Q4 2023 Schlumberger NV Earnings Call

January 19, 2024

Ladies and gentlemen, thank you for standing by welcome to the S. L. B 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. One then zero you may remove yourself from Q by repeating.

The same one zero 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 Our Mcdonald. Please go ahead.

Thank you, Leo. Good morning, and welcome to the SOB fourth quarter and full year 2023 earnings conference call.

Thank you, Leo. Good morning, and welcome to the SOB 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 LaPouche, 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.

James McDonald: Thank you Leah good morning, and welcome to the <unk> fourth quarter and full year 2023 earnings conference call.

Today's call is being hosted from Houston following our board meeting held earlier this

James McDonald: Today's call is being hosted from Houston Following our board meeting held earlier this week.

Joining us on the call are Olivier LaPouche, Chief Executive Officer, and Stéphane Biguet, Chief Financial Officer.

James McDonald: Joining us on the call are living and a push chief Executive Officer, and Stephane <unk> 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.

James McDonald: 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.

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.

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.

James McDonald: 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 Olivia.

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.

Olivier Le Peuch: Thank you, James. Ladies and gentlemen, thank you for joining us on the call today.

Olivier Le Peuch: 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 full year 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.

Olivia: Thank you James ladies and gentlemen, thank you for joining us on the call today.

Olivier Le Peuch: In my prepared remarks, I will discuss our fourth quarter and full year results, highlight a number of achievements, and share our thoughts on the outlook for 2024 and our financial ambitions.

Olivia: In my prepared remarks, I will discuss our fourth quarter and full year results highlight a number of achievements and shell holds on the outlook for 2024 and our financial ambitions.

Olivier Le Peuch: Stéphane will then provide more detail on our financial results and we'll open the line for your questions.

Olivia: Stephane will then provide more detail on our financial results and we'll open the line for your questions.

Olivier Le Peuch: Let's begin.

Stephane: Let's begin.

Olivier Le Peuch: The fourth quarter was an impressive conclusion to the year's financial results.

Olivier Le Peuch: 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. A strong performance was fueled by the international and offshore markets.

Stephane: The fourth quarter was an impressive conclusion to the year's financial results.

Olivier Le Peuch: We grew revenue both sequentially and year-on-year, and we achieved cycle-high margins and cash flows during the quarter.

Stephane: We grew revenue both sequentially and year on year, and we achieved second high margins and cash flows during the quarter.

Olivier Le Peuch: A strong performance was fueled by the international and offshore markets.

Stephane: Our strong performance was fueled by the international and offshore markets.

Olivier Le Peuch: I was supported by robust sales in digital and integration of the acquired hacker subsidy.

Stephane: Supported by all the sets in digital and integration of <unk>.

Stephane: Okay, all subsea business.

Olivier Le Peuch: Throughout the year, we witnessed continued growth in international and offshore markets where customers are focused on enhanced production and capacity at the end.

Stephane: Throughout the year, we witnessed continued growth in international and offshore markets, what customers are focused on enhanced collection and capacity additions.

Olivier Le Peuch: We've also seen further investments in digital technologies,

Well those all seemed further investments in digital technologies.

Olivier Le Peuch: For planning and operational efficiency. This is driving growth today and presenting opportunities into the future.

We're planning an approximate efficiency this is driving growth today and presenting opportunities into the future.

Olivier Le Peuch: 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 results.

Stephane: The international sheets and investments as accelerated during the year with fourth quarter revenue growth driven by the recent Asia and Europe and Africa.

Stephane: While we continued to benefit from long cycle development capacity expansions and exploration and appraisal activities.

Olivier Le Peuch: 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 platform.

Olivier Le Peuch: 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 bench.

Stephane: Specific to offshore we delivered a very strong fourth quarter as we grew our legacy portfolio and the hottest strong performance from our one subsea joint venture on.

Olivier Le Peuch: On this note, I would like to extend my thanks to the entire Acker subsidy who have joined us three months ago.

Olivier Le Peuch: On this note, I would like to extend my thanks to the entire Acker subsidy team who joined us three months ago, and I've already contributed very well to our stronger end result.

Speaker Change: On this note I would like to extend my thanks to them Tayo I call subsea team, who have joined US three months ago and have already contributed today wedded to a swing and miss it.

Olivier Le Peuch: and I've already contributed very well to our stronger end result.

Olivier Le Peuch: Exceeding the year.

Olivier Le Peuch: Exceeding the year. Our international revenue and margins reach 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.

Speaker Change: Exiting the year.

Olivier Le Peuch: Our international revenue and margins reach new cycle highs, marking our 10th consecutive quarter of year-on-year double-digit revenue growth on the international front.

Our international revenue and margins reached new second highest marking our 10th consecutive quarter of year on year double digit revenue growth on the international fault.

Olivier Le Peuch: and we delivered exceptional free cash flow of $2.3 billion in the quarter.

We delivered exceptional free cash flow of $2 3 billion in the quarter.

Olivier Le Peuch: Next, let me reflect on our accomplishments for the fully.

Olivier Le Peuch: 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. Dollar and free cash flow are the highest since 2015. In the core, across production systems, reservoir performance, and world construction, we grew revenue by more than 20% and expanded 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.

Speaker Change: Next.

Let me reflect on our accomplishments for the full year.

Olivier Le Peuch: 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.

Speaker Change: We fulfilled our full year financial ambitions.

Speaker Change: Revenue by 18%, surpassing our revenue growth targets for the year and achieving adjusted EBITDA growth in the mid twenties.

Olivier Le Peuch: Additionally, we generated $4 billion.

Speaker Change: Additionally, we generated 4 billion.

Olivier Le Peuch: Dollar and free cash flow are highest since 2015.

Speaker Change: Darla and free cash flow our highest since 2015.

Olivier Le Peuch: In the core, across production systems, reservoir performance and world construction, we grew revenue by more than 20%, and expanded pre-tax operating margins by almost 300 basis points.

Speaker Change: Nicole across functions systems, because of our performance and what construction, we grew revenue by more than 20% and expanded pretax operating margins of almost 300 basis points.

Olivier Le Peuch: 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 its 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 Acker subsidiary business, which enabled us to expand in certain markets, mainly in Norway and Australia.

Olivier Le Peuch: This was driven by strong activity internationally and offshore, new technology deployment, and strong product sales.

This was driven by swung activity internationally and offshore new take those deployment and swung put access.

Olivier Le Peuch: 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.

Speaker Change: 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 eastern Med Italia.

Olivier Le Peuch: Offshore also continued its positive momentum, led by remarkable growth in Brazil and Angola, and very solid increases in the U.S. Gulf of Mexico, Guyana, and Norway.

Speaker Change: Or offshore also continued its positive momentum led by remarkable growth in Brazil, and Angola, and very solid increases in the U S Gulf of Mexico, Vienna and Norway.

Olivier Le Peuch: This was supported by the contribution from the acquired Acker subsidiary business, which enabled us to expand in certain markets, mainly in Norway and Australia.

Speaker Change: This was supported by the contribution from that acquired Echo subsea business, which enabled us to expand in certain markets, mainly Norway and Australia.

Olivier Le Peuch: Additionally, our fit-for-business model continues to deliver differentiated value in North America, resulting in revenue growth outperforming the RITCA.

Olivier Le Peuch: Additionally, our fit-for-business model continues to deliver differentiated value in North America, resulting in revenue growth outperforming the RITCA. In digital, we continue to witness the adoption of our digital workflows and data AI platform as customers work to enhance efficiency and returns by integrating our connected and autonomous trading data and AI. 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.

Speaker Change: Additionally, our fit for basin business model continued to deliver detailing shifted value North America visiting your revenue goals up performing rig count.

Olivier Le Peuch: 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.

Speaker Change: In digital we continued to witness the adoption of digital workflows and data AI platform, our system to work to enhance efficiency and returns by integrating our connected and autonomous drilling data and AI solutions.

Olivier Le Peuch: 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.

Speaker Change: We now have more than 6000 users and observe it generated 125 million compute hours, both representing more than 40% year on year.

Olivier Le Peuch: With our new technology platforms comprised of cloud, edge, and AI, growing at a CAGR of 60% since 2020.

Olivier Le Peuch: As a result, we achieved full-year digital revenue of more than $2 billion.

Speaker Change: As a result, we achieved full year digital revenue of more than $2 billion.

Olivier Le Peuch: With our new technology platforms comprised of cloud, edge, and AI, growing at a CAGR of 60% since 2020.

Speaker Change: We saw new technology platforms comprise of cloud hedge NII going up the cargo 60% since 2021.

Olivier Le Peuch: New Energy, we forged new partnerships and made new investments in capture technology for common captures.

Olivier Le Peuch: New Energy, we forged new partnerships and made new investments in capture technology for common captures. 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, individuals on lower-carbon electricity, and in Europe, on zero-carbon heating and cooling systems.

New energy, we forged new partnerships and made new investments in carbon capture technology for carbon capture and storage. We are seeing very positive momentum in this space.

Olivier Le Peuch: We are seeing very positive momentum in space.

Olivier Le Peuch: and we are actively participating in more than $400 million of CCS tenders globally.

Speaker Change: And we're also.

Speaker Change: Activity, perhaps being more than phone and me on the lot of Ccs tenders globally.

Olivier Le Peuch: Additionally, in geothermal and geoenergy, we are partnering with government agencies, individuals on lower-carbon electricity, and in Europe, on zero-carbon heating and cooling systems.

Additionally, in Georgetown when I joined after you are partnering with government agency in the Middle East on the overall Calvin electricity and in New York on zero carbon heating and cooling solutions.

Speaker Change: As we advance our three engines of growth. We also continued to deliver for customers and stakeholders by achieving our lowest recordable injury rate and the highest level of operational reliability on record.

Olivier Le Peuch: This is also reflected in industry surveys, where we are growing customer satisfaction through performance and value creation.

This is also reflected in industry surveys.

Our growing customer satisfaction through performance and value creation.

Olivier Le Peuch: Finally, we reduce our emission intensity across Scope 1, 2, and 3 on the path to achieving our 2025 Emissions Reduction Committee.

Speaker Change: Finally, we reduced our emission intensity of course scope, one two and three on the bus to achieving our 2025 emissions reductions commitments.

Olivier Le Peuch: 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 SELDI team for delivering this impressive result.

Olivier Le Peuch: Moving forward, we are well positioned to capture further growth and I look forward to building on this strong success in the year ahead.

Speaker Change: Moving forward, well well positioned to capture further growth and I look forward to building on the strong success in the year.

Olivier Le Peuch: I want to thank the entire SELDI team for delivering this impressive result.

Speaker Change: Ed.

Speaker Change: I won't do thank the entire <unk> team for delivering these impressive results.

Olivier Le Peuch: Turning to the macro.

Olivier Le Peuch: Turning to the macro, the characteristics of breadth, resilience, and durability that have defined this cycle remain fully in play. 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 Middle East offshore and gas resources.

Speaker Change: Turning to the Michael.

Olivier Le Peuch: The characteristics of breadth, resilience, and durability that have defined this cycle remain fully in play.

Michael: The characteristics of breath, resiliency and durability that defined the second remains fully in place.

Olivier Le Peuch: 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.

Michael: This continues to be supported by the imperative of energy security to meet rising global demand confirming our belief in the longevity of the second.

Olivier Le Peuch: 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.

After a year of demand growth in 2020 free we anticipate further growth in 2024 that we continue to support the ongoing mid tier invest on second.

Olivier Le Peuch: 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 resources.

Michael: 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 versus place.

Olivier Le Peuch: 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 for both oil and natural gas.

Michael: In the Middle East Gulf will be led by Saudi Arabia, and the United Arab Emirates, which commit continue to commit significant investments to increase production capacity in both oil and unconventional gas followed by Iraq and Kuwait.

Olivier Le Peuch: Followed by Irak and Corey.

Olivier Le Peuch: Followed by Iraq and Corey.

Olivier Le Peuch: Meanwhile, in Asia, countries such as China, Malaysia, Indonesia, and India are leading new gas exploration and development.

Olivier Le Peuch: 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 to take across this wide base load of activities. A significant portion is taking place offshore, while capital expenditure will continue to drive that growth momentum in 2024. As a result, the rig count will continue to rise, many 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.

Michael: Meanwhile, in Asia countries, such as China, Malaysia, Indonesia, and India added any new gas exploration and development and of course, all of our international basis, We anticipate strong activity led by Brazil, and followed by West Africa and Australia.

Olivier Le Peuch: And across our international basins, we anticipate strong activity led by Brazil and followed by West Africa and Australia.

Olivier Le Peuch: to take across this wide base load of activities.

Michael: If you could close this white baseload of activity a significant portion is taking place so while capital expenditure, we continue that growth momentum in 2024.

Olivier Le Peuch: A significant portion is taking place offshore, while capital expenditure will continue that growth momentum in 2024.

Olivier Le Peuch: As a result, the rig count will continue to rise, many in the Middle East and Asia responding to a strong FID pipeline in both shallow and deep water.

Michael: As a result, the rig counts have continued to rise mainly in the middle East and Asia responding to a strong exciting pipeline with both shallow and deepwater.

Olivier Le Peuch: 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.

Speaker Change: Well you know, we see the potential for more than call. It beat on the Angola offshore East Ids in both 2024 and 2025 underscoring the enduring strength of the offshore markets and supporting a very solvable subsea outlook for years to come.

Olivier Le Peuch: In this context, although geopolitical tensions persist in several regions, we do not expect any significant impact on activity in 2024 absent further escalation. Additionally, although we have witnessed short-term commodity prices fluctuate over the past few months, long-cycle investment in the Middle East offshore and gas markets remains decoupled from short-term pricing, which will continue to support the resilience of this market.

Olivier Le Peuch: In this context, although geopolitical tensions persist in several regions, we do not expect any significant impact to activity in 2024 absent further escalation.

Speaker Change: In this context, although geopolitical tensions persist in several regions, we do not expect any significant impact to activity in 2024 at some sort of escalation.

Olivier Le Peuch: 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 this market.

Additionally, although we have witness short term commodity price fluctuate over the past few months long cycle of investment in the middle East offshore gas markets remain decoupled from short term pricing, which we continue to support the resilience of this market.

Olivier Le Peuch: In North America, following a noticeable moderation of activity in the later part of 2023, we anticipate capital discipline to continue.

Olivier Le Peuch: In North America, following a noticeable moderation of activity in the latter part of 2023, we anticipate capital discipline to continue. Consequently, investment levels will be sustained at 2023 exit rates with a minimal increase in activity as the region focuses 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.

Speaker Change: In North America, following a noticeable moderation of activity in the later part of 2023, we don't see bad capital discipline to continue.

Olivier Le Peuch: Consequently, investment levels will be sustained at 2023 exit rates with minimal increase in activity as the region focused on sustaining its record output from last year.

Speaker Change: <unk> investment levels will be sustained at 2023 exit rates with minimum minimal increase in activity as a vision focused on sustaining this record output from past year.

Olivier Le Peuch: This will drive further adoption of technology as operators aim to further improve efficiency and recovery rate.

Speaker Change: This will drive further adoption of technology as operators aim to further improve efficiency and recovery rates.

Olivier Le Peuch: Now, let me explain how we expect these factors to drive our performance in 2025.

Olivier Le Peuch: Now, let me explain how we expect these factors to drive our performance in 2025 and Dean Tanner, and Sean Mack. We expect full-year revenue goals to reach 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.

Speaker Change: Now let me explain how we expect these factors to drive our performance through 2024.

Olivier Le Peuch: and Dean Tanner, Sean Mack.

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.

Olivier Le Peuch: We expect full-year revenue goals reaching the mid-teens.

Olivier Le Peuch: Led by the Middle East and Asia and Europe and Africa.

Olivier Le Peuch: 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.

Speaker Change: These growth would 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 barrel of subsea production system backlog.

Olivier Le Peuch: We expect to deliver more than $4 billion in additional SEPSI bookings in 2024, an increase of more than 25% year-on-year as the market continues to expand.

Olivier Le Peuch: We expect to deliver more than $4 billion in additional SEPSI bookings in 2024, opposite an increase of more than 25% year-on-year as the market continues to expand.

Speaker Change: We expect to deliver more than 4 billion. There are an additional subsea bookings in 2024 hope is again increase of more than 25% year on year as the market continues to expect.

Olivier Le Peuch: For clarity, when excluding the impact of hacker contribution and the expected decline in Russia,

Olivier Le Peuch: For clarity, when excluding the impact of hacker contributions 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.

Speaker Change: For clarity when excluding the impact of ACA contribution and the expected decline in Russia.

Olivier Le Peuch: We expect double digit international growth for the year.

Speaker Change: We expect double digit international growth for the year.

Olivier Le Peuch: Meanwhile, in North America, although activity has moderated, we expect full year revenue growth reaching the mid-single digits.

Speaker Change: Meanwhile, in North America, although activity has moderated we expect full year revenue growth, reaching the mid single digits.

Olivier Le Peuch: Driven by our technology-leveraged portfolio in both U.S. land and U.S. growth from experience.

Speaker Change: Driven by our technology and leverage portfolio in both U S and in the U S Gulf of Mexico.

Olivier Le Peuch: Turning to the divisions, we expect all core divisions to grow, led by production systems and the reservoir performance.

Olivier Le Peuch: 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.

Speaker Change: Turning to the divisions, we expect all core divisions enroll led by production systems and because of our performance.

Olivier Le Peuch: Digital integration is also expected to grow, with digital growing in the high-teens, primarily driven by new technology platforms, while APS remains flat.

Speaker Change: Digital integration is also expected to grow with digital growing in the high teens.

Speaker Change: Rally driven by new technology platforms, while Aps remains flat.

Olivier Le Peuch: Directionally, we expect further margin expansions driven by tight service capacity internationally, pricing, and increased technology adoption.

Speaker Change: Directionally, we expect further margin expansions driven by tight service capacity internationally.

Speaker Change: And increased technology adoption.

Olivier Le Peuch: This will result in year-on-year epithelial growth in the mid-teens.

Olivier Le Peuch: This will result in year-on-year epithelial 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 has approved a 10% increase in our quarterly dividend, and we have also increased our share re-purchase program for 2024. Combined, we are targeting a return of more than $2.5 billion to shareholders in 2024, an increase of more than 25% compared to 2020.

Speaker Change: This.

Speaker Change: And year on year EBITDA growth in the mid teens.

Speaker Change: With continued growth in earnings our proven ability to generate cash and confidence in our long term outlook. We are pleased to announce that the board of directors have approved a 10% increase in our quarterly dividend.

Olivier Le Peuch: and we also increased our share re-purchase program in 2024.

Speaker Change: And we will also increase our share repurchase program in 2024.

Olivier Le Peuch: 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 2020.

Speaker Change: 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.

Olivier Le Peuch: 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.

Speaker Change: Looking to the first quarter, we anticipate the typical pattern of activity beginning with the combined effects of seasonality and yet sales of year end digital sex.

Olivier Le Peuch: As a result, on New York, New York, Benzie.

Speaker Change: 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.

Olivier Le Peuch: We expect first quarter revenue growth in the low teens and EBITDA growth in the mid-teens.

Olivier Le Peuch: We expect first quarter revenue growth in the low teens and EBITDA growth in the mid-teens. This would be followed by an activity rebound in the second quarter and further acceleration of growth in the second half of the year.

