SLB Limited Common Shares

Good morning. My name is Megan and I will be your conference operator today and would like to welcome everyone to the first quarter SLB 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 cell phone 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.

Thank you, Megan. Good morning, and welcome to the FOB First Quarter 2026 Earnings Conference Call. Today's call is being hosted from Houston, following our board meeting held earlier this week in Midland, Texas. 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 first quarter 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. Before we begin, I would like to acknowledge our people, customers, and partners in the Middle East as they navigate this challenging and uncertain time. Our strong presence in the region dates back more than 85 years. and I'm proud of the resilience and unity demonstrated by our people as they work in lockstep for our customers to safeguard our teams and assets while preparing for an eventual resumption of operations. I want to commend the entire Selby team for their continued care, commitment, and support for one another and for our customers. Turning to today's goal, I will start with our first quarter performance, followed by an update on the evolving situation in the Middle East and our outlook in the mid to long term. I will then cover our strategic initiatives, including ShopNX, digital, and data centers, and provide our folks for the second quarter. Stéphane will then take you through the financial, and we'll open the line for your questions. Let's begin. It was a challenging start of the year, marked by severe disruption in the Middle East that impacted our first quarter with revenue and earnings. At the onset of the conflict, customer decisions to safeguard personnel and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shut-ins. The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations, and in Iraq due to security conditions. We also experienced more gradual impact from offshore rig shutdowns in other countries in the region, driven by a combination of security concerns and export capacity disruptions. In addition to the situation in the Middle East, unfavorable activity mix and higher costs further away on the quarter, most notably in 1 subsea. Looking across the divisions, Production systems and digital grew year-on-year, while reservoir performance and well construction declined, mostly due to the impact of the conflict. Production systems' year-on-year revenue increased 23% due to the acquisition of ChampionX, which continued to deliver accretive growth. Additionally, we're on track to achieve our synergies target. On a pro forma basis, ChampionX also grew year-on-year, demonstrating the increasing demand in the production market. Turning to digital, we will increase 9% year-on-year, driven by strong uptake in digital operations. Of note, automated footage drilling will increase by 145% year-on-year as customers continue to adopt digital and AI power solutions to boost operational performance and efficiency. Also, data center solutions remain a bright spot, with 45% growth year-on-year. The momentum in this area continues, as you saw with our recent announcement to serve as a modular design partner for NVIDIA DSX AI factories. With our growing backlog, we remain on track to exit the year at a $1 billion run rate and expect a growth rate to accelerate in 2027. Overall, despite the challenges of the quarter, I'm pleased that the strategic decisions and portfolio actions that we are taking in digital data center solutions and production recovery are delivering results. I would like to express a big thank you to our teams in the Middle East and across the world who continue to deliver each day for our customers in this very dynamic environment. Now, let me turn to how we expect the market to evolve as the conflict in the Middle East is resolved. Firstly, we anticipate that oil prices will settle at levels above the pre-conflict baseline. This reflects the new balance of liquid supply and demand, which has been significantly altered by more than 500 million miles of lost production impact thus far. In this environment, energy security remains at the forefront. We expect many countries to accelerate efforts to diversify supply, strengthen domestic resource development, and rebuild strategic and commercial inventories that have been drawn down during the conflict. In short, the fragility of the global energy complex we are witnessing today demonstrates the strategic importance and long-term value of oil and gas. Together, these dynamics are expected to support a constructive macroenvironment for upstream investment over the coming years. In the near term, activity will be led by efforts to restore pollution capacity across the Middle East for both oil and gas. While some countries executed orderly shut-ins and should be able to resume production within days or weeks, other areas, particularly where disruption were more abrupt, may require more gradual ramp-up, including additional wetting damage. As a result, while the near-term recovery will be gradual and differ across countries, we see an upside in the outlook, barring demand destruction from the prolonged contract. We are committed and ready to support our customers across the region. Beyond the region, we expect a broad-based response across both short- and long-cycle investments. Short-cycle activity is likely strengthened first, partially in North America and parts of Latin America, where operators can respond quickly to higher prices. In addition, when international activities that can yield additional production will get a natural boost across all bases. At the same time, We expect renewed momentum in long-cycle developments, especially in offshore and deep-water markets, as customers look to secure durable, large-scale source of supply. This is also likely to improve certainty of offshore FID approvals while also supporting increased exploration activity. As you can read in third-party reports, the FID pipeline in 2026 is strengthening and directionally adding over $100 billion total investment approval, visibly ahead of the last two years, And with another step up expected in 2027, with deep water resources gaining a large portion of these investments. Regionally, this presents opportunity in Africa, Asia, and Latin