SLB Announces First-Quarter 2024 Results, Targeting to Return $7 Billion to Shareholders Over 2024–2025
- Revenue of $8.71 billion increased 13% year on year
- GAAP EPS of $0.74 increased 14% year on year
- EPS, excluding charges and credits, of $0.75 increased 19% year on year
- Net income attributable to SLB of $1.07 billion increased 14% year on year
- Adjusted EBITDA of $2.06 billion increased 15% year on year
- Cash flow from operations was $327 million
- Board approved quarterly cash dividend of $0.275 per share
KUALA LUMPUR, Malaysia–(BUSINESS WIRE)–SLB (NYSE: SLB) today announced results for the first-quarter 2024.
First-Quarter Results
| (Stated in millions, except per share amounts) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential |
Year-on-year | |||||
| Revenue |
$8,707 |
$8,990 |
$7,736 |
-3% |
13% |
||||
| Income before taxes – GAAP basis |
$1,357 |
$1,433 |
$1,161 |
-5% |
17% |
||||
| Income before taxes margin – GAAP basis |
15.6% |
15.9% |
15.0% |
-35 bps |
58 bps |
||||
| Net income attributable to SLB – GAAP basis |
$1,068 |
$1,113 |
$934 |
-4% |
14% |
||||
| Diluted EPS – GAAP basis |
$0.74 |
$0.77 |
$0.65 |
-4% |
14% |
||||
|
|
|
||||||||
| Adjusted EBITDA* |
$2,057 |
$2,277 |
$1,788 |
-10% |
15% |
||||
| Adjusted EBITDA margin* |
23.6% |
25.3% |
23.1% |
-171 bps |
51 bps |
||||
| Pretax segment operating income* |
$1,649 |
$1,868 |
$1,391 |
-12% |
19% |
||||
| Pretax segment operating margin* |
18.9% |
20.8% |
18.0% |
-184 bps |
95 bps |
||||
| Net income attributable to SLB, excluding charges & credits* |
$1,082 |
$1,243 |
$906 |
-13% |
19% |
||||
| Diluted EPS, excluding charges & credits* |
$0.75 |
$0.86 |
$0.63 |
-13% |
19% |
||||
|
|
|
||||||||
| Revenue by Geography |
|
|
|||||||
| International |
$7,056 |
$7,292 |
$5,985 |
-3% |
18% |
||||
| North America |
1,598 |
1,641 |
1,698 |
-3% |
-6% |
||||
| Other |
53 |
57 |
53 |
n/m |
n/m |
||||
|
$8,707 |
$8,990 |
$7,736 |
-3% |
13% |
|||||
| *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 | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| Revenue by Division | |||||||||
| Digital & Integration |
$953 |
$1,049 |
$894 |
-9% |
7% |
||||
| Reservoir Performance |
1,725 |
1,735 |
1,503 |
-1% |
15% |
||||
| Well Construction |
3,368 |
3,426 |
3,261 |
-2% |
3% |
||||
| Production Systems |
2,818 |
2,944 |
2,207 |
-4% |
28% |
||||
| Other |
(157) |
(164) |
(129) |
n/m |
n/m |
||||
|
$8,707 |
$8,990 |
$7,736 |
-3% |
13% |
|||||
| Pretax Operating Income by Division |
|
|
|||||||
| Digital & Integration |
$254 |
$356 |
$265 |
-29% |
-4% |
||||
| Reservoir Performance |
339 |
371 |
242 |
-8% |
40% |
||||
| Well Construction |
690 |
770 |
672 |
-10% |
3% |
||||
| Production Systems |
400 |
442 |
205 |
-10% |
95% |
||||
| Other |
(34) |
(71) |
7 |
n/m |
n/m |
||||
|
$1,649 |
$1,868 |
$1,391 |
-12% |
19% |
|||||
| Pretax Operating Margin by Division |
|
|
|||||||
| Digital & Integration |
26.6% |
34.0% |
29.6% |
-735 bps |
-300 bps |
||||
| Reservoir Performance |
19.7% |
21.4% |
16.1% |
-170 bps |
356 bps |
||||
| Well Construction |
20.5% |
22.5% |
20.6% |
-198 bps |
-11 bps |
||||
| Production Systems |
14.2% |
15.0% |
9.3% |
-84 bps |
490 bps |
||||
| Other |
n/m |
n/m |
n/m |
n/m |
n/m |
||||
|
18.9% |
20.8% |
18.0% |
-184 bps |
95 bps |
|||||
| n/m = not meaningful | |||||||||
Exciting Start to the Year
SLB CEO Olivier Le Peuch commented, “We have had an exciting start to the year with our announced agreement to acquire ChampionX Corporation (ChampionX), which will bolster our production and recovery portfolio. We also continued our growth momentum, with a strong first-quarter performance resulting from robust year-on-year revenue and EBITDA growth consistent with our first quarter and full-year guidance.
