- Revenue of $7.7 billion increased 30% year on year
- GAAP EPS of $0.65 increased 81% year on year
- EPS, excluding charges and credits, of $0.63 increased 85% year
on year
- Net income attributable to SLB of $934 million increased 83%
year on year
- Adjusted EBITDA of $1.8 billion increased 43% year on year
- Cash flow from operations was $330 million
- Board approved quarterly cash dividend of $0.25 per share
SLB (NYSE: SLB) today announced results for the first-quarter
2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230419006045/en/
The exterior of the SLB corporate
headquarters, Houston. (Photo: Business Wire)
First-Quarter Results
(Stated in millions, except per share amounts)
Three Months
Ended Change Mar. 31,2023 Dec. 31,2022 Mar.
31,2022
Sequential Year-on-year Revenue
$7,736
$7,879
$5,962
-2%
30%
Income before taxes - GAAP basis
$1,161
$1,347
$638
-14%
82%
Income before taxes margin - GAAP basis
15.0%
17.1%
10.7%
-208 bps 432 bps Net income attributable to SLB - GAAP basis
$934
$1,065
$510
-12%
83%
Diluted EPS - GAAP basis
$0.65
$0.74
$0.36
-12%
81%
Adjusted EBITDA*
$1,788
$1,921
$1,254
-7%
43%
Adjusted EBITDA margin*
23.1%
24.4%
21.0%
-127 bps 208 bps Pretax segment operating income*
$1,391
$1,557
$894
-11%
56%
Pretax segment operating margin*
18.0%
19.8%
15.0%
-178 bps 298 bps Net income attributable to SLB, excluding
charges & credits*
$906
$1,026
$488
-12%
86%
Diluted EPS, excluding charges & credits*
$0.63
$0.71
$0.34
-11%
85%
Revenue by Geography International
$5,985
$6,194
$4,632
-3%
29%
North America
1,698
1,633
1,282
4%
32%
Other
53
52
48
n/m
n/m
$7,736
$7,879
$5,962
-2%
30%
*These are non-GAAP financial measures. See sections titled
"Charges & Credits", "Divisions", and "Supplemental
Information" for details. n/m = not meaningful (Stated in millions)
Three Months Ended Change Mar. 31,2023 Dec.
31,2022 Mar. 31,2022
Sequential Year-on-year
Revenue by
Division Digital & Integration
$894
$1,012
$857
-12%
4%
Reservoir Performance
1,503
1,554
1,210
-3%
24%
Well Construction
3,261
3,229
2,398
1%
36%
Production Systems
2,207
2,215
1,604
-
38%
Other
(129)
(131)
(107)
n/m
n/m
$7,736
$7,879
$5,962
-2%
30%
Pretax Operating Income by Division Digital &
Integration
$265
$382
$292
-31%
-9%
Reservoir Performance
242
282
160
-14%
52%
Well Construction
672
679
388
-1%
73%
Production Systems
205
238
114
-14%
80%
Other
7
(24)
(60)
n/m
n/m
$1,391
$1,557
$894
-11%
56%
Pretax Operating Margin by Division Digital &
Integration
29.6%
37.7%
34.0%
-810 bps -440 bps Reservoir Performance
16.1%
18.2%
13.2%
-207 bps 291 bps Well Construction
20.6%
21.0%
16.2%
-44 bps 444 bps Production Systems
9.3%
10.8%
7.1%
-148 bps 217 bps Other
n/m
n/m
n/m
n/m
n/m
18.0%
19.8%
15.0%
-178 bps 298 bps n/m = not meaningful
Strong Growth and Broad-Based Attributes
SLB CEO Olivier Le Peuch commented, “I am very pleased with our
start to 2023. We delivered strong year-over-year revenue growth
and margin expansion at a scale that instills further confidence in
our full-year financial ambition. The quarter was defined by strong
activity dynamics offshore and in the broader international basins,
most notably in Well Construction and Production Systems.
“Compared to the same period last year, revenue grew 30%;
adjusted EBITDA increased 43%; EPS—excluding charges and
credits—increased 85%; and pretax segment operating margin expanded
298 basis points (bps). All Divisions grew, both in North America
and in the international markets, reflecting the strength of our
portfolio across geographies and business lines. Revenue growth
surpassed rig count growth both in North America and
internationally—representing the highest year-on-year quarterly
growth in more than a decade.
“Sequentially, revenue grew 4% in North America, our eighth
consecutive quarter of growth, benefiting from our exposure to the
most resilient basins and market segments. Internationally, the
sequential revenue decline was less pronounced than historical
trends as seasonal effects were partially offset by robust activity
gains.
“We continue to see positive pricing as our performance
differentiates, technology adoption increases, contract terms are
adjusted to offset inflation, and service capacity continues to
tighten in key international markets. In this environment, our
customers are more actively collaborating with us to improve their
operational performance, attain decarbonization objectives, and
lower overall costs through the increased use of our differentiated
technologies.
“First-quarter cash flow from operations was $330 million,
reflecting the seasonal first-quarter buildup of working capital
that will support our anticipated growth for the year and the
payment of our annual incentives. Free cash flow generation is
expected to accelerate throughout the year, consistent with
historical trends.
Great Start to the Year Anchored on a Very Solid Core
“Year over year, our Core Divisions collectively grew by 34% and
expanded operating margins by more than 300 bps. Each of the three
Core Divisions delivered very strong growth and expanded
margins—driven by increased activity, pricing, and technology
adoption.
“In our Core, we continue to leverage the industry’s most
comprehensive technology portfolio with disruptive fit-for-basin
technologies, advanced digital solutions, and an unmatched ability
to integrate across the entire value chain—from subsurface to
midstream.
