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Charges and Credits | 12 Months Ended
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Dec. 31, 2018
Restructuring And Related Activities [Abstract] |
Charges and Credits | 3. Charges and Credits Schlumberger recorded the following charges and credits during 2018, 2017 and 2016: 2018
| • | During the fourth quarter of 2018, Schlumberger completed the divestiture of its marine seismic acquisition business to Shearwater GeoServices (“Shearwater”) for $600 million of cash and a 15% equity interest in Shearwater. As a result of this transaction, Schlumberger recognized a $215 million gain. This gain is classified in Gain on sale of business in the Consolidated Statement of Income (Loss).
| • | During the fourth quarter of 2018, Schlumberger recorded $172 million of charges to fully impair certain long-lived assets. This amount is classified in Impairments & other in the Consolidated Statement of Income (Loss).
| • | During the second quarter of 2018, Schlumberger recorded a $184 million charge associated with workforce reductions, primarily to further streamline its support cost structure. This charge is classified in Impairment & other in the Consolidated Statement of Income (Loss).
The following is a summary of these charges and credits.
| (Stated in millions) |
| Pretax |  |  | Tax |  |  | Net |
Gain on sale of marine seismic acquisition business | $ | (215 | ) |  | $ | (19 | ) |  | $ | (196 | )
Workforce reductions |  | 184 |  |  |  | 20 |  |  |  | 164 |
Asset impairments |  | 172 |  |  |  | 16 |  |  |  | 156 |
| $ | 141 |  |  | $ | 17 |  |  | $ | 124 |
2017
| • | During the fourth quarter of 2017, Schlumberger decided to cease all future marine seismic acquisition activities, after satisfying its remaining contractual commitments. This decision resulted in a charge of $1.025 billion consisting of the following: $786 million write-down of the vessels to their estimated fair value; $78 million impairment of intangible assets; $59 million write-down of inventory, and $102 million of other related restructuring costs. The fair value of the vessels was determined based on unobservable inputs that required significant judgments. Schlumberger also recorded a $90 million impairment charge relating to its land seismic business.
| • | As a result of the unfavorable near-term outlook for exploration spending, Schlumberger determined in the fourth quarter of 2017 that the carrying value of certain multiclient seismic data, primarily related to the US Gulf of Mexico, was impaired, resulting in a $246 million charge that was estimated based on the projected present value of future cash flows these surveys are expected to generate.
| • | During the fourth quarter of 2017, Schlumberger determined that it was appropriate to write-down its investment in Venezuela, given the recent economic and political developments in the country which have created significant uncertainties regarding recoverability. As a result, Schlumberger recorded a charge of $938 million, reflecting $469 million of accounts receivable, a $105 million other-than-temporary impairment charge relating to certain promissory notes, $285 million of fixed assets and $79 million of other assets in the country.
| • | During the fourth quarter of 2017, Schlumberger recorded a $245 million charge related to an estimated loss on a long-term surface facility construction project.
| • | Schlumberger recorded $156 million of other restructuring charges during the fourth quarter of 2017, primarily relating to facility and other exit costs.
| • | During the fourth quarter of 2017, Schlumberger recorded a $247 million charge associated with workforce reductions primarily to further streamline its support cost structure.
• | On December 22, 2017, the US enacted the Tax Cuts and Jobs Act (the “Act”). The Act, which is also commonly referred to as “US tax reform,” significantly changes US corporate income tax laws by, among other things, reducing the US corporate income tax rate to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of US subsidiaries. As a result, Schlumberger recorded a net charge of $76 million during the fourth quarter of 2017. This amount, which is included in Tax expense (benefit) in the Consolidated Statement of Income (Loss), consists of two components: (i) a $410 million charge relating to the one-time mandatory tax on previously deferred earnings of certain non-US subsidiaries that are owned either wholly or partially by a US subsidiary of Schlumberger, and (ii) a $334 million credit resulting from the remeasurement of Schlumberger’s net deferred tax liabilities in the US based on the new lower corporate income tax rate. Although the $76 million net charge represented what Schlumberger believed was a reasonable estimate of the impact of the income tax effects of the Act on Schlumberger’s Consolidated Financial Statements as of December 31, 2017, it was considered provisional. During 2018, Schlumberger finalized its accounting for this matter and concluded that no material adjustments were required. After considering the impact of foreign tax credits and tax losses, the resulting cash tax payable as a result of the one-time mandatory tax on previously deferred foreign earnings of Schlumberger’s US subsidiary will not be significant.
