Yes | X | No |
Yes | X | No |
Large
accelerated filer[X]
Non-accelerated
filer [ ]
|
Accelerated
filer
[ ]
Smaller
reporting company[ ]
|
Yes | No X |
Page No.
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
3 |
Item
1.
|
Financial
Statements
|
3 |
- 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 | |
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and
|
|
Results
of Operations
|
18 | |
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
38 |
Item
4.
|
Controls
and Procedures
|
38 |
PART
II.
|
OTHER
INFORMATION
|
39 |
Item
1.
|
Legal
Proceedings
|
39 |
Item
1(a).
|
Risk
Factors
|
39 |
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
39 |
Item
3.
|
Defaults
Upon Senior Securities
|
39 |
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
39 |
Item
5.
|
Other
Information
|
39 |
Item
6.
|
Exhibits
|
40 |
Signatures
|
41 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars and shares except per share data
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Revenue:
|
||||||||||||||||
Services
|
$ | 2,645 | $ | 3,608 | $ | 8,137 | $ | 9,864 | ||||||||
Product
sales
|
943 | 1,245 | 2,852 | 3,505 | ||||||||||||
Total
revenue
|
3,588 | 4,853 | 10,989 | 13,369 | ||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Cost
of services
|
2,270 | 2,670 | 6,845 | 7,423 | ||||||||||||
Cost
of sales
|
796 | 1,055 | 2,431 | 2,940 | ||||||||||||
General
and administrative
|
49 | 78 | 149 | 221 | ||||||||||||
Gain
on sale of assets, net
|
(1 | ) | (1 | ) | (2 | ) | (62 | ) | ||||||||
Total
operating costs and expenses
|
3,114 | 3,802 | 9,423 | 10,522 | ||||||||||||
Operating
income
|
474 | 1,051 | 1,566 | 2,847 | ||||||||||||
Interest
expense
|
(80 | ) | (35 | ) | (215 | ) | (119 | ) | ||||||||
Interest
income
|
3 | 6 | 8 | 35 | ||||||||||||
Other,
net
|
(4 | ) | (4 | ) | (23 | ) | (7 | ) | ||||||||
Income
from continuing operations before income taxes
|
||||||||||||||||
and noncontrolling
interest
|
393 | 1,018 | 1,336 | 2,756 | ||||||||||||
Provision
for income taxes
|
(124 | ) | (343 | ) | (420 | ) | (869 | ) | ||||||||
Income
from continuing operations
|
269 | 675 | 916 | 1,887 | ||||||||||||
Loss
from discontinued operations, net of income
|
||||||||||||||||
tax benefit (provision) of $2,
$(1), $3, and $(1)
|
(3 | ) | − | (5 | ) | (115 | ) | |||||||||
Net
income
|
$ | 266 | $ | 675 | $ | 911 | $ | 1,772 | ||||||||
Noncontrolling
interest in net income of subsidiaries
|
(4 | ) | (3 | ) | (9 | ) | (16 | ) | ||||||||
Net
income attributable to company
|
$ | 262 | $ | 672 | $ | 902 | $ | 1,756 | ||||||||
Amounts
attributable to company shareholders:
|
||||||||||||||||
Income
from continuing operations
|
$ | 265 | $ | 672 | $ | 907 | $ | 1,871 | ||||||||
Loss
from discontinued operations, net
|
(3 | ) | − | (5 | ) | (115 | ) | |||||||||
Net
income attributable to company
|
$ | 262 | $ | 672 | $ | 902 | $ | 1,756 | ||||||||
Basic
income per share attributable to company shareholders:
|
||||||||||||||||
Income
from continuing operations
|
$ | 0.29 | $ | 0.76 | $ | 1.01 | $ | 2.13 | ||||||||
Loss
from discontinued operations, net
|
− | − | (0.01 | ) | (0.13 | ) | ||||||||||
Net
income per share
|
$ | 0.29 | $ | 0.76 | $ | 1.00 | $ | 2.00 | ||||||||
Diluted
income per share attributable to company shareholders:
|
||||||||||||||||
Income
from continuing operations
|
$ | 0.29 | $ | 0.74 | $ | 1.01 | $ | 2.05 | ||||||||
Loss
from discontinued operations, net
|
− | − | (0.01 | ) | (0.13 | ) | ||||||||||
Net
income per share
|
$ | 0.29 | $ | 0.74 | $ | 1.00 | $ | 1.92 | ||||||||
Cash
dividends per share
|
$ | 0.09 | $ | 0.09 | $ | 0.27 | $ | 0.27 | ||||||||
Basic
weighted average common shares outstanding
|
902 | 882 | 899 | 879 | ||||||||||||
Diluted
weighted average common shares outstanding
|
904 | 908 | 901 | 913 |
September
30,
|
December
31,
|
|||||||
Millions
of dollars and shares except per share data
|
2009
|
2008
|
||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and equivalents
