Large
accelerated
filer X
|
Accelerated
filer
|
Non-accelerated
filer
|
Page
No.
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Financial
Statements
|
3-5
|
- Condensed
Consolidated Statements of Operations
|
3
|
|
- Condensed
Consolidated Balance Sheets
|
4
|
|
- Condensed
Consolidated Statements of Cash Flows
|
5
|
|
- Notes
to Condensed Consolidated Financial Statements
|
6-21
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and
|
|
Results
of Operations
|
22-46
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
47
|
Item
4.
|
Controls
and Procedures
|
47
|
PART
II.
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
48
|
Item
1(a).
|
Risk
Factors
|
48
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
48
|
Item
3.
|
Defaults
Upon Senior Securities
|
48
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
48
|
Item
5.
|
Other
Information
|
48
|
Item
6.
|
Exhibits
|
49
|
Signatures
|
50
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars and shares except per share data
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenue:
|
||||||||||||||||
Services
|
$ |
2,951
|
$ |
2,566
|
$ |
8,217
|
$ |
7,073
|
||||||||
Product
sales
|
977
|
826
|
2,868
|
2,373
|
||||||||||||
Total
revenue
|
3,928
|
3,392
|
11,085
|
9,446
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Cost
of services
|
2,111
|
1,770
|
5,908
|
4,957
|
||||||||||||
Cost
of sales
|
845
|
669
|
2,423
|
1,936
|
||||||||||||
General
and administrative
|
63
|
84
|
214
|
243
|
||||||||||||
Gain
on sale of business assets, net
|
(1 | ) | (1 | ) | (51 | ) | (12 | ) | ||||||||
Total
operating costs and expenses
|
3,018
|
2,522
|
8,494
|
7,124
|
||||||||||||
Operating
income
|
910
|
870
|
2,591
|
2,322
|
||||||||||||
Interest
expense
|
(39 | ) | (40 | ) | (118 | ) | (124 | ) | ||||||||
Interest
income
|
26
|
36
|
100
|
94
|
||||||||||||
Other,
net
|
(1 | ) | (3 | ) | (6 | ) | (2 | ) | ||||||||
Income
from continuing operations before income taxes
|
||||||||||||||||
and
minority
interest
|
896
|
863
|
2,567
|
2,290
|
||||||||||||
Provision
for income taxes
|
(152 | ) | (257 | ) | (695 | ) | (725 | ) | ||||||||
Minority
interest in net income of subsidiaries
|
(18 | ) | (3 | ) | (22 | ) | (15 | ) | ||||||||
Income
from continuing operations
|
726
|
603
|
1,850
|
1,550
|
||||||||||||
Income
from discontinued operations, net of income tax
|
||||||||||||||||
provision
of $0, $61, $11, and
$123
|
1
|
8
|
959
|
140
|
||||||||||||
Net
income
|
$ |
727
|
$ |
611
|
$ |
2,809
|
$ |
1,690
|
||||||||
Basic
income per share:
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.83
|
$ |
0.60
|
$ |
2.00
|
$ |
1.52
|
||||||||
Income
from discontinued operations, net
|
-
|
0.01
|
1.04
|
0.13
|
||||||||||||
Net
income per share
|
$ |
0.83
|
$ |
0.61
|
$ |
3.04
|
$ |
1.65
|
||||||||
Diluted
income per share:
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.79
|
$ |
0.57
|
$ |
1.93
|
$ |
1.46
|
||||||||
Income
from discontinued operations, net
|
-
|
0.01
|
0.99
|
0.13
|
||||||||||||
Net
income per share
|
$ |
0.79
|
$ |
0.58
|
$ |
2.92
|
$ |
1.59
|
||||||||
Cash
dividends per share
|
$ |
0.09
|
$ |
0.075
|
$ |
0.255
|
$ |
0.225
|
||||||||
Basic
weighted average common shares outstanding
|
880
|
1,011
|
925
|
1,021
|
||||||||||||
Diluted
weighted average common shares outstanding
|
917
|
1,048
|
961
|
1,062
|
September
30,
|
December
31,
|
|||||||
Millions
of dollars and shares except per share data
|
2007
|
2006
|
||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and equivalents
|
$ |
735
|
$ |
2,918
|
||||
Receivables
(less allowance for bad debts of $51 and $40)
|
3,109
|
2,629
|
||||||
Inventories
|
1,560
|
1,235
|
||||||
