Financial- Net Income Statement - P&L Part 1

Question 1

Profit and Loss (P&L) - Main Components (12)

Answer 1

1. Revenue
2. Compensation
3. M & S (Materials & Supplies)
4. Depreciation
5. ‘Product Cost’
6. Other Incremental Costs
7. Total Field Costs
8. Field Segment Contribution
9. Shared Costs
10. IBT (Income Before Tax)
11. Tax
12. Net Income

Question 2

What does NIS stand for?

Answer 2

Net Income Statement.

Question 3

What is revenue?

Answer 3

Income that a company receives from its normal business activity.

Question 4

What is the formula or NIS (P&L)?

Answer 4

Formula: Revenue – Expenses = Net Income

$600 - $400 = $200 Profit

$600 - $900 = ($300) Loss

Question 5

What are the elements of revenue? (4)

Answer 5

• Service Revenue- (example pumping)
• Product revenue- (example sand/chemicals)
• Reimbursable revenue- (shower trailer, fuel)
• Lost in Hole (LIH) Revenue- (WL tools lost in hole)

Question 6

Explain Service revenue

Answer 6

Service revenue- Operating Revenue from services performed by SLB for it’s clients.

Depending on the segment, this can be categorized by activity, by tool etc.

Example pumping.

Question 7

Explain Product revenue-

Answer 7

Product revenue- Typically revenue earned by the sale of products from SLB to it’s clients.

Example: Charge for chems/sand.

Question 8

Explain Reimbursable revenue

Answer 8

Reimbursable revenue- We may be asked to provide supplies/services which are not part of our business.

On such occasions, we will obtain the supplies/services from a third party and will add a ‘mark-up’ to these costs before charging to the client. The mark-up % will be determined in the contract before embarking on the project.

Example: shower trailer, fuel.

Question 9

Lost in Hole (LIH) Revenue

Answer 9

Lost in Hole (LIH) Revenue.- revenue generated when SLB assets are lost in Hole during operations. When this occurs, we invoice the client to cover out loss as per terms of contract.

Example. WL could not go out of hole due to casing conditions they need to drop the tools. SLB charges for that tools.

Question 10

What are the 4 criteria to recognize revenue?

Answer 10

1. • Persuasive Evidence of Arrangement- Signed contract
2. • Price is Fixed or Determinable- Bid/Quote form sales
3. • Delivery has occurred- field ticket signed
4. • Collectability is reasonably assured – Checked with credit team.

Question 11

What IBT Stands for?

Answer 11

Income before Taxes

Question 12

What does company deal mainly between IBT or Net income?

Answer 12

IBT (Income before taxes) due to is more simple and due to competitor do not need to know how we spend our money.

Question 13

Categories and Description of field costs? (10)

Answer 13

1. Compensation: Payroll & benefits for all staff including contractors
2. M&S: spare parts, tires, maintenance, & fuel
3. Depreciation: charge for depreciation of all fixed assets held at location
4. Product Costs: cost of material sold directly to customer
5. Transportation and Mobilization: Freight on M&S; fixed assets, customs, freight charges to clients
6. Lease and Rent : Buildings, Operating equipment, vehicles
7. Office and Camp: Office supplies, computer hardware, furniture, manual/docs, phone, fax, postage
8. Travel and Entertainment: Offshore travels, business travels, hotels, meals, client entertainment, memberships
9. HSE: QHSE Costs
10. Taxes and Insurance: