SLB Limited Common Shares

Good morning. My name is Megan and I'll be your conference operator today and would like to welcome everyone to the fourth quarter and full year 2025 SLV earnings call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. You may remove yourself from the queue by pressing star two. As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

James R. Thank you, Megan. Good morning, and welcome to the SLB fourth quarter and full year 2025 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 Stephane Begay, 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. 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 fourth quarter and full year earnings 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 today. I will begin by reviewing our fourth quarter performance, followed by an update on market conditions and the unique opportunities we see developing for our business. I will then share outlook for the first quarter and expectations for the full year 2026. Stéphane will then provide additional details on our financial results. And finally, we will open the line for your questions. Let's begin. We ended the year with strong operational and financial performance in the fourth quarter, achieving sequential revenue growth, margin expansion and substantial cash flow generation. This performance reflects the breadth of our portfolio and the impact of our strategy in a challenging macro environment. Sequentially, revenue increased by 9%, driven by high single-digit growth internationally and mid-teens growth in North America. Excluding Champagnex, organic revenue increased by 7% internationally and 6% in North America. We saw sequential growth across all our geographies for the first time since the second quarter of 2024. This demonstrates that global upstream activity has stabilized, with key markets showing early signs of a rebound. This helped us to deliver approximately 500 million of organic revenue growth this quarter, in addition to a roughly 300 million contribution from ChampagneX, resulting from an extra month of consolidation. Let me briefly discuss a few highlights from the quarter. First, we benefited from stronger end product sales in production systems globally. higher exploration data cells, and strong demand for digital operation across all areas. Second, activity increased across the Middle East, led by Saudi Arabia, and with momentum in UAE due to a combination of sustained gas development and increased oil field intervention activity. Third, we delivered strong results across Asia, with increased activity in Western Asia, East Asia and Indonesia as this market continues to benefit from offshore gas development. Notably, this quarter also marked the return of growth in Saudi Arabia and across sub-Saharan Africa with flat revenue in Mexico. These three basins actually accounted for the entire organic revenue decline in the full year of 2025. And directionally, we expect activity in this market to improve as we move toward 2026. Turning to the divisions, in the fourth quarter, production system and digital led the way, where reservoir performance was up slightly and well-construction revenue was steady. The strength in production system was driven by increased demand for production chemicals, artificial lift, and process technology and solutions, as well as backlog execution, completions, and one subsidy. When excluding the Champagnex contribution, This division still grew by double digits sequentially and maintained its momentum with several contract awards during the quarter, as you can see from today's highlights. Digital also continued to grow at a healthy rate, driven by strong growth in digital exploration with year-end sales in the Gulf of America, Brazil, and Angola, as well as robust increase in digital operations and platform applications. Digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%. We also announced several exciting digital milestones in the fourth quarter, including launching Tela, an Atlantic AI system purpose-built to transform the upstream energy sector, and forming a partnership with AdNoc to launch an AI-powered production system optimization platform. These underscore the opportunity for AI to continue to reshape industry operations. Meanwhile, in reservoir performance, sequential growth was a result of increased stimulation activity in the Middle East and Asia and higher intervention activity in Europe and Africa. In water construction, high offshore drilling activity in North America and Europe and Africa was offset by declines in some land markets. Additionally, our fourth quarter revenue benefited from resumption of pollution in the APS projects of Ecuador. Overall, our fourth quarter results are a positive indication of the opportunity that lies ahead. I want to thank the entire SEB team for delivering excellent performance for our customers throughout 2025 and finishing the year on such a strong note. Turning to the market environment, near-term oversupply may continue to exert downward pressure on commodity price throughout the first half of 2026, while elevated geopolitical uncertainties should provide a price floor. ENP operators are therefore expected to remain cautious and to backlog their 2026 budget. As supply and demand continues to rebalance into 2027, conditions will likely support a gradual recovery in upstream investments with activity in key international markets and offshore deployers exiting 2026 at a higher level than 2025. Indeed, economic growth, increasing population and large-scale manufacturing and infrastructure investments, partially in the U.S. and China related to AI, will inherently drive more demand in both oil and gas. Coupled with the natural decline of existing oil and gas assets, we believe this will be the key drivers for the rebalancing of supply and demand. In the meantime, our customers are focused on delivering the lowest cost incremental bias. This means capturing efficiencies at scale. And in our view, That requires more technology, more integration, and more digital solutions. Today, operators are increasingly prioritizing performance assurance across the asset lifecycle, reducing development timelines, and accelerating optimization through digital solutions. SLB is uniquely positioned to deliver value in this environment by integrating equipment with intelligent and autonomous