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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file No.:
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
(Exact name of registrant as specified in its charter)
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Curaçao |
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(State or other jurisdiction of |
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(IRS Employer |
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42 rue Saint-Dominique |
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Paris, France |
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75007 |
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62 Buckingham Gate |
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London, United Kingdom |
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SW1E 6AJ |
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Parkstraat 83, The Hague, |
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The Netherlands |
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2514 JG |
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(Addresses of principal executive offices) |
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(Zip Codes) |
Registrant’s telephone number in the United States, including area code, is: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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☒ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
Outstanding at March 31, 2022 |
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COMMON STOCK, $0.01 PAR VALUE PER SHARE |
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SCHLUMBERGER LIMITED
First Quarter 2022 Form 10-Q
Table of Contents
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Page |
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PART I |
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Financial Information |
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Item 1. |
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3 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 |
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Item 3. |
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20 |
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Item 4. |
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20 |
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PART II |
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Other Information |
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Item 1. |
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21 |
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Item 1A. |
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21 |
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Item 2. |
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21 |
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Item 3. |
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21 |
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Item 4. |
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21 |
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Item 5. |
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21 |
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Item 6. |
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22 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
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(Stated in millions, except per share amounts) |
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenue |
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Services |
$ |
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$ |
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Product sales |
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Total Revenue |
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Interest & other income |
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Expenses |
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Cost of services |
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Cost of sales |
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Research & engineering |
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General & administrative |
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Interest |
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Income before taxes |
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Tax expense |
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Net income |
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Net income attributable to noncontrolling interests |
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Net income attributable to Schlumberger |
$ |
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$ |
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Basic income per share of Schlumberger |
$ |
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$ |
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Diluted income per share of Schlumberger |
$ |
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$ |
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Average shares outstanding: |
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Basic |
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Assuming dilution |
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See Notes to Consolidated Financial Statements
3
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
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(Stated in millions) |
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||||||
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Three Months Ended March 31, |
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|||||
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2022 |
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2021 |
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Net income |
$ |
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$ |
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Currency translation adjustments |
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Unrealized net change arising during the period |
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( |
) |
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Cash flow hedges |
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Net gain on cash flow hedges |
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Reclassification to net income of net realized loss (income) |
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( |
) |
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Pension and other postretirement benefit plans |
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Amortization to net income of net actuarial loss |
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Amortization to net income of net prior service credit |
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( |
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( |
) |
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Comprehensive income |
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Comprehensive income attributable to noncontrolling interests |
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Comprehensive income attributable to Schlumberger |
$ |
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$ |
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See Notes to Consolidated Financial Statements
4
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
|
(Stated in millions) |
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|||||||
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Mar. 31, |
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2022 |
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Dec. 31, |
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|||
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(Unaudited) |
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2021 |
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ASSETS |
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Current Assets |
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Cash |
$ |
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$ |
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Short-term investments |
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Receivables less allowance for doubtful accounts (2022 - $ |
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Inventories |
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Other current assets |
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Investments in Affiliated Companies |
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Fixed Assets less accumulated depreciation |
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Goodwill |
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Intangible Assets |
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Other Assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current Liabilities |
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Accounts payable and accrued liabilities |
$ |
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$ |
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Estimated liability for taxes on income |
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Short-term borrowings and current portion of long-term debt |
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Dividends payable |
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Long-term Debt |
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Postretirement Benefits |
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Deferred Taxes |