“Compared to the same quarter last year, revenue increased 13%, EPS (excluding charges and credits) rose 19% to $0.75, adjusted EBITDA grew 15%, and adjusted EBITDA margin expanded year on year for the 13th consecutive quarter. Approximately half of the year-on-year revenue increase came from the Aker subsea business, which was added as part of our OneSubsea joint venture in the fourth quarter of 2023.
“International revenue grew 18% year on year, compensating for a softer North American market where revenue declined 6%. Excluding the contribution of the Aker subsea business, international revenue grew 10%.
“During the quarter, we continued to benefit from our favorable exposure to the international markets, with remarkable year-on-year growth of 29% in the Middle East & Asia, in addition to growth of 18% in Europe & Africa.
“Sequentially, revenue declined 3% both in North America and in the international markets due to seasonality. However, this impact was less pronounced than in prior years as robust activity gains partially offset seasonal effects.
“I want to extend my appreciation to the SLB team for achieving these outstanding results. I look forward to building on this momentum in the coming quarters.”
First Quarter Powered by the Core
“Our Core business—comprising Reservoir Performance, Well Construction, and Production Systems—achieved revenue growth of 13% year on year and expanded pretax segment operating margin by more than 200 basis points (bps). This growth was supported by investments in long-cycle developments and production capacity expansions, particularly in the Middle East & Asia and Latin America.
“Production Systems revenue grew 28% year on year driven by the acquired Aker subsea business. Excluding the contribution of the Aker subsea business, Production Systems revenue grew 6% driven by a double-digit increase in international revenue resulting from higher sales of completions, surface production systems, and artificial lift. Reservoir Performance revenue increased 15% year on year due to increased stimulation, evaluation, and intervention services across all areas on land and offshore and from both exploration and production activity. Well Construction grew 3% year on year driven by a 9% increase in international revenue, led by Middle East & Asia but partially offset by reduced activity in North America.”
Revenue Growth, Margin Expansion, and Returns to Shareholders
“We remain confident in our global revenue growth outlook for 2024, with softness in North America being offset by upside in the international markets. The dynamics of this cycle remain intact, with international and offshore growth taking place across all geographies, benefiting all of our Divisions as we continue to be awarded new contracts, enhancing the quality and longevity of our revenue backlog.
“Our journey of margin expansion continues to be driven by tight service and equipment capacity internationally, increased technology adoption, and further operational efficiency. As a result, we affirm our previous guidance of mid-teens EBITDA growth for the full year.
“Turning specifically to the second quarter, we expect a seasonal rebound in activity in the Northern Hemisphere coupled with robust activity internationally, led by the Middle East, Asia, and Africa. This will drive broad sequential margin expansion across all Divisions and geographies.
“Based on our strong start to the year, confidence in our ability to generate robust cash flows, and the anticipated contribution of the announced ChampionX acquisition, we are targeting to return $7 billion to shareholders over the next two years. This represents a target for returns to shareholders of $3 billion in 2024 and $4 billion in 2025.”
