Schlumberger’s Drilling group
Schlumberger’s (SLB) Drilling group comprises Bits and Advanced Technologies, M-I SWACO, Geoservices, Drilling and Measurements, Drilling Tools and Remedial, and Integrated Project Management well sub-segments. The group manufactures roller cone and fixed cutter drill bits, drilling fluid systems, mud logging services, directional drilling, measurement-while-drilling and logging-while-drilling services, and various drilling tools.
In 2Q14, revenues increased by 9.7% over the same quarter last year to $4.6 billion from $4.2 billion in 2Q13. Revenues increased primarily on account of higher demand for M-I SWACO technologies in Russia, Sub-Saharan Africa, and Latin America. M-I SWACO is the leading supplier of drilling fluid systems that improve drilling performance.
The increase in drilling activity in North America and Russia also resulted in higher demand for drilling tools and services.
Earnings before tax (or EBT) for 2Q14 increased ~23% to $981 million from $800 million in 2Q13. EBT margin improved to 21% in 2Q14 from 18.8% in 2Q13. The higher margin in North American drilling operations and margin improvement in some other international drilling locations helped margins inflate.
In particular, improved drilling efficiency and optimized well placement through application of SLB’s new drilling technologies were instrumental.
SLB’s drill technologies used by leading international drillers
During Q14, the new technologies related to drilling and measurements were used in PetroChina-Shell’s—a joint venture between PetroChina Company, PTR, and Royal Dutch Shell (or RDS)—natural gas rigs in China’s Chang Bei field.
In Turkmenistan, SLB received an integrated service contract for drilling ten rigs in the Galkynysh field during 2Q14.
In its offshore drill operations in Brazil, Shell (RDS) deployed SLB’s PowerDrive Xceed Rotary drill technologies and drilled four deviated wells with higher efficiency level.
In Oman, Petroleum Development Oman—a leading hydrocarbon exploration and production company in Oman—used SLB’s Smith drillbit cutting technology that helped the company improve drill penetration rate.
In the offshore rigs in Azerbaijan, a joint venture between SLB and State Oil Company of Azerbaijan Republic used SLB’s ULTRADRIL fluid systems aimed at improving shale stability and penetration rate.
Key stocks and ETFs
Schlumberger Ltd. (SLB) is a component of the VanEck Vectors Oil Services ETF (OIH) and the Energy Select Sector SPDR (XLE). Other companies in this industry that are components of OIH include Halliburton Company (HAL) and Baker Hughes Inc. (BHI).