Olivier Le Peuch: This would be followed by an activity rebound in the second quarter and further acceleration of growth in the second half of the year.

Speaker Change: 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.

Speaker Change: Paal Sudali, The International Night.

Speaker Change: This will support the ambition we have set for the full year revenue and earnings goal.

Speaker Change: This will support the ambition, we have set for the full year revenue.

Speaker Change: Earnings calls.

Speaker Change: I will now turn the call over to Stefan.

Speaker Change: I will now turn the call over to Stephane.

Stefan: Thank you Olivier and good morning ladies and gentlemen.

Stefan: Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, were 86 cents. This represents an increase of 8 cents sequentially and an increase of 15 cents when compared to the same period of last year. We recorded 9 cents of charges during the fourth quarter of this year. Sixth sense related to the devaluation of the peso in Argentina and the remaining $0.03 related to merger and integration costs associated with our acquisition of the hacker subsidy business, which closed at the beginning of the program. We anticipate that we will incur additional charges as integration activities continue over the course of 2020.

Stephane: Thank you Olivier.

Stephane: Good morning, ladies and gentlemen.

Stefan: Fourth quarter earnings per share, excluding charges and credits, was 86 cents.

Stephane: Fourth quarter earnings per share excluding charges and credits was <unk> 86.

Stefan: This represents an increase of 8 cents sequentially and an increase of 15 cents when compared to the same period of last year.

Stephane: This represents an increase of 8% sequentially and.

An increase of 15.

When compared to the same period of last year.

Stefan: We recorded 9 cents of charges during the fourth quarter of this year.

Stephane: We recorded nine of charges during the fourth quarter of this year.

Stefan: Sixth sense related to the devaluation of the peso in Argentina.

Stephane: <unk> related to the devaluation of the peso in Argentina.

Stefan: and the remaining $0.03 related to merger and integration costs associated with our acquisition of the hacker subsidy business.

Stephane: And the remaining free.

Stephane: Related to merger and integration costs associated with our acquisition of the aircraft subsidy business, which closed at the beginning of the quarter.

Stefan: which closed at the beginning of the program.

Stefan: We anticipate that we will incur additional charges as integration activities continue over the course of 2020.

Stephane: We anticipate that we will incur additional charges as integration activities continue over the course of 2024.

Stefan: Our full year 2023 revenue of $33.1 billion grew 18% year-on-year. While this revenue is roughly the same as the pre-pandemic level of 2019, our adjusted EBITDA in 2023, in absolute dollars, was 22% higher. As a result, our full year 2023 EBITDA margin of 24.5% has expanded 430 basis points over this period on a similar revenue base.

Stefan: Our full year 2023 revenue of $33.1 billion grew 18% year-on-year.

Our full year 2023 revenue of $33 1 billion grew 18% year on year.

Stefan: While this revenue is roughly the same as the pre-pandemic level of 2019, our adjusted EBITDA in 2023, in absolute dollars, was 22% higher.

Stephane: Why does this revenue is roughly the same as the pre pandemic level of 2019, our adjusted EBITDA in 2023, and absolute dollars was 22% higher.

Stefan: As a result, our full year 2023 EBITDA margin of 24.5% has expanded 430 basis points over this period on a similar revenue base.

Stephane: As a result, our full year 2020 free EBITDA margin of $24 five consent has expanded 430 basis points over this period on a similar revenue base.

Stefan: This highlights the high grading of our portfolio over the last few years.

Stefan: This highlights the high grading of our portfolio over the last few years, our significantly improved operating leverage, and our favorable market position, particularly internationally and offshore.

This highlights the high grading of our portfolio over the last few years.

Stefan: Our significantly improved operating leverage and our favorable market position, particularly internationally and offshore.

Stephane: Our significantly improved operating leverage.

Stephane: Our favorable market position, particularly internationally and offshore.

Stefan: Fourth quarter revenue of 8.99 billion, increased 8% sequentially.

Stefan: Fourth quarter revenue of $8.99 billion increased 8% sequentially, with the acquired hacker subsidy business accounting for approximately 70% of the increase. Fourth quarter pre-tax operating margin of 20.8% improved 52 basis points sequentially and 101 basis points year-on-year. Adjusted EBITDA margin for the fourth quarter of 25.3% was 95 basis points higher than the same period last year.

Stephane: Fourth quarter revenue of $8 99 billion increased 8% sequentially.

Stefan: With the acquired hacker subsidy business accounting for approximately 70% of the increase.

Stephane: With the acquirer that go subsea business accounting for approximately 70% of the increase.

Stefan: Fourth quarter pre-tax operating margin of 20.8% improved 52 basis points sequentially and 101 basis points year-on-year.

Stephane: Fourth quarter pre tax operating margin of 28% improved 52 basis points sequentially and 101 basis points year on year.

Host: Thank you, Leo. Good morning, and welcome to the SOB 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 LaPouche, 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.

Stefan: Adjusted EBITDA margin for the fourth quarter of 25.3%,

Adjusted EBITDA margin for the fourth quarter of 25, 3%.

Stefan: I will now go through the fourth quarter results for each division. For the fourth quarter, digital and integration revenue of 1 billion increased 7% sequentially, with pre-tax operating margin expanding 197 basis points to 34%. This growth is due to increased digital revenue across all areas.

Stefan: was 95 basis points higher than the same period of last.

Stephane: It was 95 basis points higher vendor same period of last year.

Stefan: I will now go through the fourth quarter results for each division.

Stephane: I will now go through the fourth quarter results for each division.

Stefan: Fourth quarter, digital and integration revenue of 1 billion increased 7% sequentially, with pre-tax operating margin expanding 197 basis points to 34%.

Fourth quarter of digital integration revenue of 1 billion increased 7% sequentially with pre tax operating margin expanding 197 basis points to 30 forecast.

Stefan: This growth was due to increased digital revenue across all areas.

Stephane: This growth was due to increased digital revenue across all areas.

Host: 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.

Stefan: Led by the Middle East and Asia and Europe and Africa.

Stefan: Led by the Middle East and Asia and Europe and Africa, reservoir performance revenue of 1.7 billion grew 3% sequentially, primarily due to increased activity internationally, mainly in the Middle East and Africa. Pre-tax operating margin increased 88 basis points to 21.4%, representing the highest level of this cycle, driven by higher activity and improved pricing.

Stephane: Led by the Middle East and Asia, and Europe and Africa.

Stefan: Reservoir performance revenue of 1.7 billion grew 3% sequentially, primarily due to increased activity internationally, mainly in the Middle East and Africa.

Stephane: Reservoir performance revenue of $1 7 billion grew 3% sequentially.

Stephane: Primarily due to increased activity internationally, mainly in the middle East and Africa.

Stefan: Pre-tax operating margin increased 88 basis points to 21.4%.

Stephane: Pretax operating margin increased 88 basis points to 21, 4%.

Stefan: representing the highest level of this cycle driven by higher activity and improved pricing.

Stephane: Representing the highest level of the cycle driven by higher activity and improved pricing.

Stefan: While construction, revenue of $3.4 billion was essentially flat sequentially, as international growth of 2% was offset by a decline in North America revenue resulting from lower U.S. land recount. Pre-tax operating margin increased 35 basis points sequentially.

Stefan: While construction, revenue of $3.4 billion, was essentially flat sequentially, as international growth of 2% was offset by a decline in North America revenue resulting from lower U.S. land recount.

Stephane: Well construction revenue of $3 4 billion was essentially flat sequentially as international growth of 2% was offset by a decline in North America revenue, resulting from lower U S land rig counts.

Stefan: Lastly, production systems revenue of $2.9 billion increased 24% sequentially, largely due to the acquired hacker subsidies. Excluding these effects, revenue grew 4% sequentially due to strong internationals. The pre-tax operating margin expanded by 153 basis points to 15%.

Stefan: Pre-tax operating margin increased 35 basis point sequences.

Pretax operating margin increased 35 basis points sequentially.

Stefan: Lastly, production systems revenue of $2.9 billion increased 24% sequentially, largely due to the acquired hacker subsidies.

Stephane: Lastly, production systems revenue of $2 9 billion increased 24% sequentially largely due to the acquired <unk> subsea business <unk>.

Stefan: Excluding these effects, revenue grew 4% sequentially due to strong internationals.

Stephane: Excluding these effects.

Stephane: <unk> grew 4% sequentially due to strong international sales.

Stefan: Pre-tax operating margin expanded 153 basis points to 15%

Stephane: Pre tax operating margin expanded 163 basis points to 15%.

Olivier Le Peuch: Throughout the year, we witnessed continued growth in international and offshore markets where customers are focused on enhanced production and capacity at the end. 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 results. 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 bench. On this note, I would like to extend my thanks to the entire Acker subsidy who joined us three months ago, and I've already contributed very well to our stronger end result. Exceeding the year.

Stefan: It's highest level recycle on higher sales of midstream, artificial lift, and subsea production.

Stefan: Its highest level recycling on higher sales of midstream, artificial lift, and subsea production.

Stephane: Highest level recycle on higher sales of the midstream artificial lift and subsea production systems.

Stefan: Looking ahead to the full year of 2024.

Stefan: Looking ahead to the full year of 2024, we expect continued margin expansion in our core, driven by sustained operating leverage, a favorable geographic mix, and pricing tailwinds. In our digital and integration division, we expect margins to remain approximately at the same level as 2023, as digital margins will increase due to the accelerated adoption of our new technology platforms, while APS margins will decrease as a result of higher amortization expectations. All in all, as mentioned by Olivier, strong year-on-year revenue growth and continued margin expansion will result in adjusted EBITDA growth in the mid-teens in 2024 when compared to

Looking ahead to the full year of 2024.

Stefan: We expect continued margin expansion in our core, driven by sustained operating leverage, a favorable geographic mix, and pricing tailwind.

Stephane: We expect continued margin expansion in our core driven by sustained operating leverage a favorable geographic mix and pricing headwinds.

Stefan: In our digital and integration division, we expect margins to remain approximately at the same level as 2023, as digital margins will increase due to the accelerated adoption of our new technology platforms, while APS margins will decrease as a result of higher amortization expectations.

Stephane: In our digital and integration Division, we expect margins to remain approximately at the same level as 2020 free as digital margins will increase due to the accelerated adoption of our new technology platforms, while EPS margins will decrease as a result of higher amortization expense.

Stefan: All in all, as mentioned by Olivier, strong year-on-year revenue growth and continued margin expansion will result in adjusted EBITDA growth in the mid-teens in 2024 when compared to 2020.

Stephane: All in all as mentioned by Olivier strong year on year revenue growth and continued margin expansion will result in adjusted EBITDA growth in the mid teens in 2024, when compared to 2023.

Stefan: Now turning to our liquidity.

Stefan: Now turning to our liquidity, we generated $3 billion of cash flow from operations and $2.3 billion of free cash flow during the fourth quarter. This exceptional performance resulted in a full-year free cash flow of $4 billion, which is the highest level we have achieved since 2015. This was due to a combination of very strong year-end receivable cash collections. Increased customer advances, improved inventory terms, and the receipt of a prior year tax refund.

Olivier Le Peuch: 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. The dollar and free cash flow are the highest since 2015.

Now turning to our liquidity.

Stefan: We generated $3 billion of cash flow from operations and $2.3 billion of free cash flow during the fourth quarter.

Stephane: We generated 3 billion of cash flow from operations and $2 3 billion of free cash flow during the fourth quarter.

Stefan: This exceptional performance resulted in a full-year free cash flow of $4 billion.

Stephane: This exceptional performance resulted in full year free cash flow of $4 billion.

Stefan: which is the highest level we have achieved since 2015.

Which is the highest level we have achieved since 2015.

Stefan: This was due to a combination of very strong year-end receivable cash collections.

Stephane: This was due to a combination of very strong year end receivable cash collections increased customer advances improved inventory turns and the receipt of the prior year tax refund.

Stefan: As a result of this exceptional free cash flow performance, we reduced our net debt by 1.4 billion during the quarter to 8 billion. This represents our lowest net debt level since the first quarter of 2016.

Stefan: Increased customer advances, improved inventory terms, and the receipt of a prior year tax refund.

Stefan: As a result of this exceptional free cash flow performance, we reduced our net debt by 1.4 billion during the quarter to 8 billion.

Stephane: As a result of this et cetera on a free cash flow performance, we reduced our net debt by $1 4 billion during the quarter two 8 billion.

Olivier Le Peuch: In the core, across production systems, reservoir performance, and world construction, we grew revenue by more than 20% and expanded 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 continues 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 Acker subsidiary business, which enabled us to expand in certain markets, mainly in Norway and Australia.

Stefan: This represents our lowest net debt level since the first quarter of 2016.

Stephane: This represents our lowest net debt level since the first quarter of 2016.

Stefan: Capital investments, including CAPEX and investment in APS projects and exploration data.

Stefan: Capital investments, including CAPEX and investment in APS projects and exploration data, were $742 million in the fourth quarter and 2.6 billion for the full year. Looking ahead, we will continue to be disciplined as it relates to our capital investments. Despite the continued revenue growth of 2024 capital investments, we remain at approximately the same level as in 2020. Finally, during the fourth quarter, we repurchased 1.8 million shares of our stock for a total purchase price of 100 million.

Stephane: Capital investments, including Capex and investment in Aps projects and exploration data.

Stefan: We're 742 million in the fourth quarter.

Stephane: $742 million in the fourth quarter and.

Stefan: and 2.6 billion for the full year.

Stephane: And $2 6 billion for the full year.

Stefan: Looking ahead, we will continue to be disciplined as it relates to our capital investments.

Looking ahead, we will continue to be disciplined as it relates to our capital investments.

Stefan: Despite the continued revenue growth of 2024 capital investments, we remain at approximately the same level as in 2020.

Stephane: Despite the continued the continued revenue growth, while 2024 capital investments will remain at approximately the same level as in 2023.

Stefan: Finally, during the fourth quarter, we repurchased 1.8 million shares of our stock for a total purchase price of 100 million.

Stephane: Finally during the fourth quarter, we repurchased one 8 million shares of our stock for a total purchase price of $100 million.

Stefan: For the full year, we return a total of $2 billion to shareholders in the form of dividends and stock repurchase. Our continued capital decision, combined with the confidence we have that 2024 will be another year of strong cash flow generation, will enable us to increase our returns to shareholders in 2021. In this regard, when combining the increased quarterly dividend that we announced today with increased share repurchases, we are targeting to return more than 2.5 billion to our shareholders in 2020.

Stefan: For the full year, we return the total of 2 billion to shareholders in the form of dividends and stock repurchase.

Stephane: For the full year, we returned a total of 2 billion to shareholders in the form of dividends and stock repurchases.

Stefan: Our continued capital decision.

Stephane: Our continued capital discipline.

Stefan: Combined with the confidence we have that 2024 will be another year of strong cash flow generation, will enable us to increase our returns to shareholders in 2021.

Stephane: Combined with the confidence we have by 2024 will be another year of strong cash flow generation will enable us to increase our returns to shareholders in 2024.

Stefan: In this regard, when combining the increased quarterly dividend that we announced today with increased share repurchases, we are targeting to return more.

Stephane: In this regard when combining the increased quarterly dividend that we announced today, we've increased share repurchases. We are targeting to return more than $2 5 billion to our shareholders in 2024.

Stefan: and 2.5 billion to our shareholders in 2020.

Olivier Le Peuch: 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 rate of 60% since 2020. Through New Energy, we forged new partnerships and made new investments in capture technology for common captures. 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, individuals on lower-carbon electricity, and in Europe, on zero-carbon heating and cooling systems.

Stefan: I will now turn the conference call back to Olivier.

Stephane: I will now turn the conference call back to Olivier.

Olivier Le Peuch: Thank you, Stéphane. Ladies and gentlemen, I think we will start the Q&A. Solia, back to you.

Olivier Le Peuch: Thank you, Stéphane. Ladies and gentlemen, I think we will start the Q&A session now. Solia, back to you.

Olivier: Thank you Stephane, ladies and gentleman, who I think will be stopped.

Speaker Change: The Q&A so layer that back to you.

Speaker Change: Thank you, ladies and gentlemen, once again, if you would like to ask a question you May press. One then zero on your telephone keypad.

Speaker Change: on his television show.

Speaker Change: And first we go to the line of James West with Evercore ISI. Please go ahead.

Speaker Change: Hey, good morning, Olivier and Stefan.

James Carlyle West: Hey, good morning, Olivier and savant.

Speaker Change: Good morning. Good morning.

Speaker Change: Good morning, good morning.

Speaker Change: So, Olivier, curious to hear your thoughts. Clearly, you're looking for another year of pretty strong growth in EBITDA.

Speaker Change: So, Olivier, curious to hear your thoughts. Clearly, you're looking for another year of pretty strong growth in EBITDA and revenue, but it seems to me like we've got a lot.

Speaker Change: So let me.

Speaker Change: Curious to hear your thoughts clearly youre looking for another year.

Speaker Change: Pretty strong growth in EBITDA.

Olivier Le Peuch: As we advance our tree and genes of growth, we also continue to deliver for our 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. Finally, we reduce our emission intensity across Scope 1, 2, and 3 on the path to achieving our 2025 Emissions Reduction Committee targets. 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 SELDI team for delivering this impressive result. Turning to the macro,

Speaker Change: and revenue but it seems to me like we've got a lot of

Speaker Change: And revenue.

Speaker Change: But it seems to me like we've got a lot of years.

Speaker Change: Deepwater rigs that are going to start turning to the right here very soon

Speaker Change: Particularly deepwater rigs that are going to start turning to the right here.

Speaker Change: Very soon.

Speaker Change: And particularly in the second half, there should be an exit rate that's even higher than that type of growth as we go into 25. I think, is that a fair assumption or am I getting ahead of my skis here in terms of kind of what the overall market opportunity is going to be as we step through this year and get into the 25-26?

Speaker Change: And particularly in the second half, there should be an exit rate that's even higher than that type of growth as we go into 25. Is that a fair assumption or am I getting ahead of myself here in terms of kind of what the overall market opportunity is going to be as we step through this year and get into 25-26?

Speaker Change: And particularly in the second half and that there should be an exit rate is even higher than.

Speaker Change: And then that type of growth as we go into 2005, I think is that a fair assumption or.

Speaker Change: Am I getting ahead of my skis here.

Speaker Change: In terms of kind of what the.

Speaker Change: What's the overall market opportunities are going to be as we speak.

Speaker Change: Step through this year and get into the.

Speaker Change: 25, 26 up here.

Speaker Change: No, that's correct. I think, James, thank you for laying out the

Speaker Change: No, that's correct. I think, James, thank you for laying out the. I think the theme of SHORE is a distinct attribute of this cycle. I have already delivered in terms of total activity visibly beyond 2019 and including both shallow and deep water that have both grown visibly in the last 24 months, shallow mainly driven by the addition of rigs that we continue to see coming in the Middle East and the Asia region, and deep water across all the deep water basins. And we anticipate, albeit at a more moderate rate for deep water than shallow, the rig activity to continue to increase and the exit rate of 24 to be above in terms of rig counts, and the offshore rig count.

Speaker Change: No that's correct I think.

Speaker Change: James Thank you for laying out the.

