| 1.0 | % |
Weighted-average fair value per share | $ | 5.81 |
|
| $ | 9.01 |
|
| $ | 9.46 |
|
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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Stock options | $ | 99 |
|
| $ | 134 |
|
| $ | 161 |
| |||||||||||
Restricted stock |
| 274 |
|
|
| 179 |
|
|
| 148 |
| $ | 255 |
|
| $ | 254 |
|
| $ | 293 |
|
DSPP |
| 32 |
|
|
| 32 |
|
|
| 34 |
|
| 41 |
|
|
| 34 |
|
|
| 29 |
|
Stock options |
| 17 |
|
|
| 36 |
|
|
| 75 |
| |||||||||||
| $ | 405 |
|
| $ | 345 |
|
| $ | 343 |
| $ | 313 |
|
| $ | 324 |
|
| $ | 397 |
|
At December 31, 2019,2022, there was $324$275 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements, of which $191$172 million is expected to be recognized in 2020, $1002023, $87 million in 2021, $272024, $12 million in 2022, $62025, and $4 million in 2023.2026.
As of December 31, 2019,2022, approximately 3536 million shares of SchlumbergerSLB common stock were available for future grants under Schlumberger’sSLB’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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
United States | $ | (8,991 | ) |
| $ | (55 | ) |
| $ | (841 | ) | $ | 600 |
|
| $ | 30 |
|
| $ | (4,394 | ) |
Outside United States |
| (1,427 | ) |
|
| 2,679 |
|
|
| (342 | ) |
| 3,671 |
|
|
| 2,344 |
|
|
| (6,904 | ) |
| $ | (10,418 | ) |
| $ | 2,624 |
|
| $ | (1,183 | ) | $ | 4,271 |
|
| $ | 2,374 |
|
| $ | (11,298 | ) |
SchlumbergerSLB recorded net pretax credits of $347 million in 2022 ($379 million of credits in the US and $32 million of net charges outside the US); and $65 million in 2021 ($75 million of credits in the US and $10 million of charges outside the US). SLB recorded net pretax charges of $12.901$12.515 billion in 20192020 ($8.7693.961 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$8.554 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)liabilities were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||
Postretirement benefits | $ | 51 |
|
| $ | 122 |
| |||||||
Intangible assets |
| (1,833 | ) |
|
| (2,110 | ) | $ | (780 | ) |
| $ | (855 | ) |
Investments in non-US subsidiaries |
| (220 | ) |
|
| (223 | ) | |||||||
Net operating losses |
| 326 |
|
|
| 427 |
| |||||||
Research and development credits |
| 129 |
|
|
| 118 |
| |||||||
Fixed assets, net |
| 434 |
|
|
| (140 | ) |
| 101 |
|
|
| 151 |
|
Inventories |
| 155 |
|
|
| 111 |
|
| 45 |
|
|
| 58 |
|
Foreign tax credits |
| 312 |
|
|
| 343 |
| |||||||
Investments in non-US subsidiaries |
| (125 | ) |
|
| (161 | ) | |||||||
Pension and other postretirement benefits |
| (114 | ) |
|
| (136 | ) | |||||||
Other, net |
| 610 |
|
|
| 456 |
|
| 357 |
|
|
| 304 |
|
| $ | (491 | ) |
| $ | (1,441 | ) | $ | (61 | ) |
| $ | (94 | ) |
Approximately $300 million of the $326 million deferred tax asset relating to net operating losses at December 31, 2022 can be carried forward indefinitely. The abovevast majority of the remaining balance expires at various dates between 2030 and 2041.
The deferred tax balances at December 31, 20192022 and 20182021 were net of valuation allowances relating to net operating losses in certain countries of $82$111 million and $87$133 million, respectively. Additionally, the deferred tax balances were net of valuation allowances relating to the following:
Schlumberger generally does not provide for taxes related to its undistributed earnings because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested. Taxes that would be incurred if the undistributed earnings of other Schlumberger subsidiaries were distributed to their ultimate parent company would not be material.
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||
Foreign tax credits | $ | 181 |
|
| $ | 210 |
|
Capital losses | $ | - |
|
| $ | 49 |
|
The components of Tax expense (benefit) were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (81 | ) |
| $ | 124 |
|
| $ | (170 | ) | $ | 2 |
|
| $ | (32 | ) |
| $ | 21 |
|
United States-State |
| 11 |
|
|
| (50 | ) |
|
| 57 |
|
| 3 |
|
|
| - |
|
|
| 5 |
|
Outside United States |
| 770 |
|
|
| 618 |
|
|
| 703 |
|
| 813 |
|
|
| 509 |
|
|
| 410 |
|
|
| 700 |
|
|
| 692 |
|
|
| 590 |
|
| 818 |
|
|
| 477 |
|
|
| 436 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States-Federal | $ | (660 | ) |
| $ | (143 | ) |
| $ | (225 | ) | $ | 98 |
|
| $ | (132 | ) |
| $ | (824 | ) |
United States-State |
| (93 | ) |
|
| (4 | ) |
|
| 4 |
|
| 13 |
|
|
| 12 |
|
|
| (67 | ) |
Outside United States |
| (257 | ) |
|
| (69 | ) |
|
| (47 | ) |
| (70 | ) |
|
| (15 | ) |
|
| (563 | ) |
Valuation allowance |
| (1 | ) |
|
| (29 | ) |
|
| 8 |
|
| (80 | ) |
|
| 104 |
|
|
| 206 |
|
|
| (1,011 | ) |
|
| (245 | ) |
|
| (260 | ) |
| (39 | ) |
|
| (31 | ) |
|
| (1,248 | ) |
| $ | (311 | ) |
| $ | 447 |
|
| $ | 330 |
| $ | 779 |
|
| $ | 446 |
|
| $ | (812 | ) |
47
A reconciliation of the United States statutory federal tax rate to the consolidated effective tax rate follows:
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
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 | ) |
| (1 | ) |
|
| - |
|
|
| (14 | ) |
Enactment of US tax reform (See Note 3) |
| - |
|
|
| - |
|
|
| (6 | ) | |||||||||||
Other |
| 1 |
|
|
| - |
|
|
| 7 |
|
| (2 | ) |
|
| (2 | ) |
|
| - |
|
|
| 3 | % |
|
| 17 | % |
|
| (28 | )% |
| 18 | % |
|
| 19 | % |
|
| 7 | % |
A number of the jurisdictions in which SchlumbergerSLB operates have tax laws that are not fully defined and are evolving. Schlumberger’sSLB’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, 2018 and 2017 is as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Balance at beginning of year | $ | 1,433 |
|
| $ | 1,393 |
|
| $ | 1,419 |
| $ | 1,001 |
|
| $ | 1,271 |
|
| $ | 1,301 |
|
Additions based on tax positions related to the current year |
| 86 |
|
|
| 88 |
|
|
| 132 |
|
| 41 |
|
|
| 38 |
|
|
| 76 |
|
Additions for tax positions of prior years |
| 65 |
|
|
| 145 |
|
|
| 58 |
|
| 64 |
|
|
| 19 |
|
|
| 78 |
|
Impact of changes in exchange rates |
| 2 |
|
|
| (41 | ) |
|
| 23 |
|
| (38 | ) |
|
| (24 | ) |
|
| (3 | ) |
Settlements with tax authorities |
| (50 | ) |
|
| (22 | ) |
|
| (41 | ) |
| (37 | ) |
|
| (49 | ) |
|
| (15 | ) |
Reductions for tax positions of prior years |
| (176 | ) |
|
| (57 | ) |
|
| (157 | ) |
| (94 | ) |
|
| (228 | ) |
|
| (87 | ) |
Reductions due to the lapse of the applicable statute of limitations |
| (59 | ) |
|
| (73 | ) |
|
| (41 | ) | |||||||||||
Reductions due to the lapse of statute of limitations |
| (44 | ) |
|
| (26 | ) |
|
| (79 | ) | |||||||||||
| $ | 1,301 |
|
| $ | 1,433 |
|
| $ | 1,393 |
| $ | 893 |
|
| $ | 1,001 |
|
| $ | 1,271 |
|
The amounts above exclude accrued interest and penalties of $188$155 million, $205$164 million and $195$184 million at December 31, 2019, 20182022, 2021 and 2017,2020, respectively. SchlumbergerSLB 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 SchlumbergerSLB operates:
Canada |
|
Ecuador |
|
Mexico |
|
Norway |
|
Russia |
|
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’sSLB’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 $1.7$1.2 billion in each of 2019both 2022 and 2018,2021 and $1.4 billion in 2017.2020.