digital capabilities to reduce downtime, improve efficiency, and increase productivity as witnessed by the rapid uptake in our digital operations. Additionally, pollution recovery has emerged as a critical domain for value creation, not only in brownfield and mature assets, but also across greenfield developments and tiebacks. This is not an either-or proposition between CAPEX and OPEX, but an opportunity to increase our share of CAPEX spend and capture OPEX wide space with new solutions. With SLB's expanded production portfolio, including the addition of Champonnex, we are uniquely positioned to meet the developing demand in the production space. Globally, the international markets are stabilizing and trending upwards directionally, with Latin America and Middle East and Asia leading the rebound in 2026. regionally middle east continues to represent the largest international market with positive in that investment outlook indeed there is a resurgence of oil production across the region given by opec plus policy while gas remains a strategic priority to meet regional demand and long-term capacity expansion in 2025 we witnessed double digit growth in the united arab emirates iraq kuwait which was more than offset by the decline in saudi arabia in 2026 The Middle East market will be characterized by rebounds in drilling and walkover activity in Saudi Arabia, with recounts potentially returning to early 2025 levels by the end of 2026. And this has already begun. Offshore also continues to present compelling long-term growth opportunities for SLB, particularly in deep water, where we expect activity to inflect toward the end of 2026 as white space subsides. With one subsea, we have the unique ability to combine subsea processing capabilities, digital solutions, and SLB's integrated port-to-process expertise across subsea intervention and integrated wall construction to create differentiated value for customers. Specific to the subsea market, more than 500 subsea trees are expected to be awarded across 2026 and 2027, about 20% higher than 2025 run rate. And this is an opportunity we aim to capitalize on. In 2025, one subsea was about approximately $4 billion in subsea bookings, and we see a path for cumulative bookings exceeding $9 billion over the next two years, supported by this tendering activity. Finally, we're excited about the strong progress in our data center solution business, since it launched less than two years ago. This year, we plan to expand our range of offering, our customer base, and the geography we serve, paving the way for future growth. The opportunity is growing faster than anticipated. and we expect to exceed the year at the quarterly revenue run rate of $1 billion per year. Overall, SLB is clearly positioned to fully benefit from a rebound in international activity as supply-demand rebalance, supported by ongoing investments for oil capacity, gas expansion projects, and a constructive long-term outlook for deepwater. Regional activity dynamics will further reinforce this favorable directional trajectory beginning in 2026. Let me now share outlook for the year. The headwinds we face in 2025 in certain markets may become tailwinds for our business this year. We anticipate this will translate into higher fourth quarter revenue exit rate in 2026 compared to the fourth quarter of 2025. For the full year, assuming all price remains range bound in the high 50s, to low 60 range, we expect 2026 revenue to be between $36.9 billion to $37.7 billion. In North America, we will benefit from the addition of seven months of activity from Champonnex, stronger offshore activity tied to customer plans, and accelerated growth in data centers, while upstream land activity will continue to decline year on year. In international markets, revenue is expected to trend upwards over the year. resulting in a slight year-over-year increase. Growth will come from Latin America and the Middle East and Asia, while Europe and Africa is anticipated to decline slightly. Let me now describe how this dynamics will unfold across the divisions. In digital, revenue is expected to go at the same pace as 2025, driven by digital operations. Production system will increase, mostly benefiting from a full year of Champagnex revenue. Reservoir performance will be flattish, while well construction will decline slightly. Revenue in the all-over category will be flat year-on-year, considering the loss of revenue from the divested Parisseur asset will be offset by growth in the data center solutions. This revenue outlook translates into adjusted EBITDA between $8.6 billion to $9.1 billion, with margins remaining in line with full-year 2025 levels. With visibility into another year of strong cash flow, we will return more than $4 billion to shareholders in 2026 through the combination of the increased dividend that we announced this morning and share repurchase. Turning to the first quarter, we anticipate revenue to decline by high single digits sequentially, similar to the prior year, due to outsized year-end product sales and project milestones in the production system in the prior quarter. We also expect adjusted EBITDA margin to decrease by 150 to 200 basis points versus the prior quarter. This seasonal dip will be followed by a rebound of activity during the second quarter with further expansion into the second half driven primarily by international markets. Finally, before I hand over to Stéphane, let me briefly touch on Venezuela. SLB is the only international service company actively operating in Venezuela today. as we are delivering a diverse set of services for NIOC under their license. With nearly a century of experience in Venezuela, we did maintain active facilities, equipment, and local personnel on the ground. Historically, we have been the only country, and we remain confident that with appropriate licensing, safety parameters, and compliance measures in place, we can rapidly ramp up activities in support of the oil and gas industry in Venezuela. We are excited, and we are already receiving a lot of inquiries from our customers. I will now turn the call over to Stéphane to discuss financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, was 78 cents. This represents an increase of 9 cents sequentially and a decrease of 14 cents compared to the fourth quarter of last year. We recorded 23 cents