SLB Limited Common Shares

Ladies and gentlemen, thank you for standing by and welcome to the Schlumberger Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, this conference call is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations, Simon Ferrant. Please go ahead.

Good morning, good afternoon, and welcome to the Schlumberger Limited second quarter 2019 earnings call. Today's call is being hosted from Paris, France, following the Schlumberger Limited board meeting. Joining us on the call are Paul Kipsgaard, Chairman and Chief Executive Officer, Simon Eyre, Chief Financial Officer, and Olivier Lepouche, Chief Operating Officer. We will, as usual, first go through our prepared remarks, after which we'll open up for questions. For today's agenda, Simon will first present comments on our second quarter financial performance before Olivier reviews our results by geography. Paul will close our remarks with a discussion of our technology portfolio and our updated view of the industry macro. However, before we begin, I'd like to remind the participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest 10-K filing and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measure can be found in our second quarter press release, which is on our website. Finally, after our prepared remarks, we ask that you please limit yourself to one question and one related follow-up during the Q&A period in order to allow more time for others who may be in the queue. Now, I'll hand the call over to Simon Ayat.

Thank you, Simon. Ladies and gentlemen, thank you for participating in this conference call. Second quarter earnings per share was 35 cents. Excluding charges and credits, this represents an increase of 5 cents sequentially and a decrease of 8 cents when compared to the same quarter last year. There were no charges or credits recorded during the quarter. Our second quarter revenue of $8.3 billion increased 5 percent sequentially, largely driven by our international operations. Pre-tax segment operating margins increased by 17 basis points to 11.7%. Highlights by product group were as follows. Second quarter reservoir characterization revenue of $1.6 billion increased 7% sequentially due to activity increases beyond the normal seasonal improvements we typically experience in a Q2. These increases were primarily driven by strong multi-client license sales and higher international wireline activity. Margins increased 81 basis points to 19.8% due to the increased contributions from higher margin wireline activity and multi-client. Drilling revenue of $2.4 billion increased 1% as a stronger activity in the international areas was partially offset by lower drilling activity in North America land. Margins decreased 45 basis points to 12.4%. Production revenue of $3.1 billion increased 6.5% sequentially. primarily driven by higher international activity across all the product lines. Margins were essentially flat at 8% as the improvements in international margins from higher activity was offset by the effects of pricing pressure in North America land. Cameron revenue of $1.2 billion increased 5% sequentially margins increased 94 basis points to 12.6%. These increases were primarily driven by 1 sub C and surface systems. The book-to-bill ratio for the Cameron long cycle businesses was 1.2 in the second quarter. The 1 sub C backlog increased to $2.2 billion at the end of the second quarter. Now turning to Schlumberger as a whole, the effective tax rate was 16.7% in the second quarter compared to 15.5% in the previous quarter. This increase was a result of the geographic mix of earnings. In terms of cash flow, we generated $1.1 billion from operations, leading to $459 million of a free cash flow. Good performance for the second quarter despite the temporary delays in receivable collection that we experienced in certain regions. Our net debt increased $335 million during the quarter to $14.7 billion. We ended the quarter with total cash and investment of $2.3 billion. During the quarter, we spent $101 million to repurchase 2.5 million shares at an average price of $40.12. Other significant liquidity events during the quarter included capex of approximately $404 million and capitalized costs relating to SPM projects of $181 million. During the quarter, we also made $693 million of dividend payments. Full year 2019 CapEx, excluding SPM and multi-client investment, is still expected to be approximately $1.5 to $1.7 billion. And now, I will turn the conference call over to Olivier.