Q2 2024 Schlumberger Ltd Earnings Call
Speaker Change: Thank you everyone for standing by. Welcome to the SLB Second Quarter Earnings Conference Call.
Operator: Welcome to the SLB Second Quarter Earnings Conference. At this time, all participants... If you would like to ask a question, you may press 1, then 0.
Speaker Change: At this time, all participants are in a listen-only mode. If you would like to ask a question, you may press 1, then 0. You will hear acknowledgment that your line has been placed in queue. You may remove yourself from queue by repeating the same 10 command.
Operator: You will hear acknowledgment that your line is on. You remove yourself from Q by repeating the same one As a reminder, this comp- I would now like to turn the conference over to James Arman, Vice President of Investor Relations and Industry Affairs. Please go ahead.
Speaker Change: As a reminder, this conference is being recorded. I would now like to turn the conference over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.
James Carlyle West: Thank you, Leah. Good morning, and welcome to the SLB second quarter 2024 earnings conference call. Today's call is being hosted from London, following our board meeting held earlier this week. Joining us on the call are Olivier LaPouche, Chief Executive Officer, and Stephane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.
Speaker Change: Thank you, Leah. Good morning and welcome to the SOB Second Quarter 2024 Earnings Conference Call. Today's call is being hosted from London following our board meeting held earlier this week.
Speaker Change: Joining us on the call are Olivier LaPouche, Chief Executive Officer, and Stephane Biguet, Chief Financial Officer.
Speaker Change: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking.
Speaker Change: These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.
James Carlyle West: For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter press release, which is on our website, and Fyne. In conjunction with our proposed acquisition, SLB and Champion X have filed materials with the SEC, including a registration statement with a proxy statement and prospectus. These materials can be found on the SEC's website or from the parties' websites.
Speaker Change: For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.
Speaker Change: Our comments today also include non-GAAP financial measures.
Speaker Change: Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter press release which is on our website.
Speaker Change: And finally, in conjunction with our proposed acquisition, SLB and ChampionX have filed materials with the SEC, including a registration statement with a proxy statement and prospectuses.
Olivier Le Peuch: These materials can be found on the SEC's website or from the parties' websites. With that, I will turn the call over to Olivier.
Olivier Le Peuch: With that, I will turn the call over to Olivier. Thank you, James. Ladies and gentlemen, thank you for joining us on the call. This was a very strong second quarter for SLB, showcasing our ability to harness the ongoing growth cycle while driving efficiencies throughout our business. During today's call, I will cover three topics. First, I will review our second quarter results. Then I will describe the dynamics of the cycle and how we are positioning our business for further growth and margin expansion.
Olivier Le Peuch: And finally, I will share our updated outlook for the full year and discuss our ongoing commitment to returns to shareholders. Stephane will then provide additional details on our financial results, and we will open the line for your questions. I'm very pleased with our strong second quarter performance.
Olivier Le Peuch: Thank you, James. Ladies and gentlemen, thank you for joining us on the call.
Olivier Le Peuch: This was a very strong second quarter for SLB, showcasing our ability to harness the ongoing growth cycle while driving efficiencies throughout our business.
Olivier Le Peuch: During today's call I will cover three topics.
Olivier Le Peuch: First, I will review our second quarter results.
Olivier Le Peuch: Then I will describe the dynamics of the cycle and how we are positioning our business for further growth and margin expansion.
Olivier Le Peuch: And finally, I will share our updated outlook for the full year and discuss our ongoing commitment to returns to shareholders.
Olivier Le Peuch: Stephan will then provide additional details on our financial results and we will open the line for your questions.
Olivier Le Peuch: sequentially, revenue increased 5%, adjusted EBITDA grew 11%, adjusted EBITDA margin expanded 142 basis points, and we generated $776 million of free cash. These results were driven by continued growth momentum in international markets, with more than half of our international geo-units posting their highest revenue quarter of the century. Overall, international revenue grew 6% sequentially, led by the Middle East and Asia, which continue to set new records with two-thirds, 8 out of 12, of the EU units in the area posting record-high quarterly revenue.
Olivier Le Peuch: Let's begin.
Speaker Change: I'm very pleased with our strong second quarter performance.
Stéphane Biguet: Sequentially, revenue increased 5%. Adjusted EBITDA grew 11%. Adjusted EBITDA margin expanded 142 basis points and we generated 776 million of free cash flow.
Stéphane Biguet: These results were driven by continued growth momentum in international markets, with more than half of our international geo-units posting the highest revenue quarter of the cycle.
Stéphane Biguet: Overall, international revenue grew 6% sequentially, led by the Middle East and Asia, which continue to set new records with two-thirds, 8 out of 12, of the EU units in the area posting record-high quarterly revenue.
Olivier Le Peuch: This was fueled by capacity expansion projects, new gas developments, and production recovery investments across the region. Additionally, the ongoing strength of the offshore markets supported further growth in Europe and Africa, as well as Latin America. This was particularly pronounced in deep water basins, including Brazil, West Africa, and Norway, where we continued to benefit from strong backlog conversion in one sector. We also benefited from new projects on land, notably in Argentina and North Africa.
Stéphane Biguet: This was fueled by capacity expansion projects, new gas developments, and production recovery investments across the region.
Stéphane Biguet: Additionally, the ongoing strength of the offshore markets supported further growth in Europe and Africa, as well as Latin America.
Stéphane Biguet: This was particularly pronounced in deep water basins including Brazil, West Africa and Norway where we continued to benefit from strong backlog conversion in one subsea.
Stéphane Biguet: We also benefited from new projects on land, notably in Argentina and North Africa.
Olivier Le Peuch: Meanwhile, in North America, revenue increased 3% sequentially. This was led by the Gulf of Mexico, where we saw increased revenue and higher digital revenue from sales of exploration data and ISOs. However, this sequential growth was partially offset by lower drilling in U.S. land as the market continues to be constrained by weaker gas prices, capital discipline, and ongoing market consolidation.
Stéphane Biguet: Meanwhile, in North America, revenue increased 3% sequentially. This was led by the Gulf of Mexico, where we saw increased revenue and higher digital revenue from sales of exploration data licenses.
Stéphane Biguet: However, this sequential growth was partially offset by lower drilling in U.S. land as the market continues to be constrained by weaker gas prices, capital discipline, and ongoing market consolidation.
Olivier Le Peuch: Next, let me describe how this growth played out across the divisions. In our core divisions, we continue to harness this cycle, with revenue growing 4% sequentially and pre-tax segment operating margins expanding by 120 basis points. Growth was led by our production systems and by our performance divisions, which visibly expanded margins due to the favorable conversion of backlog, as well as many business lines operating at record activity levels. Demand for our services and equipment is being further reinforced by the combination of long-cycle development activity and the acceleration of production recovery investments, particularly in the Middle East and Asia and Latin America. Wild construction also grew sequentially, supported by offshore developments, although this was partially offset by weaker land activity in North America.