“In our Digital & Integration Division, digital sales posted
strong year-on-year growth that is on track with our strategic
ambition as we continue to secure new contracts and accelerate
cloud and edge solutions. However, the increase in digital sales
during the quarter was largely offset by a decline in Asset
Performance Solutions (APS) revenue, arising from production
interruptions in Ecuador and lower revenue from our Palliser asset
in Canada.
A Resilient Cycle—Powered by the International and Offshore
Markets
“Looking at the macro, we maintain our very constructive
multiyear outlook as the upcycle attributes and key activity
drivers continue to evolve very positively. The international and
offshore markets continue to experience a strong resurgence of
activity driven by resilient long-cycle development and capacity
expansion projects. In contrast, the North American land market,
which has led this upcycle in the early innings, could potentially
result in an activity plateau in 2023 due to lower gas prices and
capital restraint by private E&P operators.
“On balance, the global activity outlook for the full year
remains very solid. Through the first quarter, the resilience,
breadth, and durability of this upcycle have become more evident,
particularly in the international markets. These attributes are
highlighted by the following factors.
“First, there is broader recognition of the positive long-term
demand outlook for oil and gas and the potential for a stronger
demand rebound in the second half of the year. In addition, recent
OPEC+ decisions continue to keep commodity prices at supportive
levels—providing operators increased confidence to execute their
projects.
“Second, broad-based investments to expand oil capacity and
diversify gas supply have been reinforced by the capex plans
recently announced by major IOCs and NOCs. Most of the announced
budgets highlight a significant increase in spending that supports
multiyear activity growth in key resource basins all over the
world. In fact, we expect investments will become even more
extensive internationally as the pursuit of supply diversity
remains a global priority and gathers greater urgency.
“And third, the durability of the current cycle is underscored
by the nature of the ongoing investments with the emergence of gas
as a long-term energy transition fuel and enabler of energy
security, the prominence of long-cycle projects, and the pivot to
the Middle East and offshore basins as the anchors of supply
growth. Finally, the return of global exploration and appraisal
will likely extend this cycle of investment for a number of
years.
“Taken together, these market dynamics play to our strengths and
create an advantaged position for SLB. Our strategy, global
footprint, unique integration capabilities, and portfolio actions
have strengthened our ability to support our customers.
Sequential Revenue Growth and Margin Expansion Ahead
“Looking ahead to the second quarter, we expect strong growth
with seasonal recovery in the Northern Hemisphere, capacity
expansion projects in the Middle East that are in various stages of
ramp-up, and robust activity in Asia and Sub-Sahara Africa. This
growth scenario provides support for broad sequential margin
expansion across the Divisions and geographies.
“I am excited about our start to the year, which gives us even
further confidence in our full-year 2023 and through-cycle targets.
We are laser-focused on execution, supporting our customers, and
delivering on our goals for the year.
“I would like to thank our team for delivering these strong
results and performing for our customers and stakeholders.”
Other Events
During the quarter, SLB repurchased approximately 4.4 million
shares of its common stock at an average price of $52.65 per share
for a total purchase price of $230 million.
On February 3, 2023, SLB completed the acquisition of Gyrodata
Incorporated, a global company specializing in gyroscopic wellbore
positioning and survey technology. The transaction incorporates
Gyrodata’s wellbore placement and surveying technologies within
SLB’s Well Construction business, further enhancing its ability to
deliver innovative drilling solutions to customers.
On April 20, 2023, SLB’s Board of Directors approved a quarterly
cash dividend of $0.25 per share of outstanding common stock,
payable on July 13, 2023, to stockholders of record on June 7,
2023.
First-Quarter Revenue by Geographical Area
(Stated in millions)
Three Months Ended Change
Mar. 31,2023 Dec. 31,2022 Mar. 31, 2022
Sequential
Year-on-year North America
$1,698
$1,633
$1,282
4%
32%
Latin America
1,617
1,619
1,204
-
34%
Europe & Africa
1,974
2,067
1,404
-5%
41%
Middle East & Asia
2,394
2,508
2,024
-5%
18%
Eliminations & other
53
52
48
n/m
n/m
$7,736
$7,879
$5,962
-2%
30%
International
$5,985
$6,194
$4,632
-3%
29%
North America
$1,698
$1,633
$1,282
4%
32%
n/m = not meaningful
International
Revenue in Latin America of $1.6 billion increased 34%
year on year due to robust drilling activity and improved pricing,
higher sales of offshore production systems in Brazil and Guyana,
and increased stimulation work in Argentina. Sequentially, revenue
was essentially flat as higher drilling activity was offset by
reduced APS revenue in Ecuador due to production interruptions.
Europe & Africa revenue of $2.0 billion grew 41% year
on year primarily from higher sales of production systems in Europe
and Scandinavia and increased exploration and production activity
offshore Africa. Sequentially, revenue decreased 5% primarily
driven by Russia. Excluding Russia, revenue grew 2% sequentially
due to higher drilling activity from new projects in Angola, Gabon,
and Namibia and increased sales of production systems in
Europe.
Revenue in the Middle East & Asia of $2.4 billion
increased 18% year on year due to higher drilling, intervention,
and evaluation activity in Saudi Arabia, United Arab Emirates,
Qatar, and Oman and across Southeast Asia and Australia.
Sequentially, revenue decreased 5% due to seasonally lower activity
in Asia, weather-impacted stimulation activity in Saudi Arabia, and
reduced sales of production systems across the area following the
strong year-end sales in the previous quarter.
