UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

      

FORM 10-Q

      

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

      

For the quarterly period ended: September 30, 2013

Commission file No.: 1-4601

      

SCHLUMBERGER N.V.

(SCHLUMBERGER LIMITED)

(Exact name of registrant as specified in its charter)

      

   

 

CURAÇAO

   

52-0684746

(State or other jurisdiction of
incorporation or organization)

   

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

   

   

   

42 RUE SAINT-DOMINIQUE

   

   

PARIS, FRANCE

   

75007

   

   

   

5599 SAN FELIPE, 17th FLOOR

   

   

HOUSTON, TEXAS, U.S.A.

   

77056

   

   

   

PARKSTRAAT 83 THE HAGUE,

   

   

THE NETHERLANDS

   

2514 JG

(Addresses of principal executive offices)

   

(Zip Codes)

Registrant’s telephone number: (713) 375-3400

      

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

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

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

   

 

Large accelerated filer

x

Accelerated filer

¨

   

   

   

   

Non-accelerated filer

¨  (Do not check if a smaller reporting company)

Smaller reporting company

¨

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

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

   

 

Class

Outstanding at September 30, 2013

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,316,954,935

   

   

       

 

   


SCHLUMBERGER LIMITED

Third Quarter 2013 Form 10-Q

Table of Contents

   

 

   

   

   

Page

 PART I

   

Financial Informaiton

   

   

   

   

   

Item 1.

   

Financial Statements  

 

 3

   

   

   

   

Item 2.

   

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

19

   

   

   

   

Item 3.

   

Quantitative and Qualitative Disclosures about Market Risk  

 

 28

   

   

   

   

Item 4.

   

Controls and Procedures  

 

 28

   

   

   

   

 PART II

   

Other Information

   

   

   

   

   

Item 1.

   

Legal Proceedings  

 

 29

   

   

   

   

Item 1A.

   

Risk Factors  

 

 29

   

   

   

   

Item 2.

   

Unregistered Sales of Equity Securities and Use of Proceeds  

 

 29

   

   

   

   

Item 3.

   

Defaults Upon Senior Securities  

 

 29

   

   

   

   

Item 4.

   

Mine Safety Disclosures  

 

 29

   

   

   

   

Item 5.

   

Other Information  

 

 29

   

   

   

   

Item 6.

   

Exhibits  

 

 30

   

   

   

   

   

   

Certifications

   

   

   

   

   

 

 2 


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

   

 

   

(Stated in millions, except per share amounts)

   

   

   

   

   

   

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Revenue

$

11,608

   

   

$

10,498

   

   

$

33,360

   

   

$

30,648

   

Interest & other income

   

43

   

   

   

44

   

   

   

105

   

   

   

137

   

Gain on formation of OneSubsea

   

—  

   

   

   

—  

   

   

   

1,028

   

   

   

—  

   

Expenses

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Cost of revenue

   

8,926

   

   

   

8,237

   

   

   

26,047

   

   

   

24,124

   

Research & engineering

   

286

   

   

   

291

   

   

   

870

   

   

   

849

   

General & administrative

   

110

   

   

   

95

   

   

   

305

   

   

   

294

   

Merger & integration

   

—  

   

   

   

32

   

   

   

—  

   

   

   

68

   

Impairment & other

   

—  

   

   

   

—  

   

   

   

456

   

   

   

—  

   

Interest

   

98

   

   

   

89

   

   

   

294

   

   

   

246

   

Income before taxes

   

2,231

   

   

   

1,798

   

   

   

6,521

   

   

   

5,204

   

Taxes on income

   

506

   

   

   

436

   

   

   

1,361

   

   

   

1,268

   

Income from continuing operations

   

1,725

   

   

   

1,362

   

   

   

5,160

   

   

   

3,936

   

Income (loss) from discontinued operations

   

—  

   

   

   

65

   

   

   

(69

)

   

   

211

   

Net income

   

1,725

   

   

   

1,427

   

   

   

5,091

   

   

   

4,147

   

Net income attributable to noncontrolling interests

   

10

   

   

   

3

   

   

   

23

   

   

   

20

   

Net income attributable to Schlumberger

$

1,715

   

   

$

1,424

   

   

$

5,068

   

   

$

4,127

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Schlumberger amounts attributable to:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Income from continuing operations

$

1,715

   

   

$

1,359

   

   

$

5,137

   

   

$

3,916

   

Income (loss) from discontinued operations

   

—  

   

   

   

65

   

   

   

(69

)

   

   

211

   

Net income

$

1,715

   

   

$

1,424

   

   

$

5,068

   

   

$

4,127

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Basic earnings per share of Schlumberger:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Income from continuing operations

$

1.30

   

   

$

1.02

   

   

$

3.87

   

   

$

2.94

   

Income (loss) from discontinued operations

   

—  

   

   

   

0.05

   

   

   

(0.05

)

   

   

0.16

   

Net income

$

1.30

   

   

$

1.07

   

   

$

3.82

   

   

$

3.10

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Diluted earnings per share of Schlumberger:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Income from continuing operations

$

1.29

   

   

$

1.02

   

   

$

3.84

   

   

$

2.92

   

Income (loss) from discontinued operations

   

—  

   

   

   

0.05

   

   

   

(0.05

)

   

   

0.16

   

Net income

$

1.29

   

   

$

1.07

   

   

$

3.79

   

   

$

3.08

   

Average shares outstanding:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Basic

   

1,322

   

   

   

1,328

   

   

   

1,326

   

   

   

1,331

   

Assuming dilution

   

1,333

   

   

   

1,336

   

   

   

1,336

   

   

   

1,340

   

   

See Notes to Consolidated Financial Statements

   

   

   

 

 3 


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

   

 

   

   

(Stated in millions)

   

   

   

   

   

   

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Net income

$

1,725

   

   

$

1,427

   

   

$

5,091

   

   

$

4,147

   

Currency translation adjustments

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Unrealized net change arising during the period

   

95

   

   

   

138

   

   

   

(139

)

   

   

45

   

Marketable securities

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Unrealized (loss) gain arising during the period

   

(25

   

   

—  

   

   

   

58

   

   

   

—  

   

Derivatives

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Net derivatives gain (loss) on hedge transactions (see Note 11)

   

76

   

   

   

142

   

   

   

(27

)

   

   

(35

)

Reclassification to net income of net realized (gain) loss (see Note 11)

   

(30

)

   

   

(92

)

   

   

15

   

   

   

58

   

Pension and other postretirement benefit plans

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Actuarial loss

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Actuarial loss arising during the period

   

(18

)

   

   

(14

)

   

   

(23

)

   

   

(35

)

Amortization to net income of net actuarial loss (see Note 15)

   

73

   

   

   

51

   

   

   

224

   

   

   

137

   

Prior service cost

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Amortization to net income of net prior service cost (see Note 15)

   

31

   

   

   

31

   

   

   

94

   

   

   

93

   

Income taxes on pension and other postretirement benefit plans

   

(9

)

   

   

(8

)

   

   

(40

)

   

   

(31

)

Comprehensive income

   

1,918

   

   

   

1,675

   

   

   

5,253

   

   

   

4,379

   

Comprehensive income attributable to noncontrolling interests

   

10

   

   

   

3

   

   

   

23

   

   

   

20

   

Comprehensive income attributable to Schlumberger

$

1,908

   

   

$

1,672

   

   

$

5,230

   

   

$

4,359

   

See Notes to Consolidated Financial Statements

   

   

   

 

 4 


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

   

 

   

   

(Stated in millions)

      

   

   

   

   

   

Sept. 30, 2013

(Unaudited)

   

   

Dec. 31,

2012

   

   

   

ASSETS

   

   

   

   

   

   

   

Current Assets

   

   

   

   

   

   

   

Cash

$

3,149

   

   

$

1,905

   

Short-term investments

   

3,286

   

   

   

4,369

   

Receivables less allowance for doubtful accounts

   

   

   

   

   

   

   

(2013—$254; 2012—$202)

   

12,057

   

   

   

11,351

   

Inventories

   

4,895

   

   

   

4,785

   

Deferred taxes

   

278

   

   

   

343

   

Other current assets

   

1,428

   

   

   

1,403

   

   

   

25,093

   

   

   

24,156

   

Fixed Income Investments, held to maturity

   

363

   

   

   

245

   

Investments in Affiliated Companies

   

3,298

   

   

   

1,502

   

Fixed Assets less accumulated depreciation

   

14,828

   

   

   

14,780

   

Multiclient Seismic Data

   

650

   

   

   

518

   

Goodwill

   

14,623

   

   

   

14,585

   

Intangible Assets

   

4,732

   

   

   

4,802

   

Other Assets

   

1,536

   

   

   

959

   

   

$

65,123

   

   

$

61,547

   

LIABILITIES AND EQUITY

   

   

   

   

   

   

   

Current Liabilities

   

   

   

   

   

   

   

Accounts payable and accrued liabilities

$

8,366

   

   

$

8,453

   

Estimated liability for taxes on income

   

1,471

   

   

   

1,426

   

Long-term debt—current portion

   

1,876

   

   

   

1,163

   

Short-term borrowings

   

622

   

   

   

958

   

Dividends payable

   

418

   

   

   

368

   

   

   

12,753

   

   

   

12,368

   

Long-term Debt

   

9,916

   

   

   

9,509

   

Postretirement Benefits

   

1,833

   

   

   

2,169

   

Deferred Taxes

   

1,479

   

   

   

1,493

   

Other Liabilities

   

1,111

   

   

   

1,150

   

   

   

27,092

   

   

   

26,689

   

Equity

   

   

   

   

   

   

   

Common stock

   

12,108

   

   

   

11,912

   

Treasury stock

   

(7,208

)

   

   

(6,160

)

Retained earnings

   

36,711

   

   

   

32,887

   

Accumulated other comprehensive loss

   

(3,726

)

   

   

(3,888

)

Schlumberger stockholders’ equity

   

37,885

   

   

   

34,751

   

Noncontrolling interests

   

146

   

   

   

107

   

   

   

38,031

   

   

   

34,858

   

   

$

65,123

   

   

$

61,547

   

See Notes to Consolidated Financial Statements

   

   

   

 

 5 


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

   

 

   

   

(Stated in millions)

   

   

Nine Months Ended Sept. 30,

   

   

2013

   

   

2012

   

Cash flows from operating activities:

   

   

   

   

   

   

   

Net income

$

5,091

   

   

$

4,147

   

Less: Loss (income) from discontinued operations

   

69

   

   

   

(211

)

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

   

   

   

   

   

   

   

Depreciation and amortization (1)..................................................................................................