|
$ | 1,675 | $ | 1,124 | ||||
Receivables
(less allowance for bad debts of $89 and $60)
|
3,098 | 3,795 | ||||||
Inventories
|
1,716 | 1,828 | ||||||
Investments
in marketable securities
|
1,515 | – | ||||||
Current
deferred income taxes
|
198 | 246 | ||||||
Other
current assets
|
497 | 418 | ||||||
Total
current assets
|
8,699 | 7,411 | ||||||
Property,
plant, and equipment, net of accumulated depreciation of $5,067 and
$4,566
|
5,564 | 4,782 | ||||||
Goodwill
|
1,093 | 1,072 | ||||||
Other
assets
|
981 | 1,120 | ||||||
Total
assets
|
$ | 16,337 | $ | 14,385 | ||||
Liabilities
and Shareholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 800 | $ | 898 | ||||
Accrued
employee compensation and benefits
|
487 | 643 | ||||||
Deferred
revenue
|
194 | 231 | ||||||
Department
of Justice (DOJ) and Securities and Exchange Commission (SEC)
settlement
|
||||||||
and indemnity,
current
|
190 | 373 | ||||||
Current
maturities of long-term debt
|
– | 26 | ||||||
Other
current liabilities
|
513 | 610 | ||||||
Total
current liabilities
|
2,184 | 2,781 | ||||||
Long-term
debt
|
4,573 | 2,586 | ||||||
Employee
compensation and benefits
|
466 | 539 | ||||||
Other
liabilities
|
538 | 735 | ||||||
Total
liabilities
|
7,761 | 6,641 | ||||||
Shareholders’
equity:
|
||||||||
Common
shares, par value $2.50 per share – authorized 2,000 shares, issued 1,067
shares
|
2,667 | 2,666 | ||||||
Paid-in
capital in excess of par value
|
397 | 484 | ||||||
Accumulated
other comprehensive loss
|
(202 | ) | (215 | ) | ||||
Retained
earnings
|
10,702 | 10,041 | ||||||
Treasury
stock, at cost – 165 and 172 shares
|
(5,015 | ) | (5,251 | ) | ||||
Company
shareholders’ equity
|
8,549 | 7,725 | ||||||
Noncontrolling
interest in consolidated subsidiaries
|
27 | 19 | ||||||
Total
shareholders’ equity
|
8,576 | 7,744 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 16,337 | $ | 14,385 |
Nine
Months Ended
|
||||||||
September
30
|
||||||||
Millions
of dollars
|
2009
|
2008
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 911 | $ | 1,772 | ||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Depreciation,
depletion, and amortization
|
677 | 535 | ||||||
Payments
of DOJ and SEC settlement and indemnity
|
(369 | ) | – | |||||
Provision
for deferred income taxes, continuing operations
|
164 | 268 | ||||||
Other
changes:
|
||||||||
Receivables
|
737 | (628 | ) | |||||
Inventories
|
114 | (365 | ) | |||||
Accounts
payable
|
(111 | ) | 204 | |||||
Other
|
(493 | ) | (139 | ) | ||||
Total
cash flows from operating activities
|
1,630 | 1,647 | ||||||
Cash
flows from investing activities:
|
||||||||
Sales
(purchases) of investments in marketable securities
|
(1,518 | ) | 388 | |||||
Capital
expenditures
|
(1,390 | ) | (1,305 | ) | ||||
Acquisitions
of assets, net of cash acquired
|
(37 | ) | (408 | ) | ||||
Other
investing activities
|
93 | 96 | ||||||
Total
cash flows from investing activities
|
(2,852 | ) | (1,229 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from long-term borrowings, net of offering costs
|
1,975 | 1,189 | ||||||
Payments
of dividends to shareholders
|
(243 | ) | (239 | ) | ||||
Payments
on long-term borrowings
|
(30 | ) | (1,896 | ) | ||||
Payments
to reacquire common stock
|
(12 | ) | (504 | ) | ||||
Other
financing activities
|
100 | 165 | ||||||
Total
cash flows from financing activities
|
1,790 | (1,285 | ) | |||||
Effect
of exchange rate changes on cash
|
(17 | ) | (7 | ) | ||||
Increase
(decrease) in cash and equivalents
|
551 | (874 | ) | |||||
Cash
and equivalents at beginning of period
|
1,124 | 1,847 | ||||||
Cash
and equivalents at end of period
|
$ | 1,675 | $ | 973 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
payments during the period for:
|
||||||||
Interest
from continuing operations
|
$ | 226 | $ | 117 | ||||
Income
taxes from continuing operations
|
$ | 437 | $ | 738 |
|
-
|
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.
