- Revenue of $8.31 billion increased 3% sequentially and 11% year
on year
- GAAP EPS of $0.78 increased 8% sequentially and 24% year on
year
- Net income attributable to SLB of $1.12 billion increased 9%
sequentially and 24% year on year
- Adjusted EBITDA of $2.08 billion increased 6% sequentially and
18% year on year
- Cash flow from operations was $1.68 billion and free cash flow
was $1.04 billion
- Board approved quarterly cash dividend of $0.25 per share
SLB (NYSE: SLB) today announced results for the third-quarter
2023.
Third-Quarter Results
(Stated in millions, except per share amounts)
Three Months
Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue
$8,310
$8,099
$7,477
3%
11%
Income before taxes - GAAP basis
$1,395
$1,293
$1,134
8%
23%
Income before taxes margin - GAAP basis
16.8%
16.0%
15.2%
82 bps
161 bps
Net income attributable to SLB - GAAP basis
$1,123
$1,033
$907
9%
24%
Diluted EPS - GAAP basis
$0.78
$0.72
$0.63
8%
24%
Adjusted EBITDA*
$2,081
$1,962
$1,756
6%
18%
Adjusted EBITDA margin*
25.0%
24.2%
23.5%
82 bps
155 bps
Pretax segment operating income*
$1,683
$1,581
$1,400
6%
20%
Pretax segment operating margin*
20.3%
19.5%
18.7%
73 bps
153 bps
Net income attributable to SLB, excluding charges & credits*
$1,123
$1,033
$907
9%
24%
Diluted EPS, excluding charges & credits*
$0.78
$0.72
$0.63
8%
24%
Revenue by Geography
International
$6,614
$6,297
$5,881
5%
12%
North America
1,643
1,746
1,543
-6%
6%
Other
53
56
53
n/m
n/m
$8,310
$8,099
$7,477
3%
11%
*These are non-GAAP financial measures. See sections titled
"Divisions" and "Supplementary Information" for details. n/m = not
meaningful (Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue by Division
Digital & Integration
$982
$947
$900
4%
9%
Reservoir Performance
1,680
1,643
1,456
2%
15%
Well Construction
3,430
3,362
3,084
2%
11%
Production Systems
2,367
2,313
2,150
2%
10%
Other
(149)
(166)
(113)
n/m
n/m
$8,310
$8,099
$7,477
3%
11%
Pretax Operating Income by Division
Digital & Integration
$314
$322
$305
-2%
3%
Reservoir Performance
344
306
244
13%
41%
Well Construction
759
731
664
4%
14%
Production Systems
319
278
224
15%
42%
Other
(53)
(56)
(37)
n/m
n/m
$1,683
$1,581
$1,400
6%
20%
Pretax Operating Margin by Division
Digital & Integration
32.0%
34.0%
33.9%
-200 bps
-186 bps
Reservoir Performance
20.5%
18.6%
16.7%
190 bps
376 bps
Well Construction
22.1%
21.7%
21.5%
38 bps
58 bps
Production Systems
13.5%
12.0%
10.4%
147 bps
305 bps
Other
n/m
n/m
n/m
n/m
n/m
20.3%
19.5%
18.7%
73 bps
153 bps
n/m = not meaningful
International Markets Driving Profitable Growth
SLB CEO Olivier Le Peuch commented, “Our third-quarter results
continue to reflect strong year-to-date performance with revenue
and adjusted EBITDA growth of 19% and 28%, respectively. These
results, which reinforce our full-year financial ambitions, were
driven by sustained growth in the international markets, where we
posted our ninth consecutive quarter of double-digit year-on-year
growth.
“Compared to the same quarter a year ago, international revenue
grew 12%, outpacing North America, which increased 6%. Year on
year, global third-quarter revenue grew 11% and pretax segment
operating margin expanded 153 basis points (bps) to 20%. We have
also increased our year-on-year pretax segment operating margin for
the 11th consecutive quarter.
“I am very pleased with these results, which demonstrate how SLB
is continuing to seize this multiyear growth cycle. Our
differentiated technology and service offerings, combined with our
focus on the quality of our revenue, enabled profitable growth and
drove our adjusted EBITDA margin to a new cycle high of 25%.”
Strong Sequential Performance Led by the Middle East &
Asia
“Third-quarter revenue increased 3% sequentially—by more than
$200 million—driven by the Middle East & Asia, which increased
8% in the quarter and continues to demonstrate positive investment
momentum. Our strong quarterly performance was propelled by
broad-based growth across Saudi Arabia, the United Arab Emirates,
Indonesia, China, Malaysia, Kuwait, and Oman.
“Similarly, revenue in our offshore business grew as our
activity continues to benefit from operators working to renew
supply, accelerate cycle times, and increase the productivity of
their assets. This was particularly notable in offshore Africa,
Brazil, and Scandinavia.
