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Schlumberger: This Is "The Most Severe Downturn For Decades", "The Recovery Now Appears To Be Delayed"
Moments ago energy infrastructure giant Schulmberger reported third quarter earnings. We won't waste much time on the numbers (EPS of $0.78 beat consensus estimates by 1 cent due to $545 million in buybacks, and a drop in the effective tax rate, which was nonetheless a 48% plunge Y/Y, on revenue of $8.5bn which missed, and tumbled 33% Y/Y) and instead we will focus on the wording in the press release which, just like Fastenal's from a few days ago, admitted the recession has arrived.
Here it is, with the punchlines highlighted:
Schlumberger Chairman and CEO Paal Kibsgaard commented, “Schlumberger third-quarter revenue decreased 6% sequentially driven by a continuing decline in rig activity and persistent pricing pressure throughout our global operations. North America revenue fell 4% sequentially as we focused on balancing margins and market share, while International revenue dropped 7% due to customer budget cuts, activity disruptions, and service pricing erosion.
“The business environment deteriorated further in the third quarter. However, the cost reduction actions we took in previous quarters and the acceleration of our transformation program enabled us to protect our financial performance in what is shaping up to be the most severe downturn in the industry for decades. As a result of our actions, we have been able to deliver pretax operating margins well above those seen in any previous downturn and we have continued to generate significant liquidity with free cash flow of $1.7 billion in the third quarter, representing 170% of earnings.
“During the first nine months of 2015, our year-on-year revenue has dropped by 34% in North America, and 18% internationally. In spite of the size of these declines, our decremental operating margins over the same period have been limited to 34% in North America, and 23% internationally. These figures continue to be substantially better than those we delivered in the 2009 downturn.
“As we enter the last quarter of the year, the oil market is still weighed down by fears of reduced growth in Chinese demand and the expectations regarding the timing and magnitude of additional Iranian supply. However, the fundamental balance of supply and demand continues to tighten, driven by both solid global macroeconomic growth and by weakening supply as the dramatic cuts in E&P investments are starting to take effect. We expect this trend to continue as the oil market further recognizes the magnitude of the industry’s annual production replacement challenge.
“However, for oilfield services, the market outlook for the coming quarters looks increasingly challenging with activity expected to be reduced further, as lack of available cash flow exhausts capital spending for a number of our customers, leading them to take a conservative view on 2016 E&P spending in spite of any gradual improvement in oil prices. In addition, the winter season will have the normal impact on activity in the fourth quarter, which this year is unlikely to be offset by the usual year-end sales of software, products and multiclient licenses.
“In light of conservative customer budgets for next year, we are therefore entering another period during which we will continually adjust resources in line with activity, as the recovery now appears to be delayed."
* * *
In retrospect, it now appears that what we thought earlier was humor, when Deutsche Bank said it's not a "'recession' recession", wasn't humor at all: DB simply meant a depression is coming.
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don't worry, recovery,
jezzz, they are coming in the real world
No "liftoff"?
We Schlumbergered some folks.
Green shoots shot
It's like a snake eating it's tail.
don't worry about paal, he got plenty
exactly. how long can a corporate snake eat its balance sheet. most are so flush they can thrive for years.
Jamie Gorelick was on the Schlumberger board of directors from 2004-2009, they have a lot of contracts within range of US MENA military activities, pretty much everywhere we removed the government and turned over assets to Muslim gangs Schlumberger was there cashing a check.
http://www.justice.gov/opa/pr/schlumberger-oilfield-holdings-ltd-agrees-...
Gorelick left SLM about 6 MO before the feds discovered the treasonous trade with Iran and Sudan and the USDOJ moved in, later her lawfire (wilmerhale) hired the prosecuting attorney.
Nobody asked GW if he knew (Gorelick was also a GW Bush NSA adviser). Bush also had a former CIA director on the SLM board, John Deutche.
So, you're saying that in addition to their drilling rigs and software and such, their multinational operations afford the US Government a way to cover up CIA intrusions and private military contracts.
Shit, maybe I ought to buy their stock.
We Oompa Loompa'd some folks.
Something is wrong, the stock is down a little on this news.
Slumburger.
scumberger
You better get with the program, Paal. The economy is a Multicultural Rainbow-Shitting Unicorn where everyone is happy, so you'd better join the Kumbaya Chorus if you don't want the IRS on your ass. Gnome Sane?
Unexpectedly...
Don't look now, but your oil drillers are showing ....
I was promised 'green shoots'. You Kenyan cocksucker! I want my fucking 'green shoots' now!! Probably thinks I forgot.
All these percents and this year on year nonsense. How much profit did your company make?
http://www.bizjournals.com/houston/news/news-wire/2015/10/15/export-impo...
https://www.youtube.com/watch?v=7K9xw6ydXbE
Markets will go up on this bad economic narrative. Bang-head and repeat until unconscious.
We are in a depression from 2008.
I don't know about the rest of you, but I just bought about twenty games of Monopoly. When the shit hits the fan, guess what type of money I'm using!
The empire is not prospering.
Heh, heh, heh
Look on the bright side. Bakken production up almost 6% August 2015 over August 2014. Of course, December 2014 v December 2013 was up over 35%.
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
We have been in a depression since US crude oil production peaked and began declining circa 1969-1971 and increasingly higher priced imported oil. It's no coincidence that it coincided with President Richard M. Nixon's decision to renege on the convertibility of the US dollar to gold at $35 per Troy ounce.