|
|
-
|
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 a consortium of engineering firms
comprised of Technip SA of France, Snamprogetti Netherlands B.V., JGC
Corporation of Japan, and Kellogg Brown & Root LLC (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.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Millions
of dollars
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Revenue:
|
||||||||||||||||
Completion
and Production
|
$ | 1,821 | $ | 2,579 | $ | 5,601 | $ | 7,058 | ||||||||
Drilling
and Evaluation
|
1,767 | 2,274 | 5,388 | 6,311 | ||||||||||||
Total
revenue
|
$ | 3,588 | $ | 4,853 | $ | 10,989 | $ | 13,369 | ||||||||
Operating
income:
|
||||||||||||||||
Completion
and Production
|
$ | 240 | $ | 633 | $ | 846 | $ | 1,674 | ||||||||
Drilling
and Evaluation
|
283 | 499 | 871 | 1,412 | ||||||||||||
Total
operations
|
523 | 1,132 | 1,717 | 3,086 | ||||||||||||
Corporate
and other
|
(49 | ) | (81 | ) | (151 | ) | (239 | ) | ||||||||
Total
operating income
|
$ | 474 | $ | 1,051 | $ | 1,566 | $ | 2,847 | ||||||||
Interest
expense
|
(80 | ) | (35 | ) | (215 | ) | (119 | ) | ||||||||
Interest
income
|
3 | 6 | 8 | 35 | ||||||||||||
Other,
net
|
(4 | ) | (4 | ) | (23 | ) | (7 | ) | ||||||||
Income
from continuing operations before
|
||||||||||||||||
income taxes and noncontrolling
interest
|
$ | 393 | $ | 1,018 | $ | 1,336 | $ | 2,756 |
September
30,
|
December
31,
|
||||||||
Millions
of dollars
|
2009
|
2008
|
|||||||
Finished
products and parts
|
$ | 1,137 | $ | 1,312 | |||||
Raw
materials and supplies
|
550 | 446 | |||||||
Work
in process
|
29 | 70 | |||||||
Total
|
$ | 1,716 | $ | 1,828 |
Noncontrolling
|
||||||||||||
Total
|
Company
|
interest
in
|
||||||||||
shareholders’
|
shareholders’
|
consolidated
|
||||||||||
Millions
of dollars
|
equity
|
equity
|
subsidiaries
|
|||||||||
Balance
at December 31, 2008
|
$ | 7,744 | $ | 7,725 | $ | 19 | ||||||
Transactions
with shareholders
|
151 | 152 | (1 | ) | ||||||||
Comprehensive
income:
|
||||||||||||
Net income
|
911 | 902 | 9 | |||||||||
Other comprehensive
income
|
13 | 13 | – | |||||||||
Total
comprehensive income
|
924 | 915 | 9 | |||||||||
Dividends
paid on common stock
|
(243 | ) | (243 | ) | – | |||||||
Balance
at September 30, 2009
|
$ | 8,576 | $ | 8,549 | $ | 27 |
Noncontrolling
|
||||||||||||
Total
|
Company
|
interest
in
|
||||||||||
shareholders’
|
shareholders’
|
consolidated
|
||||||||||
Millions
of dollars
|
equity
|
equity
|
subsidiaries
|
|||||||||
Balance
at December 31, 2007
|
$ | 6,966 | $ | 6,873 | $ | 93 | ||||||
Share
repurchases
|
(481 | ) | (481 | ) | – | |||||||
Other
transactions with shareholders
|
(534 | ) | (485 | ) | (49 | ) | ||||||
Comprehensive
income:
|
||||||||||||
Net income
|
1,772 | 1,756 | 16 | |||||||||
Other comprehensive
income
|
3 | 3 | – | |||||||||
Total
comprehensive income
|
1,775 | 1,759 | 16 | |||||||||
Dividends
paid on common stock
|
(239 | ) | (239 | ) | – | |||||||
Balance
at September 30, 2008
|
$ | 7,487 | $ | 7,427 | $ | 60 |
Three
Months Ended
|
||||||||
September
30
|
||||||||
Millions
of dollars
|
2009
|
2008
|
||||||
Net income
|
$ | 266 | $ | 675 | ||||
Other comprehensive
loss
|
(4 | ) | (1 | ) | ||||
Total
comprehensive income
|
262 | 674 | ||||||
Comprehensive income
attributable to noncontrolling interest
|
4 | 3 | ||||||
Comprehensive income
attributable to company
|
$ | 258 | $ | 671 |
September
30,
|
December
