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Must-know: What's in store for oilfield service stocks this year?

Part 6
Must-know: What's in store for oilfield service stocks this year? (Part 6 of 8)

Schlumberger 4Q13 Earnings Highlights

On January 17, Schlumberger (SLB) reported 4Q13 earnings. Highlights include the following:

Schlumberger posted 4Q13 adjusted net income of $1.35 per share, compared to consensus estimates of $1.33. Adjusted EPS increased 5% sequentially from 3Q13 EPS of $1.29, and increased 30% year-over-year from 4Q12 EPS of $1.04. Adjusted net income in 4Q13 was $1.8 billion, compared to $1.7 billion in 3Q13 and $1.4 billion in 4Q12.

Adjusted net income for 2013 was $6.3 billion, compared to $5.4 billion in 2012 ($4.75 per diluted share in 2013 vs. $4.01 per diluted share in 2012).

2014.01.29 - SLB Adjusted EPSEnlarge Graph

Revenue during 4Q13 totaled $11.9 billion, compared to consensus estimates of $12.0 billion. Revenue during 4Q13 increased 3% over 3Q13 revenue of $11.6 billion, and 7% over 4Q12 revenue of $11.1 billion. Revenue for the full year 2013 totaled $45.3 billion, an 8% increase over 2012 revenue of $41.7 billion.

2014.01.29 - SLB RevenuesEnlarge Graph

Regarding specific geographies, SLB stated:

  1. Continued strength in Saudi Arabia, the United Arab Emirates, Malaysia, and Australia is driving strong Middle East & Asia results, resulting in a 5% increase in quarterly revenue (4Q13 vs. 3Q13).
  2. North America remains mixed, with deepwater activity in the Gulf of Mexico strong, offset by pricing weakness in most onshore product lines, resulting in a 1% increase in quarterly revenue (4Q13 vs. 3Q13).
  3. Latin America benefited from deepwater exploration activities in Mexico and Central America, as well as strength in Argentina and Ecuador, resulting in a 3% increase in quarterly revenue (4Q13 vs. 3Q13).
  4. Europe/CIS/Africa saw strong product and software sales across the area, as well as high activities in Angola, Azerbaijan, and Turkmenistan partially offset by seasonal slowdowns in Russia and the North Sea, resulting in a 1% increase in quarterly revenue  (4Q13 vs. 3Q13).

Capex in 4Q13 was $1.2 billion. Capex for full-year was $3.9 billion, a 16% decrease from 2012 levels of $4.7 billion. Free cash flow in 4Q13 was $2.5 billion, helped by a working capital improvement of $1.2 billion. During 2013, SLB generated ~$5.5 billion of free cash flow.

Capex in 4Q13 was $859 million. Capex for full-year 2013 was $2.9 billion, a 41% decrease from 2012 levels of $2.1 billion. Free cash flow in 4Q13 was $1.0 billion. During 2013, HAL generated $1.5 billion of free cash flow, compared to free cash flow of $88 million over 2012.

Also in 4Q13, SLB repurchased $1.07 billion of stock (11.9 million shares). During 2013, SLB repurchased a total of $2.6 billion of shares and paid out $1.6 billion in dividends.. Note that in July 2013, SLB’s board approved a $10 billion share repurchase program, to be completed by June 30, 2018. In January 2014, SLB’s board also approved a 28% increase in the quarterly dividend from $0.3125 to $0.40 per share.

On the company’s earnings call, Halliburton stated that it had previously stated that it would grow its percentage of cash available for distribution to shareholders up to ~35% of operating cash flows over the next few years, and it affirmed that given 2013’s results, it was on track to meet this goal. The company intends for its dividend payout going forward to be at least 15% to 20% of net income. Plus, Halliburton’s Board of Directors has authorized ~$1.7 billion in share repurchases.

Debt at the end of the year was $13.2 billion, compared to $12.4 billion at September 30, and $11.6 billion at year end 2012. Total cash and short-term investments at year-end 2013 totaled $8.4 billion (inc. $4.9 billion of short-term investments), compared to cash and short-term investments at 3Q13 of $6.4 billion (including $3.3 billion of short-term investments). Total debt-to-cap at year-end was 20%, compared to 19% at 3Q13 and YE2012. During the quarter, SLB issued $1.5 billion of 3.65% 10-year notes, and 500 million euros of 1.5% 5-year notes.

To read about Schlumberger’s guidance for the year, please continue to the next section of this series.

 

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