The Momentum Continues
“The oil and gas industry continues to benefit from strong market fundamentals driven by a growing demand outlook. This is resulting in a significant baseload of activity, particularly in the international and offshore markets, closely aligned with the strengths of our business. As the cycle persists, we expect operators to increase their investments in production and reservoir recovery, with the goal of maximizing the efficiency and longevity of their producing assets. This will result in operating expenditures becoming an increasing part of global upstream spending over time.
“We are already benefiting from these investments, and our recently announced agreement to acquire ChampionX will position us to further capture this growing opportunity through the addition of a leading production chemicals portfolio and a complementary artificial lift offering. We look forward to harnessing the strong capabilities of ChampionX to deliver superior performance for our customers.
“There also continues to be a growing emphasis across the industry on emissions reduction. This is presenting an exciting new market for lower-carbon technologies and carbon capture and sequestration (CCS), where we are positioned very well, as exemplified by the expansion of our CCS portfolio with our recent announcement of our agreement to acquire a majority ownership stake in Aker Carbon Capture.
“All in all, the dynamics of the cycle continue to reinforce our strategy and outlook for the future. I look forward to continuing to deliver exceptional service for our customers and results for our stockholders throughout the year.”
Other Events
During the quarter, SLB repurchased 5.4 million shares of its common stock at an average price of $50.13 per share for a total purchase price of $270 million.
On March 27, 2024, SLB announced an agreement to combine its carbon capture business with Aker Carbon Capture (OSE: ACC) to support accelerated industrial decarbonization at scale. Bringing together complementary technology portfolios, leading process design expertise, and an established project delivery platform, the combination will leverage Aker Carbon Capture’s commercial carbon capture product offering and SLB’s new technology developments and industrialization capability. It will create a vehicle for accelerating the introduction of disruptive early-stage technology into the global market on a commercial, proven platform. Following the transaction, SLB will own 80% of the combined business and ACC will own 20%. The transaction is subject to regulatory approvals and other customary closing conditions and is anticipated to close in the second quarter of 2024.
On April 2, 2024, SLB and ChampionX Corporation (NASDAQ: CHX) announced a definitive agreement for SLB to purchase ChampionX in an all-stock transaction. Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share. At the closing of the transaction, ChampionX shareholders will own approximately 9% of SLB’s outstanding shares of common stock. SLB expects to realize annual pretax synergies of approximately $400 million within the first three years post-closing through incremental revenue and cost savings. The transaction is subject to ChampionX shareholders’ approval, regulatory approvals, and other customary closing conditions. It is anticipated that the closing of the transaction will occur before the end of 2024.
On April 19, 2024, SLB’s Board of Directors approved a quarterly cash dividend of $0.275 per share of outstanding common stock, payable on July 11, 2024, to stockholders of record on June 5, 2024.
First-Quarter Revenue by Geographical Area
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| North America |
$1,598 |
$1,641 |
$1,698 |
-3% |
-6% |
||||
| Latin America |
1,654 |
1,722 |
1,617 |
-4% |
2% |
||||
| Europe & Africa* |
2,322 |
2,429 |
1,974 |
-4% |
18% |
||||
| Middle East & Asia |
3,080 |
3,141 |
2,394 |
-2% |
29% |
||||
| Eliminations & other |
53 |
57 |
53 |
n/m |
n/m |
||||
|
$8,707 |
$8,990 |
$7,736 |
-3% |
13% |
|||||
|
|
|
||||||||
| International |
$7,056 |
$7,292 |
$5,985 |
-3% |
18% |
||||
| North America |
$1,598 |
$1,641 |
$1,698 |
-3% |
-6% |
||||
| *Includes Russia and the Caspian region | |||||||||
| n/m = not meaningful | |||||||||
International
Revenue in Latin America of $1.65 billion increased 2% year on year due to higher sales of production systems in Brazil and robust drilling activity in Argentina, partially offset by reduced drilling revenue in Mexico. Sequentially, revenue decreased 4% due to lower drilling revenue in Mexico and reduced Asset Performance Solutions (APS) revenue in Ecuador.