Stéphane Biguet: Next, let me describe how this growth played out across the divisions.
Stéphane Biguet: In our core divisions, we continue to harness this cycle, with revenue growing 4% sequentially and pre-tax segment operating margins expanding by 120 basis points.
Stéphane Biguet: Growth was led by our production systems and was our performance divisions, which visibly expanded margins due to the favorable conversion of backlog, as well as many business lines operating at record activity levels.
Stéphane Biguet: Demand for our services and equipment is being further reinforced by the combination of long-cycle development activity and the acceleration of production recovery investments, particularly in the Middle East and Asia and Latin America.
Stéphane Biguet: Wild construction also grew sequentially, supported by offshore developments, although this was partially offset by weaker land activity in North America.
Olivier Le Peuch: Overall, the core divisions continue to deliver margin expansion, combining to post their 14th consecutive quarter of year-on-year pre-tax segment operating margin expansion. Meanwhile, in digital integration, I was very pleased to see highly accretive sequential growth highlighted by our digital business reaching a new quarterly high and supporting visible sequential margin expansion. This puts us on track to achieve our full year ambition of digital revenue growth in the high-tech sector. We have opportunities to build on this momentum as customers are increasingly choosing to partner with SLB to modernize their digital infrastructure, as you have seen in a number of announcements included in today's release. At the end of the second quarter, we had 6,900 users on the Delphi platform, an increase of 28% year-on-year.
Stéphane Biguet: In general, the fundamental divisions continue to improve margin expansion, completing their fourth quarter of pre-tax margin expansion.
Stéphane Biguet: Meanwhile, in digital integration, I was very pleased to see highly accretive sequential growth, highlighted by our digital business reaching a new quarterly high and supporting visible sequential margin expansion.
Stéphane Biguet: This puts us on track to achieve our full ambition of digital revenue growth in the high teens.
Stéphane Biguet: We have opportunities to build on this momentum as customers are increasingly choosing to partner with SLB to modernize their digital infrastructure as you have seen in a number of announcements included in today's release.
Stéphane Biguet: At the end of the second quarter, we have 6900 users on the Delphi platform. An increase of 28% for the year.
Stéphane Biguet: Additionally, the number of connected assets increased by 57%, and trading 12-month compute hours increased by 43%.
Olivier Le Peuch: Additionally, the number of connected assets increased by 57%, and trading 12-month compute hours increased by 43%. Combined with our first-quarter results, SAB's first-half adjusted EBITDA grew in the mid-teens compared to the same period last year, in line with our full-year OMB. Moving forward, we will remain focused on driving quality revenue growth and leveraging operational efficiency to grow EBITDA, expand operating margins, generate robust cash flows, and meet our commitment to return to shareholders. I'm here to express my full gratitude to the entire SEBI team for delivering such a strong second quarter and first half result.
Speaker Change: Combined with our first quarter results, SAB first-half adjusted EBITDA grew in mid-teens compared to the same period last year, in line with our full-year ambition.
Speaker Change: Moving forward, we will remain focused on driving quality revenue growth and leveraging operational efficiency to grow EBITDA, expand operating margins, generate robust cash flows, and meet our commitment to return to shareholders.
Speaker Change: I'm here to clearly express my full gratitude to the entire CELBI team for delivering such a strong second quarter and first half results.
Olivier Le Peuch: Next, let me describe how the market is evolving and the steps we are taking to capture profitable growth across the world. As the cycle continues, investments will increasingly be targeted in the most resilient areas of the market, including key international markets such as the Middle East and Asia, and offshore globally. In these areas, we are seeing long-cycle gas and deep water projects, production and recovery activity to address natural decline, and increased digital adoption to drive efficiency and performance.
Speaker Change: Next, let me describe how the market is evolving and the steps we are taking to capture profitable growth across the business.
Speaker Change: As the cycle continues, investments will increasingly be targeted in the most resilient areas of the market, including key international markets such as the Middle East and Asia, and offshore globally.
Speaker Change: In these areas, we are seeing long cycle gas and deep water projects, production and recovery activity to address natural decline, and increased digital adoption to drive efficiency and performance.
Olivier Le Peuch: This is an optimal environment for our business, and we are seizing each of these opportunities. In the Middle East, in addition to exposure to the Oil Capacity Expansion Program across the region, we continue to benefit from the acceleration and scale of investments in gas development, both conventional and unconventional, leveraging our feed-for-basin technology and differentiated integration capabilities. Offshore, we see the benefits of our one-subsidy JV, as highlighted by the number of high-value contracts awarded and partnerships included in today's release.
Speaker Change: This is an optimal environment for our business and we are seizing each of these opportunities.
Speaker Change: In the Middle East, in addition to the exposure to the Oil Capacity Expansion Program across the region, we continue to benefit from the acceleration and scale of investments in gas development, both conventional and unconventional, leveraging our feed-for-basin technology and differentiated integration capability.
Speaker Change: Offshore, we see the benefits of our one-subsidy as highlighted by the number of high-value contracts award and partnerships included in today's release.
Olivier Le Peuch: Through one subsea, we're helping customers unlock reserves and reduce cycle times through an extensive subsea production and processing technology portfolio, and we are increasingly being offered the opportunity to partner with customers in early engineering phases to unlock the economics of the asset. In production and recovery, we are seeing customers embrace offerings as they work to offset natural decline, extend performance, and maximize the value of their producing assets. We have many solutions to help customers access resources through our production system and with our performance division.
Speaker Change: Through one subsea, we're helping customers unlock reserves and reduce cycle times through an extensive subsea production and processing technology portfolio. And we're increasingly being offered the opportunity to partner with customers in early engineering phases to unlock the economics of their assets.
Speaker Change: In production recovery, we are seeing customers embrace offerings as they work to offset natural decline, extend performance, and maximize the value of their producing assets.
Speaker Change: We have many solutions to help customers access resources through our production system and with our performance division and this is showing up in the strong results these divisions are achieving.
Olivier Le Peuch: And this is showing up in the strong results these divisions are achieving. As this market continues to evolve, we expect to strengthen our portfolio to fully capture this growing opportunity through our pending acquisition of Champenex. Finally, underpinning nearly everything we do is the power of digital and AI.
Speaker Change: As this market continues to evolve, we expect to strengthen our portfolio to fully capture this growing opportunity through our planning acquisition of Champenex.
Speaker Change: Finally, underpinning nearly everything we do is the power of digital and AI.