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Other Liabilities |
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Equity |
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Common stock |
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Treasury stock |
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( |
) |
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( |
) |
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Retained earnings |
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Accumulated other comprehensive loss |
|
( |
) |
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( |
) |
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|
Schlumberger stockholders’ equity |
|
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Noncontrolling interests |
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|
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$ |
|
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$ |
|
|
|
See Notes to Consolidated Financial Statements
5
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
|
(Stated in millions) |
|
||||||
|
|
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|
|
Three Months Ended March 31, |
|
|||||
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|
2022 |
|
|
2021 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
$ |
|
|
|
$ |
|
|
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization (1) |
|
|
|
|
|
|
|
|
Deferred taxes |
|
( |
) |
|
|
( |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
Earnings of equity method investments, less dividends received |
|
|
|
|
|
( |
) |
|
Change in assets and liabilities: (2) |
|
|
|
|
|
|
|
|
Increase in receivables |
|
( |
) |
|
|
( |
) |
|
(Increase) decrease in inventories |
|
( |
) |
|
|
|
|
|
Increase in other current assets |
|
( |
) |
|
|
( |
) |
|
(Increase) decrease in other assets |
|
( |
) |
|
|
|
|
|
Increase (decrease) in accounts payable and accrued liabilities |
|
|
|
|
|
( |
) |
|
Increase (decrease) in estimated liability for taxes on income |
|
|
|
|
|
( |
) |
|
Decrease in other liabilities |
|
( |
) |
|
|
( |
) |
|
Other |
|
( |
) |
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
( |
) |
|
|
( |
) |
|
APS investments |
|
( |
) |
|
|
( |
) |
|
Multiclient seismic data costs capitalized |
|
( |
) |
|
|
( |
) |
|
Business acquisitions and investments, net of cash acquired |
|
- |
|
|
|
( |
) |
|
Proceeds from sale of Liberty shares |
|
|
|
|
|
- |
|
|
Sale of investments, net |
|
|
|
|
|
|
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|
Other |
|
( |
) |
|
|
( |
) |
|
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES |
|
( |
) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Dividends paid |
|
( |
) |
|
|
( |
) |
|
Taxes paid on net settled stock-based compensation awards |
|
( |
) |
|
|
( |
) |
|
Proceeds from employee stock purchase plan |
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
- |
|
|
Proceeds from issuance of long-term debt |
|
- |
|
|
|
|
|
|
Repayment of long-term debt |
|
- |
|
|
|
( |
) |
|
Net increase (decrease) in short-term borrowings |
|
|
|
|
|
( |
) |
|
Other |
|
( |
) |
|
|
( |
) |
|
NET CASH USED IN FINANCING ACTIVITIES |
|
( |
) |
|
|
( |
) |
|
Net (decrease) increase in cash before translation effect |
|
( |
) |
|
|
|
|
|
Translation effect on cash |
|
( |
) |
|
|
( |
) |
|
Cash, beginning of period |
|
|
|
|
|
|
|
|
Cash, end of period |
$ |
|
|
|
$ |
|
|
|
(1) |
|
|
(2) |
|
See Notes to Consolidated Financial Statements
6
SCHLUMBERGER LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
|
|
|
(Stated in millions, except per share amounts) |
|
|||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Retained |
|
|
Comprehensive |
|
|
Noncontrolling |
|
|
|
|
|
||||||||
|
January 1, 2022 – March 31, 2022 |
|
Issued |
|
|
In Treasury |
|
|
Earnings |
|
|
Loss |
|
|
Interests |
|
|
Total |
|
||||||
|
Balance, January 1, 2022 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold to optionees, less shares exchanged |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock, net of taxes withheld |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Shares issued under employee stock purchase plan |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared ($ |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
|
|
(Stated in millions, except per share amounts) |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Retained |
|
|
Comprehensive |
|
|
Noncontrolling |
|
|
|
|
|
||||||||
|
January 1, 2021 – March 31, 2021 |
|
Issued |
|
|
In Treasury |
|
|
Earnings |
|
|
Loss |
|
|
Interests |
|
|
Total |
|
||||||
|
Balance, January 1, 2021 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
Changes in fair value of cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock, net of taxes withheld |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Shares issued under employee stock purchase plan |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared ($ |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Balance, March 31, 2021 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
SHARES OF COMMON STOCK
(Unaudited)
|
|
|
|
|
|
(Stated in millions) |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
Issued |
|
|
In Treasury |
|
|
Outstanding |
|
|||
|
Balance, January 1, 2022 |
|
|
|
|
|
( |
) |
|
|
|
|
|
Vesting of restricted stock |
|
- |
|
|
|
|
|
|
|
|
|
|
Shares issued under employee stock purchase plan |
|
- |
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
|
|
|
|
( |
) |
|
|
|
|
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 three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022. The December 31, 2021 balance sheet information has been derived from the Schlumberger 2021 audited 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, 2021, filed with the Securities and Exchange Commission on January 26, 2022.
2. Charges and Credits
On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada, including its pressure pumping, pumpdown perforating and Permian frac sand business to Liberty Energy Inc. (“Liberty”) in exchange for an equity interest in Liberty. During the first quarter of 2022, Schlumberger sold
Schlumberger did not record any charges or credits during the first quarter of 2021.
3. Earnings per Share
The following is a reconciliation from basic income per share of Schlumberger to diluted income per share of Schlumberger:
|
(Stated in millions, except per share amounts) |
|
||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
||||||||||||||||||
|
|
Net Income Attributable to Schlumberger |
|
|
Average Shares Outstanding |
|
|
Earnings per Share |
|
|
Net Income Attributable to Schlumberger |
|
|
Average Shares Outstanding |
|
|
Earnings per Share |
|
||||||
|
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Unvested restricted stock |
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of outstanding options to purchase shares of Schlumberger common stock that were not included in the computation of diluted income per share, because to do so would have had an antidilutive effect, was as follows:
|
(Stated in millions) |
|
||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
Employee stock options |
|
|
|
|
|
|
|
8
4. Inventories
A summary of inventories, which are stated at the lower of average cost or net realizable value, is as follows:
|
(Stated in millions) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Mar. 31, |
|
|
Dec. 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
|
Raw materials & field materials |
$ |
|
|
|
$ |
|
|
|
Work in progress |
|
|
|
|
|
|
|
|
Finished goods |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
5. Fixed Assets
A summary of fixed assets follows:
|
(Stated in millions) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Mar. 31, |
|
|
Dec. 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
|
Property, plant & equipment |
$ |
|
|
|
$ |
|
|
|
Less: Accumulated depreciation |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
Depreciation expense relating to fixed assets was $
6. Intangible Assets
The gross book value, accumulated amortization and net book value of intangible assets were as follows:
|
|
(Stated in millions) |
|
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
Mar. 31, 2022 |
|
|
Dec. 31, 2021 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
||||||
|
|
Book Value |
|
|
Amortization |
|
|
Value |
|
|
Book Value |
|
|
Amortization |
|
|
Value |
|
||||||
|
Customer relationships |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Technology/technical know-how |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradenames |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Amortization expense charged to income was $
Based on the net book value of intangible assets at March 31, 2022, amortization expense for the subsequent five years is estimated to be: remaining three quarters of 2022—$
9
7. Long-term Debt
A summary of Long-term Debt follows:
|
(Stated in millions) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Mar. 31, |
|
|
Dec. 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
The estimated fair value of Schlumberger’s Long-term Debt, based on quoted market prices at March 31, 2022 and December 31, 2021, was $
Schlumberger has a €
In addition to the revolving credit facility described above, at March 31, 2022, Schlumberger had separate committed credit facility agreements aggregating $
There were
Schlumberger Limited fully and unconditionally guarantees the securities issued by certain of its subsidiaries, including securities issued by Schlumberger Investment SA and Schlumberger Finance Canada Ltd., both wholly-owned subsidiaries of Schlumberger.