   

2,737

   

   

   

2,570

   

Non-cash charges

   

459

   

   

   

—  

   

Gain on formation of OneSubsea

   

(1,028

)

   

   

—  

   

Earnings of companies carried at equity, less dividends received

   

(46

)

   

   

(87

)

Deferred income taxes

   

16

   

   

   

(88

)

Stock-based compensation expense

   

255

   

   

   

251

   

Pension and other postretirement benefits expense

   

388

   

   

   

298

   

Pension and other postretirement benefits funding

   

(468

)

   

   

(462

)

Change in assets and liabilities: (2)

   

   

   

   

   

   

   

Increase in receivables

   

(1,292

)

   

   

(2,180

)

Increase in inventories

   

(96

)

   

   

(787

)

Decrease (increase) in other current assets

   

28

   

   

   

(392

)

Increase in other assets

   

(614

)

   

   

(104

)

Increase in accounts payable and accrued liabilities

   

189

   

   

   

340

   

Increase in liability for taxes on income

   

15

   

   

   

131

   

Increase (decrease) in other liabilities

   

2

   

   

   

(23

)

Other

   

233

   

   

   

33

   

NET CASH PROVIDED BY OPERATING ACTIVITIES

   

5,938

   

   

   

3,436

   

Cash flows from investing activities:

   

   

   

   

   

   

   

Capital expenditures

   

(2,753

)

   

   

(3,161

)

Multiclient seismic data capitalized

   

(300

)

   

   

(260

)

Business acquisitions, net of cash acquired

   

(544

)

   

   

(713

)

Payment for OneSubsea transaction

   

(600

)

   

   

—  

   

Sale of investments, net

   

963

   

   

   

221

   

Other

   

131

   

   

   

(124

)

NET CASH USED IN INVESTING ACTIVITIES

   

(3,103

)

   

   

(4,037

)

Cash flows from financing activities:

   

   

   

   

   

   

   

Dividends paid

   

(1,196

)

   

   

(1,067

)

Proceeds from employee stock purchase plan

   

270

   

   

   

247

   

Proceeds from exercise of stock options

   

145

   

   

   

139

   

Stock repurchase program

   

(1,526

)

   

   

(972

)

Proceeds from issuance of long-term debt

   

2,267

   

   

   

2,788

   

Repayment of long-term debt

   

(1,211

)

   

   

(1,718

)

Net (decrease) increase in short-term borrowings

   

(306

)

   

   

223

   

Other

   

3

   

   

   

15

   

NET CASH USED IN FINANCING ACTIVITIES

   

(1,554

)

   

   

(345

)

Cash flows from discontinued operations—operating activities

   

(2

)

   

   

76

   

Cash flows from discontinued operations—investing activities

   

(28

)

   

   

1,011

   

Cash flows from discontinued operations

   

(30

)

   

   

1,087

   

Net increase in cash before translation effect

   

1,251

   

   

   

141

   

Translation effect on cash

   

(7

)

   

   

6

   

Cash, beginning of period

   

1,905

   

   

   

1,705

   

Cash, end of period

$

3,149

   

   

$

1,852

   

 

(1)

Includes multiclient seismic data costs.

(2)

Net of the effect of business acquisitions and divestitures.

See Notes to Consolidated Financial Statements

   

 

 6 


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

   

 

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(Stated in millions)

   

   

Common Stock

   

   

   

   

   

Accumulated
Other
Comprehensive
Loss

   

   

   

   

   

Total

   

January 1, 2013—September 30, 2013

Issued

   

   

In Treasury

   

   

Retained
Earnings

   

   

   

   

Noncontrolling
Interests

   

   

Balance, January 1, 2013

$

11,912

   

   

$

(6,160

)

   

$

32,887

   

   

$

(3,888

)

   

$

107

   

   

$

34,858

   

Net income

   

   

   

   

   

   

   

   

   

5,068

   

   

   

   

   

   

   

23

   

   

   

5,091

   

Currency translation adjustments

   

   

   

   

   

   

   

   

   

   

   

   

   

(139

)

   

   

   

   

   

   

(139

)

Changes in unrealized gain on marketable securities

   

   

   

   

   

   

   

   

   

   

   

   

   

58

   

   

   

   

   

   

   

58

   

Changes in fair value of derivatives

   

   

   

   

   

   

   

   

   

   

   

   

   

(12

)

   

   

   

   

   

   

(12

)

Pension and other postretirement benefit plans

   

   

   

   

   

   

   

   

   

   

   

   

   

255

   

   

   

   

   

   

   

255

   

Shares sold to optionees, less shares exchanged

   

(31

)

   

   

176

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

145

   

Vesting of restricted stock

   

(48

)

   

   

48

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

—  

   

Shares issued under employee stock purchase plan

   

18

   

   

   

252

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

270

   

Stock repurchase program

   

   

   

   

   

(1,526

)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(1,526

)

Stock-based compensation expense

   

255

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

255

   

Dividends declared ($0.9375 per share)

   

   

   

   

   

   

   

   

   

(1,244

)

   

   

   

   

   

   

   

   

   

   

(1,244

)

Other

   

2

   

   

   

2

   

   

   

   

   

   

   

   

   

   

   

16

   

   

   

20

   

Balance, September 30, 2013

$

12,108

   

   

$

(7,208

)

   

$

36,711

   

   

$

(3,726

)

   

$

146

   

   

$

38,031

   

   

 

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(Stated in millions)

   

   

Common Stock

   

   

   

   

   

Accumulated
Other
Comprehensive
Loss

   

   

   

   

   

   

   

January 1, 2012—September 30, 2012

Issued

   

   

In Treasury

   

   

Retained
Earnings

   

   

   

   

Noncontrolling
Interests

   

   

Total

   

Balance, January 1, 2012

$

11,639

   

   

$

(5,679

)

   

$

28,860

   

   

$

(3,557

)

   

$

129

   

   

$

31,392

   

Net income

   

   

   

   

   

   

   

   

   

4,127

   

   

   

   

   

   

   

20

   

   

   

4,147

   

Currency translation adjustments

   

   

   

   

   

   

   

   

   

   

   

   

   

40

   

   

   

   

   

   

   

40

   

Changes in fair value of derivatives

   

   

   

   

   

   

   

   

   

   

   

   

   

23

   

   

   

   

   

   

   

23

   

Pension and other postretirement benefit plans

   

   

   

   

   

   

   

   

   

   

   

   

   

164

   

   

   

   

   

   

   

164

   

Shares sold to optionees, less shares exchanged

   

(63

)

   

   

202

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

139

   

Vesting of restricted stock

   

(16

)

   

   

16

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

—  

   

Shares issued under employee stock purchase plan

   

16

   

   

   

231

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

247

   

Stock repurchase program

   

   

   

   

   

(972

)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(972

)

Stock-based compensation expense

   

251

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

251

   

Dividends declared ($0.825 per share)

   

   

   

   

   

   

   

   

   

(1,098

)

   

   

   

   

   

   

   

   

   

   

(1,098

)

Other

   

13

   

   

   

2

   

   

   

   

   

   

   

5

   

   

   

(42

)

   

   

(22

)

Balance, September 30, 2012

$

11,840

   

   

$

(6,200

)

   

$

31,889

   

   

$

(3,325

)

   

$

107

   

   

$

34,311

   

SHARES OF COMMON STOCK

(Unaudited)

   

 

   

   

   

   

   

   

(Stated in millions)

   

   

Issued

   

   

In Treasury

   

   

Shares
Outstanding

   

Balance, January 1, 2013

   

1,434

   

   

   

(106

)

   

   

1,328

   

Shares sold to optionees, less shares exchanged

   

—  

   

   

   

3

   

   

   

3

   

Vesting of restricted stock

   

—  

   

   

   

1

   

   

   

1

   

Shares issued under employee stock purchase plan

   

—  

   

   

   

4

   

   

   

4

   

Stock repurchase program

   

—  

   

   

   

(19

)

   

   

(19

)

Balance, September 30, 2013

   

1,434

   

   

   

(117

)

   

   

1,317

   

See Notes to Consolidated Financial Statements

   

   

   

 

 7 


SCHLUMBERGER LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

   

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Schlumberger Limited and its subsidiaries (“Schlumberger”) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Schlumberger management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements. All intercompany transactions and balances have been eliminated in consolidation. Operating results for the nine-month period ended September 30, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013. The December 31, 2012 balance sheet information has been derived from the Schlumberger 2012 financial statements. For further information, refer to the Consolidated Financial Statements and notes thereto included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on January 31, 2013.

   

2. Charges and Credits

Schlumberger recorded the following charges and credits during the first nine months of 2013 and 2012:

2013   

Second quarter 2013:

 

Schlumberger recorded a pretax and after-tax gain of $1.028 billion as a result of the deconsolidation of its subsea business in connection with the formation of the OneSubsea joint venture with Cameron International Corporation (“Cameron”). Refer to Note 4 – Acquisitions for further details.

 

Schlumberger recorded a $222 million pretax ($203 million after-tax) impairment charge relating to an investment in a company involved in developing drilling-related technology and a $142 million pretax and after-tax impairment charge relating to an investment in a contract drilling business.

The following is a summary of the charges and credits recorded during the second quarter of 2013:

   

 

   

(Stated in millions)

   

   

   

   

   

   

   

   

   

   

   

   

   

Consolidated Statement

of Income Classification

   

Pretax

   

   

Tax

   

   

Net

   

   

Gain on formation of OneSubsea joint venture

$

(1,028

)

   

$

—  

   

   

$

(1,028

)

   

Gain on formation of OneSubsea

Impairment of equity-method investments

   

364

   

   

   

19

   

   

   

345

   

   

Impairment & other

   

$

(664

)

   

$

19

   

   

$

(683

)

   

   

First quarter 2013:

 

Although the functional currency of Schlumberger’s operations in Venezuela is the US dollar, a portion of the transactions are denominated in local currency. In February 2013, Venezuela’s currency was devalued from the prior exchange rate of 4.3 Bolivar Fuertes per US dollar to 6.3 Bolivar Fuertes per US dollar. As a result of this devaluation, Schlumberger recorded a pretax and after-tax foreign currency loss of $92 million during the first quarter of 2013.

The following is a summary of the charges and credits recorded during the first nine months of 2013:

   

 

   

(Stated in millions)

   

   

   

   

   

   

   

   

   

   

   

   

   

Consolidated Statement

of Income Classification

   

Pretax

   

   

Tax

   

   

Net

   

   

Gain on formation of OneSubsea joint venture

$

(1,028

)

   

$

—  

   

   

$

(1,028

)

   

Gain on formation of OneSubsea

Impairment of equity-method investments

   

364

   

   

   

19

   

   

   

345

   

   

Impairment & other

Currency devaluation loss in Venezuela

   

92

   

   

   

—  

   

   

   

92

   

   

Impairment & other

   

$

(572

)

   

$

19

   

   

$

(591

)

   

   

 

 8 


2012   

Schlumberger recorded the following merger and integration-related charges in connection with its 2010 acquisitions of Smith International, Inc. and Geoservices.