| • | During the second quarter of 2017, Schlumberger entered into a financing agreement with its primary customer in Venezuela. This agreement resulted in the exchange of $700 million of outstanding accounts receivable for promissory notes with a three-year term that bear interest at the rate of 6.50% per annum. Schlumberger recorded these notes at their estimated fair value on the date of the exchange, which resulted in a charge of $460 million. Following the $105 million other-than-temporary impairment charge described above, the new cost basis of these promissory notes was $135 million, which approximated their fair value at December 31, 2017. Schlumberger sold these promissory notes during the fourth quarter of 2018, which resulted in an immaterial loss.
• | During the second quarter of 2017, Schlumberger entered into discussions with a customer relating to certain of its outstanding accounts receivable. As a result of these discussions, Schlumberger recorded a charge of $50 million to adjust these receivables to their estimated net realizable value.
| • | Schlumberger recorded $308 million of charges during 2017 relating to employee benefits, facility closures and other merger and integration-related costs, primarily in connection with Schlumberger’s 2016 acquisition of Cameron International Corporation (“Cameron”) (See Note 4 – Acquisitions).
The following is a summary of these charges and credits, of which $3.211 billion were classified as Impairments & other, $245 million were classified in Cost of sales and $308 million were classified as Merger & integration in the Consolidated Statement of Income (Loss).
| (Stated in millions) |
|  |  |  |  |  |  |  |  | Noncontrolling |  |  |  |  |
| Pretax |  |  | Tax |  |  | Interests |  |  | Net |
Impairment & other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WesternGeco seismic restructuring charges | $ | 1,114 |  |  | $ | 20 |  |  | $ | - |  |  | $ | 1,094 |
Venezuela investment write-down |  | 938 |  |  |  | - |  |  |  | - |  |  |  | 938 |
Promissory note fair value adjustment and other |  | 510 |  |  |  | - |  |  |  | 12 |  |  |  | 498 |
Workforce reductions |  | 247 |  |  |  | 13 |  |  |  | - |  |  |  | 234 |
Multiclient seismic data impairment |  | 246 |  |  |  | 81 |  |  |  | - |  |  |  | 165 |
Other restructuring charges |  | 156 |  |  |  | 10 |  |  |  | 22 |  |  |  | 124 |
Cost of sales |  |  |  |  |  |  |  |  |  | - |  |  |  | - |
Provision for loss on long-term construction project |  | 245 |  |  |  | 22 |  |  |  | - |  |  |  | 223 |
Merger & integration |  |  |  |  |  |  |  |  |  | - |  |  |  | - |
Merger and integration-related costs |  | 308 |  |  |  | 70 |  |  |  | - |  |  |  | 238 |
US tax reform charge |  | - |  |  |  | (76 | ) |  |  | - |  |  |  | 76 |
| $ | 3,764 |  |  | $ | 140 |  |  | $ | 34 |  |  | $ | 3,590 |
2016
• | Schlumberger reduced its workforce during the second quarter of 2016 as a result of persistent unfavorable oil and gas industry market conditions and the expected impact on customer activity levels. As a result, Schlumberger recorded a $646 million charge during the second quarter of 2016. During the fourth quarter of 2016, Schlumberger further reduced its workforce in order to streamline its support cost structure and recorded an additional $234 million charge associated with these actions.
