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Jun 30, 2020
Schlumberger Q2 2020 Earnings Report
Schlumberger's second-quarter earnings were impacted by the historic COVID-19 pandemic and the unprecedented fall in North America activity, but the company demonstrated resilience through decisive actions to protect liquidity and cash positions, and sustain resilient international margins.
Key Takeaways
Schlumberger's second-quarter revenue declined 28% sequentially due to the unprecedented fall in North America activity and international activity drop related to COVID-19 disruptions. The company recorded $3.7 billion of pretax restructuring and asset impairment charges. Despite these challenges, Schlumberger generated $465 million of free cash flow and sustained resilient international margins through decisive actions to reduce costs and restructure the company.
Worldwide revenue decreased 28% sequentially to $5.4 billion.
North America revenue decreased 48% sequentially to $1.2 billion.
GAAP loss per share was $2.47, while EPS, excluding charges and credits, was $0.05.
Free cash flow was $465 million despite significant severance payments.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Conditions are set in the third quarter for a modest frac completion activity increase in North America, though from a very low base. Absent any further material COVID-19 disruption or significant setback in oil demand, Schlumberger anticipates flat sequential revenue on a global basis and pretax segment operating income and margin should expand as a result of restructuring efforts, improved activity mix, and sustained benefits from technology adoption, including digital.
Positive Outlook
- Oil demand is slowly starting to normalize and is expected to improve as government measures support consumption.
- Conditions are set in the third quarter for a modest frac completion activity increase in North America.
- Internationally, markets may continue to be disrupted by the pandemic and will continue to adjust to budget levels set during the second quarter, but this would be mostly offset by the seasonal return of activity in the Northern Hemisphere and the rebound of Latin America from its second-quarter weakness.
- Pretax segment operating income and margin should expand as a result of restructuring efforts.
- Improved activity mix and sustained benefits from technology adoption, including digital.
Challenges Ahead
- Subsequent waves of potential COVID-19 resurgence pose a negative risk to the outlook.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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