Reservoir Characterization group business overview
Schlumberger’s (SLB) Reservoir Characterization group includes WesternGeco, Wireline, Testing Services, Schlumberger Information Solutions (or SIS), and PetroTechnical Services. The services provided by the group include:
- reservoir imaging, monitoring, and development services
- evaluation of subsurface formation rocks and fluids
- E&P pressure and flow-rate measurement services
The group also provides software, consulting, information management, and IT infrastructure services to the oil and gas industry, as well as various production enhancement and multi-disciplinary reservoir and production solutions.
Why revenues decreased for the group
During 4Q14, revenues from the Reservoir Characterization group decreased by 6.4% to $3.09 billion from $3.30 billion recorded in the year-ago period.
Revenues decreased primarily due to the seasonal drop in marine seismic activity in the North Sea and Eastern Canada, as well as lower exploration activity in Angola and Russia. These decreases were partially offset by higher revenues from multi-client license and software sales.
Why earnings deteriorated
The Reservoir Characterizations group’s EBT (or earnings before tax) decreased by 7.3% to $956 million in 4Q14 from $1.03 billion in 4Q13. EBT margin remained steady at around 31%. The EBT margin is the ratio of earnings before tax to segment revenues. A lower ratio implies lower profitability.
The group’s operating margin held up due to favorable revenue mix from high-margin multi-client license and software sales. Other oil and gas wellfield servicing companies that run a similar business include Halliburton Company (HAL), Weatherford International (WFT), and Baker Hughes (BHI). All of these companies are components of the VanEck Vectors Oil Services ETF (OIH).
New technology implementations
The Reservoir Characterization group executed some key projects during 4Q14.
In Angola, Schlumberger received ENI Angola, SpA’s interval pressure transient test in a deepwater well. Schlumberger’s Saturn 3D radial probe technology led to efficient capture and retrieval of a reservoir fluid sample for a full drill stem test.
In West Africa, Schlumberger’s WesternGeco received a 4D monitor survey project from Hess Corporation (HES). The company also deployed its Wireline Flow Scanner well production logging and TuffTRAC cased-hole services tractor technologies in Abu Dhabi.
In the Gulf of Mexico, Schlumberger initiated Revolution X survey using its broadband acquisition and imaging technologies for both field development and conventional exploration. The company expects to complete this in 2Q15.
The next article in this series will discuss the performance of SLB’s Drilling Group in 4Q14.