Investments
in marketable securities
|
1,156
|
20
|
||||||
Current
deferred income taxes
|
275
|
205
|
||||||
Current
assets of discontinued operations
|
-
|
3,898
|
||||||
Other
current assets
|
386
|
285
|
||||||
Total
current assets
|
7,221
|
11,190
|
||||||
Property,
plant, and equipment, net of accumulated depreciation of $3,991 and
$3,793
|
3,337
|
2,557
|
||||||
Goodwill
|
731
|
486
|
||||||
Noncurrent
deferred income taxes
|
439
|
448
|
||||||
Noncurrent
assets of discontinued operations
|
-
|
1,497
|
||||||
Other
assets
|
741
|
682
|
||||||
Total
assets
|
$ |
12,469
|
$ |
16,860
|
||||
Liabilities
and Shareholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ |
798
|
$ |
655
|
||||
Accrued
employee compensation and benefits
|
525
|
496
|
||||||
Income
tax payable
|
216
|
146
|
||||||
Deferred
revenue
|
188
|
171
|
||||||
Current
maturities of long-term debt
|
10
|
26
|
||||||
Current
liabilities of discontinued operations
|
-
|
2,831
|
||||||
Other
current liabilities
|
454
|
409
|
||||||
Total
current liabilities
|
2,191
|
4,734
|
||||||
Long-term
debt
|
2,796
|
2,783
|
||||||
Employee
compensation and benefits
|
503
|
474
|
||||||
Noncurrent
liabilities of discontinued operations
|
-
|
981
|
||||||
Other
liabilities
|
692
|
443
|
||||||
Total
liabilities
|
6,182
|
9,415
|
||||||
Minority
interest in consolidated subsidiaries
|
90
|
69
|
||||||
Shareholders’
equity:
|
||||||||
Common
shares, par value $2.50 per share – authorized 2,000 shares, issued 1,062
and 1,060
|
||||||||
shares
|
2,655
|
2,650
|
||||||
Paid-in
capital in excess of par value
|
1,694
|
1,689
|
||||||
Accumulated
other comprehensive income (loss)
|
(178 | ) | (437 | ) | ||||
Retained
earnings
|
7,591
|
5,051
|
||||||
11,762
|
8,953
|
|||||||
Less
181 and 62 shares of treasury stock, at cost
|
5,565
|
1,577
|
||||||
Total
shareholders’ equity
|
6,197
|
7,376
|
||||||
Total
liabilities and shareholders’ equity
|
$ |
12,469
|
$ |
16,860
|
Nine
Months Ended
|
||||||||
September
30
|
||||||||
Millions
of dollars
|
2007
|
2006
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
2,809
|
$ |
1,690
|
||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Income
from discontinued operations
|
(959 | ) | (140 | ) | ||||
Depreciation,
depletion, and amortization
|
417
|
356
|
||||||
Provision
(benefit) for deferred income taxes, including $(15) and $23 related
to
discontinued
|
||||||||
operations
|
(82 | ) |
558
|
|||||
Gain
on sale of assets
|
(51 | ) | (19 | ) | ||||
Other
changes:
|
||||||||
Receivables
|
(318 | ) | (265 | ) | ||||
Inventories
|
(320 | ) | (252 | ) | ||||
Accounts
payable
|
109
|
144
|
||||||
Contributions
to pension plans
|
(23 | ) | (57 | ) | ||||
Other
|
237
|
(80 | ) | |||||
Cash
flows from continuing operations
|
1,819
|
1,935
|
||||||
Cash
flows from discontinued operations
|
(55 | ) |
335
|
|||||
Total
cash flows from operating activities
|
1,764
|
2,270
|
||||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures
|
(1,064 | ) | (569 | ) | ||||
Sales
of property, plant, and equipment
|
124
|
108
|
||||||
Dispositions
(acquisitions) of business assets, net of cash acquired or
disposed
|
(447 | ) |
7
|
|||||
Sales
(purchases) of short-term investments in marketable securities,
net
|
(1,113 | ) |
–
|
|||||
Investments
– restricted cash
|
55
|
–
|
||||||
Other
investing activities
|
(21 | ) | (10 | ) | ||||
Cash
flows from continuing operations
|
(2,466 | ) | (464 | ) | ||||
Cash
flows from discontinued operations
|
(13 | ) |
233
|
|||||
Total
cash flows from investing activities
|
(2,479 | ) | (231 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Payments
to reacquire common stock
|
(1,303 | ) | (1,056 | ) | ||||
