Oilfield Services
Full-year 2010 revenue of $26.67 billion was 17% higher than 2009. This increase was largely attributable to the
acquisition of Smith as well as significantly higher activity and pricing for Well Services technologies in US land.
However, these increases were partially offset by lower activity in the US Gulf of Mexico due to the deepwater drilling
moratorium and by lower pricing and activity in Europe/CIS/Africa.
Year-on-year, pretax operating margin declined 141 bps to 19.0% primarily due to the inclusion of the acquired Smith
businesses as well as the reduced activity and weaker pricing in the Europe/CIS/Africa Area. These effects, however,
were partially offset by the impact of the stronger activity and pricing for Well Services technologies in US land.
Reservoir Characterization
Revenue of $9.32 billion was 2% lower than last year. WesternGeco revenue decreased primarily due to reduced
activity and pricing for Marine acquisition services, which was partially offset by higher sales of wide-azimuth
multiclient surveys in the US Gulf of Mexico. Wireline revenue fell primarily due to the deepwater drilling moratorium
in the Gulf of Mexico and reduced activity and lower pricing in Europe/CIS/Africa. Testing Services revenue also
decreased as a result of lower activity and pricing in Europe/CIS/Africa. These decreases were partially offset by an
increase in SIS revenue primarily in Latin America and North America.
Year-on-year, pretax operating margin decreased 203 bps to 24.9% mostly due to the lower activity and pricing for
Wireline and Testing services in Europe/CIS/Africa and from the impact of the moratorium in the US Gulf of Mexico.
Drilling
Revenue of $8.23 billion was 40% higher than the previous year. This increase was primarily driven from the
acquisitions of Smith and Geoservices during 2010 partially offset by lower revenue for Drilling & Measurements due to
the impact of the deepwater drilling moratorium in the US Gulf of Mexico and generally lower pricing in international
markets.
Year-on-year, pretax operating margin decreased 496 bps to 16.2% due to the inclusion of the Smith and Geoservices
technologies as well the lower pricing and activity for Drilling & Measurements.
Reservoir Production
Revenue of $9.05 billion was 24% higher year-on-year mostly from significantly higher pricing and activity for Well
Services technologies in North America and increased gain share from SPM field production projects in Latin America.
In addition, an $87 million early payout relating to services on an SPM gain share project, triggered by the customer’s
sale of the field, also contributed to the revenue growth.
Year-on-year, pretax operating margin increased 440 bps to 15.1% primarily due to improved pricing and activity for
Well Services in North America and strong contribution from the SPM field production projects. The SPM gain share
early payout mentioned above contributed approximately $55 million to pretax operating income.
Interest and Other Income
Interest and other income consisted of the following:
(Stated in millions)
2011
2010 2009
Interest income
$ 40
$ 50 $ 61
Equity in net earnings of affiliated companies:
M-I SWACO
–
78 131
Others
89
86 78
Other
–
–
3
$129
$214 $273
22
