- Revenue of $8.10 billion increased 5% sequentially and 20% year
on year
- GAAP EPS of $0.72 increased 11% sequentially and 7% year on
year
- EPS, excluding charges and credits, of $0.72 increased 14%
sequentially and 44% year on year
- Net income attributable to SLB of $1.03 billion increased 11%
sequentially and 8% year on year
- Adjusted EBITDA of $1.96 billion increased 10% sequentially and
28% year on year
- Cash flow from operations was $1.61 billion and free cash flow
was $986 million
- Board approved quarterly cash dividend of $0.25 per share
SLB (NYSE: SLB) today announced results for the second-quarter
2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230719377867/en/
The exterior of the SLB corporate
headquarters, Houston. (Photo: Business Wire)
Second-Quarter Results
(Stated in millions, except per share amounts)
Three Months
Ended Change Jun. 30,2023 Mar. 31,2023 Jun.
30,2022
Sequential
Year-on-year Revenue
$8,099
$7,736
$6,773
5%
20%
Income before taxes - GAAP basis
$1,293
$1,161
$1,152
11%
12%
Income before taxes margin - GAAP basis
16.0%
15.0%
17.0%
96 bps
-105 bps
Net income attributable to SLB - GAAP basis
$1,033
$934
$959
11%
8%
Diluted EPS - GAAP basis
$0.72
$0.65
$0.67
11%
7%
Adjusted EBITDA*
$1,962
$1,788
$1,530
10%
28%
Adjusted EBITDA margin*
24.2%
23.1%
22.6%
111 bps
163 bps
Pretax segment operating income*
$1,581
$1,391
$1,159
14%
36%
Pretax segment operating margin*
19.5%
18.0%
17.1%
154 bps
240 bps
Net income attributable to SLB, excluding charges & credits*
$1,033
$906
$715
14%
44%
Diluted EPS, excluding charges & credits*
$0.72
$0.63
$0.50
14%
44%
Revenue by Geography
International
$6,297
$5,985
$5,188
5%
21%
North America
1,746
1,698
1,537
3%
14%
Other
56
53
48
n/m
n/m
$8,099
$7,736
$6,773
5%
20%
*These are non-GAAP financial
measures. See sections titled "Charges & Credits", "Divisions",
and "Supplementary Information" for details.
n/m = not meaningful
(Stated in millions)
Three Months Ended
Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year
Revenue by Division
Digital & Integration
$947
$894
$955
6%
-1%
Reservoir Performance
1,643
1,503
1,333
9%
23%
Well Construction
3,362
3,261
2,686
3%
25%
Production Systems
2,313
2,207
1,893
5%
22%
Other
(166)
(129)
(94)
n/m
n/m
$8,099
$7,736
$6,773
5%
20%
Pretax Operating Income by Division
Digital & Integration
$322
$265
$379
22%
-15%
Reservoir Performance
306
242
195
26%
57%
Well Construction
731
672
470
9%
55%
Production Systems
278
205
171
36%
63%
Other
(56)
7
(56)
n/m
n/m
$1,581
$1,391
$1,159
14%
36%
Pretax Operating Margin by Division
Digital & Integration
34.0%
29.6%
39.7%
438 bps
-572 bps
Reservoir Performance
18.6%
16.1%
14.6%
248 bps
396 bps
Well Construction
21.8%
20.6%
17.5%
115 bps
424 bps
Production Systems
12.0%
9.3%
9.0%
274 bps
300 bps
Other
n/m
n/m
n/m
n/m
n/m
19.5%
18.0%
17.1%
154 bps
240 bps
n/m = not meaningful
International- and Offshore-Led Growth Fueling Strong Margin
Expansion and Cash Flows
SLB CEO Olivier Le Peuch commented, “I am very pleased with our
second-quarter results, which reflect significant growth in the
international markets, particularly in the Middle East & Asia,
and offshore. North America revenue also grew sequentially
benefiting from our agility across the most resilient basins and
market segments, although the rig count in the area declined. As
the upcycle continues to unfold, we are excited about the
opportunities for our business, with international- and
offshore-led growth fueling strong pretax segment operating margin
expansion and cash flows as highlighted in this quarter’s results.
We are very well positioned in these markets, as international
represents nearly 80% of our global revenue, and offshore
constitutes approximately half of that. Both sequentially and year
on year, we saw broad international revenue growth that resulted in
margins expanding across all Divisions and geographical areas.
“Our focus on the quality of our revenue continues to drive
margins, and during the second quarter, we received numerous
multiyear contract awards. This is bolstering our outlook for
long-term growth that will outlast near-term commodity price
volatility, and it is reinforcing our belief in the breadth,
resilience, and durability of the upcycle.
“Compared to the same period a year ago, international revenue
grew 21%, outpacing North America which increased 14%. Year on
year, revenue grew 20% and pretax segment operating margin expanded
240 basis points (bps), representing the tenth straight quarter
that we have increased our pretax segment operating margin year on
year. This was driven by the international markets, where we posted
our highest year-on-year incremental margin in the last three
years, demonstrating the earnings power of our operations in these
markets.”
Middle East & Asia and Offshore Drove Strong Sequential
Performance
“Sequentially, our revenue grew 5%—more than $350 million—driven
largely by the Middle East & Asia area which increased 10%, or
$249 million. This increase was propelled by strong double-digit
growth in Saudi Arabia, Kuwait, United Arab Emirates, Egypt, India,
and China. Similarly, our offshore businesses in the US Gulf of
Mexico, Brazil, Angola, Namibia, and the Caspian Sea posted
double-digit growth sequentially.
