Schlumberger Announces First-Quarter 2007 Results



    HOUSTON, April 20 /CNW/ - Schlumberger Limited (NYSE:  SLB) today reported
first-quarter operating revenue of $5.46 billion versus $5.35 billion in the
fourth quarter of 2006, and $4.24 billion in the first quarter of 2006.

    Net income reached $1.18 billion--an increase of 4% sequentially and 63%
year-on-year. Diluted earnings-per-share were $0.96 versus $0.92 in the
previous quarter, and $0.59 in the first quarter of 2006.

    Oilfield Services revenue of $4.76 billion increased 3% sequentially and
28% year-on-year. Pretax business segment operating income of $1.41 billion
increased 6% sequentially and 47% year-on-year.

    WesternGeco revenue of $706 million decreased 2% sequentially but
increased 33% year-on-year. Pretax business segment operating income of $266
million increased 2% sequentially and 79% year-on-year.

    Schlumberger Chairman and CEO Andrew Gould commented, "First-quarter
sequential revenue growth was driven by acceleration of international activity
in GeoMarkets in Europe, Africa, the Middle East and Asia. In North America
moderate sequential seasonal growth in Canada and strong exploration activity
in Alaska partly offset slowing activity on land in the US and a change in
service mix in the US Gulf Coast. Strong revenues were recorded in Latin
America as negotiations with PDVSA related to certain rig management and
engineering contracts were completed, enabling recognition of previously
deferred revenue. Increasing demand for Wireline, Drilling & Measurements and
Well Testing technologies, as well as for WesternGeco services, contributed to
the highly satisfactory overall financial performance.

    The colder weather late in the North American winter resulted in natural
gas storage levels falling somewhat below those anticipated. The evolution of
Canadian gas production after the lower winter peak rig count and earlier
spring break-up, coupled with high decline rates and the poorer quality
reservoirs now being drilled in the US leads us to believe that the
fundamentals for reinforced natural gas activity in North America are becoming
apparent. New equipment capacity however, particularly in pressure pumping,
will limit service pricing power except where new technology brings clear
improvements in both the efficiency and productivity of unconventional gas
wells.

    Internationally, as well as in the remaining frontier provinces of North
America, we expect activity to continue to strengthen in the coming months
underpinning strong demand for quality measurements and services that improve
performance and reduce technical risk. However, in the second quarter a number
of scheduled dry dock inspections and vessel transits will momentarily slow
WesternGeco growth which should resume when the seventh Q vessel is
commissioned in May.

    The OPEC supply cuts applied late in 2006 coupled with stronger demand
and continuing weak non-OPEC supply performance has caused a significant
rebound in oil prices. We continue to believe the most fragile element of
current supply projections is the age of the existing production base and the
consequent failure of current activity levels to slow decline rates. This
environment, coupled with delays in the increasingly complex projects that
operators are undertaking, means that the supply response to create adequate
levels of spare production will take longer than we originally anticipated.
Absent any severe economic recession that would impact hydrocarbon demand,
Schlumberger remains exceptionally well placed to benefit from this
environment."

    Other Events

    --  As part of the current 40 million-share buy-back program approved in
the second quarter of 2006, Schlumberger repurchased 5.2 million shares during
the first quarter for a total amount of $332 million, at an average price of
$64.19 per share. Under this buy-back program 18.7 million shares, for a total
amount of $1.15 billion, have been repurchased to date.

    
                       Consolidated Statement of Income

                            (Stated in thousands except per share amounts)

                                                        Three Months
                                                   -----------------------
    For Periods Ended March 31                        2007       2006(1)
    ----------------------------------------------------------------------

    Operating revenue                              $5,464,405  $4,239,017
    Interest and other income(2)                       83,623      65,492
    Expenses
     Cost of goods sold and services                3,617,424   2,991,891
     Research & engineering                           167,098     129,406
     Marketing                                         16,683      15,148
     General & administrative                         124,170      98,145
     Interest                                          68,147      47,844
    ----------------------------------------------------------------------

    Income before taxes and minority interest       1,554,506   1,022,075
    Taxes on income                                   373,679     256,651
    ----------------------------------------------------------------------
    Income before minority interest                 1,180,827     765,424
    Minority interest                                       -     (42,913)
    ----------------------------------------------------------------------

    Net Income                                     $1,180,827    $722,511
    ----------------------------------------------------------------------

    Diluted Earnings Per Share                          $0.96       $0.59

    Average shares outstanding                      1,178,453   1,180,344
    Average shares outstanding assuming dilution    1,236,491   1,240,694

    Depreciation & amortization included in
     expenses (3)                                    $440,977    $354,603
    ----------------------------------------------------------------------

    1) Certain items from the prior year have been reclassified to conform
     to the current year presentation.

