SLB Limited Common Shares

Thank you, everyone, for standing by. Welcome to the third quarter SLB earnings conference call. At this time, all participants are in a listen-only mode. If you would like to ask a question, you may press 1, then 0. You will hear acknowledgement that your line has been placed in queue. 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 James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Leah. Good morning, and welcome to the SLB Third Quarter 2024 Earnings Conference Call. Today's call is being hosted from New York following our board meeting held earlier this week. Joining us on the call are Olivier Lepuche, Chief Executive Officer, and Stéphane Viguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we'll 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. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter press release, which is on our website. And finally, in conjunction with our proposed acquisition, SLB and ChampionX have filed materials with the SEC, including a registration statement with a proxy statement and prospectus. These materials can be found on the SEC's website or from the parties' websites. With that, I will turn the call over to Olivier.

Thank you, James. Ladies and gentlemen, thank you for joining us this morning. During the call, I will cover a few topics. I will start by reviewing our first quarter results. Then I will discuss how we are leveraging our differentiated market positioning, digital leadership, and operating efficiency to navigate the evolving macro environment. And finally, I will provide an update on our full year financial ambitions and our early outlook for 2025. Stefan will then provide additional details on our financial results and will open the line to your questions. Let's begin. SLB delivered strong third quarter results with continued margin expansion. Sequentially, although revenue was flat, we expanded our adjusted EBITDA margin by more than 50 basis points to 20.5%. 3.6 percent by driving efficiencies throughout the business, and we generated very strong free cash flow of $1.81 billion. In the international market, revenue remains steady sequentially, despite lower reactivity as commodity prices resulted in a more cautious approach to discretionary short-cycle spending. Demand for SLBs, digital products, and services continued to accelerate. And we saw continued growth in the Middle East and Asia, fueled by oil capacity expansions and strong gas activity, as well as offshore projects. Meanwhile, revenue in Europe and Africa was largely unchanged, as strong production and recovery activity in North Africa was offset by a decline in Latin America following a strong second quarter. Turning to North America, revenue increased 3% sequentially as higher offshore activity in the Gulf of Mexico was partially offset by lower drilling activity in U.S. land as the market remained constrained by gas prices and ongoing capital discipline by operators. Next, let me touch on the performance of the divisions. In digital and integration, we delivered strong sequential growth led by our digital business, which reached a new quarterly revenue high. We also continue to increase profitability, expanding our pre-tax segment operating margins to 36% driven by our digital revenue and cost optimization. Overall, our digital business remains on pace to achieve full year revenue growth in the high teens, and we announced a number of exciting new products and partnerships during the quarter that I will discuss a little later in today's call. Turning to the core divisions, production system continues to grow. benefiting from long-cycle development activity, particularly in the Middle East and Asia and in the Gulf of Mexico. I was proud to see that most production system business lines contributed to this performance as we continued to secure sizable bookings while also increasing our backlog for the future. Reservoir performance remained steady, supported by stable production and recovery spending, and well construction declined slightly due to weaker land activity in North America and international markets. Overall, These results demonstrate SLB's unique ability to navigate the evolving market by leveraging our differential international and offshore positioning, our broad technology portfolio, and our continued focus on capital discipline and operating efficiency. I want to thank the SLB team for continuing to deliver for our customers and shareholders in this dynamic environment. I'm extremely proud of their contribution and dedication to our performance strategies. Next, I wanted to share some updates on our progress in digital. We delivered an over quarter of strong digital growth as operators continue to increase their investment in digital technology to reduce cycle times and risk, enhance productivity, lower cost and carbon, and accelerate returns. This is presenting opportunities for high margin growth. And we have taken a leading role in this space, partnering with our customers to accelerate their transition to the cloud, scaling new technology for drilling and production operations, and creating new markets by developing disruptive solutions for data and AI. As part of this journey, we hosted a digital forum in September, where we brought more than 1,000 customers and partners to innovate solutions and shape our shared digital future. During this event, we launched the Lumi data and AI platform, which will accelerate advanced data and generative AI capabilities at scale for SLB customers across the energy value chain. Today, we offer approximately 150 AI and machine learning capabilities across our product and solutions, and we continue to work for customers and partners to innovate and deploy new ones. We also unveiled a number of cross-industry announcements during the forum. These include a collaboration with NVIDIA to develop generative AI solution for energy, as well as a partnership with Amazon Web Services to expand access to application from the Delphi platform and to evaluate decarbonization solution for Amazon digital infrastructure. Each of these agreements helps to expand our capability set and positions SLB as a key partner in digital and sustainability across the industry. Next, let me discuss the macro environment. Over the past few months, community prices have been under pressure. This is largely due to concern of an oversupplied market, driven by higher output from non-OPEC Plus producers, uncertainty around OPEC Plus supply releases, weaker demand from China, and softer economic growth rates in the U.S. and Europe. This has resulted in a cautionary approach to activity and discussion is spent by many customers, as highlighted in our third quarter results. Despite these evolving market conditions, we believe the long-term fundamental for oil and gas remain in place. The demand for energy is increasing, and energy security remains a global priority, as witnessed by recent commodity prices fluctuation tied to geopolitical tension in the Middle East. In this environment, gas will continue to play an increasing role in the energy transition, while oil remains a large part of the energy mix for decades to come. Internationally, gas investment remains strong, particularly in Asia, the Middle East, and the North Sea, and is expected to grow regardless of OPEC Plus decisions on oil production. Meanwhile, whereas short-cycle oil investment has been more challenged, long-cycle deepwater projects globally and most capacity expansion projects in the Middle East remain economically and strategically favorably. Specific to North America, we do not see U.S. activity rebounding in the near term, and any potential increases in gas rigs could be quickly offset by a further decline in oil rigs due to increased operating efficiency. Overall, we expect this to result in a sustained level of global upstream investment in the years to come with the secular trends of digital and industry decarbonization extending the investment horizons. SLV is well positioned to navigate in this evolving macro environment through a differential portfolio and multiple strategic across core, digital, and new energy. With that background, let me conclude my opening remarks by sharing outlook for the full year 2024 and our early thoughts regarding 2025. Specific to the fourth quarter, we expect muted revenue growth with a favorable mix of year-end digital and product sales partially offset by E&P budget exhaustion in U.S. land and cautious discussion expanding from certain international customers. And with continued cost optimization, we anticipate we will deliver EBITDA margin expansion in the fourth quarter. For the full year 2024, ongoing margin expansion will enable us to deliver full-year adjusted EBITDA margins at or above 25%. Additionally, our strong cash flows, coupled with the announced sale of the Palisade asset in Canada, will support increased returns to our shareholders. In 2025, we see the potential for upstream spending in the international market to grow in the low to mid-single digits, while North America's spending will be flat to slightly down. This directional outlook will depend on the geopolitical environment and commodity prices, and will share an updated view in January after we receive more feedback on customer budgets. In conclusion, SAB remains well positioned to deliver strong financial results as an optimized cost structure, portfolio rationalization, differentiated exposure to key international and offshore markets, and digital leadership will support further margin expansion, higher cash generation, and increased returns to shareholders. I will now turn the call over to Stéphane.