• | During the fourth quarter of 2016, Schlumberger recorded $302 million of restructuring charges consisting of the following: $165 million of facility closure costs due to the expected sale of certain owned properties and the termination of certain facility leases; $98 million of asset write-offs associated with exiting certain activities; and $39 million of contract termination costs.
• | During the fourth quarter of 2016, the Central Bank of Egypt took the decision to float its currency and the Egyptian pound devalued relative to the US dollar. As a result, Schlumberger recorded a $63 million devaluation charge during the fourth quarter of 2016.
• | As a result of the unfavorable oil and gas industry market conditions that continued to deteriorate in the first half of 2016, and the related impact on 2016 first half operating results and expected customer activity levels, Schlumberger determined that the carrying values of certain assets were no longer recoverable and also took certain decisions that resulted in the following impairment and other charges during the second quarter of 2016:
| - | $209 million impairment of pressure pumping equipment in North America.
| - | $165 million impairment of facilities in North America.
| - | $684 million of other fixed asset impairments primarily relating to underutilized equipment.
| - | $616 million write-down of the carrying value of certain inventory to its net realizable value.
| - | $198 million impairment of certain multiclient seismic data, largely related to the US Gulf of Mexico.
| - | $55 million of other restructuring costs.
The fair value of the impaired fixed assets and multiclient seismic data was estimated based on the projected present value of future cash flows that these assets are expected to generate. Such estimates included unobservable inputs that required significant judgments.
• | In connection with Schlumberger’s acquisition of Cameron, Schlumberger recorded $349 million of charges consisting of the following: $83 million relating to employee benefits for change-in-control arrangements and retention bonuses; $45 million of transaction costs, including advisory and legal fees; $61 million of facility closure costs, and $160 million of other merger and integration-related costs. Additionally, Schlumberger recorded $299 million of charges relating to the amortization of purchase accounting adjustments associated with the write-up of acquired inventory to its estimated fair value.
The following is a summary of these charges and credits, of which $3.172 billion were classified as Impairments & other, $349 million were classified as Merger & integration and $299 million were classified in Cost of sales in the Consolidated Statement of Income (Loss):
| (Stated in millions) |
| Pretax |  |  | Tax |  |  | Net |
Impairment & other |  |  |  |  |  |  |  |  |  |  |
Workforce reductions | $ | 880 |  |  | $ | 69 |  |  | $ | 811 |
Other fixed asset impairments |  | 684 |  |  |  | 52 |  |  |  | 632 |
Inventory write-downs |  | 616 |  |  |  | 49 |  |  |  | 567 |
North America pressure pumping asset impairments |  | 209 |  |  |  | 67 |  |  |  | 142 |
Multiclient seismic data impairment |  | 198 |  |  |  | 62 |  |  |  | 136 |
Facility impairments |  | 165 |  |  |  | 58 |  |  |  | 107 |
Facility closure costs |  | 165 |  |  |  | 40 |  |  |  | 125 |
Costs associated with exiting certain activities |  | 98 |  |  |  | 23 |  |  |  | 75 |
Currency devaluation loss in Egypt |  | 63 |  |  |  | - |  |  |  | 63 |
Contract termination costs |  | 39 |  |  |  | 9 |  |  |  | 30 |
Other restructuring charges |  | 55 |  |  |  | - |  |  |  | 55 |
Merger & integration |  |  |  |  |  |  |  |  |  |  |
Other merger and integration-related |  | 160 |  |  |  | 28 |  |  |  | 132 |
Merger-related employee benefits |  | 83 |  |  |  | 13 |  |  |  | 70 |
Facility closure costs |  | 61 |  |  |  | 13 |  |  |  | 48 |
Professional fees |  | 45 |  |  |  | 10 |  |  |  | 35 |
Cost of sales |  |  |  |  |  |  |  |  |  |  |
Amortization of inventory fair value adjustment |  | 299 |  |  |  | 90 |  |  |  | 209 |
| $ | 3,820 |  |  | $ | 583 |  |  | $ | 3,237 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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