    2) Includes interest income of: 2007 - $35 million (2006 - $35
     million).

    3) Including Multiclient seismic data costs.
    

    
                            Condensed Balance Sheet
                                                     (Stated in thousands)

    Assets                                     Mar. 31, 2007 Dec. 31, 2006
    ----------------------------------------------------------------------
    Current Assets
     Cash and short-term investments             $2,590,905    $2,998,873
     Other current assets                         6,880,722     6,186,789
    ----------------------------------------------------------------------
                                                  9,471,627     9,185,662
    Fixed income investments, held to maturity      216,001       153,000
    Fixed assets                                  5,805,745     5,576,041
    Multiclient seismic data                        224,355       226,681
    Goodwill                                      4,992,700     4,988,558
    Other assets                                  2,798,356     2,702,196
    ----------------------------------------------------------------------

                                                $23,508,784   $22,832,138
    ----------------------------------------------------------------------


    Liabilities and Stockholders' Equity
    ----------------------------------------------------------------------
    Current Liabilities
     Accounts payable and accrued liabilities    $3,647,048    $3,848,017
     Estimated liability for taxes on income      1,093,566     1,136,529
     Bank loans and current portion of long-
      term debt                                     959,907     1,321,529
     Dividend payable                               207,641       148,720
    ----------------------------------------------------------------------
                                                  5,908,162     6,454,795
    Convertible debentures                        1,424,987     1,424,990
    Other long-term debt                          3,194,689     3,238,952
    Postretirement benefits                       1,036,269     1,036,169
    Other liabilities                               584,625       257,349
    ----------------------------------------------------------------------
                                                 12,148,732    12,412,255
    Stockholders' Equity                         11,360,052    10,419,883
    ----------------------------------------------------------------------

                                                $23,508,784   $22,832,138
    ----------------------------------------------------------------------
    

    
                                   Net Debt

    "Net Debt" represents gross debt less cash, short-term investments and
     fixed income investments, held to maturity. Management believes that
     Net Debt provides useful information regarding the level of
     Schlumberger indebtedness. Details of the Net Debt follow:

                                        (Stated in millions)

    Three Months                                       2007
    --------------------------------------------------------
    Net Debt, January 1, 2007                       $(2,834)
       Net income                                     1,181
       Depreciation and amortization                    441
       Excess of equity income over dividends
        received                                        (50)
       Increase in working capital
        requirements                                   (545)
       Capital expenditures (1)                        (615)
       Dividends paid                                  (147)
       Proceeds from employee stock plans               184
       Stock repurchase program                        (332)
       Business acquisitions                            (18)
       Other                                            (37)
       Translation effect on Net Debt                    (1)
                                               -------------

    Net Debt, March 31, 2007                        $(2,773)
                                               -------------


    Components of Net Debt                     Mar. 31, 2007 Dec. 31, 2006
    ----------------------------------------------------------------------
    Cash and short-term investments                  $2,591        $2,999
    Fixed income investments, held to maturity          216           153
    Bank loans and current portion of long-
     term debt                                         (960)       (1,322)
    Convertible debentures                           (1,425)       (1,425)
    Other long-term debt                             (3,195)       (3,239)
                                               ------------- -------------

                                                    $(2,773)      $(2,834)
                                               ------------- -------------

    1) Including Multiclient seismic data expenditure.
    

