| |
 |
|
|
|
|
Print friendly pdf of Form 10-K Part I
|
|
|
|
| |
All references herein to "Registrant", "Company" and "Schlumberger" refer
to Schlumberger Limited and its consolidated subsidiaries. The following
discussion of results should be read in conjunction with the Consolidated
Financial Statements.
Founded in 1927, Schlumberger is a global oilfield and information services company
with major activity in the energy industry. As of December 31, 2003, the
company employed 77,000 people, which included 25,000 employees of SchlumbergerSema,
of more than 140 nationalities working in 100 countries, and has principal
executive offices in New York, Paris and The Hague. During 2003, Schlumberger
comprised three primary business segments: Schlumberger Oilfield Services
is the world's premier oilfield services company supplying a wide range
of technology services and solutions to the international oil and gas industry.
WesternGeco, jointly owned with Baker Hughes, is one of the world's largest
and most advanced surface seismic company. SchlumbergerSema is a leading
supplier of IT consulting, systems integration, and network and infrastructure
services to the energy industry, as well as to the public sector, telecommunications
and finance markets.
On September 22, 2003, Schlumberger announced its intention to sell the SchlumbergerSema
business to Atos Origin. The sale closed on January 29, 2004. Today, Schlumberger
comprises two primary business segments - Oilfield Services and WesternGeco.
Active divestiture negotiations are currently ongoing for each of the remaining
businesses, which are included in Other activities described below.
Schlumberger Oilfield Services is the world's leading provider of
technology, project management and information solutions to the international
petroleum industry. With 48,000 employees, Schlumberger Oilfield Services
manages its business through 27 Oilfield Services GeoMarket* regions, which
are grouped into four geographic areas: North America; Latin America; Europe/CIS/W.
Africa; Middle East & Asia. The GeoMarket regions offer customers a single
point of contact at the local level for field operations and bring together
geographically focused teams to meet local needs and deliver customized
solutions.
Schlumberger invented wireline logging in 1927 as a technique for obtaining downhole
data in oil and gas wells. Today, Schlumberger Oilfield Services operates
in each of the major oilfield service markets covering the entire life cycle
of the reservoir. These services are organized into seven technology product
lines, in which Schlumberger holds a number of market leading positions,
to capitalize on technical synergies and introduce innovative solutions
within the GeoMarket regions.
|
|
|
| |
| • |
Wireline - services that provide the information necessary to evaluate the formation, plan and monitor well construction, and monitor and evaluate production, divided into open-hole and cased-hole wireline logging.
|
| • |
Drilling & Measurements - directional drilling, measurements-while-drilling and logging-while drilling services.
|
| • |
Well Services - services to construct oil and gas wells, as well as maintain optimal production through the life of an oil and gas field. These include pressure pumping, well stimulation services, coiled tubing, cementing and engineering services.
|
| • |
Well Completions & Productivity - services for testing and completing wells and producing oil and gas, ranging from well testing and perforating services, completions systems, intelligent completions to a full spectrum of artificial lift services.
|
| • |
Integrated Project Management - consulting, project management and engineering services leveraging the expertise from the other technology segments for the E&P industry.
|
| • |
Data & Consulting Services - measurements, interpretation and integration of all exploration and production data types, and expert consulting services for reservoir characterization, production enhancement, multi-disciplinary reservoir and production solutions, and field development planning.
|
| • |
Schlumberger Information Solutions - consulting, software, information management and IT infrastructure services that support oil and gas industry core operational processes.
|
|
|
| |
The technology product lines are also responsible for overseeing operational
processes, resource allocation, personnel and quality, health, safety and
environmental matters in the GeoMarket.
Supporting the service technology product lines are 19 research and development (R&D) centers. Through its R&D, Schlumberger is committed to advanced technology programs that will enhance oilfield efficiency, lower finding and producing costs, improve productivity, maximize reserve recovery, increase asset value and accomplish all of these goals in a safe, environmentally sound manner.