These amounts are classified in Merger & integration in the Consolidated Statement of Income.

   

 

   

(Stated in millions)

   

   

Pretax

   

   

Tax

   

   

Net

   

First Quarter

$

14

   

   

$

1

   

   

$

13

   

Second Quarter

   

22

   

   

   

1

   

   

   

21

   

Third Quarter

   

32

   

   

   

4

   

   

   

28

   

   

$

68

   

   

$

6

   

   

$

62

   

   

   

3. Earnings Per Share

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

   

 

   

   

   

   

(Stated in millions, except per share amounts)

   

   

Third Quarter 2013

   

   

Third Quarter 2012

   

   

Schlumberger
Income from
Continuing
Operations

   

   

Average
Shares
Outstanding

   

   

Earnings
per Share
from
Continuing
Operations

   

   

Schlumberger
Income from
Continuing
Operations

   

   

Average
Shares
Outstanding

   

   

Earnings
per Share
from
Continuing
Operations

   

Basic

$

1,715

   

   

   

1,322

   

   

$

1.30

   

   

$

1,359

   

   

   

1,328

   

   

$

1.02

   

Assumed exercise of stock options

   

—  

   

   

   

7

   

   

   

   

   

   

   

—  

   

   

   

5

   

   

   

   

   

Unvested restricted stock

   

—  

   

   

   

4

   

   

   

   

   

   

   

—  

   

   

   

3

   

   

   

   

   

Diluted

$

1,715

   

   

   

1,333

   

   

$

1.29

   

   

$

1,359

   

   

   

1,336

   

   

$

1.02

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

 

   

Nine Months 2013

   

   

Nine Months 2012

   

   

Schlumberger
Income from
Continuing
Operations

   

   

Average
Shares
Outstanding

   

   

Earnings
per Share
from
Continuing
Operations

   

   

Schlumberger
Income from
Continuing
Operations

   

   

Average
Shares
Outstanding

   

   

Earnings
per Share
from
Continuing
Operations

   

Basic

$

5,137

   

   

   

1,326

   

   

$

3.87

   

   

$

3,916

   

   

   

1,331

   

   

$

2.94

   

Assumed exercise of stock options

   

—  

   

   

   

6

   

   

   

   

   

   

   

—  

   

   

   

6

   

   

   

   

   

Unvested restricted stock

   

—  

   

   

   

4

   

   

   

   

   

   

   

—  

   

   

   

3

   

   

   

   

   

Diluted

$

5,137

   

   

   

1,336

   

   

$

3.84

   

   

$

3,916

   

   

   

1,340

   

   

$

2.92

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

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

   

 

   

   

(Stated in millions)

   

   

2013

   

      

2012

   

Third Quarter

   

13

      

      

   

21

      

Nine Months

   

13

      

      

   

21

      

   

   

4. Acquisitions

On June 30, 2013, Schlumberger and Cameron completed the formation of OneSubsea, a joint venture to manufacture and develop products, systems and services for the subsea oil and gas market. Schlumberger and Cameron each contributed all of their respective subsea businesses to the joint venture and Schlumberger made a $600 million cash payment to Cameron. Schlumberger owns 40% of OneSubsea and accounts for this investment under the equity method. Schlumberger recognized a pretax and after-tax gain of $1.028 billion, which is classified as Gain on formation of OneSubsea in the Consolidated Statement of Income, as a result of the deconsolidation of its subsea business. This gain is equal to the difference between the fair value of the Schlumberger subsea business, which was determined based on the present value of its estimated future cash flows, and its carrying value at the time of closing.

 

 9 


During the first nine months of 2013, Schlumberger made certain other acquisitions and investments, none of which were significant on an individual basis, for cash payments, net of cash acquired, of $544 million.

   

5. Inventories

A summary of inventories follows:

   

 

   

(Stated in millions)

   

   

Sept. 30,
2013

   

      

Dec. 31,
2012

   

Raw materials & field materials

$

2,642

      

      

$

2,519

      

Work in process

   

296

      

      

   

349

      

Finished goods

   

1,957

      

      

   

1,917

      

   

$

4,895

      

      

$

4,785

      

   

   

   

6. Fixed Assets

A summary of fixed assets follows:

   

 

   

(Stated in millions)

   

   

Sept. 30,
2013

   

      

Dec. 31,
2012

   

Property, plant & equipment

$

34,571

      

      

$

33,168

      

Less: Accumulated depreciation

   

19,743

      

      

   

18,388

      

   

$

14,828

      

      

$

14,780

      

Depreciation expense relating to fixed assets was as follows:

   

 

   

(Stated in millions)

   

   

2013

   

      

2012

   

Third Quarter

$

788

      

      

$

730

      

Nine Months

$

2,324

      

      

$

2,144

      

   

   

7. Multiclient Seismic Data

The change in the carrying amount of multiclient seismic data for the nine months ended September 30, 2013 was as follows:

   

 

   

(Stated in millions)

   

Balance at December 31, 2012

$

518

   

Capitalized in period

   

300

   

Charged to expense

   

(168

)

Balance at September 30, 2013

$

650

   

   

   

 

 10 


8. Goodwill

The changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2013 were as follows:

   

 

   

(Stated in millions)

   

   

Reservoir
Characterization

   

   

Drilling

   

   

Production

   

   

Total

   

Balance at December 31, 2012

$

3,760

   

   

$

8,337

   

   

$

2,488

   

   

$

14,585

   

Acquisitions

   

4

   

   

   

3

   

   

   

247

   

   

   

254

   

Divestiture of business

   

—  

   

   

   

—  

   

   

   

(150

)

   

   

(150

)

Impact of changes in exchange rates

   

(24

)

   

   

(23

)

   

   

(19

)

   

   

(66

)

Balance at September 30, 2013

$

3,740

   

   

$

8,317

   

   

$

2,566

   

   

$

14,623

   

   

   

9. Intangible Assets

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

   

 

   

   

   

   

      

   

   

   

      

   

   

   

      

   

   

   

      

   

(Stated in millions)

      

   

Sept. 30, 2013

   

      

Dec. 31, 2012

   

   

Gross
Book Value

   

      

Accumulated
Amortization

   

      

Net Book
Value

   

      

Gross
Book Value

   

      

Accumulated
Amortization

   

      

Net Book
Value

   

Technology/Technical Know-How

$

1,958

      

      

$

563

      

      

$

1,395

      

      

$

1,967

      

      

$

474

      

      

$

1,493

      

Tradenames

   

1,647

      

      

   

240

      

      

   

1,407

      

      

   

1,647

      

      

   

188

      

      

   

1,459

      

Customer Relationships

   

2,235

      

      

   

381

      

      

   

1,854

      

      

   

2,115

      

      

   

312

      

      

   

1,803

      

Other

   

407

      

      

   

331

      

      

   

76

      

      

   

369

      

      

   

322

      

      

   

47

      

   

$

6,247

      

      

$

1,515

      

      

$

4,732

      

      

$

6,098

      

      

$

1,296

      

      

$

4,802

      

Amortization expense charged to income was as follows:

   

 

   

(Stated in millions)

   

   

2013

   

      

2012

   

Third Quarter

$

80

      

      

$

84

      

Nine Months

$

244

      

      

$

245

      

The weighted average amortization period for all intangible assets is approximately 20 years.

Based on the net book value of intangible assets at September 30, 2013, amortization charged to income for the subsequent five years is estimated to be: remainder of 2013—$89 million; 2014—$349 million; 2015—$339 million; 2016—$321 million; 2017—$307 million; and 2018—$300 million.

   

10. Long-term Debt

A summary of Long-term Debt follows:

   

 

   

(Stated in millions)

   

   

Sept. 30,
2013

   

      

Dec. 31
2012

   

3.30% Senior Notes due 2021

$

1,596

      

      

$

1,595

      

4.50% Guaranteed Notes due 2014

   

—  

      

      

   

1,324

      

2.75% Guaranteed Notes due 2015

   

1,347

      

      

   

1,318

      

1.95% Senior Notes due 2016

   

1,099

      

      

   

1,099

      

4.20% Senior Notes due 2021

   

1,099

      

      

   

1,099

      

1.25% Senior Notes due 2017

   

999

      

      

   

999

      

2.40% Senior Notes due 2022

   

998

      

      

   

998

      

2.65% Senior Notes due 2016

   

500

      

      

   

500

      

Floating Rate Senior Notes due 2014

   

—  

      

      

   

300

      

Commercial paper borrowings

   

1,700

      

      

   

—  

      

Other

   

578

      

      

   

277

      

   

$

9,916

      

      

$

9,509

      

 

 11 


The estimated fair value of Schlumberger’s Long-term Debt at September 30, 2013 and December 31, 2012, based on quoted market prices, was $10.0 billion and $9.9 billion, respectively.

   

11. Derivative Instruments and Hedging Activities

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

Foreign Currency Exchange Rate Risk

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

Schlumberger is exposed to risks on future cash flows to the extent that local currency expenses exceed revenues denominated in local currency that are other than the functional currency. In addition, Schlumberger is also exposed to risks on future cash flows relating to certain of its long-term debt which is denominated in currencies other than the functional currency. Schlumberger uses foreign currency forward contracts and foreign currency options to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in Accumulated Other Comprehensive Loss. Amounts recorded in Accumulated Other Comprehensive Loss are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of hedging instruments, if any, is recorded directly to earnings.

At September 30, 2013, Schlumberger recognized a cumulative net $18 million gain in Equity relating to revaluation of foreign currency forward contracts and foreign currency options designated as cash flow hedges, the majority of which is expected to be reclassified into earnings within the next 12 months.

Schlumberger is also exposed to changes in the fair value of assets and liabilities which are denominated in currencies other than the functional currency. Schlumberger uses foreign currency forward contracts and foreign currency options to hedge this exposure as it relates to certain currencies. These contracts are accounted for as fair value hedges with the fair value of the contracts recorded on the Consolidated Balance Sheet and changes in the fair value recognized in the Consolidated Statement of Income along with the change in fair value of the hedged item.

At September 30, 2013, contracts were outstanding for the US dollar equivalent of $6.4 billion in various foreign currencies, of which $3.2 billion related to hedges of debt denominated in currencies other than the functional currency.

   

Interest Rate Risk

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

At September 30, 2013, Schlumberger had fixed rate debt aggregating $9.0 billion and variable rate debt aggregating $3.4 billion.

Short-term investments and Fixed income investments, held to maturity, totaled $3.6 billion at September 30, 2013, and were comprised primarily of money market funds, eurodollar time deposits, certificates of deposit, commercial paper, euro notes and Eurobonds, and were substantially all denominated in US dollars. The carrying value of these investments approximated fair value, which was estimated using quoted market prices for those or similar investments.