Speaker Change: I think the theme of SHORE is a distinct attribute of this cycle. I have already delivered in terms of total activity visibly beyond 2019 and includes both shallow and deep water that have both grown visibly in the last 24 months. Shallow mainly driven by addition of rigs that we continue to see coming in the Middle East and the Asia region and deep water across all the deep water basins. And we anticipate, albeit at a more moderate rate for deep water than shallow, the rig activity to continue to increase and the exit rate of 24 to be above in terms of rig counts, offshore rig count. The exit rate of 23 as a benefit, I think both the offshore activity and the deep water where we have the benefit of the scale with our subsea venture will benefit and we continue to see growth not only in 24 but running out to 25 and beyond as I said.

Olivier Le Peuch: The characteristics of breadth, resilience, and durability that have defined this cycle remain fully in play. This continues to be supported by the imperative of energy security to meet rising global demand, confirming our belief in the longevity of this 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 resources. 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 natural gas, followed by Iraq and Corey.

Speaker Change: The theme of offshore I think offshore is a distinct attributes of this cycle.

Speaker Change: Really.

Speaker Change: <unk> already delivered in terms of total activity.

Speaker Change: Visibility on the 2019 and includes both shallow and deepwater.

Speaker Change: And that have both grown visibly in the last.

Speaker Change: The last 24 months.

Speaker Change: Shallow mainly driven by addition of rigs and.

Speaker Change: That we continue to see come in in the Middle East and the Asia region and deepwater costs, all the deepwater basins and we anticipate.

Speaker Change: Albeit at a more moderate rate for deepwater and shallow the rig activity to continue to increase.

Speaker Change: And the exit rate of 24 to be both in terms of rig count offshore head count per offshore rig count the exit rate of.

Speaker Change: The exit rate of 23 as a benefit, I think both the offshore activity and the deep water, where we have the benefit of scale with our subsea venture, will benefit, and we continue to see growth not only in 24, but running out to 25 and beyond, as I said.

Speaker Change: Of 23 as the benefit I think both the offshore activity and deepwater on where we are have had the benefit of the scale with our subsea venture will benefit as we continue to see growth opening 24, but the winning out to 'twenty five and beyond.

Speaker Change: As I said.

Speaker Change: The total FID for offshore keeps being $100 billion for each of 24 and 25, and this is not only supporting activity next year and 25, but support longevity of offshore investment beyond. So we remain very constructive on that environment, and yes, we see the exit rate to be above last December in 12 months from now.

Speaker Change: The total FID for offshore stays at $100 billion for each of 24 and 25, and this is not only supporting activity next year and 25, but also supporting the longevity of offshore investment beyond. So we remain very constructive in that environment, and yes, we see the exit rate to be above last December in 12 months from now.

Speaker Change: The total <unk>.

Speaker Change: There are four offshore keeps being a 100 billion there are for each of $20 25, and it is not only supporting activity next year in 'twenty, five but support longevity of offshore investments.

Speaker Change: Beyond so we are we.

Speaker Change: We remain very constructive on that on Diamond and yes, we see the exit rate to be to be above the last December.

In 12 months from now.

Speaker Change: Okay, perfect. That's great to hear. And then maybe a quick follow-up in terms of CapEx. I don't know if, Stefan, if you want to take this one, but CapEx seems to be, it seems like you're going to keep it at the same type of level that it's been, that it was in 23, but there's going to be a lot more activity. And so does that number eventually need to move higher? And when it does, if it does, do you still believe that you can maintain this, you know, 5% to 6% of revenue for a CapEx dollars ratio?

Speaker Change: Okay, perfect. That's great to hear. And then maybe a quick follow-up in terms of CapEx. I don't know if, Stefan, you want to take this one, but CapEx seems to be, it seems like you're going to keep it at the same type of level that it was in 23, but there's going to be a lot more activity. And so does that number eventually need to move higher? And when it does, if it does, do you still believe that you can maintain this, you know, 5% to 6% of revenue for a CapEx dollars ratio?

Speaker Change: Okay. Okay perfect. That's great good to hear and then maybe a quick follow up in terms of Capex I don't know if you.

Speaker Change: You want to take this one but.

Speaker Change: Capex seems to be.

Speaker Change: It seems like Youre going to keep it at the same type of level that its been there wasn't in 'twenty three.

Speaker Change: But it's going to be a lot of there's a lot more activity and so does that number eventually need to move higher and when it does if it does do you still believe that you can maintain this 5% to 6% of revenue.

Speaker Change: For our Capex dollars.

Olivier Le Peuch: Additionally, although we have witnessed short-term commodity prices fluctuate over the past few months, long-cycle investment in the Middle East offshore and gas markets remains decoupled from short-term pricing, which will continue to support the resilience of this market. In North America, following a noticeable moderation of activity in the latter part of 2023, we anticipate capital discipline to continue. Consequently, investment levels will be sustained at 2023 exit rates with a minimal increase in activity as the region focuses on sustaining its record output from last year.

Speaker Change: Ratio.

Stefan: So Luke, James, yes, we are still growing, going into 2024 and beyond, but this level of capex we spent in 2023 we think remains adequate for this year as well. You have to think about the mix of activities as well amongst our divisions, so we think we can very well address the upcoming growth within this envelope without having to increase normally throughout the year, unless growth is much more than expected, but we are comfortable with this and we will remain indeed within our guidance and it's actually the low end of our guidance on the capex side.

Stefan: So Luke, James, yes, we are still growing going into 2024 and beyond, but this level of capex we spent in 2023 we think remains adequate for this year as well. You have to think about the mix of activities as well amongst our divisions, so we think we can very well address the upcoming growth within this envelope without having to increase it normally throughout the year unless growth is much more than expected, but we are comfortable with this, and we will remain, indeed, within our guidance, and it's actually the low end of our guidance on the capex side.

Speaker Change: So yes, we are we are still growing and going into 'twenty four and beyond that.

Speaker Change: This level of Capex, we spent in the.

Speaker Change: In 'twenty three we think remains adequate for this year as well you have to think about the mix of activities as well amongst our divisions. So so we think we can very well addressed.

The upcoming growth.

Speaker Change: Within this envelope without having to.

We increased <unk> throughout the year unless groceries is much more than expected, but but we were comfortable with visa and we will remain indeed, we've been on all guidance and it's actually the low end of our guidance on the Capex side.

Speaker Change: Okay, got it. Thanks, gentlemen.

Speaker Change: Okay, I got it. Thanks, gentlemen.

Speaker Change: Okay got it thanks gentlemen.

Speaker Change: Thank you.

Thank you.

Speaker Change: Questions?

Olivier Le Peuch: 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 2025, and Dean Tanner, Sean Mack. We expect full-year revenue goals to reach the mid-teens, led by the Middle East and Asia and Europe and Africa.

Speaker Change: Our next question is from David Anderson with Barclays. Please go ahead.

Speaker Change: Good morning, Olivier and Stefan.

Speaker Change: Good morning, Olivier and Stefan. Good morning, Dave. Hi, so maybe we can start off with the Middle East here. So another double-digit sequential quarter out of MENA, clearly an enormous runway of activity in front of you in the next several years.

David Anderson: Alright, great. Thank you good morning, Olivia it's stephane.

Speaker Change: Morning, Dave.

Speaker Change: Hi, so maybe we can start off with the Middle East here. So another double-digit sequential quarter out of MENA, clearly an enormous runway of activity in front of you in the next several years.

David Anderson: Hi.

So maybe you could start off with the middle East here. So another double digit sequential quarter auto Nina clearly an enormous runway of activity and plenty of the next several years between <unk>.

Speaker Change: On conventional gas and the number of capacity expansion projects underway, my question is how you see top line versus margins evolving.

Speaker Change: On conventional gas and the number of capacity expansion projects underway, my question is how you see top line versus margins evolving. Can you maintain this pace of growth in the region in 24, or are we getting close to capacity in terms of the number of rigs available, service equipment, even E&C capacity here is pretty tight over there, and I guess, conversely, should we start seeing margins expand further as contracts are re-priced due to tighten

Olivier Le Peuch: 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 SEPSI bookings in 2024, versus an increase of more than 25% year-on-year as the market continues to expand. For clarity, when excluding the impact of hacker contributions 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.

David Anderson: And conventional gas in a number of capacity expansion projects underway. My question is how you see top line versus margins evolving.

Speaker Change: Can you maintain this pace of growth in the region in 24, or are we getting close to capacity in terms of the number of rigs available, service equipment, even E&C capacity here is pretty tight over there, and I guess conversely, should we start seeing margins expand further as contracts re-priced due to tightening?

David Anderson: Can you maintain this pace of growth in the region in 'twenty four or are we getting close to capacity in terms of the number of rigs available service equipment EBIT E&P capacity here, it's pretty tight over there and I guess, Conversely should we start seeing margins expand further contracts reprice due to tightened sub.

Speaker Change: I noted that the tendering of stuff in Iowa was delayed by nine months. I'm wondering maybe there's some sticker shock from pricing. So perhaps this is already underway, but just a little bit more details in terms of capacity and pricing in the Middle East, please. Thank you.

Speaker Change: I noted that the tendering of stuff in Iowa was delayed by nine months. I'm wondering if maybe there's some sticker shock from pricing. So perhaps this is already underway, but just a little more details in terms of capacity and pricing in the Middle East, please. Thank you.

David Anderson: I noted that the tendering of stuff and Io was delayed by nine months I'm wondering maybe there's some sticker shock from pricing. So perhaps this is already underway, but just a little bit more details.

David Anderson: Terms of capacity and pricing in the Middle East. Please thank you.

Speaker Change: Thank you, Dave. I think we have been very pleased with the activity and the way we have been able to turn this activity growth in the last 18 months and the last 12 months, particularly into revenue, benefiting from our strength on the ground in the Middle East. I think I would characterize beyond the capacity expansion and on commercial gas, which is a dual benefit for activity, I will also characterize the activity in the Middle East to be very broad. It's not two countries leading this. It's almost every country in the region that will see further activity and will derive from it further revenue growth. So we are not at capacity. We don't see an infection down of our revenue growth potential in the region, benefiting from our technology, market position with each and every national company in the region, and the capability for integration to harness the power of our technology into performance for our customers, hence delivering higher revenue from a rate of activity. So we are confident. When it comes to capacity, yes, equipment capacity and everybody has been disciplined in the region, and hence we have been responding and benefiting from pricing in the last 18 months. And as a consequence, our margins have expanded in the region and have supported what we have seen as our international margin expansion year on year. And I've been a driver for margin expansion internationally, and we expect this to continue. As we execute 2024, but again, it's a long duration cycle, both by the nature of the investment, decoupled from short-term pricing on commodity. So we remain very confident about our market position first on the market outlook.

Speaker Change: Yeah no. Thank you Dave I think we have been very pleased with.

Speaker Change: The activity in the way, we have been able to turn this activity growth in the last 18 months and the last 12 months, particularly in <unk> into revenue benefiting from our strength on the ground in the middle East.

Olivier Le Peuch: Driven by our technology-leveraged portfolio in both U.S. land and U.S. growth from experience. 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 epithelial growth in the mid-teens.

Speaker Change: I think I would characterize beyond.

Speaker Change: Capacity expansion in unconventional gas, which is a dual.

Speaker Change: Benefits productivity I would also characterize the activity in the business to be very broad.

Speaker Change: It's not a two country leading this it's almost every country in the region that we serve activity and will derive and we derived from its further vehicles. So we are not at capacity.

Speaker Change: So we are not at capacity. We don't see an infection of our revenue growth potential in the region, benefiting from our technology, market position with each and every national company in the region, and the capability for integration to harness the power of our technology into performance for our customers, hence delivering higher revenue from a rate of activity. So we are confident.

Speaker Change: We don't see an infection down of revenue growth potential in the region, but if you can form a.

Speaker Change: Technology.

Speaker Change: Market position with with each and every national oil company in the region and capability for integration to harness the power of our technology into performance for our customers and said that have been driving a higher revenues from a from a rate of activity so where can.

Olivier Le Peuch: 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 has approved a 10% increase in our quarterly dividend, and we have also increased our share re-purchase program for 2024. Combined, we are targeting a return of more than $2.5 billion to shareholders in 2024, an increase of more than 25% compared to 2020. 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.

Speaker Change: When it comes to capacity, yes, equipment capacity, and everybody has been disciplined in the region, and hence we have been responding to and benefiting from pricing in the last 18 months. And, as a consequence, our margins have expanded in the region and have supported what we have seen as our international margin expansion year on year. And I've been a driver for margin expansion internationally, and we expect this to continue as we execute 2024. But again, it's a long-duration cycle, both by the nature of the investment, decoupled from short-term pricing on commodities. So we remain very confident about our market position, first in terms of the market outlook, and our ability to differentiate on performance, integration, and technology and then continue this success in 2024 and 2025 and again well into the second half of the year.

Speaker Change: When it comes to.

Speaker Change: Capacity.

Speaker Change: Yes equivalent capacity and everybody has been discipline.

Speaker Change: In the region and hence we have been responding and benefiting from our from pricing.

Speaker Change: In the last 18 months and as a consequence, our margins expanded in the region and have supported the what you have seen is our international margin expansion year on year and have been a driver for margin expansion internationally and we expect this to continue as we execute our 2024, but again, it's a long.

Speaker Change: It's a long duration cycle, both by the nature of the investment decoupled from the shutdown that pricing.

Speaker Change: On commodity so we remain very confident about our market position first on the market outlook.

Olivier Le Peuch: 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 would be followed by an activity rebound in the second quarter and further acceleration of growth in the second half of the year. Paal Sudali, The International Night

Speaker Change: and our ability to differentiate to performance, integration, technology and then continue this success in 2024 and 2025 and again well into the second half of the year.

Speaker Change: And our ability to differentiate to performance indication technology and and then continued his successor in 'twenty, four and 'twenty, five and again well into the second half of the decade.

Speaker Change: Long way from the peak, that's pretty clear, at least in that part of the region. I was wondering if we could shift over on the digital side. I noticed there were a number of comments in the release today regarding increasing digital adoption by your customers.

Speaker Change: A long way from the peak, that's pretty clear, at least in that part of the region. I was wondering if we could shift over to the digital side. I noticed there were a number of comments in the release today regarding increasing digital adoption by your customers. I was hoping you could expand on that a little bit. Is that simply about customers using Delphi more, or as they get more comfortable with it, is a certain application gaining traction? Are there any metrics you can give us in terms of year-over-year usage from your bigger customers? And I'm also just kind of curious, in order to grow digital revenue by essentially 50% over the next two years, is this primarily coming from an increased digital adoption by existing customers, or do you also need new customers to get to this?

Speaker Change: Yes long way from the peak, that's pretty clear and we said that part of the region.

Speaker Change: I was wondering if we could shift over on the digital side I know, it's a number of comments in the release today regarding increasing digital adoption by your customers I was hoping you could expand expand on that a little bit.

Speaker Change: I was hoping you could expand on that a little bit. Is that simply about customers using Delphi more, or as they get more comfortable with it, is a certain application gaining traction? Is there any metrics you can give us in terms of year-over-year usage from your bigger customers? And I'm also just kind of curious, in order to grow digital revenue by essentially 50% over the next two years, is this primarily coming from an increased digital adoption of existing customers, or do you also need new customers to get to it?

Olivier Le Peuch: This will support the ambition we have set for the full year revenue and earnings goal. I will now turn the call over to Stefan. Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, were 86 cents.

Speaker Change: Is that simply about customers using delphi more or as they get more comfortable with it at certain applications gaining traction is there any metrics you can give us in terms of year over year usage from your bigger customers.

Speaker Change: And I'm also just kind of curious in order to grow digital revenue.

50% of that two years is this primarily coming from an increased digital adoption of existing customers or do you also need new customers to get to that target.

Olivier Le Peuch: This represents an increase of 8 cents sequentially and an increase of 15 cents when compared to the same period of last year. We recorded 9 cents of charges during the fourth quarter of this year. Sixth sense related to the devaluation of the peso in Argentina and the remaining $0.03 related to merger and integration costs associated with our acquisition of the Accur subsidy business, which closed at the beginning of the program. We anticipate that we will incur additional charges as integration activities continue over the course of 2020. Our full year 2023 revenue of $33.1 billion grew 18% year-on-year. While this revenue is roughly the same as the pre-pandemic level of 2019, our adjusted EBITDA in 2023, in absolute dollars, was 22% higher.

Speaker Change: Okay, well, let me come back first on there are some metrics that I think we have highlighted in my opening remarks, and I think this relates to the adoption of <unk>. Indeed.

Speaker Change: The adoption of the number of users use of cloud compute on our Delfi platform and use of additional hedge or AI capability that we offer to our customers the combination of which as I said as grown 60%.

Speaker Change: The last two years on a CAGR rate and the adoption metrics that we share both.

Speaker Change: The number of users and the.

Speaker Change: The number of hours of complete power that yourself to customers on the clouds have been growing by 40%. So yes. The adoption is growing both measured by.

Speaker Change: As I said, one customer at a time that transition from a legacy desktop offering to our cloud and.

By expansion of our workflows data AI capability that will fill in.

Speaker Change: Existing and new customers. So it's a combination of <unk>.

Speaker Change: Condition of the existing customers to the cloud and adoption of data and AI capability, because we are offering our platform that industry, he's organizing adapting and finally and maybe one of the most exciting part that adds a dimension of growth is a digital operation both drilling and production. This operation you have seen some of it.

Olivier Le Peuch: As a result, our full year 2023 EBITDA margin of 24.5% has expanded 430 basis points over this period on a similar revenue base. This highlights the high grading of our portfolio over the last few years. Our significantly improved operating leverage and our favorable market position, particularly internationally and offshore. Fourth quarter revenue of $8.99 billion increased 8% sequentially. With the acquired hacker subsidy business accounting for approximately 70% of the increase, fourth quarter pre-tax operating margin of 20.8% improved 52 basis points sequentially and 101 basis points year-on-year. The adjusted EBITDA margin for the fourth quarter, of 25.3%, was 95 basis points higher than the same period last year. I will now go through the fourth quarter results for each division.

The announcements that have been highlighted in recent the recent weeks and months and last week.

Speaker Change: Alignment with our partner to accelerate drilling automation in and autonomous systems. So the drilling adoption on the operation production with our partner Koch Knight.

And this is <unk> I will say the core growth of transitioning our geoscience customers from desktop to the cloud. So you have three dimension you have the cloud transition with existing customers and adoption of new customer coming to SaaS solution, you have the data and AI <unk>.

Speaker Change: Marketing.

Speaker Change: It's a rebirth of the data management at scale into the.

Speaker Change: Cloud and AI and looking above data through AI in our industry and finally digital operation. These three trends are.

Speaker Change: Supporting our growth ambitions, both this year and next year and this span all the costs in our segment across the globe and you keep seeing some announcement of <unk> adoption on our solutions.

Speaker Change: Thank you very much.

Speaker Change: Okay. Thank you very much appreciate it.

Speaker Change: Thank you.

Speaker Change: Next we go to Scott Gruber with Citigroup. Please go ahead.

Speaker Change: Yes, good morning.

Scott A. Gruber: Yes, good morning.

Speaker Change: Good morning, Shots.

Scott A. Gruber: Good morning Jud.

Speaker Change: So, I want to touch on transition technologies. You noted over a billion dollars.

Speaker Change: So, I want to touch on transition technologies. You noted over a billion dollars. And I realize a lot of these are new and focused on emissions reduction, and I believe that the bucket there is separate from new energy. Correct me if I'm not accurate.