Proceeds
from exercises of stock options
|
92
|
146
|
||||||
Borrowings
(repayments) of short-term debt, net
|
(2 | ) | (14 | ) | ||||
Payments
of long-term debt
|
(3 | ) | (323 | ) | ||||
Payments
of dividends to shareholders
|
(235 | ) | (231 | ) | ||||
Tax
benefit from exercise of options and restricted stock
|
22
|
–
|
||||||
Other
financing activities
|
(4 | ) | (3 | ) | ||||
Cash
flows from continuing operations
|
(1,433 | ) | (1,481 | ) | ||||
Cash
flows from discontinued operations
|
(18 | ) | (18 | ) | ||||
Total
cash flows from financing activities
|
(1,451 | ) | (1,499 | ) | ||||
Effect
of exchange rate changes on cash
|
(17 | ) | (13 | ) | ||||
Increase
(decrease) in cash and equivalents
|
(2,183 | ) |
527
|
|||||
Cash
and equivalents at beginning of period
|
2,918
|
2,001
|
||||||
Cash
and equivalents at end of period
|
$ |
735
|
$ |
2,528
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
payments during the period for:
|
||||||||
Interest
from continuing operations
|
$ |
118
|
$ |
135
|
||||
Income
taxes from continuing operations
|
$ |
689
|
$ |
202
|
|
-
|
the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements;
and
|
|
-
|
the
reported amounts of revenue and expenses during the reporting
period.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenue
|
$ |
-
|
$ |
2,439
|
$ |
2,250
|
$ |
7,114
|
||||||||
Operating
income
|
$ |
-
|
$ |
96
|
$ |
62
|
$ |
118
|
||||||||
Net
income
|
$ |
-
|
$ |
10
|
$ | 23 | (a) | $ |
141
|
|
(a)
|
Net
income for the nine months ended September 30, 2007 represents our
81%
share of KBR, Inc.’s results.
|
|
-
|
fines
or other monetary penalties or direct monetary damages, including
disgorgement, as a result of a claim made or assessed by a governmental
authority in the United States, the United Kingdom, France, Nigeria,
Switzerland, and/or Algeria, or a settlement thereof, related to
alleged
or actual violations occurring prior to November 20, 2006 of the
United
States Foreign Corrupt Practices Act (FCPA) or particular, analogous
applicable foreign statutes, laws, rules, and regulations in connection
with investigations pending as of that date, including with respect
to the
construction and subsequent expansion by TSKJ of a natural gas
liquefaction complex and related facilities at Bonny Island in Rivers
State, Nigeria; and
|
|
-
|
all
out-of-pocket cash costs and expenses, or cash settlements or cash
arbitration awards in lieu thereof, KBR may incur after the effective
date
of the master separation agreement as a result of the replacement
of the
subsea flowline bolts installed in connection with the Barracuda-Caratinga
project. See Note 10 for further discussion of these
matters.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenue:
|
||||||||||||||||
Completion
and Production
|
$ |
2,187
|
$ |
1,896
|
$ |
6,097
|
$ |
5,279
|
||||||||
Drilling
and Evaluation
|
1,741
|
1,496
|
4,988
|
4,167
|
||||||||||||
Total
revenue
|
$ |
3,928
|
$ |
3,392
|
$ |
11,085
|
$ |
9,446
|
||||||||
Operating
income (loss):
|
||||||||||||||||
Completion
and Production
|
$ |
596
|
$ |
564
|
$ |
1,628
|
$ |
1,543
|
||||||||
Drilling
and Evaluation
|
372
|
368
|
1,082
|
943
|
||||||||||||
Corporate
and other
|
(58 | ) | (62 | ) | (119 | ) | (164 | ) | ||||||||
Total
operating income
|
$ |
910
|
$ |
870
|
$ |
2,591
|
$ |
2,322
|
September
30,
|
December
31,
|
|||||||
Millions
of dollars
|
2007
|
2006
|
||||||
Total
assets:
|
||||||||
Completion
and Production
|
$ |
4,779
|
$ |
3,636
|
||||
Drilling
and Evaluation
|
4,402
|
3,566
|
||||||
Shared
energy services
|
853
|
1,216
|
||||||
Corporate
and other
|
2,435
|
3,047
|
||||||
Discontinued
operations
|