Olivier Le Peuch: In today's market, accelerating the time-to-returns and extracting new levels of efficiency are top of mind for our customers, and they are increasingly recognizing that upscaling their digital infrastructures is a key enabler in these areas, presenting us with significant opportunities for high-margin growth. In summary... SLB is well-positioned across key resident markets, and it remains focused on expanding margins through quality of revenue growth, and this is complemented by a heightened focus on operating efficiency, support structure optimization, and strategic resource allocation in certain markets to align with expected levels of activity going forward. To support these ongoing cost efficiency actions, we recorded a charge this quarter, and Stephane will share additional details on this topic later in the week.
Speaker Change: In today's market, accelerating the time to returns and extracting new levels of efficiency are top of mind for our customers.
Speaker Change: And they are increasingly recognizing that upscaling their digital infrastructures is a key enabler in these areas, presenting us with significant opportunities for high-margin growth.
Speaker Change: In summary,
Speaker Change: SLB is well positioned across key resin art markets.
Speaker Change: We main focus on expanding margins to quality revenue growth and this is complemented by heightened focus on operating efficiency, support structure optimization and strategic resource allocation in certain markets to align with expected levels of activity going forward.
Speaker Change: To support these ongoing cost efficiency actions, we recorded a charge this quarter and Stephane will share additional details on this topic later in the call.
Olivier Le Peuch: Overall, the positive market dynamics and our continued focus on operating efficiency present a strong backlog for continued outperformance. We look forward to harnessing these dynamics to deliver further growth and margin expansion in the second half of 2024 and in 2025. On that note, let me conclude my opening remarks by showing our updated outlook for the year. Based on our strong second quarter and first half results, we expect fully adjusted EBITDA growth in the range of 14% to 15% and fully adjusted EBITDA margins at or above 25%.
Stéphane Biguet: Overall, the positive market dynamics and our continued focus on operating efficiency present a strong backlog for continued outperformance.
Speaker Change: We look forward to harnessing these dynamics to deliver further growth and margin expansion in the second half of 2024 and in 2025.
Stéphane Biguet: On that note, let me conclude my opening remarks by showing our updated outlook for the year.
Speaker Change: Based on our strong second quarter and first half results, we expect fully adjusted EBITDA growth in the range of 14 to 15% and fully adjusted EBITDA margins at or above 25%.
Olivier Le Peuch: Specific to the third quarter, we expect sequential revenue growth in the low single digits enhanced by further margin expansion. This will accelerate as we move toward the end of the year with a visible increase in top-line growth and an uptick in margin expansion during the fourth quarter due to seasonally higher year-end digital and product sales. Lastly, we return $1.5 billion to shareholders in the first quarter through the combination of stock repurchase and dividends.
Speaker Change: Specific to the third quarter, we expect sequential revenue growth in the low single digits enhanced by further margin expansion.
Speaker Change: This will accelerate as we move towards the end of the year with visible increase in top-line growth and an uptick in margin expansion during the fourth quarter due to seasonally higher year-end digital and product sales.
Speaker Change: Lastly, we returned $1.5 billion to shareholders of the first quarter through the combination of stock repurchase and dividends.
Olivier Le Peuch: In the second half of the year, we expect to generate higher EBITDA and strong cash flows, supporting our full-year commitment. Directionally, we expect a strong exit from the year to position us for continued revenue growth, margin expansion, and cash generation, reinforcing our commitment to continue returns to shareholders in 2025. I will now turn the call over to Stephane. Thank you, Olivier, and good morning, ladies and gentlemen.
Speaker Change: In the second half of the year we expect to generate higher EBITDA and strong cash flows supporting our full year commitments.
Speaker Change: Directionally, we expect the strong exit of the year to position us for continued revenue growth, margin expansion, and cash generation, reinforcing our commitment to continue returns to shareholders in 2025.
Speaker Change: I will now turn the call over to Stephane.
Stéphane Biguet: Overall, our second quarter revenue of $9.1 billion increased 5% sequentially, mostly driven by the international market, led by the Middle East and Asia. Sequentially, our pre-tax segment operating margins expanded 135 basis points to 20.3%, as margins increased in each of our four divisions. Company-wide adjusted EBITDA margin for the second quarter was 25%, representing a sequential increase of 142 basis points. In absolute dollars, adjusted EBITDA As a result, second quarter earnings per share, excluding charges and credits, were $0.85.
Stéphane Biguet: Thank you, Olivier, and good morning, ladies and gentlemen.
Stéphane Biguet: Overall, our second quarter revenue of $9.1 billion increased 5% sequentially, mostly driven by the international markets, led by the Middle East and Asia.
Stéphane Biguet: Sequentially, our pre-tax segment operating margins expanded 135 basis points to 20.3%, as margins increased in each of our four divisions.
Stéphane Biguet: Company-wide adjusted EBITDA margin for the second quarter was 25%.
Stéphane Biguet: representing a sequential increase of 142 basis points.
Stéphane Biguet: In absolute dollars, adjusted EBITDA increased 11% sequentially and 17% year-on-year.
Stéphane Biguet: As a result, second quarter earnings per share, excluding charges and credits, was $0.85. This represents an increase of $0.10 sequentially and $0.13, or 18%, when compared to the second quarter of last year.
Stéphane Biguet: This represents an increase of $0.10 sequentially and $0.13, or 18%, when compared to the second quarter of last year. During the quarter, we recorded one cent of merger and integration charges relating to the Hacker Subsid Transaction and 7 cents of charges in connection with a program that we have recently started to realign and optimize the support and service delivery structure in certain parts of our organization. This includes adjusting resources as a result of lower activity levels in North America, centralizing certain digital delivery services, and improving efficiency in our support structure.
Stéphane Biguet: During the quarter we recorded one cent of merger and integration charges relating to the Hacker Subsid Transaction.
Stéphane Biguet: and 7 cents of charges in connection with a program that we have recently started to realign and optimize the support and service delivery structure in certain parts of our organization.
Stéphane Biguet: This includes adjusting resources as a result of lower activity levels in North America.
Stéphane Biguet: centralizing certain digital delivery services.
Stéphane Biguet: and improving efficiency in our support structure.
Stéphane Biguet: This program, which will result in additional charges in the third quarter, will drive further margin expansion in the second half of the year and into 2020. The related actions will be completed by the end of the day. Let me now go through the second quarter results for each division. Second quarter digital and integration revenue of 1.1 billion increased 10% sequentially, with margins expanding 435 basis points to 31%. The sequential revenue growth was entirely due to higher digital sales, as APS revenue was higher. The strong margin performance was driven by improved digital profitability as a result of robust exploration data sales and the higher uptake of digital solutions. APS margins were essentially flat.