“Overall, our second-quarter pretax segment operating margin
expanded 154 bps sequentially. Margin expansion was driven by
operating leverage, increased technology adoption, and pricing that
stemmed from contracts being adjusted for inflation and tight
service capacity in key markets.
“Second-quarter cash flow from operations vastly improved to
$1.61 billion—$1.28 billion higher sequentially—and free cash flow
was $986 million. Contributing to this very strong cash flow
performance were higher earnings, robust receivable collections,
improved inventory turnover, and continued capex discipline. We
expect free cash flow generation in the second half of the year to
be visibly higher than the first half, firmly positioning us to
outperform last year’s free cash flow.
“I am very proud of the exceptional results delivered by the SLB
team.”
Confidence in the Long-Term Outlook
“We continue to see positive upstream investment momentum in the
international and offshore markets. These markets are being driven
by resilient long-cycle offshore developments, production capacity
expansions, the return of global exploration and appraisal, and the
recognition of gas as a critical fuel source for energy security
and the energy transition.
“This is resulting in a significant baseload of activity as you
can see from the number of contract awards in our quarterly
highlights. The nature of these awards displays the duration and
magnitude of this upcycle, both on land and offshore. We remain
proud to be the partner of choice for our customers.
“As international spending builds further momentum in the second
half of 2023 and North America moderates as anticipated, this cycle
continues to align closely with SLB’s strengths, affirming our
confidence in our full-year financial ambitions.
“This is a compelling environment for our industry, and SLB is a
disciplined and efficient company that is moving in sync with our
customers and our shareholders. We believe we are well positioned
to execute our returns-focused strategy and commitment to
shareholder returns.”
Other Events
During the quarter, SLB repurchased approximately 4.5 million
shares of its common stock at an average price of $47.33 per share
for a total purchase price of $213 million.
Also during the quarter, SLB issued $500 million of 4.500%
Senior Notes due 2028 and $500 million of 4.850% Senior Notes due
2033.
On July 20, 2023, SLB’s Board of Directors approved a quarterly
cash dividend of $0.25 per share of outstanding common stock,
payable on October 12, 2023, to stockholders of record on September
6, 2023.
Second-Quarter Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year
North America
$1,746
$1,698
$1,537
3%
14%
Latin America
1,624
1,617
1,329
-
22%
Europe & Africa*
2,031
1,974
1,691
3%
20%
Middle East & Asia
2,642
2,394
2,168
10%
22%
Eliminations & other
56
53
48
n/m
n/m
$8,099
$7,736
$6,773
5%
20%
International
$6,297
$5,985
$5,188
5%
21%
North America
$1,746
$1,698
$1,537
3%
14%
*Includes Russia and the Caspian region n/m = not meaningful
International
Revenue in Latin America of $1.62 billion was essentially
flat sequentially as higher drilling activity offshore Brazil,
increased stimulation activity in Argentina, higher sales of
midstream production systems offshore Guyana, and increased Asset
Performance Solutions (APS) revenue in Ecuador were offset by lower
revenue in Mexico. Year on year, revenue grew 22% led by higher
drilling activity in Mexico and Brazil, increased sales of
production systems in Guyana, and increased intervention and
stimulation activity in Argentina.
Europe & Africa revenue of $2.03 billion grew 3%
sequentially due to higher offshore activity in Angola and Namibia,
increased drilling in Scandinavia, and higher sales of subsea
production systems in the Caspian Sea. These increases were
partially offset by the non-repeat of last quarter’s significant
midstream production systems project milestones. Year on year,
revenue grew 20% resulting from increased exploration, drilling,
and production activity offshore Africa and higher drilling in
Scandinavia and Europe.
Revenue in the Middle East & Asia of $2.64 billion
increased 10% sequentially driven by double-digit revenue growth in
Saudi Arabia, Egypt, United Arab Emirates, Kuwait, China, and
India. This was a result of higher drilling, intervention,
stimulation, and evaluation activity, both on land and offshore.
Year on year, revenue grew 22% with double-digit growth across
Saudi Arabia, United Arab Emirates, Qatar, Egypt, Oman, Iraq,
India, East Asia, and Australia.
North America
North America revenue of $1.75 billion grew 3%
sequentially–despite the decrease in rig count–benefiting from our
agility across the most resilient land basins and market segments.
In addition, our strong offshore position in the US Gulf of Mexico
contributed to our revenue growth as activity increased
sequentially. US land revenue grew sequentially, outperforming the
rig count decline, while offshore experienced double-digit growth,
boosted by increased sales of completions and subsea production
systems as well as higher drilling and evaluation activity. In
contrast, Canada land revenue decreased due to the spring breakup.
Year on year, North America revenue grew 14% due to strong land and
offshore drilling and higher sales of production systems, although
this was partially offset by lower APS project revenue in Canada
due to lower commodity prices.
Second-Quarter Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year Revenue International
$712
$642
$627
11%
14%
North America
234
251
327
-7%
-29%
Other
1
1
1
n/m
n/m
$947
$894
$955
6%
-1%
Pretax operating income
$322
$265
$379
22%
-15%
Pretax operating margin
34.0%
29.6%
39.7%
438 bps -572 bps n/m = not meaningful
Digital & Integration revenue of $947 million increased 6%
sequentially due to strong growth in digital sales internationally.
