BAKU, Azerbaijan, Apr.20
By Leman Zeynalova - Trend:
Schlumberger’s production revenue of $2.7 billion, 61 percent of which came from the international markets, declined 6 percent sequentially in the first quarter of 2020, Trend reports citing the company.
“This was driven by lower Well Services activity and weaker Artificial Lift Solutions sales in the international markets. Revenue also declined as we accelerated our land strategy to high-grade our business portfolio in North America land, such as by exiting from the coiled tubing services business. OneStim revenue grew 2 percent as its scale-to-fit strategy successfully generated higher fleet utilization, however activity fell sharply in mid-March as customers cut their spending. We began to stack more frac fleets in response and have reduced our active fleets by 27 percent during March,” the company said in its quarterly report.
This is while production pretax operating margin of 8 percent contracted by 98 bps sequentially due to reduced profitability in North America while international margins were flat despite lower revenue.
“Although margins were seasonally lower in Russia and the North Sea, these were fully offset by improved margins in Latin America. In North America, APS margin contracted due to lower oil prices, but this was partially mitigated by our exit from the dilutive coiled tubing services business. OneStim margin was flat sequentially,” Schlumberger said.
Schlumberger’s drilling revenue of $2.3 billion, 75 percent of which came from the international markets, decreased 6 percent sequentially due to seasonality effects in the Northern Hemisphere.
“US land rig count was 6 percent lower sequentially including a 15% drop in the last two weeks of March. Revenue was also lower, particularly in Bits & Drilling Tools, due to the divestiture of the businesses and associated assets of DRILCO, Thomas Tools, and Fishing & Remedial Services (Drilling Tools businesses) consistent with our capital stewardship strategy of high-grading the business portfolio. WCS revenue from LSTK projects in Saudi Arabia was lower following the strong activity and the delivery of additional wells in the fourth quarter. WCS revenue in India was also lower due to reduced drilling activity,” the company said.
The report shows that drilling pretax operating margin of 12 percent was resilient, as it remained flat with the previous quarter despite the sequential revenue decline.
“Although margins were seasonally lower in Russia and the North Sea, they were offset by improved margins in the Americas. Improved profitability in Latin America and in North America land was boosted by the divestiture of the Drilling Tools businesses, which were previously dilutive to margins, while margins on WCS contracts in the Middle East and India combined, proved resilient,” the company said.
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