“Overall, our third-quarter pretax segment operating margin
expanded 73 bps sequentially. We also generated strong cash flow
from operations of $1.68 billion and free cash flow of $1.04
billion.
“I want to thank the SLB team for delivering these impressive
results.”
Growth Powered by the Core
“Looking ahead, we believe the market fundamentals remain very
compelling for our business. The oil and gas industry continues to
benefit from a multiyear growth cycle that has shifted to the
international and offshore markets where we are the clear leader.
Concurrently, upstream spending is accelerating as operators
continue to invest in long-cycle developments, production capacity
expansions, exploration and appraisal, and enhanced gas production.
The long-term nature of these global investments underscores the
breadth, durability, and resilience of this cycle, and we expect
these market dynamics to continue to drive profitable growth in the
years ahead.
“SLB’s Core business has been primed for this opportunity. On a
year-to-date basis, the Core business—comprising Reservoir
Performance, Well Construction, and Production Systems—grew revenue
by 22% and expanded pretax segment operating margin by 295 bps.
Customers continue to make SLB their partner of choice for
delivering enhanced value through our unmatched technology
offerings, and our international and offshore leadership is
perfectly aligned with the cycle’s activity trends. In the
international market, we continue to benefit from our leading
exposure to the Middle East, and we have further bolstered our
unparalleled offshore offering with the formation of our OneSubsea
joint venture with Aker Solutions and Subsea7. This joint venture
offers a combined technology portfolio that will drive innovation
and efficiency in subsea production, helping customers to unlock
reserves and reduce cycle time.”
Strong Close to the Year
“In the fourth quarter, we expect continued sequential revenue
growth driven by year-end sales in Digital & Integration and
seasonal product and equipment sales in Production Systems. In
addition, the fourth quarter will reflect the results of the
OneSubsea joint venture.
“I remain highly confident in our business and look forward to
the exciting opportunities ahead. We will remain focused on driving
financial outperformance, and our teams will continue delivering
strong results for our customers and stakeholders in the quarter
ahead.”
Other Events
During the quarter, SLB repurchased 2.6 million shares of its
common stock at an average price of $57.46 per share for a total
purchase price of $151 million.
On October 2, 2023, SLB, Aker Solutions, and Subsea7 closed
their previously-announced joint venture. The new business,
OneSubsea, will drive innovation and efficiency in subsea
production by helping customers unlock reserves and reduce cycle
time. OneSubsea now comprises SLB’s and Aker Solutions’ subsea
businesses, which include an extensive complementary subsea
production and processing technology portfolio, world-class
manufacturing scale and capacity, access to industry-leading
reservoir and digital domain expertise, unique pore-to-process
integration capabilities, and strengthened R&D
capabilities.
On October 19, 2023, SLB’s Board of Directors approved a
quarterly cash dividend of $0.25 per share of outstanding common
stock, payable on January 11, 2024, to stockholders of record on
December 6, 2023.
Third-Quarter Revenue by Geographical Area
(Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
North America
$1,643
$1,746
$1,543
-6%
6%
Latin America
1,681
1,624
1,508
4%
11%
Europe & Africa*
2,091
2,031
2,039
3%
3%
Middle East & Asia
2,842
2,642
2,334
8%
22%
Eliminations & other
53
56
53
n/m
n/m
$8,310
$8,099
$7,477
3%
11%
International
$6,614
$6,297
$5,881
5%
12%
North America
$1,643
$1,746
$1,543
-6%
6%
*Includes Russia and the Caspian region n/m = not meaningful
International
Revenue in Latin America of $1.68 billion increased 4%
sequentially due to higher sales of production systems offshore
Brazil, partially offset by lower revenue in Guyana. Year on year,
revenue grew 11%, led by higher sales of production systems and
increased drilling in Brazil and increased intervention,
stimulation, and drilling activity in Argentina.
Europe & Africa revenue of $2.09 billion increased 3%
sequentially due to higher exploration, drilling, and production
activity offshore Angola, Namibia, the Republic of the Congo, and
Uganda and higher sales of production systems in Scandinavia and
Angola. Year on year, revenue grew 3% resulting from increased
exploration, drilling, and production activity offshore Africa.
Revenue in the Middle East & Asia of $2.84 billion
increased 8% sequentially driven by strong growth in Saudi Arabia,
the United Arab Emirates, Indonesia, China, Malaysia, Kuwait, and
Oman. This was a result of higher drilling, intervention,
stimulation, and evaluation activity, both on land and offshore.
Year on year, revenue increased 22%, driven by significant growth
across Saudi Arabia, the United Arab Emirates, Kuwait, and
Egypt.
North America
North America revenue of $1.64 billion decreased 6%
sequentially due to reduced drilling activity in US land and in the
US Gulf of Mexico. Offshore revenue declined as a result of lower
subsea sales and decreased drilling activity. Year on year, North
America revenue grew 6% led by strong land and offshore sales of
production systems and higher drilling activity, partially offset
by lower APS project revenue in Canada stemming from lower
commodity prices.