Scott A. Gruber: So I wanted to touch on transition technologies, you noted over $1 billion.

Olivier Le Peuch: Fourth quarter, digital and integration revenue of 1 billion increased 7% sequentially, with pre-tax operating margin expanding 197 basis points to 34%. This growth was due to increased digital revenue across all areas, led by the Middle East and Asia and Europe and Africa.

Speaker Change: And I realize a lot of these are new and focused on emissions reduction, and I believe that the bucket there is separate from new energy. Correct me if I'm not accurate.

Sales and I realize a lot of these are new.

Scott A. Gruber: And focus on the emissions reduction and I believe that the.

Scott A. Gruber: Bucket there is separate from some new energy correctly correct.

Scott A. Gruber: It's not accurate.

Speaker Change: Olivier, I wanted to ask about the...

Speaker Change: Olivier, I wanted to ask you about the...

Scott A. Gruber: Well, let's see I wanted to ask about the.

Olivier Le Peuch: The outlook for these technologies and the growth of sales of these technologies as the uptake by customers around the world seems pretty strong. Can you speak to the multi-year outlook and is the cadence of growth for transition technologies additive to the growth rate from the core?

Olivier Le Peuch: The outlook for these technologies and the growth of sales of these technologies as the uptake by customers around the world seems pretty strong. Can you speak to the multi-year outlook, and is the cadence of growth for transition technologies additive to the growth rate from the core?

Scott A. Gruber: The outlook for <unk>.

Scott A. Gruber: These these technologies and.

Scott A. Gruber: And the growth of sales of these technologies is the uptake whereby customers around the world is pretty strong.

Olivier Le Peuch: Reservoir performance revenue of 1.7 billion grew 3% sequentially, primarily due to increased activity internationally, mainly in the Middle East and Africa. Pre-tax operating margin increased 88 basis points to 21.4%, representing the highest level of this cycle, driven by higher activity and improved pricing. While construction revenue of $3.4 billion was essentially flat sequentially, as international growth of 2% was offset by a decline in North America revenue resulting from a lower U.S. land recount.

Scott A. Gruber: Can you speak to the multiyear outlook.

Scott A. Gruber: The cadence of growth for transition technologies additive to the growth rate from our core.

No I think Youre correct first in stating that this is distinct from our focus on our five teams that we have a new energy.

And this thing from the Ccs I mentioned, where we have a lot of success in geothermal and it represents a portfolio of technology that we have that we're developing that we're promoting to our customers that have a distinct lower emission carbon intensity compared to your existing or legacy <unk>.

Energy and has a net effect on our customers for their scope, one or their scope three upstream as we call. It emissions, but also add the characteristic to bring efficiency. So customers looking for lower cost lower carbon output and continue to adopt this technology by <unk>.

Olivier Le Peuch: Pre-tax operating margin increased 35 basis points sequentially. Lastly, production systems revenue of $2.9 billion increased 24% sequentially, largely due to the acquired hacker subsidies. Excluding these effects, revenue grew 4% sequentially due to strong internationals.

With alternate technology that exists in the market as the deliver not only lower carbon but also deliver higher efficiency, which are the way we characterize this technology. So yes. We are very pleased adoption some technology they are unique.

Almost zero zero carbon cement solution some solution.

Olivier Le Peuch: Pre-tax operating margin expanded 153 basis points to 15%, its highest level of recycling on higher sales of midstream, artificial lift, and subsea production. Looking ahead to the full year of 2024. We expect continued margin expansion in our core, driven by sustained operating leverage, a favorable geographic mix, and pricing tailwinds. In our digital and integration division, we expect margins to remain approximately at the same level as 2023, as digital margins will increase due to the accelerated adoption of our new technology platforms, while APS margins will decrease as a result of higher amortization expectations. All in all, as mentioned by Olivier, strong year-on-year revenue growth and continued margin expansion will result in adjusted EBITDA growth in the mid-teens in 2024 when compared to 2020. Now, turning to our liquidity. We generated $3 billion of cash flow from operations and $2.3 billion of free cash flow during the fourth quarter.

Really game changing.

Such as our some of our booths processing subsea processing solution that having a net impact on the carbon footprint of subsea operation.

<unk> technology, a disruptive for the future such as electrical full subsea and electrical through completion technology and <unk>.

We are seeing accelerated adoption of this and finally, we set it.

Scott A. Gruber: We are also seeing following the cop 28.

Scott A. Gruber: Much more interest in TR maintained emission management solution and you have had seen the announcement, we made with Eni as supporting them as a global company.

Scott A. Gruber: Make an assessment NB.

Speaker Change: Assessing there.

Emission intensity from that maintain and proposing a baked on solution. So this is a mix of signature but continues to be growing in our thinking there was mix and that supports our ambition for a sustainable future and balanced planets, but also aligned with our customers on <unk> global.

Speaker Change: Cost future.

Speaker Change: I got it. Appreciate that color. And then, Stefan, one for you. I appreciate the cash return target for 24. Can you also provide some broader color on the cash conversion rate? The working capital release in 4Q was very impressive. So curious about the working capital outlook for 24, tax rate, et cetera.

Speaker Change: I got it. I appreciate that color. And then, Stefan, one for you. I appreciate the cash return target for 24. Can you also provide some broader color on the cash conversion rate? The working capital release in 4Q was very impressive. So curious about the working capital outlook for 24, the tax rate, et cetera.

Speaker Change: Got it I appreciate that color.

And then one for you.

Speaker Change: Yeah appreciate the cash return target.

Speaker Change: For 2004, he also provide some broader color on the cash conversion rate.

Speaker Change: The working capital release of <unk> was very impressive so curious about the working capital outlook for 'twenty for tax rate et cetera.

Stefan: So, Luke, yes, we were also very pleased with the fourth quarter and full year free cash flow. And indeed, in the fourth quarter, it's coming almost entirely from the working capital. So now we do expect, as I said, 2024 to be another very strong year of free cash flow. And it will show the same quarterly pattern we usually see. So in the first quarter, the working capital will clearly increase. We have the payment of annual incentives to employees, as you may know. And then we'll have the reversal of certain exceptional items that occurred in the last quarter of 2023. So we'll see the effect in Q1 as usual. But then this will be followed by a gradual improvement in subsequent quarters in line with what we observed this year. So hopefully we can have another very strong finish of the year in 12 months from now and deliver a strong performance as well.

Stefan: So, Luke, yes, we were also very pleased with the fourth quarter and full year free cash flow. And indeed, in the fourth quarter, it came almost entirely from working capital. So now we do expect, as I said, 2024 to be another very strong year of free cash flow, and it will show the same quarterly pattern we usually see. So in the first quarter, working capital will clearly increase. We have the payment of annual incentives to employees, as you may know. And then we'll have the reversal of certain exceptional items that occurred in the last quarter of 2023. So we'll see the effect in Q1 as usual. But then, this will be followed by a gradual improvement in subsequent quarters, in line with what we observed this year.

Well sure.

Speaker Change: So look yes, we were also very pleased with.

Speaker Change: With the fourth quarter and full year free cash flow and indeed in the fourth quarter.

It's coming.

And our lead from our from the working capital.

Olivier Le Peuch: This exceptional performance resulted in a full-year free cash flow of $4 billion, which is the highest level we have achieved since 2015. This was due to a combination of very strong year-end receivable cash collections, increased customer advances, improved inventory terms, and the receipt of a prior year tax refund. As a result of this exceptional free cash flow performance, we reduced our net debt by 1.4 billion during the quarter to 8 billion.

Speaker Change: So now we do expect as I say 2024 to be another very strong year of free cash flow and it will.

Speaker Change: It will show the same quarterly pattern, we usually see so in the in the first quarter of the working capital will clearly increase do we have the payment of annual incentives to employees.

Speaker Change: As you May know and when we'll have the reversal of certain exceptional items that occurred in the in the last quarter of 2023. So so we will see the effect in Q1 as usual, but when this will be followed by a gradual improvement in subsequent quarters and in line with what we observed this year. So hopefully we can.

Stefan: So hopefully, we can have another very strong finish in the year 12 months from now and deliver a strong performance as well.

Olivier Le Peuch: This represents our lowest net debt level since the first quarter of 2016. Capital investments, including CAPEX and investment in APS projects and exploration data. We had $742 million in the fourth quarter and 2.6 billion for the full year. Looking ahead, we will continue to be disciplined as it relates to our capital investments. Despite the continued revenue growth of 2024 capital investments, we remain at approximately the same level as in 2020. Finally, during the fourth quarter, we repurchased 1.8 million shares of our stock for a total purchase price of 100 million.

Speaker Change: We can have another a very strong finish of the year.

Speaker Change: 12 months from now.

And deliver a strong performance as well.

Luke: Got it. Thanks, Stephen.

Speaker Change: Got it thanks Stephanie.

Speaker Change: Thank you. Thank you.

Stephanie: Thank you. Thank you.

Speaker Change: Next we go to Luke Lemoine with Piper Sandler. Please go ahead.

Speaker Change: Hi, good morning.

Luke Lemoine: Hi, good morning.

Speaker Change: Olivier, you noted the bookings and backlog at 1 sub C.

Olivier you've noticed the bonding to backlog out morning in bookings and backlog at one subsea and last call you talked about some of the commercial and operational objectives and I wanted to see if you could just talk about how customer engagement.

Olivier Le Peuch: And last call, you talked about some of the commercial and operational objectives, and I wanted to see if you could just talk about how customer engagement

Olivier Le Peuch: And on the last call, you talked about some of the commercial and operational objectives, and I wanted to see if you could just talk about how customer engagement and dialogue has progressed, and many more.

Olivier Le Peuch: and dialogue has progressed.

Luke Lemoine: And dialogue has progressed with the enhanced offering you now have.

Olivier Le Peuch: and many more.

Speaker Change: No. Thank you look I think we're very pleased with the first.

Speaker Change: Of.

Speaker Change: The subsea joint venture we have with <unk>.

And the subsea seven and I think the results speak for themselves.

Olivier Le Peuch: For the full year, we return a total of 2 billion to shareholders in the form of dividends and stock repurchase. Our continued capital decision. Combined with the confidence we have that 2024 will be another year of strong cash flow generation, it will enable us to increase our returns to shareholders in 2021. In this regard, when combining the increased quarterly dividend that we announced today with increased share repurchases, we are targeting to return more and $2.5 billion to our shareholders in 2020. I will now turn the conference call back to Olivier. Thank you, Stéphane. Ladies and gentlemen, I think we will start the Q&A. Solia, back to you on his television show.

Speaker Change: I think it was.

A direct contributor to the PFS depletion Sistema performance in the fourth quarter, both on the on the top line and the.

Speaker Change: And on the margin. So we're very pleased and I think as I said I cannot be more pleased on that and this now going forward I think.

Objective continue to be to extract more value through synergy and to fully sees these deepwater offshore cycle is in full <unk>.

Speaker Change: Full fledge happening and where we see a as I said earlier, a strong outlook so our priority.

Speaker Change: <unk> benefits from integration capability and.

Speaker Change: And.

Speaker Change: As you have seen that you have announced some alliance and one of them with with BP, where I think us and are pushing us organizing it.

Olivier Le Peuch: Hey, good morning, Olivier and Stefan. Good morning. Good morning.

Subsea integration capability.

So, Olivier, curious to hear your thoughts. Clearly, you're looking for another year of pretty strong growth in EBITDA and revenue, but it seems to me like we've got a lot of Deepwater rigs that are going to start turning right here very soon, and particularly in the second half, and there should be an exit rate that's even higher than that type of growth as we go into 25. I think is that a fair assumption or am I getting ahead of myself here in terms of kind of what the overall market opportunity is going to be as we, you know, step through this year and get into the 25-20 No, that's correct. I think, James, thank you for laying out the, I think the theme of SHORE is a distinct attribute of this cycle. I have already delivered in terms of total activity visibly beyond 2019 and including both shallow and deep water that have both grown visibly in the last 24 months, shallow mainly driven by the addition of rigs that we continue to see coming in the Middle East and the Asia region, and deep water across all the deep water basins.

Speaker Change: Of course, this Sps and surf.

Speaker Change: Augmented by our ability to deliver and understand the reservoir as well as deliver well construction, so hence opportunity to have integrated asset development integrated tieback delivery and more opportunity in the space that is fully integrated subsea and beyond too.

Speaker Change: Xbox at better economics, and to extract more broadly equity importantly, a higher recovery.

Speaker Change: Combining our reservoir.

Speaker Change: Subsurface domain expertise.

Speaker Change: Well placement and our subsea boosting and processing capability all combined to extract.

Speaker Change: And trades at a bit of more as value for subsea market going forward from economics and from traditional recovery. So that's why we see a trends coming.

Speaker Change: And we have a portfolio at a unique.

Speaker Change: With the the.

Speaker Change: Buffalo, partly on the boosting in processing and tieback capability that is unmatched in the market and we have the.

Speaker Change: <unk> reservoir technology on our core portfolio that complaint on this and <unk> will support this allowance integration capability. So I can only be pleased with the prospect ahead of us and the feedback from our customers. So size is very positive and active equity.

Speaker Change: Got it. Thanks for watching. We'll be right back.

Speaker Change: Alright got it thanks Olivier.

Olivier Le Peuch: And we anticipate, albeit at a more moderate rate for deep water than shallow, the rig activity to continue to increase and the exit rate of 24 to be above in terms of rig counts, and the offshore rig count. The exit rate of 23 as a benefit, I think both the offshore activity and the deep water, where we have the benefit of scale with our subsea venture, will benefit, and we continue to see growth not only in 24, but running out to 25 and beyond, as I said. The total FID for offshore stays at $100 billion for each of 24 and 25, and this is not only supporting activity next year and 25, but also supporting the longevity of offshore investment beyond. So we remain very constructive in that environment, and yes, we see the exit rate to be above last December in 12 months from now. Okay, perfect.

Speaker Change: Thank you, Luke.

Thank you Luke.

Speaker Change: Our next question is from Sohrab <unk> with Bank of America. Please go ahead.

Speaker Change: Hi, good morning Olivier, good morning team.

Sohrab: Hi, good morning, Olivier and good morning, Dave.

Speaker Change: Good morning.

Speaker Change: Good morning, Olivia. Maybe I want to touch on exploration a little bit. You talked about that on the call today. You highlighted Asia. I think you talked about China, Malaysia, India, and some of the other countries exploring for gas. I know you've talked about exploration in the past. So we are seeing at least a little bit of a tangible recovery happening on the exploration side. Maybe you can expand on that a little bit. What do you expect over the next couple of years on both the gas and the oil side? And just maybe, remind us how impactful that is for Asia?

Speaker Change: Good morning.

Speaker Change: Olivia, maybe I want to touch on exploration a little bit. You talked about that on the call today. You highlighted Asia. I think you talked about China, Malaysia, India, some of the other countries exploring for gas. I know you've talked about exploration in the past. So we are seeing at least a little bit of a tangible recovery happening on the exploration side. Maybe you can expand on that a little bit. What do you expect over the next couple of years on both the gas and the oil side? And just maybe remind us how impactful that is for Asia.

Speaker Change: Olivia maybe I wanted to touch on our exploration a little bit you talked about that on the call. Today, you highlighted Asia I think you talked about China, Malaysia, India or some of the other countries exploring for gas I know you've talked about the exploration in the past. So we are seeing.

Speaker Change: It's a little bit of a tangible recovery happening on the exploration side, maybe you can expand on that a little bit what do you expect over the next couple of years on both the gas and the oil side and just maybe remind us how impactful that is no.

Speaker Change: Oh for <unk>.

Speaker Change: Yes. Thank you I think yes, we have commented before that we have seen a resurgence and rebound off of exploration activity and appraisal in the last two or three years at this cycle as added exploration activity.

Speaker Change: Back to the cycle and I think it has been driven by the desire to find.

That's great to hear. And then maybe a quick follow-up on terms of CapEx. I don't know if, Stefan, you want to take this one, but CapEx seems to be, it seems like you're going to keep it at the same type of level that it was in 23, but there's going to be a lot more activity. And so does that number eventually need to move higher?

Speaker Change: New gas reserves to respond to the gas.

Speaker Change: Supply security concerns and also it has benefited from the continued exploration of oil.

Speaker Change: Around the existing offshore.

Speaker Change: Offshore hubs in the form of.

Speaker Change: Of infrastructure led exploration and also in the new frontier.

Speaker Change: Obligating the success that the.

Speaker Change: Exxon had in G&A and other basin. So when you look at it from a weight is happening what is unique in this cycle is happening everywhere, we have exploration activity.

Olivier Le Peuch: And when it does, if it does, do you still believe that you can maintain this, you know, 5% to 6% of revenue for a CapEx dollars ratio? So Luke, James, yes, we are still growing going into 2024 and beyond, but this level of capex we spent in 2023 we think remains adequate for this year as well. You have to think about the mix of activities as well amongst our divisions, so we think we can very well address the upcoming growth within this envelope without having to increase it normally throughout the year unless growth is much more than expected, but we are comfortable with this, and we will indeed remain within our guidance, and it's actually the low end of our guidance on the capex side. Okay.

Speaker Change: Most of the offshore.

Speaker Change: That's where I think the.

Speaker Change: The actual <unk>.

Speaker Change: Success of new reserves have been mostly.

Speaker Change: And all of shale basins, both shallow and deepwater.

Speaker Change: Infrastructure led exploration in existing mature deepwater market and in new frontier. So you have seen new frontier and happening in Namibia senior continuing tsunami.

Speaker Change: In upcoming are positive.

Speaker Change: Total margin.

Speaker Change: You have a you have exploration in the east.

Speaker Change: Yes.

Speaker Change: Colombia.

<unk>. Furthermore, in in West Africa, South and <unk>.

Speaker Change: You have what is maybe a little bit new this cycle more expression coming back in Asia.

Speaker Change: From India, as I said to Malaysia.

Speaker Change: China and I think this is what constitutes it'll be the unique cycle. It is broad and.

Speaker Change: No opinion to stay because they couldnt mix of.

Thanks, gentlemen. Thank you. Questions?

Speaker Change: Also offshore as improved significantly over the last couple of cycles and.

David Anderson: Good morning, Olivier and Stefan. Good morning, Dave. Hi, so maybe we can start off with the Middle East here. So another double-digit sequential quarter out of MENA, clearly an enormous runway of activity in front of you in the next several years. On conventional gas and the number of capacity expansion projects underway, my question is how you see top line versus margins evolving. Can you maintain this pace of growth in the region in 24, or are we getting close to capacity in terms of the number of rigs available, service equipment, even E&C capacity here is pretty tight over there, and I guess, conversely, should we start seeing margins expand further as contracts are re-priced due to tighten I noted that the tendering of stuff in Iowa was delayed by nine months. I'm wondering if maybe there's some sticker shock from pricing.

Speaker Change: <unk> of of reserve, both gas and oil.

Speaker Change: With our low carbon intensity and.

Speaker Change: And our ability to deliver alone.

Speaker Change: Long plateau of prediction is unique so access to offshore acreage.

Speaker Change: Better economics, a better quality of potential geological reserves are all driven this and we are enthused a success and we have exposure.

Speaker Change: In reservoir performance.

Speaker Change: With a performance evaluation segments that is benefiting from it and as introduced technology that are really in high demand at Goa and we have a lot of exposure of UC as well in the digital segment with <unk>.