Maturities of operating lease liabilities as of December 31, 20192022 were as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||
|
|
|
|
|
|
|
2020 | $ | 510 |
| |||
2021 |
| 276 |
| |||
2022 |
| 188 |
| |||
2023 |
| 152 |
| $ | 165 |
|
2024 |
| 124 |
|
| 134 |
|
2025 |
| 105 |
| |||
2026 |
| 79 |
| |||
2027 |
| 67 |
| |||
Thereafter |
| 332 |
|
| 262 |
|
Total lease payments | $ | 1,582 |
| $ | 812 |
|
Less: Interest |
| (171 | ) |
| (113 | ) |
| $ | 1,411 |
| $ | 699 |
|
Amounts recognized in Balance Sheet |
|
|
| |||
Amounts recognized in balance sheet: |
|
|
| |||
Accounts payable and accrued liabilities | $ | 494 |
| $ | 160 |
|
Other Liabilities |
| 917 |
|
| 539 |
|
| $ | 1,411 |
| $ | 699 |
|
Operating lease assets of $1.3 billion and $1.8 billion as of December 31, 2019 and 2018, respectively, were included in Other Assets in the Consolidated Balance Sheet. Operating lease liabilities as of December 31, 2018 were $1.8 billion, of which $0.6 billion was classified in Accounts payable and accrued liabilities and $1.2 billion was classified in Other Liabilities in the Consolidated Balance Sheet.
The weighted-average remaining lease term as of December 31, 20192022 was 710 years. The weighted-average discount rate used to determine the operating lease liability as of December 31, 20192022 was 3.2%3.3%.
15.14. Contingencies
SchlumbergerSLB 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’sSLB is organized under four Divisions that combine and integrate SLB’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 SLB’s segments, are as follows:are:
| • |
|
| • |
|
| • |
|
| • |
|
Financial information for the years ended December 31, 2019, 2018 and 2017, by segment is as follows:
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| |||||
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 |
|
Eliminations & other |
| (439 | ) |
|
| (171 | ) |
|
| 1,414 |
|
|
| 216 |
|
|
| 84 |
|
|
|
|
|
|
| 3,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 23,130 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,167 |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
|
|
|
|
|
|
| 5,577 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (957 | ) |
|
|
|
|
|
| 417 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (571 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (12,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,917 |
|
| $ | (10,418 | ) |
| $ | 56,312 |
|
| $ | 3,589 |
|
| $ | 1,724 |
|
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 |
| 2022 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Pretax |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Income |
|
| Assets |
|
| Amortization |
|
| Investments |
| ||||||||||
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 |
| |||||||||||||||||||
Digital & Integration | $ | 3,725 |
|
| $ | 1,357 |
|
| $ | 3,132 |
|
| $ | 504 |
|
| $ | 689 |
| |||||||||||||||||||
Reservoir Performance |
| 5,553 |
|
|
| 881 |
|
|
| 3,159 |
|
|
| 386 |
|
|
| 478 |
| |||||||||||||||||||
Well Construction |
| 11,397 |
|
|
| 2,202 |
|
|
| 6,481 |
|
|
| 524 |
|
|
| 687 |
| |||||||||||||||||||
Production Systems |
| 7,862 |
|
|
| 748 |
|
|
| 5,603 |
|
|
| 311 |
|
|
| 346 |
| |||||||||||||||||||
Eliminations & other |
| (522 | ) |
|
| (104 | ) |
|
| 1,460 |
|
|
| 189 |
|
|
| 108 |
|
| (446 | ) |
|
| (177 | ) |
|
| 1,426 |
|
|
| 271 |
|
|
| 102 |
|
|
|
|
|
|
| 4,187 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Pretax segment operating income |
|
|
|
|
| 5,011 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 33,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15,974 |
|
|
|
|
|
|
|
|
|
Cash and short term investments |
|
|
|
|
|
|
|
|
| 2,777 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 2,897 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 5,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,463 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (937 | ) |
|
|
|
|
|
| 439 |
|
|
|
|
|
|
|
|
|
| (637 | ) |
|
|
|
|
|
| 151 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (477 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (141 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 32,815 |
|
| $ | 2,624 |
|
| $ | 70,507 |
|
| $ | 3,556 |
|
| $ | 2,160 |
| $ | 28,091 |
|
| $ | 4,271 |
|
| $ | 43,135 |
|
| $ | 2,147 |
|
| $ | 2,302 |
|
|
|
|
|
| (Stated in millions) |
|
|
|
|
| (Stated in millions) |
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2021 |
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| ||
|
|
|
|
| Income |
|
|
|
|
|
| and |
|
| Capital |
|
|
|
|
| Pretax |
|
|
|
|
|
| and |
|
| Capital |
| ||||||
| Revenue |
|
| Before Taxes |
|
| Assets |
|
| Amortization |
|
| Expenditures |
| Revenue |
|
| Income |
|
| 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 | $ | 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 |
| (582 | ) |
|
| (142 | ) |
|
| 1,665 |
|
|
| 213 |
|
|
| 134 |
|
| (376 | ) |
|
| (253 | ) |
|
| 1,501 |
|
|
| 269 |
|
|
| 99 |
|
|
|
|
|
|
| 3,921 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Pretax segment operating income |
|
|
|
|
| 3,365 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Goodwill and intangible assets |
|
|
|
|
|
|
|
|
| 34,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,201 |
|
|
|
|
|
|
|
|
|
Cash, short term investments and fixed income investments |
|
|
|
|
|
|
|
|
| 5,089 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Cash and short-term investments |
|
|
|
|
|
|
|
|
| 3,139 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
All other assets |
|
|
|
|
|
|
|
|
| 3,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,215 |
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
| (934 | ) |
|
|
|
|
|
| 438 |
|
|
|
|
|
|
|
|
|
| (573 | ) |
|
|
|
|
|
| 151 |
|
|
|
|
|
Interest income (2) |
|
|
|
|
| 107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
| (513 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (514 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Charges & credits (4) |
|
|
|
|
| (3,764 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 30,440 |
|
| $ | (1,183 | ) |
| $ | 71,987 |
|
| $ | 3,837 |
|
| $ | 2,107 |
| $ | 22,929 |
|
| $ | 2,374 |
|
| $ | 41,511 |
|
| $ | 2,120 |
|
| $ | 1,654 |
|
|
|
|
|
| (Stated in millions) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
|
|
| |
|
|
|
|
| Pretax |
|
|
|
|
|
| and |
|
| Capital |
| |||
| Revenue |
|
| Income (Loss) |
|
| 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 |
|
Pretax segment operating income |
|
|
|
|
| 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 |
|
(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 seismicexploration data and APS investments.