Third-Quarter Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue
International
$737
$712
$671
3%
10%
North America
242
234
229
4%
6%
Other
3
1
-
n/m
n/m
$982
$947
$900
4%
9%
Pretax operating income
$314
$322
$305
-2%
3%
Pretax operating margin
32.0%
34.0%
33.9%
-200 bps
-186 bps
n/m = not meaningful
Digital & Integration revenue of $982 million increased 4%
sequentially due to increased APS revenue in Ecuador and increased
digital revenue, which includes higher exploration data sales in
Angola, the US Gulf of Mexico, and Malaysia. Year on year, revenue
increased 9% due to strong growth in digital revenue, partially
offset by lower APS revenue in Canada.
Digital & Integration pretax operating margin of 32%
contracted 200 bps sequentially due to lower profitability in APS,
more than offsetting improved digital margins. Year on year, pretax
operating margin decreased 186 bps due to reduced profitability in
APS, which was impacted by lower commodity prices in Canada.
Reservoir Performance
(Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue
International
$1,554
$1,512
$1,335
3%
16%
North America
125
130
119
-4%
5%
Other
1
1
2
n/m
n/m
$1,680
$1,643
$1,456
2%
15%
Pretax operating income
$344
$306
$244
13%
41%
Pretax operating margin
20.5%
18.6%
16.7%
190 bps
376 bps
n/m = not meaningful
Reservoir Performance revenue of $1.68 billion grew 2%
sequentially primarily due to increased evaluation and stimulation
activity internationally. More than 70% of the revenue growth came
from Europe & Africa, mainly in offshore Angola, Namibia, and
the United Kingdom. Strong growth was also achieved in Saudi Arabia
from robust stimulation activity, offset by lower revenue in India.
Year on year, revenue grew 15% driven by double-digit growth across
all international areas, led by the Middle East & Asia
supported by higher intervention and stimulation activity.
Reservoir Performance pretax operating margin of 20% expanded
190 bps sequentially and 376 bps year on year, the highest level of
pretax operating margin in this cycle. These increases were
primarily driven by higher activity, pricing, and improved
operating leverage across evaluation and stimulation. New
technology deployment also contributed to the margin expansion,
particularly in the Middle East and West Africa.
Well Construction
(Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue
International
$2,707
$2,582
$2,406
5%
13%
North America
663
721
621
-8%
7%
Other
60
59
57
n/m
n/m
$3,430
$3,362
$3,084
2%
11%
Pretax operating income
$759
$731
$664
4%
14%
Pretax operating margin
22.1%
21.7%
21.5%
38 bps
58 bps
n/m = not meaningful
Well Construction revenue of $3.43 billion increased 2%
sequentially led by strong growth in the Middle East & Asia,
which was partially offset by lower revenue in North America. Year
on year, revenue increased 11%, driven by 25% growth in Middle East
& Asia due to very strong activity. This year-on-year increase
was driven mainly by strong measurements, fluids, and equipment
sales.
Well Construction pretax operating margin of 22% expanded 38 bps
sequentially driven by the international markets, mainly in Europe
& Africa and the Middle East & Asia. Year on year, pretax
operating margin expanded 58 bps with profitability improving in
measurements, fluids, and equipment sales as a result of higher
activity.
Production Systems
(Stated in millions)
Three Months Ended
Change
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Sequential
Year-on-year
Revenue
International
$1,740
$1,628
$1,569
7%
11%
North America
626
679
578
-8%
8%
Other
1
6
3
n/m
n/m
$2,367
$2,313
$2,150
2%
10%
Pretax operating income
$319
$278
$224
15%
42%
Pretax operating margin
13.5%
12.0%
10.4%
147 bps
305 bps
n/m = not meaningful
Production Systems revenue of $2.37 billion increased 2%
sequentially driven by strong sales of completions, artificial
lift, and surface production systems, partially offset by reduced
sales of midstream production systems. The strong international
sequential revenue growth was led by the Middle East & Asia,
with double-digit growth, followed by Latin America. North America
revenue declined due to lower subsea activity. Year on year,
revenue grew 10% due to strong activity in the Middle East &
Asia and Latin America, partially offset by a decline in Europe
& Africa.
Production Systems pretax operating margin expanded 147 bps
sequentially to 13%, its highest level in this cycle. The expansion
was driven primarily by higher sales of completions, artificial
lift, and surface production systems. Year on year, pretax
operating margin expanded 305 bps led by improved profitability in
completions, surface production systems, artificial lift, and
subsea production systems, and driven by an improved activity mix,
pricing, 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, Woodside awarded a significant contract to OneSubsea
for the supply of subsea trees and controls for the country’s first
deepwater subsea development. The contract scope is for Phase 1 of
the multiphase Trion project, and OneSubsea will deliver subsea
horizontal trees, controls, and topside equipment. The first
delivery of the equipment is expected in the fourth quarter of
2024, and first oil is targeted for 2028.
