SLB Limited Common Shares

Ladies and gentlemen, thank you for standing by. Welcome to the SLB Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question, please press 1, then 0. You may remove yourself from queue by repeating the same 1-0 command. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Senior Vice President of Investor Relations and Industry Affairs, James R. McDonald. Please go ahead.

Thank you, Leah. Good morning, and welcome to the SLB fourth quarter and full year 2023 earnings conference call. Today's call is being hosted from Houston following our board meeting held earlier this week. Joining us on the call are Olivier Lepuche, 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 for 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, James. Ladies and gentlemen, thank you for joining us on the call today. In my prepared remarks, I will discuss our fourth quarter and fully our results, highlight a number of achievements, and share our thoughts on the outlook for 2024 and our financial ambitions. Stéphane will then provide more detail on our financial results and we'll open the line for your questions. Let's begin. The fourth quarter was an impressive conclusion to the year's financial results. We grew revenue both sequentially and year-on-year, and we achieved cycle-high margins and cash flows during the quarter. Our strong performance was fueled by the international and offshore markets and was supported by robust sales in digital and integration of the hacker subsea business. Throughout the year, we witnessed continued growth in international and offshore markets, where customers are focused on enhanced production and capacity additions. We've also seen further investments in digital technologies for planning and operational efficiency. This is driving growth today and presenting opportunities into the future. The international shift in investments has accelerated during the year. with fourth quarter revenue growth driven by the Middle East and Asia and Europe and Africa, where we continue to benefit from long cycle developments, capacity expansions, and exploration of result activities. Specific to offshore, we delivered a very strong fourth quarter as we grew our legacy portfolio and harnessed a strong performance from our one subsea zone venture. On this note, I would like to extend my thanks to the entire hacker subsidy team who have joined us three months ago and have already contributed very well to our strong year-end results. Exiting the year, our international revenue and margins reached new cycle highs, marking our 10th consecutive quarter of year-on-year double-digit revenue growth on the international front. and we delivered exceptional free cash flow of $2.3 billion in the quarter. Next, let me reflect on our accomplishments for the full year. We fulfilled our full-year financial ambitions, growing revenue by 18%, surpassing our revenue growth target for the year, and achieving adjusted EBITDA growth in the mid-20s. Additionally, we generated $4 billion in free cash flow, our highest since In the core, across production systems, reserve of performance and world construction, we grew revenue by more than 20%, and extended pre-tax operating margins by almost 300 basis points. This was driven by strong activity internationally and offshore, new technology deployment, and strong product sales. Notably, we achieved our highest ever revenue in the Middle East. led by impressive growth in Saudi Arabia, the United Arab Emirates, Egypt, and the East Mediterranean. Offshore also continued this positive momentum, led by remarkable growth in Brazil and Angola, and very solid increases in the U.S. Gulf of Mexico, Guyana, and Norway. This was supported by the contribution from the acquired hacker Subsibusness, which enabled us to expand in certain markets, mainly in Norway and Australia. Additionally, our feed-for-bass business model continues to deliver differentiated value in North America, resulting in revenue growth outperforming the recount. In digital, we continue to witness the adoption of our digital workflows and data AI platform as customer work to enhance efficiency and returns by integrating our connected and autonomous trading data and AI solutions. We now have more than 6,000 Delphi users, and have generated 125 million compute hours, both representing more than 40% growth year-on-year. As a result, we achieved full-year digital revenue of more than $2 billion, with our new technology platforms comprised of cloud, edge, and AI growing at a CAGR of 60% since 2021. In new energy, we forged new partnerships and made new investments in capture technology for carbon capture and storage. We are seeing very positive momentum in space. And we are actively participating in more than $400 million of CCS tenders globally. Additionally, in geothermal and geoenergy, we are partnering with government agencies in the Middle East on lower carbon electricity and in Europe on zero carbon heating and cooling solutions. As we advance our three engines of growth, we also continue to deliver for customers and stakeholders by achieving our lowest recordable injury rate and highest level of operational reliability on record. This is also reflected in industry surveys, where we are growing customer satisfaction through performance