Stéphane Biguet: This program, which will result in additional charges in the third quarter, will drive further margin expansion in the second half of the year and into 2025.
Stéphane Biguet: The related actions will be completed by the end of the year.
Stéphane Biguet: Let me now go through the second quarter results for each division.
Stéphane Biguet: Second quarter, digital and integration revenue of 1.1 billion increased 10% sequentially.
Speaker: with margins expanding 435 business points to 31%. The sequential revenue growth was entirely due to higher digital sales, as APS revenue was flat. The strong margin performance was driven by improved digital profitability as a result of robust exploration data sales and a higher uptake of digital solutions. APS margins were essentially flat. We expect the digital revenue growth and margin expansion to continue in both Q3 and Q4. Reservoir performance revenue of 1.8 billion increased 5% sequentially, while margins improved 98-based points to 20.6%. Vising 3Ds were primarily due to strong growth internationally led by higher activity in the Middle East and Asia.
Stéphane Biguet: with margins expanding 435 basis points to 31%.
Stéphane Biguet: The sequential revenue growth was entirely due to higher digital sales as APS revenue was flat.
Stéphane Biguet: The strong margin performance was driven by improved digital profitability as a result of robust exploration data sales and a higher uptake of digital solutions.
Stéphane Biguet: APS margins were essentially flat.
Stéphane Biguet: We expect the digital revenue growth and margin expansion to continue in both Q3 and Q4. Reservoir performance revenue of $1.8 billion increased 5% sequentially, while margins improved 98 basis points to 20.6%. These increases were primarily due to strong growth internationally, led by higher activity in the Middle East and Asia, while construction revenue of $3.4 billion increased 1% sequentially, while margins of 21.7% increased 125 basis points, driven by strong measurements and fluids activity internationally.
Stéphane Biguet: We expect the digital revenue growth and margin expansion to continue in both Q3 and Q4.
Stéphane Biguet: Reservoir performance revenue of 1.8 billion increased 5% sequentially, while margins improved 98 basis points to 20.6%.
Stéphane Biguet: These increases were primarily due to strong growth internationally, led by higher activity in the Middle East and Asia.
Speaker: While construction revenue of 3.4 billion increased 1% sequentially, margins of 21.7% increased 125 basis points driven by strong measurements and fluid activity internationally. Finally, production system revenue of 3 billion increased 7% sequentially, driven by the strong activity in the international markets led by Europe and Africa. margins expanded 100 and 46-based points to 15.6% on improved profitability in subsidy production systems and artificial list.
Stéphane Biguet: while construction revenue of $3.4 billion increased 1% sequentially, while margins of 21.7% increased 125 basis points.
Stéphane Biguet: driven by strong measurements and fluids activity internationally.
Stéphane Biguet: Finally, production system revenue of $3 billion increased 7% sequentially, driven by the strong activity in the international markets, led by Europe and Africa. Margins expanded 146 basis points to 15.6% on improved profitability in subsea production systems and artificial reefs. Now turning to our liquidity, our cash flow was strong, as we generated $1.4 billion of cash flow from operations and free cash flow of $776 million during the quarter.
Stéphane Biguet: Finally, production system revenue of $3 billion increased 7% sequentially, driven by the strong activity in the international markets led by Europe and Africa.
Stéphane Biguet: Margins expanded 146 basis points to 15.6% on improved profitability in subsea production systems and artificial lift.
Speaker: Now turning to our liquidity, our cash flow was strong as we generated 1.4 billion of cash flow from operations and 3 cash flow of 76 million during the quarter. We expect our cash flow to continue to improve throughout the rest of the year. As a result, our free cash flow in the second half of will be materially higher than the first half. Capital investments, inclusive of capex and investments in APS projects and exploration data, were 666 billion in the second quarter. For the full year, we are still expecting capital investments to be approximately 2.6 billion.
Stéphane Biguet: Now turning to our liquidity.
Speaker Change: Orchestra Floor was strong.
Speaker Change: as we generated $1.4 billion of cash flow from operations and free cash flow of $776 million during the quarter.
Stéphane Biguet: We expect our cash flow to continue to improve throughout the rest of the year. As a result, our free cash flow in the second half of this year will be materially higher than the first. Capital investments, inclusive of capex and investments in APS projects and exploration data, were $666 billion in the second quarter.
Speaker Change: We expect our cash flow to continue to improve throughout the rest of the year.
Speaker Change: As a result, our free cash flow in the second half of this year will be materially higher than the first half.
Speaker Change: Capital investments, inclusive of CAPEX and investments in APS projects and exploration data, were $666 billion in the second quarter.
Stéphane Biguet: For the full year, we are still expecting capital investments to be approximately $2.6 billion. As I mentioned last quarter, under the securities laws, we were prohibited from repurchasing our stock during the period between the mailing of the proxy in connection with the ChampionX acquisition and ChampionX's shareholders' board. Following the shareholder vote in June, we resumed our stock repurchase program, and during the quarter, we repurchased 9.9 million shares for a total purchase price of $465 million.
Speaker Change: For the full year, we are still expecting capital investments to be approximately $2.6 billion.
Speaker: As I mentioned last quarter, under the securities laws, we were prohibited from repurchasing our stock during the period between the mailing of the proxy in connection with the championing acquisition and championing the shareholder vote. Following the shareholder vote in June, we have received our stock repurchased program, and during the quarter we repurchased 9.9 million shares for a total purchase price of 465 million. During the first half of the year, total returns to shareholders in the form of stock repurchases and dividends were approximately 1.5 billion, repurchasing half of our free billion commitment for all of 2020.
Speaker Change: As I mentioned last quarter, under the securities laws, we were prohibited from repurchasing our stock during the period between the mailing of the proxy in connection with the ChampionX acquisition and ChampionX's shareholder's vote.
Speaker Change: Following the shareholder vote in June , we have resumed our stock repurchase program, and during the quarter we repurchased 9.9 million shares for a total purchase price of $465 million.
Stéphane Biguet: During the first half of the year, total returns to shareholders in the form of stock repurchases and dividends were approximately $1.5 billion, representing half of our $3 billion commitment for all of 2020. Finally, we issued $1.5 billion of bonds during the second quarter.
Speaker Change: During the first half of the year, total returns to shareholders in the form of stock repurchases and dividends were approximately $1.5 billion.
Speaker Change: representing half of our 3 billion commitment for all of 2024.
Speaker Change: Finally, we issued 1.5 billion dollars of bonds during the second quarter.