of net charges during the fourth quarter. This includes an 11-cent goodwill impairment charge relating to our carbon capture business, 8 cents of merger and integration charges, 7 cents related to workforce reductions, and 3 cents of overcharges. of setting these charges is a $0.06 credit relating to the reversal of a valuation allowance that was recorded against certain deferred tax assets. Overall, our fourth quarter revenue of $9.7 million increased $817 million, or 9% sequentially. Approximately $300 million of this increase is due to an additional month of activity from the acquired ChampionX businesses. Excluding the impact of this transaction, SLB's fourth quarter global revenue increased 6% sequentially. The sequential revenue step-up was higher than expected and was driven by strong year-end digital sales, significant backlog deliveries, and project milestones in production systems, as well as higher reservoir performance activity in international markets. Fourth quarter adjusted EBITDA margin of 23.9 percent, increased 83 basis points sequentially, primarily driven by very strong digital performance. Margin growth during the quarter was, however, constrained by a loss in a carbon capture project that negatively impacted margins by approximately 50 basis points. Let me now go through the fourth quarter results for each division. fourth quarter digital revenue of $825 million increased 25% sequentially, while pre-tax operating margin expanded 557 basis points to 34%. These results were driven by stronger end sales in digital exploration and increased revenue in both digital operations and platforms and applications. Notably, for the full year, digital revenue of 2.7 billion grew 9%. The combination of his growth rate and the full year EBITDA margin of 35% well exceeded the widely recognized rule of 40. In addition, digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%. Finally, Trading 12-month net recurring revenue was 103% at the end of the fourth quarter. Reservoir performance revenue of $1.7 billion increased 4% sequentially, driven by strong international activity, particularly in Saudi Arabia, East Asia, Qatar, Indonesia, and Guyana. Pre-tax operating margin of 19.6% increased 105 basis points, largely due to a favorable activity mix in the Middle East. Well construction revenue of $2.9 billion decreased 1% sequentially, primarily driven by declines in Middle East and Asia, while pre-tax operating margin of 18.7% was slightly down. Production systems revenue of $4.1 billion increased 17% sequentially. reflecting a full quarter of activity from ChampionX. Excluding the impact of this acquisition, production systems revenue increased 11%, driven by strong sales of completions and artificial lift, as well as project milestones in process technologies, subsea, and . Pre-tax operating margin of 16% increased 20 basis points due to improved profitability in completions and production chemicals. Now turning to liquidity. During the fourth quarter, we generated $3 billion of cash flow from operations and $2.3 billion of free cash flow. This strong performance was due to the unwinding of working capital on significant customer collections and reduced inventory driven by year-end product deliveries. For the full year, we generated free cash flow of $4.1 billion, marking the third year in a row with free cash flow at or above $4 billion. As a result, net debt reduced by $1.8 billion during the quarter to end the year at $7.4 billion. Capital investments, including capex and investments in APS projects and exploration data, were $716 million in the fourth quarter and $2.4 billion for the full year. For the full year, we returned a total of $4 billion to our shareholders, with approximately $2.4 billion in stock repurchases and $1.6 billion in dividends. Looking ahead, let me now provide some additional color on our outlook for 2026, building on the details Olivier shared earlier. We expect revenue to benefit from a full year of ChampionX. which will result in incremental revenue of approximately $1.8 billion in 2026. This increase will be partially offset by the effects of the 2025 divestitures of our interest in the Palliser APS project in Canada and of our rigged business in the Middle East. These two businesses accounted for approximately $350 million in combined revenue in 2025. As Olivier mentioned, adjusted EBITDA margin for 2026 will be relatively consistent with 2025 levels, with differing dynamics by division. Digital margin will increase slightly year on year on continued top line growth. Production systems margin will increase, primarily driven by synergies from the ChampionX acquisition. where we still expect to achieve approximately half of the 400 million of total synergies by the end of 2026, 30 million of which were achieved in 2025. About 75% of the synergies will benefit production systems, with the remaining portion benefiting well construction and reservoir performance. The positive effect of ChampionX synergies on production system margins will be partially offset by unfavorable technology mix within the division. In reservoir performance and web construction, despite activity levels stabilizing, margins will be done year on year due to activity mix and pricing headwinds in select markets. From a below the line perspective, Corporate costs will increase year on year, driven by an incremental 70 million of intangible asset amortization expense as a result of a full year of ChampionX. Additionally, we expect our effective tax rate to be approximately 20%, representing a slight increase from 2020. While we expect overall activity to stabilize and increase from today's level in certain key international markets, we will remain disciplined in our capital allocation. In this regard, we expect our total capital investments to be approximately 2.5 billion in 2026. This should lead to another year of strong free cash flow generation. As a result, today we announced a 3.5% dividend increase and we expect to return more than 4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. We are currently targeting to buy back the same 2.4 billion that we repurchased in 2025. However, this amount could increase as the year unfolds depending on our free cash flow generation progress and our visibility on the business outreach. I will now turn the conference call back to Olivier.