Schlumberger Oilfield Services uses its own personnel to market its products and services. The customer base, business risks and opportunities for growth are essentially uniform across all services. There is a sharing of manufacturing and engineering facilities as well as research centers; labor force is interchangeable. Technological innovation, quality of service, and price are the principal methods of competition. Competition varies geographically with respect to the different services offered. While there are numerous competitors, both large and small, Schlumberger believes that it is an industry leader in providing measurements-while-drilling and logging-while-drilling services, and fully computerized logging and geoscience software and computing services. A large proportion of the company's offering is non-rig related; consequently, revenue does not necessarily correlate to rig count fluctuations.
In December 2003, Schlumberger announced a phased agreement to acquire PetroAlliance, Russia's largest independent oilfield services company, beginning with a minority share in 2004. PetroAlliance provides a broad range of exploration and development services, to international standards, throughout Russia and the Caspian.
Schlumberger is a minority owner in M-I Drilling Fluids, a joint venture with Smith International that offers drilling and completion fluids utilized to stabilize rock strata during the drilling process and minimize formation damage during completion and workover operations.
WesternGeco, which is 70% owned by Schlumberger, provides comprehensive
worldwide reservoir imaging, monitoring, and development seismic services,
with the most extensive seismic crews and data processing centers in the
industry, as well as the world's largest multiclient seismic library. Services
range from 3D and time-lapse (4D) seismic surveys to multi-component surveys
for delineating prospects and reservoir management. Seismic solutions include
proprietary Q* technology for enhanced reservoir description, characterization,
and monitoring throughout the life of the field - from exploration through
enhanced recovery.
Positioned for meeting a full range of customer needs in land, marine and shallow-water transition-zone services, WesternGeco offers a wide range of technologies and services:
|
|
| |
| • |
Land Seismic - comprehensive resources for seismic data acquisition on land and across shallow-water transition zones.
|
| • |
Marine Seismic - fully calibrated single-sensor marine seismic acquisition and processing system, delivering the seismic technology breakthrough needed for new-generation reservoir management.
|
| • |
Multiclient Services - high-quality seismic data from the most prospective hydrocarbon basins with the leading multiclient data library.
|
| • |
Reservoir Services - people, tools, and technology to help customers capture the benefits of a completely integrated approach to locating, defining, and monitoring the reservoir.
|
| • |
Seismic Data Processing - extensive seismic data processing centers for complex processing projects.
|
|
|
| |
SchlumbergerSema provided during 2003 IT consulting, systems integration, managed services together with network and infrastructure solutions to the global energy industry, as well as in specific regional markets spanning the telecommunications, finance, transport and public sectors.
Prior to its sale, SchlumbergerSema was organized as follows:
|
|
| |
| • |
Network & Infrastructure Solutions that combines specialized technologies, domain experience and global infrastructure to enable the digital enterprise through their DeXa Suite of Services and provides secure global IP infrastructure, integrated information security solutions, wireless and remote network connectivity and complete network managed services.
|
| • |
Consulting & Systems Integration which offers consulting services, business systems and large-scale technical systems designed to operate to the highest levels of reliability in demanding conditions. The knowledge, skills and methods used by Schlumberger consultants around the world, combined with technical, systems integration and outsourced managed services capability within SchlumbergerSema, enable the development, implementation and management of major business and IT programs that are core to the strategic goals and long-term success of all businesses.
|
|
|
| |
Other comprises of businesses which are in active divestiture negotiations. The activities included in this segment are:
|
|
| |
| • |
Axalto (Smart Cards and Point-of-Sale Terminals) - On September 22, 2003, Schlumberger Smart Cards & Terminals (SC&T) changed its name to Axalto to bring more visibility and reinforce its image as a leading smart card player. The SC&T e-City parking meters business was subsequently sold to Apax in the fourth quarter of 2003.
|
| • |
Business Continuity (disaster recovery services and support to ensure continuation of customers' business-critical operations).
|
| • |
Essentis (software platform for payment card issuing and merchant acquiring operations).
|
| • |
Telecom Software Products (software solutions for wireless messaging applications).
|
| • |
Water Services (water resource management services).