Stéphane Biguet: The proceeds either have been or will be used to refinance our debt obligation. We are pleased with our current capital structure, which allows us to prioritize returns to shareholders, as illustrated by our $3 billion total return commitment for 2024 and our $4 billion commitment for 2021. I will now turn the conference call back to Olivier. Thank you, Stephan, and ladies and gentlemen. I believe we will open the floor to your questions. Ladies and gentlemen, once again, if you'd like to ask a question... one, then zero on your telephone keypad. One moment.
Speaker Change: The proceeds either have been or will be used to refinance our debt obligations.
Speaker Change: We are pleased with our current capital structure, which allows us to prioritize returns to shareholders, as illustrated by our 3 billion total returns commitment for 2024 and our 4 billion commitment for 2025.
Speaker Change: I will now turn the conference call back to Olivier.
Olivier Le Peuch: Thank you, Stephan and ladies and gentlemen. I believe we will open the floor for your questions.
Speaker Change: Thank you, ladies and gentlemen. Once again, if you'd like to ask a question, you may press 1 then 0 on your telephone keypad. One moment, please.
James Carlyle West: Your first question is from the line of James West with Evercore ISI. Please go ahead. Hey, good morning, Olivier, Stephan. Good morning, gentlemen. So, Olivier, in your guidance for the year, you didn't use the word or highlight rays, but it seems like there was a slight Evita guide rays. I guess one is, is, am I correct in that?
Speaker Change: Our first question is from the line of James West with Evercore ISI. Please go ahead.
James Carlyle West: Hey, good morning, Olivier, Stephan.
Olivier Le Peuch: Good morning, James.
Olivier Le Peuch: So, Olivier, I know in your guidance for the year, you didn't...
Speaker Change: You know, you use the word or highlight rays, but it seems like there was a slight Evita guide, rays, I guess one is, is, am I correct in that?
Olivier Le Peuch: And two, is the guidance for, you know, for 25 that you'd already laid out, I guess now starting from a bit higher base to kind of move up across the board. Well, that's a fair assessment and a fair reading of our guidance in the prepared remarks. We had originally been guiding the EBITDA growth year-on-year in the mid-teens, and we have here confirmed that as we have delivered the second quarter and foresee further margin expansion in the second half, driven by the different factors we highlighted, we still foresee the EBITDA growth year-on-year to be in the range of 14% to 15%.
Speaker Change: And two, is the guidance for, you know, for 25 that you'd already laid out, I guess, now starting from a bit higher base, so the numbers need to kind of move up across the board?
Speaker Change: Now that's a fair assessment and a fair...
Speaker Change: and a fair reading of our gallants in the prepared remarks.
Speaker Change: We had originally been guiding the EBITDA growth here in the mid-teens and we have here confirmed that as we have delivered the second quarter and foresee further margin expansion in the second half driven by the different factors we highlighted.
Speaker Change: we still foresee the EBITDA growth year-on-year to be now in the range of 14 to 15 percent.
Olivier Le Peuch: Hence, I believe this is indeed a very solid outlook for EBITDA growth year-on-year and in line with our previous guidance, but certainly on the back of international margin expansion and the success we have had in the second quarter, we expect to carry on as we continue to execute with greater revenue and a favorable market position in the second half. Okay, okay. I got it.
Speaker Change: Hence, I believe this is indeed a very solid outlook for the EBITDA growth year-on-year and in line with our previous guidance, but certainly on the back of...
Speaker Change: international margin expansion and the success we have had in the second quarter we expect to carry on as we continue to execute with greater revenue and favorable market position in the second half.
Olivier Le Peuch: And then maybe just a quick follow-up for me. It seems like international, well, I was to know offshore looks great, but international land, particularly in the Middle East, across the Middle East, whether it's KSA or UAE, looks like expansion is going to be significantly, or going to be strong. Maybe it's not much above your expectations, but very, very strong growth. Could you maybe highlight what you're seeing in the Middle East right now across the region? Particular projects that make sense to highlight, I'd love to hear about.
Speaker Change: Okay, okay, got it. And then, maybe just a quick follow-up for me. It seems like international, well, I was to know offshore looks great, but international land...
Speaker Change: particularly in the Middle East, across the Middle East, whether it's KSA or UAE, looks like expansion is going to be significantly, or going to be strong, maybe it's not.
Speaker Change: much above your expectations, but very, very strong growth. Could you maybe highlight what you're seeing in the Middle East right now, across the region, and if there's any.
Speaker Change: Particular projects that make sense to highlight, I'd love to hear about.
Olivier Le Peuch: Yeah, I think it's fair to say that we see a large breadth of growth engines across the region, Middle East, and also North Africa, driven by a combination of all capacity expansion programs that, I think you may know, are still in full swing in many countries, including KSA. But most visibly, the UAE, Kuwait, and Iraq are running after, and Libya is running after, a visible oil capacity expansion program, and activity as such is indeed going up.
Speaker Change: Yeah, I think it's fair to say that we see...
Speaker Change: a large breadth of growth engine across the region, Middle East and also North Africa.
Speaker Change: driven by a combination of...
Speaker Change: All Capacity Expansion Program that I think you may know.
Speaker Change: are still in full swing in many countries, including KSA, but most visibly the UAE, the Kuwait, and Iraq.
Speaker Change: are running after in Libya, are running after a visible oil capacity expansion program and activity as such is indeed going up. And the addition of large conventional and unconventional gas projects.
Olivier Le Peuch: And the addition of large conventional and unconventional gas projects that are being accelerated in several countries to respond to local demand and the desire to transition. And I think we are seeing that obviously in Saudi Arabia, and we have commented a lot on this before, and you may have seen in the early press release that we have been awarded an extension and a large market for drilling services for the unconventional program in Saudi Arabia.
Speaker Change: that are being accelerated.
Speaker Change: in several countries to respond to...
Speaker Change: And I think we are seeing it obviously in Saudi and we commented a lot on this before and you may have seen...
Speaker Change: into the early press release that we have been awarded an extension and a large market for our drilling services for the unconventional program in Saudi.
Olivier Le Peuch: And we continue to fully participate in other countries where this is very relevant, including UAE, committing to accelerate the unconventional, including Qatar, that continues to expand, and including Algeria, that is starting to look back and clearly having a path forward to also increase activity. So all across the Middle East, we see growth year on year.
Speaker Change: and we continue to fully participate in the other.
Speaker Change: A country where this is very relevant, including UAE, committing to accelerate their uncommercial including Qatar, that continues to expand, and including Algeria, that is starting to look back and clearly, having a path forward to also activity increase.
Speaker Change: All across the Middle East, we see a growth year on year, we see, as I said...
Olivier Le Peuch: We see, as I said, the vast majority of the geo-units having record revenue for Bissacola and for many, record-ever activity. And hence, we benefit from this very large breadth and multiple levels of activity growth in the Middle East, which we foresee continuing going forward.
