number of GeoMarkets both offshore and in key land markets contributed to the increase. The increase was led by the
Europe/CIS/Africa Area which increased 18%, mainly in Russia and in the Nigeria & Gulf of Guinea, Angola, the East
Africa and North Sea Africa GeoMarkets. Latin America was higher by 17%, mainly in the Mexico & Central America;
Venezuela, Trinidad & Tobago; and Ecuador GeoMarkets driven by strong Integrated Project Management (IPM)
activity on land and robust offshore activity for Wireline and Drilling Group services and products. Middle East & Asia
increased 13% on strong results in the Saudi Arabia & Bahrain; Australasia; Brunei, Malaysia & Philippines; and China
GeoMarkets. The increase in North America was due to strong growth in North America offshore driven by robust
deepwater and exploration activity that benefited the Reservoir Characterization and Drilling Groups Technologies.
There was also an improvement in activity in North America land for the Production Group Technologies although the
increase slowed in the second half of the year due to the weakness in the hydraulic fracturing market.
Full-year 2012 pretax operating income of $8.3 billion increased 14% year-on-year as international pretax operating income
of $5.8 billion increased 31% while North America pretax operating income of $2.7 billion declined by 10% year-on-year.
Pretax operating margin was essentially flat at 19.8% as international pretax operating margin expanded 226 bps to
20.5% while North America pretax operating margin declined 448 bps to 20.3%. Europe/CIS/Africa posted a 435 bps
improvement to reach 19.6% and Latin America increased 175 bps to 18.4% and Middle East & Asia reported a 27 bps
increase to 23.4%. North America margin decline was due to Well Services production technologies, as a result of
pricing pressure and cost inflation.
Reservoir Characterization Group
Full-year revenue of $11.42 billion was 15% higher than the same period last year led by Wireline, Testing Services,
WesternGeco and SIS Technologies driven by improved offshore exploration activities across all Areas Pretax operating
margin increased 345 bps to 28.1% largely due to the higher-margin exploration activities that benefited Wireline and
Testing Services, higher SIS software sales, higher WesternGeco marine vessel utilization and improved UniQ land
seismic productivity.
Drilling Group
Full-year revenue of $15.97 billion was 15% higher than the previous year primarily due to the significantly improved
exploration and development activities of M-I SWACO, Drilling & Measurements, and the other Drilling Group
Technologies in North America offshore and in the international markets.
Pretax operating margin increased 142 bps to 17.7% primarily due to the increase in higher-margin activities of
Drilling & Measurements, M-I SWACO and Drilling Tools & Remedial technologies – all of which benefited from
exploration activities in North America offshore and in the international markets – mainly in the Europe/CIS/Africa
Area.
Production Group
Full-year revenue of $14.88 billion increased 13% year-on-year, both in North America and the international markets.
Well Intervention, Artificial Lift and Completions Technologies posted strong growth across all Areas. Well Services
grew both in North America and internationally, with international growth led by Latin America and by Europe/CIS/
Africa.
Pretax operating margin decreased 414 bps to 15.9% mainly due to a decline in margins for Well Services production
technologies, primarily in North America, as a result of pricing pressure and cost inflation. This was mitigated by
margin expansion for the other Production Group Technologies led by Well Intervention Services and Completions.
20