APS revenue was slightly higher, as production resumed in Ecuador
following an interruption in the previous quarter. However, this
revenue increase was partially offset by lower revenue in Canada.
Year on year, revenue declined 1% as strong growth in digital sales
was offset by lower APS revenue and decreased exploration data
license sales due to the significant transfer fees recorded in the
same quarter last year.
Digital & Integration pretax operating margin of 34%
expanded 438 bps sequentially due to improved profitability in
digital solutions. Year on year, pretax operating margin contracted
572 bps due to lower sales of exploration data licenses and reduced
APS revenue, which was impacted by lower commodity prices in
Canada.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year Revenue International
$1,512
$1,380
$1,222
10%
24%
North America
130
120
111
8%
17%
Other
1
3
-
n/m
n/m
$1,643
$1,503
$1,333
9%
23%
Pretax operating income
$306
$242
$195
26%
57%
Pretax operating margin
18.6%
16.1%
14.6%
248 bps 396 bps n/m = not meaningful
Reservoir Performance revenue of $1.64 billion grew 9%
sequentially due primarily to increased intervention, stimulation,
and evaluation activity internationally. More than half of the
revenue growth came from the Middle East & Asia, mainly from
higher stimulation and intervention activity in Saudi Arabia and
strong evaluation activity in India and China. Year on year,
revenue grew 23% led by the Middle East & Asia, due to higher
intervention and stimulation activity.
Reservoir Performance pretax operating margin of 19% expanded
248 bps sequentially and 396 bps year on year. Profitability
improved driven mainly by higher activity and improved operating
leverage across intervention and stimulation. New technology
deployment also contributed to the margin expansion, particularly
in Saudi Arabia, Qatar, Europe & Africa, and Mexico.
Well Construction
(Stated in millions)
Three Months Ended Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year Revenue International
$2,582
$2,493
$2,083
4%
24%
North America
721
711
553
1%
30%
Other
59
57
50
n/m
n/m
$3,362
$3,261
$2,686
3%
25%
Pretax operating income
$731
$672
$470
9%
55%
Pretax operating margin
21.8%
20.6%
17.5%
115 bps 424 bps n/m = not meaningful
Well Construction revenue of $3.36 billion increased 3%
sequentially led by Europe & Africa and the Middle East &
Asia, partially offset by lower revenue in Mexico and the impact of
spring breakup in Canada land. Year on year, revenue increased 25%
with strong growth across all areas. These increases were driven
mainly by strong measurements, fluids, and equipment sales activity
and pricing improvements internationally.
Well Construction pretax operating margin of 22% expanded 115
bps sequentially driven by international, while North America
margin was essentially flat. Year on year, pretax operating margin
expanded 424 bps with profitability improving in measurements,
drilling, fluids, and equipment sales across most areas, driven by
higher activity and improved pricing.
Production Systems
(Stated in millions)
Three Months Ended Change
Jun. 30,2023 Mar. 31,2023 Jun. 30,2022
Sequential
Year-on-year Revenue International
$1,628
$1,574
$1,341
3%
21%
North America
679
626
550
8%
23%
Other
6
7
2
n/m
n/m
$2,313
$2,207
$1,893
5%
22%
Pretax operating income
$278
$205
$171
36%
63%
Pretax operating margin
12.0%
9.3%
9.0%
274 bps 300 bps n/m = not meaningful
Production Systems revenue of $2.31 billion increased 5%
sequentially driven by strong sales of completions, subsea
production systems, surface production systems, and artificial
lift. The strong sequential revenue growth was led by the Middle
East & Asia, which posted double-digit growth, followed by
North America and Latin America. Europe & Africa revenue
declined sequentially following the non-repeat of significant
midstream production systems project milestones achieved in the
previous quarter. Year on year, revenue grew 22% due to strong
activity across all areas. Completions, subsea production systems,
surface production systems, artificial lift, and midstream
production systems each recorded year-on-year double-digit growth
across North America and internationally.
Production Systems pretax operating margin of 12% expanded 274
bps sequentially, driven primarily by higher sales of completions
and surface production systems and improved product deliveries.
Year on year, pretax operating margin expanded 300 bps driven by
improved profitability in completions, surface production systems,
artificial lift, and subsea production systems. Geographically,
margin expansion was led by the Middle East & Asia, Latin
America, and North America stemming from an improved activity mix
and the easing of supply chain constraints.
Quarterly Highlights
CORE
Contract Awards
SLB continues to win new long-cycle contract awards that align
with SLB’s core strengths, particularly in the international and
offshore basins. Notable highlights include the following:
- In Mexico, through its reference agreement process, our main
customer in Mexico awarded SLB contracts with a total value of
approximately $1 billion over the next two years for land and
shallow-water exploration and development. SLB will provide
drilling technology and completion solutions to execute both
conventional and highly complex wells, including high-pressure and
high-temperature work.
- In Saudi Arabia, SLB received a contract award from Saudi
Aramco for directional drilling services for the world’s largest
oil and gas fields. On both land and offshore, SLB will deliver
directional drilling and digital drilling solutions and
logging-while-drilling services. These proven technologies will
provide technical solutions for drilling challenging wells.