-
|
5,395
|
||||||
Total
|
$ |
12,469
|
$ |
16,860
|
September
30,
|
December
31,
|
|||||||
Millions
of dollars
|
2007
|
2006
|
||||||
Finished
products and parts
|
$ |
1,050
|
$ |
883
|
||||
Raw
materials and supplies
|
394
|
256
|
||||||
Work
in process
|
116
|
96
|
||||||
Total
|
$ |
1,560
|
$ |
1,235
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Net
income
|
$ |
727
|
$ |
611
|
$ |
2,809
|
$ |
1,690
|
||||||||
Cumulative
translation adjustments
|
–
|
14
|
–
|
51
|
||||||||||||
Realization
of (gains) losses included in net income
|
–
|
2
|
(24 | ) | (14 | ) | ||||||||||
Net
cumulative translation adjustments
|
–
|
16
|
(24 | ) |
37
|
|||||||||||
Realized
pension liability adjustments
|
–
|
–
|
282
|
–
|
||||||||||||
Unrealized
net gains (losses) on investments
|
||||||||||||||||
and
derivatives
|
–
|
(10 | ) |
1
|
11
|
|||||||||||
Realization
of gains on investments and
|
||||||||||||||||
derivatives
included in net
income
|
–
|
(1 | ) |
–
|
(1 | ) | ||||||||||
Net
unrealized gains (losses) on investments
|
||||||||||||||||
and
derivatives
|
–
|
(11 | ) |
1
|
10
|
|||||||||||
Total
comprehensive income
|
$ |
727
|
$ |
616
|
$ |
3,068
|
$ |
1,737
|
September
30,
|
December
31,
|
|||||||
Millions
of dollars
|
2007
|
2006
|
||||||
Cumulative
translation adjustments
|
$ | (62 | ) | $ | (38 | ) | ||
Pension
liability adjustments
|
(118 | ) | (400 | ) | ||||
Unrealized
gains on investments and derivatives
|
2
|
1
|
||||||
Total
accumulated other comprehensive income
|
$ | (178 | ) | $ | (437 | ) |
|
-
|
the
Comprehensive Environmental Response, Compensation, and Liability
Act;
|
|
-
|
the
Resources Conservation and Recovery
Act;
|
|
-
|
the
Clean Air Act;
|
|
-
|
the
Federal Water Pollution Control Act;
and
|
|
-
|
the
Toxic Substances Control Act.
|
Three
Months
|
Nine
Months
|
|||||||||||||||
Ended
|
Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of shares
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Basic
weighted average common shares outstanding
|
880
|
1,011
|
925
|
1,021
|
||||||||||||
Dilutive
effect of:
|
||||||||||||||||
Convertible
senior notes
premium
|
30
|
27
|
28
|
30
|
||||||||||||
Stock
options
|
6
|
8
|
6
|
9
|
||||||||||||
Restricted
stock
|
1
|
2
|
2
|
2
|
||||||||||||
Diluted
weighted average common shares outstanding
|
917
|
1,048
|
961
|
1,062
|
Unrecognized
|
Interest
|
|||||||
Millions
of dollars
|
Tax
Benefits
|
and
Penalties
|
||||||
Balance
at January 1, 2007
|
$ |
266
|
$ |
47
|
||||
Increase
(decrease) in prior year tax positions
|
50
|
(3 | ) | |||||
Increase
in current year tax positions
|
10
|
2
|
||||||
Decrease
related to settlements with taxing authorities
|
(7 | ) |
-
|
|||||
Decrease
related to lapse of statute of limitations
|
(1 | ) |
-
|
|||||
Reclassification
to discontinued operations
|
(24 | ) | (13 | ) | ||||
Balance
at September 30, 2007
|
$ |
294
|
$ |
33
|
Three
Months Ended September 30
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Millions
of dollars
|
United
States
|
International
|
United
States
|
International
|
||||||||||||
Components
of net periodic
|
||||||||||||||||
benefit
cost:
|
||||||||||||||||
Service
cost
|
$ |
-
|
$ |
6
|
$ |
-
|
$ |
6
|
||||||||
Interest
cost
|
2
|
11
|
2
|
9
|
||||||||||||
Expected
return on plan assets
|
(2 | ) | (10 | ) | (2 | ) | (7 | ) | ||||||||
Settlements/curtailments
|
1
|
-
|
-
|
-
|
||||||||||||
Recognized
actuarial loss
|
2
|
3
|
1
|
1
|
||||||||||||
Net
periodic benefit cost
|
$ |
3
|
$ |
10
|
$ |
1
|
$ |
9
|
Nine
Months Ended September 30
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Millions
of dollars
|
United
States
|
International
|
United
States
|
International
|