51
Capital investments includes capital expenditures, APS investments and exploration data cost capitalized.
Depreciation and amortization includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismicexploration data costs and APS investments.
Revenue by geographic area for the years ended December 31, 2019, 20182022, 2021 and 2017 is2020 was as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
North America | $ | 10,843 |
|
| $ | 11,984 |
|
| $ | 9,487 |
| $ | 5,995 |
|
| $ | 4,466 |
|
| $ | 5,478 |
|
Latin America |
| 4,149 |
|
|
| 3,745 |
|
|
| 3,976 |
|
| 5,661 |
|
|
| 4,459 |
|
|
| 3,472 |
|
Europe/CIS/Africa |
| 7,683 |
|
|
| 7,158 |
|
|
| 7,072 |
|
| 7,201 |
|
|
| 5,778 |
|
|
| 5,963 |
|
Middle East & Asia |
| 10,017 |
|
|
| 9,543 |
|
|
| 9,394 |
|
| 9,033 |
|
|
| 8,059 |
|
|
| 8,567 |
|
Eliminations & other |
| 225 |
|
|
| 385 |
|
|
| 511 |
|
| 201 |
|
|
| 167 |
|
|
| 121 |
|
| $ | 32,917 |
|
| $ | 32,815 |
|
| $ | 30,440 |
| $ | 28,091 |
|
| $ | 22,929 |
|
| $ | 23,601 |
|
Revenue is based on the location where services are provided and products are sold.
During each of the three years ended December 31, 2019, 20182022, 2021 and 2017,2020, no single customer exceeded 10% of consolidated revenue.
Schlumberger
SLB did not have revenue from third-party customers in its country of domicile during the last three years. Revenue in the United States in 2019, 20182022, 2021 and 20172020 was $9.3$4.6 billion, $10.1$3.4 billion and $8.1$4.5 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) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2022 |
| |||||||||||||
| North America |
|
| International |
|
| Other |
|
| Total |
| ||||
Digital & Integration | $ | 1,069 |
|
| $ | 2,651 |
|
| $ | 5 |
|
| $ | 3,725 |
|
Reservoir Performance |
| 455 |
|
|
| 5,091 |
|
|
| 7 |
|
|
| 5,553 |
|
Well Construction |
| 2,311 |
|
|
| 8,875 |
|
|
| 211 |
|
|
| 11,397 |
|
Production Systems |
| 2,176 |
|
|
| 5,675 |
|
|
| 11 |
|
|
| 7,862 |
|
Eliminations & other |
| (16 | ) |
|
| (397 | ) |
|
| (33 | ) |
|
| (446 | ) |
| $ | 5,995 |
|
| $ | 21,895 |
|
| $ | 201 |
|
| $ | 28,091 |
|
(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) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2021 |
| |||||||||||||
| North America |
|
| International |
|
| 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 |
|
52
(Stated in millions) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| |||||||||||||
| North America |
|
| International |
|
| 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 |
|
Fixed Assets less accumulated depreciation by geographic area arewas as follows:
(Stated in millions) |
| |||||||||||||
(Stated in millions) | (Stated in millions) |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||
North America | $ | 3,646 |
|
| $ | 5,715 |
| $ | 1,459 |
|
| $ | 1,368 |
|
Latin America |
| 824 |
|
|
| 898 |
|
| 913 |
|
|
| 868 |
|
Europe/CIS/Africa |
| 2,258 |
|
|
| 2,364 |
|
| 1,668 |
|
|
| 1,690 |
|
Middle East & Asia |
| 2,453 |
|
|
| 2,604 |
|
| 2,099 |
|
|
| 2,049 |
|
Unallocated |
| 89 |
|
|
| 98 |
|
| 468 |
|
|
| 454 |
|
| $ | 9,270 |
|
| $ | 11,679 |
| $ | 6,607 |
|
| $ | 6,429 |
|
17.16. Pension and Other Postretirement Benefit Plans
Pension Plans
SchlumbergerSLB 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, SchlumbergerSLB 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 |
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||||||||
Discount rate |
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
|
| 4.00 | % |
|
| 3.55 | % |
|
| 4.13 | % |
| 3.00 | % |
|
| 2.60 | % |
|
| 3.30 | % |
|
| 2.83 | % |
|
| 2.38 | % |
|
| 3.27 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.81 | % |
|
| 4.81 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.82 | % |
|
| 4.83 | % |
Return on plan assets |
| 6.60 | % |
|
| 7.25 | % |
|
| 7.25 | % |
|
| 7.22 | % |
|
| 7.40 | % |
|
| 7.40 | % |
| 4.40 | % |
|
| 6.60 | % |
|
| 6.60 | % |
|
| 5.05 | % |
|
| 6.73 | % |
|
| 6.71 | % |
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 |
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||||||||
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 | $ | 37 |
|
| $ | 44 |
|
| $ | 55 |
|
| $ | 101 |
|
| $ | 117 |
|
| $ | 140 |
| |||||||||||||||||||||||
Interest cost |
| 137 |
|
|
| 127 |
|
|
| 148 |
|
|
| 298 |
|
|
| 267 |
|
|
| 301 |
| |||||||||||||||||||||||
Expected return on plan assets |
| (232 | ) |
|
| (248 | ) |
|
| (242 | ) |
|
| (592 | ) |
|
| (584 | ) |
|
| (541 | ) |
| (202 | ) |
|
| (254 | ) |
|
| (233 | ) |
|
| (530 | ) |
|
| (640 | ) |
|
| (591 | ) |
Amortization of prior service cost |
| 10 |
|
|
| 13 |
|
|
| 12 |
|
|
| 7 |
|
|
| 10 |
|
|
| 97 |
|
| - |
|
|
| - |
|
|
| 8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Amortization of net loss |
| 29 |
|
|
| 47 |
|
|
| 39 |
|
|
| 70 |
|
|
| 140 |
|
|
| 120 |
|
| 5 |
|
|
| 44 |
|
|
| 41 |
|
|
| 80 |
|
|
| 227 |
|
|
| 159 |
|
Settlement charge |
| 37 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |||||||||||||||||||||||
| $ | 73 |
|
| $ | 38 |
|
| $ | 41 |
|
| $ | (70 | ) |
| $ | 8 |
|
| $ | 77 |
| $ | (23 | ) |
| $ | (39 | ) |
| $ | 19 |
|
| $ | (51 | ) |
| $ | (29 | ) |
| $ | 9 |
|
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 |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 3.27 | % |
|
| 4.00 | % |
| 5.50 | % |
|