- In Qatar, Qatargas awarded SLB a five-year exclusive contract
with an optional five-year extension for the provision of unitized
Cameron wellhead and tree systems. The equipment will be installed
in 50 offshore and five onshore wells in the North Field South
project and will incorporate MRD™ recessed-bore metal-to-metal
seals and CANH™ rough casing metal-to-metal seals. The onshore
portion of the project includes CO2 injection and wastewater wells.
The first delivery of the equipment is expected in the third
quarter of 2023.
- In Brazil, Petrobras awarded a contract to OneSubsea™ to supply
critical subsea equipment to assist in the development of the
Búzios pre-salt field in the country’s prolific Santos Basin. It
was the sixth consecutive contract covering the supply of subsea
trees signed between the two parties. SLB will supply 15 subsea
trees and electrohydraulic distribution units to serve the
Búzios-11 project, set to enter production in 2027 via the P-83
floating production, storage, and offloading vessel. The contract
work scope also includes installation, commissioning, and
associated maintenance services.
- Offshore Egypt, bp and its joint venture partner Wintershall
Dea have awarded Subsea Integration Alliance an engineering,
procurement, construction, and installation (EPCI) contract for the
Raven infill project. The project represents the alliance’s second
early-integration contract with bp. The contract scope is for a
two-well tieback in the West Nile Delta development in water depths
of approximately 800 meters. The subsea production systems (SPS)
scope will be delivered by OneSubsea and includes project execution
comprising subsea controls, connectors, wet parking structures,
instrumentation and control installation and commissioning support,
and life-of-field support. The subsea umbilicals, risers, and
flowlines (SURF) scope will be delivered by Subsea7 and includes
the engineering, procurement, transport, and installation of
approximately 6 kilometers of flexible pipes, umbilicals, and
associated subsea structures.
- In the UK North Sea, bp awarded OneSubsea a contract for the
supply of subsea dual-bore trees, as part of its ongoing infill
drilling program in the Schiehallion/Loyal fields west of
Shetland.
- In Turkey, Turkish Petroleum awarded SLB an EPCI contract for
Phase 2 of the Sakarya field development, offshore Turkey in the
Black Sea. The contract for the two-phase subsea development is
awarded to a consortium including SLB, Subsea7, and Saipem. The
integrated project scope will be delivered by Subsea Integration
Alliance and covers SPS and SURF. OneSubsea will deliver the EPCI
of the SPS, which includes subsea tree systems, manifold
structures, topsides and distribution controls, tie-in connectors,
and valves.
Technology and Performance
Notable technology introductions and deployment in the quarter
include the following:
- In Mauritania, the XR-Perf™ expanded-range wireline perforating
system restored production in a deepwater well operated by bp by
enabling the perforation of more than 300 meters in eight runs
without incident or nonproductive time. The operation saved bp more
than 100 hours of rig time compared with traditional wireline
methods, resulting in significant cost savings and a reduced carbon
footprint. This was the first deployment of the XR-Perf system for
bp in Africa.
- In Libya, SLB executed the first treatments utilizing the
OneSTEP EF™ efficient, low-risk sandstone stimulation solution for
Waha Oil Company to improve the well influx from a fractured
reservoir, mitigate the increasing water production in the field,
and reduce the risk of damage from precipitation. A high-rate
matrix stimulation was performed on two wells using the OneSTEP EF
solution and the OilMAX™ matrix acidizing diverter. The OilMAX
fluid, composed of a new-generation viscous relative permeability
modifier, was used to increase zonal coverage and reduce the water
production after treatment. Kinetix Matrix™ matrix stimulation
design software was used to model the fluid placement for the
stimulation job. The successful treatment revived wells that had
been shut-in for up to 20 years and increased the total production
rate by 140% while reducing water cut to 0.4%. The novel fluid
system improved well influx helping Waha Oil Company achieve its
production goals.
- Offshore Malaysia, the integrated solution of Gyrodata Quest™
gyro-while-drilling (GWD) system together with PowerDrive X6™
rotary steerable system delivered the longest
extended-reach-drilling well in the country, the first integrated
deployment since SLB’s acquisition of Gyrodata Incorporated.
High-accuracy real-time definitive gyroscopic surveys and precise
steering maximized reservoir exposure and recovery potential. The
Quest GWD system’s extended battery life allowed for 322 hours of
surveying in the 12 1/4-inch section and 294 hours in the 8
1/2-inch section with no battery trip required. The Quest GWD
system also saved rig time compared to a conventional GWD tool by
reducing the survey time by 75%.
DIGITAL
SLB is deploying digital technology at scale, enabling customers
to track and access their data, leverage insights to elevate their
performance, and embrace new AI-enabled autonomous operations.
Notable highlights include the following:
- In Brazil, SLB was awarded a five-year contract by Petrobras
for an enterprise-wide deployment of its Delfi™ digital platform.
The contract scope facilitates Petrobras’ digital transformation
from exploration, development, and production operations, including
moving subsurface workflows to the cloud to significantly
accelerate decision making. The award represents one of Petrobras’
largest investments in cloud-based technologies.
- In Ecuador, Empresa Nacional del Petróleo (ENAP) has awarded
SLB a three-year software-as-a-service contract, granting ENAP
access to the advanced technology solutions in the Delfi digital
platform to enhance its operations and respond more efficiently to
daily challenges. ENAP’s objective is to leverage the advanced
capabilities offered by the Delfi platform to achieve streamlined
workflows, improved efficiency, and cost savings.