Europe & Africa revenue of $2.32 billion increased 18% year on year with growth driven by the acquired Aker subsea business, primarily in Scandinavia. The growth was further boosted by intensified offshore exploration, drilling, and production activity in West Africa. Sequentially, revenue decreased 4% due to seasonal activity reductions, mainly in Europe and Scandinavia.
Revenue in the Middle East & Asia of $3.08 billion increased 29% year on year due to higher drilling, intervention, and evaluation activity in Saudi Arabia, Egypt, United Arab Emirates, Oman, Kuwait, and across Southeast Asia and Australia. Sequentially, revenue decreased 2% due to seasonally lower activity and the absence of year-end product sales.
North America
North America revenue of $1.60 billion decreased 6% year on year due to reduced drilling activity in US land and lower APS revenue in Canada, while offshore revenue was flat. Sequentially, North America revenue decreased 3% on lower sales of production systems in the US Gulf of Mexico while revenue in US land was essentially flat.
First-Quarter Results by Division
Digital & Integration
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| Revenue |
|
||||||||
| International |
$717 |
$790 |
$642 |
-9% |
12% |
||||
| North America |
236 |
257 |
251 |
-8% |
-6% |
||||
| Other |
– |
2 |
1 |
n/m |
n/m |
||||
|
$953 |
$1,049 |
$894 |
-9% |
7% |
|||||
|
|
|
||||||||
| Pretax operating income |
$254 |
$356 |
$265 |
-29% |
-4% |
||||
| Pretax operating margin |
26.6% |
34.0% |
29.6% |
-735 bps |
-300 bps |
||||
| n/m = not meaningful | |||||||||
Digital & Integration revenue of $953 million increased 7% year on year as a result of growth in digital sales in the international markets while APS revenue was flat year on year. Sequentially, revenue experienced a seasonal decline of 9% following strong year-end digital sales.
Digital & Integration pretax operating margin of 27% contracted 300 bps year on year and 735 bps sequentially. The pretax operating margin decreased year on year due to the effects of higher APS amortization expense and lower gas prices. Sequentially, pretax operating margin contracted primarily due to seasonally lower digital sales.
Reservoir Performance
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$1,592 |
$1,611 |
$1,380 |
-1% |
15% |
||||
| North America |
130 |
123 |
120 |
6% |
8% |
||||
| Other |
3 |
1 |
3 |
n/m |
n/m |
||||
|
$1,725 |
$1,735 |
$1,503 |
-1% |
15% |
|||||
|
|
|
||||||||
| Pretax operating income |
$339 |
$371 |
$242 |
-8% |
40% |
||||
| Pretax operating margin |
19.7% |
21.4% |
16.1% |
-170 bps |
356 bps |
||||
| n/m = not meaningful | |||||||||
Reservoir Performance revenue of $1.72 billion grew 15% year on year due to increased stimulation, evaluation, and intervention services across all areas on land and offshore and from both exploration and production activity. More than 70% of the revenue growth was recorded in the Middle East & Asia. Sequentially, revenue decreased 1% as the seasonal activity reductions in Russia and Asia were partially offset by activity increases in the Middle East, North America, and Europe & Africa.
Reservoir Performance pretax operating margin of 20% expanded 356 bps year on year with profitability improving across the international markets driven by higher activity and improved pricing from increased technology intensity in evaluation and stimulation. Sequentially, pretax operating margin contracted 170 bps as a result of the seasonal revenue decline in intervention activity internationally.