Speaker Change: Seismic assessment data accountability processing in our digital geoscience offering that both benefit from this as a consumption. So.

Speaker Change: We are pleased with the market position, we have and we believe that this exploration or appraisal.

Olivier Le Peuch: So perhaps this is already underway, but just a little more details in terms of capacity and pricing in the Middle East, please. Thank you. Thank you, Dave.

Speaker Change: To say, because it's very broad diverse and across many many basin chartering offshore.

Speaker Change: Fantastic. Okay, no, thanks, Olivier. Thanks for the detail. I have one very quick follow-up, if I may, on the Middle East side. I know you talked about that on the prepared remarks in the Q&A early on, but just to go back to that, I think one thing you noted in the press release was that you expect the record Middle East growth to continue beyond 2025. If you can elaborate a little bit, Olivier, on what gives you the confidence, the line of sight beyond 2025. Maybe part of that is just the gas side of things, not just oil, right? But elaborate a little bit on the line of sight you have beyond 2025.

Speaker Change: Fantastic. Okay, no, thanks, Olivier. Thanks for the detail. I have one very quick follow-up, if I may, on the Middle East side. I know you talked about that in your prepared remarks in the Q&A early on, but just to go back to that, I think one thing you noted in the press release was that you expect the record Middle East growth to continue beyond 2025. If you can elaborate a little bit, Olivier, on what gives you the confidence, the line of sight beyond 2025. Maybe part of that is just the gas side of things, not just oil, right? But elaborate a little bit on the line of sight you have beyond 2025, and many more.

Speaker Change: Fantastic Okay no. Thanks, Olivia thanks for that detail I have one very quick follow up if I may on the middle East side I know you talked about that on the prepared remarks into Q&A early on but.

Olivier Le Peuch: I think we have been very pleased with the activity and the way we have been able to turn this activity growth in the last 18 months and the last 12 months, particularly into revenue, benefiting from our strength on the ground in the Middle East. I think I would characterize, beyond the capacity expansion and on commercial gas, which is a dual benefit for activity, I will also characterize the activity in the Middle East as very broad. It's not two countries leading this.

Speaker Change: Just to go back to that I think one thing that you'd noted in the press release was that.

Speaker Change: You expect the record middle East growth to continue beyond 2025.

Speaker Change: You can elaborate a little bit of levy on what gives you the confidence to line of sight beyond 2025, maybe part of that is just the gas side of things not just <unk>, but elaborate a little bit on the lighter side do you have beyond 2020 plan on.

Speaker Change: and many more.

Speaker Change: The middle East.

Olivier Le Peuch: Yeah, I think first you have to realize that the capacity expansion program announced by the multiple countries that have made their commitments extends from 27 to 30 plus, 30, 35, or 40 from the last country that have expanded this. And I think the capacity will continue to be seen addition, both land and offshore, to respond to that capacity expansion. Gas, I think, is here for the long in the Middle East for two reasons. First, there are gas reserves that are really at a very good economic point, particularly in Qatar, and will continue to present an energy feed to the global gas market. But also unconventional reserves are seeing significant investment, and we expect this to actually grow fast in the coming years in two or three countries that are focused on unconventional gas. So the combination of this is giving us the confidence that the record ever investment that we have seen last year in Middle East will continue in 24, 25, and has potential to expand well into the second half of the decade.

Olivier Le Peuch: Yeah, I think first you have to realize that the capacity expansion program announced by the multiple countries that have made their commitments extends from 27 to 30 plus, 30, 35, or 40 from the last country that expanded this. And I think the capacity will continue to be seen added, both land and offshore, to respond to that capacity expansion. Gas, I think, is here for the long haul in the Middle East for two reasons. First, there are gas reserves that are really at a very good economic point, particularly in Qatar, and will continue to present an energy feed to the global gas market. But unconventional reserves are also seeing significant investment, and we expect this to actually grow fast in the coming years in two or three countries that are focused on unconventional gas.

Olivier Le Peuch: It is almost every country in the region that will see further activity and will derive from it further revenue growth. So we are not at capacity. We don't see an infection of our revenue growth potential in the region, benefiting from our technology, market position with each and every national company in the region, and the capability for integration to harness the power of our technology into performance for our customers, hence delivering higher revenue from a rate of activity. So we are confident. When it comes to capacity, yes, equipment capacity, and everybody has been disciplined in the region, and hence we have been responding to and benefiting from pricing in the last 18 months. And, as a consequence, our margins have expanded in the region and have supported what we have seen as our international margin expansion year on year.

Speaker Change: Yeah, I think first you have to realize that the capacity expansion program announced by the multiple countries <unk> commitments extend from 27 to 30, plus 2035 or 44 from the last country that either expand this and.

Speaker: The adjusted EBITDA margin for the fourth quarter, of 25.3%, was 95 basis points higher than the same period last year. I will now go through the fourth quarter results for each division.

I think the capacity will be continued to be seen additions, both land and offshore to respond to that capacity expansion.

Speaker Change: As I think is here for the long in middle.

Speaker: Fourth quarter digital and integration revenue of $1 billion increased 7% sequentially, with pre-tax operating margin expanding 197 basis points to 34%. This growth was due to increased digital revenue across all areas, led by the Middle East and Asia and Europe and Africa. Reservoir performance revenue of 1.7 billion grew 3% sequentially, primarily due to increased activity internationally, mainly in the Middle East and Africa. Pre-tax operating margin increased 88 basis points to 21.

Speaker Change: There is for two reasons, firstly, our gas reserves.

Are really at a very good economic point, partially in Qatar and will continue to present and LNG feed to the to the global gas market, but also unconventional.

Speaker Change: Our reserves are.

Speaker Change: Seeing a significant investment and we expect this to actually grow.

Olivier Le Peuch: And I've been a driver for margin expansion internationally, and we expect this to continue as we execute 2024. But again, it's a long-duration cycle, both by the nature of the investment, decoupled from short-term pricing on commodities. So we remain very confident about our market position, first in terms of the market outlook, and our ability to differentiate on performance, integration, and technology and then continue this success in 2024 and 2025 and again well into the second half of the year. A long way from the peak, that's pretty clear, at least in that part of the region.

As in the in the coming years.

Speaker Change: In two or three country.

Olivier Le Peuch: So the combination of this is giving us confidence that the record investment that we saw last year in the Middle East will continue in 24, 25, and has the potential to expand well into the second half of the decade.

Speaker Change: Focus on unconventional gas so the combination of this.

Speaker Change: It is giving us the confidence that.

Speaker Change: The record ever investment that we have seen last year in middle East and.

Speaker Change: We will continue in 'twenty four 'twenty five and as production expense went into the second half of the decade.

Speaker: Representing the highest level of this cycle, driven by higher activity and improved pricing, revenue of $3.4 billion was essentially flat sequentially, as international growth of 2% was offset by a decline in North America revenue resulting from lower U.S. land recap. Pre-tax operating margin increased 35 basis points sequentially. Lastly, production systems revenue of $2.9 billion increased 24% sequentially, largely due to the acquired hacker subsidies. Excluding these effects, revenue grew 4% sequentially due to strong international sales.

Speaker Change: Fantastic. That's really helpful, Olivier. Thank you. I've done it back.

Speaker Change: Fantastic that's very helpful. Thank you I'll turn it back.

Speaker Change: Thank you.

Speaker Change: And our next question is from Neil Mehta with Goldman Sachs. Please go ahead.

Speaker Change: Yeah, good morning, Olivier, Stefan, uh,

Neil Singhvi Mehta: Yeah, Good morning, Olivier Stephane.

Speaker Change: A couple questions for me. The first is on EBITDA margins. Congrats on crossing that 25% EBITDA margin, Marc. How should we think about the margin path in 2024? And if you think about the upside and downside?

Speaker Change: I have a couple questions for you. The first is on EBITDA margins. Congratulations on crossing that 25% EBITDA margin, Marc. What should we think about the margin path in 2024? And if you think about the upside and downside? Factors that could drive you on that metric. How should we Clearly, we see upside in 24 and continued margin expansion, as we expressed earlier. Really, I'm sure you will calculate that our guidance of mid-teens EBITDA growth in absolute dollars will be achieved with revenue growth, but clearly with margin expansion across our core and in digital, as I mentioned. So, yes, we continue to see margin expansion because we have great operating leverage. We have pricing tailwinds in our backlog and new technology adoption, and this is pushing margins together with the favorable mix. As you well know, offshore is helping margins as well. So, it subsides, and it continues to subside from now on.

Neil Singhvi Mehta: A couple of questions for me the first one on EBITDA margins Congrats on Kraft crossing that 25% EBITDA margin Mark how should we think about the margin path in 2024, and if you think about the upside and downside.

David Anderson: I was wondering if we could shift over to the digital side. I noticed there were a number of comments in the release today regarding increasing digital adoption by your customers. I was hoping you could expand on that a little bit. Is that simply about customers using Delphi more, or as they get more comfortable with it, is a certain application gaining traction? Is there any metrics you can give us in terms of year-over-year usage from your bigger customers?

Speaker Change: Factors that could drive you

Factors that could drive you.

Speaker Change: on that metric.

Neil Singhvi Mehta: On that metric.

Speaker Change: How should we

Neil Singhvi Mehta: How should we think about that.

Speaker Change: Clearly, we see upside in 24 and continued margin expansion as we expressed earlier. Really, I'm sure you will calculate that our guidance of mid-teens EBITDA growth in absolute dollars will be achieved with revenue growth, but clearly with margin expansion across our core and in digital, as I mentioned. So, yes, we continue to see margin expansion. We have great operating leverage. We have pricing tailwinds in our backlog and new technology adoption. And this is pushing margins together with the favorable mix. As you well know, offshore is helping margins as well. So, it's...

Neil Singhvi Mehta: Clearly, we see upside in our in 'twenty four.

Speaker: Pre-tax operating margin expanded 153 basis points to 15%, its highest level of recycling on higher sales of midstream, artificial lift, and subsea production. Looking ahead to the full year of 2024. We expect continued margin expansion in our core, driven by sustained operating leverage, a favorable geographic mix, and pricing tailwinds. In our digital and integration division, we expect margins to remain approximately at the same level as 2023, as digital margins will increase due to the accelerated adoption of our new technology platforms, while APS margins will decrease as a result of higher amortization expectations. All in all, as mentioned by Olivier, strong year-on-year revenue growth and continued margin expansion will result in adjusted EBITDA growth in the mid-teens in 2024 when compared to 2020. Now, turning to our liquidity. We generated $3 billion of cash flow from operations and $2.3 billion of free cash flow during the fourth quarter.

And continued margin expansion as we are.

Speaker Change: As we expressed earlier really the I'm just I'm sure you will bulk escalade backdoor.

Olivier Le Peuch: And I'm also just kind of curious, in order to grow digital revenue by essentially 50% over the next two years, is this primarily coming from an increased digital adoption by existing customers, or do you also need new customers to get there? Okay, let me come back first on some metrics that I think we highlighted in my opening remarks. And I think this relates to the adoption of Delphi, indeed, by a number of users, the use of cloud compute on our Delphi platform, and the use of additional edge or AI capability that we offer to our customers. The combination of which, as I said, has grown 60% in the last two years on a CAGR rate. And the adoption metrics that we share, both the number of users and the number of hours of compute power that we serve to our customers on the cloud, have been growing by 40%. So yes, the adoption is growing, both measured by, as I always said, one customer at a time, the transition from our legacy desktop offering to our cloud.

Speaker Change: Our guidance of <unk>.

Speaker Change: Mid teens.

Speaker Change: The growth in absolute dollars.

Speaker Change: Will be achieved with revenue growth, but clearly with margin expansion.

Speaker Change: Our core and in digital as I mentioned, so so yes, we continue to see margin expansion. We have we have great operating leverage we have a pricing tailwind.

In our backlog and new technology adoption in this this is pushing.

Speaker Change: This is pushing margins too given the favorable mix as you well know offshore is is helping margins as well.

Speaker Change: It subsides, it continues to subside from now on.

Speaker Change: It's in sub side.

Speaker Change: New subsides from known.

Speaker Change: Okay, yeah, it does sound like geomix, operating leverage, pricing, a lot of different factors there that's helpful. And then in terms of North America, I recognize this is a smaller business for you, but you indicated in the comments you expect North America to grow in 2024 despite weaker rig count and activity. Can you talk about what's driving that and how you're

Speaker Change: Okay, yeah, it does sound like geomix, operating leverage, pricing, a lot of different factors there that are helpful. And then, in terms of North America, I recognize this is a smaller business for you, but you indicated in the comments that you expect North America to grow in 2024 despite a weaker rig count and activity. Can you talk about what's driving that and how you're doing it?

Speaker Change: Okay, Yeah. It does sound like Geo mix operating leverage pricing a lot of different factors. There that's helpful and then.

In terms of North America, I recognize there's a smaller business for you but.

Speaker Change: You indicated the comments you expect North America to grow in 2024 despite.

Speaker Change: Weaker rig count and activity well can you talk about what's driving that and how.

Speaker Change: Are you able to outperform in the basin.

Speaker Change: Tuffer North America Macro and where are you seeing the technology adoption

Speaker Change: Tiff North America Macro, and where are you seeing the technology adoption?

For North American macro in and where are you seeing the technology adoption from a customer perspective.

Speaker Change: No, we are very pleased with our performance in North America in retrospect in 2023, as we visibly outperformed the recount and we were able to grow in NAMM sequentially visibly. And we expect, indeed, to continue to outperform the market. And it comes from multiple factors. The mixed factor of exposure we have, with great exposure in Gulf of Mexico, as well as East Canada and Alaska, we will see a potential of further technology adoption and giving us the benefits of our mix. But also in the U.S. land market, I think we had a transition to a fit for basin and a technology leverage focused portfolio in U.S. land and to some extent in Canada. And we have seen this as a success with adoption. Of some really unique drilling technology, particular digital CCS, giving us the tailwind to outperform the market in 2023. And we see this continuing now. The priority for customers remain clearly efficiency and recovery in the U.S. land market. And hence, more efficiency on the drilling well construction side, more recovery. Use of... Use of digital, use of ESPs, and also low carbon when it matters, will continue to make an impact and serve us very well. And the U.S. and the U.S. Gulf of Mexico and other offshore markets, performance through integration, performance through execution and reliability of our execution, I think will continue to be paramount for our customers. And as long as we continue to deliver at this level, we'll get rewarded with... With market position and contract and pricing. And hence, we'll be able to outperform the recount, hence our guidance up to reaching the mid-single digit in 2024 against the market outlook.

Speaker Change: No, we are very pleased with our performance in North America in retrospect in 2023, as we visibly outperformed the recount, and we were able to grow in NAMM sequentially visibly. And we expect, indeed, to continue to outperform the market. And it comes from multiple factors. The mixed factor of exposure we have, with great exposure in the Gulf of Mexico, as well as East Canada and Alaska, we will see the potential for further technology adoption giving us the benefits of our mix. But also in the U.S. land market, I think we had a transition to a fit for basin and a technology leverage focused portfolio in U.S. land and, to some extent, in Canada, and we have seen this as a success with adoption.

Speaker Change: No. We are we're very pleased with our performance in North America and in retrospect in 2023, as we visibly outperform the rig count and we were able to grow.

Speaker: This exceptional performance resulted in a full-year free cash flow of $4 billion, which is the highest level we have achieved since 2015. This was due to a combination of very strong year-end receivable cash collections, increased customer advances, improved inventory terms, and the receipt of the prior year tax return. As a result of this exceptional free cash flow performance, we reduced our net debt by 1.4 billion during the quarter to 8 billion.

Olivier Le Peuch: And by expanding our workflows, data, and AI capability that we offer to existing or new customers. So it's a combination of the transition of the existing customer to the cloud and adoption of data and AI capability because we are offering now a platform that the industry is recognizing and adopting. And finally, and maybe one of the most exciting parts that adds a dimension of growth, is the digital operation, both drilling and production digital operation. You have seen some of the announcements that have been highlighted in recent weeks and months. And last week, further alignment with a partner to accelerate the adoption of automation and autonomous systems. So the drilling adoption on the operation, production with our partner Cognite. And this is supplementing, I would say, the core goal of transitioning our geoscience customers from desktop to the cloud. So you have three dimensions.

Speaker Change: None.

Sequentially visibly and we're expecting these to continue to outperform the market and it comes some multiple factors the mix factor of exposure, we have with great exposure.

Speaker Change: In the Gulf of Mexico, as well as East, Canada, Alaska with will recede.

Speaker Change: Onshore of technology adoption, and giving us the benefits of our mix, but also in the U S land market I think we had.

Speaker: This represents our lowest net debt level since the first quarter of 2016. Capital investments, including CAPEX and investment in APS projects and exploration data. We're $742 million in the fourth quarter, and 2.6 billion for the full year. Looking ahead, we will continue to be disciplined as it relates to our capital investment. Despite the continued revenue growth of 2024 capital investments, we remain at approximately the same level as in 2020. Finally, during the fourth quarter, we repurchased 1.8 million shares of our stock for a total purchase price of 100 million.

Our transition to a fit.

Speaker Change: And the.

Speaker Change: Fit for basin and in our technology.

Speaker Change: Technology leverage.

Focused portfolio in.

Speaker Change: In U S land.

Speaker Change: Some extent in Canada, and we have seen this as a success with adoption of some really unique drilling technology vascular the Ccs.

Speaker Change: Of some really unique drilling technology, particularly digital CCS, giving us the tailwind to outperform the market in 2023. And we see this continuing now. The priority for customers remains clearly efficiency and recovery in the U.S. land market. And hence, more efficiency on the drilling well construction side means more recovery. Use of... Use of digital, use of ESPs, and also low carbon when it matters, will continue to make an impact and serve us very well. And in the U.S. and the U.S. Gulf of Mexico and other offshore markets, performance through integration, performance through execution, and reliability of our execution, I think will continue to be paramount for our customers. And as long as we continue to deliver at this level, we'll get rewarded with... market position, contract, and pricing. And hence, we'll be able to outperform the recount, hence our guidance up to reaching the mid-single digit in 2024 against the market outlook.

Speaker Change: Giving us the tailwind to outperform the market.

Speaker Change: <unk>.

Speaker Change: In 2023, and we see this continuing now the priority for customers remain.

Olivier Le Peuch: You have the cloud transition with existing customers and adoption of new customers coming to SaaS solutions. You have data and AI. It's a new market. It's a rebirth of data management that's scaling to within the cloud and AI, unlocking the power of data to AI in our industry. And finally, digital operations.

Clearly our system and a recovery in the U S land market in the handset.

Speaker Change: More efficiency and on the trading well construction side.

Speaker Change: More recovery use of digital and use of ESP and and also low carbon when it when it matters and we will continue to make an impact in service very well and the U S and the U.

Speaker: For the full year, we return a total of 2 billion to shareholders in the form of dividends and stock repurchase. Our continued capital decision. Combined with the confidence we have that 2024 will be another year of strong cash flow generation, it will enable us to increase our returns to shareholders in 2020. In this regard, when combining the increased quarterly dividend that we announced today with increased share repurchases, we are targeting to return more and $2.5 billion to our shareholders in 2020. I will now turn the conference call back to Olivia. Thank you, Stefan. Ladies and gentlemen, I think we will start the Q&A. Solia, back to you on his television show.