- In Nigeria, Shell Nigeria Exploration and Production Company
(SNEPCo) has awarded SLB a contract for provision of completion
equipment and associated services for 35 deepwater wells in the
Bonga Field.
- In Malaysia, SLB was awarded contracts by major customers for
the provision of drilling fluids and cementing over the next five
years for offshore operations. The contracts cover exploration and
development wells for various operators and span shallow- and
deepwater and high-temperature, high-pressure applications in East
and West Malaysia. SLB will provide technological solutions to
address the drilling challenges such as drilling depleted
reservoirs and wells with ultrahigh temperatures and pressures,
while continuing to decarbonize the operations.
- bp has signed a memorandum of understanding with Subsea
Integration Alliance (Alliance) aimed at developing a framework to
enhance subsea project performance. The agreement with the
Alliance, which comprises Subsea7 and OneSubsea, will combine the
skills, knowledge, and experience of the three companies across a
global portfolio of projects. The agreement will combine bp’s
experience to frame, build, and execute projects with the
Alliance’s capability to deliver integrated subsea production
systems and subsea umbilical, riser, and flowline systems. The team
will work together, from concept development through the full field
lifecycle, to support project delivery through new ways of working
and an innovative commercial model.
- In Egypt, Petrojet awarded SLB a contract for detailed
engineering, procurement, commissioning, and startup of the Meleiha
gas treatment plant, with further opportunities for operations and
maintenance in the future. The project is located in the Western
Desert and is owned by Agiba Petroleum Company, an Eni/EGPC joint
venture. Petrojet is the main engineering, procurement,
construction, and commissioning contractor. The project will adopt
a zero-flaring approach, in line with the SLB decarbonization
strategy.
Technology and Performance
Notable technology introductions and deployment in the quarter
include the following:
- SLB and Eni, through its subsidiary Enivibes, have announced an
alliance to deploy the e-vpms® Eni vibroacoustic pipeline
monitoring system, an innovative vibroacoustic wave detection
system capable of providing real-time analysis, monitoring, and
leak detection for pipelines around the world. Enivibes will bring
the new proprietary pipeline integrity technology to the global
market through SLB industry-leading digital expertise and
operations in more than 100 countries. The e-vpms technology can be
retrofitted to any pipeline, regardless of age, providing immediate
integrity data essential for maintaining a network’s continuously
reliable operation.
- In the United Arab Emirates, the introduction of the PeriScope
Edge™ multilayer mapping-while-drilling service in an offshore
field has enabled mapping the top of a target that could not
previously be mapped with confidence. The PeriScope Edge technology
improved the depth of investigation for mapping reservoir
boundaries and target intervals by 80%. This supported earlier and
more efficient decision making, which resulted in a smoother
wellbore with less undulation. The enhanced deep resistivity
measurements and a high-resolution inversion improved geosteering
and reservoir understanding to develop the offshore field.
- In southeastern Kuwait, the Kuwait Oil Company (KOC) increased
production by 900 barrels per day in the Mauddud carbonate, after
acquiring 3D far field sonic data with the SLB ThruBit™
through-the-bit logging service. Using the ThruBit service, KOC was
able to understand fracture geometry in a highly deviated well, to
quantify the target, and to detect fractures up to 95 feet from the
borehole in a complex well that lacked advanced logs. The critical
well data and a robust mechanical earth model enabled KOC to
optimize the stimulation job to increase production.
- In the Republic of the Congo, a successful five-well,
eight-stage acid stimulation campaign was performed for Perenco
deploying OpenPath Reach™ and OpenPath Sequence™ technologies via
the Greatship Ramya stimulation vessel. The campaign, a mix of
high-rate acid fracturing and matrix stimulation stages,
represented the first implementation of this technology for Perenco
worldwide. The main drivers for selecting SLB as a partner for
reviving mature offshore fields were operational efficiency and a
record of successful well stimulations. The operations were
completed a day ahead of schedule, and well performance from
initial flowback was deemed very promising, enabling Perenco to
achieve both key objectives.
- Offshore Norway, the Quest™ gyro-while-drilling service was run
for the first time globally with wired drillpipe (WDP) firmware.
The gyro surveys were taken over 29 connections on the Deepsea
Aberdeen semi-submersible rig without consuming rig time, thereby
saving almost 5 hours of rig time compared to conventional
mud-pulse telemetry surveys. The development of the WDP technology
was accelerated with the acquisition of Gyrodata in the first
quarter of 2023, with the one-year development plan being completed
within a few months.
Decarbonization and Transition Technologies™
SLB is focused on technologies that can reduce emissions and
environmental impact with practical, quantifiably proven solutions
in our Core operations and extending these to adjacent industries.