31,
|
|||||||
Millions
of dollars
|
2009
|
2008
|
||||||
Defined
benefit and other postretirement liability adjustments
|
$ | (138 | ) | $ | (151 | ) | ||
Cumulative
translation adjustments
|
(64 | ) | (60 | ) | ||||
Unrealized
losses on investments
|
– | (4 | ) | |||||
Total
accumulated other comprehensive loss
|
$ | (202 | ) | $ | (215 | ) |
-
|
the
Comprehensive Environmental Response, Compensation, and Liability
Act;
|
|
-
|
the
Resource Conservation and Recovery Act;
|
|
-
|
the
Clean Air Act;
|
|
-
|
the
Federal Water Pollution Control Act; and
|
|
-
|
the
Toxic Substances Control Act.
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||||
September
30
|
September
30
|
||||||||||||||||
Millions
of shares
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Basic
weighted average common shares outstanding
|
902 | 882 | 899 | 879 | |||||||||||||
Dilutive
effect of:
|
|||||||||||||||||
Convertible senior notes
premium
|
– | 22 | – | 30 | |||||||||||||
Stock options
|
2 | 4 | 2 | 4 | |||||||||||||
Diluted
weighted average common shares outstanding
|
904 | 908 | 901 | 913 |
Quoted
prices
|
||||||||||||||||
in
active
|
Significant
|
|||||||||||||||
markets
for
|
observable
inputs
|
|||||||||||||||
Carrying
|
identical
assets
|
for
similar assets or
|
||||||||||||||
Millions
of dollars
|
Value
|
Fair
value
|
or
liabilities
|
liabilities
|
||||||||||||
September
30, 2009
|
||||||||||||||||
Marketable
securities
|
$ | 1,515 | $ | 1,515 | $ | 1,515 | $ | – | ||||||||
Long-term debt
|
4,573 | 5,304 | 4,878 | 426 | ||||||||||||
December
31, 2008
|
||||||||||||||||
Long-term debt
|
$ | 2,612 | $ | 2,826 | $ | 2,414 | $ | 412 |
Three
Months Ended September 30
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Millions
of dollars
|
United
States
|
International
|
United
States
|
International
|
||||||||||||
Service
cost
|
$ | – | $ | 6 | $ | – | $ | 7 | ||||||||
Interest
cost
|
1 | 10 | 2 | 13 | ||||||||||||
Expected
return on plan assets
|
(1 | ) | (8 | ) | (2 | ) | (11 | ) | ||||||||
Settlements/curtailments
|
– | – | – | (6 | ) | |||||||||||
Recognized
actuarial loss
|
– | 1 | 1 | 1 | ||||||||||||
Net
periodic benefit cost
|
$ | – | $ | 9 | $ | 1 | $ | 4 |
Nine
Months Ended September 30
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Millions
of dollars
|
United
States
|
International
|
United
States
|
International
|
||||||||||||
Service
cost
|
$ | – | $ | 19 | $ | – | $ | 20 | ||||||||
Interest
cost
|
4 | 31 | 5 | 39 | ||||||||||||
Expected
return on plan assets
|
(5 | ) | (25 | ) | (6 | ) | (34 | ) | ||||||||
Settlements/curtailments
|
1 | 1 | – | (6 | ) | |||||||||||
Recognized
actuarial loss
|
1 | 3 | 3 | 4 | ||||||||||||
Net
periodic benefit cost
|
$ | 1 | $ | 29 | $ | 2 | $ | 23 |
|
-
|
our
Completion and Production segment delivers cementing, stimulation,
intervention, and completion services. The segment consists of
production enhancement services, completion tools and services, and
cementing services; and
|
|
-
|
our
Drilling and Evaluation segment provides field and reservoir modeling,
drilling, evaluation, and precise wellbore placement solutions that enable
customers to model, measure, and optimize their well construction
activities. The segment consists of fluid services, drilling
services, drill bits, wireline and perforating services, testing and
subsea, software and asset solutions, and integrated project management
services.