North America
North America revenue of $1.7 billion grew 32% year on
year due to strong land and offshore drilling and higher sales of
production systems. US land revenue increased, driven by Well
Construction revenue growth that outperformed the rig count growth,
in addition to higher Production Systems revenue. North America
offshore revenue grew due to increases in drilling activity,
exploration data licensing sales, and sales of subsea production
systems in the US Gulf of Mexico. Sequentially, North America
revenue increased 4% due to higher land and offshore drilling and
increased sales of subsea production systems, which were partially
offset by lower APS revenue in Canada. Revenue from both Well
Construction and Production Systems grew 9% sequentially.
First-Quarter Results by Division
Digital & Integration
(Stated in millions)
Three Months Ended Change
Mar. 31,2023 Dec. 31,2022 Mar. 31,2022
Sequential
Year-on-year Revenue International
$642
$723
$631
-11%
2%
North America
251
288
225
-13%
11%
Other
1
1
1
n/m
n/m
$894
$1,012
$857
-12%
4%
Pretax operating income
$265
$382
$292
-31%
-9%
Pretax operating margin
29.6%
37.7%
34.0%
-810 bps -440 bps n/m = not meaningful
Digital & Integration revenue of $894 million increased 4%
year on year as a result of continued growth in digital sales and
increased exploration data license sales in the US Gulf of Mexico,
which were partially offset by lower revenue from APS projects.
Sequentially, revenue declined 12% due to lower revenue from APS
projects and seasonally lower sales of digital and exploration data
licenses following strong year-end sales. The APS revenue decline
resulted primarily from a temporary production interruption in our
projects in Ecuador due to a pipeline disruption. Additionally,
lower commodity prices impacted our project in Canada.
Digital & Integration pretax operating margin of 30%
decreased 440 bps year on year as the continued growth in digital
sales was more than offset by lower APS revenue.
Sequentially, pretax operating margin decreased eight percentage
points due to seasonally lower sales of digital and exploration
data licenses and lower APS revenue. Pretax operating margin is
expected to expand next quarter on higher digital sales and
increased revenue from APS projects.
Reservoir Performance
(Stated in millions)
Three Months Ended Change
Mar. 31,2023 Dec. 31,2022 Mar. 31,2022
Sequential
Year-on-year Revenue International
$1,380
$1,430
$1,105
-3%
25%
North America
120
123
103
-2%
17%
Other
3
1
2
n/m
n/m
$1,503
$1,554
$1,210
-3%
24%
Pretax operating income
$242
$282
$160
-14%
52%
Pretax operating margin
16.1%
18.2%
13.2%
-207 bps 291 bps n/m = not meaningful
Reservoir Performance revenue of $1.5 billion grew 24% year on
year due to increased intervention, evaluation, and stimulation
services across all areas on land and offshore and from both
exploration and production activity. More than 30% revenue growth
was recorded both in Latin America, mainly from higher intervention
activity, and in Europe & Africa, largely from new evaluation
and stimulation projects.
Sequentially, revenue decreased 3% due to seasonal activity
reductions in Europe and Asia, weather-impacted activity in the
Middle East, and lower revenue in Russia. These declines were
partially offset by strong evaluation activity in Latin America,
while North America revenue was essentially flat.
Reservoir Performance pretax operating margin of 16% expanded
291 bps year on year with profitability improving across the
international market driven by higher activity and improved pricing
across evaluation, intervention, and stimulation.
Sequentially, pretax operating margin decreased 207 bps due to
reduced profitability from the seasonal decline in stimulation
activity internationally, primarily in the Northern Hemisphere,
which more than offset the strong margin expansion in North
America.
Well Construction
(Stated in millions)
Three Months Ended Change
Mar. 31,2023 Dec. 31,2022 Mar. 31,2022
Sequential
Year-on-year Revenue International
$2,493
$2,522
$1,865
-1%
34%
North America
711
652
485
9%
47%
Other
57
55
48
n/m
n/m
$3,261
$3,229
$2,398
1%
36%
Pretax operating income
$672
$679
$388
-1%
73%
Pretax operating margin
20.6%
21.0%
16.2%
-44 bps 444 bps n/m = not meaningful
Well Construction revenue of $3.3 billion increased 36% year on
year driven by strong activity and solid pricing improvements led
by North America and Latin America, both of which grew more than
45%. Europe & Africa revenue increased 38% while Middle East
& Asia revenue grew 24% year on year. Double-digit revenue
growth was recorded both on land and offshore in fluids,
measurements, integrated well construction, drilling, and equipment
sales.
Sequentially, revenue was slightly higher, driven by increased
drilling, measurements, and integrated well construction activity,
mainly on land and offshore North America; in Latin America,
primarily in Mexico and Brazil; and offshore Africa. These
increases were partially offset by lower revenue in Russia and
seasonal reductions in Asia.
Well Construction pretax operating margin of 21% expanded 444
bps year on year with profitability improving in measurements,
integrated drilling, equipment sales, and fluids across most areas
driven by higher activity and improved pricing.
Sequentially, pretax operating margin was essentially flat as
improved profitability in Latin America was offset by reduced
margin in the Northern Hemisphere due to seasonality.
Production Systems
(Stated in millions)
Three Months Ended Change
Mar. 31,2023 Dec. 31,2022 Mar. 31,2022
Sequential
Year-on-year Revenue International
$1,574
$1,638
$1,127
-4%
40%
North America
626
575
473
9%
32%
Other
7
2
4
n/m
n/m
$2,207
$2,215
$1,604
-
38%
Pretax operating income
$205
$238
$114
-14%
80%
Pretax operating margin
9.3%
10.8%
7.1%
-148 bps 217 bps n/m = not meaningful
Production Systems revenue of $2.2 billion increased 38% year on
year driven by strong activity across all areas led by Europe &
Africa and Latin America, which grew 63% and 50%, respectively.
North America revenue increased 32% while Middle East & Asia
revenue grew 11% year on year. Midstream, subsea, artificial lift
sales, completions, and valves each recorded double-digit growth
across North America and internationally.