Examples include the following:
- SLB End-to-end Emissions Solutions (SEES) introduced its
next-generation methane point instrument, a self-installed
continuous methane monitoring system that uses IoT-enabled sensors
to quickly and cost effectively detect, locate, and quantify
emissions across oil and gas operations. Effective monitoring is
essential to reducing emissions of methane, a greenhouse gas (GHG)
that represents about half of the oil and gas sector’s operational
emissions. The methane point instrument provides operators with
industry-leading leak detection sensitivity, and the continuous
methane monitoring eliminates the need for manual data
collection.
- In the US, SEES delivered an evaluation to Chord Energy of
options for eliminating routine flaring. Focusing on sites
producing small volumes of rich gas in the Bakken, SEES helped to
identify, assess, and high-grade gas capture solutions based on
overall reduction in emissions with the least cost or best revenue
maximization. The SEES recommendation followed a rigorous
thermodynamic analysis and techno-economic review of emerging and
mature technologies for converting flared gas into a
commodity.
- In Pakistan, SLB received a contract award from Mari Petroleum
Company Limited (MPCL) for provision of CO2 separation membrane
technology in combination with life-of-field services. This project
includes the provision of CO2 removal membranes from natural gas,
commissioning, and field service, with future development and
installation of Process Live™ data-enriched performance services,
which provide digital insights and direct collaboration with SLB
subject matter experts. These services will focus on maximizing
treated gas production within the system, while predicting the CO2
membranes’ remaining useful life with early identification of
process upsets and optimization of membrane replacement cycles.
This first implementation of the Process Live digital application
in the Middle East & North Africa region will allow MPCL to
optimize the economic performance of the production network by
increasing uptime and reducing total membrane replacement
expenditure.
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 from the quarter include the following:
- SLB, Amazon Web Services (AWS), and Shell Global Solutions
Nederland BV (Shell) have signed a multiyear, three-way
collaboration agreement to deliver digital end-to-end workflows for
Shell, using SLB subsurface solutions on AWS cloud infrastructure.
The collaboration is intended to deliver high-performance and
cost-efficient subsurface digital solutions, to be used by Shell
and made available to the industry. The digital workflows will use
the OSDU® Data Platform standards to further improve the positive
customer experience by business users—increasing efficiency and
collaboration, while producing better insights to Shell and the
energy industry. This collaboration builds on the existing
strategic collaboration agreement between SLB and AWS and
accelerates the availability of SLB’s industry-leading software,
including Petrel™ subsurface solutions and Techlog™ wellbore
solutions, on AWS.
- SLB has signed a subsurface technology partnership with INEOS
Energy, the energy division of INEOS, a global chemical and
manufacturing company. INEOS Energy will partner with SLB to
collaborate and innovate subsurface technologies, including AI
capabilities, to help drive operational performance for continued
growth, new acquisitions, and carbon capture and sequestration
(CCS). Under the agreement, INEOS Energy will integrate the SLB
Delfi™ digital platform into its oil and gas operations, especially
subsurface, wells, transport, and monitoring. Integration of the
Delfi platform into current assets and new acquisitions represents
a critical element of INEOS Energy’s emissions-reducing CCS
strategy for a sustainable low-carbon future.
Digital Operations
Digital operations are gaining in maturity, transforming the way
operators develop and utilize assets. From automation to autonomous
operations, we are clearly seeing a positive inflection in the
deployment of digital operations with significant impacts on
efficiency and performance. Notable examples include the
following:
- In Kuwait, Kuwait Oil Company (KOC) has implemented a
successful proof-of-value project with SLB by deploying the Agora™
edge AI and IoT solutions on selected natural gas wells in the
Greater Burgan, the largest sandstone field complex in the world.
With the Agora technology, KOC can seamlessly integrate engineering
workflows, tailored precisely to KOC unique business and technical
requirements, eradicating the need for multiple platforms,
streamlining operations, and maximizing efficiency. KOC will also
be able to optimize production-related processes, reduce costs, and
drive significant improvements in the pilot project, which is
considered strategic for KOC digital transformation adoption.
- In Iraq, Kuwait Energy Basra Limited (KEBL) awarded SLB a
contract for a real-time drilling and production data and workflows
integration platform. The contract scope covers the digitalization
of drilling and production workflows and includes Agora technology
at the well/rig site and a Dataiku-powered AI platform at the
center of the system. The scope covers all current and future
producing wells and rig fleet in KEBL’s Block 9 expansion plans.
The project is built as a fit-for-purpose solution that will enable
KEBL to monitor and collaborate in real time and integrate diverse
data into one platform, allowing data analytics to enable better
decision making and intelligent surveillance.