Speaker Change: the vast majority of the G unit having a record.
Speaker Change: revenue for this cycle and for many record ever activity.
Speaker Change: And hence, we benefit from this very large breadth and multiple levels of activity growth in the Middle East, and we foresee it continuing going forward.
Speaker Change: Perfect. Thanks, Olivier.
David Anderson: Thanks, Olivier. Thank you. Next, we go to the line for David Anderson with Barclays, please go ahead.
Speaker Change: Thank you. Next we go to...
Speaker Change: Next we go to the line of David Anderson with Barclays. Please go ahead.
Olivier Le Peuch: Hi, good morning, gentlemen. I want to talk about the key resilient markets that you mentioned a few times that are driving SLB's growth going forward. I was wondering if you could give us kind of your longer-term views on global natural gas markets and how they're developing, and maybe your demand assumptions through the end of the decade. Because I noticed that there were a number of contracts and awards that you're hiring for natural gas, for unconventional, Qatar, Egypt.
David Anderson: Hey, good morning, gentlemen. I want to talk about the key resilient markets that you mentioned a few times that are driving SLB's growth going forward.
David Anderson: I was wondering if you could give us your longer-term views on global natural gas markets and how they're developing, and kind of maybe your demand assumptions through the end of the decade. Because I noticed that there was a number of contracts and awards that you're hiring for natural gas. I'm sure Foron Conventional, Qatar, Egypt.
Olivier Le Peuch: So I'm just wondering, are you expecting your overall mix of business to shift towards natural gas in the coming years, and is that already happening? No, I would say that more generically, as we see, we see resilience in three aspects.
Speaker Change: So, I'm just wondering, are you expecting your overall mix of business to shift towards natural gas in the coming years, and is that already happening?
Speaker Change: No, I would say that more generically, as we see, we see resilience on three aspects. We see resilience on the still oil capacity expansion and deep water oil development happening and having significant resilience.
Olivier Le Peuch: We see resilience in the still oil capacity expansion and deepwater oil developments happening and having significant resilience. And you may foresee not an existing deepwater program in oil in the Latin America region, but you will see emerging new oil developments coming into Africa. So that's a strong resilient aspect of deepwater. You see and you can anticipate gas resilience in deepwater development more in the East Med, Turkey, and Asia region.
Speaker Change: and you may foresee not an existing deepwater program in oil in the Latin Americas region, but you will see emerging new oil developments coming into Africa. So that's a strong resilient aspect of deepwater.
Speaker Change: You see and you can anticipate a gas residence in deep water development more in the...
Speaker Change: in the ISMED Turkey and Asia region.
Olivier Le Peuch: And then you have the complex of the Middle East that is both reinforcing their oil capacity, as I mentioned, and gas. So it's not only one market. I think gas, we have increased our share of gas activity in the Middle East visibly.
Speaker Change: And then you have the complex of, indeed, Middle East that is both reinforcing their oil capacity, as I mentioned, and gas. So, it's not only one market. I think gas, we have increased our share of gas activity in Middle East visibly. We are very well exposed.
Olivier Le Peuch: We are very well exposed. I would say we are long on gas in the Middle East region. And we believe that it's a matter of offshore long cycle, both oil and gas, Middle East oil capacity and unconventional gas developments, and Asia, for gas security reasons, offshore development for gas as well. So it's a mix that is favorable. And then we should not forget about North America, which I think should continue to have a continued high-intensity technology deployment to support sustained production growth for oil, particularly in the short term.
Speaker Change: Say we are long on gas
Speaker Change: in the Middle East region, and we believe that it's a matter of...
Speaker Change: Offshore, long cycle, both oil and gas.
Speaker Change: Middle East Oil Capacity and Unconventional Gas Development.
Speaker Change: and Asia for gas security reasons, offshore development for gas as well. So it's a mix that is favorable and then we should not forget about North America that I think has continued.
Speaker Change: a high-intensity technology deployment to support sustained production growth for oil, particularly in the short term.
Olivier Le Peuch: So if I could dig in a little bit more on the offshore, you highlighted OneSubsea's performance this quarter with the backlog conversion. We saw a number of announcements as well during the quarter on OneSubsea. I was wondering, could you talk a little bit about the order book, how that's shaping up this year's date compared to last year?
Speaker Change: So if I could dig in a little bit more on the offshore, you'd highlighted one subsea's performance this quarter with the backlog conversion. We saw a number of announcements as well during the quarter.
Speaker Change: I was wondering, could you talk a little bit about the order book, how that's shaping up this year's date compared to last year, and just kind of overall of your offshore portfolio. Are you expecting growth to start to accelerate in the next couple of quarters and into 2025?
Olivier Le Peuch: And just kind of overall, for your offshore portfolio, are you expecting growth to start to accelerate in the next couple of quarters and into 25? I think we see the market for deep water; I think you have two markets; you have the offshore shallow market that is highly concentrated in the Middle East and in Asia, and then you have the deep water market that is concentrated in the Americas, Africa, and some parts of Asia and the Eastern Mediterranean.
Speaker Change: I think we see the market of deep water, I think you have two markets, you have the offshore shallow that is highly concentrated in the Middle East and in Asia, and then you have the deep water market that is concentrated in the Americas, Africa, and some part of Asia and Eastern Med.
Olivier Le Peuch: And I think what we see, if we look at it more genetically, we see three legs of activity developing for the future of deep water at large and offshore at large, but deep water in particular. There is a strong portfolio of projects underway, from Guyana to Brazil, from Norway to part of Asia, that will continue to complete and develop over the next two or three years and are part of the portfolio of subsea deployment that we have.
Speaker Change: And I think what we see, if we look at it more genetically, we see three legs.
Speaker Change: of activity developing for the future of deep water at large and offshore at large, but deep water in particular. There is a strong...
Speaker Change: a portfolio of projects underway.
Speaker Change: from Guyana to Brazil, from Norway to...
Speaker Change: to part of Asia that we continue to complete and develop to the next two or three years and are part of the portfolio of subsea deployment that we have across.
Olivier Le Peuch: Then you have a growing set of FIDs, and we expect that the offshore FID this year will reach $100 billion or exceeding this, and the same for 2025, and this FID is led by a combination of oil and a lot of oil projects. FIDs being developed and decisions being made in the coming months, and some have just been approved, and you have seen some of the announcements in Patra and Angola, and we are very pleased with this because that will feed our pipeline of subsea going forward.
Speaker Change: Then you have an ongoing set of FIDs, and we expect that the offshore FID this year will be reaching $100 billion or exceeding this, and the same for 2025, and this FID is led by
Speaker Change: a combination of oil, a lot of oil.
