Schlumberger’s operating cash flows
Schlumberger’s free cash flow and capex
SLB’s capex increased 19% in the year up to Q1 2018. The FCF excludes SLB’s expenditure on SPM investments and multiclient seismic data. SLB capitalizes the costs of obtaining multiclient seismic data. Higher capex, coupled with a fall in CFO, resulted in free cash flow (or FCF) decreasing sharply in the past year. In the first quarter, SLB’s FCF was $114 million. Schlumberger’s FCF has been positive in the past 13 quarters.
FCF compared to peers
Superior Energy Services’ (SPN) Q1 2018 FCF was -$90.6 million, which was worse than Q1 2017. SPN’s cash flow from operations was negative in Q1 2018, which led to the negative FCF.
Schlumberger’s capex plans for 2018
In fiscal 2018, SLB plans to spend around $2 billion in capex, which would be lower than Schlumberger’s fiscal 2017 capex of $2.1 billion. SLB is 14.9% of the iShares US Oil Equipment & Services ETF (IEZ). IEZ tracks an index composed of US equities in the oil equipment and services sector. IEZ increased 6% in the past year versus a 4% rise in SLB’s stock price.
In the next part of this series, we’ll discuss Schlumberger’s dividend and dividend yield.