Speaker Change: Gulf of Mexico, and other offshore markets.

Olivier Le Peuch: These three trends are supporting our growth ambitions, both this year and next year, and this covers all the customer segments across the globe. And you keep seeing some announcements of customer adoption of our solution. Thank you very much. Thank you. Yes, good morning. Good morning, Shots.

Speaker Change: <unk> two integration performance to our execution and our reliability of our execution I think will continue to be paramount for our customers and and as long as we continue to deliver this level will get rewarded with.

Speaker Change: Our market position and compact and pricing and hence.

Neil Singhvi Mehta: So, I want to touch on transition technologies. You noted over a billion dollars. And I realize a lot of these are new and focused on emissions reduction, and I believe that the bucket there is separate from new energy. Correct me if I'm not accurate.

Speaker Change: We will be able to outperform the rig count hence our guidance.

Speaker Change: Up to a.

Speaker Change: Hitching the mid single digits in 2024 against the market outlook.

Speaker Change: Thanks, Olivia.

Speaker Change: Thanks Olivia.

Speaker Change: Thank you.

Olivier Le Peuch: Olivier, I wanted to ask about the... The outlook for these technologies and the growth of sales of these technologies as the uptake by customers around the world seems pretty strong. Can you speak to the multi-year outlook and is the cadence of growth for transition technologies additive to the growth rate from the core? No, I think you're correct first in stating that this is distinct from our focus on the five themes that we have in new energy and distinct from the CCS I mentioned where we have a lot of success in geothermal and it represents a portfolio of technology that we have, that we are developing, that we are promoting to our customers that have a distinct lower emission carbon intensity compared to existing or legacy technology and have a net effect on our customer for their scope one or their scope three, upstream as we call it, emissions, but also have the characteristic to bring efficiency.

Speaker Change: Thank you.

Speaker Change: And next we'll go to <unk> with J P. Morgan. Please go ahead.

Speaker Change: Yeah, good morning, Olivier. I wanted to get your thoughts on what you're seeing in the international markets in terms, perhaps you could compare and contrast the spending behavior you're seeing from the NOCs versus the IOCs.

Speaker Change: Yeah, good morning, Olivier. I wanted to get your thoughts on what you're seeing in the international markets, in terms of perhaps you could compare and contrast the spending behavior you're seeing from the NOCs versus the IOCs.

Speaker Change: Yeah. Good morning, Olivier I wanted to get your thoughts on what Youre seeing in the international markets in terms of perhaps you could compare and contrast, the <unk>.

Olivier: Hey, good morning, Olivier and Simon. Good morning. Good morning.

Speaker Change: Spending behavior, you're seeing from the NFC is versus the Ioc's.

Speaker Change: Yeah.

Olivier Le Peuch: Thank you, Haroun.

Olivier Le Peuch: Thank you, Haroun. If I were to characterize at the highest level, I think that we have seen significant traction in the last two years and a rebound of investment internationally by the international company with a delay coming from the contractual nature and also from the investment execution decision by the national company. We anticipate national companies to actually grow faster as we turn into 2024, led in particular by the Middle East region with leading NOCs clearly going. But I think the momentum we have gained, which was leading the pack to some extent in the IOC in 2023, we expect due to the nature of our mix, offshore exposure, still very solid.

James: Olivier, I'm curious to hear your thoughts. Clearly, you're looking for another year of pretty strong growth in EBITDA and revenue, but it seems to me like we've got a lot of, particularly deep water rigs, that are going to start turning to the right here very soon. And particularly in the second half, there should be an exit rate that's even higher than that type of growth as we go into 25. Is that a fair assumption or am I getting ahead of myself here in terms of kind of what the overall market opportunity is going to be as we step through this year and get into 25-26? No, that's incorrect.

Speaker Change: No. Thank you Arun I think.

Olivier Le Peuch: If I was to characterize at the highest level, I think that we have seen significant traction in the last two years and rebound of investment internationally by the international company with a delay coming from the contractual nature and also from the investment execution decision from national company. We anticipate national company to actually grow faster as we turn into 2024, led in particular by the Middle East region with leading NOCs clearly going. But I think the momentum we have gained, which was leading the pack to some extent in the IOC in 2023, we expect due to the nature of our mix, offshore exposure, still very solid. And I think the expansion of Resolve for a few of them will continue to give us momentum in the IOCs internationally. And I will not forget about the international independents that have a market position, particularly in some offshore markets, and they are continuing to execute on their plan. And so we are pleased and I think we are looking forward to the national company accelerating their, relatively speaking, their growth in 2024 compared to the IOC.

Speaker Change: If I was to characterize at the highest level I think that we are seeing significant traction.

Speaker Change: In the last two years and rebound of investment internationally by the International company.

Speaker Change: With a delay.

Speaker Change: I mean from the contractual nature and also from the investment.

Speaker Change: Execution.

<unk> from National Company, we anticipate National company too.

Speaker Change: Actually.

Speaker Change: Grow faster as we turn into 2024 led in part by the Middle East region with leading <unk> clearly going.

But I think the momentum we have gained.

Which was leading the pack to some extent in the IOC in 2023, and we expect due to the nature of our mix.

Speaker Change: Offshore exposure.

Olivier Le Peuch: And I think the expansion of Resolve for a few of them will continue to give us momentum in the IOCs internationally. And I will not forget about the international independents that have a market position, particularly in some offshore markets, and they are continuing to execute on their plans. And so we are pleased and I think we are looking forward to the national company accelerating, relatively speaking, their growth in 2024 compared to the IOC.

Olivier: I think James, thank you for laying out the... I think the theme of the show is a distinct attribute of this cycle. I've already delivered in terms of total activity visibly beyond 2019 and including both shallow and deep water that have both grown visibly in the last 24 months, so mainly driven by the addition of rigs that we continue to see coming in the Middle East and the Asia region and deep water across all the deep water basins. And we anticipate orbiting at a more moderate rate for deep water than shallow.

Speaker Change: Very solid exploration appraisal for a few of them will continue to give us momentum in the in the Ioc's internationally and I will not forget about the.

International Independents that Adam our market position in some offshore markets and continue to execute on our plan and.

Olivier Le Peuch: So customers looking for a low cost, low carbon outlook continue to adopt this technology by contrast with alternative technology that exists in the market as they deliver not only lower carbon but also higher efficiency, which is the way we characterize this technology. So yes, we are very pleased with the option. Some technologies are very unique, like almost a zero carbon cement solution.

Speaker Change: And we so we are we're pleased and I think we look forward. We are looking forward to the national company accelerating DAU relatively speaking.

Speaker Change: Our growth in 2024 compared to <unk>.

Speaker Change: Great. And my follow-up, Olivier, at the Analyst Day in 2022, you highlighted a target of $3 billion in new energy revenue by the end of the decade. Does that even give us a sense of where you're at in terms of that path, that journey, and maybe some of the areas where you're seeing the most traction today?

Speaker Change: Great. And my follow-up, Olivier, at Analyst Day in 2022, you highlighted a target of $3 billion in new energy revenue by the end of the decade. Do you even think that gives us a sense of where you are in terms of that path, that journey, and maybe some of the areas where you're seeing the most traction today?

Speaker Change: Great and my follow up Olivier at the Analyst day.

Olivier Le Peuch: <unk> highlighted.

Olivier Le Peuch: Some solutions are really game changing, such as some of our processing subsea processing solutions that are having a net impact on the carbon footprint of subsea operations. Some technologies are disrupting for the future, such as electrical full subsea and electrical full completion technology. And hence, we are seeing accelerated adoption of this. And finally, we said that we are also seeing, following COP28, much more interest in our methane emission management solution. And you have seen the announcement we made with ENI, supporting them as a global company, to make an assessment and assess their emission intensity from methane and propose a baseline solution. So this is a mix of technologies. We continue to be growing in our technology mix, and that supports our ambition for a sustainable future and a balanced planet but also aligns with our customers on lower carbon, lower cost. Appreciate that color. And then, Stefan, one for you.

Olivier Le Peuch: A a target of 3 billion in new energy revenue by the end of the decade I'm wondering if you can give us a sense of where you're at in terms of that path the journey.

James: Rig activity is expected to continue to increase and the exit rate of 2014 to be both in terms of recounts, offshore recounts, and total offshore recounts, with the exit rate of 23 as a benefit. I think both the offshore activity and the deep water, where we have the benefit of scale with our subsea venture, will benefit, and we will continue to see growth not only in 24 but running out to 25 and beyond, as I said. The total FID for offshore stays at $100 billion for each of 24 and 25, and this is not only supporting activity next year and 25, but also supporting the longevity of offshore investment beyond. So we remain very constructive in that environment, and yes, we see the exit rate to be above last December in 12 months from now. Okay, perfect.

Olivier Le Peuch: And maybe some of the areas.

Where youre seeing the most traction today.

Olivier Le Peuch: I think as you as we remember and then.

Olivier Le Peuch: Setting the scene for everyone I think we had an amplified size.

Olivier Le Peuch: Domain in which we believe were the adjacency we have.

Olivier Le Peuch: Potentially we have a technology porphyry belief to bring to market and disrupt and best spent in new and as yet scale. Cts showed you Joe term onshore energy and as you still age critical in L. A.

Olivier Le Peuch: And.

And the hydrogen that are both that all of them have different horizons of growth and scale.

Scale potential for us so we have been for the last two or three years of seeding investments at developing organically and Inorganically technology position we are.

Olivier Le Peuch: Very pleased with the momentum in Ccs and geothermal going ahead of our expectation Tamil.

Olivier Le Peuch: I appreciate the cash return target for 24. However, can you also provide some broader color on the cash conversion rate? The working capital release in 4Q was very impressive. I am so curious about the working capital outlook for 24, the tax rate, et cetera. So, Luke, yes, we were also very pleased with the fourth quarter and full year free cash flow. And indeed, in the fourth quarter, it came almost entirely from working capital. So now we do expect, as I said, 2024 to be another very strong year of free cash flow, and it will show the same quarterly pattern we usually see. So in the first quarter, working capital will clearly increase.

Stefan: That's great to hear! And then maybe a quick follow-up in terms of CapEx. I don't know, Stefan, if you want to take this one, but CapEx seems like you're going to keep it at the same type of level that it was in 23 but there's going to be a lot of a lot more activity, and so does that number eventually need to move higher, and when it does, if it does, do you still believe that you can maintain this, you know, five to six percent of revenue for capital expenditure Luke, James, yes, we are still growing going into 2024 and beyond, but this level of capex we spent in 2023 we think remains adequate for this year as well.

Olivier Le Peuch: For Ccs sequestration, the studies and participation.

Exploration.

Olivier Le Peuch: This in this market and geothermal by a.

Olivier Le Peuch: Growth potential going beyond the established basins.

Olivier Le Peuch: So we believe that Ah Ah Ah Ah <unk> target it will be a combination of organic growth on these adjacent market and inorganic development into the into the non the non the address adjacent markets and we believe that Ccs likely to be a leading.

Olivier Le Peuch: In terms of potential contributor to this ambition.

Olivier Le Peuch: Followed by likely hydro and starting to be in a position that will more impact later part of the cycle in the next decade. So we feel confident by the early investment we are making and we feel confident about the development of the market the support of the incentive across many regions and <unk>.

Olivier Le Peuch: We have the payment of annual incentives to employees, as you may know. And then we'll have the reversal of certain exceptional items that occurred in the last quarter of 2023. So we'll see the effect in Q1 as usual, but then this will be followed by a gradual improvement in subsequent quarters in line with what we observed this year. So hopefully, we can have another very strong finish in the year 12 months from now and deliver a strong performance as well.

Stefan: You have to think about the mix of activities as well amongst our divisions, so we think we can very well address the upcoming growth within this envelope without having to increase it normally throughout the year unless growth is much more than expected, but we are comfortable with this, and we will indeed remain within our guidance, and it's actually the low end of our guidance on the capex side. Okay.

Early stage of success in our Ccs, particularly.

Olivier Le Peuch: As we exited this.

Speaker Change: Great, thanks a lot.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Thank you.

And my apologies, we have time for one more question that is from Roger read with Wells Fargo. Please go ahead.

Olivier Le Peuch: Yeah, thank you. Good morning. Congratulations on the quarter.

Roger: Yes. Thank you good morning, congratulations on the quarter.

Olivier Le Peuch: Thanks. Thank you. Thank you. Hi, Olivier. You noted the bookings and backlog at 1 sub C. And on the last call, you talked about some of the commercial and operational objectives, and I wanted to see if you could just talk about how customer engagement and dialogue have progressed, and many more. No, thank you, Luke.

Speaker Change: Olivia, I'd like to follow up a little bit on the last question.

Speaker Change: Olivia, I'd like to follow up on the last question.

Roger: Thank you Olivia I'd like to follow up a little bit on the last question on the spending iOS.

Speaker Change: We're spending IOCs and OCs, international EMPs, as you mentioned.

Speaker Change: We're spending IOCs and OCs, international EMPs, as you mentioned. You know, we generally want to, let's say, look at the oil slick or assume a flat oil price. If spending is going to increase second half 24, you know, a fairly positive outlook as you showed, you know, kind of 25 and beyond. Would you characterize overall reinvestment by the industry as still too low? In other words, we don't need a higher oil price to get higher, or would you say we are or aren't?

James: Thanks, gentlemen. Thank you. Any other questions?

Roger: <unk> International E&ps as you mentioned.

Speaker: Great, thank you. Good morning, Olivier and Stefan. Good morning, Dave.

Speaker Change: You know, we generally want to, let's say, look at the oil strip or assume a flat oil price.

Roger: We generally wanted to let's say look at the oil strip or assume a flat oil price.

Dave: Hi, so maybe we can start off with the Middle East here. So another double-digit sequential quarter out of MENA, clearly an enormous runway of activity in front of you in the next several years. On conventional gas and the number of capacity expansion projects underway, my question is how you see top line versus margins evolving. Can you maintain this pace of growth in the region for 24 months, or are we getting close to capacity in terms of the number of rigs available, service equipment, even E&C capacity here is pretty tight over there, and I guess, conversely, should we start seeing margins expand further as contracts repricing due to tighten I noted that the tendering of stuff in Iowa was delayed by nine months. I'm wondering if maybe there's some sticker shock from pricing.

Speaker Change: If spending is going to increase second half 24, you know, a fairly positive outlook as you showed, you know, kind of 25 and beyond.

Roger: If spending is going to increase second half 'twenty four.

Roger: Positive outlook as you kind of 'twenty five and beyond.

Olivier Le Peuch: I think we are very pleased first with the first quarter of the subsea jump venture we have with Acura and Subsea 7. I think the results speak for themselves. I think it was a direct contributor to the PS, the production system, performance in the fourth quarter, both on the top line and the margins. So we are very pleased. And I think, as I said, I could not be more pleased than this.

Speaker Change: Would you characterize overall reinvestment by the industry as still too low? In other words, we don't need a higher oil price to get higher.

Roger: Would you characterize overall reinvestment by the industry is still too low in other words, we don't need a higher oil price to get higher spending and investment.

Speaker Change: or would you say we are or are

Roger: Or would you say, we are simply dependent on oil prices I am just kind of curious.

Speaker Change: I'm just kind of curious the way you're looking at it from a

Speaker Change: I'm just kind of curious about the way you're looking at it from the productive capacity that these companies and countries need and, you know, where they sit on excess capacity.

Roger: The way you are looking at it from a.

Speaker Change: Productive capacity these companies and countries need.

Roger: I guess productive capacity of these companies these companies and countries need.

Speaker Change: and, you know, where they sit on excess capacity.

Roger: And.

Where are they where they sit on excess capacity today versus that oil price outlook.

Olivier Le Peuch: Now, going forward, I think our objective continues to be to extract more value through synergy and to fully seize this deepwater offshore cycle that is in full force and where we see, as I said earlier, a strong outlook. So our priority is to benefit from integration capability. And as you have seen, you have announced some alliances, one of them with BP, where I think customers are approaching us, recognizing that subsea integration capability across the SPS and surf is augmented by the ability to deliver and understand the reservoir as well as deliver well construction. So hence, the opportunity to have integrated asset development, integrated tieback delivery, and more opportunity in the space that is fully integrated subsea and beyond to extract better economics and, more importantly, higher recovery combining our reservoir subsurface domain expertise, our well placement, and our subsea boosting and processing capability, all combined to extract and create a little bit of more value for the subsea market going forward from economics and from pollution recovery. So that's where we see a trend coming.

Speaker: So perhaps this is already underway, but just a little more details in terms of capacity and pricing in the Middle East, please. Thank you. Thank you, Dave.

Roger: I think I will turn it a little bit.

Roger: Upside down and realized that.

What's the operator looking at beta in National Company of IOC is that looking at the demand that we continue to grow throughout the decades and realized that if we continue to execute on our capital discipline.

Olivier: I think we have been very pleased with the activity and the way we have been able to turn this activity growth in the last 18 months and the last 12 months, particularly into revenue, benefiting from our strength on the ground in the Middle East. I think I would characterize, beyond the capacity expansion and non-commercial gas, which is a dual benefit for activity, I would also characterize the activity in the Middle East as very broad. It's not two countries leading this; it's almost every country in the region that will see further activity and will derive from it further revenue growth. So we are not at capacity.

They need to accelerate.

Roger: The supply coming from international market to fulfill this demand.

Roger: We continue to grow and we will put more pressure on the demand supply balance. So some of them are responding for two capacity expansion program. Some of them are responding by accelerating the exploration appraisal all that development of existing international.

Roger: That they have and develop and so thats, what we see it applies to both for oil and gas and gas is being more driven by our regional dynamics in the consumption of gas security access with Asia is many danny to seed to feed Europe.

Speaker: We don't see an infection of our revenue growth potential in the region, benefiting from our technology, market position with each and every national company in the region, and the capability for integration to harness the power of our technology to perform for our customers and deliver higher revenue from a rate of activity. So we are confident. When it comes to capacity, yes, equipment capacity, and everybody has been disciplined in the region, and hence we have been responding to and benefiting from pricing in the last 18 months. And, as a consequence, our margins have expanded in the region and have supported what we have seen as our international margin expansion year on year. And I've been a driver of margin expansion internationally, and we expect this to continue.

Roger: For energy security and domestic consumption. This both these factors are driven by demand.

Roger: At the current level still favorable for long cycle investments the price of offshore International development and economics have improved through the cycle the benefits of efficiency integration technology as turned into making the offshore investment more attractive.

Olivier Le Peuch: And we have a portfolio that is unique, with the portfolio of particularly on the boosting, processing, and tieback capability that is unmatched in the market. And we have digital reservoir technology in our core portfolio that complements this and helps and will support this alliance integration capability. So I can only be pleased with the prospect ahead of us, and the feedback from our customers so far is very positive about our capability. Got it.

Roger: So long run and it adds that we attracted investments I will not try to comment on the industry needs more or less I think the industry. He's certainly having the incentives today and have put the program in place with exciting pipeline that confirm that it is attractive it will be met.

Roger: Demand.

Roger: In the loan outlook and confidence into the longevity of the cycle internationally and into the breadth and the resilience across oil and gas or the investment profile, we are seeing from operators.