|
| • |
Infodata offers a broad range of on-line database services and direct marketing services in Sweden.
|
| • |
Payphones provides payphones terminals and related communication solutions.
|
| • |
Electricity Meters (automated meters and meter reading technology for the North American electricity industry). In July 2003, Schlumberger entered into an agreement to sell the Electricity Meters activity to Itron Inc.; the sale is expected to be completed in the first half of 2004 pending the successful completion of the Hart-Scott-Rodino review process and other conditions.
|
|
|
| |
Acquisitions
Information on acquisitions made by Schlumberger or its subsidiaries appears under the heading "Acquisitions" on page 49 of this Report within the Notes to Consolidated Financial Statements.
GENERAL
Research & Development
Research to support the engineering and development efforts of Schlumberger's activities is conducted at Schlumberger Doll Research, Ridgefield, Connecticut, USA; Schlumberger Cambridge Research, Cambridge, England, and at Stavanger, Norway; Moscow, Russia and Dhahran, Saudi Arabia.
Patents
While Schlumberger seeks and holds numerous patents, no particular patent or group of patents is considered material to Schlumberger's business.
Seasonality
Although weather and natural phenomena can temporarily affect delivery of oilfield services, the widespread geographic location of such services precludes the overall business from being characterized as seasonal. However, because oilfield services are provided predominantly in the Northern Hemisphere, severe weather can temporarily affect the delivery of such services and products.
Customers and Backlog of Orders
No single customer exceeded 10% of consolidated revenue. Oilfield Services has no backlog since it is primarily service rather than product related. SchlumbergerSema backlog at December 31, 2003 was $5.2 billion of which $1.9 billion is the subsequent twelve month backlog. At December 31, 2002, the SchlumbergerSema backlog was $4.7 billion of which $1.5 billion was the subsequent twelve month backlog. The orders are believed to be firm but there is no assurance that any of the current backlog will actually result in sales.
Government Contracts
No material portion of Schlumberger's business is subject to renegotiation of profits or termination of contracts by the US or other governments.
Employees
As of December 31, 2003, Schlumberger had approximately 77,000 employees which included 25,000 SchlumbergerSema employees.
Non-US Operations
Schlumberger's non-US operations are subject to the usual risks which may affect such operations. Such risks include unsettled political conditions in certain areas, exposure to possible expropriation or other governmental actions, exchange controls, and currency fluctuations. Although it is impossible to predict such occurrences or their effect on Schlumberger, management believes these risks are acceptable.
Environmental Protection
Compliance with governmental provisions relating to the protection of the environment does not materially affect Schlumberger's capital expenditures, earnings or competitive position. Management believes that Schlumberger is currently in substantial compliance with applicable environmental laws and regulations. For more information, see Environmental Matters, PartII, Item 7.
Financial Information
Financial information by business segment for the years ended December 31, 2003, 2002 and 2001 is given on Part II, Item 8, Note: 24 of this Report, within the Notes to Consolidated Financial Statements.
Internet Website
Schlumberger's Internet website can be found at www.slb.com. Schlumberger makes available free of charge, or through our internet website at investorcenter.slb.com, access to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our proxy statement and Forms 3, 4 and 5 filed on behalf of directors and executive officers and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is filed, or furnished to the Securities and Exchange Commission ("SEC"). Additionally, Schlumberger's corporate governance materials, including Board Committee Charters, Corporate Governance Guidelines, and Code of Ethics may also be found on investorcenter.slb.com. From time to time to time corporate governance materials on our website may be updated to comply with rules issued by the SEC and the New York Stock Exchange ("NYSE") or as desirable to promote the effective governance of Schlumberger. Any stockholder wishing to receive, without charge, a copy of any of the SEC filings or corporate governance materials should write the Secretary, Schlumberger Limited, 153 East 53rd Street, 57th Floor, New York, New York, 10022.
The reference to this website address does not constitute incorporation by reference of the information contained on the website and should not be construed as part of this report.
Go to Part I, Item 2 |
|
| |
|
|
|