Well Construction
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$2,707 |
$2,748 |
$2,493 |
-1% |
9% |
||||
| North America |
604 |
614 |
711 |
-2% |
-15% |
||||
| Other |
57 |
64 |
57 |
n/m |
n/m |
||||
|
$3,368 |
$3,426 |
$3,261 |
-2% |
3% |
|||||
|
|
|
||||||||
| Pretax operating income |
$690 |
$770 |
$672 |
-10% |
3% |
||||
| Pretax operating margin |
20.5% |
22.5% |
20.6% |
-198 bps |
-11 bps |
||||
| n/m = not meaningful | |||||||||
Well Construction revenue of $3.37 billion increased 3% year on year driven by strong international activity, primarily in the Middle East & Asia, partially offset by declining revenue in North America and Latin America. Sequentially, revenue was 2% lower due to seasonal activity reductions across all areas.
Well Construction pretax operating margin of 20% was essentially flat year on year, expanding internationally due to robust activity increases in measurements and fluids, but partially offset by margin contraction in North America. Sequentially, pretax operating margin contracted 198 bps due to the seasonal decline in activity.
Production Systems
| (Stated in millions) | |||||||||
| Three Months Ended | Change | ||||||||
| Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Sequential | Year-on-year | |||||
| Revenue | |||||||||
| International |
$2,164 |
$2,276 |
$1,574 |
-5% |
37% |
||||
| North America |
647 |
666 |
626 |
-3% |
3% |
||||
| Other |
7 |
2 |
7 |
n/m |
n/m |
||||
|
$2,818 |
$2,944 |
$2,207 |
-4% |
28% |
|||||
|
|
|
||||||||
| Pretax operating income |
$400 |
$442 |
$205 |
-10% |
95% |
||||
| Pretax operating margin |
14.2% |
15.0% |
9.3% |
-84 bps |
490 bps |
||||
| n/m = not meaningful | |||||||||
Production Systems revenue of $2.82 billion increased 28% year on year, mainly due to the acquisition of the Aker subsea business. Excluding the effects of the Aker subsea acquisition, revenue grew 6% year on year driven by double-digit international sales. Organic year-on-year growth was led by strong international sales of completions, surface production systems, and artificial lift, partially offset by reduced sales of midstream production systems. The sequential revenue decline was driven by seasonally lower sales of subsea production systems, artificial lift, and midstream production systems.
Production Systems pretax operating margin expanded 490 bps year on year due to improved profitability in subsea production systems, completions, surface production systems, and artificial lift driven by activity mix, execution efficiency, and conversion of improved-price backlog. Sequentially, pretax operating margin contracted due to seasonally lower sales.
Quarterly Highlights
CORE
Contract Awards
SLB continues to win new contract awards that align with SLB’s core strengths, particularly in the international and offshore basins. Notable highlights include the following:
- In Brazil, SLB secured an integrated drilling contract in the Búzios, Atapu, and Sepia fields. The three-year scope, from 2025 to 2028, includes drilling services, drill bits and fluids, mudlogging, managed-pressure-while-drilling wireline services, cementing, fishing and remediation tools, and wellbore cleanup.
- Also in Brazil, Petrobras awarded SLB a technology framework agreement to develop an autonomous light workover intervention system that will eliminate the need for a deepwater rig. This two-and-a-half-year contract will be locally developed and will determine the feasibility of a cost-effective platform to execute light interventions offshore.
- In Libya, Arkenu awarded SLB an Integrated Production Services contract with a minimum term of eight years. With a scope of more than 150 wells, operations will include reactivating shut-in wells, drilling reentries/sidetracks, and upgrading existing surface facilities. These initiatives expand SLB offerings in the country for optimizing oil and gas production in a cost-effective and sustainable manner.
- Also in Libya, Mabruk Oil Operations awarded SLB a second three-year contract to deploy an “express” early production facility (EPF). As a key part of the Production ExPRESS™ rapid production response solutions portfolio, the express EPF will mobilize existing, fit-for-purpose SLB technologies, enabling the operator to fast-track the production of 25,000 barrels per day, reducing cash flow exposure while dealing with unknown reservoir dynamics. The integration of zero-flaring technology in Production ExPRESS solutions aids in compliance with regulatory requirements and reduces the environmental impact of production facilities.