Thank you, Stéphane. I believe, Megan, that we are ready for the Q&A session.

We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone key. Your first question comes from the line of Steve Richardson from Evercore ISI. Your line is open.

Hi, good morning. Hi. I was wondering if we could talk a little bit about CapEx. I understand, appreciate you've given some outlook here on 2026. There seems to be something with investors of an old rule of thumb about your CapEx leading revenue expectations. And I thought it'd be helpful if you could maybe give us some context around the trend line of CapEx, but also How is the capital intensity of your forward business different than perhaps it was in the past?

Thanks for the question. Yes, so we increased CAPEX slightly compared to last year in total with APS and exploration to 2.5 billion, as I just said. We think this is what we need to operate this year. and to capture new opportunity as activity recovers gradually throughout the year, particularly in international markets. So, yes, compared to the past, our capital efficiency has improved quite a bit in the last few years. We can do more with less, basically, but clearly we will not miss any opportunity if activity recovers faster. We want to be ready for the ramp-up, and we'll bring more equipment and tools as needed. By division, clearly reservoir performance is probably the highest capital intensity followed by web construction and production systems, especially with the addition of ChampionX as quite lower capital intensity.

Thank you. And on the Middle East, your comments are appreciated about the other regions picking up the slack in Saudi and your view on the full year improving. I was wondering if you could talk, what we're seeing is the IOCs are seeing a lot more opportunity across North Africa and the Middle East. And I was wondering if you could talk a little bit about your mix or your expectation of your kind of customer mix as you go into 26 and how much of that is driving some of this optimism on improvement versus some of your traditional customers on the national companies.

No, first I would comment, reinforce the trust and the confidence we have with our national company to continue to execute the capital program. And I think indeed we are foreseeing and already witnessing the rebound of the Saudi rig and doing a walkover activity, which is very favorable. And I think, as I said, coming from a dip in 2025, bounding at the end of 2026 to, as we expect, to the level of entry of 2025, which is a V-shaped recovery. I think that will set... the year very well, and also the 2027 is a much stronger year going forward. So beyond that, you see the region still continues momentum, high momentum in Kuwait, in UAE, and has been witnessing significant growth. But coming to international, indeed, Libya, I think, is attracting There's a conference this week and next week, and Libya is attracting a lot of investment, and we have been the early benefitter of this, and we see Libya's high trajectory of growth. We have seen it in the last couple of years, and we foresee this will continue well into 26 and 27, driven by investment coming back in-country from international companies. Algeria has been successful in licensing rounds and I think is exploring unconventional in the south and also getting additional independence coming back into country. So we see a rebound in Algeria that will strengthen in 2027. Egypt in the region I think is back in offshore. Additional rigs will mobilize in deep water offshore Egypt as well as in Egypt due to the support that the government has provided. and, again, the return of investment into Egypt. And finally, Iraq, I think, has been an hour of growth last year and will continue to be significant going forward. Iraq is where some international companies are investing, and I think we are associated with this. directly, so we have a strong exposure in all of these markets where international companies are joining. And finally, I would say that the unconventional UAE is a place where newcomers are uh appraising uh the resource and ready to scale the investment uh from appraisal in 26 to uh 27 development uh and going forward so combination of oil attractiveness in the region libya iraq particularly for international company and gas in the region qatar obviously steady but also uh the upcoming uae and unconventional and deep water offshore is made so that that's the the template and i've said the favorable outlook from noc and international company in the middle east thanks so much thank you thank you your next question comes from the line of james west with amelius research your line is open thanks uh good morning olivier stephan morning morning james

