Intrinsic value of Schlumberger - SLB

Previous Close

$64.80

  Intrinsic Value

$25.57

stock screener

  Rating & Target

str. sell

-61%

Previous close

$64.80

 
Intrinsic value

$25.57

 
Up/down potential

-61%

 
Rating

str. sell

We calculate the intrinsic value of SLB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 89.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
Revenue, $m
  33,332
  36,348
  39,491
  42,761
  46,161
  49,696
  53,369
  57,186
  61,153
  65,277
  69,565
  74,026
  78,668
  83,501
  88,536
  93,783
  99,254
  104,962
  110,919
  117,139
  123,637
  130,427
  137,527
  144,951
  152,719
  160,849
  169,359
  178,270
  187,603
  197,381
Variable operating expenses, $m
  24,198
  26,069
  28,019
  30,047
  32,157
  34,350
  36,628
  38,996
  41,457
  44,016
  43,156
  45,923
  48,803
  51,801
  54,925
  58,180
  61,574
  65,115
  68,810
  72,669
  76,700
  80,913
  85,317
  89,923
  94,742
  99,785
  105,064
  110,593
  116,383
  122,448
Fixed operating expenses, $m
  9,275
  9,479
  9,687
  9,900
  10,118
  10,341
  10,568
  10,801
  11,038
  11,281
  11,529
  11,783
  12,042
  12,307
  12,578
  12,855
  13,137
  13,426
  13,722
  14,024
  14,332
  14,648
  14,970
  15,299
  15,636
  15,980
  16,331
  16,691
  17,058
  17,433
Total operating expenses, $m
  33,473
  35,548
  37,706
  39,947
  42,275
  44,691
  47,196
  49,797
  52,495
  55,297
  54,685
  57,706
  60,845
  64,108
  67,503
  71,035
  74,711
  78,541
  82,532
  86,693
  91,032
  95,561
  100,287
  105,222
  110,378
  115,765
  121,395
  127,284
  133,441
  139,881
Operating income, $m
  -141
  800
  1,785
  2,813
  3,886
  5,006
  6,173
  7,389
  8,658
  9,980
  14,880
  16,320
  17,823
  19,393
  21,033
  22,749
  24,543
  26,421
  28,387
  30,446
  32,604
  34,867
  37,240
  39,729
  42,342
  45,084
  47,963
  50,987
  54,163
  57,499
EBITDA, $m
  8,609
  10,023
  11,501
  13,042
  14,649
  16,323
  18,066
  19,882
  21,772
  23,742
  25,795
  27,934
  30,166
  32,494
  34,925
  37,463
  40,116
  42,889
  45,790
  48,825
  52,003
  55,331
  58,818
  62,472
  66,303
  70,321
  74,535
  78,957
  83,598
  88,469
Interest expense (income), $m
  599
  983
  1,161
  1,349
  1,545
  1,749
  1,961
  2,181
  2,410
  2,647
  2,895
  3,152
  3,419
  3,697
  3,986
  4,287
  4,601
  4,927
  5,268
  5,624
  5,995
  6,382
  6,787
  7,210
  7,653
  8,115
  8,599
  9,105
  9,636
  10,191
  10,772
Earnings before tax, $m
  -1,123
  -361
  436
  1,268
  2,137
  3,045
  3,992
  4,979
  6,010
  7,086
  11,728
  12,901
  14,126
  15,407
  16,746
  18,148
  19,615
  21,152
  22,763
  24,451
  26,222
  28,080
  30,030
  32,077
  34,227
  36,485
  38,858
  41,351
  43,972
  46,727
Tax expense, $m
  0
  0
  118
  342
  577
  822
  1,078
  1,344
  1,623
  1,913
  3,167
  3,483
  3,814
  4,160
  4,522
  4,900
  5,296
  5,711
  6,146
  6,602
  7,080
  7,582
  8,108
  8,661
  9,241
  9,851
  10,492
  11,165
  11,872
  12,616
Net income, $m
  -1,123
  -361
  318
  926
  1,560
  2,223
  2,914
  3,635
  4,387
  5,173
  8,562
  9,418
  10,312
  11,247
  12,225
  13,248
  14,319
  15,441
  16,617
  17,849
  19,142
  20,498
  21,922
  23,416
  24,985
  26,634
  28,366
  30,186
  32,100
  34,111