 

 12 


The fair values of outstanding derivative instruments are summarized as follows:

   

 

   

(Stated in millions)

   

      

   

   

Fair Value of Derivatives

   

      

Consolidated Balance Sheet Classification

   

Sept. 30,
2013

   

      

Dec. 31,
2012

   

      

   

Derivative Assets

   

   

   

      

   

   

   

      

   

Derivatives designated as hedges:

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

66

      

      

$

26

   

      

Other current assets

Foreign exchange contracts

   

3

      

      

   

22

   

      

Other Assets

Interest rate swaps

   

—  

      

      

   

2

   

      

Other Assets

   

$

69

      

      

$

50

   

      

   

Derivatives not designated as hedges:

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

12

      

      

$

10

   

      

Other current assets

Foreign exchange contracts

   

5

      

      

   

6

   

      

Other Assets

   

$

17

      

      

$

16

   

      

   

   

$

86

      

      

$

66

   

      

   

Derivative Liabilities

   

   

   

      

   

   

   

      

   

Derivatives designated as hedges:

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

12

      

      

$

80

   

      

Accounts payable and accrued liabilities

Foreign exchange contracts

   

3

      

      

   

19

   

      

Other Liabilities

   

$

15

      

      

$

99

   

      

   

Derivatives not designated as hedges:

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

6

      

      

$

3

   

      

Accounts payable and accrued liabilities

   

$

21

      

      

$

102

   

      

   

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

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

   

 

   

(Stated in millions)

   

      

   

   

Gain (Loss) Recognized in Income

   

      

   

   

Third Quarter

   

      

Nine Months

   

      

Consolidated Statement

of Income Classification

   

2013

   

      

2012

   

      

2013

   

      

2012

   

      

Derivatives designated as fair value hedges:

   

   

   

      

   

   

   

      

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

—  

      

      

$

(58

      

$

—  

      

      

$

(58

)

      

Cost of revenue

Interest rate swaps

   

—  

      

      

   

1

      

      

   

(2

      

   

2

   

      

Interest expense

   

$

—  

      

      

$

(57

      

$

(2

      

$

(56

)

      

   

Derivatives not designated as hedges:

   

   

   

      

   

   

   

      

   

   

   

      

   

   

   

      

   

Foreign exchange contracts

$

31

   

      

$

(22

      

$

8

   

      

$

10

   

      

Cost of revenue

   

$

31

   

      

$

(22

      

$

8

   

      

$

10

   

      

   

   

The effect of derivative instruments in cash flow hedging relationships on income and Accumulated other Comprehensive Loss (AOCL) was as follows:

   

 

   

(Stated in millions)

   

   

   

   

Gain (Loss) Reclassified from
AOCL into Income

   

   

   

   

Third Quarter

   

   

Nine Months

   

   

Consolidated Statement

of Income Classification

   

2013

   

   

2012

   

   

2013

   

   

2012

   

   

Foreign exchange contracts

$

33

      

   

$

97

      

   

$

(8

   

$

(48

   

Cost of revenue

Foreign exchange contracts

   

(3

   

   

(5

   

   

(7

   

   

(10

   

Research & engineering

   

$

30

      

   

$

92

   

   

$

(15

   

$

(58

   

   

 

 13 


   

 

   

(Stated in millions)

   

   

   

   

Gain (Loss) Recognized in AOCL

   

   

   

   

Third Quarter

   

      

Nine Months

   

   

   

   

2013

   

      

2012

   

      

2013

   

   

2012

   

   

   

Foreign exchange contracts

$

76

      

      

$

142

      

      

$

(27

   

$

(35

)

   

   

   

   

12. Income Tax

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

   

 

   

(Stated in millions)

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

United States

$

494

   

   

$

455

   

   

$

1,425

   

   

$

1,578

   

Outside United States

   

1,737

   

   

   

1,343

   

   

   

5,096

   

   

   

3,626

   

   

$

2,231

   

   

$

1,798

   

   

$

6,521

   

   

$

5,204

   

There were no charges or credits in the third quarter of 2013.  Schlumberger recorded pretax charges of $32 million ($20 million in the US and $12 million outside of the US) during the third quarter of 2012.

Schlumberger recorded net pretax credits of $572 million during the nine months ended September 30, 2013 ($53 million of charges in the US and $625 million of net credits outside of the US) and pretax charges of $68 million during the nine months ended September 30, 2012 ($41 million in the US and $27 million outside the US).  These charges and credits are included in the table above and are more fully described in Note 2 — Charges and Credits.

   

   

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

   

 

   

(Stated in millions)

   

   

Sept. 30,
2013

   

   

Dec. 31,
2012

   

Postretirement benefits, net

$

486

      

   

$

543

      

Intangible assets

   

(1,464

   

   

(1,490

Investments in non-US subsidiaries

   

(317

   

   

(317

Other, net

   

94

      

   

   

114

      

   

$

(1,201

   

$

(1,150

The above deferred tax balances at September 30, 2013 and December 31, 2012 were net of valuation allowances relating to net operating losses in certain countries of $237 million and $256 million, respectively.

 

 14 


The components of consolidated Taxes on income were as follows:

   

 

   

(Stated in millions)

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Current:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

United States — Federal

$

116

   

   

$

195

   

   

$

435

   

   

$

556

   

United States — State

   

16

   

   

   

16

   

   

   

51

   

   

   

51

   

Outside United States

   

313

   

   

   

283

   

   

   

859

   

   

   

749

   

   

$

445

   

   

$

494

   

   

$

1,345

   

   

$

1,356

   

Deferred:

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

United States — Federal

$

36

   

   

$

(66

)

   

$

12

   

   

$

(91

)

United States — State

   

2

   

   

   

(2

)

   

   

(1

)

   

   

(4

)

Outside United States

   

26

   

   

   

10

   

   

   

28

   

   

   

3

   

Valuation allowance

   

(3

)

   

   

—  

   

   

   

(23

)

   

   

4

   

   

$

61

   

   

$

(58

)

   

$

16

   

   

$

(88

)

   

$

506

   

   

$

436

   

   

$

1,361

   

   

$

1,268

   

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

   

 

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

US federal statutory rate

   

35

%

   

      

35

%

   

      

35

%

   

      

35

%

US state income taxes

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

1

   

Non-US income taxed at different rates

   

(12

)

   

   

(10

)

   

   

(12

)

   

   

(11

)

Charges and credits (See Note 2)

   

—  

   

   

   

—  

   

   

   

(2

)

   

   

—  

   

Other

   

—  

   

   

   

(1

)

   

   

—  

   

   

   

(1

)

Effective income tax rate

   

23

%

   

   

24

%

   

   

21

%

   

   

24

%

   

   

13. Contingencies

In 2009, Schlumberger learned that United States officials began a grand jury investigation and an associated regulatory inquiry, both related to certain Schlumberger operations in specified countries that are subject to United States trade and economic sanctions. Governmental agencies and authorities have a broad range of civil and criminal penalties that they may seek to impose for violations of trade and economic sanction laws including, but not limited to, disgorgement, fines, penalties and modifications to business practices. In recent years, these agencies and authorities have obtained a wide range of penalties in settlements with companies arising from trade and economic sanction investigations, including in some cases fines and other penalties in the tens and hundreds of millions of dollars. Schlumberger is cooperating with the governmental authorities and cannot currently predict the outcome or estimate the possible impact of the ultimate resolution of these matters.

On April 20, 2010, a fire and explosion occurred onboard the semisubmersible drilling rig Deepwater Horizon, owned by Transocean Ltd. and under contract to a subsidiary of BP plc. Pursuant to a contract between M-I SWACO and BP, M-I SWACO provided certain services under the direction of BP. A number of legal actions, certain of which named an M-I SWACO entity as a defendant, were filed in connection with the Deepwater Horizon incident. Many of these claims were consolidated into multidistrict litigation pending in federal court (the “MDL”). During the first quarter of 2013, the federal court entered its order dismissing all claims against M-I SWACO that were consolidated as part of the MDL.

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

   

 

 15 


14. Segment Information

   

   

 

   

(Stated in millions)

   

   

Third Quarter 2013

   

   

Third Quarter 2012

   

   

Revenue

   

   

Income
before
taxes

   

   

Revenue

   

   

Income
before
taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Reservoir Characterization

$

3,232

   

   

$

983

   

   

$

2,835

   

   

$

799

   

Drilling

   

4,415

   

   

   

894

   

   

   

4,035

   

   

   

727

   

Production

   

4,024

   

   

   

707

   

   

   

3,655

   

   

   

537

   

Eliminations & other

   

(63

)

   

   

(88

)

   

   

(27

)

   

   

21

   

   

   

11,608

   

   

   

2,496

   

   

   

10,498

   

   

   

2,084

   

Corporate & other

   

—  

   

   

   

(179

)

   

   

—  

   

   

   

(177

)

Interest income (1)

   

—  

   

   

   

6

   

   

   

—  

   

   

   

8

   

Interest expense (2) 

   

—  

   

   

   

(92

)

   

   

—  

   

   

   

(85

)

Charges and credits (see Note 2)

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

(32

)

   

$

11,608

   

   

$

2,231

   

   

$

10,498

   

   

$

1,798

   

 

(1) Excludes interest income included in the segment results ($3 million in 2013; $— million in 2012).

 

(2) Excludes interest expense included in the segment results ($6 million in 2013; $3 million in 2012).

   

 

   

(Stated in millions)

   

   

Nine Months 2013

   

   

Nine Months 2012

   

   

Revenue

   

   

Income
before
taxes

   

   

Revenue

   

   

Income
before
taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Reservoir Characterization

$

8,996

   

   

$

2,616

   

   

$

8,066

   

   

$

2,183

   

Drilling

   

12,820

   

   

   

2,429

   

   

   

11,772

   

   

   

2,102

   

Production

   

11,708

   

   

   

1,888

   

   

   

10,896

   

   

   

1,746

   

Eliminations & other

   

(164

)

   

   

(193

)

   

   

(86

)

   

   

(26

)

   

   

33,360

   

   

   

6,740

   

   

   

30,648

   

   

   

6,005

   

Corporate & other

   

—  

   

   

   

(529

)

   

   

—  

   

   

   

(516

)

Interest income (1)

   

—  

   

   

   

15

   

   

   

—  

   

   

   

24

   

Interest expense (2)

   

—  

   

   

   

(277

)

   

   

—  

   

   

   

(241

)

Charges and credits (see Note 2)

   

—  

   

   

   

572

   

   

   

—  

   

   

   

(68

)

   

$

33,360

   

   

$

6,521

   

   

$

30,648

   

   

$

5,204

   

 

(1) Excludes interest income included in the segment results ($5 million in 2013; $— million in 2012).

