http://www.morningstar.com/earnings/54527874-schlumberger-nv-slb-q2-2013.aspx

Schlumberger NV SLB
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/19/2013

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Schlumberger Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Vice President of Investor Relations, Mr. Malcolm Theobald, please go ahead.

Malcolm Theobald - VP, IR: Thank you, Greg. Good afternoon, and good morning; and welcome to the Schlumberger Limited second quarter 2013 results conference call. Today's call is being hosted from Paris where the Schlumberger Limited Board meeting took place yesterday.

Joining us on the call today are Paal Kibsgaard, Chief Executive Officer; and Simon Ayat, Chief Financial Officer. Our prepared comments will be provided by Simon and Paal. Simon will first review the financial results and Paal will discuss the operational and technical highlights.

However, before we begin with the opening remarks, I'd like to remind the participants that some of the information in today's call may include forward-looking statements, as well as non-GAAP financial measures. A detailed disclaimer and other important information are included in the FAQ document, which is available on our website or upon request. We will welcome your questions after the prepared statements.

Now, I'll turn the call over to Simon.

Simon Ayat - EVP and CFO: Thank you, Malcolm. Ladies and gentlemen, thank you for participating in this conference call. Second quarter earnings per share from continuing operations, excluding charges and credits was $1.15. This is an increase of $0.18 sequentially and is $0.14 higher when compared to the same quarter last year.

During the quarter, we completed the wind-down of our operations in Iran, and as a result, we have now classified this business as a discontinued operations. All prior period amounts have been restated. As previously disclosed, we completed the formation of our OneSubsea joint venture with Cameron prior to the end of the quarter. We recognized a $1 billion gain in connection with this transaction which equates to $0.77 in terms of EPS. We also recorded $0.26 of charges relating to the impairment of drilling-related equity investments.

From an operational perspective, we had a very strong quarter. Oilfield Services second quarter revenue of $11.2 billion increased 5.8% sequentially. Pre-tax operating income increased 15.9% sequentially, while the pre-tax operating margin improved 178 basis points to 20.4%.

Sequential highlights by product group were as follows. Reservoir Characterization revenue of $3 billion increased 9.6% and pre-tax income grew by over 25%. This resulted in margins improving by 380 basis points to 30.1%. This growth was driven by very strong performance in both Wireline and WesternGeco, combined with the seasonal rebound in SIS software sales and maintenance.

Drilling Group revenue of $4.3 billion increased 4.4% and margins improved by 97 basis points to 18.7%. These increases were largely attributable to the Drilling & Measurements and M-I SWACO on robust international activity.

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