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  78,799
  85,930
  93,358
  101,089
  109,128
  117,484
  126,168
  135,192
  144,570
  154,319
  164,457
  175,002
  185,976
  197,402
  209,305
  221,709
  234,643
  248,136
  262,219
  276,924
  292,285
  308,339
  325,122
  342,675
  361,039
  380,257
  400,375
  421,442
  443,506
  466,622
Adjusted assets (=assets-cash), $m
  78,799
  85,930
  93,358
  101,089
  109,128
  117,484
  126,168
  135,192
  144,570
  154,319
  164,457
  175,002
  185,976
  197,402
  209,305
  221,709
  234,643
  248,136
  262,219
  276,924
  292,285
  308,339
  325,122
  342,675
  361,039
  380,257
  400,375
  421,442
  443,506
  466,622
Revenue / Adjusted assets
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
Average production assets, $m
  52,298
  57,031
  61,961
  67,091
  72,427
  77,973
  83,736
  89,725
  95,950
  102,420
  109,148
  116,147
  123,430
  131,013
  138,913
  147,145
  155,730
  164,685
  174,031
  183,791
  193,986
  204,640
  215,779
  227,429
  239,617
  252,372
  265,724
  279,705
  294,349
  309,691
Working capital, $m
  -6,566
  -7,161
  -7,780
  -8,424
  -9,094
  -9,790
  -10,514
  -11,266
  -12,047
  -12,860
  -13,704
  -14,583
  -15,498
  -16,450
  -17,442
  -18,475
  -19,553
  -20,677
  -21,851
  -23,076
  -24,356
  -25,694
  -27,093
  -28,555
  -30,086
  -31,687
  -33,364
  -35,119
  -36,958
  -38,884
Total debt, $m
  21,508
  24,988
  28,613
  32,385
  36,309
  40,386
  44,624
  49,028
  53,604
  58,362
  63,309
  68,455
  73,810
  79,386
  85,195
  91,248
  97,560
  104,145
  111,017
  118,193
  125,689
  133,523
  141,714
  150,279
  159,241
  168,619
  178,437
  188,718
  199,485
  210,765
Total liabilities, $m
  38,454
  41,934
  45,559
  49,331
  53,255
  57,332
  61,570
  65,974
  70,550
  75,308
  80,255
  85,401
  90,756
  96,332
  102,141
  108,194
  114,506
  121,091
  127,963
  135,139
  142,635
  150,469
  158,660
  167,225
  176,187
  185,565
  195,383
  205,664
  216,431
  227,711
Total equity, $m
  40,345
  43,996
  47,800
  51,758
  55,874
  60,152
  64,598
  69,218
  74,020
  79,012
  84,202
  89,601
  95,220
  101,070
  107,164
  113,515
  120,137
  127,046
  134,256
  141,785
  149,650
  157,869
  166,462
  175,450
  184,852
  194,692
  204,992
  215,778
  227,075
  238,910
Total liabilities and equity, $m
  78,799
  85,930
  93,359
  101,089
  109,129
  117,484
  126,168
  135,192
  144,570
  154,320
  164,457
  175,002
  185,976
  197,402
  209,305
  221,709
  234,643
  248,137
  262,219
  276,924
  292,285
  308,338
  325,122
  342,675
  361,039
  380,257
  400,375
  421,442
  443,506
  466,621
Debt-to-equity ratio
  0.530
  0.570
  0.600
  0.630
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.750
  0.760
  0.780
  0.790
  0.790
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.870
  0.870
  0.870
  0.880
  0.880
Adjusted equity ratio
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,123
  -361
  318
  926
  1,560
  2,223
  2,914
  3,635
  4,387
  5,173
  8,562
  9,418
  10,312
  11,247
  12,225
  13,248
  14,319
  15,441
  16,617
  17,849
  19,142
  20,498
  21,922
  23,416
  24,985
  26,634
  28,366
  30,186
  32,100
  34,111
Depreciation, amort., depletion, $m
  8,750
  9,223
  9,716
  10,229
  10,763
  11,317
  11,894
  12,492
  13,115
  13,762
  10,915
  11,615
  12,343
  13,101
  13,891
  14,715
  15,573
  16,468
  17,403
  18,379
  19,399
  20,464
  21,578
  22,743
  23,962
  25,237
  26,572
  27,971
  29,435
  30,969
Funds from operations, $m
  7,626
  8,862
  10,034
  11,155
  12,323
  13,540
  14,807
  16,127
  17,502
  18,934
  19,476
  21,032
  22,655
  24,348
  26,116
  27,963
  29,892
  31,910
  34,020
  36,228
  38,541
  40,962
  43,500
  46,159
  48,947
  51,871
  54,938
  58,157
  61,535
  65,080
Change in working capital, $m
  -570
  -594
  -619
  -644
  -670
  -696
  -724
  -752
  -782
  -812
  -845
  -879