So, Olivier, curious, so with the, you know, headwinds bottoming here, you know, Saudi, Mexico, some of the white space and deep water, sub-Saharan Africa, and everything looking kind of up and to the right, how are you thinking about the exit rate for 26 versus the exit rate we saw in 25? Certainly, it's going to be higher, but what kind of

if you give us some some observations or thoughts on kind of magnitude of of how this up cycle uh will begin i think first i think we we have gathered into our prepared remark that the we expect the fourth quarter of 2026 to be higher than the fourth quarter of 2025 and this will be led by the international rebounds uh secondly uh as we gathered the The first quarter has a marked decline compared to last year. Before, we will see a gradual recovery, again driven mostly by international markets throughout the year, that is setting the the scene, as we said, for 2027 to be favourable, driven by, first and foremost, continuous regain momentum in the Middle East with the addition of the rebound activity in Saudi and the combination of what the factor I mentioned before. Asia, I think, has been on a momentum, Latin America as well, I think a bit offshore base in Latin America, a bit in Argentina. We are experiencing a slight rebound of Mexico driven by deep water activity in Mexico coming back. uh and uh we will see we expect that uh gradually uh and into 2027 the activity in uh in the sub-saharan deep water will resume to higher level visibly higher level the combination of fid in namibia uh in mozambique in angola and the early pickup of activity in nigeria are already showing sign of a very promising 27 28 cycle so directionally Olivier De La Chapelle, International gradually recovering and exit rate in the end of this year to be joined by international addition, so that it will result in to be for this year being higher than last year.

David. Okay that's helpful Thank you thanks olivia and then maybe a follow up on the digital side of the business obviously strong results in the fourth quarter, but my senses were still. fairly under-penetrated on Lumi and Delphi and the cloud platforms and the AI platforms that you have. My numbers may be a little bit dated, but I think 300 or so customers out of your 1,500 or so customers were on the cloud as of maybe a year ago. Could you give us a sense of where that stands now or where you see that I'm assuming everybody eventually goes there, most everybody goes there, but just the magnitude of what that could mean for your digital business, I'm assuming it's pretty accretive.

No, long-term, I think we believe that the potential of digital to transform our industry, from the asset team productivity to the efficiency of digital operations between doing or producing assets, i think is very significant i think we are just touching the earlier innings of that transformation and we're using multi-pronged approach towards this first and foremost strategy built on a platform approach to it and i think you mentioned the combination of delphi lumi and and terra and we have been indeed gradually gaining a lot of traction for customers to recognize that a platform is the approach to have the most benefit to combine the geo sounds, the pollution, the drilling, the operation workflow improvement that everybody is looking for. But if we look at the momentum that we are benefiting from today, the momentum comes from digital operation that I think you have seen is getting significant benefits because it's where I think the river hits the ground and where the customers are seeing and materializing the savings in drilling performance in production NPT reduction, in production optimization, and we are benefiting from that. But obviously, we are pursuing adoption of data and AI, Lumi, which will launch four or five quarter ago, it's already having more than 50 customers of an adoption. Tela, that we launched less than three months ago, has already more than a dozen customers that are engaging and working with us to create this foundation model that can transform the old GeoScience workflow, or that can automatically detect and optimize, autonomously, some producing assets, as you have seen with ad-hoc announcement that we have done. So, we are pleased with the progress. surprised with their tech on digital portion, but if this momentum continues and very confident that the circular trend that the industry is continuing to witness will benefit our platform approach and that Lumi, Delphi, and Tela will be at the core of this industry transformation going forward.

Thanks, Olivier.

Thank you.

Thank you. Your next question will go to the line of Aaron Giroirio with JPMorgan. Your line is open.

Yeah, good morning. I was wondering if you could frame. Yeah, good morning. I was wondering if you could frame your thoughts on the near-term and longer-term opportunity for SLB in Venezuela. You mentioned you're the only international service company now actively operating. But talk to us about what type of product lines could benefit if we do get a revitalization of the oil industry in Venezuela.

Obviously, we have to preface this with the condition, the right condition, including licensing, including payments. and the operating license would have to be put in place. But assuming that the conditions are set for investment to resume and to accelerate, not only from the customer that we are serving today, but from new customer re-entering or entering the country, we have kept We have historically been the largest supplier, the largest partner of the national company and the largest supplier in service technology in country. Historically, we had about 10 years ago more than 3,000 people and we were recording visibly more than $1 billion revenue at that time. So we have the track record in integration. We have a unique subsurface digital leading role that we had at that time that we can resume. And we have today a significant set of assets that are ready to be deployed across the drilling services, across production with no less than 10 production sets, across rig operations with rigs that we are ready to mobilize. And I think across intervention, across drilling, for infield drilling, or production optimization, we believe you have a capacity in country, and we believe that we have the access to the village nationals about 80 of them already in country. We have more than 1,000 Venezuelan and African country employees in the company, and some of them will be welcoming to work back in Venezuela. And we have almost 2,000 alumni that I think we have kept in touch with that will be also ready to be joining us as we move forward. So as I said, Long term, under the right condition, we can be the leading partner for customers there. And I think I've quoted the number where we were before. And I think the future will tell us when and as this can accelerate. But we are ready. And we're already seeing a lot of incoming calls, as I would say, to explore options going forward.