- In India, Cairn Oil & Gas, Vedanta Limited selected SLB and
Cognite to deploy an industrial DataOps platform at the enterprise
level. The project scope includes implementation of a consolidated
and unified data enterprise platform for reservoir management in
the Rajasthan basin, with the aim of enhancing efficiency,
leveraging data science and analytics, and enabling the development
of novel applications to optimize reservoir and production
workflows. Vedanta plans to leverage the Cognite Data Fusion®
platform as well as SLB domain-driven workflows and oil and gas
expertise. The three-year strategic project will establish a
reusable, flexible data foundation and enable data and domain users
to obtain value from actionable insights.
- In Kuwait, Kuwait Oil Company (KOC) utilized Neuro™ autonomous
solutions, which included the autonomous downhole control system,
DrillOps™ Automate, DD Advisor coupled with well construction rig
equipment, the AxeBlade™ ridged diamond element bit, and the
PowerDrive Orbit G2™ rotary steerable system. Optimization through
autonomous directional drilling capabilities delivered a 90%
increase in rate of penetration (ROP) and a 37% increase in
steering effectiveness, saving over $500,000 and eight rig days
compared to the authorization for expenditure. Neuro solutions are
redefining what can be achieved when state-of-the-art software is
coupled with intelligent hardware and work processes that eliminate
manual operations. The successful adoption of these technologies
not only improved KOC's drilling performance and efficiency but
also minimized operational costs and drilling durations, directly
impacting their profitability.
- In Malaysia, SLB has incorporated Neuro autonomous solutions to
deliver autonomous directional drilling in one of PETRONAS Carigali
Sdn Bhd’s (PCSB) operated asset development campaigns. Utilizing
technical capabilities that combine surface and downhole
automation, the Neuro autonomous solutions delivered enhanced
efficiency and consistency of operations while reducing human
intervention, resulting in a 33% increase in ROP and a 62%
reduction in downlinking.
FINANCIAL TABLES
Condensed Consolidated Statement of Income
(Stated in millions, except per
share amounts)
Second Quarter Six Months Periods Ended June 30,
2023
2022
2023
2022
Revenue
$8,099
$6,773
$15,835
$12,735
Interest & other income (1)
82
311
174
361
Expenses Cost of revenue
6,502
5,568
12,787
10,581
Research & engineering
163
154
337
295
General & administrative
96
86
187
183
Interest
127
124
244
247
Income before taxes (1)
$1,293
$1,152
$2,454
$1,790
Tax expense (1)
246
182
464
300
Net income (1)
$1,047
$970
$1,990
$1,490
Net income attributable to noncontrolling interest
14
11
23
21
Net income attributable to SLB (1)
$1,033
$959
$1,967
$1,469
Diluted earnings per share of SLB (1)
$0.72
$0.67
$1.36
$1.02
Average shares outstanding
1,423
1,414
1,425
1,413
Average shares outstanding assuming dilution
1,442
1,436
1,444
1,435
Depreciation & amortization included in expenses (2)
$561
$532
$1,124
$1,065
(1)
See section entitled “Charges &
Credits” for details.
(2)
Includes depreciation of fixed assets and
amortization of intangible assets, exploration data costs, and APS
investments.
Condensed Consolidated Balance Sheet
(Stated in millions)
Jun. 30, Dec. 31, Assets
2023
2022
Current Assets Cash and short-term investments
$3,194
$2,894
Receivables
7,675
7,032
Inventories
4,360
3,999
Other current assets
925
1,078
16,154
15,003
Investment in affiliated companies
1,601
1,581
Fixed assets
6,804
6,607
Goodwill
13,117
12,982
Intangible assets
2,968
2,992
Other assets
4,182
3,970
$44,826
$43,135
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$8,938
$9,121
Estimated liability for taxes on income
859
1,002
Short-term borrowings and current portion of long-term debt
1,993
1,632
Dividends payable
373
263
12,163
12,018
Long-term debt
11,342
10,594
Postretirement benefits
167
165
Other liabilities
2,220
2,369
25,892
25,146
Equity
18,934
17,989
$44,826
$43,135
Liquidity
(Stated in millions)
Components of Liquidity
Jun. 30,2023 Mar. 31,2023 Jun.