Sequentially, revenue was flat. Strong sales of subsea
production systems offshore North America and Trinidad, higher
sales of valves in US land, and robust sales of midstream
production systems in Europe were offset by lower revenue in the
Middle East & Asia and Russia following the strong year-end
sales of the previous quarter.
Production Systems pretax operating margin of 9% expanded 217
bps year on year mainly driven by higher artificial lift, surface,
and subsea sales and execution efficiency as supply chain and
logistics constraints continued to ease.
Sequentially, pretax operating margin contracted 148 bps as
improved profitability from increasing activity, coupled with
execution efficiency in North America, was more than offset by
reduced margins in Europe & Africa and Asia due to seasonality
and activity mix.
Quarterly Highlights
CORE
Contract Awards
SLB continues to win new long-cycle contracts for the Core
Divisions, particularly in the Middle East and offshore basins.
Notable highlights include the following:
- Aramco and SLB signed a nine-year master services agreement in
January 2023 for wireline and mud logging services, committing to a
long-term partnership in energy innovation with a strong interest
in technology development. Multiple unique SLB technologies will be
deployed during the execution of the contract, including the Ora™
intelligent wireline formation testing platform, the ThruBit™
through-the-bit logging services, and the ReSOLVE™ instrumented
wireline intervention service.
- Petrobras and OneSubsea® entered into an agreement for Búzios
10 engineering, procurement, construction, and installation subsea
production system scope. OneSubsea will provide subsea production
systems equipment and associated services for four development
phases of the deepwater Búzios Field offshore Brazil. The project
scope includes 16 fit-for-purpose vertical subsea trees, control
systems, and five subsea distribution units, as well as
installation, commissioning, and services for the life of the
field. The project will be supported by the OneSubsea Brazil Center
of Excellence on Subsea Production Systems, which will drive
in-country value across both equipment and service scopes. Located
in the pre-salt area of the Santos Basin, Búzios is one of the
world’s largest deepwater oil fields.
- In a global tender exercise, Shell awarded all three deepwater
outcome-based well services scopes of work for bundled well
construction and reservoir evaluation services in Brazil, Egypt,
and the Crux project in Australia to SLB. The individual scopes of
work are planned to commence sequentially between May 2023 and the
end of the year.
- In Brazil, PRIO, one of the country’s largest independent oil
producers, has awarded OneSubsea the engineering, procurement, and
construction contract for a multiphase boosting system to support
and accelerate production from the Wahoo-Frade floating production,
storage, and offloading tieback, which will be the longest tieback
in Brazil. The OneSubsea multiphase pump system was selected based
on its proven performance delivering standardized subsea components
with a TRL-7 technical readiness level that offer high system
reliability and operational flexibility to support reservoir
performance for the life of the field. OneSubsea’s selection was
also due to its ability to expedite delivery to meet project
deadlines.
- Also in Brazil, Enauta has exercised a contract option with
OneSubsea for a third multiphase boosting system to be integrated
in its Atlanta full-field development. The expansion of the project
leveraged the standardization of manufacturing and the project
delivery process for both parties, resulting in an earlier
delivery, improved logistics, and further consolidation of field
activities to lower the overall field lifecycle cost.
Oil & Gas Decarbonization, New Technology, and
Performance
SLB remains focused on developing and implementing technology
solutions to deliver higher value with lower carbon emissions.
Customers continue to make SLB the partner of choice for maximizing
performance across reservoir evaluation, well construction,
production, and integrated operations, all while operating more
sustainably. Notable highlights include the following:
- In the US, intelligent power management, one of the SLB
Transition Technologies™ to decarbonize engine-generator (genset)
operations, was deployed on a Unit Drilling Company super-spec BOSS
rig with three gensets. During 56 consecutive days of rig
operation, this automated software leveraged a rapid-response
battery energy storage system to reduce total genset runtime by
1,186 hours, conserving 14,332 gallons of diesel fuel consumption
while eliminating an associated 147 metric tons of CO2e emissions.
The rig provided sufficient power from one genset during tophole
drilling, tubular tripping, and various surface activities. This
direct digital system runs the active genset at its optimal rating
to increase energy efficiency, and the battery safely absorbs harsh
transient power spikes, thereby extending genset reliability, all
without the need for rig crew intervention.
- During the quarter, SLB introduced the EcoShield™ geopolymer
cement-free system that minimizes the CO2 footprint of a well’s
construction. This innovative technology eliminates up to 85% of
embodied CO2 emissions compared with conventional well cementing
systems. The EcoShield system has the potential to avoid up to 5
million metric tons of CO2 emissions annually, the equivalent of
removing 1.1 million cars from the road each year. The EcoShield
system uses locally sourced natural materials and industrial waste
streams in its composition, making it a far more sustainable well
integrity method. The cement-free system can be deployed throughout
various phases of the well life cycle, including abandonment, and
across a range of field applications, including in corrosive
environments.
- Aker BP in Norway collaborated with SLB to deploy the Epilogue™
dual-string barrier evaluation on multiple wells to avoid excessive
cement remediation. The results from the Epilogue dual-string
barrier evaluation and a pressure test validated the presence of a
barrier that complied with NORSOK regulations. The Epilogue
dual-string barrier evaluation eliminated the need for removing the
production tubing before the bond evaluation, thereby saving rig
time and providing operational flexibility.
- In Libya, SLB technology and processes enhanced production from
the first six wells of a 25-well project for Sarir Oil Operations
(SOO). The production enhancement workflow included project
assessment, intelligent candidate selection, data processing,
hypothesis validation, technology selection, and production
enhancement execution. An integrated suite of production logging
and pulsed-neutron technologies was deployed to identify sources of
water. High-resistance through-tubing bridge plugs and specialized
ultra-shear cement were used to shut off the water source in the
high-pressure wells. The intervention campaign on these wells
resulted in a 400% increase in oil production and reduction in
water cut by 60%. The campaign allowed SOO to achieve its
production increase objectives and to de-bottleneck produced water,
thereby increasing overall field production.
