SLB Q2 Results

Schlumberger numbers and color positive for sector: Schlumberger Announces Second-Quarter 2008 Results

HOUSTON, Jul 18, 2008 (BUSINESS WIRE) -- Schlumberger Limited (NYSE:SLB) today reported second-quarter revenue of $6.75 billion versus $6.29 billion in the first quarter of 2008, and $5.64 billion in the second quarter of 2007.

Income from continuing operations was $1.42 billion -- an increase of 9% sequentially and 13% year-on-year. Diluted earnings-per-share from continuing operations was $1.16 versus $1.06 in the previous quarter, and $1.02 in the second quarter of 2007.

Oilfield Services revenue of $6.07 billion increased 8% sequentially and 22% year-on-year. Pretax segment operating income of $1.70 billion increased 13% sequentially and 13% year-on-year.

WesternGeco revenue of $671 million decreased 1% compared to the prior quarter but increased 1% year-on-year. Pretax segment operating income of $196 million was flat sequentially but decreased 9% year-on-year.

Schlumberger Chairman and CEO Andrew Gould commented, "Strong sequential growth throughout the Eastern Hemisphere led to improved margin performance in all Areas except North America, where the effects of strong growth in the lower forty-eight states and the US Gulf of Mexico were more than offset by a prolonged spring break-up in Canada.

Growth was helped by increased drilling efficiency in the North Sea, improved performance and lower start-up costs on IPM projects in Mexico and Russia, and a favorable exploration mix, particularly in the North Sea, eastern Siberia and South East Asia. The quarter also saw increased demand for well-placement technologies and rigless work as operators strive to increase production from existing fields.

At WesternGeco, sequential revenue growth was essentially flat as increases in Multiclient sales and Data Processing activity were offset by the seasonal drop in Marine activity. Significant increases were recorded in the backlog for land operations and marine bidding activity remained robust.

Bidding activity during the quarter at Oilfield Services was also strong, particularly for Drilling & Measurements, Wireline, and Testing Services. This led to a number of significant contract awards, particularly in the area of drilling services where advances in rotary-steerable systems and well- placement technologies, coupled with increased reliability, are critical to operators in today's environment of very high spread costs for offshore rigs.

At the beginning of the year we predicted a more complex growth pattern for 2008. Notably, we were uncertain of the evolution of North American natural gas activity and the extent to which delays in the completion of new build offshore rigs would affect growth. We anticipated solid increases in the Eastern Hemisphere land rig count.

At the half year, the uncertainty around the direction of natural gas drilling in North America has been removed and extremely high commodity prices have led operators to increase their budgets overseas. We anticipate that approximately 35 new offshore rigs will enter the fleet in the remaining half of the year. The overseas land rig count has evolved much as we predicted. It appears that customers are responding vigorously to current commodity price levels.

In the longer term, we remain convinced that absent a deep worldwide recession leading to a steep drop in demand, higher levels of investment will have to be sustained to bring some equilibrium to the market. We therefore re-iterate our 'stronger for longer' view of the current cycle of exploration and production spending. It is significant that during the quarter the industry estimated an additional 28 new offshore rigs were ordered from shipyards with delivery dates out to 2012 -- increasing the total on order to more than 180."