8. Derivative Instruments and Hedging Activities
As a multinational company, Schlumberger conducts its business in over
Schlumberger is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency. Schlumberger uses foreign currency forward contracts to provide a hedge against a portion of these cash flow risks. These contracts are accounted for as cash flow hedges, with the 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.
10
Schlumberger is also exposed to risks on future cash flows relating to certain of its fixed rate debt denominated in currencies other than the functional currency. Schlumberger uses cross-currency swaps to provide a hedge against these cash flow risks. Included in Other Assets was $
During 2019, a US-dollar functional currency subsidiary of Schlumberger issued €
During 2020, a US-dollar functional currency subsidiary of Schlumberger issued €
During 2020, a US-dollar functional currency subsidiary of Schlumberger issued €
During 2020, a Canadian dollar functional currency subsidiary of Schlumberger issued $
During the fourth quarter of 2021 and the first quarter of 2022, Schlumberger entered into derivative contracts that hedge the price of oil relating to approximately
Schlumberger is exposed to changes in the fair value of assets and liabilities denominated in currencies other than the functional currency. While Schlumberger uses foreign currency forward contracts to economically hedge this exposure as it relates to certain currencies, these contracts are not designated as hedges for accounting purposes. Instead, the fair value of the contracts is recorded on the Consolidated Balance Sheet and changes in the fair value are recognized in the Consolidated Statement of Income, as are changes in the fair value of the hedged item.
At March 31, 2022, contracts were outstanding for the US dollar equivalent of $
Other than the previously mentioned cross-currency swaps and commodity hedges, the fair value of the other outstanding derivatives was
11
The effect of derivative instruments designated as cash flow hedges, and those not designated as hedges, on the Consolidated Statement of Income was as follows:
|
|
(Stated in millions) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized in Income |
|
|
|
|||||
|
|
Three Months Ended March 31, |
|
|
|
|||||
|
|
2022 |
|
|
2021 |
|
|
Consolidated Statement of Income Classification |
||
|
Derivatives designated as cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
Cross currency swaps |
$ |
( |
) |
|
$ |
( |
) |
|
Cost of services/sales |
|
Commodity contracts |
|
( |
) |
|
|
- |
|
|
Revenue |
|
Foreign exchange contracts |
|
( |
) |
|
|
|
|
|
Cost of services/sales |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
$ |
( |
) |
|
$ |
|
|
|
Cost of services/sales |
9. Contingencies
Schlumberger is party to various 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 with respect to any currently pending legal proceeding is remote. However, litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings.
10. Segment Information
|
|
|
|
|
|
(Stated in millions) |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2022 |
|
|
First Quarter 2021 |
|
||||||||||
|
|
|
|
|
|
Income |
|
|
|
|
|
|
Income |
|
||
|
|
|
|
|
|
Before |
|
|
|
|
|
|
Before |
|
||
|
|
Revenue |
|
|
Taxes |
|
|
Revenue |
|
|
Taxes |
|
||||
|
Digital & Integration |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Reservoir Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations & other |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & other (1) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Interest income (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (3) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Charges and credits (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
(1) |
|
|
(2) |
|
|
(3) |
|
|
(4) |
|
12
Revenue by geographic area was as follows:
|
|
(Stated in millions) |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
North America |
$ |
|
|
|
$ |
|
|
|
Latin America |
|
|
|
|
|
|
|
|
Europe/CIS/Africa |
|
|
|
|
|
|
|
|
Middle East & Asia |
|
|
|
|
|
|
|
|
Eliminations & other |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
North America and International revenue disaggregated by segment was as follows:
|
|
|
|
|
|
|
|
|
|
(Stated in millions) |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2022 |
|
|||||||||||||
|
|
North |
|
|
|
|
|
|
Eliminations |
|
|
|
|
|
||
|
|
America |
|
|
International |
|
|
& other |
|
|
Total |
|
||||
|
Digital & Integration |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Reservoir Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations & other |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2021 |
|
|||||||||||||
|
|
North |
|
|
|
|
|
|
Eliminations |
|
|
|
|
|
||
|
|
America |
|
|
International |
|
|
& other |
|
|
Total |
|
||||
|
Digital & Integration |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Reservoir Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations & other |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Revenue in excess of billings related to contracts where revenue is recognized over time was $
Due to the nature of its business, Schlumberger does not have significant backlog. Total backlog was $
Billings and cash collections in excess of revenue was $
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The conflict in Ukraine that began in late February 2022 continues as of the date of this quarterly report. Schlumberger is deeply focused on the safety and security of its employees and their families in Ukraine, Russia and throughout the affected region.