30,2022 Dec. 31,2022 Cash and short-term investments
$3,194
$2,504
$2,816
$2,894
Short-term borrowings and current portion of long-term debt
(1,993)
(2,140)
(901)
(1,632)
Long-term debt
(11,342)
(10,698)
(12,946)
(10,594)
Net Debt (1)
$(10,141)
$(10,334)
$(11,031)
$(9,332)
Details of changes in liquidity follow:
Six
Second Six
Months Quarter Months Periods Ended
June 30,
2023
2023
2022
Net income
$1,990
$1,047
$1,490
Charges and credits, net of tax (2)
(28)
-
(266)
1,962
1,047
1,224
Depreciation and amortization (3)
1,124
561
1,065
Stock-based compensation expense
160
79
160
Change in working capital
(1,286)
(56)
(1,884)
Other
(22)
(23)
(26)
Cash flow from operations
1,938
1,608
539
Capital expenditures
(881)
(471)
(664)
APS investments
(253)
(120)
(311)
Exploration data capitalized
(83)
(31)
(64)
Free cash flow (4)
721
986
(500)
Dividends paid
(605)
(356)
(352)
Stock repurchase program
(443)
(213)
-
Proceeds from employee stock plans
124
3
93
Business acquisitions and investments, net of cash acquired plus
debt assumed
(262)
(18)
(8)
Proceeds from sale of Liberty shares
137
-
513
Proceeds from sale of real estate
-
-
120
Taxes paid on net settled stock-based compensation awards
(144)
(56)
(85)
Other
(167)
(83)
(86)
(Decrease) increase in net debt before impact of changes in
foreign exchange rates
(639)
263
(305)
Impact of changes in foreign exchange rates on net debt
(170)
(70)
330
(Decrease) increase in Net Debt
(809)
193
25
Net Debt, beginning of period
(9,332)
(10,334)
(11,056)
Net Debt, end of period
$(10,141)
$(10,141)
$(11,031)
(1)
“Net Debt” represents gross debt less cash
and short-term investments. Management believes that Net Debt
provides useful information regarding the level of SLB’s
indebtedness by reflecting cash and investments that could be used
to repay debt. Net Debt is a non-GAAP financial measure that should
be considered in addition to, not as a substitute for or superior
to, total debt.
(2)
See section entitled “Charges &
Credits” for details.
(3)
Includes depreciation of fixed assets and
amortization of intangible assets, exploration data costs, and APS
investments.
(4)
“Free cash flow” represents cash flow from
operations less capital expenditures, APS investments, and
exploration data costs capitalized. Management believes that free
cash flow is an important liquidity measure for the company and
that it is useful to investors and management as a measure of SLB’s
ability to generate cash. Once business needs and obligations are
met, this cash can be used to reinvest in the company for future
growth or to return to shareholders through dividend payments or
share repurchases. Free cash flow does not represent the residual
cash flow available for discretionary expenditures. Free cash flow
is a non-GAAP financial measure that should be considered in
addition to, not as a substitute for or superior to, cash flow from
operations.
Charges & Credits
In addition to financial results determined in accordance with
US generally accepted accounting principles (GAAP), this
second-quarter 2023 earnings release also includes non-GAAP
financial measures (as defined under the SEC’s Regulation G). In
addition to the non-GAAP financial measures discussed under
“Liquidity”, SLB net income, excluding charges & credits, as
well as measures derived from it (including diluted EPS, excluding
charges & credits; effective tax rate, excluding charges &
credits; adjusted EBITDA; and adjusted EBITDA margin) are non-GAAP
financial measures. Management believes that the exclusion of
charges & credits from these financial measures enables it to
evaluate more effectively SLB’s operations period over period and
to identify operating trends that could otherwise be masked by the
excluded items. These measures are also used by management as
performance measures in determining certain incentive compensation.
The foregoing non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, other measures
of financial performance prepared in accordance with GAAP. The
following is a reconciliation of certain of these non-GAAP measures
to the comparable GAAP measures. For a reconciliation of adjusted
EBITDA to the comparable GAAP measure, please refer to the section
titled “Supplementary Information” (Question 9).
(Stated in millions, except per
share amounts)
Six Months 2023 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$2,454
$464
$23
$1,967
$1.36
Gain on sale of Liberty shares
(36)
(8)
-
(28)
(0.02)
SLB net income, excluding charges & credits
$2,418
$456
$23
$1,939
$1.34
First Quarter 2023 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$1,161
$217
$10
$934
$0.65
Gain on sale of Liberty shares
(36)
(8)
-
(28)
(0.02)
SLB net income, excluding charges & credits
$1,125
$209
$10
$906
$0.63
Second Quarter 2022 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$1,152
$182
$11
$959
$0.67
Gain on sale of Liberty shares
(216)
(13)
-
(203)
(0.14)
Gain on sale of real estate
(43)
(2)
-
(41)
(0.03)
SLB net income, excluding charges & credits
$893
$167
$11
$715
$0.50
Six Months 2022 Pretax Tax Noncont.Interests Net
DilutedEPS * SLB net income (GAAP basis)
$1,790
$300
$21
$1,469
$1.02
Gain on sale of Liberty shares
(242)
(17)
-
(225)
(0.16)
Gain on sale of real estate
(43)
(2)
-
(41)
(0.03)
SLB net income, excluding charges & credits
$1,505
$281
$21
$1,203
$0.84
There were no charges or credits during
the second quarter of 2023.
* Does not add due to rounding.
All Charges & Credits for the periods
above are classified in Interest & other income in the
Condensed Consolidated Statement of Income.
Divisions
(Stated in millions)
Three Months Ended Jun. 30,
2023 Mar. 31, 2023 Jun. 30, 2022
Revenue
IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue
IncomeBeforeTaxes Digital & Integration
$947
$322
$894
$265
$955
$379
Reservoir Performance
1,643
306
1,503
242
1,333
195
Well Construction
3,362
731
3,261
672
2,686
470
Production Systems
2,313
278
2,207
205
1,893
171
Eliminations & other
(166)
(56)
(129)
7
(94)
(56)
Pretax segment operating income
1,581
1,391
1,159
Corporate & other
(183)
(169)
(148)
Interest income(1)
19
17
3
Interest expense(1)
(124)
(114)
(121)
Charges & credits(2)
-
36
259
$8,099
$1,293
$7,736
$1,161
$6,773
$1,152
(Stated in millions)
Six Months Ended Jun.