- Tailwind Energy Chinook Ltd deployed the world’s first dual
MaxFORTE™ electric submersible pumps (ESPs) on their Orlando Field,
North Sea, development well 3/03b-13Y. High-reliability and dual
ESP completions are key enablers of production assurance offshore,
where workover costs are high and scheduling ESP replacements is
limited by rig availability and weather windows in the North Sea.
Following commissioning, the MaxFORTE high-reliability ESP system
operated at oil production rates greater than 4,000 barrels per day
and continues its strong performance. This successful first
application creates more opportunities for dual MaxFORTE ESP system
installations offshore and subsea worldwide as countries aim to
align energy delivery with domestic needs.
DIGITAL
SLB is deploying digital technology at scale, helping customers
to measure and understand their data and leverage insights to drive
innovation and elevate performance. Notable highlights include the
following:
- SLB was awarded a contract to develop and implement a control
system and dynamic process simulation solution for Petrobras. This
strategic multipurpose dynamic simulation (MPDS) solution is being
developed in partnership with Inprocess Technology and Consulting
Group, a worldwide leader in MPDS, and Sensia, the leading control
system and automation specialist in oil and gas. The MPDS solution
will leverage SLB’s leadership in original equipment manufacturing
and offshore construction and operations. Moreover, it will exhibit
SLB’s expertise and ability to provide an immersive digital twin
environment to dynamically simulate operational processes and their
control and automation systems, train personnel, and strengthen
safety elements at five new floating production, storage, and
offloading units to be installed in Búzios Field in the Santos
Basin.
- In Kuwait, Saudi Arabia Chevron (SAC) awarded SLB a two-year
software-as-a-service (SaaS) contract for deployment of the Delfi™
digital platform. Delfi digitalizes petrotechnical operations with
AI and machine-learning applications running in the
high-performance computing environment of the cloud. It will enable
SAC to streamline its workflows for exploration, production,
engineering, and agile reservoir modeling to lower costs and unlock
new levels of efficiency. The contract builds on an existing
agreement between SLB and Chevron.
- CPC Corporation, Taiwan (CPC) has signed a global strategic
cooperation framework agreement with SLB to collaborate on digital
transformation, including the deployment of a cloud-based cognitive
E&P platform; carbon capture, utilization, and sequestration
(CCUS); and the assessment of geothermal prospects. These
technologies align with Taiwan’s drive towards a 2050 net-zero
economy and CPC's actions in pivoting to a low carbon future.
Leveraging the long-term cooperation between the two companies in
oil and gas E&P in Taiwan and elsewhere, the expansion of the
strategic cooperation will support CPC in accelerating its energy
transition pathway.
- In Pakistan, Mari Petroleum Company Limited signed a contract
with SLB for integrated digital drilling services to increase their
efficiency in the planning and execution of an upcoming strategic
well. The contract will introduce the DrillPlan™ coherent well
construction planning solution and the DrillOps™ on-target well
delivery solution. The SLB solutions will include integrated well
planning, performance monitoring, and predictive analytics in the
Delfi digital platform. These SLB digital drilling solutions will
enable agile decisions by both headquarters and wellsite operation
teams.
- SLB and the national agency for the valorization of hydrocarbon
resources in Algeria (ALNAFT) launched the EXplore ALgeria Today
(EXALT) upstream gateway, a fully integrated digital platform
developed by SLB that enables seamless global access to a required
portfolio of Algerian subsurface data and evergreening products.
The multiyear agreement will be enabled by SLB digital subsurface
platform and domain expertise. A joint team of ALNAFT and SLB
experts will upgrade subsurface understanding with new data to
evaluate onshore and offshore hydrocarbon potential for new and
existing operators.
- SLB has entered into a strategic partnership with Cognite to
integrate the SLB Enterprise Data Solution for subsurface data with
Cognite Data Fusion®, Cognite’s leading open industrial DataOps
platform—creating the first offering in the market with access to
contextualized operational data in an interoperable platform.
Through this partnership, customers can integrate data from
reservoirs, wells, and facilities in a single, open platform and
leverage embedded AI and advanced analytics tools to optimize
production and reduce costs, while decreasing their operational
footprint to help achieve sustainability goals.
NEW ENERGY
Customers are increasingly focused on reducing their carbon
equivalent emissions throughout the value chain. SLB is applying
its scale and expertise to new energy systems, accelerating the
path to net zero and beyond. Notable highlights include the
following:
- As part of Chevron Australia’s commitment to exploring carbon
capture and storage (CCS) potential in the Carnarvon Basin,
offshore Western Australia, SLB will perform a three-dimensional
seismic and storage assessment to identify new CCS opportunities in
the Barrow and Dampier sub-basins. A global team of
multidisciplinary experts will integrate decades of subsurface
knowledge to screen and evaluate potential CCS sites at the
regional scale.
- Also in Australia, SLB has supported Mitsui in its CO₂
sequestration assessment, which contemplates the injection of up to
50 metric tons of industry grade CO₂ into a depleted gas reservoir.
SLB has successfully completed phase 1 of the project, which
involves flow assurance and engineering. Although detailed
engineering for phases 2 and 3 is ongoing, the partners intend to
proceed with the activity upon receipt of all necessary regulatory
approvals. This will be the first CCS project on land in the Perth
Basin, and SLB will support Mitsui in executing the full CCS
workflow, including flow assurance, CO₂ supply, injection system
design, wellsite services, and third-party project management.
