Schlumberger 4Q15 Earnings Call Notes

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Paal Kibsgaard

Annual budgets were exhausted well before the half way point of the quarter

“For many of our customers, available cash and annual budgets were exhausted well before the half way point over the fourth quarter, leading to unscheduled and abrupt activity cancellations, creating an operating environment that is increasingly complex to navigate and where the traditional year-end product and multiclient seismic sales were largely muted.”

We still believe the underlying balance of supply and demand continues to tighten

” we still believe that the underlying balance of supply and demand continues to tighten, driven by both solid growth in demand and by weakening supply as the dramatic cuts in E&P investments are starting to take effect. In North America, our shale oil production is declining more or less as we expected and was in December below the levels from one year ago.”

We have gotten the low hanging fruit of cost cuts but now we’re getting to a deeper part of the transformation

“I think it’s fair to say, like you say that a lot of the low hanging fruits we’ve already picked, but we’re now getting into the deeper part of the transformation where we’re making significant structural changes to how we go about doing our work and conducting our business. ”

$5B of FCF in this environment is not bad

“2015 was another solid year. It was not perfect. There were several things that I think we could have done better, but $5 billion of free cash flow in this environment is not bad. “\

Don’t think that 2017 will be worse, but not ready to say we’re troughing in 2016

“I think it’s too early to say Jim, but I’m — I don’t currently think that 2017 is going to be worse. I think — but with that said, I’m still not ready to say that we are troughing in 2016. I’ll be focusing in on executing basically quarter-by-quarter. I’m still optimistic, and I would hope that 2016 is the trough, but I’m not ready to rule on it yet.”

2016 will be another challenging year

“2016 will be another challenging year during which we will aim to continue to deliver superior financial results empowered with proceeding and capitalizing on the broad opportunity set the current market environment presents. “