30, 2023 Jun. 30, 2022
Revenue IncomeBeforeTaxes
Revenue IncomeBeforeTaxes Digital & Integration
$1,840
$587
$1,813
$671
Reservoir Performance
3,146
548
2,543
355
Well Construction
6,623
1,403
5,083
858
Production Systems
4,520
483
3,497
285
Eliminations & other
(294)
(49)
(201)
(115)
Pretax segment operating income
2,972
2,054
Corporate & other
(353)
(313)
Interest income(1)
36
5
Interest expense(1)
(237)
(241)
Charges & credits(2)
36
285
$15,835
$2,454
$12,735
$1,790
(1)
Excludes amounts which are included in the
segments’ results.
(2)
See section entitled “Charges &
Credits” for details.
Supplementary Information Frequently Asked
Questions
1)
What is the capital investment guidance
for the full-year 2023?
Capital investment (composed of capex,
exploration data costs, and APS investments) for the full-year 2023
is expected to be approximately $2.50 to $2.60 billion. Capital
investment for the full-year 2022 was $2.30 billion.
2)
What were cash flow from operations and
free cash flow for the second quarter of 2023?
Cash flow from operations for the second
quarter of 2023 was $1.61 billion, and free cash flow was $986
million.
3)
What was included in “Interest &
other income” for the second quarter of 2023?
“Interest & other income” for the
second quarter of 2023 was $82 million. This consisted of interest
income of $19 million and earnings of equity method investments of
$63 million.
4)
How did interest income and interest
expense change during the second quarter of 2023?
Interest income of $19 million for the
second quarter of 2023 increased $2 million sequentially. Interest
expense of $127 million increased $10 million sequentially.
5)
What is the difference between SLB’s
consolidated income before taxes and pretax segment operating
income?
The difference consists of corporate
items, charges and credits, and interest income and interest
expense not allocated to the segments as well as stock-based
compensation expense, amortization expense associated with certain
intangible assets, certain centrally managed initiatives, and other
nonoperating items.
6)
What was the effective tax rate (ETR)
for the second quarter of 2023?
The ETR for the second quarter of 2023,
calculated in accordance with GAAP, was 19.0% as compared to 18.7%
for the first quarter of 2023. Excluding charges and credits, the
ETR for the first quarter of 2023 was 18.6%. There were no charges
or credits during the second quarter of 2023.
7)
How many shares of common stock were
outstanding as of June 30, 2023, and how did this change from the
end of the previous quarter?
There were 1.421 billion shares of common
stock outstanding as of June 30, 2023, and 1.425 billion shares
outstanding as of March 31, 2023.
(Stated in millions)
Shares outstanding at March 31, 2023
1,425
Shares issued to optionees, less shares exchanged
-
Vesting of restricted stock
-
Stock repurchase program
(4)
Shares outstanding at June 30, 2023
1,421
8)
What was the weighted average number of
shares outstanding during the second quarter of 2023 and first
quarter of 2023? How does this reconcile to the average number of
shares outstanding, assuming dilution, used in the calculation of
diluted earnings per share?
The weighted average number of shares
outstanding was 1.423 billion during the second quarter of 2023 and
1.426 billion during the first quarter of 2023. The following is a
reconciliation of the weighted average shares outstanding to the
average number of shares outstanding, assuming dilution, used in
the calculation of diluted earnings per share.
(Stated in millions)
Second Quarter2023 First
Quarter2023 Weighted average shares outstanding
1,423
1,426
Unvested restricted stock
17
18
Assumed exercise of stock options
2
2
Average shares outstanding, assuming dilution
1,442
1,446
9)
What was SLB’s adjusted EBITDA in the
second quarter of 2023, the first quarter of 2023, and the second
quarter of 2022?
SLB’s adjusted EBITDA was $1.96 billion in
the second quarter of 2023, $1.79 billion in the first quarter of
2023, and $1.53 billion in the second quarter of 2022, and was
calculated as follows:
(Stated in millions)
Second Quarter2023 First
Quarter2023 Second Quarter2022 Net income attributable to
SLB
$1,033
$934
$959
Net income attributable to noncontrolling interests
14
10
11
Tax expense
246
217
182
Income before taxes
$1,293
$1,161
$1,152
Charges & credits
-
(36)
(259)
Depreciation and amortization
561
563
532
Interest expense
127
117
124
Interest income
(19)
(17)
(19)
Adjusted EBITDA
$1,962
$1,788
$1,530
Adjusted EBITDA represents income before
taxes, excluding charges & credits, depreciation and
amortization, interest expense, and interest income. Management
believes that adjusted EBITDA is an important profitability measure
for SLB and that it allows investors and management to more
efficiently evaluate SLB’s operations period over period and to
identify operating trends that could otherwise be masked. Adjusted
EBITDA is also used by management as a performance measure in
determining certain incentive compensation. Adjusted EBITDA should
be considered in addition to, not as a substitute for or superior
to, other measures of financial performance prepared in accordance
with GAAP.
10)
What were the components of
depreciation and amortization expense for the second quarter of
2023, the first quarter of 2023, and the second quarter of
2022?