- In Brunei, an operator deployed the first Agora visual
analytics solution for rig safety across its fleet of rigs after a
successful pilot that demonstrated a 35% reduction in at-risk
events. Edge computing and AI allow automatic detection of an
at-risk event when a person steps into the smart red zone on the
rig floor. During the pilot, the Agora solution resulted in the
identification of 10 times more at-risk events and a saving of 51
workdays per month compared to manual review of live video
streaming. The at-risk event data, which are viewable as still
photos and video clips, drive operational standard operating
procedure reviews and support safety learnings. The Agora visual
analytics scope was written into an existing contract and will
result in additional revenue over the remaining two years.
NEW ENERGY
SLB continues to participate in the global transition to
low-carbon energy systems through innovative technology and
strategic partnerships, including the following:
- SLB and TDA Research Inc. (TDA), a leading research firm,
entered into an exclusive agreement to codevelop and scale up TDA’s
emerging sorbent technologies for industrial carbon capture
applications across the power, cement, steel, and petrochemical
sectors. TDA’s emerging sorbent technologies address a broad range
of industrial CO2 emissions, from low- and high-concentration point
sources to direct air capture. These technologies have the
potential to significantly lower carbon capture–related capital and
operating costs by reducing equipment size and footprint,
simplifying associated process equipment, and lowering energy
requirements.
- SLB launched its carbon storage screening and ranking solution
that increases confidence in site selection decisions based on
scientific analysis of the long-term integrity and economic
potential of an asset. The solution helps customers avoid
suboptimal storage sites with risk factors that can waste valuable
time and resources as well as decrease the probability of a carbon
capture, utilization, and sequestration project reaching final
investment decision.
- In Louisiana, Strategic Biofuels has entered into an agreement
with SLB to provide carbon sequestration services for its Louisiana
Green Fuels (LGF) biofuel refinery project, supporting the
production of deeply carbon-negative fuels that will be powered by
an adjacent bioenergy with CCS (BECCS) power plant. SLB will
provide site de-risking and front-end engineering and design
services for the CCS complex that will be located on and around the
biofuel refinery and BECCS plant. The agreement includes provisions
for future services, including injection operations and long-term
CO2 monitoring. Once online, the LGF plant will have the capacity
to offset up to 1.36 million tons of CO2 emissions annually.
- In Canada, LithiumBank has engaged SLB to conduct detailed
subsurface reservoir modeling of the Leduc and Swan Hills
formations for an upcoming resource estimation and preliminary
economic assessment of the Park Place lithium brine project in
west-central Alberta. The SLB reservoir characterization will
include facies modeling, porosity and permeability modeling, and
interpretation of 57 kilometers of seismic lines. The detailed
reservoir modeling will provide a higher level of confidence in
future engineering and production designs and support the upcoming
resource estimation.
FINANCIAL TABLES
Condensed Consolidated Statement of Income
(Stated in millions, except per
share amounts)
Third Quarter
Nine Months
Periods Ended September 30,
2023
2022
2023
2022
Revenue
$8,310
$7,477
$24,145
$20,213
Interest & other income (1)
73
75
247
436
Expenses Cost of revenue
6,592
6,042
19,378
16,623
Research & engineering
186
160
524
456
General & administrative
81
94
268
277
Interest
129
122
373
369
Income before taxes (1)
$1,395
$1,134
$3,849
$2,924
Tax expense (1)
259
215
722
514
Net income (1)
$1,136
$919
$3,127
$2,410
Net income attributable to noncontrolling interests
13
12
36
33
Net income attributable to SLB (1)
$1,123
$907
$3,091
$2,377
Diluted earnings per share of SLB (1)
$0.78
$0.63
$2.14
$1.65
Average shares outstanding
1,424
1,418
1,424
1,414
Average shares outstanding assuming dilution
1,442
1,439
1,442
1,436
Depreciation & amortization included in expenses (2)
$579
$533
$1,703
$1,598
(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)
Sept. 30,
Dec. 31,
Assets
2023
2022
Current Assets Cash and short-term investments
$3,735
$2,894
Receivables
8,049
7,032
Inventories
4,305
3,999
Other current assets
949
1,078
17,038
15,003
Investment in affiliated companies
1,622
1,581
Fixed assets
6,875
6,607
Goodwill
13,111
12,982
Intangible assets
2,912
2,992
Other assets
4,255
3,970
$45,813
$43,135
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$9,222
$9,121
Estimated liability for taxes on income
935
1,002
Short-term borrowings and current portion of long-term debt