and value creation. reduce our emission density across scope one, two, and three on the path to achieving our 2025 emissions reduction commitment. Moving forward, we are well positioned to capture further growth, and I look forward to building on this strong success in the year ahead. I want to thank the entire CLB team for delivering these impressive results. Turning to the macro, the characteristics of breadth Resilience and durability that have defined this cycle remain fully in place. This continues to be supported by the imperative of energy security to meet rising global demand, confirming our belief in the longevity of the cycle. After a year of demand growth in 2023, we anticipate further growth in 2024 that will continue to support the ongoing multi-year investment cycle. In international markets, growth momentum is set to continue. with more than two-thirds of total investment taking place in the Middle East offshore and gas resource place. In the Middle East, growth will be led by Saudi Arabia and the United Arab Emirates, which continue to commit significant investments to increase production capacity in both oil and uncommercial gas, followed by Iraq and Kuwait. Meanwhile, in Asia, countries such as China, Malaysia, Indonesia, and India are leading new gas exploration and development. And across our international basins, we anticipate strong activity led by Brazil and followed by West Africa and Australia. Looking across this wide base load of activity, a significant portion is taking place offshore, where capital expenditure will continue that growth momentum in 2024. As a result, the rig count will continue to rise, mainly in the Middle East and Asia, responding to a strong FID pipeline in both shallow and deep water. All in all, we see the potential for more than 100 billion global offshore FIDs in both 2024 and 2025, underscoring the enduring strength of the offshore markets and supporting a very favorable subsea outlook for years to come. In this context, Although geopolitical tensions persist in several regions, we do not expect any significant impact to activity in 2024, absent further escalation. Additionally, although we have witnessed short-term commodity price fluctuate over the past few months, long cycle investment in the Middle East offshore and gas markets remain decoupled from short-term pricing, which will continue to support the resilience of these markets. In North America, Following a noticeable moderation of activity in the later part of 2023, we anticipate capital discipline to continue. Consequently, investment levels will be sustained at 2023 exit rates with minimal increase in activity as a region focused on sustaining its record output from last year. This will drive further adoption of technology as operators aim to further improve efficiency and recovery rates. Now, let me explain how we expect these factors to drive our performance in 2024. In the international markets, we expect full-year revenue growth reaching the mid-teens, led by the Middle East and Asia and Europe and Africa. This growth will take place both onshore and offshore, with offshore benefiting from our newly formed one-subsea joint venture, which enters the year with close to $4.5 billion of subsea production system backlog. we expect to deliver more than $4 billion in additional SEBSI bookings in 2024, opposing an increase of more than 25% year-on-year as the market continues to expand. For clarity, when excluding the impact of hacker contribution and the expected decline in Russia, we expect double-digit international growth for the year. Meanwhile, in North America, although activity has moderated, We expect full-year revenue growth, reaching the mid-single digits, driven by our technology leverage portfolio in both US land and the US Gulf of Mexico. Turning to the divisions, we expect all core divisions to grow, led by production systems and reservoir performance. Digital integration is also expected to grow, with digital growing in the high teens, primarily driven by new technology platforms, while APS remains flat. Directionally, we expect further margin expansions driven by tight service capacity internationally, pricing, and increased technology adoption. This will result in year-on-year EBITDA growth in the mid-teens. With continued growth in earnings, our proven ability to generate cash, and confidence in the long-term outlook, we are pleased to announce that the Board of Directors have approved a 10% increase in our quarterly dividends. and will also increase our share repurchase program in 2024. Combined, we are targeting a return to return more than $2.5 billion to shareholders in 2024, an increase of more than 25% compared to 2023. Looking to the first quarter, we anticipate the typical pattern of activity beginning with the combined effects of seasonality and the absence of year-end digital sales. As a result, On a year-on-year basis, we expect first quarter revenue growth in the low teens and EBITDA growth in the mid-teens. This will be followed by an activity rebound in the second quarter and further acceleration of growth in the second half of the year, particularly in the international markets. This will support the ambition we have set for the full year revenue and earnings growth. I will now turn the call over to Stéphane.