Schlumberger Limited (NYSE:SLB) today reported second-quarter 2006 operating revenue of $4.69 billion versus $4.24 billion in the first quarter of 2006 and $3.43 billion in the second quarter of last year.

Income from continuing operations, before charges and credits, reached $900 million—an increase of 25% sequentially and 90% year-on-year. Earnings-per-share diluted, before charges and credits, were $0.73, versus $0.59 in the previous quarter and $0.39 in the second quarter of last year.

Income from continuing operations, including charges and credits, was $0.69 per share-diluted versus $0.59 in the previous quarter and $0.39 in the second quarter of 2005. Net income was $857 million or $0.69 per share-diluted, compared to $0.59 in the previous quarter and $0.40 in the second quarter of 2005.

Oilfield Services revenue of $4.13 billion increased 11% sequentially and 36% year-on-year. Pretax business segment operating income of $1.12 billion increased 18% sequentially and 67% year-on-year.

WesternGeco revenue of $562 million increased 6% sequentially and 47% year-on-year. Pretax business segment operating income of $180 million increased 13% sequentially and 211% year-on-year.

Schlumberger Chairman and CEO Andrew Gould commented, "Led by increased demand for Q technology, seismic has now become the fastest growing Schlumberger Technology. WesternGeco revenue increased 47% year-on-year and the segment has the healthiest backlog in its history. This exploration-dominated growth demonstrates that our customers’ concerns are as much a longer-term preoccupation with the renewal of reserves through defining new reservoirs, as they are concerns with short-term production volumes. The accelerating growth rates of our reservoir characterization and well testing technology portfolios serve as confirmation of this trend.

The second-quarter growth patterns proved to be the opposite of the first quarter of 2006. Sequential growth in North America slowed as impressive results in US Land and exceptional performance in the US Gulf Coast were partially offset by a prolonged spring break-up in Canada. Outside North America, sequential growth rates improved dramatically as Russia recovered from the severe winter weather and other regions showed accelerating trends.

Many Schlumberger Technologies saw positive sequential growth rates worldwide with Seismic, Drilling & Measurements, Well Testing, Completion Systems, and Integrated Project Management being particularly strong, driven by a combination of increased activity, project demand, and technology-led pricing power.

During the quarter, we made several small but highly significant acquisitions that will add to our reservoir definition capability. We also completed the final stage of the acquisition of PetroAlliance whose performance over the past year has far exceeded our original expectations.

Sequential growth rates for the remainder of 2006 will continue to be strong, particularly in the Eastern Hemisphere, albeit at slightly lower levels than the blistering pace of the second quarter. In North America some temporary slowing of natural gas drilling activity cannot be excluded though currently there are no clear signs of this."

Other Events:

- On April 28, Schlumberger completed the acquisition of the 30% minority interest in WesternGeco held by Baker Hughes for $2.4 billion in cash. Excluding one-time charges of $21 million for in-process R&D and $9.4 million for liquidation of certain investments in connection with the funding of the transaction, the acquisition was approximately one-and-a-half cents accretive for the quarter, and is now expected to remain accretive in the future.

- On May 16, Schlumberger completed the final stage of the acquisition of PetroAlliance Service Company Limited for $165 million in cash and approximately 4.7 million shares of Schlumberger stock.

- As part of the new 40 million-share buy-back program announced in the first quarter of 2006, Schlumberger repurchased 3.6 million shares during the quarter for a total amount of $213 million, at an average price of $59 per share.

- During the quarter, after-tax charges totaling $42.8 million were recorded. These included the $21 million WesternGeco in-process R&D charge; a $9.4 million loss on the liquidation of certain investments to fund the WesternGeco transaction; WesternGeco visa settlement costs of $6.8 million; and other in-process R&D charges amounting to $5.6 million.


Oilfield Services

Second-quarter revenue of $4.13 billion was 11% higher sequentially and 36% higher year-on-year.

Sequential revenue increases were highest in the US Land, US Gulf Coast, Mexico, North Sea, West Africa, Arabian, Gulf, and Russian GeoMarkets. All Technologies contributed to the strong growth with Drilling & Measurements, Well Testing, Integrated Project Management (IPM), and Completion Systems recording double-digit increases.

Pretax operating income of $1.12 billion increased 18% sequentially and 67% year-on-year. These results were driven by higher activity, increased pricing, stronger demand for higher-margin technologies, and operating efficiency improvements. The combination of these factors resulted in sequential growth of 160 basis points (bps) in pretax operating margins to reach 27.2%.

During the quarter, Schlumberger acquired TerraTek, Inc., a global leader in geomechanics measurements and analysis. TerraTek will become the Schlumberger Geomechanics Laboratory Center of Excellence—providing rock mechanics evaluations, unconventional gas reservoir analysis, large-scale drilling and completions performance testing, and log-to-core integration. This acquisition provides unparalleled expertise in technologies to reduce reservoir risk and uncertainty by delivering superior reservoir characterization.