Speaker: FID, being developed and being a decision in a coming moment, and some have just been approved, and you have seen some of the announcements in Patron, Nongola, and we are very pleased with this because they are two feet off by plan of subsequently going forward. And lastly, we should not forget that there is a third leg, and the third leg is coming from exploration and appraisal. Actually, that is not only in the media, not only in Brazil, but in Syria, but in Asia. But I think it is very strong across many basing in front here, region, as well as in the infrastructure lead exploration.
Speaker Change: FID being developed and nearing a decision in the coming months and some have just been approved and you have seen some of the announcements.
Patrion Nangola: and Patrion Nangola.
Patrion Nangola: And we are very pleased with this because that will feed our pipeline of subsea going forward.
Olivier Le Peuch: And lastly, and we should not forget, there is a third leg, and the third leg is coming from exploration and appraisal activity that is not only happening in Namibia or not only happening in Brazil or in Suriname or in Asia but, I think, is very strong across many basins in frontier regions as well as in infrastructure-led exploration. And we believe that this third leg will certainly add quarters, if not years, of growth to the deepwater outlook.
Patrion Nangola: And lastly, and we should not forget, there is a third leg. And the third leg is coming from exploration.
Patrion Nangola: and appraisal activity that is not only happening in Namibia or not only happening in...
Patrion Nangola: in Brazil, or in Suriname, or in Asia, but I think it's very strong across many basins, in frontier regions, as well as in infrastructure-led exploration. And we believe that this third leg will certainly add quarters, if not years, of growth to the deepwater outlook. Hence, we are very confident in our exposure to the deepwater market, to the offshore market at large. As we commented before, that offshore represents about 50 percent of revenue exposure internationally, and we see it extremely resilient.
Speaker: And we believe that this third leg will certainly add quarters, if not yours, or growth to the deep water outlook; hence, we have very confident enough exposure to the deep water market, to the offshore market at large, as we commented before, that offshore will present about 60% of revenue exposure internationally, and we see it extremely resilient, and we see multiple legs in the deep water market going forward.
Olivier Le Peuch: Hence, we are very confident in our exposure to the deepwater market, to the offshore market at large, as we commented before, that offshore represents about 50% of revenue exposure internationally, and we see it as extremely resilient, and we see multiple legs in the deepwater market going forward. Great. Thank you. Thank you, Dave. Next we go to the line of Scott Gruber with Citigroup. Please go ahead. Yes, good morning. Thanks, Scott. Good morning.
Patrion Nangola: and we see multiple legs in the deep water market going forward.
Speaker: Okay, thank you. Thank you, Doug.
Speaker Change: Great. Thank you.
Scott Gruber: Next, we go to the line of Scott Gruber with Citigroup. Please go ahead.
Speaker Change: Thank you, Dave.
Speaker Change: Next we go to the line of Scott Gruber with Citigroup. Please go ahead.
Speaker: Yes, good morning. Good morning.
Speaker Change: Yes, good morning. Thanks, Scott.
Scott Andrew Gruber: I wanted to ask, you know, about... You think about segmenting the portfolio next year when Champion X comes in? I guess the heart of the question is, you know, you have this awesome digital business. It's growing rapidly. It's going to be $3 billion or so in revenues next year.
Speaker Change: [inaudible]
Scott Gruber: What did you think about segmenting the portfolio next year when Champion X comes in? I guess that the harder the question is, you know, you have this awesome digital business. It's growing rapidly. It's going to be $3 billion or so in revenues next year. You know, there's the kick in X acquisition provided half the opportunity for you to think about resegmenting the portfolio to further highlight the digital business.
Scott Andrew Gruber: Good morning. I wanted to ask about how you think about segmenting the portfolio next year when Champion X comes in.
Speaker Change: I guess that the heart of the question is, you know, you have this awesome digital business.
Speaker Change: It's growing rapidly. It's going to be $3 billion or so in revenues next year. Does the ChampionX acquisition provide an opportunity for you to think about re-segmenting the portfolio to further highlight the digital business?
Olivier Le Peuch: Does the ChampionX acquisition provide an opportunity for you to think about re-segmenting the portfolio? further highlighting the digital business. First, I cannot comment, obviously, on where we stand on the regulatory process and usual process clearance on the Champenex acquisition.
Speaker: First, I cannot comment; obviously, you understand. When we send the regulatory process and usual processes, creating clients on the Champion X.
Speaker Change: First, I cannot comment on the sound, where we stand on the regulatory process and usual
Speaker Change: Visual Process Clearance on the Champonex.
Speaker: But obviously, we are looking at the way we could, at the time of the closing, a restructure and get better exposure to the digital if we can, do this in a way that we will indeed expose and provide a little bit more direct measurement of our success and ambition going forward in digital. So that's what we will, that's the integration team looking to it, and we'll make this a new time and inform you.
Olivier Le Peuch: But obviously, we are looking at the way we could, at the time of the closing, restructure and get better exposure to digital, if we can do this in a way that will indeed expose and provide a little bit more direct measurement of our success and ambition going forward in digital. So, that's the integration team looking into it, and we'll make a decision in due time and inform you. Okay, we'll wait for the details, but good to hear.
Speaker Change: But, obviously, we are looking at the way we could, at the time of the closing, restructure and get better exposure to the digital, if we can do this in a way that will indeed expose and provide a little bit more direct measurement of our success.
Speaker Change: and Ambition going forward in digital. So, that's the integration team looking into it and we'll make decisions in due time and inform you.
Speaker: Okay, well wait for the details, but good to hear. And then you mentioned low single-budget revenue growth in 3Q and continuing margin expansion.
Olivier Le Peuch: And then you mentioned low single-digit revenue growth in 3Q and continued margin expansion, but it does sound like the margin expansion potential may be stronger into 4Q with those year-end sales. Can you just provide a bit more color on how you see the margin expansion potential shaping up for 3Q? And then, if you want to, any additional color in 4Q? Yeah, we would expect that on the low single-digit global growth sequentially in the fourth quarter to still increase our margin expansion. I will not give more precise guidance.
Speaker Change: Okay, we'll wait for the details but good to hear. And then you mentioned low single-digit revenue growth in 3Q and continuing margin expansion.
Speaker: But does sound like the margin expansion potential may be stronger in the 4Q with those year and sales.
Speaker Change: But it does sound like the margin expansion potential may be stronger.
Speaker: You just provide a bit more color on how you get the margin expansion potential and shape it up to 3Q and then if you want to, you know, any additional clearance more to. Yeah, we will expect that on the low single digit global growth sequentially in the 4Q order to increase a margin expansion. I'm not giving more precise guidance, and we expect an optic in the 4Q order, driven first by an acceleration of our top line. The second row for the 4Q order in particular due to the year and effect product sales in both software digital and in some of our equipment division.
