Did Schlumberger’s Free Cash Flow Improve in 2Q17?



Schlumberger’s operating cash flows

Schlumberger’s cash from operating activities fell ~47% in 2Q17—compared to 2Q16. Schlumberger generated $858 million in operating cash flows in 2Q17. Despite increased revenues in the past year, negative changes in working capital led to the lower operating cash flow. To learn more, read Oilfield Services Stocks: Free Cash Flow Winners and Losers.

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Free cash flow and capex

Schlumberger’s capital expenditure, or capex, rose ~12% in the past year until 2Q17. The higher capex combined with lower operating cash flows caused the free cash flow to fall 70% in the past year. In 2Q17, Schlumberger’s free cash flow was $355 million—compared to ~$1.2 billion the previous year. The free cash flow excludes Schlumberger’s expenditure on SPM (Schlumberger Production Management) investments and multi-client seismic data. Schlumberger capitalizes on the costs of obtaining multi-client seismic data. Schlumberger’s free cash flow has been positive in the past 13 quarters.

In comparison, Superior Energy Services’ (SPN) free cash flow in 2Q17 was $24 million. National Oilwell Varco’s (NOV) free cash flow in 2Q17 was $106 million, while TechnipFMC’s (FTI) free cash flow was $87 million.

Capex plans for 2017

In 2017, Schlumberger plans to spend $2.2 billion in capex. The estimate remained unchanged in 2Q17—compared to Schlumberger’s previous capex estimates in 1Q17. Schlumberger’s 2017 capex is expected to rise ~5% compared to 2016. Schlumberger accounts for 0.42% of the SPDR S&P 500 ETF (SPY). SPY tracks the price and yield performance of the S&P 500 Index (SPX-INDEX). The SPX-INDEX rose 12% in the past year—compared to a 21% fall in Schlumberger’s stock price.

In the next part, we’ll discuss Schlumberger’s dividend.


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