||||||||||||
Components
of net periodic
|
||||||||||||||||
benefit
cost:
|
||||||||||||||||
Service
cost
|
$ |
-
|
$ |
18
|
$ |
-
|
$ |
17
|
||||||||
Interest
cost
|
5
|
32
|
5
|
26
|
||||||||||||
Expected
return on plan assets
|
(5 | ) | (28 | ) | (5 | ) | (21 | ) | ||||||||
Settlement/curtailments
|
1
|
(1 | ) |
-
|
-
|
|||||||||||
Recognized
actuarial loss
|
5
|
7
|
4
|
5
|
||||||||||||
Net
periodic benefit cost
|
$ |
6
|
$ |
28
|
$ |
4
|
$ |
27
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Components
of net periodic
|
||||||||||||||||
benefit
cost:
|
||||||||||||||||
Service
cost
|
$ |
1
|
$ |
-
|
$ |
1
|
$ |
1
|
||||||||
Interest
cost
|
2
|
3
|
6
|
7
|
||||||||||||
Net
periodic benefit cost
|
$ |
3
|
$ |
3
|
$ |
7
|
$ |
8
|
|
-
|
maintaining
optimal utilization of our equipment and
resources;
|
|
-
|
leveraging
our technologies to provide our customers with the ability to more
efficiently drill and complete their wells and to increase their
productivity. To that end,
we
recently opened one and have plans for two more international research
and
development centers with global technology and training
missions;
|
|
-
|
expanding
our manufacturing capability and capacity with new manufacturing
plants,
such as three that opened in Mexico, Brazil, and Malaysia in the
first
half of 2007 and one in Singapore expected to open by
year-end;
|
|
-
|
hiring
and training additional personnel to meet the increased demand for
our
services;
|
|
-
|
pursuing
strategic acquisitions in line with our core products and services
to
expand our portfolio in key geographic areas. Consistent with
this objective:
|
|
-
|
in
July 2007, we acquired the United Kingdom-based PSL Energy Services
Limited, a leading eastern hemisphere provider of process, pipeline,
and
well intervention services;
|
|
-
|
also
in July 2007, we entered into a definitive agreement to purchase
the
entire share capital of OOO Burservice, a leading provider of directional
drilling services in Russia;
and
|
|
-
|
in
September 2007, we acquired the intellectual property and substantially
all of the assets and existing business of GeoSmith Consulting Group,
LLC,
a leading developer of software components for 3-D interpretation
and
geometric modeling applications;
and
|
|
-
|
increasing
capital spending, primarily directed toward eastern hemisphere operations
for service equipment additions and infrastructure related to recent
project wins. Capital spending for 2008 is expected to be
approximately $1.5 billion to $1.7
billion.
|
|
-
|
fines
or other monetary penalties or direct monetary damages, including
disgorgement, as a result of a claim made or assessed by a governmental
authority in the United States, the United Kingdom, France, Nigeria,
Switzerland, and/or Algeria, or a settlement thereof, related to
alleged
or actual violations occurring prior to November 20, 2006 of the
United
States Foreign Corrupt Practices Act (FCPA) or particular, analogous
applicable foreign statutes, laws, rules, and regulations in connection
with investigations pending as of that date, including with respect
to the
construction and subsequent expansion by TSKJ of a natural gas
liquefaction complex and related facilities at Bonny Island in Rivers
State, Nigeria; and
|
|
-
|
all
out-of-pocket cash costs and expenses, or cash settlements or cash
arbitration awards in lieu thereof, KBR may incur after the effective
date
of the master separation agreement as a result of the replacement
of the
subsea flowline bolts installed in connection with the Barracuda-Caratinga
project. See Note 10 to our condensed consolidated financial
statements for further discussion of these
matters.