 

(2) Excludes interest expense included in the segment results ($17 million in 2013; $5 million in 2012).

   

15. Pension and Other Postretirement Benefits

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

   

 

   

(Stated in millions)

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

   

US

   

   

Int’l

   

   

US

   

   

Int’l

   

   

US

   

   

Int’l

   

   

US

   

   

Int’l

   

Service cost — benefits earned during period

$

19

      

   

$

28

      

   

$

17

      

   

$

21

      

   

$

60

      

   

$

95

      

   

$

51

      

   

$

63

      

Interest cost on projected benefit obligation

   

38

      

   

   

65

      

   

   

38

      

   

   

62

      

   

   

113

      

   

   

189

      

   

   

114

      

   

   

178

      

Expected return on plan assets

   

(47

   

   

(88

   

   

(46

   

   

(82

   

   

(150

   

   

(288

   

   

(139

   

   

(242

Amortization of prior service cost

   

3

      

   

   

29

      

   

   

3

      

   

   

30

      

   

   

9

      

   

   

88

      

   

   

9

      

   

   

90

      

Amortization of net loss

   

28

      

   

   

42

      

   

   

26

      

   

   

22

      

   

   

91

      

   

   

116

      

   

   

72

      

   

   

52

      

   

$

41

      

   

$

76

      

   

$

38

      

   

$

53

      

   

$

123

      

   

$

200

      

   

$

107

      

   

$

141

      

 

 16 


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

   

 

   

(Stated in millions)

   

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Service cost — benefits earned during period

$

12

      

   

$

7

      

   

$

36

      

   

$

21

      

Interest cost on accumulated postretirement benefit obligation

   

14

      

   

   

14

      

   

   

42

      

   

   

44

      

Expected return on plan assets

   

(9

   

   

(8

   

   

(28

   

   

(22

Amortization of prior service cost

   

(1

   

   

(2

   

   

(3

   

   

(6

Amortization of net loss

   

2

      

   

   

3

      

   

   

17

      

   

   

13

      

   

$

18

      

   

$

14

      

   

$

64

      

   

$

50

      

   

   

16. Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss consists of the following:

   

 

   

(Stated in millions)

   

   

Currency
Translation
Adjustments

   

   

Fair Value of
Derivatives

   

   

Pension and Other
Postretirement
Benefit Plans

   

   

Unrealized Gains
on Marketable
Securities

   

      

Total

   

Balance, January 1, 2013

$

(918

   

$

30

      

   

$

(3,141

   

$

141

      

      

$

(3,888

Other comprehensive income (loss) before reclassifications

   

(139

)

   

   

(27

)

   

   

(23

)

   

   

58

   

      

   

(131

Amounts reclassified from accumulated other comprehensive loss

   

—  

   

   

   

15

   

   

   

318

   

   

   

—  

      

      

   

333

      

Income taxes

   

—  

      

   

   

—  

      

   

   

(40

)

   

   

—  

      

      

   

(40

Net other comprehensive income (loss)

   

(139

   

   

(12

   

   

255

      

   

   

58

      

      

   

162

   

Balance, September 30, 2013

$

(1,057

   

$

18

   

   

$

(2,886

   

$

199

      

      

$

(3,726

   

 

   

(Stated in millions)

   

   

Currency
Translation
Adjustments

   

   

Fair Value of
Derivatives

   

   

Pension and Other
Postretirement
Benefit Plans

   

   

Unrealized Gains
on Marketable
Securities

   

      

Total

   

Balance, January 1, 2012

$

(993

   

$

(26

   

$

(2,538

   

$

—  

      

      

$

(3,557

Other comprehensive income (loss) before reclassifications

   

45

      

   

   

(35

   

   

(35

   

   

—  

      

      

   

(25

Amounts reclassified from accumulated other comprehensive loss

   

—  

      

   

   

58

      

   

   

230

      

   

   

—  

      

      

   

288

      

Income taxes

   

—  

      

   

   

—  

      

   

   

(31

   

   

—  

      

      

   

(31

Net other comprehensive income

   

45

      

   

   

23

      

   

   

164

      

   

   

—  

      

      

   

232

      

Balance, September 30, 2012

$

(948

   

$

(3

   

$

(2,374

   

$

—  

      

      

$

(3,325

   

   

17. Discontinued Operations

During the second quarter of 2013, Schlumberger completed the wind down of its operations in Iran and, therefore, has classified the historical results of this business as a discontinued operation.

During the second quarter of 2012, Schlumberger sold its Wilson distribution business to National Oilwell Varco Inc. (“NOV”) for $906 million in cash. During the third quarter of 2012, Schlumberger completed the sale of its 56% interest in CE Franklin Ltd. to NOV for $122 million in cash. As Wilson and CE Franklin comprised Schlumberger’s entire Distribution segment, the results of this segment were classified as discontinued operations in the Consolidated Statement of Income.

 

 17 


The following table summarizes the results of these discontinued operations (in millions):

   

 

   

Third Quarter

   

   

Nine Months

   

   

2013

   

      

2012

   

   

2013

   

   

2012

   

Revenue

$

—  

      

      

$

110

      

   

$

102

      

   

$

1,308

      

Income (loss) before taxes

$

—  

      

      

$

59

      

   

$

(63

   

$

221

      

Tax expense

   

—  

      

      

   

(6

   

   

(6

   

   

(33

Net income attributable to noncontrolling interests

   

—  

      

      

   

—  

      

   

   

—  

      

   

   

(5

Gain on divestiture, net of tax

   

—  

      

      

   

12

      

   

   

—  

      

   

   

28

      

Income (loss) from discontinued operations

$

—  

      

      

$

65

      

   

$

(69

   

$

211

      

   

   

   

 

 18 


Item 2.

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

Third Quarter 2013 Compared to Second Quarter 2013

Product Groups

   

 

   

(Stated in millions)

   

   

Third Quarter 2013

   

   

Second Quarter 2013

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Reservoir Characterization

$

3,232

      

   

$

983

      

   

$

3,014

      

   

$

908

      

Drilling

   

4,415

      

   

   

894

      

   

   

4,292

      

   

   

804

      

Production

   

4,024

      

   

   

707

      

   

   

3,926

      

   

   

625

      

Eliminations & other

   

(63

   

   

(88

   

   

(50

   

   

(59

   

   

11,608

      

   

   

2,496

      

   

   

11,182

      

   

   

2,278

      

Corporate & other

   

—  

      

   

   

(179

   

   

—  

      

   

   

(181

Interest income (1)

   

—  

      

   

   

6

      

   

   

—  

      

   

   

4

      

Interest expense (1)

   

—  

      

   

   

(92

   

   

—  

      

   

   

(92

Charges and credits

   

—  

      

   

   

—  

      

   

   

—  

      

   

   

664

      

   

$

11,608

      

   

$

2,231

      

   

$

11,182

      

   

$

2,673

      

   

Geographic Areas

   

 

   

(Stated in millions)

   

   

Third Quarter 2013

   

   

Second Quarter 2013

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

North America

$

3,602

      

   

$

730

      

   

$

3,357

      

   

$

662

      

Latin America

   

1,934

      

   

   

399

      

   

   

1,913

      

   

   

394

      

Europe/CIS/Africa

   

3,178

      

   

   

714

      

   

   

3,125

      

   

   

643

      

Middle East & Asia

   

2,801

      

   

   

730

      

   

   

2,667

      

   

   

655

      

Eliminations & other

   

93

      

   

   

(77

   

   

120

      

   

   

(76

   

   

11,608

      

   

   

2,496

      

   

   

11,182

      

   

   

2,278

      

Corporate & other

   

—  

      

   

   

(179

   

   

—  

      

   

   

(181

Interest income (1) 

   

—  

      

   

   

6

      

   

   

—  

      

   

   

4

      

Interest expense (1)

   

—  

      

   

   

(92

   

   

—  

      

   

   

(92

Charges and credits

   

—  

      

   

   

—  

      

   

   

—  

      

   

   

664

      

   

$

11,608

      

   

$

2,231

      

   

$

11,182

      

   

$

2,673

      

 

(1)

Excludes interest income and interest expense included in the Product Group and Geographical Area results.

Pretax operating income represents the segments’ income before taxes and noncontrolling interests. The pretax operating income excludes such items as corporate expenses and interest income and interest expense not allocated to the segments, as well as the charges and credits described in detail in Note 2 to the Consolidated Financial Statements, interest on postretirement medical benefits, stock-based compensation costs and amortization expense associated with intangible assets recorded as a result of Schlumberger’s 2010 acquisition of Smith.

   

   

OILFIELD SERVICES

   

Third-quarter revenue of $11.61 billion was up 4% sequentially with International Area revenue of $7.91 billion growing $209 million, or 3% sequentially, while North America Area revenue of $3.60 billion increased $245 million, or 7% sequentially.  

   

Reservoir Characterization Group revenue of $3.23 billion grew 7% while Drilling Group revenue of $4.41 billion increased 3%.  These increases were due to strong exploration and drilling activity, both offshore and in key international land markets that benefited Wireline, Testing Services, Drilling & Measurements and M-I SWACO Technologies.  WesternGeco revenue also increased from improved global marine vessel activity leading to high asset utilization during the quarter.  Production Group revenue of $4.02 billion

 

 19 


grew 3% despite the transfer of the Schlumberger subsea business at the end of the second quarter to OneSubsea, a Cameron/Schlumberger joint venture.  Excluding this effect, the Production Group revenue grew 6% sequentially mainly from strong results in Well Services, Completions & Artificial Lift Technologies and Schlumberger Production Management (SPM) projects. The seasonal rebound in Western Canada following the spring break-up accounted for the majority of the sequential increase in Well Services activity with a significant amount also coming from improved efficiency in US land hydraulic fracturing services that enabled deployment of four additional fleets from existing equipment despite continued pricing weakness.

   

Geographically, North America led the increase with revenue of $3.60 billion growing 7%. The performance in North America was driven by the offshore business setting a new high for quarterly revenue, Western Canada land rebounding from the seasonal spring break-up in the previous quarter, and US land being up from improved efficiency, growing new technology penetration, and market share gains.  Middle East & Asia revenue of $2.80 billion increased 5%, mainly from continued growth across a diversified portfolio of projects and activities in Saudi Arabia and Iraq, while high growth rates were posted in the United Arab Emirates and Qatar.  Strong WesternGeco marine vessel activity in the Brunei, Malaysia & Philippines and Indonesia GeoMarkets, and increased land drilling and stimulation activities in China also contributed to the strong results.  Europe/CIS/Africa revenue of $3.18 billion increased 2% from high WesternGeco marine vessel activity in the North Sea and Equatorial Guinea and peak summer drilling and exploration activity in Russia and Central Asia, while Angola and North Africa activity continued to be subdued by project delays.  Europe/CIS/Africa revenue for the third quarter reflects the absence of the results of the subsea business that was transferred to the OneSubsea joint venture in the second quarter of 2013.  Excluding the effect of this business transfer, the revenue for Europe/CIS/Africa grew 5%.  Latin America revenue of $1.93 billion grew 1% with strong sequential growth posted in Venezuela and Argentina.  Higher incremental production results from the SPM project in Ecuador also contributed to growth.  These increases, however, were partially offset by a decrease in Brazil due to lower rig count, both on land and in deepwater.