| 3.00 | % |
|
| 5.41 | % |
|
| 2.83 | % |
Compensation increases |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.83 | % |
|
| 4.83 | % |
| 4.00 | % |
|
| 4.00 | % |
|
| 4.84 | % |
|
| 4.83 | % |
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 |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
Change in Projected Benefit Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Change in Projected Benefit Obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Projected benefit obligation at beginning of year | $ | 4,278 |
|
| $ | 4,603 |
|
| $ | 8,111 |
|
| $ | 8,752 |
| $ | 4,668 |
|
| $ | 4,940 |
|
| $ | 10,618 |
|
| $ | 11,140 |
|
Service cost |
| 49 |
|
|
| 59 |
|
|
| 112 |
|
|
| 138 |
|
| 37 |
|
|
| 44 |
|
|
| 101 |
|
|
| 117 |
|
Interest cost |
| 180 |
|
|
| 167 |
|
|
| 333 |
|
|
| 304 |
|
| 137 |
|
|
| 127 |
|
|
| 298 |
|
|
| 267 |
|
Contribution by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 47 |
|
|
| 53 |
|
Actuarial (gains) losses |
| 535 |
|
|
| (349 | ) |
|
| 1,304 |
|
|
| (758 | ) | |||||||||||||||
Actuarial gains |
| (1,152 | ) |
|
| (211 | ) |
|
| (3,140 | ) |
|
| (586 | ) | |||||||||||||||
Currency effect |
| - |
|
|
| - |
|
|
| 50 |
|
|
| (87 | ) |
| - |
|
|
| - |
|
|
| (148 | ) |
|
| (18 | ) |
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
| |||||||||||||||
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (375 | ) |
|
| (232 | ) |
|
| (363 | ) |
|
| (355 | ) |
Other |
| - |
|
|
| - |
|
|
| 185 |
|
|
| - |
| |||||||||||||||
Projected benefit obligation at end of year | $ | 4,593 |
|
| $ | 4,278 |
|
| $ | 9,647 |
|
| $ | 8,111 |
| $ | 3,315 |
|
| $ | 4,668 |
|
| $ | 7,598 |
|
| $ | 10,618 |
|
Change in Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Change in Plan Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Plan assets at fair value at beginning of year | $ | 3,748 |
|
| $ | 4,058 |
|
| $ | 7,872 |
|
| $ | 8,507 |
| $ | 4,696 |
|
| $ | 4,776 |
|
| $ | 11,221 |
|
| $ | 10,493 |
|
Actual return on plan assets |
| 931 |
|
|
| (112 | ) |
|
| 1,676 |
|
|
| (370 | ) |
| (933 | ) |
|
| 145 |
|
|
| (2,834 | ) |
|
| 1,040 |
|
Currency effect |
| - |
|
|
| - |
|
|
| 59 |
|
|
| (105 | ) |
| - |
|
|
| - |
|
|
| (188 | ) |
|
| (28 | ) |
Company contributions |
| 6 |
|
|
| 4 |
|
|
| 19 |
|
|
| 78 |
|
| 8 |
|
|
| 7 |
|
|
| 18 |
|
|
| 18 |
|
Contributions by plan participants |
| - |
|
|
| - |
|
|
| 63 |
|
|
| 79 |
|
| - |
|
|
| - |
|
|
| 47 |
|
|
| 53 |
|
Settlement |
| (240 | ) |
|
| - |
|
|
| (17 | ) |
|
| - |
| |||||||||||||||
Benefits paid |
| (209 | ) |
|
| (202 | ) |
|
| (309 | ) |
|
| (317 | ) |
| (375 | ) |
|
| (232 | ) |
|
| (363 | ) |
|
| (355 | ) |
Other |
| - |
|
|
| - |
|
|
| 225 |
|
|
| - |
| |||||||||||||||
Plan assets at fair value at end of year | $ | 4,236 |
|
| $ | 3,748 |
|
| $ | 9,363 |
|
| $ | 7,872 |
| $ | 3,396 |
|
| $ | 4,696 |
|
| $ | 8,126 |
|
| $ | 11,221 |
|
Unfunded Liability | $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | |||||||||||||||
Amounts Recognized in Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Asset | $ | 81 |
|
| $ | 28 |
|
| $ | 528 |
|
| $ | 603 |
| |||||||||||||||
Amounts Recognized in Balance Sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Postretirement Benefits | $ | (357 | ) |
| $ | (530 | ) |
| $ | (602 | ) |
| $ | (514 | ) | $ | (151 | ) |
| $ | (212 | ) |
| $ | (14 | ) |
| $ | (19 | ) |
Other Assets |
| - |
|
|
| - |
|
|
| 318 |
|
|
| 275 |
|
| 232 |
|
|
| 240 |
|
|
| 542 |
|
|
| 622 |
|
| $ | (357 | ) |
| $ | (530 | ) |
| $ | (284 | ) |
| $ | (239 | ) | $ | 81 |
|
| $ | 28 |
|
| $ | 528 |
|
| $ | 603 |
|
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Amounts Recognized in Accumulated Other Comprehensive Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Actuarial losses | $ | 622 |
|
| $ | 852 |
|
| $ | 1,638 |
|
| $ | 1,440 |
| $ | 255 |
|
| $ | 276 |
|
| $ | 1,366 |
|
| $ | 1,174 |
|
Prior service cost |
| 9 |
|
|
| 18 |
|
|
| - |
|
|
| 9 |
| |||||||||||||||
| $ | 631 |
|
| $ | 870 |
|
| $ | 1,638 |
|
| $ | 1,449 |
| |||||||||||||||
Accumulated benefit obligation | $ | 4,345 |
|
| $ | 4,070 |
|
| $ | 9,376 |
|
| $ | 7,895 |
| $ | 3,221 |
|
| $ | 4,484 |
|
| $ | 7,454 |
|
| $ | 10,370 |
|
54
The unfunded liabilityasset 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 lossesgains arising during 2019 areeach of 2022 and 2021 were primarily attributable to the decreaseincreases 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 as of December 31, 2022 and 2021 and the target allocations by asset category areas of December 31, 2022 were as follows:
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| US |
|
|
| International |
| US |
|
|
| International |
|
| ||||||||||||||||||||||||||||||||||||||||||||
| Target |
|
|
| 2019 |
|
|
| 2018 |
|
|
| Target |
|
|
| 2019 |
|
|
| 2018 |
| Target |
|
|
| 2022 |
|
|
| 2021 |
|
|
| Target |
|
|
| 2022 |
|
|
| 2021 |
|
| ||||||||||||
Cash and cash equivalents | 0 - 3 |
| % |
|
| 2 |
| % |
|
| 2 |
| % |
| 0 - 5 |
| % |
|
| 2 |
| % |
|
| 3 |
| % | ||||||||||||||||||||||||||||||
Equity securities | 20 - 30 |
| % |
|
| 22 |
| % |
|
| 21 |
| % |
| 47 - 59 |
| % |
|
| 50 |
| % |
|
| 50 |
| 0 - 5 |
|
|
|
| - |
|
|
|
| 5 |
|
|
| 10 - 20 |
|
|
|
| 10 |
|
|
|
| 23 |
|
| ||||
Debt securities | 63 - 77 |
|
|
|
| 70 |
|
|
|
| 70 |
|
|
| 27 - 33 |
|
|
|
| 31 |
|
|
|
| 32 |