|
-
|
leveraging
our technologies to deploy our packaged-services strategy to provide our
customers with the ability to more efficiently drill and complete their
wells, especially in service-intensive environments such as deepwater and
shale plays;
|
|
-
|
retaining
key investments in technology and capital to accelerate growth
opportunities;
|
|
-
|
increasing
our market share in unconventional markets by enhancing our technological
position and leveraging our technical expertise and wide portfolio of
products and services;
|
|
-
|
lowering
our input costs from vendors by negotiating price reductions for both
materials used in our operations and those utilized in the manufacturing
of capital equipment;
|
|
-
|
negotiating
with our customers to trade an expansion of scope and a lengthening of
contract duration for price concessions;
|
|
-
|
reducing
headcount in locations experiencing significant activity
declines;
|
|
-
|
improving
working capital, operating within our cash flow, and managing our balance
sheet to maximize our financial flexibility;
|
|
-
|
continuing
the globalization of our manufacturing and supply chain processes,
preserving work at our lower-cost manufacturing centers, and utilizing our
international infrastructure to lower costs from our supply chain through
delivery;
|
|
-
|
expanding
our business with national oil companies; and
|
|
-
|
minimizing
discretionary spending.
|
Three
Months Ended
|
Year
Ended
|
|||||||||||
September
30
|
December
31
|
|||||||||||
Average Oil Prices
(dollars per barrel)
|
2009
|
2008
|
2008
|
|||||||||
West
Texas Intermediate
|
$ | 68.20 | $ | 117.88 | $ | 99.57 | ||||||
United
Kingdom Brent
|
68.20 | 114.83 | 96.85 | |||||||||
Average United States Gas Prices (dollars per thousand cubic feet, or mcf) | ||||||||||||
Henry
Hub
|
$ | 3.26 | $ | 9.29 | $ | 9.13 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Land
vs. Offshore
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
United
States:
|
||||||||||||||||
Land
|
940 | 1,910 | 1,032 | 1,807 | ||||||||||||
Offshore
|
34 | 68 | 46 | 64 | ||||||||||||
Total
|
974 | 1,978 | 1,078 | 1,871 | ||||||||||||
Canada:
|
||||||||||||||||
Land
|
186 | 431 | 201 | 369 | ||||||||||||
Offshore
|
1 | 1 | 1 | 1 | ||||||||||||
Total
|
187 | 432 | 202 | 370 | ||||||||||||
International
(excluding Canada):
|
||||||||||||||||
Land
|
699 | 796 | 718 | 778 | ||||||||||||
Offshore
|
270 | 299 | 275 | 297 | ||||||||||||
Total
|
969 | 1,095 | 993 | 1,075 | ||||||||||||
Worldwide
total
|
2,130 | 3,505 | 2,273 | 3,316 | ||||||||||||
Land
total
|
1,825 | 3,137 | 1,951 | 2,954 | ||||||||||||
Offshore
total
|
305 | 368 | 322 | 362 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
Oil
vs. Natural Gas
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
United
States:
|
||||||||||||||||
Oil
|
279 | 398 | 253 | 367 | ||||||||||||
Natural Gas
|
695 | 1,580 | 825 | 1,504 | ||||||||||||
Total
|
974 | 1,978 | 1,078 | 1,871 | ||||||||||||
Canada:
|
||||||||||||||||
Oil
|
105 | 177 | 90 | 158 | ||||||||||||
Natural Gas
|
82 | 255 | 112 | 212 | ||||||||||||
Total
|
187 | 432 | 202 | 370 | ||||||||||||
International
(excluding Canada):
|
||||||||||||||||
Oil
|
756 | 849 | 774 | 831 | ||||||||||||
Natural Gas
|
213 | 246 | 219 | 244 | ||||||||||||
Total
|
969 | 1,095 | 993 | 1,075 | ||||||||||||
Worldwide
total
|
2,130 | 3,505 | 2,273 | 3,316 | ||||||||||||
Oil
total
|
1,140 | 1,424 | 1,117 | 1,356 | ||||||||||||
