SLB Announces Second-Quarter 2023 Results
- 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
PARIS–(BUSINESS WIRE)–SLB (NYSE: SLB) today announced results for the second-quarter 2023.
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 |
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(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 |
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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.
Contacts
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
Media Contacts:
Josh Byerly – Vice President of Communications
Moira Duff – Director of External Communications
Office +1 (713) 375-3407