Schlumberger’s executive leadership established local and global crisis management teams which began meeting regularly in February 2022 to respond to the crisis and its effect on Schlumberger’s employees, business and operations, including impacts related to increased economic sanctions and export controls. In March 2022, Schlumberger decided to immediately suspend new investment and technology deployment to its Russia operations.
Russia represented approximately 5% of Schlumberger’s worldwide revenue during the first quarter of 2022. The carrying value of Schlumberger’s net assets in Russia was approximately $0.8 billion as of March 31, 2022. This consisted of $0.2 billion of receivables, $0.2 billion of inventories, $0.3 billion of other current assets, $0.3 billion of fixed assets, $0.1 billion of other non-current assets and $0.3 billion of current liabilities.
Schlumberger continues to actively monitor this dynamic situation and comply with applicable international laws and sanctions. The extent to which Schlumberger’s operations and financial results (including the need to potentially write-down the carrying value of certain assets) may be affected by the ongoing conflict in Ukraine will depend on various factors, including the extent and duration of the conflict; the effects of the conflict on regional and global economic and geopolitical conditions; the effect of further international sanctions and trade control restrictions on Schlumberger’s business, the global economy and global supply chains; and the impact of further devaluation of the ruble. Continuation or escalation of the conflict may also aggravate the risk factors that Schlumberger identified in its Annual Report on Form 10-K for the year ended December 31, 2021.
First Quarter 2022 Compared to Fourth Quarter 2021
|
|
|
|
|
|
(Stated in millions) |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2022 |
|
|
Fourth Quarter 2021 |
|
||||||||||
|
|
|
|
|
|
Income Before |
|
|
|
|
|
|
Income Before |
|
||
|
|
Revenue |
|
|
Taxes |
|
|
Revenue |
|
|
Taxes |
|
||||
|
Digital & Integration |
$ |
857 |
|
|
$ |
292 |
|
|
$ |
889 |
|
|
$ |
335 |
|
|
Reservoir Performance |
|
1,210 |
|
|
|
160 |
|
|
|
1,287 |
|
|
|
200 |
|
|
Well Construction |
|
2,398 |
|
|
|
388 |
|
|
|
2,388 |
|
|
|
368 |
|
|
Production Systems |
|
1,604 |
|
|
|
114 |
|
|
|
1,765 |
|
|
|
159 |
|
|
Eliminations & other |
|
(107 |
) |
|
|
(60 |
) |
|
|
(104 |
) |
|
|
(76 |
) |
|
|
|
|
|
|
|
894 |
|
|
|
|
|
|
|
986 |
|
|
Corporate & other (1) |
|
|
|
|
|
(164 |
) |
|
|
|
|
|
|
(140 |
) |
|
Interest income (2) |
|
|
|
|
|
2 |
|
|
|
|
|
|
|
14 |
|
|
Interest expense (3) |
|
|
|
|
|
(120 |
) |
|
|
|
|
|
|
(123 |
) |
|
Charges and credits (4) |
|
|
|
|
|
26 |
|
|
|
|
|
|
|
18 |
|
|
|
$ |
5,962 |
|
|
$ |
638 |
|
|
$ |
6,225 |
|
|
$ |
755 |
|
|
(1) |
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items. |
|
(2) |
Interest income excludes amounts which are included in the segments’ income ($12 million in Q1 2022; $1 million in Q4 2021). |
|
(3) |
Interest expense excludes amounts which are included in the segments’ income ($3 million in Q1 2022; $4 million in Q4 2021). |
|
(4) |
Charges and credits are described in detail in Note 2 to the Consolidated Financial Statements. |
First-quarter 2022 revenue of $6.0 billion decreased 4% sequentially. Geographically, North America revenue was flat sequentially and international revenue declined 5% sequentially.
The sequential revenue decline primarily reflects the typical seasonal activity decline in the Northern Hemisphere, with the decline in Europe/CIS/Africa more pronounced due to the depreciation of the ruble, as well as global supply chain constraints impacting Production Systems. In contrast, North America and Latin America revenue was essentially flat sequentially. By Division, Well Construction revenue was slightly higher than last quarter as strong drilling activity in North America, Latin America, and the Middle
14
East more than offset the seasonal reductions in Europe/CIS/Africa and Asia. Reservoir Performance, Production Systems, and Digital & Integration were sequentially lower due to seasonal reductions in activity and sales.