Natural
Gas total
|
990 | 2,081 | 1,156 | 1,960 |
-
|
leveraging
our technologies to deploy our packaged-services strategy to provide our
customers with the ability to more efficiently drill and complete their
wells, especially in service-intensive environments such as deepwater and
shale plays;
|
|
-
|
retaining
key investments in technology and capital to accelerate growth
opportunities;
|
|
-
|
increasing
our market share in unconventional markets by enhancing our technological
position and leveraging our technical expertise and wide portfolio of
products and services;
|
|
-
|
lowering
our input costs from vendors by negotiating price reductions for both
materials used in our operations and those utilized in the manufacturing
of capital equipment;
|
|
-
|
negotiating
with our customers to trade an expansion of scope and a lengthening of
contract duration for price concessions;
|
|
-
|
reducing
headcount in locations experiencing significant activity
declines;
|
|
-
|
improving
working capital, operating within our cash flow, and managing our balance
sheet to maximize our financial flexibility;
|
|
-
|
continuing
the globalization of our manufacturing and supply chain processes,
preserving work at our lower-cost manufacturing centers, and utilizing our
international infrastructure to lower costs from our supply chain through
delivery;
|
|
-
|
expanding
our business with national oil companies; and
|
|
-
|
minimizing
discretionary spending.
|
-
|
a
two-year, $229 million contract with multiple extension options, to
provide drilling fluids and associated services in
Norway;
|
|
-
|
a
three-year contract renewal for continued access to a broad suite of
software technology and petro-technical consulting services for the
development, deployment, and ongoing global support of exploration and
production technology and workflows;
|
|
-
|
a
five-year, $1.5 billion contract to provide a broad base of products and
services to an international oil company for its work associated with
North America;
|
|
-
|
several
wins totaling $1 billion, including $700 million to provide deepwater
drilling fluid services in the Gulf of Mexico, Brazil, Indonesia, Angola,
and other countries, which solidifies our position in the deepwater
drilling fluids market and $300 million for shelf- and land-related
work;
|
|
-
|
a
two-year contract extension, estimated to be valued at $450 million, to
provide cementing services and completion and drilling fluids for
StatoilHydro in offshore fields on the Norwegian continental
shelf;
|
|
-
|
a
five-year, $190 million contract to provide drilling fluid, completion
fluid, and drilling waste management services for Petrobras in the
offshore markets of Brazil;
|
|
-
|
a
five-year, $100 million contract to provide directional-drilling and
logging-while-drilling services in the Middle East;
|
|
-
|
a
contract award in Algeria to provide integrated project management
services for a number of delineation wells initially with the potential to
expand to 120 wells for full field development;
|
|
-
|
a
four-year contract to provide directional-drilling,
measurement-while-drilling, and logging-while-drilling, along with
drilling fluids and cementing services in Russia; and
|
|
-
|
a
multi-year contract scheduled to commence in 2010 to provide completion
products and services and drilling and completion fluids in the deepwater,
offshore fields of Angola.
