Schlumberger Limited reported results for the first-quarter 2015. Revenue of $10.2 billion decreased 19% sequentially.
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North America first-quarter revenue of $3.2 billion decreased 25% sequentially. In the US and Western Canada, revenue fell on lower pressure pumping activity and increased pricing pressure, precipitated by the sharp drop in land rig count and the early onset of the Canadian spring break-up.
In the US Gulf of Mexico, offshore activity was flat sequentially but revenue declined due mainly to lower multiclient seismic license sales.
North America pretax operating margin declined 670 basis points (bps) sequentially to 12.9% on decreased pressure pumping activity and pricing weakness in North America land. North America offshore operating margin declined due to an unfavorable revenue mix resulting from a shift from exploration to development activity and reduced high-margin multiclient license sales.
Despite the severity of the revenue decline, focused execution and prompt action on cost management limited the sequential decremental margin to 39%.
Middle East & Asia Area revenue of $2.7 billion declined 13% sequentially due mainly to double-digit drops in China, Asia-Pacific and Australia.
The Middle East GeoMarkets remained robust on new projects and higher activity, but revenue declined on reduced product and software sales following the year-end high of the previous quarter. India GeoMarket revenue also grew sequentially while activity in Iraq continued to be muted.
Europe/CIS/Africa Area revenue of $2.5 billion fell 17% sequentially due mainly to continued weakness in the Russian ruble and the seasonal activity decline in Russia. As customer spending decelerated, exploration in the UK North Sea fell to its lowest level, while rig count in the Norway sector was flat compared with the previous quarter.
Sub-Saharan activity was mixed, with offshore and exploration work declining in the East Africa, Chad, and Nigeria GeoMarkets. North Africa showed some early but slow signs of increasing activity, while work in Libya was limited to offshore operations.
Revenue in the Latin America Area of $1.6 billion dropped 20% on the exchange rate effect in Venezuela and decreased activity in Mexico, Brazil and Colombia due to budgetary cuts. These effects, however, were partially offset by slight but steady activity increases in Argentina, Venezuela, Trinidad and the Caribbean.
International Area pretax operating margin of 24.1% was essentially flat sequentially. Middle East & Asia pretax operating margin increased slightly by 30 bps to 28.6%, Latin America increased 59 bps to 21.5%, and Europe/CIS/Africa fell 133 bps to 21%.
Despite the severity of the sequential revenue decline and the increasingly unfavorable shift in revenue mix, the impact on margins was minimized by focused execution, prompt action on all variable cost categories, and acceleration of our transformation program across the GeoMarkets.
The positive effects of these limited sequential decremental margins to 25%. Compared to the first quarter of 2014, international margins increased by 131 bps. ■