Schlumberger’s reservoir characterization group in 3Q14

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Nov. 26 2019, Updated 2:32 p.m. ET

About the reservoir characterization group 

Schlumberger Limited’s (SLB) reservoir characterization group includes WesternGeco, wireline, testing services, information solutions, and petrotechnical services. These are the services provided to the oil and gas industry by the reservoir characterization group:

  • Reservoir imaging, monitoring and development
  • Evaluation of subsurface formation rocks and fluids
  • Exploration and production pressure and flow-rate measurement
  • Software, consulting, information management and IT infrastructure
  • Various production enhancement and multi-disciplinary reservoir and production solutions

Reservoir Characterization revenues

Why revenues decreased for the reservoir characterization group

During 3Q14, reservoir-characterization-group revenues decreased by 3% to $3.18 billion, from $3.29 billion recorded in the same period a year ago.

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Revenues decreased primarily in petrotechnical services and because of poor Norway operations performance. Schlumberger’s multi-client seismic sales took a hit in 3Q14. These decreases were partially offset by higher revenues from testing services in Brazil, higher WesternGeco sales, and higher software sales by the company’s information solutions business.

Reservoir Characterization EBT

Why earnings deteriorated

The reservoir characterizations group’s EBT, or earnings before tax, decreased by 3.4% to $954 million in 3Q14, from $988 million in 3Q13. EBT margin remained steady at around 30%. EBT margin is the ratio of earnings before tax to revenues. A lower ratio implies lower profitability.

Operating margins held up due to higher WesternGeco vessel utilization, higher-margin software sales, and improved margins from testing services.

Other oil and gas field-servicing companies running similar businesses include Halliburton Company (HAL), Weatherford International (WFT), and Baker Hughes Incorporated (BHI). All of these are components of the VanEck Vectors Oil Services ETF (OIH).

New technology implementations 

The reservoir characterization group executed some key projects during 3Q14. Its wireline operation implemented Saturn 3D probe technology in Kazakhstan. This technology improved operational efficiencies with faster clean-up in the deeply invaded hydrocarbon zones, and faster fluid content identification at different zones. The same technology was used in Australia by Apache Corporation in the Canning Basin.

In Angola, Schlumberger won a three-year project contract with Total—exploration & production. Schlumberger used its marine isometric seismic technology for this project—an offshore multi-sensor survey for 3D sample data collection.

In Malaysia, Schlumberger’s WesternGeco won a contract using the isometric technology offshore, at Sarawak. The company also won a contract offshore in Norway, using 4D-enabled technology.

In the next part of this series, we’ll review the performance of Schlumberger’s drilling group for the quarter.

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