    
                               Business Review

    Business Segments
    ---------------------------------------------

    (Stated in millions)
                                                        Three Months
                                                  ------------------------
                                                     2007    2006  % chg
                                                  ------------------------
    Oilfield Services
    ---------------------------------------------
    Operating Revenue                              $4,759  $3,711      28%
    Pretax Operating Income                        $1,405    $958      47%

    WesternGeco
    ---------------------------------------------
    Operating Revenue                                $706    $530      33%
    Pretax Operating Income                          $266    $149      79%
    

    Effective January 1, 2007, a GeoMarket(*), which had been included in the
Middle East & Asia Area, was reassigned to the Europe/CIS/Africa Area. Certain
activities have also been reallocated between Oilfield Services and
WesternGeco. Prior period data has been reclassified to conform to the current
organizational structure.

    Pretax operating income represents the business segments' income before
taxes and minority interest. The pretax operating income excludes corporate
expenses, interest income, interest expense, amortization of certain
intangible assets, interest on postretirement benefits and stock-based
compensation costs, as these items are not allocated to the segments.

    Oilfield Services

    First-quarter revenue of $4.76 billion was 3% higher sequentially and 28%
higher year-on-year.

    Sequential revenue increases were highest in the West and South Africa,
Arabian, North Sea and Eastern Mediterranean GeoMarkets. Double-digit growth
rates were also experienced in Alaska, Australia/Papua New Guinea,
Thailand/Vietnam, North Africa and India. Across all Oilfield Services Areas
demand was particularly strong for Drilling & Measurements, Wireline, Well
Testing and Data & Consulting Services technologies. However, growth was
partially offset by lower Schlumberger Information Solutions (SIS) and
Artificial Lift Systems sales following seasonal highs in the prior quarter.

    Pretax operating income of $1.41 billion increased 6% sequentially and
47% year-on-year. The sequential increase was mainly driven by higher overall
activity and a favorable technology mix in the West and South Africa, Eastern
Mediterranean, Arabian, North Sea and Australia/Papua New Guinea GeoMarkets;
by increased rig count in Canada, Alaska, North Africa and Thailand/Vietnam;
and by efficiency gains in the North America Area. This resulted in Oilfield
Services pretax operating margins reaching 29.5%.

    During the quarter the Contact(*) family of multistage fracturing and
completion services was introduced at the first Society of Petroleum Engineers
technical conference wholly devoted to hydraulic fracturing technology.
Integrating stimulation technologies such as CoilFRAC(*) and RapidSTIM(*), the
Contact family provides operators with a broader range of efficient and
effective fracturing services that are of particular value when placing
multiple fractures in a single well. Deployed across multiple regions during
the quarter, this new stimulation technology has proven instrumental to
improving production.

    Industry acceptance of the Scanner Family(*) of wireline logging services
continued at a rapid pace. With nearly 1,000 operations completed in 2006 and
more than 300 logs run since the start of 2007, the Scanner suite of downhole
rock and fluid characterization measurements services is now active across all
Areas. In regions where Scanner technologies have been deployed, their use has
brought increased certainty in reservoir modeling to reduce the risk often
associated with the development of smaller, more difficult and more complex
reservoirs.

    North America

    Revenue of $1.37 billion decreased 4% sequentially but increased 12%
year-on-year. Pretax operating income of $431 million decreased 2%
sequentially but increased 15% year-on-year.

    Sequentially, the Alaska GeoMarket recorded strong revenue growth
resulting from increased exploration activity and increased demand for
Drilling & Measurements, Well Testing and Well Services technologies. Seasonal
growth in Canada was moderate due partly to project slowdowns in the East, but
mainly as a result of declining activity in the regions of shallow gas and
coalbed methane production. However, the growth in the Alaska and Canada
GeoMarkets was more than offset by a lower overall Area rig count; the
seasonal land-access restrictions and weather activity in US Land; and a
change in service mix in the US Gulf Coast.

    Sequential pretax operating margins were driven by the favorable activity
mix in Alaska and by overall efficiency gains in the Area to reach 31.4% in
spite of the lower activity levels seen in US Land, and the less favorable
service mix in the US Gulf Coast.

    In East Texas, Contact technology enabled Goodrich Petroleum to improve
production, save natural gas time-to-market and reduce cost in a growing
unconventional gas play. Streaming hydraulic fracture-mapping data to the
customer's Houston office permitted real-time stimulation optimization.

    The fifth horizontal well steered using PeriScope 15(*) technology was
completed in a tar-bearing reservoir in a Californian field, resulting in a
cumulative five-fold increase in oil production and a five-fold decrease in
water production across the five wells. PeriScope technology provides
directional, deep imaging-while-drilling measurements to enable optimal well
placements. Based on these results the customer now plans to deploy this
technology to drill an additional 14 horizontal wells in 2007.