Speaker: As we execute 2024, but again, it's a long-duration cycle, both by the nature of the investment, decoupled from short-term pricing on commodities. So we remain very confident about our market position, first on the market outlook, and our ability to differentiate on performance, integration, and technology and then continue this success in 2024 and 2025 and again well into the second half of the team. A long way from the peak, that's pretty clear, at least in that part of the region.

Olivier Le Peuch: Thanks for watching. We'll be right back. Thank you, Luke. Hi, good morning Olivier, good morning team. Good morning.

Speaker Change: No, thanks for that. And then the follow-up question that kind of ties into that, obviously a meaningful dividend raised here

Speaker Change: No, thanks for that. And then the follow-up question that kind of ties into that, obviously a meaningful dividend raised here.

Speaker Change: No thanks for that and then.

Olivia, maybe I want to touch on exploration a little bit. You talked about that on the call today. You highlighted Asia.

Speaker Change: A follow up question kind of ties into that obviously, a meaningful dividend range here.

Speaker Change: The increase in the dividend from <unk>.

Speaker Change: The COVID era, but as you look forward,

Speaker Change: The Covid era, but.

Speaker Change: As you look forward.

Olivier Le Peuch: I think you talked about China, Malaysia, India, and some of the other countries exploring for gas. I know you've talked about exploration in the past. So we are seeing at least a little bit of a tangible recovery happening on the exploration side. Maybe you can expand on that a little bit. What do you expect over the next couple of years on both the gas and the oil side? And just maybe, remind us how impactful that is for Asia? Yeah, thank you.

Speaker Change: Thank you so much for joining us.

Speaker Change: Thank you so much for joining us, era.

Speaker Change: Recognizing it's the board that besides the dividend how should we think about the dividend evolving.

Speaker Change: Back to the sort of 2014 to 2019 era when it was substantially higher than today, I know there've been some changes acquisitions and share count and all that but.

Speaker Change: era.

Speaker Change: Thank you so much for joining us.

Olivier: I was wondering if we could shift over to the digital side. I know there were a number of comments in the release today regarding increasing digital adoption by your customers. I was hoping you could expand on that a little bit. Is that simply about customers using Delphi more, or as they get more comfortable with it, is a certain application gaining traction? Is there any metrics you would give us in terms of year-over-year usage from your bigger customers? And I'm also just kind of curious, in order to grow digital revenue by essentially 50% over the next two years, is this primarily coming from an increased digital adoption of existing customers, or do you also need new customers to get to that?

Whether it's an aggregate dollar dividend or per share metric, how do you think about the dividend within the overall framework here.

Olivier Le Peuch: I think, Yes, we have commented before that we have seen a resurgence and rebound of exploration activity in the last two or three years. This cycle has brought exploration activity back to the cycle. I think it has been driven by the desire to find new gas reserves to respond to gas supply security concerns.

Speaker Change: Thanks for the question, Roger. Really, the way we look at it is it goes beyond the dividend. We prefer looking at the total payout to shareholders, including buyback. So the dividend itself, yes, 10%. We're happy we can do this. We're happy it was approved by our board. It's on the back, of course, of the strong free cash flow generation we had in 23, and our confidence we can replicate that in the future. But we want to go at the right pace so that it remains sustainable in the future, and we can do more dividend increases in the future as long as they are reasonable. But, again, total payout is what we are focusing on. We are increasing it from $2 billion in 23, including buybacks, to hopefully more than $2.5 in 2024. So if you back-calculate this, of course, with the new amount of dividend, that means a minimum of $1 billion of share buybacks. And as the year evolves, we will review that every quarter, and we'll address that potentially above the $1 billion minimum as relevant.

Speaker Change: Thanks for the question, Roger. Really, the way we look at it is that it goes beyond the dividend. We prefer looking at the total payout to shareholders, including the buyback. So the dividend itself, yes, 10%. We're happy we can do this. We're happy it was approved by our board. It's on the back, of course, of the strong free cash flow generation we had in 23 and our confidence that we can replicate that in the future. But we want to go at the right pace so that it remains sustainable in the future, and we can do more dividend increases in the future as long as they are reasonable.

Speaker Change: Thanks for the question on order, it's really the way we look at it is.

Speaker Change: It goes beyond the dividend, we prefer looking at the total payout to shareholders.

Speaker Change: Including buybacks.

Speaker Change: The dividend itself, yes.

Loans, where we believe we can do is we have it was approved by our board.

Olivier Le Peuch: And also, it has benefited from the continued exploration of oil around the existing offshore hubs in the form of infrastructure-led exploration. And also, in the new frontier, replicating the success that Exxon had in Green Line over Basin. So, when you look at it from where it's happening, what is unique in this cycle, it's happening everywhere.

Olivier: Okay, let me come back first on some metrics that I think we highlighted in my opening remarks. And I think this relates to the adoption of Delphi, indeed, by a number of users, the use of cloud compute on our Delphi platform, and the use of additional edge or AI capability that we offer to our customers, the combination of which, as I said, has grown 60% in the last two years on a CAGR rate. And the adoption metrics that we share, both the number of users and the number of hours of compute power that we serve to our customers on the clouds, have been growing by 40%. So yes, the adoption is growing, both measured by, as I always said, one customer at a time that transitions from our legacy desktop offering to our clouds, and by the expansion of our workflows, data, and AI capabilities that we offer to existing or new customers.

Speaker Change: On the back of course of strong free cash flow generation, we had in 2003 and the confidence we can replicate that in the future.

Speaker Change: We want to grow at the rate base of vantage remains sustainable in the future and we just we can do more dividend increases in the future as long as they are reasonable, but again total payout, which is what we are focusing on.

Olivier Le Peuch: We have exploration activity mostly offshore. That's where I think the actual success of new reserves has been mostly. And in all offshore basins, both shallow and deepwater, infrastructure-led exploration in existing mature deepwater markets and in new frontiers. So, we have seen new frontier exploration happening in Namibia. We have seen a new frontier in Suriname, in the upcoming Brazil equatorial margin. You have exploration in East or West Columbia. You have furthermore in West Africa, South.

Speaker Change: But, again, total payout is what we are focusing on. We are increasing it from $2 billion in 23, including buybacks, to hopefully more than $2.5 billion in 2024. So if you back-calculate this, of course, with the new amount of dividend, that means a minimum of $1 billion of share buybacks. And as the year evolves, we will review that every quarter, and we'll address that potentially above the $1 billion minimum as relevant.

Speaker Change: We are increasing it from 2 billion in 2000 free including buybacks to hopefully more than $2 five.

Speaker Change: In 2024, so if you back calculate visa of course with the new new.

The amount of dividend that means.

Speaker Change: A $1 billion of share buybacks and as the year evolves, we will review that.

Olivier Le Peuch: And you have what is maybe a bit new in this cycle, more exploration coming back into Asia from India, as I said, to Malaysia, and China. And I think this is what constitutes a bit of this unique cycle. It's broad.

Speaker Change: Every quarter, and we'll address that potentially above the $1 billion.

Speaker Change: And the more meza as relevant.

Speaker Change: Great, thank you.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Olivier Le Peuch: And it's here, in my opinion, to stay because the economics of offshore have improved significantly over the last couple of cycles. And the attributes of the reserve, both gas and oil, with low carbon intensity and ability to deliver a long plateau of production are unique. So, access to offshore acreage, better economics, and a better quality of potential geological reserves have all driven this, and we have increased its success. And we have exposure in reservoir performance with reservoir performance evaluation segments that are benefiting from it and have introduced technology that is really in high demand, like Aura. And we have a lot of exposure, obviously, as well in the digital segments with seismic data capability processing and our digital geoscience offering that both benefit from this as a consumer. So, we are pleased with the market position we have, and we believe that this exploration appraisal is here to stay because it's very broad, diverse, and across many basins, partly in offshore. Fantastic. Okay, no, thanks, Olivier.

And ladies and gentlemen, now I'll turn the conference back to Olivier Le push for closing comments. Please go ahead.

Speaker Change: Thank you, Leah.

Olivier Le Peuch: Thank you ladies.

Speaker Change: Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways.

Speaker Change: Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our fourth quarter and full year 2023 results underscore SLB's differentiated ability to generate returns throughout the cycle. We delivered strong revenue growth and free cash flow above expectations and continue to expand EBITDA and operating margins. With momentum across our three engines of growth and our returns-focused strategy in place, we will continue to build on this success in the year ahead. Second, the macro environment remains very compelling for our business, with investment and activity predicated on international and offshore business.

Speaker: So it's a combination of the transition of the existing customer to the clouds and adoption of data and AI capability because we are offering now a platform that the industry is recognized for adopting. And finally, and maybe one of the most exciting parts that adds a dimension of growth, is the digital operation, both drilling and production. You have seen some of the announcements that have been highlighted in recent weeks and months, and last week, further alignment with a partner to accelerate automation and autonomous systems. So the drilling adoption on the operation, production with our partner Cognite, and this is supplementing, I would say, the core growth of transitioning our geoscience customers from desktop to the cloud. So you have three-dimension; you have the cloud transition with existing customers and adoption of new customers coming to the SaaS solution.

Olivier Le Peuch: Ladies and gentlemen, as we conclude today's call I would like to leave you with the following takeaways.

Speaker Change: First, our fourth quarter and full year 2023 results underscore SLB's differentiated ability to generate returns throughout the cycle.

Olivier Le Peuch: First our fourth quarter and full year 2023 results underscore <unk> differentiated ability to generate returns throughout the cycle.

Speaker Change: We delivered strong revenue growth and free cash flow above expectations and continue to expand EBITDA and operating margins.

Olivier Le Peuch: We delivered strong revenue growth and free cash flow above expectations and continued to expand EBITDA and operating margins.

Speaker Change: With momentum across our three engines of growth and our returns-focused strategy in place, we will continue to build on this success in the year ahead.

Olivier Le Peuch: With momentum across our three engines of growth and a returns focused strategy in place. We will continue to build on this success in the year.

Speaker Change: Second, the macro environment remains very compelling for our business, with investment and activity predicated in international and offshore business.

Olivier Le Peuch: So on the macro environment remains very compelling for our business with investment and activity predicated in international and offshore basis combined with tight service capacity and an emphasis on performance in digital we are well positioned to expand our lead by delivering exceptional value to our customers.

Speaker Change: Combined with tight service capacity and an emphasis on performance and digital, we are well positioned to expand our lead by delivering exceptional value to our customers. Finally, I remain very confident in our strategy and impressed by the outstanding performance of our teams. I'm fully confident in our ability to deliver our 2024 financial targets and continue increasing shareholder returns. I look forward to sharing our progress with you throughout the year. With that, I will conclude today's call. Thank you all for joining me.

Speaker Change: Combined with tight service capacity and an emphasis on performance and digital, we are well positioned to expand our lead by delivering exceptional value to our customers.

Speaker Change: Finally, I remain very confident in our strategy and impressed by the outstanding performance of our teams. I'm fully confident in our ability to deliver our 2024 financial targets and continue increasing shareholder returns.

Olivier Le Peuch: Finally, I remain very confident in our strategy and impressed by the outstanding performance of our teams I am pretty confident in our ability to deliver our 2024 financial targets and continue increasing shareholder returns I look forward to sharing our progress with you throughout the year with this we conclude today's call. Thank you all.

Thanks for the detail. I have one very quick follow-up, if I may, on the Middle East side. I know you talked about that in your prepared remarks in the Q&A early on, but just to go back to that, I think one thing you noted in the press release was that you expect the record Middle East growth to continue beyond 2025. If you can elaborate a little bit, Olivier, on what gives you the confidence, the line of sight beyond 2025. Maybe part of that is just the gas side of things, not just oil, right?

Speaker Change: I look forward to sharing our progress with you throughout the year. With this, I will conclude today's call. Thank you all for joining.

Speaker Change: For joining.

Speaker Change: Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.

Speaker: You have data and AI, it's a new market, it's a rebirth of data management at scale within the cloud and AI, unlocking the power of data to AI in our industry, and finally, digital operations. These three trends are supporting our growth ambitions, both this year and next year, and this spans all the customer segments across the globe, and you keep seeing some announcements of customer adoption of our solution. Thank you very much.

Olivier Le Peuch: But elaborate a little bit on the line of sight you have beyond 2025, and many more. Yeah, I think first you have to realize that the capacity expansion program announced by the multiple countries that have made their commitments extends from 27 to 30 plus, 30, 35, or 40 from the last country that has expanded this. And I think the capacity will continue to be seen added, both land and offshore, to respond to that capacity expansion. Gas, I think, is here for the long haul in the Middle East for two reasons.

Speaker: Thank you. Yes, good morning. Good morning, Shots.

Speaker: I want to touch on transition technologies. You noted over a billion dollars, and I realize a lot of these are new and focused on emissions reduction, and I believe the bucket there is separate from new energy. Correct me if I'm not accurate.

Olivier Le Peuch: First, there are gas reserves that are really at a very good economic point, particularly in Qatar, and will continue to present an energy feed to the global gas market. But also, unconventional reserves are seeing significant investment, and we expect this to actually grow fast in the coming years in two or three countries that are focused on unconventional gas. So the combination of this is giving us confidence that the record investment that we saw last year in the Middle East will continue in 24, 25, and has the potential to expand well into the second half of the decade. Fantastic. That's really helpful, Olivier. Thank you. I've done it again.

Olivier: Olivia, I wanted to ask about the... The outlook for these technologies and the growth of sales of these technologies as the uptake by customers around the world seems pretty strong. Can you speak to the multi-year outlook and whether the cadence of growth for transition technologies is additive to the growth rate from the core? No, I think you're correct first in stating that this is distinct from our focus on the five themes that we have in New Energy and distinct from the CCS I mentioned, where we have a lot of success in geothermal. And it represents a portfolio of technology that we have, that we are developing, that we are promoting to our customers that have a distinct lower emission carbon intensity compared to existing or legacy technology and have a net effect on our customers for their Scope 1 or their Scope 3, upstream, as we call it, emissions, but also have the characteristic of bringing efficiency. So customers looking for lower emissions.

Kurt Hallead: Yeah, good morning, Olivier, Stefan, uh, I have a couple questions for you. The first is on EBITDA margins. Congratulations on crossing that 25% EBITDA margin, Marc. How should we think about the margin path in 2024? And if you think about the upside and downside? Factors that could drive you on that metric.

Speaker: Low cost, low carbon outlook and continue to adopt this technology by contrast with alternative technology that exists in the market as they deliver not only lower carbon but also higher efficiency, which is the way we characterize this technology. So, yes, we are very pleased with the option. Some technologies are very unique, like almost a zero carbon cement solution.

Olivier Le Peuch: How should we, Clearly, we see upside in 24 and continued margin expansion, as we expressed earlier. Really, I'm sure you will calculate that our guidance of mid-teens EBITDA growth in absolute dollars will be achieved with revenue growth, but clearly with margin expansion across our core and in digital, as I mentioned. So, yes, we continue to see margin expansion because we have great operating leverage. We have pricing tailwinds in our backlog and new technology adoption, and this is pushing margins together with the favorable mix. As you well know, offshore is helping margins as well. So, it's...

Speaker: Some solutions are really game changing, such as some of our... Both processing, and subsea processing solutions that are having a net impact on the carbon footprint of subsea operations. Some technology is disrupting the future, such as electrical full subsea and electrical full completion technology. And hence, we are seeing an accelerate adoption of this. And finally, we say that we are also seeing, following COP28, much more interest in our methane emissions. We are also seeing a lot of innovation in the energy management solutions, and you have seen the announcement we made with ENI, supporting them as a global company to make an assessment and be assessing their emission intensity from methane and proposing abatement solutions. So this is a mix of technology that will continue to be growing in our technological mix and that supports our ambition for a sustainable future and a balanced planet. Thank you. Thank you. Aligned with our customers on lower carbon, lower cost. I got it. I appreciate that color. And then, Stefan, one for you.

Speaker Change: We're sorry, your conference is ending now. Please hang up.

Speaker Change: We're sorry your conferences ending now please hang up.

Olivier Le Peuch: It subsides, and it continues to subside from now on. Okay, yeah, it does sound like geomix, operating leverage, pricing, a lot of different factors there that's helpful. And then in terms of North America, I recognize this is a smaller business for you, but you indicated in the comments that you expect North America to grow in 2024 despite a weaker rig count and activity. Can you talk about what's driving that and how you're going to do that?

Olivier Le Peuch: Tuffer North America Macro and where are you seeing the technology adoption, No, we are very pleased with our performance in North America in retrospect in 2023, as we visibly outperformed the recount, and we were able to grow in NAMM sequentially visibly. And we expect, indeed, to continue to outperform the market. And it comes from multiple factors.

Stefan: You know, appreciate the cash return target for 24. Can you also provide some broader color, you know, on the cash conversion rate? The working capital release in 4Q was very impressive. So curious about the working capital outlook for 24, the tax rate, et cetera. Sure, sure, Scott.

Olivier Le Peuch: The mixed factor of exposure we have, with great exposure in the Gulf of Mexico, as well as East Canada and Alaska, we will see the potential for further technology adoption and give us the benefits of our mix. But also, in the U.S. land market, I think we have made a transition to a fit for basin and a technology leverage focused portfolio in U.S. land and to some extent in Canada. And we have seen this as a success with the adoption of some really unique drilling technology, particularly digital CCS, giving us the tailwind to outperform the market in 2023. And we see this continuing now. The priority for customers remains clearly efficiency and recovery in the U.S. land market. And hence, more efficiency on the drilling well construction side, and more recovery.

Speaker: So, Luke, yes, we were also very pleased with the fourth quarter and full year free cash flow. And indeed, in the fourth quarter, it came almost entirely from working capital. So, now, we do expect, as I said, 2024 to be another very strong year of free cash flow. And it will show the same quarterly pattern we usually see. So, in the first quarter, working capital will clearly increase.

Olivier Le Peuch: Use of... Use of digital, use of ESPs, and also low carbon when it matters, will continue to make an impact and serve us very well. And in the U.S. and the U.S. Gulf of Mexico and other offshore markets, performance through integration, performance through execution, and reliability of our execution, I think will continue to be paramount for our customers. And as long as we continue to deliver at this level, we'll get rewarded with... market position, contract, and pricing. And hence, we'll be able to outperform the recount, hence our guidance up to reaching the mid-single digit in 2024 against the market outlook. Thanks, Olivia. Thank you. Yeah, good morning, Olivier.

Speaker: We have the payment of annual incentives to employees, as you may know. And then we'll have the reversal of certain exceptional items that occurred in the last quarter of 2023. So, that's the first quarter.

Speaker: So, we'll see the effect in Q1 as usual, but then this will be followed by a gradual improvement in subsequent quarters in line with what we observed this year. So, hopefully, we can have another very strong finish of the year in 12 months from now and deliver a strong performance as well.

I wanted to get your thoughts on what you're seeing in the international markets. Perhaps you could compare and contrast the spending behavior you're seeing from the NOCs versus the IOCs. Thank you, Haroun. If I were to characterize at the highest level, I think that we have seen significant traction in the last two years and a rebound of investment internationally by the international company with a delay coming from the contractual nature and also from the investment execution decision from the national company. We anticipate national companies to actually grow faster as we turn into 2024, led in particular by the Middle East region with leading NOCs clearly going. But I think the momentum we have gained, which was leading the pack to some extent in the IOC in 2023, we expect due to the nature of our mix, offshore exposure, still very solid. And I think the expansion of Resolve for a few of them will continue to give us momentum in the IOCs internationally.