Great. That's helpful. Olivier, my follow-up is wondering if you could talk a little bit about your data center infrastructure business. You mentioned that you expect to reach a $1 billion run rate in revenue, if I heard you correct, by year-end. Can you talk a little bit about the solutions you're providing today and maybe how you're thinking about organic and even inorganic opportunities to grow that business over time?

Yeah, I think you heard me correctly. I think this is amazing what you have put together in less than 18 months. I think the rate of growth, The customer engagement that we are getting, the traction we are getting with hyperscalers and everything is amazing. And yes, we put together a setup that is focused on the modular manufacturing capability and co-engineering of data center solution from several and cooling solution. And we are aiming at increasing not only our our scope, but also our footprint, as we have announced last quarter, doubling our capacity to respond to the pipeline and to respond to the backlog we have. And we continue to be expanding, both in terms of scope, in terms of around this manufacturing design capability for modular data center solution. We will be this year growing and growing internationally. We'll be this year adding new customers to our portfolio. and preparing ourselves to grow throughout the year. In 2027, $1 billion is the round rate, but we'll be significantly above this in 2027. And we believe that we see growth through the rest of the decade internationally. And indeed, as we explore and respond to the requests from our customers who are looking for integrators in this space, we will look for complementing our current capability that you have built organically and to look at what could help complement this and accelerate our market penetration and make us as a fulfilled partner for customers going forward, technology throughout the lifecycle of the data center for construction and operation.

Great. Thanks. Thank you.

Thank you. Your next question comes from the line of David Anderson with Barclays. Your line is open.

Great. Thank you. Good morning, Olivier. You know, if we compare Schlumberger today or SLB, if we compare SLB today versus 10 years ago, in addition to digital, I think the biggest shift is now the emphasis on production and recovery. I was wondering if you could talk a little bit more specifically about the growth opportunity in the next few years as we think about One Subsea, Champion X, Artificial Lift. If I think about one step C, I'm thinking about backlog conversion accelerating. You know, Guiana, Venezuela, potentially Venezuela could be growth engines and chemicals, and then artificial up in the Middle East. Could you sort of frame this growth opportunity for us over the next few years on this side of your business?

No, absolutely, Dave. I think personal recovery, as we call it, is a new chapter for the company, something that we have decided strategically to invest. Because we believe that first is a market that has significant opportunity for value creation through technology, through integration, through digital. And we believe that we needed to own and have access to a broader portfolio, hence the access to the Champagnex chemical, OPEX and fulfilled lift technology and the digital portfolio. platform addition that put us very well placed into that market. So now the customer response is very positive. And indeed, I think if you look at the priority of our customers today into a changing committee on pricing environment, it's all about getting more from the asset that they have on the production. and hence the return of the higher barrel for lower cost is a priority. So we are getting a lot of intake into our lift solution, into our digital production as you have heard, and indeed trying to realize and realizing today the benefit of chemistry. Chemistry for not only production assurance, chemistry for, but also chemistry for reservoir performance or recovery. So we believe that the integrated capability that we have built together will give us a positive solution for the market, end-to-end solution that will help to improve the performance of existing producing assets, will help transform existing assets into a solution for recovery, solution for optimization, and will help across to bring digital solutions. So yes, LEAP solution in the metro basin or into the most producing oil basin in the world, including Middle East, uh yes subsea as a beneficiary for the long-term uh uh deep water but also the boosting processing capability you have in subsea that are quite unique and contribute to this recovery production uh again and goal we have so yes it is a new story for us as a new chapter we're excited customer feedback the feedback is is very strong because they believe that they need somebody that have the subsurface have the technology and has the full integrated portfolio to respond to the transformation of pollution recovery landscape as we have contributed and help the industry transform the well construction or exploration historically that makes a lot of sense um shifting gears a little bit to another area of potential growth

in geothermal. You've been dabbling there for a number of years, but now, as you noted in the release here, you're working with ORMAT on a pilot project, I believe, later this year in enhanced geothermal. It looks a lot of this, when we look at geothermal, a lot of this sounds a lot like shale in the early 2000s. We know the resources there, but it's a matter of process and technique to solve for the economics. Do you agree with that conceptually? And where's your confidence that this can be scaled up to create, say, 100 hundred plus megawatt geothermal plants in the next few years.