1,998
1,632
Dividends payable
373
263
12,528
12,018
Long-term debt
11,147
10,594
Postretirement benefits
166
165
Other liabilities
2,265
2,369
26,106
25,146
Equity
19,707
17,989
$45,813
$43,135
Liquidity
(Stated in millions)
Components of Liquidity
Sept. 30,
2023
Jun. 30,
2023
Sept. 30,
2022
Dec. 31,
2022
Cash and short-term investments
$3,735
$3,194
$3,609
$2,894
Short-term borrowings and current portion of long-term debt
(1,998)
(1,993)
(899)
(1,632)
Long-term debt
(11,147)
(11,342)
(12,452)
(10,594)
Net Debt (1)
$(9,410)
$(10,141)
$(9,742)
$(9,332)
Details of changes in liquidity follow:
Nine
Third
Nine
Months
Quarter
Months
Periods Ended September 30,
2023
2023
2022
Net income
$3,127
$1,136
$2,410
Charges and credits, net of tax (2)
(28)
-
(265)
3,099
1,136
2,145
Depreciation and amortization (3)
1,703
579
1,598
Stock-based compensation expense
218
58
236
Change in working capital
(1,353)
(67)
(1,814)
Other
(52)
(29)
(59)
Cash flow from operations
3,615
1,677
2,106
Capital expenditures
(1,345)
(464)
(1,046)
APS investments
(391)
(138)
(420)
Exploration data capitalized
(121)
(38)
(77)
Free cash flow (4)
1,758
1,037
563
Dividends paid
(961)
(356)
(600)
Stock repurchase program
(594)
(151)
-
Proceeds from employee stock plans
276
152
171
Business acquisitions and investments, net of cash acquired
(280)
(18)
(45)
Proceeds from sale of Liberty shares
137
-
513
Proceeds from sale of real estate
-
-
120
Taxes paid on net settled stock-based compensation awards
(162)
(18)
(92)
Other
(272)
(105)
(118)
(Increase) decrease in net debt before impact of changes in
foreign exchange rates
(98)
541
512
Impact of changes in foreign exchange rates on net debt
20
190
802
(Increase) decrease in Net Debt
(78)
731
1,314
Net Debt, beginning of period
(9,332)
(10,141)
(11,056)
Net Debt, end of period
$(9,410)
$(9,410)
$(9,742)
(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
third-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 provide useful
perspective on SLB’s underlying business results and operating
trends, and a means to evaluate SLB’s operations period over
period. 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)
Nine Months 2023
Pretax
Tax
Noncont.
Interests
Net
Diluted
EPS
SLB net income (GAAP basis)
$3,849
$722
$36
$3,091
$2.14
Gain on sale of Liberty shares
(36)
(8)
-
(28)
(0.02)
SLB net income, excluding charges & credits
$3,813
$714
$36
$3,063
$2.12
Nine Months 2022
Pretax
Tax
Noncont.
Interests
Net
Diluted
EPS *
SLB net income (GAAP basis)
$2,924
$514
$33
$2,377
$1.65
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
$2,639
$495
$33
$2,111
$1.47
There were no charges or credits during
the third quarters of 2023 and 2022 and during the second quarter
of 2023.
All Charges & Credits for the periods
above are classified in Interest & other income in the
Condensed Consolidated Statement of Income.
* Does not add due to rounding.
Divisions
(Stated in millions)
Three Months Ended
Sept. 30, 2023
Jun. 30, 2023
Sept. 30, 2022
Revenue
Income
Before
Taxes
Revenue
Income
Before
Taxes
Revenue
Income
Before
Taxes
Digital & Integration
$982
$314
$947
$322
$900
$305
Reservoir Performance
1,680
344
1,643
306
1,456
244
Well Construction
3,430
759
3,362
731
3,084
664
Production Systems
2,367
319
2,313
278
2,150
224
Eliminations & other
(149)
(53)
(166)
(56)
(113)
(37)
Pretax segment operating income
1,683
1,581
1,400
Corporate & other
(182)
(183)
(155)
Interest income(1)
20
19
8
Interest expense(1)
(126)
(124)
(119)
$8,310
$1,395
$8,099
$1,293
$7,477
$1,134
(Stated in millions)
Nine Months Ended Sept. 30, 2023
Sept. 30, 2022
Revenue
Income
Before
Taxes
Revenue
Income
Before
Taxes
Digital & Integration
$2,822
$901
$2,713
$976
Reservoir Performance
4,826
892
3,999
598
Well Construction
10,052
2,162
8,168
1,522
Production Systems
6,888
802
5,647
509
Eliminations & other
(443)
(102)
(314)
(151)
Pretax segment operating income
4,655
3,454
Corporate & other
(536)
(468)
Interest income(1)
57
13
Interest expense(1)
(363)
(360)
Charges & credits(2)
36
285
$24,145
$3,849
$20,213
$2,924
(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 (consisting 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 third quarter of 2023?
Cash flow from operations for the third
quarter of 2023 was $1.68 billion, and free cash flow was $1.04
billion.
3)
What was included in “Interest &
other income” for the third quarter of 2023?
“Interest & other income” for the
third quarter of 2023 was $73 million. This consisted of interest
income of $22 million and earnings of equity method investments of
$51 million.
4)
How did interest income and interest
expense change during the third quarter of 2023?
Interest income of $22 million for the
third quarter of 2023 increased $3 million sequentially. Interest
expense of $129 million increased $2 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 third quarter of 2023?