|
Millions
of dollars
|
||||
October
1 through December 31, 2007
|
$ |
23
|
||
2008
|
67
|
|||
2009
|
132
|
|||
2010
|
16
|
|||
Total
|
$ |
238
|
Three
Months Ended
|
Year
Ended
|
|||||||||||
September
30
|
December
31
|
|||||||||||
Average
Oil Prices (dollars per barrel)
|
2007
|
2006
|
2006
|
|||||||||
West
Texas Intermediate
|
$ |
75.16
|
$ |
70.80
|
$ |
66.17
|
||||||
United
Kingdom Brent
|
74.62
|
70.03
|
65.35
|
|||||||||
Average
United States Gas Prices (dollars per million
British
|
||||||||||||
thermal
units, or
mmBtu)
|
||||||||||||
Henry
Hub
|
$ |
6.00
|
$ |
6.35
|
$ |
6.81
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Land
vs. Offshore
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
United
States:
|
||||||||||||||||
Land
|
1,716
|
1,624
|
1,682
|
1,533
|
||||||||||||
Offshore
|
72
|
95
|
78
|
91
|
||||||||||||
Total
|
1,788
|
1,719
|
1,760
|
1,624
|
||||||||||||
Canada:
|
||||||||||||||||
Land
|
346
|
490
|
337
|
477
|
||||||||||||
Offshore
|
2
|
4
|
3
|
3
|
||||||||||||
Total
|
348
|
494
|
340
|
480
|
||||||||||||
International
(excluding Canada):
|
||||||||||||||||
Land
|
733
|
671
|
714
|
648
|
||||||||||||
Offshore
|
287
|
270
|
287
|
269
|
||||||||||||
Total
|
1,020
|
941
|
1,001
|
917
|
||||||||||||
Worldwide
total
|
3,156
|
3,154
|
3,101
|
3,021
|
||||||||||||
Land
total
|
2,795
|
2,785
|
2,733
|
2,658
|
||||||||||||
Offshore
total
|
361
|
369
|
368
|
363
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Oil
vs. Gas
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
United
States:
|
||||||||||||||||
Oil
|
298
|
306
|
285
|
269
|
||||||||||||
Gas
|
1,490
|
1,413
|
1,475
|
1,355
|
||||||||||||
Total
|
1,788
|
1,719
|
1,760
|
1,624
|
||||||||||||
Canada:
|
||||||||||||||||
Oil
|
122
|
122
|
127
|
104
|
||||||||||||
Gas
|
226
|
372
|
213
|
376
|
||||||||||||
Total
|
348
|
494
|
340
|
480
|
||||||||||||
International
(excluding Canada):
|
||||||||||||||||
Oil
|
798
|
720
|
780
|
703
|
||||||||||||
Gas
|
222
|
221
|
221
|
214
|
||||||||||||
Total
|
1,020
|
941
|
1,001
|
917
|
||||||||||||
Worldwide
total
|
3,156
|
3,154
|
3,101
|
3,021
|
||||||||||||
Oil
total
|
1,218
|
1,148
|
1,192
|
1,076
|
||||||||||||
Gas
total
|
1,938
|
2,006
|
1,909
|
1,945
|
|
-
|
continued
growth in worldwide petroleum demand, despite high oil
prices;
|
|
-
|
projected
production growth in non-Organization of Petroleum Exporting Countries
(non-OPEC) supplies is not expected to accommodate world wide demand
growth;
|
|
-
|
OPEC’s
commitment to control production;
|
|
-
|
modest
increases in OPEC’s current and forecasted production capacity;
and
|
|
-
|
geopolitical
tensions in major oil-exporting
nations.