    In the US Gulf of Mexico, the first StethoScope 475(*) service for slimhole
applications was run for Murphy Exploration and Production Company. The new
technology enabled the customer to acquire critical pressures for reservoir
evaluation and gradients for zonal connectivity. StethoScope 475 technology
expands the formation pressure-while-drilling capabilities of Drilling &
Measurements to include all wellbore sizes from 6 to 15 inches.

    SIS released the Avocet(*) Production Surveillance software solution
designed to increase the value and reliability of high-frequency data for
production managers by putting production monitoring and alerts in the context
of wells and their dynamic behavior. The solution leverages a unique
combination of real-time data management technology and production domain
knowledge.

    Latin America

    Revenue of $728 million increased 8% sequentially and 23% year-on-year.
Pretax operating income of $163 million increased 15% sequentially and 70%
year-on-year.

    During the quarter, the drilling and engineering contracts associated
with the drilling barges in Venezuela were finalized, resulting in certain
previously deferred revenues and related costs being recognized. This
accounted for the majority of the Area's sequential revenue growth, but had
only a marginal impact on the Area's pretax operating income. Discussions
regarding finalization of two remaining contracts are ongoing.

    Sequential pretax operating margins improved by 136 basis points (bps) as
a result of a more favorable activity mix in the Mexico GeoMarket; increased
Drilling & Measurements and Well Testing activities in Peru/Colombia/Ecuador;
together with higher Wireline, Well Services and Well Testing services and
higher Artificial Lift Systems sales in Latin America South.

    In Mexico, the CleanGEL(*) and FiberFRAC(*) fracturing fluid systems were
deployed for Pemex in the Burgos Basin in a stimulation program in which 80
fracturing treatments were pumped. The two technologies enabled the use of
lower polymer load, resulting in cleaner fracturing fluids and increased well
productivity.

    In Venezuela, the introduction of PhaseWatcher(*) gas mode multiphase
flowmeter technology lead to a service and maintenance contract for multiple
PhaseWatcher meters to be installed in the Quiriquire field for Repsol YPF.
With an increasing gas volume fraction affecting output in the field, two
units will be used to monitor gas production. Multiphase Vx(*) technology--part
of the PhaseWatcher system--enables continuous production monitoring to
optimize well performance, resulting in greater production efficiency.

    In BP's Florena field in the Colombian Piedmonte Llanero region,
PowerDrive vorteX(*) rotary-steerable technology drilled 5,658 ft in a single
run in 262 hours. Combined with PowerPulse(*) MWD and PERFORM(*) real-time
drilling optimization services, PowerDrive vorteX technology enabled the
customer to improve the rate of penetration from a planned rate of 15 ft/hr to
34 ft/hr, saving more than eight days of rig time.

    In Brazil, project collaboration focused on heavy and extra-heavy oil
exploration and production challenges will now be facilitated with the opening
of the Heavy Oil Competence Center in Vitoria. A partnership among the
Petrobras research arm CENPES, Espirito Santo Federal University (UFES) and
Schlumberger, the center is located on the campus of UFES and is equipped with
a magnetic resonance imaging laboratory for hydrocarbon typing.

    Europe/CIS/Africa

    Revenue of $1.52 billion increased 6% sequentially and 45% year-on-year.
Pretax operating income of $430 million increased 12% sequentially and 87%
year-on-year.

    Sequential revenue growth was driven by higher activity in the West and
South Africa, North Sea, North Africa, Nigeria and Libya GeoMarkets. This was
partially offset by weather-related seasonal drilling activity slowdowns in
Russia, coupled with seasonal drilling shutdowns in northern Russia and
offshore Sakhalin, as well as lower activity in the Caspian GeoMarket. Across
the Area demand was particularly strong for Drilling & Measurements, Wireline,
Well Services and Well Testing technologies.

    Sequential pretax operating margins grew by 150 bps driven by demand for
exploration-related services in West and South Africa and Libya; increased
demand for Drilling & Measurements technologies in the North Sea; and new
technology Well Testing services in North Africa. This growth was partially
offset by lower SIS and Completions sales across the Area and the seasonal
weather activity slowdown in Russia.