   

Third-quarter pretax operating income of $2.50 billion was up 10% sequentially. International pretax operating income of $1.84 billion increased 9% sequentially, while North America pretax operating income of $730 million increased 10% sequentially.  

   

Sequentially, pretax operating margin of 21.5% increased 114 basis points (bps), as International pretax operating margin expanded 134 bps to 23.3%.  Middle East & Asia posted a 151-bps sequential margin improvement to reach 26.1%, Europe/CIS/Africa increased by 189 bps to 22.5%, while Latin America was steady at 20.6%.  The expansion in International margins was due to strong results in Russia & Central Asia resulting from deployment of higher-margin technologies during the peak summer drilling and exploration campaigns.  Increased high-margin wireline and seismic activities also helped boost international margins further in Middle East & Asia as exploration work increased.  North America pretax operating margin increased 57 bps sequentially to 20.3% as Western Canada recovered following the previous quarter’s seasonal spring break-up.  US land margin continued to expand on improving efficiency, better utilization, and lower raw material costs in pressure pumping stimulation services.  North America offshore operating margin continued to grow on increasing activity and technology deployment but overall results decreased sequentially due to lower multiclient sales during the quarter.

   

Sequentially by Product Group, Reservoir Characterization Group pretax operating margin expanded 27 bps to 30.4% due to strong exploration activities that benefited Wireline and Testing Services Technologies.  The pretax operating margin of the Drilling Group increased 154 bps to 20.3% through improved Drilling & Measurements operational performance and increased profitability on Integrated Project Management (IPM) projects in the Latin America and Middle East & Asia Areas.  Production Group pretax operating margin increased 165 bps to 17.6% on improved profitability in Well Services as Western Canada recovered from the previous quarter’s spring break-up and US land margin continued to expand on improving efficiency, better utilization, and lower raw material costs.  SPM projects in Latin America and Asia also continued to be accretive to the group’s expanding margins.

   

Reservoir Characterization Group

   

Third-quarter revenue of $3.23 billion increased 7% sequentially.  Pretax operating income of $983 million was 8% higher sequentially.

   

Sequentially, the increase in revenue was driven primarily by higher use of Wireline and Testing Services technologies as a result of strong exploration activity in the Middle East & Asia and Europe/CIS/Africa Areas. This was particularly marked in Russia & Central Asia where drilling & exploration activity increased during the summer.  WesternGeco revenue also increased sequentially from improved global marine vessel activity leading to high asset utilization during the quarter, although the effect of this was partially offset by sequentially lower multiclient sales.

   

Pretax operating margin of 30.4% increased 27 bps sequentially from robust higher-margin exploration activity for Wireline in Russia and the Middle East & Asia Area, while Testing Services across all Areas also contributed to the group’s expanding margin.

   

 

 20 


Drilling Group

   

Third-quarter revenue of $4.41 billion increased 3% over the prior quarter. Pretax operating income of $894 million was 11% higher than the second quarter.

   

Sequentially, revenue increased primarily on strong M-I SWACO performance from the rebound of Western Canada land activity, increased deepwater work in North America, and increased activity in Mexico and Russia.  Strong Drilling & Measurements activity in the Middle East & Asia Area, in Russia, and offshore North America also contributed to growth.

   

Sequentially, pretax operating margin grew 154 bps to 20.3% as a result of improved profitability in Drilling & Measurements due to stronger activity and a more favorable geographical and technology mix.  Improved profitability on IPM projects in the Middle East & Asia and Latin America Areas continued to contribute to the group’s expanding margins.

   

Production Group

   

Third-quarter revenue of $4.02 billion increased 3% sequentially. Pretax operating income of $707 million was 13% higher sequentially.

   

The group’s revenue increased 3% despite the transfer of the subsea business to the OneSubsea joint venture.  Excluding the effect of the transfer of this business, the group grew 6% mainly from strong results in Well Services, Completions, Artificial Lift and SPM.  The rebound from the seasonal spring break-up in Western Canada accounted for the majority of the sequential increase in Well Services while a significant proportion came through improved efficiency in the US land hydraulic fracturing market with the deployment of additional fleets and crews from existing assets despite continued pricing weakness.  Strong sales of Completions and Artificial Lift products in the Latin America and Middle East & Asia Areas also contributed to growth.

   

Pretax operating margin of 17.6% increased 165 bps sequentially on improved profitability in Well Services as Western Canada recovered from the previous quarter’s seasonal spring break-up and US land margin continued to expand on improving efficiency, better utilization, and lower raw material costs.  SPM projects in Latin America and Asia also continued to be accretive to the group’s expanding margins.

   

Third Quarter 2013 Compared to Third Quarter 2012

   

Product Groups

   

 

   

(Stated in millions)

   

   

Third Quarter 2013

   

   

Third Quarter 2012

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Reservoir Characterization

$

3,232

   

   

$

983

   

   

$

2,835

   

   

$

799

   

Drilling

   

4,415

   

   

   

894

   

   

   

4,035

   

   

   

727

   

Production

   

4,024

   

   

   

707

   

   

   

3,655

   

   

   

537

   

Eliminations & other

   

(63

)

   

   

(88

)

   

   

(27

)

   

   

21

   

   

   

11,608

   

   

   

2,496

   

   

   

10,498

   

   

   

2,084

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Corporate & other

   

—  

   

   

   

(179

)

   

   

—  

   

   

   

(177

)

Interest income (1) 

   

—  

   

   

   

6

   

   

   

—  

   

   

   

8

   

Interest expense (1)

   

—  

   

   

   

(92

)

   

   

—  

   

   

   

(85

)

Charges and credits

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

(32

)

   

$

11,608

   

   

$

2,231

   

   

$

10,498

   

   

$

1,798

   

   

 

 21 


Geographic Areas

   

 

   

(Stated in millions)

   

   

Third Quarter 2013

   

   

Third Quarter 2012

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

North America

$

3,602

   

   

$

730

   

   

$

3,303

   

   

$

612

   

Latin America

   

1,934

   

   

   

399

   

   

   

1,860

   

   

   

333

   

Europe/CIS/Africa

   

3,178

   

   

   

714

   

   

   

2,984

   

   

   

645

   

Middle East & Asia

   

2,801

   

   

   

730

   

   

   

2,244

   

   

   

511

   

Eliminations & other

   

93

   

   

   

(77

)

   

   

107

   

   

   

(17

)

   

   

11,608

   

   

   

2,496

   

   

   

10,498

   

   

   

2,084

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Corporate & other

   

—  

   

   

   

(179

)

   

   

—  

   

   

   

(177

)

Interest income (1) 

   

—  

   

   

   

6

   

   

   

—  

   

   

   

8

   

Interest expense (1) 

   

—  

   

   

   

(92

)

   

   

—  

   

   

   

(85

)

Charges and credits

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

(32

)

   

$

11,608

   

   

$

2,231

   

   

$

10,498

   

   

$

1,798

   

 

(1) 

Excludes interest included in the Product Group and Geographical Area results.

   

   

OILFIELD SERVICES

   

Third-quarter 2013 revenue of $11.61 billion was 11% higher than the same period last year with International Area revenue of $7.91 billion increasing 12% while North America Area revenue of $3.60 billion was up 9%.

   

Internationally, higher exploration and development activities in a number of GeoMarkets both offshore and in key land markets contributed to the increase.  The increase was led by the Middle East & Asia Area increasing 25%, mainly from robust results across a diversified portfolio of projects and activities in Saudi Arabia, Iraq and United Arab Emirates; increased seismic surveys across Asia; and sustained land and offshore drilling activity in the Australasia and China GeoMarkets.  Europe/CIS/Africa Area increased 7% led by the Russia and Central Asia region on strong land activity in West Siberia and robust offshore projects in Sakhalin.  The Sub-Saharan Africa region increased on strong development, exploration and seismic activities as well.  Latin America Area was 4% higher, mainly due to solid progress on an SPM project in Ecuador and strong IPM results in Argentina.

   

North America growth was driven by increased offshore revenue as a result of higher drilling and exploration activities.  The land business continues to experience pricing weakness in the areas of drilling, stimulation and wireline, although this was more than offset by increased service intensity, improved efficiency, market share gains and new technology penetration.  

   

Reservoir Characterization revenue of $3.23 billion grew 14% while Drilling Group revenue of $4.41 billion increased 9%.  These increases were a result of robust exploration and development activities in a number of international GeoMarkets and in North America offshore, particularly in the US Gulf of Mexico.  Production Group revenue of $4.02 billion grew 10%.

   

Third-quarter 2013 pretax operating income of $2.50 billion grew $413 million, or 20% versus the same period last year with International pretax operating income of $1.84 billion increasing 24%, while North America pretax operating income of $730 million increased 19%.

   

Third-quarter 2013 pretax operating margin of 21.5% grew 166 bps versus the same period last year, as International pretax operating margin expanded 227 bps to 23.3% while North America pretax operating margin increased 176 bps to 20.3%.  The expansion in International margins was due to increased high-margin exploration, seismic and deepwater activities while the North America margin improvement was from improved efficiency, better utilization and lower raw material costs despite the weak pricing environment.

   

Reservoir Characterization Group

   

Third-quarter 2013 revenue of $3.23 billion was 14.0% higher than the same period last year due to market share gains and higher exploration activity in both offshore and key international land markets.

   

Year-on-year, pretax operating margin increased 224 bps to 30.4% largely due to the higher-margin exploration activities that benefited Wireline and Testing Services and increased Schlumberger Information Services software sales.

 

 22 


   

Drilling Group

   

Third-quarter 2013 revenue of $4.41 billion was 9% higher than the previous year primarily due to the robust demand for Drilling & Measurements services as offshore drilling activity strengthened in the US Gulf of Mexico, Sub-Sahara Africa, Russia and the Middle East & Asia Area and as rig count increased in key international land markets, namely in Saudi Arabia, China and Australia.  M-I SWACO and Drilling Tools & Remedial Technologies expanded across all Areas and IPM grew on projects in Iraq, Australia and Argentina.