The ETR for the third quarter of 2023 was
18.6% as compared to 19.0% for the second quarter of 2023. There
were no charges or credits during the third and second quarters of
2023.
7)
How many shares of common stock were
outstanding as of September 30, 2023, and how did this change from
the end of the previous quarter?
There were 1.423 billion shares of common
stock outstanding as of September 30, 2023, and 1.421 billion
shares outstanding as of June 30, 2023.
(Stated in millions)
Shares outstanding at June 30, 2023
1,421
Shares issued under employee stock purchase plan
3
Shares issued to optionees, less shares exchanged
1
Vesting of restricted stock
1
Stock repurchase program
(3)
Shares outstanding at September 30, 2023
1,423
8)
What was the weighted average number of
shares outstanding during the third quarter of 2023 and second
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 1.424 billion during the third quarter of 2023 and
1.423 billion during the second 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)
Third Quarter
2023
Second Quarter
2023
Weighted average shares outstanding
1,424
1,423
Unvested restricted stock
16
17
Assumed exercise of stock options
2
2
Average shares outstanding, assuming dilution
1,442
1,442
9)
What was SLB’s adjusted EBITDA in the
third quarter of 2023, the second quarter of 2023, and the third
quarter of 2022, the nine months of 2023, and the nine months of
2022?
SLB’s adjusted EBITDA was $2.08 billion in
the third quarter of 2023, $1.96 billion in the second quarter of
2023, and $1.76 billion in the third quarter of 2022, and was
calculated as follows:
(Stated in millions)
Third
Quarter 2023
Second
Quarter 2023
Third
Quarter 2022
Net income attributable to SLB
$1,123
$1,033
$907
Net income attributable to noncontrolling interests
13
14
12
Tax expense
259
246
215
Income before taxes
$1,395
$1,293
$1,134
Depreciation and amortization
579
561
533
Interest expense
129
127
122
Interest income
(22)
(19)
(33)
Adjusted EBITDA
$2,081
$1,962
$1,756
SLB’s adjusted EBITDA was $5.830 billion
for the nine months ended September 30, 2023 and $4.539 billion for
the nine months ended September 30, 2022, and was calculated as
follows:
(Stated in millions)
Nine Months
2023
Nine Months
2022
Net income attributable to SLB
$3,091
$2,377
Net income attributable to noncontrolling interests
36
33
Tax expense
722
514
Income before taxes
$3,849
$2,924
Charges & credits
(36)
(285)
Depreciation and amortization
1,703
1,598
Interest expense
373
369
Interest income
(59)
(66)
Adjusted EBITDA
$5,830
$4,540
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 provides useful perspective on SLB’s underlying
business results and operating trends, and a means to evaluate
SLB’s operations period over period. 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 third quarter of
2023, the second quarter of 2023, and the third quarter of
2022?
The components of depreciation and
amortization expense for the third quarter of 2023, the second
quarter of 2023, and the third quarter of 2022 were as follows:
(Stated in millions)
Third Quarter
2023
Second Quarter
2023
Third Quarter
2022
Depreciation of fixed assets
365
$353
$343
Amortization of intangible assets
78
77
76
Amortization of APS investments
107
101
96
Amortization of exploration data costs capitalized
29
30
18
579
$561
$533
11)
What Divisions comprise SLB’s Core
business and what was their revenue and pretax operating income for
the nine months ended September 30, 2023 and 2022?
SLB’s Core business comprises Reservoir
Performance, Well Construction, and Production Systems. SLB’s Core
business revenue and pretax operating income for the nine months
ended September 30, 2023 and 2022 are calculated as follows:
(Stated in millions)
Nine Months Ended
Change
Sept. 30,
2023
Sept. 30,
2022
Revenue
Reservoir Performance
4,826
3,999
Well Construction
10,052
8,168
Production Systems
6,888
5,647
$21,766
$17,814
22%
Pretax Operating Income
Reservoir Performance
892
598
Well Construction
2,162
1,522
Production Systems
802
509
$3,856
$2,629
47%
Pretax Operating Margin
Reservoir Performance
18.5%
15.0%
Well Construction
21.5%
18.6%
Production Systems
11.7%
9.0%
17.7%
14.8%
295 bps
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, October 20, 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 November 20, 2023, by dialing +1
(866) 207-1041 within North America, or +1 (402) 970-0847 outside
North America, and providing the access code 1720594. 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 November
20, 2023.
This third-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 capital allocation plans, including dividend plans
and share repurchase programs; our APS projects, joint ventures,
and other alliances; 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 its 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 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/20231018866280/en/
Investors James R. McDonald – SVP, Investor Relations
& Industry Affairs, SLB Joy V. Domingo – Director of Investor
Relations, SLB Tel:+1 (713) 375-3535 Email:
investor-relations@slb.com
Media Josh Byerly – Vice President of Communications, SLB
Moira Duff – Director of External Communications, SLB Tel: +1 (713)
375-3407 Email: media@slb.com
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