- In Iraq, Eni Iraq BV awarded SLB two contracts for integrated well construction services, which will start by the second quarter of 2024. The scope of the first contract, a rollover of a current contract, includes 18 wells with two rigs. The scope of the second contract covers 16 wells with two additional rigs.
- In Oman, bp has awarded a substantial contract extension to SLB for the provision of stimulation services. The five-year extension reflects the strong partnership and mutual agreement to continue collaborating on efficiency and sustainability roadmaps. These initiatives aim to reduce upstream stimulation services sector emissions, demonstrating our shared commitment to environmental stewardship and sustainable practices.
- In the Philippines, Prime Energy Resources Development B.V. awarded OneSubsea a contract for the supply of subsea production systems for the Malampaya gas field expansion. The contract scope is for Phase 4 of the Malampaya development inclusive of all hardware for the addition of two new wells. OneSubsea will deliver capital-efficient, standard configurable systems comprising subsea trees, wellheads, and controls. The first delivery of equipment is expected in December 2024, with field development goals targeted to deliver first gas in 2026.
- In Malaysia, two national oil companies awarded contracts to SLB for work for the two-year period 2024–2025. These contracts cover well testing and tubing-conveyed perforating completion work for exploration offshore Malaysia.
Technology and Performance
Notable technology introductions and deployment in the quarter include the following:
- In Guyana, SLB technologies set a new standard for performance in an open-water-work campaign for ExxonMobil Guyana. Advanced SLB tools deployed in the 13-well campaign improved the rate of penetration by 60%, reduced the time for gyro surveys by 85%, and improved steering by 20%. The campaign saw the first use of a 26-inch polycrystalline diamond cutter bit in Guyana, the application of the GyroLink™ definitive gyro-while-drilling service, and the first global implementation of a nine-inch DynaForce™ high-performance drilling motor integrated with the DynaPower XE™ extreme-environment motor elastomer in the PowerDrive vorteX™ powered rotary steerable system. The first use in Guyana of an AccuStrike™ short-makeup drill bit expanded the performance capabilities in complex trajectory wells.
- Also in Guyana, the SLB SureRock™ enhanced sidewall coring solution was utilized as a key enabler to avoid drilling a bypass well for whole core in the Stabroek Block. Using advanced digital capabilities and real-time insights from nearby wells, ExxonMobil Guyana Limited (EMGL) and SLB established an efficient strategy that acquired 118 sidewall cores in only two runs, representing a recovery rate of 96%. Through elimination of the bypass well, EMGL saved 15 days of rig time, equating to 2,550 metric tons of CO2 emissions, while achieving all formation evaluation objectives.
- In Norway, SLB innovative technology solutions and commitment to excellence were integral in supporting Aker BP in drilling the longest exploration well in Norway with more than 6,000 meters drilled in the reservoir. This cooperation resulted in technological milestones that enabled drilling horizontally for long intervals in the reservoir and acquiring a large volume of data critical to the field development while supporting a significant oil discovery.
- In Thailand, a production enhancement campaign using the ReSOLVE iX™ intelligent extreme wireline intervention service successfully restored production in four offshore gas wells experiencing scale issues. The tool’s downhole sensors enabled real-time monitoring of scale milling performance at high temperatures. Deployment of the tool on electric wireline lowered overall operational cost and the carbon footprint.
- In Indonesia, SLB contributed to the success of Mubadala Energy’s Layaran-1 exploration well with bundled services that included well construction, reservoir performance analysis, and a subsea landing string. The deployment of the full deepwater services package in high-temperature operations proved the robustness and value of these high-end technologies. This was Mubadala Energy’s first deepwater well in a field that is estimated to contribute an additional six trillion cubic feet to Indonesia’s gas reserves.
Decarboniz
Contacts
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
