Oil services giant Schlumberger takes $10.1B hit in 2019

Accounting charges 'did not impede our ability to generate strong cash flow'

Schlumberger suffered a $10.1 billion loss in 2019 as write-downs and waning North American demand for fracking services ate into its bottom line.

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The negative numbers marked a sharp reversal of fortune from the previous year, when the world's largest oilfield services company posted a $2.2 billion profit. Sales of $32.9 billion were little changed from 2018.

“During the year, we recognized material pretax charges driven by market conditions, particularly in North America,” Schlumberger CEO Olivier Le Peuch said in a statement.

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The Houston-based Schlumberger took $8.8 billion of goodwill writedowns in the third quarter, related to its 2010 acquisition of Smith International and the 2016 takeover of Cameron International. It also took a $1.58 billion charge related to its pressure-pumping business in North America and a $127 million hit due to challenges in Argentina.

“As these charges were largely noncash and primarily related to goodwill, intangible assets, and fixed assets, they did not impede our ability to generate strong cash flow as we demonstrated in the second half of the year,” Le Peuch said.

Shares rallied after the company predicted cash-flow generation would continue to improve this year.

TickerSecurityLastChangeChange %
SLBSCHLUMBERGER LIMITED33.59-0.83-2.41%

For the fourth quarter, Schlumberger earned a profit of $333 million, or 39 cents a share, as revenue rose 1 percent from the previous year to $8.2 billion, matching estimates. Wall Street analysts surveyed by Refinitiv were anticipating adjusted earnings of 37 cents a share.

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Excluding the company's Cameron business, North American revenue fell 16 percent quarter-over-quarter to $1.91 billion due to “customer exhaustion and cash-flow constraints,” Schlumberger said. Meanwhile, international revenue excluding Cameron rose 1 percent on the same basis to $4.89 billion, driven by higher sales in the Middle East.

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Schlumberger shares have fallen 3.5 percent year-to-date. They gained 11.4 percent last year, trailing the S&P 500’s 29.5 percent gain.