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Schlumberger 2020

Schlumberger’s full-year revenue declined by 28% in 2020

Schlumberger is the world’s leading provider of technology for reservoir characterization, drilling, production and processing to the oil and gas industry.  Schlumberger supplies products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance sustainably.  The Company employed over 100,000 people over 160 nationalities and generates revenue in more than 120 countries.

During 2020, Schlumberger restructured its organization in order to prepare for a changing industry future.  This new structure is aligned with customer workflows and is directly linked to Schlumberger’s corporate strategy. The new four restructured Divisions are: Digital & Integration, Reservoir Performance, Well Construction and Production System.

Global demand for oil dropped from January through April of 2020. Global stocks of crude and refined products increased as oil supply could not respond quickly enough to balance the market.

As a result, Brent crude oil experienced its highest price of the year—$70 per barrel—in January, with a low of $9 per barrel in mid-April.  

The OPEC-led supply alliance-maintained production within an agreed quota and helped to maintain a relatively stable oil price, despite oil demand in the second half of 2020.

Oil price volatility in the first half of the year caused producers to lay down more than 40% of the world’s drilling rigs in just six months. Gas demand for 2020 was down only approximately 5% as compared to 2019.

According to the Company´s Annual Report Schlumberger’s full-year 2020 revenue of $23.6 billion declined by 28% from $32.9 billion in 2019, compared with $32.8 billion in 2018 and $30.4 billion in 2017. North American revenue fell sharply by 48% to $5.5 billion, reflecting the continued capital discipline of North America operators, who reduced drilling and hydraulic fracturing activity due to the pandemic. This decrease was largely driven by weakness in the land market as operators reacted to oversupplied markets by making deep cuts to activity.  North America operators dropped drilling and pressure pumping activity quickly in the first quarter due to the pandemic. International revenue was more resilient, declining only by 19% in 2020 compared to the previous year.  This decline was most prominent in Latin America, Europe, and Africa due to revisions to customer budgets, due to the COVID-19-related disruptions and the drop in offshore activity.

In 2020 the Company generated full-year net loss of $10.5 billion compared to net loss of $10.1 billion in 2019 and net income of $2.2 billion in 2018.

During the fourth quarter of 2020, Schlumberger completed two transactions: the contribution of its OneStim business in North America to Liberty Oilfield Services (“Liberty”) in exchange for a 37% stake in Liberty, and the divestiture of the North America low-flow rod-lift business in a cash transaction. These businesses accounted for approximately 25% of Schlumberger’s North America revenue in 2020.  

Segmentally, full-year 2020 Digital & Integration revenue of $3.1 billion decreased by 26% compared to 2019 primarily due to lower multiclient and software sales as customers reduced activity due to COVID-19 and cut discretionary spending.

Full-year 2020 Reservoir Performance revenue of $5.6 billion decreased by 40% compared to 2019.  A little more than half of this revenue decrease was attributable to the sharp drop in OneStim pressure pumping activity in North America land. The remaining portion of the revenue decline resulted from COVID-19 disruptions that caused international activity to be cancelled or suspended.  
Full-year 2020 Well Construction revenue of $8.6 billion decreased by 28% compared to 2019 due to the activity decline in US land as the rig count decreased significantly, while COVID-19 disruptions caused drilling activities to be cancelled or suspended in several international markets.

Full-year 2020 Production System revenue of $6.7 billion decreased by 19% compared to 2020 primarily driven by lower sales of valves and surface systems in North America.

Research & engineering and General & administrative expenses, as a percentage of Revenue, were 2.5% and 1.5% in 2020, compared to 2.2% and 1.4% in 2019 respectively.

Cash flow from operations was $2.9 billion in 2020, $5.4 billion in 2019 and $5.7 billion in 2018.  The decrease in cash flow from operations in 2020 as compared to 2019 was driven by the sharp reduction in earnings excluding non-cash charges and credits and depreciation and amortization expense as result of the challenging business conditions in 2020.

On January 21, 2016, the Schlumberger Board of Directors approved a $10 billion share repurchase program for Schlumberger common stock.  Schlumberger had repurchased $1.0 billion of Schlumberger common stock under this program as of December 31, 2020.

Dividends paid during 2020, 2019 and 2018 were $1.7 billion, $2.8 billion and $2.8 billion, respectively. Capital investments (consisting of capital expenditures, investments and multiclient seismic data capitalized) were $1.5 billion in 2020, $2.7 billion in 2019 and $3.2 billion in 2018. Capital investments during 2021 are expected to be between $1.5 billion and $1.7 billion.

As of December 31, 2020, Schlumberger had $3.0 billion of cash and short-term investments on hand. The Company believes that these amounts are sufficient to meet future business requirements for at least the next 12 months.