Moving forward, the outlook for the rest of 2022—particularly in the second half—remains positive with both short- and long-cycle investments accelerating. Notably, a number of final investment decisions for long-cycle development projects have been approved, new contracts were awarded, offshore exploration drilling is resuming, and several customers have announced a significant step-up in their spending plans for this year and over the next few years.
Consequently, it is Schlumberger’s view that increased activity—both on land and offshore—higher technology adoption, and pricing momentum will drive simultaneous growth internationally and in North America. This will result in a sequential seasonal rebound in the second quarter followed by significant growth in the second half of the year, particularly in the international market.
With this backdrop and despite the uncertainty linked to Russia, Schlumberger believes the current market dynamics should allow it to maintain its full-year ambitions of year-on-year revenue growth in the mid-teens. Schlumberger’s positive outlook extends further into 2023 and beyond as it anticipates successive years of market growth. As demand continues to strengthen and new investments are committed to diversify energy supply, the duration and scale of this upcycle may potentially prove higher than originally anticipated, absent a setback in the economic recovery.
Digital & Integration
Digital & Integration revenue of $857 million decreased 4% sequentially due to seasonally lower sales of digital and exploration data licenses primarily in North America and Europe/CIS/Africa. This decline was partially offset by strong contribution from our APS projects in Ecuador with the resumption of production following the pipeline disruptions in the previous quarter.
Digital & Integration pretax operating margin of 34% contracted 372 bps sequentially primarily due to the effects of lower sales of digital and exploration data licenses.
Reservoir Performance
Reservoir Performance revenue of $1.2 billion decreased 6% sequentially due to seasonal activity reductions, primarily in the Northern Hemisphere as well as reduced intervention and stimulation activity in Latin America. Revenue was also impacted by the depreciation of the ruble.
Reservoir Performance pretax operating margin of 13% contracted 232 bps sequentially due to reduced profitability from seasonally lower evaluation and stimulation activity, primarily in the Northern Hemisphere.
Well Construction
Well Construction revenue of $2.4 billion was slightly higher sequentially driven by strong drilling activity in North America, Latin America, and the Middle East that was largely offset by seasonal reductions in Europe/CIS/Africa and Asia as well as the effects of the depreciation of the ruble.
Well Construction pretax operating margin of 16% expanded 77 bps sequentially due to improved profitability in integrated drilling.
Production Systems
Production Systems revenue of $1.6 billion declined 9% sequentially due to lower sales of well production systems across all areas and reduced revenue from subsea projects. Revenue was temporarily impacted by supply chain and logistics constraints resulting in lower-than-expected product deliveries.
Production Systems pretax operating margin of 7% declined 192 bps sequentially. The margin contraction was primarily due to reduced profitability in well production systems driven by the impact of global supply chain and logistics constraints.
15
First Quarter 2022 Compared to First Quarter 2021
|
|
|
|
|
|
|
(Stated in millions) |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2022 |
|
|
First Quarter 2021 |
|
||||||||||
|
|
|
|
|
|
|
Income |
|
|
|
|
|
|
Income |
|
||
|
|
|
|
|
|
|
Before |
|
|
|
|
|
|
Before |
|
||
|
|
|
Revenue |
|
|
Taxes |
|
|
Revenue |
|
|
Taxes |
|
||||
|
Digital & Integration |
|
$ |
857 |
|
|
$ |
292 |
|
|
$ |
772 |
|
|
$ |
247 |
|
|
Reservoir Performance |
|
|
1,210 |
|
|
|
160 |
|
|
|
1,002 |
|
|
|
102 |
|
|
Well Construction |
|
|
2,398 |
|
|
|
388 |
|
|
|
1,936 |
|
|
|
210 |
|
|
Production Systems |
|
|
1,604 |
|
|
|
114 |
|
|
|
1,590 |
|
|
|
138 |
|
|
Eliminations & other |
|
|
(107 |
) |
|
|
(60 |
) |
|
|
(77 |
) |
|
|
(33 |
) |
|
|
|
|
|
|
|
|
894 |
|
|
|
|
|
|
|
664 |
|
|
Corporate & other (1) |
|
|
|
|
|
|
(164 |
) |
|
|
|
|
|
|
(150 |
) |
|
Interest income (2) |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
4 |
|
|
Interest expense (3) |
|
|
|
|
|
|
(120 |
) |
|
|
|
|
|
|
(132 |
) |
|
Charges and credits (4) |
|
|
|
|
|
|
26 |
|
|
|
|
|
|
|
- |
|
|
|
|
$ |
5,962 |
|
|
$ |
638 |
|
|
$ |
5,223 |
|
|
$ |
386 |
|
|
(1) |
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items. |
|
(2) |
Interest income excludes amounts which are included in the segments’ income ($12 million in 2022; $1 million in 2021). |
|
(3) |
Interest expense excludes amounts which are included in the segments’ income ($3 million in 2022; $4 million in 2021). |
|
(4) |
Charges and credits are described in detail in Note 2 to the Consolidated Financial Statements. |
First quarter 2022 revenue of $6.0 billion increased 14% year-on-year. Year-on-year revenue growth was led by Well Construction and Reservoir Performance, both of which grew more than 20%—outperforming global rig count growth. Digital & Integration revenue grew 11%, while Production Systems revenue increased 1%. In Digital & Integration, growth was driven by strong digital sales, increased exploration data license sales, and higher revenue from APS projects. In contrast, Production Systems growth was temporarily hampered by ongoing supply chain and logistics constraints, resulting in lower-than-expected product deliveries.