   

Year-on-year, pretax operating margin increased 224 bps to 20.3% primarily due to the increase in higher-margin activities of Drilling & Measurements that benefited from higher-margin exploration activities in North America offshore and in the international markets and improved profitability on IPM projects.

   

Production Group

   

Third-quarter 2013 revenue of $4.02 billion increased 10% year-on-year on increasing Well Services and Well Intervention activity, strong international sales of Completion and Artificial Lift products and increased SPM project results.  While North America land rig count declined, well & stage counts increased through drilling efficiency.  Well Services revenue in North America increased despite pricing weakness on improved efficiency with the deployment of additional fleets and crews from existing assets.

   

Year-on-year, pretax operating margin increased 289 basis points to 17.6% mainly due to Well Services margin expansion mainly in US land due to improving efficiency, better asset utilization and lower raw material costs against the backdrop of a weak pricing environment.  SPM projects in Latin America and Asia also continued to be accretive to the group’s expanding margins.

   

Nine Months 2013 Compared to Nine Months 2012

Product Groups

   

 

   

(Stated in millions)

   

   

Nine Months 2013

   

   

Nine Months 2012

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Reservoir Characterization

$

8,996

   

   

$

2,616

   

   

$

8,066

   

   

$

2,183

   

Drilling

   

12,820

   

   

   

2,429

   

   

   

11,772

   

   

   

2,102

   

Production

   

11,708

   

   

   

1,888

   

   

   

10,896

   

   

   

1,746

   

Eliminations & other

   

(164

)

   

   

(193

)

   

   

(86

)

   

   

(26

)

   

   

33,360

   

   

   

6,740

   

   

   

30,648

   

   

   

6,005

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Corporate & other

   

—  

   

   

   

(529

)

   

   

—  

   

   

   

(516

)

Interest income (1) 

   

—  

   

   

   

15

   

   

   

—  

   

   

   

24

   

Interest expense (1)

   

—  

   

   

   

(277

)

   

   

—  

   

   

   

(241

)

Charges and credits

   

—  

   

   

   

572

   

   

   

—  

   

   

   

(68

)

   

$

33,360

   

   

$

6,521

   

   

$

30,648

   

   

$

5,204

   

   

 

 23 


Geographic Areas

   

 

   

(Stated in millions)

   

   

Nine Months 2013

   

   

Nine Months 2012

   

   

Revenue

   

   

Income
Before
Taxes

   

   

Revenue

   

   

Income
Before
Taxes

   

Oilfield Services

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

North America

$

10,249

   

   

$

2,019

   

   

$

10,112

   

   

$

2,082

   

Latin America

   

5,751

   

   

   

1,164

   

   

   

5,483

   

   

   

1,010

   

Europe/CIS/Africa

   

9,154

   

   

   

1,865

   

   

   

8,485

   

   

   

1,666

   

Middle East & Asia

   

7,874

   

   

   

1,933

   

   

   

6,290

   

   

   

1,372

   

Eliminations & other

   

332

   

   

   

(241

)

   

   

278

   

   

   

(125

)

   

   

33,360

   

   

   

6,740

   

   

   

30,648

   

   

   

6,005

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Corporate & other

   

—  

   

   

   

(529

)

   

   

—  

   

   

   

(516

)

Interest income (1) 

   

—  

   

   

   

15

   

   

   

—  

   

   

   

24

   

Interest expense (1) 

   

—  

   

   

   

(277

)

   

   

—  

   

   

   

(241

)

Charges and credits

   

—  

   

   

   

572

   

   

   

—  

   

   

   

(68

)

   

$

33,360

   

   

$

6,521

   

   

$

30,648

   

   

$

5,204

   

 

(1) 

Excludes interest included in the Product Group and Geographical Area results.

OILFIELD SERVICES

   

Nine-month 2013 revenue of $33.36 billion grew $2.71 billion, or 9% versus the same period last year with International Area revenue of $22.78 billion increasing $2.52 billion, or 12%, while North America Area revenue of $10.25 billion increased $136 million, or 1%.

   

Internationally, higher exploration and development activities in a number of GeoMarkets both offshore and in key land markets contributed to the increase.  The increase was led by the Middle East & Asia Area increasing 25%, mainly from robust results across a diversified portfolio of projects and activities in Saudi Arabia, Iraq, and United Arab Emirates; increased seismic surveys across Asia; and sustained land and offshore drilling activity in the Australasia and China GeoMarkets.  Europe/CIS/Africa Area increased 8%, led by the Russia and Central Asia region on strong land activity in West Siberia and robust offshore projects in Sakhalin.  The Sub-Saharan Africa region increased on strong development, exploration and seismic activities as well.  Latin America Area was 5% higher, mainly due to solid progress on an SPM project in Ecuador and strong IPM results in Argentina.

   

North America growth was driven by increased offshore revenue as a result of higher drilling and exploration activities.  This increase was largely offset by a decline in land as a result of a reduction in rig count and pricing weakness in the areas of drilling, stimulation and wireline, although the downward pricing trend slowed during the second and third quarters.  

   

Reservoir Characterization and Drilling Group (primarily Drilling & Measurements, M-I SWACO and Drilling Tools & Remedial) revenue increased 12% and 9%, respectively as a result of robust exploration and development activities in a number of international GeoMarkets and in North America offshore, particularly in the US Gulf of Mexico.  Production Group revenue was up 7% mostly from Well Intervention, Completions, Artificial Lift, SPM and Well Services Technologies in the international GeoMarkets.

   

Year-to-date 2013 pretax operating income of $6.74 billion grew $734 million, or 12% versus the same period last year with International pretax operating income of $4.96 billion increasing 23%, while North America pretax operating income of $2.02 billion declined 3%.

   

Year-to-date 2013 pretax operating margin of 20.2% increased 61 bps versus the same period last year, as International pretax operating margin expanded 180 bps to 21.8% while North America pretax operating margin contracted 88 bps to 19.7%.  The expansion in International margins was due to increased high-margin exploration, seismic and deepwater activities while the North American margin contraction was due to pricing weakness.

   

Reservoir Characterization Group

   

Nine-month 2013 revenue of $9.00 billion was 12% higher than the same period last year due to market share gains and higher exploration activity in both offshore and key international land markets.

   

Year-on-year, pretax operating margin increased 201 basis points to 29.1% largely due to the higher-margin exploration activities that benefited Testing Services, WesternGeco and Wireline Technologies.

 

 24 


   

Drilling Group

   

Nine-month 2013 revenue of $12.82 billion was 9% higher than the previous year primarily due to the robust demand for Drilling & Measurements services as offshore drilling activity strengthened in the US Gulf of Mexico, Sub-Sahara Africa, Russia and the Middle East & Asia Area and rig count increases in key international land markets, namely in Saudi Arabia, China and Australia.  Drilling Tools & Remedial and M-I SWACO Technologies expanded across all Areas and IPM grew strongly on projects in Iraq, Australia and Argentina.

   

Year-on-year, pretax operating margin increased 109 bps to 18.9% primarily due to the increase in higher-margin activities of Drilling & Measurements that benefited from higher-margin exploration activities in North America offshore and in the international markets.

   

Production Group

   

Nine-month 2013 revenue of $11.71 billion increased 7% year-on-year on increasing Well Intervention activity and strong international sales of Completion and Artificial Lift products and Well Services technologies.  SPM also posted strong growth.  While North America land rig count declined, well & stage counts increased through drilling efficiency.  Despite the efficiency-driven activity increase, Well Services revenue in North America declined on pricing weakness.

   

Year-on-year, pretax operating margin increased slightly by 10 bps to 16.1%.  Margin expanded on improving profitability in SPM, Completions and Artificial Lift but this was offset by a decline in margins of Well Services technologies, primarily in North America, as a result of pricing pressure and cost inflation.

   

INTEREST & OTHER INCOME

   

Interest & other income consisted of the following for the third quarter and nine months ended September 30, 2013 and 2012:

   

 

   

(Stated in millions)

   

   

Third Quarter

   

      

Nine Months

   

   

2013

   

      

2012

   

      

2013

   

      

2012

   

Equity in net earnings of affiliated companies

$

34

      

      

$

36

      

      

$

84

      

      

$

112

      

Interest income

   

9

      

      

   

8

      

      

   

21

      

      

   

25

      

   

$

43

      

      

$

44

      

      

$

105

      

      

$

137

      

OTHER

Research & engineering and General & administrative expenses, as a percentage of Revenue, for the third quarter and nine months ended September 30, 2013 and 2012 were as follows:

   

 

   

Third Quarter

   

   

Nine Months

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Research & engineering

   

2.5

%

   

   

   

   

2.8

%

   

   

   

   

2.6

%

   

   

   

   

2.8

%

   

   

General & administrative

   

0.9

%

   

   

   

   

0.9

%

   

   

   

   

0.9

%

   

   

   

   

1.0

%

   

   

The effective tax rate for the third quarter of 2013 was 22.7% compared to 24.2% for the same period of 2012.

The effective tax rate for the nine months ended September 30, 2013 was 20.9% compared to 24.4% for the same period of the prior year. The effective tax rate for the nine months ended September 30, 2013 was significantly impacted by the charges and credits described in Note 2 to the Consolidated Financial Statements. Excluding the impact of charges and credits, the effective tax rate for the nine months ended September 30, 2013 was 23.2% compared to 24.2% in the prior year. The decrease in the effective tax rate excluding charges and credits for the nine-month period ended September 30, 2013 as compared to the same period of the prior year, is primarily attributable to the fact that Schlumberger generated a smaller percentage of its pretax earnings in North America in 2013 as compared to 2012.

   

CHARGES AND CREDITS

   

Schlumberger recorded no charges or credits during the third quarter of 2013.   The following charges and credits were recorded during the first nine months of 2013 and 2012. These charges and credits, which are summarized below, are more fully described in Note 2 to the Consolidated Financial Statements.

 

 25 


   

2013    

The following is a summary of the charges and credits during the first nine months of 2013:

   

 

   

(Stated in millions)

   

   

   

   

Pretax

   

   

Tax

   

      

Net

   

   

Consolidated Statement of Income Classification

Gain on formation of OneSubsea joint venture

$

(1,028

   

$

—  

      

      

$

(1,028

   

Gain on formation of OneSubsea

Impairment of equity-method investments

   

364

      

   

   

19

      

      

   

345

      

   

Impairment & other

Currency devaluation loss in Venezuela

   

92

      

   

   

—  

      

      

   

92

      

   

Impairment & other

   

$

(572

   

$

19

      

      

$

(591

   

   

2012    

Schlumberger recorded the following merger and integration-related charges related to its 2010 acquisitions of Smith and Geoservices. These amounts are classified in Merger & integration in the Consolidated Statement of Income.