- Eni awarded SLB a contract to supply CO₂ injection trees and
wellheads for the HyNet Northwest CCS project. The contract
includes 14 Cameron tubing spools and trees, three new Cameron
wellheads, installation and plug-and-abandon services, and rental
tooling. The HyNet project is a significant part of the UK
government’s strategy to achieve net zero by 2050. CO₂ emissions
from the project will be stored for the long term in a depleted
field in the East Irish Sea through the repurposing of existing
offshore infrastructure.
- In Malaysia, SLB was awarded a contract by Malaysia Marine and
Heavy Engineering Sdn Bhd, for work on the project of PETRONAS,
namely its Kasawari CCS project in Block SK316, offshore Sarawak.
The scope of work is the design and supply of equipment to treat up
to 256.3 MMscfd of inlet gas with 57.9 to 71.7 mol% CO₂. The
project is expected to reduce CO₂ emitted by flaring by 3.3 metric
tons of CO₂e annually, making it one of the largest offshore CCS
projects in the world.
- In Canada, SLB is providing seismic processing and reservoir
modeling software to support a shallow carbon storage project for
Carbon Management Canada’s Newell County Facility. Research at the
200-hectare site demonstrates best practices for CO₂ storage
monitoring protocols and helps governments, industries, and the
public understand that CO₂ can be stored securely underground.
Access to seven years’ worth of operations research and data from
the project will enable SLB to validate its CO₂ monitoring,
modeling, and imaging technologies, expanding its capabilities to
deliver CCS solutions at scale.
- In upstate New York, United States, Cornell University awarded
SLB a contract for integrated services to construct and
characterize a stratigraphic well on the university campus. The
goal of the project is to evaluate the feasibility of sustainably
heating the campus with Earth Source Heat. The well was
successfully completed with several new technologies suited for the
stringent environmental and technical requirements of the project,
including, among others, the DrillPlan well construction planning
solution, DrillOps well delivery solution, HydraGlyde™
high-performance water-based drilling fluid, and MDT™ modular
formation dynamics tester deployed with a new 10K dual-packer
system for state-of-the art sampling and characterization. The well
was drilled to the target zone with no fluid performance issues and
was successfully tested and characterized as per project
specifications. This geothermal project is key to Cornell
University’s carbon neutrality goal by 2035.
FINANCIAL TABLES
Condensed Consolidated Statement of
Income
(Stated in millions, except per
share amounts)
Three Months Periods Ended March 31,
2023
2022
Revenue
$7,736
$5,962
Interest & other income, net (1)
92
50
Expenses Cost of revenue
6,285
5,013
Research & engineering
174
141
General & administrative
91
97
Interest
117
123
Income before taxes (1)
$1,161
$638
Tax expense (1)
217
118
Net income (1)
$944
$520
Net income attributable to noncontrolling interest
10
10
Net income attributable to SLB (1)
$934
$510
Diluted earnings per share of SLB (1)
$0.65
$0.36
Average shares outstanding
1,426
1,412
Average shares outstanding assuming dilution
1,446
1,434
Depreciation & amortization included in expenses (2)
$563
$533
(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)
Mar. 31, Dec. 31, Assets
2023
2022
Current Assets Cash and short-term investments
$2,504
$2,894
Receivables
7,578
7,032
Inventories
4,286
3,999
Other current assets
1,032
1,078
15,400
15,003
Investment in affiliated companies
1,554
1,581
Fixed assets
6,691
6,607
Goodwill
13,113
12,982
Intangible assets
3,021
2,992
Other assets
4,076
3,970
$43,855
$43,135
Liabilities and Equity Current Liabilities Accounts payable
and accrued liabilities
$8,700
$9,121
Estimated liability for taxes on income
1,038
1,002
Short-term borrowings and current portion of long-term debt
2,140
1,632
Dividends payable
374
263
12,252
12,018
Long-term debt
10,698
10,594
Postretirement benefits
168
165
Other liabilities
2,357
2,369
25,475
25,146
Equity
18,380
17,989
$43,855
$43,135
Liquidity
(Stated in millions) Components of Liquidity
Mar.
31,2023 Dec. 31,2022 Mar. 31,2022 Cash and short-term
investments
$2,504
$2,894
$2,649
Short-term borrowings and current portion of long-term debt
(2,140)
(1,632)
(923)
Long-term debt
(10,698)
(10,594)
(13,163)
Net Debt (1)
$(10,334)
$(9,332)
$(11,437)
Details of changes in liquidity follow:
ThreeMonths ThreeMonths Periods Ended March 31,
2023
2022
Net income
$944
$520
Charges and credits, net of tax (2)
(28)
(22)
916
498
Depreciation and amortization (3)
563
533
Stock-based compensation expense
81
89
Change in working capital
(1,230)
(948)
Other
-
(41)
Cash flow from operations
330
131
Capital expenditures
(410)
(304)
APS investments
(133)
(168)
Exploration data capitalized
(52)
(40)
Free cash flow (4)
(265)
(381)
Dividends paid
(249)
(175)
Stock repurchase program
(230)
-
Proceeds from employee stock plans
121
71
Business acquisitions and investments, net of cash acquired plus
debt assumed
(244)
-
Proceeds from sale of Liberty shares
137
84
Taxes paid on net settled stock-based compensation awards
(88)
(81)
Other
(84)
(24)
Increase in net debt before impact of changes in foreign
exchange rates
(902)
(506)
Impact of changes in foreign exchange rates on net debt
(100)
125
Increase in Net Debt
(1,002)
(381)
Net Debt, beginning of period
(9,332)
(11,056)
Net Debt, end of period
$(10,334)
$(11,437)
(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
first-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”, net income, excluding charges & credits, as well
as measures derived from it (including diluted EPS, excluding
charges & credits; SLB net income, excluding charges &
credits; effective tax rate, excluding charges & credits; and
adjusted EBITDA) are non-GAAP financial measures. Management
believes that the exclusion of charges & credits from these
financial measures enables it to evaluate more effectively SLB’s
operations period over period and to identify operating trends that
could otherwise be masked by the excluded items. These measures are
also used by management as performance measures in determining
certain incentive compensation. The foregoing non-GAAP financial
measures should be considered in addition to, not as a substitute
for or superior to, other measures of financial performance
prepared in accordance with GAAP. The following is a reconciliation
of certain of these non-GAAP measures to the comparable GAAP
measures. For a reconciliation of adjusted EBITDA to the comparable
GAAP measure, please refer to the section titled “Supplementary
Information” (Question 9).
