Schlumberger’s net debt
“Net debt” is defined as aggregate short and long-term debt less cash and cash equivalents. Schlumberger’s (SLB) net debt rose 65% in 1Q17—compared to 1Q16. Its net debt was ~$11.7 billion in 1Q17.
Schlumberger’s total debt fell ~12% in 1Q17—compared to last year. Cash and marketable securities fell 49% during the same period. Its net debt increased in the past year. Compared to 4Q16, its net debt rose 12%. In April 2016, Schlumberger acquired Cameron International. It paid Cameron International’s shareholders $2.8 billion in cash. As a result, Schlumberger’s cash balance was lower in the past year. Schlumberger’s net debt nearly doubled from 1Q15 until the end 1Q17.
Schlumberger’s net debt to trailing 12-month EBITDA (earnings before interest, tax, depreciation, and amortization) was ~7x in 1Q17. The net debt-to-EBITDA ratio rose in 1Q17—compared to the past year—primarily due to a sharp decline in EBITDA. EBITDA is a measure of operating income. Schlumberger accounts for 0.42% of the iShares Russell 1000 ETF (IWB).
Net debt for Schlumberger’s peers
On May 19, 2017, Tidewater (TDW) received approval from the US bankruptcy court related to its ordinary course business activities. Read Did Tidewater’s Waiver Extension Revive the Market’s Outlook? to learn more. Nabors Industries (NBR) had net debt of $3.4 billion in 1Q17, while Weatherford International’s (WFT) net debt was ~$7 billion.
Next, we’ll discuss Schlumberger’s free cash flow.