| 80 - 90 |
|
|
|
| 83 |
|
|
|
| 84 |
|
|
| 50 - 60 |
|
|
|
| 56 |
|
|
|
| 53 |
|
| ||||
Cash and cash equivalents | 0 - 3 |
|
|
|
| 2 |
|
|
|
| 2 |
|
|
| 0 - 5 |
|
|
|
| 4 |
|
|
|
| 2 |
| |||||||||||||||||||||||||||||||
Alternative investments | 5 - 10 |
|
|
|
| 6 |
|
|
|
| 7 |
|
|
| 15 - 22 |
|
|
|
| 15 |
|
|
|
| 16 |
| |||||||||||||||||||||||||||||||
Private equity and real estate | 5 - 12 |
|
|
|
| 11 |
|
|
|
| 8 |
|
|
| 15 - 22 |
|
|
|
| 19 |
|
|
|
| 13 |
|
| ||||||||||||||||||||||||||||||
Private debt | 2 - 8 |
|
|
|
| 4 |
|
|
|
| 1 |
|
|
| 9 - 15 |
|
|
|
| 13 |
|
|
|
| 8 |
|
| ||||||||||||||||||||||||||||||
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 100 |
| % |
|
| 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 earningsreturn expected on funds invested or to be invested.earned on plan assets. 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’sSLB’s pension plan assets at December 31, 20192022 and 2018,2021, 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 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 73 |
|
| $ | 59 |
|
| $ | 14 |
|
| $ | - |
|
| $ | 80 |
|
| $ | 44 |
|
| $ | 36 |
|
| $ | - |
| $ | 81 |
|
| $ | 77 |
|
| $ | 4 |
|
| $ | - |
|
| $ | 68 |
|
| $ | 61 |
|
| $ | 7 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
| 605 |
|
|
| 500 |
|
|
| 105 |
|
|
| - |
|
|
| 501 |
|
|
| 416 |
|
|
| 85 |
|
|
| - |
|
| 3 |
|
|
| - |
|
|
| 3 |
|
|
| - |
|
|
| 212 |
|
|
| 196 |
|
|
| 16 |
|
|
| - |
|
International |
| 320 |
|
|
| 315 |
|
|
| 5 |
|
|
| - |
|
|
| 267 |
|
|
| 263 |
|
|
| 4 |
|
|
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 49 |
|
|
| 48 |
|
|
| 1 |
|
|
| - |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Corporate bonds |
| 1,687 |
|
|
| - |
|
|
| 1,687 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
|
| 1,517 |
|
|
| - |
|
| 1,775 |
|
|
| - |
|
|
| 1,775 |
|
|
| - |
|
|
| 2,583 |
|
|
| - |
|
|
| 2,583 |
|
|
| - |
|
Government and government-related debt securities (d) |
| 1,256 |
|
|
| 74 |
|
|
| 1,182 |
|
|
| - |
|
|
| 1,072 |
|
|
| 66 |
|
|
| 1,006 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Collateralized mortgage obligations and mortgage backed securities (e) |
| 21 |
|
|
| - |
|
|
| 21 |
|
|
| - |
|
|
| 40 |
|
|
| - |
|
|
| 40 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Government and related debt securities |
| 1,014 |
|
|
| 157 |
|
|
| 857 |
|
|
| - |
|
|
| 1,353 |
|
|
| 199 |
|
|
| 1,154 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Mortgage and asset-based securities |
| 29 |
|
|
| - |
|
|
| 29 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |||||||||||||||||||||||||||||||
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity |
| 181 |
|
|
| - |
|
|
| - |
|
|
| 181 |
|
|
| 185 |
|
|
| - |
|
|
| - |
|
|
| 185 |
|
| 291 |
|
|
| - |
|
|
| - |
|
|
| 291 |
|
|
| 293 |
|
|
| - |
|
|
| - |
|
|
| 293 |
|
Real estate (g) |
| 93 |
|
|
| - |
|
|
| - |
|
|
| 93 |
|
|
| 86 |
|
|
| - |
|
|
| - |
|
|
| 86 |
| |||||||||||||||||||||||||||||||
Private debt |
| 124 |
|
|
| - |
|
|
| - |
|
|
| 124 |
|
|
| 39 |
|
|
| - |
|
|
| - |
|
|
| 39 |
| |||||||||||||||||||||||||||||||
Real estate |
| 79 |
|
|
| - |
|
|
| - |
|
|
| 79 |
|
|
| 99 |
|
|
| - |
|
|
| - |
|
|
| 99 |
| |||||||||||||||||||||||||||||||
Total | $ | 4,236 |
|
| $ | 948 |
|
| $ | 3,014 |
|
| $ | 274 |
|
| $ | 3,748 |
|
| $ | 789 |
|
| $ | 2,688 |
|
| $ | 271 |
| $ | 3,396 |
|
| $ | 234 |
|
| $ | 2,668 |
|
| $ | 494 |
|
| $ | 4,696 |
|
| $ | 504 |
|
| $ | 3,761 |
|
| $ | 431 |
|
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| International Plan Assets |
| International Plan Assets |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| 2022 |
|
| 2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
| Level |
|
| Level |
|
| Level |
|
|
|
|
|
| Level |
|
| Level |
|
| Level |
| ||||||||||||
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| Total |
|
| One |
|
| Two |
|
| Three |
|
| Total |
|
| One |
|
| Two |
|
| Three |
| ||||||||||||||||
Asset Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents | $ | 351 |
|
| $ | 166 |
|
| $ | 185 |
|
| $ | - |
|
| $ | 157 |
|
| $ | 75 |
|
| $ | 82 |
|
| $ | - |
| $ | 170 |
|
| $ | 163 |
|
| $ | 7 |
|
| $ | - |
|
| $ | 362 |
|
| $ | 353 |
|
| $ | 9 |
|
| $ | - |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
| 2,834 |
|
|
| 2,347 |
|
|
| 487 |
|
|
| - |
|
|
| 2,421 |
|
|
| 2,028 |
|
|
| 393 |
|
|
| - |
|
| 580 |
|
|
| 497 |
|
|
| 83 |
|
|
| - |
|
|
| 1,909 |
|
|
| 1,600 |
|
|
| 309 |
|
|
| - |
|
International |
| 1,871 |
|
|
| 1,723 |
|
|
| 148 |
|
|
| - |
|
|
| 1,526 |
|
|
| 1,406 |
|
|
| 120 |
|
|
| - |
|
| 273 |
|
|
| 273 |
|
|
| - |
|
|
| - |
|
|
| 717 |
|
|
| 717 |
|
|
| - |
|
|
| - |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Corporate bonds |
| 1,105 |
|
|
| - |
|
|
| 1,105 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
|
| 923 |
|
|
| - |
|
| 2,224 |
|
|
| - |
|
|
| 2,224 |
|
|
| - |
|
|
| 2,859 |
|
|
| - |
|
|
| 2,859 |
|
|
| - |
|
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 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Government and related debt securities |
| 2,283 |
|
|
| 336 |
|
|
| 1,947 |
|
|
| - |
|
|
| 2,390 |
|
|
| 221 |
|
|
| 2,169 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Mortgage and asset-based securities |
| 13 |
|
|
| - |
|
|
| 13 |
|
|
| - |
|
|