The components of depreciation and
amortization expense for the second quarter of 2023, the first
quarter of 2023, and the second quarter of 2022 were as
follows:
(Stated in millions)
Second
Quarter2023 First Quarter2023 Second Quarter2022
Depreciation of fixed assets
$353
$347
$340
Amortization of intangible assets
77
76
75
Amortization of APS investments
101
91
87
Amortization of exploration data costs capitalized
30
49
30
$561
$563
$532
About SLB
SLB (NYSE: SLB) is a global technology company driving energy
innovation for a balanced planet. With a global presence in more
than 100 countries and employees representing almost twice as many
nationalities, we work each day on innovating oil and gas,
delivering digital at scale, decarbonizing industries, and
developing and scaling new energy systems that accelerate the
energy transition. Find out more at slb.com.
Conference Call Information
SLB will hold a conference call to discuss the earnings press
release and business outlook on Friday, July 21, 2023. The call is
scheduled to begin at 9:30 a.m. US Eastern Time. To access the
call, which is open to the public, please contact the conference
call operator at +1 (844) 721-7241 within North America, or +1
(409) 207-6955 outside North America, approximately 10 minutes
prior to the call’s scheduled start time, and provide the access
code 8858313. At the conclusion of the conference call, an audio
replay will be available until August 21, 2023, by dialing +1 (866)
207-1041 within North America, or +1 (402) 970-0847 outside North
America, and providing the access code 4620397. The conference call
will be webcast simultaneously at www.slb.com/irwebcast on a
listen-only basis. A replay of the webcast will also be available
at the same website until August 21, 2023.
This second-quarter 2023 earnings press release, as well as
other statements we make, contain “forward-looking statements”
within the meaning of the federal securities laws, which include
any statements that are not historical facts. Such statements often
contain words such as “expect,” “may,” “can,” “believe,” “predict,”
“plan,” “potential,” “projected,” “projections,” “precursor,”
“forecast,” “outlook,” “expectations,” “estimate,” “intend,”
“anticipate,” “ambition,” “goal,” “target,” “scheduled,” “think,”
“should,” “could,” “would,” “will,” “see,” “likely,” and other
similar words. Forward-looking statements address matters that are,
to varying degrees, uncertain, such as statements about our
financial and performance targets and other forecasts or
expectations regarding, or dependent on, our business outlook;
growth for SLB as a whole and for each of its Divisions (and for
specified business lines, geographic areas, or technologies within
each Division); oil and natural gas demand and production growth;
oil and natural gas prices; forecasts or expectations regarding
energy transition and global climate change; improvements in
operating procedures and technology; capital expenditures by SLB
and the oil and gas industry; our business strategies, including
digital and “fit for basin,” as well as the strategies of our
customers; our APS projects, joint ventures, and other alliances;
our response to the COVID-19 pandemic and our preparedness for
other widespread health emergencies; the impact of the ongoing
conflict in Ukraine on global energy supply; access to raw
materials; future global economic and geopolitical conditions;
future liquidity, including free cash flow; and future results of
operations, such as margin levels. These statements are subject to
risks and uncertainties, including, but not limited to, changing
global economic and geopolitical conditions; changes in exploration
and production spending by our customers, and changes in the level
of oil and natural gas exploration and development; the results of
operations and financial condition of our customers and suppliers;
the inability to achieve our financial and performance targets and
other forecasts and expectations; the inability to achieve our
net-zero carbon emissions goals or interim emissions reduction
goals; general economic, geopolitical, and business conditions in
key regions of the world; the ongoing conflict in Ukraine; foreign
currency risk; inflation; changes in monetary policy by
governments; pricing pressure; weather and seasonal factors;
unfavorable effects of health pandemics; availability and cost of
raw materials; operational modifications, delays, or cancellations;
challenges in our supply chain; production declines; the extent of
future charges; the inability to recognize efficiencies and other
intended benefits from our business strategies and initiatives,
such as digital or SLB New Energy; as well as our cost reduction
strategies; changes in government regulations and regulatory
requirements, including those related to offshore oil and gas
exploration, radioactive sources, explosives, chemicals, and
climate-related initiatives; the inability of technology to meet
new challenges in exploration; the competitiveness of alternative
energy sources or product substitutes; and other risks and
uncertainties detailed in this press release and our most recent
Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities
and Exchange Commission. If one or more of these or other risks or
uncertainties materialize (or the consequences of any such
development changes), or should our underlying assumptions prove
incorrect, actual results or outcomes may vary materially from
those reflected in our forward-looking statements. Forward-looking
and other statements in this press release regarding our
environmental, social, and other sustainability plans and goals are
not an indication that these statements are necessarily material to
investors or required to be disclosed in our filings with the SEC.
In addition, historical, current, and forward-looking
environmental, social, and sustainability-related statements may be
based on standards for measuring progress that are still
developing, internal controls and processes that continue to
evolve, and assumptions that are subject to change in the future.
Statements in this press release are made as of the date of this
release, and SLB disclaims any intention or obligation to update
publicly or revise such statements, whether as a result of new
information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230719377867/en/
Investor Relations Contacts: James R. McDonald – Senior
Vice President of Investor Relations & Industry Affairs Joy V.
Domingo – Director of Investor Relations Office +1 (713) 375-3535
investor-relations@slb.com Media Contacts: Josh Byerly –
Vice President of Communications Moira Duff – Director of External
Communications Office +1 (713) 375-3407 media@slb.com
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