   

 

   

(Stated in millions)

   

   

Pretax

   

      

Tax

   

      

Net

   

First Quarter

$

14

      

      

$

1

      

      

$

13

      

Second Quarter

   

22

      

      

   

1

      

      

   

21

      

Third Quarter

   

32

      

      

   

4

      

      

   

28

      

   

$

68

      

      

$

6

      

      

$

62

      

CASH FLOW

Net Debt represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger indebtedness by reflecting cash and investments that could be used to repay debt.

Details of Net Debt follow:

   

 

   

(Stated in millions)

   

   

Nine Months ended Sept. 30,

   

   

2013

   

2012

   

Net Debt, beginning of period

$

(5,111

)

   

$

(4,850

)

Income from continuing operations

   

5,160

   

   

   

3,936

   

Depreciation and amortization (1)

   

2,737

   

   

   

2,570

   

Gain on formation of OneSubsea

   

(1,028

)

   

   

—  

   

Non-cash charges

   

459

   

   

   

—  

   

Stock-based compensation expense

   

255

   

   

   

251

   

Pension and other postretirement benefits expense

   

388

   

   

   

298  

   

Pension and other postretirement benefits funding

   

(468

)

   

   

(462

)

Increase in working capital

   

(1,182

)

   

   

(2,831

)

Capital expenditures

   

(2,753

)

   

   

(3,161

)

Multiclient seismic data capitalized

   

(300

)

   

   

(260

)

Dividends paid

   

(1,196

)

   

   

(1,067

)

Stock repurchase program

   

(1,526

)

   

   

(972

)

Proceeds from employee stock plans

   

415

   

   

   

386

   

Business acquisitions, net of cash acquired

   

(544

)

   

   

(713

)

Payment for OneSubsea transaction

   

(600

)

   

   

—  

   

Proceeds from divestiture of Wilson distribution business

   

—  

   

   

   

906

   

Proceeds from divestiture of CE Franklin business

   

—  

   

   

   

122

   

Currency effect on net debt

   

(43

   

   

49

   

Other

   

(279

)

   

   

(385

)

Net Debt, end of period

$

(5,616

)

   

$

(6,183

)

 

(1) 

Includes multiclient seismic data costs.

 

 26 


   

 

   

   

   

   

(Stated in millions)

   

Components of Net Debt

Sept. 30,
2013

      

   

Sept. 30,
2012

   

   

Dec. 31,
2012

      

Cash

$

3,149

   

   

$

1,852

   

   

$

1,905

   

Short-term investments

   

3,286

   

   

   

2,908

   

   

   

4,369

   

Fixed income investments, held to maturity

   

363

   

   

   

246

   

   

   

245

   

Short-term borrowings and current portion of long-term debt

   

(2,498

)

   

   

(1,792

)

   

   

(2,121

)

Long-term debt

   

(9,916

)

   

   

(9,397

)

   

   

(9,509

)

   

$

(5,616

)

   

$

(6,183

)

   

$

(5,111

)

Key liquidity events during the first nine months of 2013 and 2012 included:

 

During the second quarter of 2013, Schlumberger paid Cameron $600 million in connection with the formation of the OneSubsea joint venture.

 

On April 17, 2008, the Schlumberger Board of Directors (the “Board”) approved an $8 billion share repurchase program for shares of Schlumberger common stock, to be acquired before December 31, 2011. On July 21, 2011, the Board approved an extension of this repurchase program to December 31, 2013. This program was completed during July r of 2013. On July 18, 2013, the Board approved a new $10 billion share repurchase program for shares of Schlumberger common stock, to be completed at the latest by June 30, 2018. Schlumberger had repurchased $0.6 billion of shares under this new share repurchase program as of September 30, 2013.

The following table summarizes the activity, during the nine months ended September 30, under these share repurchase programs:

   

 

   

(Stated in millions except per share amounts)

   

   

Total cost
of shares
purchased

   

   

Total number
of shares
purchased

   

   

Average price
paid per
share

   

Nine months ended September 30, 2013

$

1,526

   

      

   

19.4

   

      

$

78.61

      

Nine months ended September 30, 2012

$

972

      

      

   

14.1

      

      

$

68.99

      

 

Cash flow provided by operations was $5.9 billion in the first nine months of 2013 compared to $3.4 billion in the first nine months of 2012 primarily reflecting a lower increase in working capital requirements year-on-year.

 

Capital expenditures were $2.8 billion in the first nine months of 2013 compared to $3.2 billion during the first nine months of 2012. Capital expenditures for full year 2013 are expected to be approximately $3.9 billion as compared to $4.7 billion in 2012.

In recent months, Schlumberger began experiencing delays in payment from OGX Petroleo e Gas SA (“OGX”), one of its customers in Brazil.  OGX is currently experiencing liquidity issues and is pursuing various options.  As of September 30, 2013, Schlumberger had outstanding accounts receivable due from OGX of approximately $195 million.  At this time, it is not possible to predict the ultimate outcome of this situation.  Depending upon the ultimate outcome, Schlumberger may be required to write-off a portion or all of these receivables in future periods.

At times in recent quarters, Schlumberger has experienced delays in payments from its national oil company customer in Venezuela. Schlumberger operates in more than 85 countries. At September 30, 2013, only five of those countries (including Venezuela) individually accounted for greater than 5% of Schlumberger’s accounts receivable balance of which only two, the United States and Mexico, represented greater than 10%.

As of September 30, 2013, Schlumberger had $6.4 billion of cash and short-term investments on hand. Schlumberger had separate committed debt facility agreements aggregating $4.0 billion with commercial banks, of which $1.8 billion was available and unused as of September 30, 2013. This included $3.5 billion of committed facilities which support commercial paper programs in the United States and Europe. Schlumberger believes that these amounts are sufficient to meet future business requirements for at least the next 12 months.

Schlumberger had commercial paper of $1.9 billion outstanding as of September 30, 2013.

Other Matters

   

 

 27 


During the second quarter of 2013, Schlumberger completed the wind down of its service operations in Iran.  Prior to this, certain non-U.S. subsidiaries of Schlumberger provided oilfield services to the National Iranian Oil Company and certain of its affiliates (“NIOC”).  Schlumberger has classified the results of this business as a discontinued operation.  All prior periods were restated accordingly.

   

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

   

FORWARD-LOOKING STATEMENTS

   

This Form 10-Q, and other statements we make contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world; pricing erosion; weather and seasonal factors; operational delays; production declines; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services and climate-related initiatives; the inability of technology to meet new challenges in exploration; and other risks and uncertainties detailed in our third-quarter 2013 earnings release, our most recent Form 10-K and other filings that we make with the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

   

   

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For quantitative and qualitative disclosures about market risk affecting Schlumberger, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of the Schlumberger Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Schlumberger’s exposure to market risk has not changed materially since December 31, 2012.

   

Item 4. Controls and Procedures.

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

   

   

   

 

 28 


PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The information with respect to Item 1 is set forth under Note 13—Contingencies, in the Consolidated Financial Statements.

   

Item 1A. Risk Factors.

As of the date of this filing, there have been no material changes from the risk factors previously disclosed in Part 1, Item 1A, of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

   

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

Unregistered Sales of Equity Securities

None.

Issuer Repurchases of Equity Securities

On April 17, 2008, the Schlumberger Board of Directors (the “Board”) approved an $8 billion share repurchase program for Schlumberger common stock (the “2008 Program”). On July 21, 2011, the Board approved an extension of this repurchase program to December 31, 2013. The program was completed during July of 2013. On July 18, 2013, the Board approved a new $10 billion share repurchase program for shares of Schlumberger common stock, to be completed at the latest by June 30, 2018 (the “2013 Program”). As of September 30, 2013, $9.4 billion remained available for repurchase under the 2013 Program.

Schlumberger’s common stock repurchase program activity for the three months ended September 30, 2013 was as follows:

   

 

   

   

   

   

   

(Stated in thousands, except per share amounts)

   

   

2008 Program

   

   

2013 Program

   

   

Total
number
of shares
purchased

   

   

Average
price
paid per
share

   

   

Total
number of
shares
purchased
as part of
publicly
announced
program

   

   

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

   

   

Total
number
of shares
purchased

   

   

Average
price
paid per
share

   

   

Total
number of
shares
purchased
as part of
publicly
announced
program

   

   

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

   

July 2013

   

2,468.6

   

   

$

75.72

   

   

   

2,468.6

   

   

$

—  

   

   

   

312.8

   

   

$

82.33

   

   

   

312.8

   

   

$

9,972,244

   

August 2013

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

2,728.0

   

   

$

81.67

   

   

   

2,728.0

   

   

$

9,751,436

   

September 2013

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

—  

   

   

   

4,577.3

   

   

$

86.91

   

   

   

4,577.3

   

   

$

9,353,626

   

   

   

2,468.6

   

   

$

75.72

   

   

   

2,468.6

   

   

   

   

   

   

   

7,618.1

   

   

$

84.85

   

   

   

7,618.1

   

   

   

   

   

   

During the three months ended September 30, 2013, Schlumberger repurchased a total of 10.09 million shares of common stock under both the 2008 Program and the 2013 Program at an average price of $82.61 for a total of $833 million.

   

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

   

Item 3. Defaults Upon Senior Securities.

None.

   

Item 4. Mine Safety Disclosures.

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

   

Item 5. Other Information.

None.

 

 29 


   

Item 6. Exhibits.

Exhibit 3.1—Articles of Incorporation of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3 to Schlumberger’s Current Report on Form 8-K filed on April 7, 2011)

Exhibit 3.2—Amended and Restated By-laws of Schlumberger Limited (Schlumberger N.V.) (incorporated by reference to Exhibit 3.1 to Schlumberger’s Current Report on Form 8-K filed on July 20, 2012)

* Exhibit 10.1—Form of 2013 One Year Performance Share Unit Award Agreement (Employees in France) under the Schlumberger 2010 Omnibus Stock Option Plan (+) 

Exhibit 10.2— Form of Indemnification Agreement (incorporated by reference to Exhibit 10 to Schlumberger’s Current Report on Form 8-K filed on October 21, 2013)

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

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

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

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

* Exhibit 95—Mine Safety Disclosures

* Exhibit 101—The following materials from Schlumberger Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statement of Income; (ii) Consolidated Statement of Comprehensive Income; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Cash Flows; (v) Consolidated Statement of Equity and (vi) Notes to Consolidated Financial Statements

* Filed with this Form 10-Q.

** Furnished with this Form 10-Q.

(+) Compensatory plans or arrangements.  

   

   

   

 

 30 


SIGNATURE

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

   

   

 

   

   

   

Schlumberger Limited

(Registrant)

Date:

October 23, 2013

   

/s/    Howard Guild

   

   

   

Howard Guild

   

   

   

Chief Accounting Officer and Duly Authorized Signatory

   

   

 

 31