| 644 |
|
|
| - |
|
|
| 644 |
|
|
| - |
| |||||||||||||||||||||||||||||||
Alternative Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity |
| 623 |
|
|
| - |
|
|
| - |
|
|
| 623 |
|
|
| 565 |
|
|
| - |
|
|
| - |
|
|
| 565 |
|
| 1,362 |
|
|
| - |
|
|
| - |
|
|
| 1,362 |
|
|
| 1,284 |
|
|
| - |
|
|
| - |
|
|
| 1,284 |
|
Real estate (g) |
| 183 |
|
|
| - |
|
|
| - |
|
|
| 183 |
|
|
| 150 |
|
|
| - |
|
|
| - |
|
|
| 150 |
| |||||||||||||||||||||||||||||||
Other |
| 633 |
|
|
| - |
|
|
| - |
|
|
| 633 |
|
|
| 517 |
|
|
| - |
|
|
| - |
|
|
| 517 |
| |||||||||||||||||||||||||||||||
Private debt |
| 1,041 |
|
|
| - |
|
|
| - |
|
|
| 1,041 |
|
|
| 869 |
|
|
| - |
|
|
| - |
|
|
| 869 |
| |||||||||||||||||||||||||||||||
Real estate |
| 180 |
|
|
| - |
|
|
| - |
|
|
| 180 |
|
|
| 187 |
|
|
| - |
|
|
| - |
|
|
| 187 |
| |||||||||||||||||||||||||||||||
Total | $ | 9,363 |
|
| $ | 4,241 |
|
| $ | 3,683 |
|
| $ | 1,439 |
|
| $ | 7,872 |
|
| $ | 3,514 |
|
| $ | 3,126 |
|
| $ | 1,232 |
| $ | 8,126 |
|
| $ | 1,269 |
|
| $ | 4,274 |
|
| $ | 2,583 |
|
| $ | 11,221 |
|
| $ | 2,891 |
|
| $ | 5,990 |
|
| $ | 2,340 |
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
Schlumberger’sSLB’s funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial accrued liability,funded status of the plans, amounts that are deductible for income tax purposes, legal funding requirements and available cash flow. Schlumberger expectsSLB does not expect to contribute approximately $20 millionmake any material contributions to its postretirement benefit plans in 2020, subject to market and business conditions.2023.
Postretirement Benefits Other Than Pensions
SchlumbergerSLB 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:
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||||||
Discount rate |
| 3.30 | % |
|
| 4.30 | % |
|
| 4.30 | % |
|
| 3.70 | % |
|
| 4.20 | % |
| 5.50 | % |
|
| 3.00 | % |
|
| 3.00 | % |
|
| 2.60 | % |
|
| 3.30 | % |
Return on plan assets | - |
|
| - |
|
|
| 7.00 | % |
|
| 7.00 | % |
|
| 7.00 | % | - |
|
| - |
|
|
| 2.94 | % |
|
| 6.21 | % |
|
| 6.21 | % | ||||
Current medical cost trend rate |
| 7.50 | % |
|
| 7.50 | % |
|
| 7.50 | % |
|
| 7.00 | % |
|
| 7.25 | % |
| 7.50 | % |
|
| 6.75 | % |
|
| 6.75 | % |
|
| 7.00 | % |
|
| 7.25 | % |
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 |
| 2035 |
|
| 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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Service cost | $ | 29 |
|
| $ | 32 |
|
| $ | 29 |
| $ | 23 |
|
| $ | 28 |
|
| $ | 31 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
|
| 46 |
|
| 33 |
|
|
| 32 |
|
|
| 36 |
|
Expected return on plan assets |
| (64 | ) |
|
| (63 | ) |
|
| (60 | ) |
| (38 | ) |
|
| (73 | ) |
|
| (70 | ) |
Amortization of prior service credit |
| (28 | ) |
|
| (28 | ) |
|
| (29 | ) |
| (23 | ) |
|
| (23 | ) |
|
| (25 | ) |
Amortization of net loss |
| (10 | ) |
|
| - |
|
|
| - |
| |||||||||||
Curtailment gain |
| - |
|
|
| - |
|
|
| (69 | ) | |||||||||||
| $ | (18 | ) |
| $ | (16 | ) |
| $ | (14 | ) | $ | (15 | ) |
| $ | (36 | ) |
| $ | (97 | ) |
57Due to the actions taken by SLB to reduce its global workforce during 2020, SLB experienced a significant reduction in the expected aggregate years of future service of its employees in its US postretirement medical plan. Accordingly, SLB 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, SLB 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 |
| 2022 |
|
| 2021 |
| ||||
Change in Projected Benefit Obligations |
|
|
|
|
|
|
| |||||||
Change in Accumulated Postretirement Benefit Obligation: |
|
|
|
|
|
|
| |||||||
Benefit obligation at beginning of year | $ | 1,106 |
|
| $ | 1,213 |
| $ | 1,146 |
|
| $ | 1,234 |
|
Service cost |
| 29 |
|
|
| 32 |
|
| 23 |
|
|
| 28 |
|
Interest cost |
| 45 |
|
|
| 43 |
|
| 33 |
|
|
| 32 |
|
Contribution by plan participants |
| 8 |
|
|
| 8 |
|
| 9 |
|
|
| 10 |
|
Actuarial (gains) losses |
| 65 |
|
|
| (128 | ) | |||||||
Actuarial gains |
| (338 | ) |
|
| (95 | ) | |||||||
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (65 | ) |
|
| (63 | ) |
Benefit obligation at end of year | $ | 1,193 |
|
| $ | 1,106 |
| $ | 808 |
|
| $ | 1,146 |
|
Change in Plan Assets |
|
|
|
|
|
|
| |||||||
Change in Plan Assets: |
|
|
|
|
|
|
| |||||||
Plan assets at fair value at beginning of year | $ | 997 |
|
| $ | 1,094 |
| $ | 1,318 |
|
| $ | 1,356 |
|
Actual return on plan assets |
| 240 |
|
|
| (44 | ) |
| (323 | ) |
|
| 15 |
|
Company contributions |
| - |
|
|
| 1 |
| |||||||
Contributions by plan participants |
| 8 |
|
|
| 8 |
|
| 8 |
|
|
| 10 |
|
Benefits paid |
| (60 | ) |
|
| (62 | ) |
| (65 | ) |
|
| (63 | ) |
Plan assets at fair value at end of year | $ | 1,185 |
|
| $ | 997 |
| $ | 938 |
|
| $ | 1,318 |
|
Unfunded Liability | $ | (8 | ) |
| $ | (109 | ) | |||||||
Amounts Recognized in Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
| |||||||
Actuarial (gains) losses | $ | (98 | ) |
| $ | 14 |
| |||||||
Asset | $ | 130 |
|
| $ | 172 |
| |||||||
Amounts Recognized in Accumulated Other Comprehensive Loss: |
|
|
|
|
|
|
| |||||||
Actuarial gains | $ | 199 |
|
| $ | 225 |
| |||||||
Prior service credit |
| (158 | ) |
|
| (186 | ) |
| 59 |
|
|
| 81 |
|
| $ | (256 | ) |
| $ | (172 | ) | $ | 258 |
|
| $ | 306 |
|