(Stated in millions, except per
share amounts)
First Quarter 2023 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$1,161
$217
$10
$934
$0.65
Gain on sale of Liberty shares
(36)
(8)
-
(28)
(0.02)
SLB net income, excluding charges & credits
$1,125
$209
$10
$906
$0.63
First Quarter 2022 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$638
$118
$10
$510
$0.36
Gain on sale of Liberty shares
(26)
(4)
-
(22)
(0.02)
SLB net income, excluding charges & credits
$612
$114
$10
$488
$0.34
Fourth Quarter 2022 Pretax Tax Noncont.Interests Net
DilutedEPS SLB net income (GAAP basis)
$1,347
$264
$18
$1,065
$0.74
Gain on ADC equity investment
(107)
(3)
-
(104)
(0.07)
Gain on sale of Liberty shares
(84)
(19)
-
(65)
(0.05)
Gain on repurchase of bonds
(11)
(2)
-
(9)
(0.01)
Loss on Blue Chip Swap transactions
139
-
-
139
0.10
SLB net income, excluding charges & credits
$1,284
$240
$18
$1,026
$0.71
All Charges & Credits are classified
in Interest & other income, net in the Condensed Consolidated
Statement of Income.
Divisions
(Stated in millions)
Three Months Ended Mar. 31,
2023 Dec. 31, 2022 Mar. 31, 2022
Revenue
IncomeBeforeTaxes Revenue IncomeBeforeTaxes Revenue
IncomeBeforeTaxes Digital & Integration
$894
$265
$1,012
$382
$857
$292
Reservoir Performance
1,503
242
1,554
282
1,210
160
Well Construction
3,261
672
3,229
679
2,398
388
Production Systems
2,207
205
2,215
238
1,604
114
Eliminations & other
(129)
7
(131)
(24)
(107)
(60)
Pretax segment operating income
1,391
1,557
894
Corporate & other
(169)
(169)
(164)
Interest income(1)
17
14
2
Interest expense(1)
(114)
(118)
(120)
Charges & credits(2)
36
63
26
$7,736
$1,161
$7,879
$1,347
$5,962
$638
(1)
Excludes amounts which are included in the
segments’ results.
(2)
See section entitled “Charges &
Credits” for details.
Supplementary Information Frequently Asked
Questions
1)
What is the capital investment guidance
for the full-year 2023?
Capital investment (composed of capex,
exploration data costs, and APS investments) for the full-year 2023
is still expected to be approximately $2.5 to $2.6 billion. Capital
investment for the full-year 2022 was $2.3 billion.
2)
What were cash flow from operations and
free cash flow for the first quarter of 2023?
Cash flow from operations for the first
quarter of 2023 was $330 million, and free cash flow was negative
$265 million.
3)
What was included in “Interest &
other income” for the first quarter of 2023?
“Interest & other income” for the
first quarter of 2023 was $92 million. This consisted of the
following:
(Stated in millions) Gain on sale of Liberty shares*
36
Interest income
17
Earnings of equity method investments
39
$92
*Refer to Question 11
4)
How did interest income and interest
expense change during the first quarter of 2023?
Interest income of $17 million for the
first quarter of 2023 decreased $16 million sequentially. Interest
expense of $117 million decreased $4 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 first quarter of 2023?
The ETR for the first quarter of 2023,
calculated in accordance with GAAP, was 18.7% as compared to 19.6%
for the fourth quarter of 2022. Excluding charges and credits, the
ETR for the first quarter of 2023 was 18.6% compared to 18.7% for
the fourth quarter of 2022.
7)
How many shares of common stock were
outstanding as of March 31, 2023, and how did this change from the
end of the previous quarter?
There were 1.425 billion shares of common
stock outstanding as of March 31, 2023, and 1.420 billion shares
outstanding as of December 31, 2022.
(Stated in millions) Shares outstanding at December 31, 2022
1,420
Shares issued under employee stock purchase plan
3
Shares issued to optionees, less shares exchanged
1
Vesting of restricted stock
5
Stock repurchase program
(4)
Shares outstanding at March 31, 2023
1,425
8)
What was the weighted average number of
shares outstanding during the first quarter of 2023 and fourth
quarter of 2022? 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 1.426 billion during the first quarter of 2023 and
1.420 billion during the fourth quarter of 2022. 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)
First Quarter2023 Fourth Quarter2022
Weighted average shares outstanding
1,426
1,420
Unvested restricted stock
18
20
Assumed exercise of stock options
2
2
Average shares outstanding, assuming dilution
1,446
1,442
9)
What was SLB’s adjusted EBITDA in the
first quarter of 2023, the fourth quarter of 2022, and the first
quarter of 2022?