  -914
  -952
  -992
  -1,034
  -1,078
  -1,124
  -1,174
  -1,225
  -1,280
  -1,338
  -1,399
  -1,463
  -1,530
  -1,601
  -1,676
  -1,755
  -1,839
  -1,926
Cash from operations, $m
  8,196
  9,456
  10,653
  11,799
  12,993
  14,236
  15,531
  16,879
  18,284
  19,747
  20,321
  21,911
  23,570
  25,301
  27,108
  28,996
  30,970
  33,034
  35,194
  37,454
  39,821
  42,300
  44,898
  47,622
  50,477
  53,473
  56,615
  59,912
  63,373
  67,006
Maintenance CAPEX, $m
  -4,776
  -5,230
  -5,703
  -6,196
  -6,709
  -7,243
  -7,797
  -8,374
  -8,973
  -9,595
  -10,242
  -10,915
  -11,615
  -12,343
  -13,101
  -13,891
  -14,715
  -15,573
  -16,468
  -17,403
  -18,379
  -19,399
  -20,464
  -21,578
  -22,743
  -23,962
  -25,237
  -26,572
  -27,971
  -29,435
New CAPEX, $m
  -4,541
  -4,733
  -4,930
  -5,131
  -5,335
  -5,546
  -5,763
  -5,989
  -6,224
  -6,470
  -6,728
  -6,999
  -7,283
  -7,583
  -7,899
  -8,233
  -8,584
  -8,955
  -9,347
  -9,759
  -10,195
  -10,654
  -11,139
  -11,650
  -12,188
  -12,755
  -13,352
  -13,982
  -14,644
  -15,341
Cash from investing activities, $m
  -9,317
  -9,963
  -10,633
  -11,327
  -12,044
  -12,789
  -13,560
  -14,363
  -15,197
  -16,065
  -16,970
  -17,914
  -18,898
  -19,926
  -21,000
  -22,124
  -23,299
  -24,528
  -25,815
  -27,162
  -28,574
  -30,053
  -31,603
  -33,228
  -34,931
  -36,717
  -38,589
  -40,554
  -42,615
  -44,776
Free cash flow, $m
  -1,120
  -506
  20
  472
  948
  1,448
  1,970
  2,517
  3,087
  3,682
  3,351
  3,998
  4,671
  5,374
  6,107
  6,872
  7,671
  8,506
  9,378
  10,291
  11,247
  12,247
  13,295
  14,394
  15,547
  16,756
  18,025
  19,358
  20,759
  22,230
Issuance/(repayment) of debt, $m
  3,309
  3,480
  3,625
  3,773
  3,923
  4,078
  4,238
  4,404
  4,577
  4,757
  4,947
  5,146
  5,355
  5,576
  5,808
  6,053
  6,312
  6,585
  6,872
  7,176
  7,496
  7,834
  8,190
  8,566
  8,962
  9,379
  9,818
  10,280
  10,768
  11,280
Issuance/(repurchase) of shares, $m
  4,626
  4,012
  3,486
  3,032
  2,556
  2,056
  1,532
  985
  414
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  7,935
  7,492
  7,111
  6,805
  6,479
  6,134
  5,770
  5,389
  4,991
  4,757
  4,947
  5,146
  5,355
  5,576
  5,808
  6,053
  6,312
  6,585
  6,872
  7,176
  7,496
  7,834
  8,190
  8,566
  8,962
  9,379
  9,818
  10,280
  10,768
  11,280
Total cash flow (excl. dividends), $m
  6,815
  6,986
  7,130
  7,277
  7,427
  7,581
  7,740
  7,906
  8,078
  8,439
  8,298
  9,144
  10,027
  10,950
  11,916
  12,926
  13,983
  15,091
  16,251
  17,467
  18,743
  20,081
  21,486
  22,960
  24,508
  26,135
  27,843
  29,639
  31,526
  33,510
Retained Cash Flow (-), $m
  -4,626
  -4,012
  -3,803
  -3,958
  -4,116
  -4,278
  -4,446
  -4,620
  -4,802
  -4,991
  -5,190
  -5,399
  -5,619
  -5,850
  -6,094
  -6,351
  -6,622
  -6,908
  -7,210
  -7,529
  -7,865
  -8,219
  -8,593
  -8,987
  -9,402
  -9,840
  -10,301
  -10,786
  -11,297
  -11,835
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  335
  367
  400
  434
  470
  508
  547
  587
  629
  673
  718
  765
  814
  865
  919
  974
  1,032
  1,092
  1,155
  1,220
  1,289
  1,360
  1,435
  1,513
  1,594
  1,680
  1,769
  1,863
  1,961
  2,064
Cash available for distribution, $m
  2,188
  2,974
  3,327
  3,319
  3,311
  3,303
  3,294
  3,285
  3,276
  3,448
  3,108
  3,745
  4,408
  5,100
  5,822
  6,575
  7,361
  8,182
  9,040
  9,938
  10,878
  11,862
  12,892
  13,973
  15,106
  16,295
  17,543
  18,853
  20,229
  21,675
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  2,092
  2,706
  2,868
  2,697
  2,522
  2,345
  2,167
  1,989
  1,813
  1,730
  1,404
  1,509
  1,571
  1,592
  1,575
  1,525
  1,447
  1,347
  1,230
  1,102
  969
  836
  707
  586
  476
  378
  294
  223
  165
  119
Current shareholders' claim on cash, %
  95.1
  91.4
  88.5
  86.3
  84.6
  83.3
  82.4
  81.9
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7
  81.7

