Schlumberger 2012 Annual Report - page 35

The sequential increase in Reservoir Characterization Group revenue resulted mainly from robust international end-
of-year Schlumberger Information Solutions (SIS) software sales. Testing Services grew for the third successive quarter
from higher activity in the Saudi Arabia & Bahrain GeoMarket. PetroTechnical Services posted double-digit revenue
growth on strong consulting activity in the Mexico & Central America GeoMarket. WesternGeco increased slightly as
the end-of-year multiclient sales and UniQ* land seismic technology direct sale in Russia were partly offset by a sharp
seasonal decline in Marine revenue on lower vessel utilization following the seasonal transits out of the North Sea.
Wireline revenue grew from increased activity in the US Gulf of Mexico but this was largely offset by a seasonal activity
decline in Asia. Drilling Group revenue increased on international and offshore demand for Drilling & Measurements
and M-I SWACO technologies. Drilling Tools & Remedial Services also contributed to growth with the full-quarter
revenue from Radius services. IPM improved slightly as the combination of an increase in projects in Australia and new
start-ups in Iraq and Argentina was partly offset by project completions in North Africa. The increase in Production
Group revenue resulted primarily from stronger Completions and Artificial Lift product year- end sales coupled with
new Framo subsea projects in the US Gulf of Mexico and in the North Sea and Angola GeoMarkets. Well Intervention
Services revenue also increased on higher activity in the Mexico & Central America and Saudi Arabia & Bahrain
GeoMarkets. Well Services revenue grew mainly due to higher activity in international and offshore North America
markets. Well Services stage count in North America land also increased, but revenue declined from continued pricing
weakness as a result of hydraulic horsepower oversupply.
Among the Areas, Middle East & Asia revenue of $2.6 billion grew 10% sequentially led by the start of new IPM
turnkey projects in Iraq; higher Testing, Well Intervention and Drilling Group services in addition to year-end product
sales in the Saudi Arabia & Bahrain GeoMarket; the start of the Jurassic seismic project as well as strong product and
year-end software sales in Kuwait; and the increase in IPM onshore projects and strong drilling activity in the
Australasia GeoMarket. In Latin America, revenue of $2.1 billion increased 11% sequentially led by robust year-end
software and product sales, strong PetroTechnical Services consulting activity, unconventional fracturing and well
intervention stimulation activity in the Mexico & Central America GeoMarket. Higher WesternGeco vessel utilization
for new seismic acquisition surveys in Brazil, Trinidad and Uruguay, coupled with the start of an IPM project in
Argentina, also contributed to the increase. In Europe/CIS/Africa, revenue of $3.0 billion declined 1% mainly due to
lower WesternGeco vessel utilization following the seasonal transit of vessels out of the North Sea. Completed IPM
projects and service contract delays in North Africa and the completion of the WesternGeco survey in the Kara Sea in
Russia also contributed to the decline. The sequential decrease, however, was partially offset by increased activity in
Angola and higher product and software sales in the Russia and Central Asia region and the Continental Europe
GeoMarket. North America revenue of $3.4 billion increased 4% sequentially—mainly from offshore which rose by 24%,
while land fell by 2%. The increase in offshore revenue resulted from both higher drilling activity as the number of
deepwater drilling rigs increased and stronger year-end WesternGeco multiclient sales. The decline in land revenue
was mainly due to continued pricing weakness for Well Services hydraulic fracturing activities. A seasonal decline in
deviated and horizontal land drilling activity paired with pricing weakness also affected the Drilling Group segment in
North America.
On a worldwide basis, fourth-quarter pretax operating income of $2.2 billion increased 1% sequentially.
International pretax operating income of $1.6 billion grew 1%, while North America pretax operating income of $655
million increased 7%.
Pretax operating margin of 19.4% declined 83 basis points (bps) sequentially. International pretax operating margin
of 20.5% declined 104 bps, which stemmed from a higher-than-usual seasonal slowdown and contractual delays in the
Europe/CIS/Africa Area that traditionally attract higher margins. In North America, pretax operating margin of 19.2%
increased 65 bps sequentially due to the increased contribution of high-margin offshore services, particularly in the US
Gulf of Mexico, which more than offset margin decline in Drilling Group and Well Services activities on land. By
segment, Reservoir Characterization Group pretax operating margin reached 29.1% while the pretax operating margins
of the Drilling and Production Groups were 16.8% and 15.0%, respectively.
Reservoir Characterization Group
Fourth-quarter revenue of $3.15 billion increased $240 million or 8% sequentially. Pretax operating income of $917
million was 9% higher sequentially.
Revenue increased mainly through robust international end-of-year SIS software sales while Testing Services grew
for the third successive quarter from higher activity in the Saudi Arabia & Bahrain and Mexico & Central America
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