On a geographical basis, revenue growth compared to the same quarter last year was broad-based, with international revenue increasing 10% and North America growing 32%. International growth was widespread across all areas, led by Latin America. Europe/CIS/Africa grew primarily from higher Production Systems sales in Turkey and increased exploration drilling in offshore Africa. Middle East & Asia revenue increased due to higher drilling, stimulation, and intervention activity. In North America, growth was pervasive across drilling and completions activity, coupled with a strong contribution from the APS project in Canada.
Digital & Integration
First quarter 2022 revenue increased 11% to $0.9 billion, with growth in all areas driven by strong digital sales, increased exploration data license sales, and higher revenue from APS projects.
Year-on-year, pretax operating margin expanded 201 bps to 34% with improvement across all areas due to increased profitability in digital, exploration data licenses, and APS projects.
Reservoir Performance
First quarter 2022 revenue increased 21% to $1.2 billion as double-digit growth was posted in evaluation, intervention, and stimulation services both on land and offshore, with more exploration-related activity during the quarter.
Pretax operating margin expanded 299 bps year-on-year to 13%, due to improved profitability in evaluation and intervention activity.
16
Well Construction
First quarter 2022 revenue of $2.4 billion increased 24% year-on-year. Double-digit growth was recorded in drilling fluids, measurements, and in integrated drilling activity both on land and offshore.
Pretax operating margin expanded 534 bps year-on-year to 16%, with profitability improving in integrated drilling, equipment sales, and measurements services.
Production Systems
First quarter revenue of $1.6 billion increased 1% year-on-year. Double-digit growth in North America and Europe & Africa was driven by new projects in contrast to reductions in Middle East & Asia and Latin America resulting from the end of projects and temporary supply chain constraints.
Pretax operating margin of 7% declined 159 bps year-on-year. The margin contraction was primarily due to reduced profitability in well production systems driven primarily by the impact of global supply chain and logistics constraints.
Interest and Other Income
Interest & other income consisted of the following:
|
(Stated in millions) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
Earnings of equity method investments |
$ |
10 |
|
|
$ |
14 |
|
|
Interest income |
|
14 |
|
|
|
5 |
|
|
Gain on sale of Liberty shares |
|
26 |
|
|
|
- |
|
|
|
$ |
50 |
|
|
$ |
19 |
|
Other
Research & engineering and General & administrative expenses, as a percentage of Revenue, for the first quarter ended March 31, 2022 and 2021 were as follows:
|
|
First Quarter |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
Research & engineering |
|
2.4 |
% |
|
|
2.6 |
% |
|
General & administrative |
|
1.6 |
% |
|
|
1.5 |
% |
The effective tax rate for the first quarter of 2022 was 18%, as compared to 19% for the same period of 2021.
Charges and Credits
On December 31, 2020, Schlumberger contributed its onshore hydraulic fracturing business in the United States and Canada, including its pressure pumping, pumpdown perforating and Permian frac sand business to Liberty Energy Inc. (“Liberty”) in exchange for an equity interest in Liberty. During the first quarter of 2022, Schlumberger sold 7.2 million of its shares of Liberty and received proceeds of $84 million. As a result of this transaction Schlumberger recognized a gain of $26 million. This gain is classified in Interest & other income in the Consolidated Statement of Income. As of March 31, 2022, Schlumberger had a 27% equity interest in Liberty.
Schlumberger did not record any charges or credits during the first quarter of 2021.