Let me know. Absolutely. I think, Dave, I think let me first step back and explain the reason why we have partnered with OMAT and the potential we see in this partnership first is to put together the two leading companies in the field. We are a subsurface leader in geothermal, helping to characterize the geothermal source and then develop the wells and develop the solution to produce the heat and the hot water from those wells. And our math is leaders into building geothermal power plants and understanding the full life cycle. So putting this together and providing an industry for one One integrated offering I think was very well received by the industry and will help accelerate providing conventional geothermal bridge power or base power for some of the data center in the future. So that's clearly one of the first the first aspect the second obviously we have put this together because we believe that we want to together optimize explore and optimize uh through a development of an asset or two assets uh in the future in a recent uh in a near future uh into the unconventional geothermal and yes we believe this is a field that has significant potential, but we want to do it right. We want to do science, we want to do technology, we want to do digital modeling of the process so that we get it right and we understand how to scale it economically, how to make it viable, how to make it safe. and then how to offer it together to the market in the near future. So that's the ambition. So we have done this for a reason. And I think we will be developing this asset. We'll be experimenting in this asset, appraising, and then getting ready with technology, digital, and with joint offering to offer this at scale to the market in the U.S. and beyond.

Very exciting. Thank you.

Thank you.

Thank you. Your next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Yeah, thank you so much, Olivia and team. I guess the first question is more of a macro question, Olivia. You have unique perspective on this big debate that's in the market right now about how much OPEC spare capacity really lives there in markets like the Middle East and You know, of course, recognizing that there's probably limitations about what you could say. Your perspective on that question, I think would be would be helpful for us as we think about the back end of the oil curve.

I think I think you you have been reading what I'm reading and I think I don't want to read it more, but I think OPEC plus has been unwinding 2.2 million by and I think when you fast forward in a year from from now when the the unbalance that still exists today will start to subside and then the market will balance itself. I don't think there will be much spare capacity available, a sign of which you see by the reinvestment into all capacity sustenance investments that are happening today across the Middle East and all intervention and intervention activity in which we have a strong exposure is benefiting from this. So yes, I don't think you have some of the OPEC members beyond the Middle East that are not necessarily having an easy path towards sustaining their existing production. So OIN, I think it bodes very well to focus on production recovery, which is focusing on providing a technology to get a capability to sustain production and enhance recovery. And I think that's where we will see adoption of this. But I don't think there is significant spare beyond what has been released back to the market. Hence, the market will tighten in rebalance into 27 and beyond. Hence, we set the condition for a better outlook as an investment backdrop for an industry from 27 and beyond.

Yeah, that makes sense to us. And then another market we'd love to get your perspective on is Mexico. Paul Cecala, Olivia this is probably the most constructive i've heard you on Mexico and a little bit that we're in a bottoming phase and in. Paul Cecala, Maybe even a cash recovery face it your perspective on that market and and how it should evolve from here, as we think about slp.

Yeah, the market, I would say, has normalized from a market that has dropped significantly and has had a need for getting the confidence of the whole industry to reinvest. I think it has normalized in the last few months. I think we anticipate it to be steady from the land activity for the foreseeable short to mid-term, and we expect the conditions are gradually uh in place uh getting in place for uh reinvestment going forward uh in 2000 in 2026 however where we see the upside is in the offshore activity in uh in mexico where the deep water asset that we are developing with uh that is being developed by the which side will give us an upside uh whereas the the activity in land now will make the assumption it is steady uh but uh with the potential to start to uh to your strength and as we move into 2027. Thank you, sir.

Thank you.

Thank you. Your next question comes from the line of Mark Bianchi with TD Cowan. Your line is open.

Hey, thank you. Good morning. I wanted to ask, we've got these activity and good morning. You've got these activity increases in your outlook for twenty six. for certain international markets. Earlier, I think a few months ago, there was some discussion of some pricing potential weakness. Can you talk about what that looks like today and what your expectation is embedded in the outlook here?

Yeah, I think first to comment that I think the industry has been under pricing pressure in the last couple of years, starting with North America, and I don't see a change there. Although we believe in North America, we are shifted to the mix of the portfolio we have and exposure where data center and digital and our exposure in deep water and Gulf of America is proportionally bigger and also the OPEX exposure where Champagnex is a bit of a towards some of the pricing pressure in North America. Internationally, the matter has been, and I keep repeating every time I get to comment on this, has remained highly competitive for a large tender. in international markets and the market has been keeping pressure considering the market has been declining the last 18 months or 12 months in the international market and the pricing pressure has been sustained in some critical markets. and we have been responding with this to these three special when we felt it was the appropriate things to do to keep us into the market at the same time. I think we are able to maintain our margin steady in 2026 compared to 2025, building on the and our shop-like synergy, building on the digital growth margin accretive business and the effort we are doing to continue to use technology performance as differential to protect where we can margin against the pricing pressure.