|
|
-
|
we
have opened a corporate office in Dubai, United Arab Emirates,
allowing us
to focus more attention on customer relationships in that part
of the
world, particularly with national oil
companies;
|
|
-
|
in
order to continue to supply our customers with leading-edge services
and
products, we have increased our technology spending during 2007
as
compared to the prior year. Our plans are progressing for new
international research and development centers with global technology
and
training missions. We opened one in Pune, India in the third
quarter of 2007, and a second facility, which will be in Singapore,
is
expected to open by year-end;
|
|
-
|
we
are expanding our manufacturing capability and capacity during
2007 to
meet the increasing demands for our services and products. In
the first nine months of 2007, we opened manufacturing plants in
Mexico,
Brazil, and Malaysia, and we plan to open an additional plant in
Singapore
by year-end. Having manufacturing facilities closer to our
worksites will allow us to more efficiently deploy equipment to
our field
operations, as well as increase our use of local people and
materials;
|
|
-
|
as
our workforce becomes more global, the need for regional training
centers
increases. To meet the increasing need for technical training,
we opened a new training center in Tyumen, Russia during the first
quarter
of 2007. We have also recently expanded training centers in
Malaysia, Egypt, and Mexico; and
|
|
-
|
part
of our growth strategy includes select acquisitions that will enhance
or
augment our current portfolio of products and services, including
those
with unique technologies or distribution networks in areas where
we do not
already have large operations;
|
|
-
|
in
January 2007, we acquired Ultraline Services Company, a provider
of
wireline services in Canada. Prior to this acquisition, we did
not have meaningful wireline and perforating operations in
Canada;
|
|
-
|
in
May 2007, we acquired the intellectual property, assets, and existing
business associated with Vector Magnetics LLC’s active ranging technology
for steam-assisted gravity drainage
applications;
|
|
-
|
in
July 2007, we acquired PSL Energy Services Limited, a leading eastern
hemisphere provider of process, pipeline, and well intervention
services. This acquisition will increase our eastern hemisphere
production enhancement operations significantly, putting us in a
strong
position in pipeline processing services both in the eastern hemisphere
and globally;
|
|
-
|
in
July 2007, we entered into a definitive agreement to purchase the
entire
share capital of OOO Burservice, a leading provider of directional
drilling services in Russia; and
|
|
-
|
in
September 2007, we acquired the intellectual property and substantially
all of the assets and existing business of GeoSmith Consulting Group,
LLC,
a leading developer of software components for 3-D interpretation
and
geometric modeling applications.
|
|
-
|
a
contract to provide hydraulic fracturing services on the Right Bank
of the
Priobskye field in Siberia. The scope of work includes
providing services for 327 wells;
|
|
-
|
a
multiservices contract for work in the Tyumen region of
Russia. We will be providing drilling fluids, waste management,
cementing, drill bits, directional drilling, and logging-while-drilling
services;
|
|
-
|
a
contract to provide acidizing, acid fracturing, water control, and
nitrogen stimulation services for a customer in the Bay of Campeche,
Mexico;
|
|
-
|
a
contract to provide deepwater sand control completion technology
in two
offshore fields of India;
|
|
-
|
a
contract to provide completion products and services to a group of
energy
companies for operations throughout Malaysia for a term of five
years;
|
|
-
|
a
contract to provide exploration and development testing services
in high
pressure, high temperature environments in Latin
America;
|
|
-
|
a
five-year contract for sand control completions for over 200 wells
in
offshore China;
|
|
-
|
a
three-year contract to provide a full range of subsurface services,
including drilling and formation evaluation, slickline, fluids, cementing
services and production enhancement in Papua New Guinea;
and
|
|
-
|
a
contract to provide completion products and services in
Indonesia.
|
Three
Months Ended
|
||||||||||||||||
REVENUE:
|
September
30
|
Increase
|
Percentage
|
|||||||||||||
Millions
of dollars
|
2007
|
2006
|
(Decrease)
|
Change
|
||||||||||||
Completion
and Production
|
$ |
2,187
|
$ |
1,896
|
$ |
291
|
15 | % | ||||||||
Drilling
and Evaluation
|
1,741
|
1,496
|
245
|
16
|
||||||||||||
Total
revenue
|
$ |
3,928
|
$ |
3,392
|
$ |
536
|
16 | % |
By
geographic region:
|
||||||||||||||||
Completion
and Production:
|
||||||||||||||||
North
America
|
$ |
1,227
|
$ |
1,159
|
$ |
68
|
6 | % | ||||||||
Latin
America
|
193
|
152
|
41
|
27
|
||||||||||||
Europe/Africa/CIS
|
439
|
352
|
87
|
25
|
||||||||||||
Middle
East/Asia
|
328
|
233
|
95
|
41
|
||||||||||||
Total
|
2,187
|
1,896
|
291
|
15
|
||||||||||||
Drilling
and Evaluation:
|
||||||||||||||||
North
America
|
620
|
579
|
41
|
7
|
||||||||||||
Latin
America
|
263
|
238
|
25
|
11
|
||||||||||||
Europe/Africa/CIS
|
493
|
369
|
124
|
34
|
||||||||||||
Middle
East/Asia
|
365
|
310
|
55
|
18
|
||||||||||||
Total
|
1,741
|
1,496
|
245
|
16
|
||||||||||||
Total
revenue by region:
|
||||||||||||||||
North
America
|
1,847
|
1,738
|
109
|
6
|
||||||||||||
Latin
America
|
456
|
390
|
66
|
17
|
||||||||||||
Europe/Africa/CIS
|
932
|