Stefan: Thanks, Stephan. Thank you, thank you. Hi, good morning. Olivier, you noted the bookings and backlog at 1 sub C, and on the last call, you talked about some of the commercial and operational objectives, and I want to see if you could just talk about how customer engagement and dialogue has progressed, and so on. No, thank you, Luke.

Speaker: I think we are very pleased first with the first quarter of the subsea jump venture we have with Aker and Subsea 7. I think the results speak for themselves. I think it was a direct contributor to the PS, the production system, performance in the fourth quarter, both on the top line and the margins. So we are very pleased. And I think, as I said, I could not be more pleased than this.

Olivier Le Peuch: And I will not forget about the international independents that have a market position, particularly in some offshore markets, and they are continuing to execute on their plan. And so we are pleased, and I think we are looking forward to the national company accelerating its, relatively speaking, relatively slow growth in 2024 compared to the IOC. Great.

Speaker: Now, going forward, I think our objective continues to be to extract more value through synergy and to fully seize this deepwater offshore cycle that is in full force and where we see, as I said earlier, a strong outlook. So our priority is to benefit from integration capability. And as you have seen, you have announced some alliances, one of them with BP, where I think customers are approaching us recognizing that subsea integration capability across the SPS and surf is augmented by the ability to deliver and understand the reservoir as well as deliver well construction. So hence, the opportunity to have integrated asset development, integrated tieback delivery, and more opportunity in the space that is a fully integrated subsea and beyond to extract better economics and, more importantly, higher recovery combining our reservoir subsurface domain expertise, our well placement, and our subsea boosting and processing capability, all combined to extract and create a little bit of more value for the subsea market going forward from economics and from pollution recovery So that's where we see a trend coming.

And my follow-up, Olivier, at the Analyst Day in 2022, you highlighted a target of $3 billion in new energy revenue by the end of the decade. Does that even give us a sense of where you're at in terms of that path, that journey, and maybe some of the areas where you're seeing the most traction today? I think as you remember, and I'm just resetting the scene for everyone, I think we had identified five domains in which we believe we have adjacency, we have potential, and we have a technology portfolio, we believe, to bring to market and disrupt and participate in new energy at scale, CCS, geothermal, geoenergy, energy storage, critical mineral, and hydrogen, that are both, that all of them have different horizons of growth and different scale potential for us.

So we have been, for the last two or three years, a seeding investment, developing organically and inorganically a technological position. We are very pleased with the momentum in CCS and geothermal, going ahead of our expectations in terms of, for CCS, the sequestration studies and participation in exploration in this market, and geothermal, with its growth potential going beyond the established basins. So we believe that our $3 billion target will be a combination of organic growth in this adjacent market and inorganic development into the non-adjacent market. And we believe that CCS is likely to be leading in terms of potential contributor to this ambition, followed by hydrogen starting to be in a position that will have more impact in the later part of the cycle in the next decade. So we feel confident about the early investment we are making, and we feel confident about the development of the market, the support of the incentive across many regions, and the early stage of success in CCS, particularly as we implement that. Great, thanks a lot.

Speaker: And we have a portfolio that is unique, with the portfolio of particularly on the boosting, processing, and tieback capability that is unmatched in the market. And we have digital reservoir technology in our core portfolio that complements this and helps and will support this alliance integration capability. So I can only be pleased with the prospect ahead of us, and the feedback from our customers so far is very positive about our capability. Got it.

Speaker: Thanks for watching. Thank you, Dukes. Hi, good morning Olivier, good morning teams. Good morning.

Speaker: Olivia, maybe I want to touch on exploration a little bit. You talked about that on the call today. You highlighted Asia.

Speaker: I think you talked about China, Malaysia, India, and some of the other countries exploring for gas. I know you've talked about exploration in the past. So we are seeing at least a little bit of a tangible recovery happening on the exploration side. Maybe you can expand on that a little bit. What do you expect over the next couple of years on both the gas and the oil side? And just maybe, remind us how impactful that is for Asia? Yeah, thank you.

Olivier Le Peuch: Thank you. Yeah, thank you. Good morning.

Marc Bianchi: Congratulations on the quarter. Olivia, I'd like to follow up a little bit on the last question. You know, IOCs and OCs, international EMPs, as you mentioned. Um, we generally want to, let's say, look at the oil strip or assume a flat oil price. If spending is going to increase second half 24, you know, a fairly positive outlook as you showed, you know, kind of 25 and beyond. Would you characterize overall reinvestment by the industry as still too low? In other words, we don't need a higher oil price to get higher, or would you say we are or aren't? I'm just kind of curious about the way you're looking at it from the, I guess, productive capacity these companies and countries need and, you know, where they sit on excess capacity.

Olivier: I think, Yes, we have commented before that we have seen a resurgence and rebound of exploration activity in the last two or three years. This cycle has brought exploration activity back to the cycle. I think it has been driven by the desire to find new gas reserves to respond to gas supply security concerns. And also, it has benefited from the continued exploration of oil around the existing offshore hubs in the form of infrastructure-led exploration and also in the new frontier, replicating the success that Exxon had in Green Line Overbasing. So, when you look at it from where it's happening, what is unique about this cycle is that it's happening everywhere.

Marc Bianchi: I think I will turn it a little bit upside down and realize that what our operators are looking at, be it national companies or IOCs, they're looking at demand that will continue to grow throughout the decade and realize that if they continue to execute under capital discipline, they need to accelerate the supply coming from international markets to fulfill this demand that will continue to grow and will put more pressure on the demand-supply balance. So some of them are responding to capacity expansion programs. Some of them are responding by accelerating their exploration appraisal or their development of existing international accretions that they have and for development. So that's what we see. It applies to both oil and gas, and gas is being more driven by regional dynamics on either consumption or gas security access, with Asia or with the East Mediterranean to feed Europe, Asia for energy security and domestic consumption.

Speaker: We have exploration activity mostly offshore. That's where I think the actual success of new reserves has been mostly. And in all offshore basins, both shallow and deep water, infrastructure-led exploration in existing mature deep water markets and in new frontiers. So, you have seen new frontier exploration happening in Namibia. You have seen the new frontier in Suriname, in the upcoming Brazil equatorial margin. You have had exploration on the east or west Columbia side. You have furthermore in West Africa, south.

Speaker: And you have what is maybe a bit new in this cycle, more exploration coming back into Asia, from India, as I said, to Malaysia, and China. And I think this is what constitutes a bit of a unique cycle. It's broad, and it's here, in my opinion, to stay because the economics of offshore have improved significantly over the last couple of cycles. And the attributes of the reserve, both gas and oil, with low carbon intensity and ability to deliver a long plateau of production are unique. So, access to offshore acreage, better economics, and better quality of potential geological reserves have all driven this, and we have increased the success. And we have exposure to reservoir performance with reservoir performance evaluation segments that are benefiting from it, and we have introduced technology that is really in high demand, like Aura.

Olivier Le Peuch: Both these factors are driven by demand. The economics are at the current level, still favorable for long-cycle investment. The price of offshore international development and economics have improved through the cycle. The benefits of efficiency, integration, and technology have turned to make the offshore investment more attractive for the long run. Hence, it has re-attracted investment. So I will not try to comment on the industry needs more or less.

Olivier Le Peuch: I think the industry is certainly having the incentive today and has put a program in place with the FID pipeline that confirms that it is attractive. It will be met with demand in the long outlook, and our confidence in the longevity of the cycle internationally and into the breadth and resilience across oil and gas of the investment profile we are seeing from our project. No, thanks for that.

Speaker: And we have a lot of exposure, obviously, as well in the digital segments with seismic data processing and our digital geoscience offering, which both benefit from this as consumption. So, we are pleased with the market position we have, and we believe that this exploration appraisal is here to stay because it's very broad, diverse, and across many basins, partly in offshore. Fantastic. Okay, no, thanks, Olivier. Thanks for that detail.

Marc Bianchi: And then the follow-up question that kind of ties into that, obviously a meaningful dividend raised here, the COVID era, but as you look forward, thank you so much for joining us, era. Thank you so much for joining us. Thanks for the question, Roger.

Olivier Le Peuch: Really, the way we look at it is that it goes beyond the dividend. We prefer looking at the total payout to shareholders, including buyback. So the dividend itself, yes, 10%.

Speaker: I have one very quick follow-up, if I may, on the Middle East side. I know you talked about that in your prepared remarks in the Q&A early on, but just to go back to that, I think one thing you noted in the press release was that you expect the record Middle East growth to continue beyond 2025. If you can elaborate a little bit, Olivier, on what gives you the confidence, the line of sight beyond 2025. Maybe part of that is just the gas side of things, not just oil, right?

Olivier Le Peuch: We're happy we can do this. We're happy it was approved by our board. It's on the back, of course, of the strong free cash flow generation we had in 23 and our confidence that we can replicate that in the future. But we want to go at the right pace so that it remains sustainable in the future, and we can do more dividend increases in the future as long as they are reasonable. But, again, total payout is what we are focusing on. We are increasing it from $2 billion in 23, including buybacks, to hopefully more than $2.5 billion in 2024. So if you back-calculate this, of course, with the new amount of dividend, that means a minimum of $1 billion of share buybacks. And as the year evolves, we will review that every quarter, and we'll address that potentially above the $1 billion minimum as relevant. Great, thank you.

Speaker: But elaborate a little bit on the line of sight you have beyond 2025, and many more. Yeah, I think first you have to realize that the capacity expansion program announced by the multiple countries that have made that commitment extends from 27 to 30 plus, 30, 35, or 40 from the last country that expanded this. And I think the capacity will continue to be seen added, both land and offshore, to respond to that capacity expansion. Gas, I think, is here for the long haul in the Middle East for two reasons.

Speaker: First, there are gas reserves that are really at a very good economic point, partially in Qatar, and will continue to present an energy feed to the global gas market. But also, unconventional reserves are seeing significant investment, and we expect this to actually grow fast in the coming years in two or three countries that are focused on unconventional gas. So the combination of this is giving us confidence that the record investment that we saw last year in the Middle East will continue in 24, 25, and has the potential to expand well into the second half of the decade. Fantastic. That's really helpful, Olivier.

Speaker: Thank you. Thank you. Yeah, good morning, Olivier, and Stefan.

Speaker: A couple of questions for me. The first is on EBITDA margins. Congratulations on crossing that 25% EBITDA margin mark. How should we think about the margin path in 2024? And if you think about the upside and downside, factors that could drive you on that metric. Where should we start?

Speaker: Clearly, we see upside in 24 and continued margin expansion, as we expressed earlier. Really, I'm sure you will back-calculate, but our guidance of mid-teens EBITDA growth in absolute dollars will be achieved with revenue growth, but clearly with margin expansion across our core and in digital, as I mentioned. So, yes, we continue to see margin expansion because we have great operating leverage. We have pricing tailwinds in our backlog and new technology adoption, and this is pushing margins together with the favorable mix, as you well know. Offshore is helping margins as well. So, it's...

Olivier: It subsides, and it continues to subside from now on. Okay, yeah, it does sound like geomix, operating leverage, pricing, a lot of different factors there that's helpful. And then in terms of North America, I recognize this is a smaller business for you, but you indicated in the comments you expect North America to grow in 2024 despite weaker rig count and activity. Can you talk about what's driving that and how you're dealing with a tougher North America macro, and where are you seeing the technology adoption? No, we are very pleased with our performance in North America in retrospect in 2023, as we visibly outperformed the recount, and we were able to grow in NAMM sequentially visibly, and we expect to indeed continue to outperform the market, and that comes from multiple factors.

Olivier Le Peuch: Thank you. Thank you, Leah. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our fourth quarter and full year 2023 results underscore SLB's differentiated ability to generate returns throughout the cycle. We delivered strong revenue growth and free cash flow above expectations and continue to expand EBITDA and operating margins. With momentum across our three engines of growth and our returns-focused strategy in place, we will continue to build on this success in the year ahead. Second, the macro environment remains very compelling for our business, with investment and activity predicated on international and offshore business.

Olivier Le Peuch: Combined with tight service capacity and an emphasis on performance and digital, we are well positioned to expand our lead by delivering exceptional value to our customers. Finally, I remain very confident in our strategy and impressed by the outstanding performance of our teams. I'm fully confident in our ability to deliver our 2024 financial targets and continue increasing shareholder returns.

Olivier Le Peuch: I look forward to sharing our progress with you throughout the year. With this, I will conclude today's call. Thank you all for joining. We're sorry, your conference is ending now. Please hang up.

Olivier: The mixed factor of exposure we have, with great exposure in the Gulf of Mexico as well as East Canada and Alaska, we will see the potential for further technology adoption and giving us the benefits of our mix, but also in the U.S. land market. I think we have made a transition to a fit for the basin and a technology leverage-focused portfolio. In the U.S. land market and to some extent in Canada, and we have seen this as a success with the adoption of some really unique drilling technology, in particular digital CCS, giving us the tailwind to outperform the market in 2023, and we see this continuing. Now the priority for customers remains clearly efficiency and recovery in the U.S. land market.

Speaker: More efficiency on the drilling well construction side, more recovery, the use of digital, the use of ESPs, and also low carbon when it matters, will continue to make an impact and serve us very well. And in the U.S. Gulf of Mexico and other offshore markets, performance through integration, performance through execution, and reliability of our execution, I think will continue to improve. I think it will be paramount for our customers, and as long as we continue to deliver at this level, we'll get rewarded with market position, contract, and pricing, and hence we'll be able to outperform the recount, hence our guidance up to reaching the mid-single digit in 2024 against the market outlook. Thanks, Olivia. Thank you. Good morning, Olivier. I wanted to get your thoughts on what you're seeing in the international markets, in terms of perhaps you could compare and contrast the spending behavior you're seeing from the NOCs versus the IOCs. No, thank you, Haroun.

Olivier: If I were to characterize at the highest level, I think that we have seen significant traction in the last two years and a rebound of investment internationally by the international company with a delay coming from the contractual nature and also from the investment execution decision from the national company. We anticipate national companies to actually grow faster as we turn into 2024, led in particular by the Middle East region with leading NOCs clearly going. But I think the momentum we have gained, which was leading the pack to some extent in the IOC in 2023, we expect due to the nature of our mix, offshore exposure, still very solid, and the expansion of results for a few of them will continue to give us momentum in the IOCs internationally.

Speaker: And I will not forget about the international independents that have a market position, particularly in some offshore markets, and they are continuing to execute on their plan. And so we are pleased, and I think we are looking forward to the national company accelerating its, relatively speaking, relatively slow growth in 2024 compared to the IOC. Great.

Olivier: And my follow-up, Olivier, at Analyst Day in 2022, you highlighted a target of $3 billion in new energy revenue by the end of the decade. Does that even give us a sense of where you are on that path, that journey, and maybe some of the areas where you're seeing the most traction today? I think, as you remember, and I'm just setting the scene for everyone, we identified five domains in which we believe we have adjacency, we have potential, and we have a technology portfolio belief to bring to market and disrupt and participate in new energy at scale, CCS, geothermal, geoenergy, energy storage, critical minerals, and hydrogen, all of which have different horizons of growth and different scale potential for us.

Olivier: So we have been for the last two or three years seeding investment, developing organically and inorganically our technological position. We are very pleased with the momentum in CCS and geothermal, going ahead of our expectations in terms of CCS sequestration studies and participation in exploration in this market, and geothermal, by its growth potential going beyond the established basins. So we believe that our $3 billion target will be a combination of organic growth in this adjacent market and inorganic development into the non-adjacent market, and we believe that CCS is likely to be leading in terms of potential contributor to this ambition, followed by likely hydrogen starting to be in a position that will have more impact in the later part of the cycle in the next decade. So we feel confident about the early investment we are making, and we feel confident about Great, thanks a lot.

Speaker: Thank you. Yeah, thank you. Good morning.

Speaker: Congratulations on the quarter. Olivia, I'd like to follow up a little bit on the last question. And many, many more who are spending IOCs and OCs. You know, we generally want to, let's say, look at the oil strip or assume a flat oil price. If spending is going to increase second half 24, you know, a fairly positive outlook as you showed, you know, kind of 25 and beyond. Would you characterize overall reinvestment by the industry as still too low? In other words, we don't need a higher oil price to get higher, or would you say we are? I'm just kind of curious the way you're looking at it from the productive capacity these companies and countries need and where they sit on excess capacity.

Speaker: I think I will turn it a little bit upside down and realize that what our operators are looking at, be it national companies or IOCs, they're looking at demand that will continue to grow throughout the decade and realize that if they continue to execute on the capital discipline, they need to accelerate the supply coming from international markets to fulfill this demand that will continue to grow and will put more pressure on the demand-supply balance. So some of them are responding to capacity expansion programs; some of them are responding by accelerating their exploration appraisal or their development of existing international accretions that they have and development. So that's what we see. It applies to both oil and gas, and gas is being more driven by regional dynamics on either consumption or gas security access with Asia or with the East Mediterranean to feed Europe, Asia for energy security and domestic consumption. Both these factors are driven by demand.

Speaker: The economics are, at the current level, still favorable for long-cycle investment. The price of offshore international development and economics have improved through the cycle. The benefits of efficiency, integration, and technology have turned to make offshore investment more attractive for the long run; hence it has re-attracted investment. So I will not try to comment on what the industry needs more or less. I think the industry is certainly having the incentive today, and they have put a program in place with the FID pipeline that confirms that it is attractive, it will be met with demand in the long run, and our confidence in the longevity of the cycle internationally and into the breadth and resilience across oil and gas of the investment profile we are seeing from our operators. No, thanks for that. And then the follow-up question that kind of ties into that, obviously a meaningful dividend raised here, the COVID era, but as you look forward, Thank you so much for joining us. Arrow.

Speaker: Thank you for joining us. Thanks for the question Roger, it's really the way we look at it, it goes beyond the dividend, we prefer looking at the total payout to shareholders, including buyback, so the dividend itself, yes, 10%. We're happy we can do this, we're happy it was approved by our board, it's on the back, of course, of the strong free cash flow generation we had in 2023 and our confidence we can replicate that in the future. But we want to go at the right pace so that it remains sustainable in the future, and we can do more dividend increases in the future as long as they are reasonable, but again, total payout is what we are focusing on; we are increasing it from 2 billion in 2023, including buybacks, to hopefully more than 2.5 billion in 2024. So if you back-calculate this, of course, with the new amount of dividend, that means a minimum of Great, thank you.

Stefan: Thank you. Thank you, Leah. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our fourth quarter and full year 2023 results underscore SLB's differentiated ability to generate returns throughout the cycle. We delivered strong revenue growth and free cash flow above expectations and continue to expand EBITDA and operating margins. With momentum across our three engines of growth and our returns-focused strategy in place, we will continue to build on this success in the year ahead. Second, the macro environment remains very compelling for our business, with investment and activity predicated on an international and offshore basis.

Olivier: Combined with tight service capacity and an emphasis on performance and digital, we are well positioned to expand our lead by delivering exceptional value to our customers. Finally, I remain very confident in our strategy and impressed by the outstanding performance of our teams. I'm fully confident in our ability to deliver our 2024 financial targets and continue increasing further returns.

Olivier: I look forward to sharing our progress with you throughout the year. With this, I will conclude today's call. Thank you all for joining. We're sorry, your conference is ending now. Please hang up.

Q4 2023 Schlumberger NV Earnings Call

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