America. Africa represents one of the most compelling long-term opportunities, with a significant base of underdeveloped oil and gas resources. We expect portfolio allocation to shift more favorably towards this region over time. We continue to prioritize access to gas, both onshore and offshore, as it works to diversify supply through development of national resources. And across Latin America, from Guyana to Brazil to Suriname, we see continued strength in deported developments, complemented by short-cycle growth in unconventional in Argentina. Separately, Venezuela continues to represent an exciting growth opportunity where we can expand on our existing operations in-country. To conclude, in the context of energy security and the balancing of supply and demand, we see three primary drivers of increased investment over the coming years. First, the replenishment of depleted commercial inventories and strategic reserves. Second, the diversification of supply, including greater redundancy in sourcing. And third, increased emphasis on developing local resources to enhance long-term resilience. Our core business would benefit from these dynamics, supporting a positive outlook for SLB into 2027 and 2028. Let me now describe the additional strategic role flavors for SLB. Production recovery, digital and data centers. Starting with production recovery, this is becoming increasingly critical as the industry faces structural challenge in replacing reserves and sustaining production from existing assets. In this context, technologies that enhance recovery and extend the life of natural fields are no longer optional, they are essential. Against the macro we just discussed, this is a defining moment for production recovery. This technology has the potential to shape the next stage of recovery in unconfessional assets and to create a step change in production enhancements in every basin and resource plate, from deep water to conventional, and from gas to oil. With Champonex, who are uniquely positioned to lead in this space by combining production chemistry, actual lift, digital capability, and subsurface domain expertise, while helping customers unlock additional buyers from existing reservoirs in a capital-efficient manner. This is particularly relevant as the project look to maximize recovery, improve returns, and bring incremental supply to market in support of energy security. We are also the first production recovery summit in houston a couple of weeks ago and we were very pleased with the engagement for our customers from every region across the world the increasing recognized the potential of this domain and the opportunities present to unlock growth for the industry turning to digital this business continues to build strong momentum and is a key driver of both differentiation and long-term value creation for slp while still relatively small portion of our revenue today its impact extend well beyond its size. Our approach is grounded in domain expertise, where AI, data, and software are integrated into our platform and workflow to deliver measurable performance outcomes. This is not about standalone tools. It is about embedding intelligence across the full lifecycle of weather development and production. Our teams continue to make exciting developments, particularly in agentic AI. And as the number of use cases increase, The value of this technology are proven in the field. We anticipate increased adoption. Over time, we expect digital to become an increasing bottom level for growth, both as a standalone business and as an enabler across our broader portfolio. And we're excited to share more about this business during our Digital Investor Day later in June. Finally, data centers represent a new and rapidly expanding opportunity for SLB. Building on our core strengths in engineering, manufacturing, and project execution, we're extending our scope of modular infrastructure solutions to support the accelerating demand for AI and digital capacity. In less than two years, we have established our right to play in this industry, proven by our manufacturing know-how and supply chain capabilities. We are building on this expertise to support design engineering and performance optimization of the data center build-out. And we are currently scaling the business through expanded capacity deepening partnerships, and selective international growth. While still at an early stage, this business is already demonstrating the characteristics we are looking for. Capitalized growth, strong demand visibility, and a clear path to becoming a meaningful contributor to earnings over time. Looking ahead, we see additional upside to opportunities such as thermal management, decarbonized power, and selling as a system integrator. These are areas where capability can serve a differential offering and expand our decibel market. We also continue to assess potential opportunities to accelerate this trajectory to targeted M&A. Taken together, these three areas, production recovery, digital, and data center solutions, reflect how we are evolving our portfolio toward higher return, technology-driven, and less cyclical growth. They are complementary, scalable and aligned with the long-term trends shaping both energy system and digital infrastructure. Let me now share our view on how the second quarter may unfold. First, it is uncertain how long geopolitical disruption will last and how the recovery in the Middle East will unfold. At the same time, we are facing higher procurement and logistics costs driven by the conflict. As a result, it is challenging to provide precise guidance for this quarter. However, there is a scenario where a portion of disruption in the region persists through the middle of the second quarter and then begins to gradually ease. Under this assumption, we estimate that the sequential revenue and earnings decline in the Middle East will be fully offset by all other international markets combined, where we anticipate mid-to-high single-digit revenue growth with improved margins. Meanwhile, North America revenue is expected to be flat sequentially. By division, under the building scenario just highlighted, digital and production systems will grow globally, while reservoir performance and well construction will decline globally. I will now turn the call over to Stéphane to discuss our financial results in more detail.