    In Gabon, Schlumberger performed the world's first offshore stimulation
using the StageFRAC(*) multistage fracturing technology for Perenco. Part of the
Contact family of fracturing services, StageFRAC delivers effective
stimulation of multi-layered reservoirs ensuring optimal treatment of each
zone, while reducing total treatment time. Four wells were treated, with
initial post-treatment well performance revealing a substantial increase in
well productivity.

    In North Africa, Schlumberger opened an OSC(*) Operation Support Center for
Eni Oil. This marks the first fully dedicated real-time drilling center in the
region. The center is staffed by Drilling & Measurements experts and supported
by SIS and Data & Consulting Services personnel to provide around the clock
monitoring of up to 10 remote rigs.

    Petrel(*) seismic-to-simulation software continued gaining operator
acceptance as Hydro selected the technology as its standard workflow tool for
subsurface reservoir characterization. Hydro exploration and production asset
teams worldwide will use Petrel software to develop and refine workflows
across multiple technical disciplines.

    In Italy, an innovative, self-healing cement system to maintain zonal
isolation was deployed for Stogit, a subsidiary of Eni responsible for gas
storage. The technology will be used in a three-year cementing campaign to
develop gas storage wells for Stogit.

    During the quarter, Schlumberger Artificial Lift Systems won multiple
contracts for the supply of 40 subsea XLift(*) gas lift systems, notably in
Norway, Angola and Nigeria. XLift artificial lift technology enables reliable
high-pressure gas lift operations in deepwater subsea wells by increasing the
operating gas-injection depth, improving efficiency and increasing production
with optimal performance.

    Middle East & Asia

    Revenue of $1.09 billion increased 5% sequentially and 34% year-on-year.
Pretax operating income of $374 million increased 11% sequentially and 49%
year-on-year.

    The sequential growth in revenue resulted from increasing exploration
activity in the Australia/Papua New Guinea and Thailand/Vietnam GeoMarkets,
stronger deepwater activity in East Mediterranean and India, together with
higher activity levels in the Arabian GeoMarket. This growth was dampened by
lower activity levels in Brunei/Malaysia/Philippines and a weather-related
activity slowdown in China. Strong demand for Drilling & Measurements, Well
Services and Well Testing technologies, together with double-digit growth in
Completions product sales were recorded in the quarter, but this was partially
offset by lower SIS and Artificial Lift Systems sales in the Area.

    Sequential pretax operating margins grew by 165 bps to reach 34.3% driven
by exploration-related activity in Australia/Papua New Guinea,
Thailand/Vietnam and deepwater India, together with strong demand for new
technology Drilling & Measurements, Well Services and Well Testing services in
the Arabian GeoMarket.

    In a Kuwait field, StageFRAC fracturing technology was deployed resulting
in a production rate five times higher than that of the average producing well
in the field. StageFRAC was used to place a VDA(*) Viscoelastic Diverting Acid
treatment on a carbonate reservoir in eight separate sections of the wellbore
in one trip.

    In India, Reliance Industries Ltd. awarded Schlumberger a two-year
contract to manage their OSC Operation Support Center for up to eight offshore
rigs operating predominately in deep water. Schlumberger will provide Drilling
& Measurements experts, software and technology--including drilling
optimization applications; Petrel geomodeling software; the InterACT(*) wellsite
monitoring and data delivery system; and reservoir modeling and interpretation
through Data & Consulting Services for all rigs.

    In Australia, the Wireline Quicksilver Probe(*) technology, used in
conjunction with a high-temperature dual packer, produced exceptionally low
contamination levels in the acquired samples for Woodside Energy Ltd.,
enabling sampling of formation fluids in a fraction of the time it takes with
conventional sampling techniques.

    In China, PetroChina Dagang awarded Schlumberger a two-year multi-well
contract to provide extended-reach drilling services in the shallow water area
of Bohai Bay, a region where integrating geomechanics expertise and
PowerDrive(*) rotary-steerable technology has been of considerable value.

    In the UAE, the PURE(*) perforating system was deployed on four wells in a
carbonate reservoir for Abu Dhabi Marine Operating Company. Typically such
wells require acid stimulation after perforation resulting in significant time
delays from completion to production. PURE technology enabled immediate
production from the wells, improved production rates following subsequent
stimulation, and increased overall operational efficiency.