Okay. Thank you for that. And the other question I had was related to the offshore outlook. So you've talked about an expectation for improvement in offshore. And I think if we go back a year or two, there was an expectation for offshore improvement that didn't really materialize. So what are you seeing now that you think is different from that prior period and gives you the confidence to make those comments?

Well, the comments I'm making is that I believe that the FID and the booking will improve in 2026, setting the right setup and context for 2027, 2028 offshore cycle rebound. Whether this is material in 2026, yes, in certain markets. In East Asia, the activity of Indonesia, the market will strengthen in deep water, and I think this reflects into this year. In South Africa, This is more a trend of FID, of project from Namibia to Angola and Mozambique, that will set the context for a marked rebound going forward. And this FID is happening as we speak, being negotiated and being pending. And in America, I think the continuous momentum in Brazil, in Guyana or Suriname, and I think are here to stay with the Metro Basin, Gulf of America, Metro Basin of the North Sea remaining steady somehow, although with a slight decline in the North Sea. So we believe that the FID, the economics are favorable, and the pipeline of FID across Africa and Asia are set to create a rebound of activity going forward as we turn into 2037. Thank you very much. Thank you.

Thank you. Your last question comes from the line of Scott Gruber with Citigroup. Your line is open.

Yes, good morning. So I want to come back to the data center solutions business. Lydia, you mentioned expanding the business abroad. Does the billion-dollar target capture any of that international growth opportunity, or would that be future upside, and how quickly could this materialize? And ultimately, as you leverage your global relationships, could the international opportunity become even larger than your U.S. businesses?

Difficult to say whether it could become larger, but easy to tell you that it will grow. And this year will be the first step into establishing ourselves in Asia and to provide this modular manufacturing solution to our customer there. Also, we initiate a partnership to design a next generation uh data center in one country in the asia region and then we expect you also look at our relationship to embed and go further including middle east in the near future so these are the these are the place where we have ambition to uh to leverage our hyperscaler relationship and our modular manufacturing capability, ability to source locally, ability to manufacture everywhere. I think it's something unique that not so many companies can do and scale and replicate what we have done in the last 18 months. So that's what we look forward and that's where we are excited about the international market. Philippe Metzger- us is still the hot market and us is where we believe we have the most exciting pipeline in 26 and 27 coming our way, and will not be stuck market.

Stephen Russell- got it appreciate that color. Stephen Russell- And I want to come back to the question Stephen asked at the beginning on capex. Stephen Russell- So you're two and a half billion dollars a capex this year will. You know, support the second half growth rate that you'll achieve, you know, which will be led by digital and data center solutions, some contribution from the core. But overall, the capital intensity of the portfolio is improving. So my question is, you know, can you sustain similar growth rate for a couple years into the future at a CapEx level that's still broadly around $2.5 billion, given, you know, those kind of less capital-intensive drivers of growth, or Or do you think CapEx will need to creep a bit higher?

Look, as I said before, we'll do what it takes to not miss any opportunity. But again, we have really improved our capital efficiency over the last five to six years, so we can really operate with less. If growth really comes at high growth rates, we will have to increase beyond the 2.5 billion for sure. But as a percentage of revenue, that will still remain pretty low compared to what we were doing before and still quite in the low end of the range we had guided before of 5% to 7% of revenue. That's excluding APS and exploration data. so yes we'll increase as uh as necessary but uh it will go with increased cash flow as well and and some of the growth that we will be seeing is production and recovery as we uh as we uh elaborated on before as well as digital and that that doesn't require as much capex as uh as the web-centric businesses so this is how we can maneuver within that range basically so it's without some acceleration in the

kind of core business, you would expect the capex to sales ratio to continue to improve over the next couple years? Is that fair?

It will be more or less as a percentage of revenue. It will stay within that 5% to 7% we've guided before. But it's more below. As you have seen, we've been closer to 5% and 7%. So we will remain at the low end of that range in the future.

okay i appreciate the call thank you thank you thank you scott ladies and gentlemen yeah thank you thank you megan ladies and gentlemen as we conclude today's call i would like to leave you with the following takeaways first our strategy focus on production recovery including champagnex digital and data center solutions present new pathways for growth, supporting a full-year revenue and margin guidance. Second, I'm confident that we continue to generate strong cash flows, enabling us to return more than $4 billion of shareholder returns in 2026. Third, in the longer term, the outlook is becoming more positive for SLB. The recovery of Saudi Arabia, the positive pipeline in Subsea, the growth dynamic in both digital and data centers are all catalysts. and Venezuela represents an upside. In summary, the current cycle is recovering towards the strength of SLB. With this, I will conclude today's call. Thank you all for joining.

This concludes today's conference call. You may now disconnect.