SLB’s adjusted EBITDA was $1.788 billion
in the first quarter of 2023, $1.921 billion in the fourth quarter
of 2022, and $1.254 billion in the first quarter of 2022, and was
calculated as follows:
(Stated in millions)
First Quarter2023 Fourth Quarter2022
First Quarter2022 Net income attributable to SLB
$934
$1,065
$510
Net income attributable to noncontrolling interests
10
18
10
Tax expense
217
264
118
Income before taxes
$1,161
$1,347
$638
Charges & credits
(36)
(63)
(26)
Depreciation and amortization
563
549
533
Interest expense
117
121
123
Interest income
(17)
(33)
(14)
Adjusted EBITDA
$1,788
$1,921
$1,254
Adjusted EBITDA represents income before
taxes, excluding charges & credits, depreciation and
amortization, interest expense, and interest income. Management
believes that adjusted EBITDA is an important profitability measure
for SLB and that it allows investors and management to more
efficiently evaluate SLB’s operations period over period and to
identify operating trends that could otherwise be masked. Adjusted
EBITDA is also used by management as a performance measure in
determining certain incentive compensation. Adjusted EBITDA should
be considered in addition to, not as a substitute for or superior
to, other measures of financial performance prepared in accordance
with GAAP.
10)
What were the components of
depreciation and amortization expense for the first quarter of
2023, the fourth quarter of 2022, and the first quarter of
2022?
The components of depreciation and
amortization expense for the first quarter of 2023, the fourth
quarter of 2022, and the first quarter of 2022 were as follows:
(Stated in millions)
First Quarter2023 Fourth Quarter2022
First Quarter2022 Depreciation of fixed assets
$347
$347
$338
Amortization of intangible assets
76
75
75
Amortization of APS investments
91
102
83
Amortization of exploration data costs capitalized
49
25
37
$563
$549
$533
11)
What does the pretax credit of $36
million recorded during the first quarter of 2023 relate
to?
During the first quarter of 2023, SLB sold
all of its remaining approximately 9 million shares in Liberty and
received net proceeds of $137 million. This gain is classified in
Interest & other income in the Consolidated Statement of
Income. As of March 31, 2023, SLB no longer had an equity interest
in Liberty.
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, April 21, 2023. The call is
scheduled to begin at 9:30 a.m. US Eastern Time. To access the
call, which is open to the public, please contact the conference
call operator at +1 (844) 721-7241 within North America, or +1
(409) 207-6955 outside North America, approximately 10 minutes
prior to the call’s scheduled start time, and provide the access
code 8858313. At the conclusion of the conference call, an audio
replay will be available until May 21, 2023, by dialing +1 (866)
207-1041 within North America, or +1 (402) 970-0847 outside North
America, and providing the access code 1502942. 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 May 21, 2023.
This first-quarter 2023 earnings press release, as well as other
statements we make, contain “forward-looking statements” within the
meaning of the federal securities laws, which include any
statements that are not historical facts. Such statements often
contain words such as “expect,” “may,” “can,” “believe,” “predict,”
“plan,” “potential,” “projected,” “projections,” “precursor,”
“forecast,” “outlook,” “expectations,” “estimate,” “intend,”
“anticipate,” “ambition,” “goal,” “target,” “scheduled,” “think,”
“should,” “could,” “would,” “will,” “see,” “likely,” and other
similar words. Forward-looking statements address matters that are,
to varying degrees, uncertain, such as statements about our
financial and performance targets and other forecasts or
expectations regarding, or dependent on, our business outlook;
growth for SLB as a whole and for each of its Divisions (and for
specified business lines, geographic areas, or technologies within
each Division); oil and natural gas demand and production growth;
oil and natural gas prices; forecasts or expectations regarding
energy transition and global climate change; improvements in
operating procedures and technology; capital expenditures by SLB
and the oil and gas industry; our business strategies, including
digital and “fit for basin,” as well as the strategies of our
customers; our APS projects, joint ventures, and other alliances;
our response to the COVID-19 pandemic and our preparedness for
other widespread health emergencies; the impact of the ongoing
conflict in Ukraine on global energy supply; access to raw
materials; future global economic and geopolitical conditions;
future liquidity, including free cash flow; and future results of
operations, such as margin levels. These statements are subject to
risks and uncertainties, including, but not limited to, changing
global economic and geopolitical conditions; changes in exploration
and production spending by our customers, and changes in the level
of oil and natural gas exploration and development; the results of
operations and financial condition of our customers and suppliers;
the inability to achieve 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 SLB New Energy; as well as our cost reduction
strategies; changes in government regulations and regulatory
requirements, including those related to offshore oil and gas
exploration, radioactive sources, explosives, chemicals, and
climate-related initiatives; the inability of technology to meet
new challenges in exploration; the competitiveness of alternative
energy sources or product substitutes; and other risks and
uncertainties detailed in this press release and our most recent
Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities
and Exchange Commission. If one or more of these or other risks or
uncertainties materialize (or the consequences of any such
development changes), or should our underlying assumptions prove
incorrect, actual results or outcomes may vary materially from
those reflected in our forward-looking statements. Forward-looking
and other statements in this press release regarding our
environmental, social, and other sustainability plans and goals are
not an indication that these statements are necessarily material to
investors or required to be disclosed in our filings with the SEC.
In addition, historical, current, and forward-looking
environmental, social, and sustainability-related statements may be
based on standards for measuring progress that are still
developing, internal controls and processes that continue to
evolve, and assumptions that are subject to change in the future.
Statements in this press release are made as of the date of this
release, and SLB disclaims any intention or obligation to update
publicly or revise such statements, whether as a result of new
information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419006045/en/
Investor Relations Contacts: Ndubuisi Maduemezia – Vice
President of Investor Relations Joy V. Domingo – Director of
Investor Relations Office +1 (713) 375-3535
investor-relations@slb.com
Media Contacts: Josh Byerly – Vice President of
Communications Moira Duff – Director of External Communications
Office +1 (713) 375-3407 media@slb.com
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