|
Three
Months Ended
|
||||||||||||||||
REVENUE:
|
September
30
|
Increase
|
Percentage
|
|||||||||||||
Millions
of dollars
|
2009
|
2008
|
(Decrease)
|
Change
|
||||||||||||
Completion
and Production
|
$ | 1,821 | $ | 2,579 | $ | (758 | ) | (29 | )% | |||||||
Drilling
and Evaluation
|
1,767 | 2,274 | (507 | ) | (22 | ) | ||||||||||
Total
revenue
|
$ | 3,588 | $ | 4,853 | $ | (1,265 | ) | (26 | )% |
By
geographic region:
|
||||||||||||||||
Completion
and Production:
|
||||||||||||||||
North America
|
$ | 807 | $ | 1,456 | $ | (649 | ) | (45 | )% | |||||||
Latin America
|
223 | 271 | (48 | ) | (18 | ) | ||||||||||
Europe/Africa/CIS
|
483 | 519 | (36 | ) | (7 | ) | ||||||||||
Middle
East/Asia
|
308 | 333 | (25 | ) | (8 | ) | ||||||||||
Total
|
1,821 | 2,579 | (758 | ) | (29 | ) | ||||||||||
Drilling
and Evaluation:
|
||||||||||||||||
North America
|
478 | 790 | (312 | ) | (39 | ) | ||||||||||
Latin America
|
319 | 376 | (57 | ) | (15 | ) | ||||||||||
Europe/Africa/CIS
|
529 | 613 | (84 | ) | (14 | ) | ||||||||||
Middle
East/Asia
|
441 | 495 | (54 | ) | (11 | ) | ||||||||||
Total
|
1,767 | 2,274 | (507 | ) | (22 | ) | ||||||||||
Total
revenue by region:
|
||||||||||||||||
North America
|
1,285 | 2,246 | (961 | ) | (43 | ) | ||||||||||
Latin America
|
542 | 647 | (105 | ) | (16 | ) | ||||||||||
Europe/Africa/CIS
|
1,012 | 1,132 | (120 | ) | (11 | ) | ||||||||||
Middle
East/Asia
|
749 | 828 | (79 | ) | (10 | ) |
Three
Months Ended
|
||||||||||||||||
OPERATING
INCOME:
|
September
30
|
Increase
|
Percentage
|
|||||||||||||
Millions
of dollars
|
2009
|
2008
|
(Decrease)
|
Change
|
||||||||||||
Completion
and Production
|
$ | 240 | $ | 633 | $ | (393 | ) | (62 | )% | |||||||
Drilling
and Evaluation
|
283 | 499 | (216 | ) | (43 | ) | ||||||||||
Corporate
and other
|
(49 | ) | (81 | ) | 32 | 40 | ||||||||||
Total
operating income
|
$ | 474 | $ | 1,051 | $ | (577 | ) | (55 | )% |
By
geographic region:
|
||||||||||||||||
Completion
and Production:
|
||||||||||||||||
North America
|
$ | 9 | $ | 404 | $ | (395 | ) | (98 | )% | |||||||
Latin America
|
45 | 59 | (14 | ) | (24 | ) | ||||||||||
Europe/Africa/CIS
|
107 | 93 | 14 | 15 | ||||||||||||
Middle
East/Asia
|
79 | 77 | 2 | 3 | ||||||||||||
Total
|
240 | 633 | (393 | ) | (62 | ) | ||||||||||
Drilling
and Evaluation:
|
||||||||||||||||
North America
|
28 | 165 | (137 | ) | (83 | ) | ||||||||||
Latin America
|
52 | 75 | (23 | ) | (31 | ) | ||||||||||
Europe/Africa/CIS
|
94 | 112 | (18 | ) | (16 | ) | ||||||||||
Middle
East/Asia
|
109 | 147 | (38 | ) | (26 | ) | ||||||||||
Total
|
283 | 499 | (216 | ) | (43 | ) | ||||||||||
Total
operating income by region
|
||||||||||||||||
(excluding Corporate and
other):
|
||||||||||||||||
North America
|
37 | 569 | (532 | ) | (93 | ) | ||||||||||
Latin America
|
97 | 134 | (37 | ) | (28 | ) | ||||||||||
Europe/Africa/CIS
|
201 | 205 | (4 | ) | (2 | ) | ||||||||||
Middle
East/Asia
|
188 | 224 | (36 | ) | (16 | ) |
Note
|
–
|
All
periods presented reflect the movement of certain operations from the
Completion and Production segment to the Drilling and Evaluation segment
during the first quarter of 2009.
|
Nine
Months Ended
|
||||||||||||||||
REVENUE:
|
September
30
|
Increase
|
Percentage
|
|||||||||||||
Millions
of dollars
|
2009
|
2008
|
(Decrease)
|
Change
|
||||||||||||
Completion
and Production
|
$ | 5,601 | $ | 7,058 | $ | (1,457 | ) | (21 | )% | |||||||
Drilling
and Evaluation
|
5,388 | 6,311 | (923 | ) | (15 | ) | ||||||||||
Total
revenue
|
$ | 10,989 | $ | 13,369 | $ | (2,380 | ) | (18 | )% |
By
geographic region:
|
||||||||||||||||
Completion
and Production:
|
||||||||||||||||
North America
|
$ | 2,673 | $ | 3,885 | $ | (1,212 | ) | (31 | )% | |||||||
Latin America
|
682 | 720 | (38 | ) | (5 | ) | ||||||||||
Europe/Africa/CIS
|
1,348 | 1,441 | (93 | ) | (6 | ) | ||||||||||
Middle
East/Asia
|
898 | 1,012 |