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%87% in equitydebt securities and 40%13% in debtequity securities at December 31, 2019.2022. 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) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pension Benefits |
|
| Postretirement |
| ||||||
| US |
|
| International |
|
| Medical Plan |
| |||
2020 | $ | 218 |
|
| $ | 333 |
|
| $ | 52 |
|
2021 | $ | 221 |
|
| $ | 343 |
|
| $ | 54 |
|
2022 | $ | 225 |
|
| $ | 353 |
|
| $ | 55 |
|
2023 | $ | 229 |
|
| $ | 365 |
|
| $ | 56 |
|
2024 | $ | 233 |
|
| $ | 366 |
|
| $ | 57 |
|
2025-2029 | $ | 1,213 |
|
| $ | 2,057 |
|
| $ | 317 |
|
(Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Pension Plans |
|
| Postretirement |
| ||||||
| US |
|
| International |
|
| Medical Plan |
| |||
2023 | $ | 226 |
|
| $ | 390 |
|
| $ | 51 |
|
2024 | $ | 227 |
|
| $ | 399 |
|
| $ | 51 |
|
2025 | $ | 228 |
|
| $ | 412 |
|
| $ | 52 |
|
2026 | $ | 230 |
|
| $ | 425 |
|
| $ | 52 |
|
2027 | $ | 231 |
|
| $ | 432 |
|
| $ | 54 |
|
2028-2032 | $ | 1,168 |
|
| $ | 2,376 |
|
| $ | 296 |
|
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 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Interest | $ | 558 |
|
| $ | 592 |
|
| $ | 572 |
| $ | 562 |
|
| $ | 560 |
|
| $ | 598 |
|
Income tax | $ | 739 |
|
| $ | 628 |
|
| $ | (44 | ) | $ | 716 |
|
| $ | 591 |
|
| $ | 582 |
|
Interest and other income, net includes the following:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Gain on sale of Liberty shares * | $ | 325 |
|
| $ | 28 |
|
| $ | - |
| |||||||||||
Loss on Blue Chip Swap transactions * |
| (139 | ) |
|
| - |
|
|
| - |
| |||||||||||
Gain on ADC equity investment * |
| 107 |
|
|
| - |
|
|
| - |
| |||||||||||
Earnings of equity method investments |
| 164 |
|
|
| 40 |
|
|
| 91 |
| |||||||||||
Interest income | $ | 41 |
|
| $ | 60 |
|
| $ | 128 |
|
| 99 |
|
|
| 33 |
|
|
| 33 |
|
Earnings of equity method investments |
| 45 |
|
|
| 89 |
|
|
| 96 |
| |||||||||||
Gain on sale of real estate * |
| 43 |
|
|
| - |
|
|
| - |
| |||||||||||
Gain on repurchase of bonds * |
| 11 |
|
|
| - |
|
|
| - |
| |||||||||||
Unrealized gain on marketable securities * |
| - |
|
|
| 47 |
|
|
| 39 |
| |||||||||||
Gain on sale of OneStim * |
| - |
|
|
| - |
|
|
| 104 |
| |||||||||||
| $ | 86 |
|
| $ | 149 |
|
| $ | 224 |
| $ | 610 |
|
| $ | 148 |
|
| $ | 267 |
|
* See Note 3 – Charges and Credits
The components of depreciation and amortization expense were as follows:
(Stated in millions) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
Depreciation of fixed assets | $ | 1,368 |
|
| $ | 1,402 |
|
| $ | 1,625 |
|
Amortization of APS investments |
| 368 |
|
|
| 305 |
|
|
| 396 |
|
Amortization of intangible assets |
| 301 |
|
|
| 302 |
|
|
| 371 |
|
Amortization of exploration data costs |
| 110 |
|
|
| 111 |
|
|
| 174 |
|
| $ | 2,147 |
|
| $ | 2,120 |
|
| $ | 2,566 |
|
The change in Allowance for doubtful accounts iswas as follows:
(Stated in millions) | (Stated in millions) |
| (Stated in millions) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
|
| 2017 |
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||||
Balance at beginning of year | $ | 249 |
|
| $ | 241 |
|
| $ | 397 |
| $ | 319 |
|
| $ | 301 |
|
| $ | 255 |
|
Additions |
| 5 |
|
|
| 15 |
|
|
| 7 |
|
| 54 |
|
|
| 47 |
|
|
| 58 |
|
Amounts written off |
| 1 |
|
|
| (7 | ) |
|
| (163 | ) |
| (33 | ) |
|
| (29 | ) |
|
| (12 | ) |
Balance at end of year | $ | 255 |
|
| $ | 249 |
|
| $ | 241 |
| $ | 340 |
|
| $ | 319 |
|
| $ | 301 |
|
Revenue in excess of billings related to contracts where revenue is recognized over time was $0.3 billion at December 31, 2022 and $0.2 billion at both December 31, 2019 and 2018.2021. 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) |
| ||||||
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||
Investments in APS projects | $ | 2,023 |
|
| $ | 1,786 |
|
Pension and other postretirement plan assets |
| 904 |
|
|
| 1,034 |
|
Operating lease assets |
| 538 |
|
|
| 553 |
|
Exploration data costs capitalized |
| 141 |
|
|
| 154 |
|
Fair value of hedge contracts |
| 1 |
|
|
| 66 |
|
Other |
| 363 |
|
|
| 590 |
|
| $ | 3,970 |
|
| $ | 4,183 |
|
Accounts payable and accrued liabilities consist of the following:
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||
Trade | $ | 3,921 |
|
| $ | 3,205 |
|
Payroll, vacation and employee benefits |
| 1,493 |
|
|
| 1,377 |
|
Billings and cash collections in excess of revenue |
| 1,157 |
|
|
| 1,088 |
|
Other |
| 2,550 |
|
|
| 2,712 |
|
| $ | 9,121 |
|
| $ | 8,382 |
|
(Stated in millions) |
| ||||||
|
|
|
|
|
|
|
|
| 2019 |
|
| 2018 |
| ||
Trade | $ | 4,790 |
|
| $ | 4,709 |
|
Payroll, vacation and employee benefits |
| 1,293 |
|
|
| 1,244 |
|
Billings and cash collections in excess of revenue |
| 910 |
|
|
| 877 |
|
Other |
| 3,670 |
|
|
| 3,393 |
|
| $ | 10,663 |
|
| $ | 10,223 |
|
Management’s Report on Internal Control Over Financial Reporting
SchlumbergerSLB 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’sSLB’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
SLB management assessed the effectiveness of its internal control over financial reporting as of December 31, 2019.2022. 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’sSLB’s management has concluded that, as of December 31, 2019,2022, its internal control over financial reporting is effective based on those criteria.