17
Liquidity and Capital Resources
Details of the components of liquidity as well as changes in liquidity follow:
|
|
(Stated in millions) |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar. 31, |
|
|
Mar. 31, |
|
|
Dec. 31, |
|
|||
|
Components of Liquidity: |
2022 |
|
|
2021 |
|
|
2021 |
|
|||
|
Cash |
$ |
1,600 |
|
|
$ |
1,268 |
|
|
$ |
1,757 |
|
|
Short-term investments |
|
1,049 |
|
|
|
1,642 |
|
|
|
1,382 |
|
|
Short-term borrowings and current portion of long-term debt |
|
(923 |
) |
|
|
(749 |
) |
|
|
(909 |
) |
|
Long-term debt |
|
(13,163 |
) |
|
|
(15,834 |
) |
|
|
(13,286 |
) |
|
Net debt (1) |
$ |
(11,437 |
) |
|
$ |
(13,673 |
) |
|
$ |
(11,056 |
) |
|
|
Three Months Ended Mar. 31, |
|
|||||
|
Changes in Liquidity: |
2022 |
|
|
2021 |
|
||
|
Net income |
$ |
520 |
|
|
$ |
312 |
|
|
Depreciation and amortization (2) |
|
533 |
|
|
|
532 |
|
|
Earnings of equity method investments, less dividends received |
|
6 |
|
|
|
(13 |
) |
|
Deferred taxes |
|
(14 |
) |
|
|
(29 |
) |
|
Stock-based compensation expense |
|
89 |
|
|
|
84 |
|
|
Increase in working capital (3) |
|
(948 |
) |
|
|
(455 |
) |
|
Other |
|
(55 |
) |
|
|
(2 |
) |
|
Cash flow from operations |
|
131 |
|
|
|
429 |
|
|
Capital expenditures |
|
(304 |
) |
|
|
(178 |
) |
|
APS investments |
|
(168 |
) |
|
|
(85 |
) |
|
Multiclient seismic data costs capitalized |
|
(40 |
) |
|
|
(7 |
) |
|
Free cash flow (4) |
|
(381 |
) |
|
|
159 |
|
|
Dividends paid |
|
(175 |
) |
|
|
(174 |
) |
|
Proceeds from employee stock plans |
|
71 |
|
|
|
62 |
|
|
Business acquisitions and investments, net of cash acquired plus debt assumed |
|
- |
|
|
|
(13 |
) |
|
Proceeds from sale of Liberty shares |
|
84 |
|
|
|
- |
|
|
Other |
|
(105 |
) |
|
|
(61 |
) |
|
Change in net debt before impact of changes in foreign exchange rates on net debt |
|
(506 |
) |
|
|
(27 |
) |
|
Impact of changes in foreign exchange rates on net debt |
|
125 |
|
|
|
234 |
|
|
(Increase) decrease in net debt |
|
(381 |
) |
|
|
207 |
|
|
Net debt, beginning of period (1) |
|
(11,056 |
) |
|
|
(13,880 |
) |
|
Net debt, end of period (1) |
$ |
(11,437 |
) |
|
$ |
(13,673 |
) |
|
(1) |
“Net debt” represents gross debt less cash and short-term investments. Management believes that Net debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt. Net debt is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, total debt. |
|
(2) |
Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs, and APS investments. |
|
(3) |
Includes severance payments of $22 million and $112 million during the three months ended March 31, 2022 and 2021, respectively. |
|
(4) |
“Free cash flow” represents cash flow from operations less capital expenditures, APS investments and multiclient seismic data costs capitalized. Management believes that free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of our ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations. |
Key liquidity events during the first three months of 2022 and 2021 included:
|
• |
Capital investments (consisting of capital expenditures, APS investments and multiclient seismic data capitalized) were $0.5 billion during the first three months of 2022 compared to $0.3 billion during the first three months of 2021. Capital investments |
18
|
during the full year of 2022 are expected to be between $1.9 billion and $2.0 billion as compared to $1.7 billion for the full year 2021. |
|
• |
During the first quarter of 2022 working capital consumed $948 million of liquidity as compared to $455 million during the same quarter of 2021. The year-on-year increase in working capital consumption was primarily driven by an increase in inventory ahead of the anticipated growth as well as an increase in receivables following the exceptional cash collections experienced in the fourth quarter of 2021. |
|
• |
On January 21, 2016, the Board 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 March 31, 2022. Schlumberger did not repurchase any of its common stock during the first three months of 2022. |
As of March 31, 2022, Schlumberger had $2.65 billion of cash and short-term investments on hand. Schlumberger had committed debt facility agreements aggregating $6.58 billion, all of which was available and unused. Schlumberger believes these amounts are sufficient to meet future business requirements for at least the next 12 months.
There were no borrowings under the commercial paper programs at March 31, 2022.
On April 21, 2022, Schlumberger’s Board of Directors approved a 40% increase in the quarterly cash dividend from $0.125 per share of outstanding common stock to $0.175 per share, beginning with the dividend payable on July 14, 2022, to stockholders of record on June 1, 2022.
Schlumberger maintains an allowance for doubtful accounts in order to record accounts receivable at their net realizable value. Judgment is involved in recording and making adjustments to this reserve. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved, or if the financial condition of Schlumberger’s customers were to deteriorate resulting in an impairment of their ability to make payments. As a large multinational company with a long history of operating in a cyclical industry, Schlumberger has extensive experience in working with its customers during difficult times to manage its accounts receivable.
Schlumberger generates revenue in more than 120 countries. As of March 31, 2022, only four of those countries individually accounted for greater than 5% of Schlumberger’s net receivable balance, of which only two (the United States and Mexico) accounted for greater than 10% of such receivables.