Schlumberger N.V. provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The Company's segments include Reservoir Characterization Group, Drilling Group, Production Group and Cameron Group. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells. The Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, Completions, Artificial Lift, Integrated Production Services (IPS) and Schlumberger Production Management (SPM). The Cameron Group consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

FINANCIAL RATIOS  of  Schlumberger (SLB)

Valuation Ratios
P/E Ratio -53.4
Price to Sales 3.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 14.4
Price to Free Cash Flow 21.4
Growth Rates
Sales Growth Rate -21.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.2%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 40.1%
Total Debt to Equity 47.8%
Interest Coverage -2
Management Effectiveness
Return On Assets -1.6%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital -2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity -4.4%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 14.2%
Gross Margin - 3 Yr. Avg. 19.2%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin -4.6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin -6.9%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin -6.1%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 14.6%
Eff/ Tax Rate - 3 Yr. Avg. 21.9%
Payout Ratio -156.9%

SLB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLB stock intrinsic value calculation we used $30440 million for the last fiscal year's total revenue generated by Schlumberger. The default revenue input number comes from 2017 income statement of Schlumberger. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SLB stock valuation model: a) initial revenue growth rate of 9.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, whose default value for SLB is calculated based on our internal credit rating of Schlumberger, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Schlumberger.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SLB stock the variable cost ratio is equal to 73.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9075 million in the base year in the intrinsic value calculation for SLB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Schlumberger.

Corporate tax rate of 27% is the nominal tax rate for Schlumberger. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SLB stock is equal to 1.1%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SLB are equal to 156.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Schlumberger operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SLB is equal to -19.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $36842 million for Schlumberger - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1388 million for Schlumberger is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Schlumberger at the current share price and the inputted number of shares is $89.9 billion.

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COMPANY NEWS

▶ Oil States International chairman resigns, joins Schlumberger's board of directors   [Aug-08-18 09:18AM  American City Business Journals]
▶ 3 Top Quality Stocks for 2018   [Aug-01-18 06:00AM  Investopedia]
▶ 6 Houston cos. named on Forbes' first 'Best Employers for Women' list   [01:47PM  American City Business Journals]
▶ Oilfield Service Majors See Bright Future Ahead   [Jul-23-18 05:00PM  Oilprice.com]
▶ Schlumberger Is Well-Positioned for Global Energy Rebound   [Jul-20-18 05:48PM  TheStreet.com]
▶ Energetic Trades For Energy Earnings   [10:40AM  Benzinga]
▶ [$$] Schlumberger Sees Growth in North America   [09:07AM  The Wall Street Journal]
▶ Schlumberger: 2Q Earnings Snapshot   [07:15AM  Associated Press]
▶ Schlumberger Q2 Earnings Preview   [03:11PM  Benzinga]
▶ Houston energy cos. jump ranks in latest Fortune Global 500 list   [01:12PM  American City Business Journals]
▶ A Big Week For This Oil Services ETF   [Jul-18-18 11:41AM  ETF Trends]
▶ Jim Cramer: Buy These Oil Servicers on New Exploration   [Jul-06-18 07:01PM  TheStreet.com]
▶ 5 Energy Picks to Ride Surging Oil Prices   [Jun-28-18 06:00AM  Investopedia]
▶ Oil Markets Turn Bearish Ahead Of OPEC Meeting   [Jun-19-18 03:00PM  Oilprice.com]
▶ Earnings Outlook For Schlumberger   [02:12PM  Benzinga]
▶ 2 Best Oil Trades Ahead of Key OPEC Meeting   [09:27AM  TheStreet.com]
▶ Why Golar LNG Limited Stock Is Plunging Today   [May-31-18 11:43AM  Motley Fool]
▶ Oil Slips on Potential Russian-Saudi Production Increases   [May-29-18 03:25PM  TheStreet.com]
▶ Top 3 Equipment and Services ETFs   [May-24-18 09:55AM  Investopedia]
▶ Jim Cramer: Schlumberger Predicted the Rise in Oil Prices   [May-22-18 12:05PM  TheStreet.com]
▶ Dow, S&P 500 and Nasdaq Jump as Crude Oil Spikes   [May-09-18 02:42PM  TheStreet.com]
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