The effectiveness of Schlumberger’sSLB’s internal control over financial reporting as of December 31, 20192022 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, 20192022 and 2018,2021, 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, 2019,2022, 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, 2019,2022, 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, 20192022 and 20182021 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20192022 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, 2019,2022, 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 ImpairmentUncertain 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.
|
|
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) |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) |
|
| Earnings (Loss) per Share of |
| ||||||
|
|
|
|
| Gross |
|
| Attributable to |
|
| Schlumberger (2) |
| |||||||
| Revenue (2) |
|
| Margin (1), (2) |
|
| Schlumberger (2) |
|
| Basic |
|
| Diluted |
| |||||
Quarters 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First | $ | 7,879 |
|
| $ | 925 |
|
| $ | 421 |
|
| $ | 0.30 |
|
| $ | 0.30 |
|
Second |
| 8,269 |
|
|
| 1,016 |
|
|
| 492 |
|
|
| 0.36 |
|
|
| 0.35 |
|
Third (3) |
| 8,541 |
|
|
| 1,155 |
|
|
| (11,383 | ) |
|
| (8.22 | ) |
|
| (8.22 | ) |
Fourth (4) |
| 8,228 |
|
|
| 1,101 |
|
|
| 333 |
|
|
| 0.24 |
|
|
| 0.24 |
|
| $ | 32,917 |
|
| $ | 4,197 |
|
| $ | (10,137 | ) |
| $ | (7.32 | ) |
| $ | (7.32 | ) |
Quarters 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First | $ | 7,829 |
|
| $ | 1,027 |
|
| $ | 525 |
|
| $ | 0.38 |
|
| $ | 0.38 |
|
Second (5) |
| 8,303 |
|
|
| 1,124 |
|
|
| 430 |
|
|
| 0.31 |
|
|
| 0.31 |
|
Third |
| 8,504 |
|
|
| 1,180 |
|
|
| 644 |
|
|
| 0.46 |
|
|
| 0.46 |
|
Fourth (6) |
| 8,180 |
|
|
| 1,008 |
|
|
| 538 |
|
|
| 0.39 |
|
|
| 0.39 |
|
| $ | 32,815 |
|
| $ | 4,337 |
|
| $ | 2,138 |
|
| $ | 1.54 |
|
| $ | 1.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
SchlumbergerSLB has carried out an evaluation under the supervision and with the participation of Schlumberger’sSLB’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of Schlumberger’sSLB’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’sSLB’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that SchlumbergerSLB 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’sSLB’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’sSLB’s internal control over financial reporting that occurred during the fourth quarter of 20192022 that has materially affected, or is reasonably likely to materially affect, Schlumberger’sSLB’s internal control over financial reporting.
63
Item 9B. Other Information.
In 2013, SchlumbergerSLB 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’sSLB’s residual transactions or dealings with the government of Iran in 20192022 consisted of payments of taxes and other typical governmental charges. Certain non-US subsidiaries of Schlumberger maintainSLB maintained 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 SchlumbergerSLB 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. SchlumbergerSLB anticipates that it will discontinue dealings with Saderat and Tejarat following the receipt of all amounts owed to SchlumbergerSLB 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.SLB.
See “Item 1. Business—Information About Our Executive Officers” of this Report for Item 10 information regarding SLB’s executive officers of Schlumberger.officers. 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 2020SLB’s 2023 Proxy Statement is incorporated herein by reference. The information set forth under the caption “Stock Ownership Information—Delinquent Section 16(a) Reports” in SLB’s 2023 Proxy Statement is incorporated herein by reference to the extent any disclosure is required.
Schlumberger
SLB 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’sSLB’s Code of Conduct is posted on its website at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct. SchlumbergerSLB 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”“Pay Versus Performance,” and “Director CompensationCompensation” in Fiscal Year 2019” in Schlumberger’s 2020SLB’s 2023 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 2020SLB’s 2023 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 2020SLB’s 2023 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”2023” in Schlumberger’s 2020SLB’s 2023 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: |
|
| Page(s) |
(1) | Financial Statements |
|
| Consolidated Statement of Income (Loss) for the three years ended December 31, |
|
|
| |
| Consolidated Balance Sheet at December 31, |
|
| Consolidated Statement of Cash Flows for the three years ended December 31, |
|
| Consolidated Statement of Stockholders’ Equity for the three years ended December 31, |
|
|
| |
| Report of Independent Registered Public Accounting Firm (PCAOB ID 238) |
|
|
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 |
|
(3) | Exhibits: See exhibits listed under Part (b) below. |
|
(b) | Exhibits |
66
INDEX TO EXHIBITS
|
| Exhibit |
|
|
|
| 3.1 | |
|
|
|
| 3.2 | |
|
|
|
| 4.1 | |
|
|
|
| 4.2 | |
|
|
|
| 4.3 | |
|
|
|
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
| 10.1 | |
|
|
|
| 10.2 | |
|
|
|
| 10.3 | |
|
|
|
| ||
| ||
| ||
| ||
|
| |
|
|
|
|
| |
|
|
|
10.6 |
Exhibit | ||
|
| |
|
|
|
| ||
| ||
| ||
| ||
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
| ||
| ||
|
| |
|
|
|
| ||
| ||
| ||
| ||
|
| |
10.14 | ||
10.15 | ||
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
|
|
|
|
| |
|
|
|
|
|
|
| Exhibit |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Consent of Independent Registered Public Accounting Firm (*) |
| 23 |
|
|
|
| 24 | |
|
|
|
| 31.1 | |
|
|
|
| 31.2 | |
|
|
|
| 32.1 | |
|
|
|
| 32.2 | |
|
|
|
| 95 | |
|
|
|
Inline XBRL Instance Document (*) |
|
|
|
|
|
Inline XBRL Taxonomy Extension Schema Document (*) |
| 101.SCH |
|
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document (*) |
| 101.CAL |
|
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document (*) |
| 101.DEF |
|
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document (*) |
| 101.LAB |
|
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document (*) |
| 101.PRE |
|
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 104 |
(*) Filed with this Form |
|
|
(**) Furnished with this Form 10-K |
|
|
(+) Management contracts or compensatory plans or |
|
|
|
|
|
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. |
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 |
|
|
|
|
|
|
|
|
|
|
|
| By: |
| /S/ |
|
|
|
|
| Howard Guild |
|
|
|
|
| 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 |
|
|
|
* |
| Chief Executive Officer and Director (Principal Executive Officer) |
Olivier Le Peuch |
| |
|
|
|
/S/ |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|
| |
|
|
|
/S/ |
| Chief Accounting Officer (Principal Accounting Officer) |
Howard Guild |
| |
|
|
|
* |
| Director |
Peter |
|
|
|
|
|
* |
| Director |
Patrick de La Chevardière |
|
|
|
|
|
* |
| Director |
Miguel M. Galuccio |
|
|
|
|
|
* |
| Director |
|
|
|
|
|
|
* |
| Director |
Tatiana A. Mitrova |
|
|
|
|
|
* |
| Director |
|
|
|
|
|
|
* |
| Director |
|
|
|
|
|
|
* |
| Chairman of the Board |
Mark G. Papa | ||
|
| |
| ||
|
| |
|
|
|
|
|
|
* |
| Director |
Jeff W. Sheets |
|
|
|
|
|
* | Director | |
Ulrich Spiesshofer | ||
/s/ |
| January |
*By |
|
|
7066