Included in Receivables, less allowance for doubtful accounts in the Consolidated Balance Sheet as of March 31, 2022 is approximately $0.6 billion of receivables relating to Mexico. Schlumberger’s receivables from its primary customer in Mexico are not in dispute and Schlumberger has not historically had any material write-offs due to uncollectible accounts receivable relating to this customer.
FORWARD-LOOKING STATEMENTS
This first-quarter 2022 Form 10-Q, as well as other statements we make, contains “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as “expect,” “may,” “can,” “believe,” “predict,” “plan,” “potential,” “projected,” “projections,” “forecast,” “estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,” “think,” “should,” “could,” “would,” “will,” “see,” “likely,” and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about Schlumberger’s financial and performance targets and other forecasts or expectations regarding, or dependent on, its business outlook; growth for Schlumberger as a whole and for each of its Divisions (and for specified business lines, geographic areas or technologies within each Division); oil and natural gas demand and production growth; oil and natural gas prices; forecasts or expectations regarding energy transition and global climate change; improvements in operating procedures and technology; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger, including digital and “fit for basin,” as well as the strategies of Schlumberger’s customers; Schlumberger’s effective tax rate; Schlumberger’s APS projects, joint ventures, and other alliances; Schlumberger’s response to the COVID-19 pandemic and its preparedness for other widespread health emergencies; the impact of the ongoing conflict in Ukraine on global energy supply; access to raw materials; future global economic and geopolitical conditions; future liquidity; and future results of operations, such as margin levels. These statements are subject to risks and uncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of Schlumberger’s customers and suppliers; Schlumberger’s inability to achieve its financial and performance targets and other forecasts and expectations; Schlumberger’s inability to achieve net-zero carbon emissions goals or interim emissions reduction goals; general economic, geopolitical and business conditions in key regions of the world; the ongoing conflict in Ukraine; foreign currency risk;
19
pricing pressure; inflation; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays or cancellations; challenges in Schlumberger’s supply chain; production declines; the extent of future charges; Schlumberger’s inability to recognize efficiencies and other intended benefits from its business strategies and initiatives, such as digital or Schlumberger New Energy, as well as its cost reduction strategies; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals and climate-related initiatives; the inability of technology to meet new challenges in exploration; the competitiveness of alternative energy sources or product substitutes; and other risks and uncertainties detailed in this Form 10-Q and our most recent Form 10-K and Forms 8-K filed with or furnished to the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this first-quarter 2022 Form 10-Q are made as of April 27, 2022, and 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, 2021. Schlumberger’s exposure to market risk has not changed materially since December 31, 2021.
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 was no change in Schlumberger’s internal control over financial reporting 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.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The information with respect to this Item 1 is set forth under Note 9—Contingencies, in the accompanying Consolidated Financial Statements.
Item 1A. Risk Factors.
As of the date of this filing, there have been no material changes from the risk factors disclosed in Part 1, Item 1A, of Schlumberger’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
None.
Issuer Repurchases of Equity Securities
As of March 31, 2022, Schlumberger had repurchased $1.0 billion of Schlumberger common stock under its $10 billion share repurchase program. Schlumberger did not repurchase any of its common stock during the first quarter of 2022.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Our mining operations 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.
In 2013, Schlumberger completed the wind down of its service operations in Iran. Prior to this, certain non-US subsidiaries provided oilfield services to the National Iranian Oil Company and certain of its affiliates (“NIOC”).
Schlumberger’s residual transactions or dealings with the government of Iran during the first quarter of 2022 consisted of payments of taxes and other typical governmental charges. Certain non-US subsidiaries of Schlumberger maintain depository accounts at the Dubai branch of Bank Saderat Iran (“Saderat”), and at Bank Tejarat (“Tejarat”) in Tehran and in Kish for the deposit by NIOC of amounts owed to non-US subsidiaries of Schlumberger for prior services rendered in Iran and for the maintenance of such amounts previously received. One non-US subsidiary also maintained an account at Tejarat for payment of local expenses such as taxes. Schlumberger anticipates that it will discontinue dealings with Saderat and Tejarat following the receipt of all amounts owed to Schlumberger for prior services rendered in Iran.
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Item 6. Exhibits.
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* Exhibit 22—Issuers of Registered Guaranteed Debt Securities |
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* Exhibit 95—Mine Safety Disclosures |
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* Exhibit 101.INS—Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document |
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* Exhibit 101.SCH—Inline XBRL Taxonomy Extension Schema Document |
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* Exhibit 101.CAL—Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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* Exhibit 101.DEF—Inline XBRL Taxonomy Extension Definition Linkbase Document |
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* Exhibit 101.LAB—Inline XBRL Taxonomy Extension Label Linkbase Document |
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* Exhibit 101.PRE—Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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Exhibit 104—Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Filed with this Form 10-Q. |
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Furnished with this Form 10-Q. |
(+) Management contracts or compensatory plans or arrangements.
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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.
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Schlumberger Limited (Registrant) |
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Date: |
April 27, 2022 |
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/s/ Howard Guild |
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Howard Guild |
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Chief Accounting Officer and Duly Authorized Signatory |
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