SLB Limited Common Shares

Ladies and gentlemen, thank you for standing by. Welcome to the Schlumberger Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for your questions. Instructions will be given at that time. Should you require assistance, please press star, then zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations, N.D. Madhu Amazia. Please go ahead.

Thank you, Leah. Good morning, and welcome to the Schlumberger Limited fourth quarter and full year 2020 earnings call. Today's call is being hosted from Houston, following the Schlumberger Limited board meeting held earlier this week. Joining us on the call are Olivier Lepoche, Chief Executive Officer, and Stéphane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest 10-K filing and our other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures can be found in our fourth quarter press release, which is on our website. With that, I will turn the call over to Olivier.

Thank you, Andy. Good morning, ladies and gentlemen. Thank you for joining us on the call. In my prepared remarks today, I will cover three topics, starting with our fourth quarter performance and my perspectives on what we accomplished in 2020. Thereafter, I will share our view of the 2021 outlook and the ambition we have set at the start of a new growth cycle. Stéphane will then give more details on our financial results and we will open the floor to questions. First, Let me start by thanking the women and men of Schlumberger for their resilience and outstanding performance in an exceptional year. The Schlumberger team significantly improved both safety and service quality, two strong foundations of our performance strategy, despite COVID-19 adversity. In fact, this performance proved to be a critical differentiator for our customers, allowing us to strengthen our market position. This contributed to ending the year on a very strong note, and I'm extremely proud of the results in the fourth quarter and our momentum headed into the new year. In the fourth quarter, we delivered solid sequential revenue growth in both North America and the international markets, and in all the four divisions. We also recorded another quarter of sequential margin expansions, and cash flow from operations before severance was more than $1 billion. The recovery in the international market and offshore, particularly deep water, has commenced and was broad, with more than half of our international business units posting sequential growth, including most in the MIA region. Our offshore long cycle exposure and favorable positions in the short cycle market combine to deliver this peer-leading sequential international growth ahead of rig activity. In North America, we posted strong double-digit revenue growth and sequential margin expansion, both onshore and offshore. Notably, on land, our well construction and surface system growth exceeded pressure pumping and outpaced rate count. This underscores the strength of our market position and breadth of services supporting shed activity and complementing our partnership with Liberty going forward. All in all, this was a very strong fourth quarter where we demonstrated the scale of our market exposure, the strength of our international franchise, the reset of our earnings power, and a very solid free cash flow conversion. Now let me give you my perspective on what we achieved last year. First, in line with our returns-focused strategy and as a response to the unique crisis, we restructured the company globally. And in North America, we scaled to fit and upgraded our portfolios. Internationally, we organized around key basins, addressed underperforming business units and contracts, and divested our Argentina APS asset. These actions have reset our operating leverage, and we exited 2020 with EBITDA margins restored to 2019 levels. Through 2021, we will build on this earnings power and visibly expand our margins. Second, we capitalise on growth drivers for the future, positioning our new divisions ahead of the recovery cycle, aligned with our customer workflow and key drivers in the new industry landscape. The digital transformation imperative, the mandate for sustainable and lower-carbon operation, and the priorities for step change in production and recovery, maximising reservoir performance and well-construction integration and efficiency. On digital, I'm particularly proud of our achievement in 2020, both internally and externally. Through our industry digital platform strategy, we are enabling digital transformation at scale, unlocking significant value and leading innovation across the digital domain in our industry. This is further demonstrated by the highlights in our release this morning, which includes enterprise-wide deployment, AI partnership, and expanding use case of our digital platform. As a result, Digital was the most resilient of our business during 2020, only second to subsea long cycle, and is set to initiate an active growth cycle from 2021. Third, we launched TrueMerge in new energy to establish market positions and develop differentiated groundbreaking technology, multiple low or zero carbon new energy venture. Our new energy portfolio is very diverse and includes venture in hydrogen, CCUS, lithium, geothermal, and geoenergy. As you have seen in this morning's earnings release, we announced significant progress with Celsius Energy and Genvia. In fact, we have made progress in every new energy venture in 2020, enabling us to scale or to prepare entering commercial agreements for this venture during 2021, an essential step in our clear ambition to position Schlumberger at the forefront of new and sustainable energy technology in the coming years. New Energy is a platform for long-term growth, and we will be making more announcements on these ventures over the coming weeks and months. Finally, last year, we accelerated our engagement with customers to provide solutions for the decarbonization of oil and gas operations, and reinforced our commitment to improving our ESG performance. Specifically, we progressed on the adoption of both TCFD and SASB frameworks to increase the transparency of our environmental disclosures, resulting into the high grading of our rating in the CDP, Climate Change Program Assessment, to a peer-leading A-. We also delivered a 15% reduction of our Scope 1 and 2 CSG emission intensity within one year, well on our path to our stated 2025 emissions reduction goal. Now I would like to share some of our view on the 2021 outlook. Absent of a new setback in the pandemic control and economic recovery, we see constructive macro drivers developing through the course of the year. In the near term, disciplined OPEC Plus supply actions are supporting oil prices well above crisis levels, while demand is projected to build up throughout the year. The exact magnitude and scale of demand inflection will be driven by the pace of global vaccine rollout, easing of lockdowns, and coordinated economic stimulus through 2021. In North America, we anticipate continued momentum and a strong start to 2021 in land markets as activity continues to build up towards maintenance levels, both in well construction and completions. However, U.S. production will still be visibly below previous production levels as continued capital discipline and the impact of consolidations will cap the spending levels. And rate of growth may slow in the second half due to budget exhaustion. As a consequence, we anticipate growth in NAM to be in the mid-teens when contrasted with the run rate of the second half of 2020, excluding one steam. In this scenario, and as the market starts to rebalance, the call on international supply will increase. And we do expect to see an acceleration of the international recovery, both short and long cycle, after the seasonal dip in the first quarter. Thus, in 2021, we anticipate the international activity to build up from the second quarter and in the second half of the year to exceed the second half of 2020 by double digits. This macro backdrop is very favourable to Schlumberger, both in North America and internationally. We expect all divisions, including Reserva Performance on a pro forma basis excluding OneSteam, to post full-year incremental growth compared to the second half of 2020, with the growth trajectory across the different divisions shaped by the NAM international mix and the relative exposure to short and long cycle markets. Building on this combined NAM and international activity recovery, our new operating leverage will support a very significant EBITDA margin expansion in 2021. with an ambition to achieve 200 to 300 BPS, 250 to 300 BPS improvement versus full year 2020 and consequently visibly above 2019 margins. In North America, this ambition will be supported by restoring double digit margins in 2021 as a result of our strategic actions combined with the strength of our offering outside of pressure pumping and strong contribution from our shore business unit. Internationally, With more than 80% of revenue coming from the markets that will expand activity momentum, we see the combination of a favorable long and short cycle mix, the breadth of our market exposure, and our unique fit for base in technology as key drivers for margin expansion throughout 2021. I will now pass on to Stéphane to discuss our financial results in greater detail. Stéphane.