    Also in the UAE, Abu Dhabi National Oil Company (ADNOC) awarded SIS a
three-year contract for Eclipse(*) reservoir simulation software, which is used
throughout the ADNOC group.

    WesternGeco

    First-quarter revenue of $706 million decreased 2% sequentially but
increased 33% compared to the same period last year. Pretax operating income
of $266 million increased 2% sequentially and 79% year-on-year.

    Sequentially, Multiclient continued to register growth due to high demand
for E-surveys in the US Gulf of Mexico. However, this growth was more than
offset by the decline in Marine due to vessel transits; lower Land activity
associated with project completions and new project start-up delays; together
with lower Data Processing revenue following the reassignment of resources
toward processing Multiclient surveys.

    Pretax operating margins improved sequentially by 142 bps to reach 37.7%
driven by increased higher margin Multiclient sales in North America and
improved efficiencies in Land and Data Processing.

    The second phase of acquisition in the E-Octopus wide-azimuth
towed-streamer survey in the Gulf of Mexico neared completion. Located in the
deepwater Walker Ridge and Keathley Canyon areas, the E-Octopus project is
part of the family of E-surveys, which utilize the most advanced acquisition
and processing technologies in the industry. The family also includes
reprocessed surveys such as the E-Cat and E-Dog deepwater projects, and the
shallow-water shelf E-Dragon project offshore Louisiana.

    BP Exploration extended the current contract in Algeria to acquire a
third high-quality exploration survey using Q-Land(*) technology. Utilizing the
unique single-sensor acquisition and processing technology of Q-Land,
high-quality 3D migrated images from more than 23,000 channels will be
delivered shortly after survey completion.

    In the Turkish sector of the Black Sea the Western Pride completed a
Q-Marine(*) exploration survey for Turkiye Petrolleri A.O. This high-quality
survey over the deepwater Sinop and Kozlu blocks was initially 4,500 sq km but
was extended in size by a further 40%. This marks the fourth Q-Marine survey
in the Black Sea.

    In Nigeria, Total contracted WesternGeco to carry out a high-resolution
3D survey using Q-Marine acquisition and processing. The two-month survey will
be acquired with the vessel Western Pride. The specifications are such that
the survey is designed as a baseline for future 4D repeat monitor surveys.

    About Schlumberger

    Schlumberger is the world's leading oilfield services company supplying
technology, information solutions and integrated project management that
optimize reservoir performance for customers working in the oil and gas
industry. The company employs more than 70,000 people of over 140
nationalities working in approximately 80 countries. Schlumberger supplies a
wide range of products and services from seismic acquisition and processing;
formation evaluation; well testing and directional drilling to well cementing
and stimulation; artificial lift and well completions; and consulting,
software, and information management. In 2006, Schlumberger operating revenue
was $19.23 billion. For more information, visit www.SLB.com.

    (*)Mark of Schlumberger

    Notes

    Schlumberger will hold a conference call to discuss the above
announcement on Friday, April 20, 2007, at 9:00 am Eastern, 8:00 am Central
(2:00 pm London/3:00 pm Paris). To access the call, which is open to the
public, please contact the conference call operator at +1-888-428-4480 (toll
free) for North America, or +1-612-234-9960 outside of North America,
approximately 10 minutes prior to the scheduled start time. Ask for the
"Schlumberger Earnings Conference Call." A replay will be available through
May 18, 2007, by dialing +1-800-475-6701 in North America, or +1-320-365-3844
outside of North America, and providing the access code 866488.

    The conference call will be webcast simultaneously at
www.SLB.com/irwebcast on a listen-only basis. Please log in 15 minutes ahead
of time to test your browser and register for the call. A replay of the
webcast will also be available at the same web site.

    Supplemental information in the form of a question and answer document on
this press release and financial schedules are available at www.SLB.com/ir.




For further information:

For further information: Schlumberger Limited, Houston Vice President of
Communications and Investor Relations Jean-Francois Poupeau, +1-713-375-3535
or Investor Relations Manager Debashis Gupta, +1-713-375-3535
investor-relations@slb.com

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