Speaker Change: into 4Q with those year-end sales. Can you just provide a bit more color on how you see the margin expansion potential in shaping up for 3Q and then if you want to, you know, any additional color in 4Q?
Speaker Change: Yeah, we would expect that on the low single-digit global growth sequentially in the fourth quarter to still increase margin expansion and not give more.
Olivier Le Peuch: And we expect that an uptick in the fourth quarter driven first by an acceleration of our top-line sequential growth in the fourth quarter, in part due to the year-end effect of product sales in both software and digital and in some of our equipment division. And this will also lead to an acceleration of margin expansion. So, giving us a very good exit point, if you like, as we enter 2025, an ambition to continue growth, as I mentioned, and further expand the margin. So, that's setting the scene very well as we conclude the year with the guidance we have shared and prepare 2025, another year of growth and margin expansion. Sounds good!
Speaker Change: precise guidance and we expect an uptick
Speaker Change: in the fourth quarter, driven first by an acceleration of our top line, sequential growth in the fourth quarter, in part due to the year-end effect of product sales in both software, digital, and in some of our equipment division, and this will lead to acceleration, also margin expansion, so giving us a very good exit.
Speaker: And this will lead to acceleration also margin expansion.
Speaker: So giving us a very good exit point, if you like, as we enter 2025, an ambition to continue growth as a margin and further expand the margin.
Speaker Change: point, if you like, as we enter 2025, an ambition to continue growth, as I mentioned, and further expand the margin. So that's setting the scene very well as we conclude the year with the Gannons we have shared and preparing 2025, another year of growth and margin expansion.
Speaker: So that's setting the scene very well as we conclude the year with the guidance we are shared on the propane 2025, an overview of growth and margin.
Scott Andrew Gruber: I appreciate it. Thank you. Thank you, stop.
Speaker Change: Sounds good. Appreciate it. Thank you.
Arun Jayaram: Next, we go to Arun Jayaram with J.P. Morgan. Please go ahead. Good morning, Olivier. You highlighted margin expansion for SLB through Quality Revenue Growth, Digital, and Efficiency Gains. I was wondering if you could maybe elaborate on just the concept of quality revenue growth, what you're referring to there, and just maybe some of the plans to boost efficiency. I assume there's some cost structure alignment going on at the company. Maybe you could give us some more thoughts on that?
Speaker Change: Thank you. Stop.
Speaker Change: Next we go to Arun Jayaram with J.P. Morgan. Please go ahead.
Arun Jayaram: Good morning, Olivier. You highlighted, you know, margin expansion for SLB through
Arun Jayaram: Quality, revenue growth, digital, and efficiency gains. I was wondering if you could maybe elaborate.
Arun Jayaram: On just the concept of quality revenue growth, what you're referring to there, and just maybe some of the plans to boost efficiency, assume there's some cost structure alignment going on at the company. Maybe you could give us some more thoughts on that.
Arun Jayaram: Yeah, I think quality revenue growth is focusing selectively on where we believe we have the most operational leverage, the most pricing upside, and the most technology adoption potential to suit our growth with higher accretive margin and hence to support our margin ambition expansion going forward. We have demonstrated this fairly well in the second quarter.
Speaker Change: Yeah, I think Quidditch to Revenue Golf is a...
Speaker Change: Focusing selectively on where we believe we have the most...
Speaker Change: operational leverage, the most pricing upside and the most technology adoption potential.
Speaker Change: to suit our growth with higher creative.
Speaker Change: Margin, and hence to support our Margin Ambition expansion going forward. We have demonstrated this fairly well in the second quarter. We continue to focus on this selectively. The market internationally remains tight.
Olivier Le Peuch: We continue to focus on this selectively. The market internationally remains tight, and it favors the best performer from execution, and we'll use this to deploy technology, fit for the base in technology, use our unique integration capability, and spice it up, if I may, with digital capability to increase and improve our margin going forward. So that's where we look at what we call quality revenue growth, and indeed, we have taken some measures to further support this by adjusting and relooking at the support structure and where we could, and we should adjust to prepare for supporting our growth and adjusting our source set to fit where we see the most resilience going forward.
Speaker Change: and it favours the best performer from execution. And we'll use this to deploy technology, fit for base in technology, use our unique integration capability and...
Speaker Change: And spice it up, if I may, with digital capability to increase and improve our margin going forward. So that's where we look at what we call quality revenue growth. And indeed, we have taken some measures to further support this by adjusting and re-looking at...
Speaker Change: support structure and where we could and we should adjust to prepare for supporting our goals and adjusting our source set to fit where we see the most resilience going forward. So that has been also contributing and will continue to contribute to margin expansion going forward.
Olivier Le Peuch: So that has also been contributing to and will continue to contribute to margin expansion going forward. Just a follow-up on D&I, your margins rebounded to 31%, and you reiterated your high teens growth outlook for digital. I was wondering if you could maybe give us a sense of D&I margin progression over the balance of the year and just how you're thinking about the APS business broadly in Canada in terms of SLB's broader portfolio. Arun, Stephan, Alan, Saurabh
Speaker Change: That's helpful. Just a follow-up on D&I, your margins rebound to 31%
Speaker Change: You reiterated your high teens growth outlook for digital. I was wondering if you could maybe give us a sense of D&I margin progression over the balance of the year, and just how you're thinking about
Speaker Change: The APS business broadly in Canada in terms of SLB's broader portfolio.
Stéphane Biguet: So yes, we were quite happy with not only the top line growth but the margin expansion in the D&I division in the second quarter. And as I said earlier, it was all due to the digital business. APS was flat.
Speaker Change: Arun, Stephane, Alan, Saurabh, so yes, we were quite happy with not only the top-line growth but the margin expansion in the D&I division in the second quarter.
Stéphane Biguet: And as it relates to the rest of the year, we do definitely expect the digital margins to continue improving in the second half, and they will accelerate even more in the fourth quarter on higher sales, but also on the effect of the changes we are making in the digital delivery and support organization to pull resources on a more global and regional basis to scale the business more efficiently. So as it relates to the APS business, again, it is mostly flat quarter on quarter. So all the upside is coming from digital.
Speaker Change: And as I said earlier, it was all due to the digital business, so APS was flat. And as it relates to the rest of the year, we do definitely expect the digital margins.
Speaker Change: to continue improving in the second half. It will accelerate even more so in the fourth quarter on higher sales, but also on the effect of the changes we are making in the...
Speaker Change: in the Digital Delivery and Support Organization to pool resources on a more global and regional basis to scale the business more efficiently.
Speaker Change: As it relates to the APS business, again, it is mostly flat, quarter on quarter, so all the upside is coming from digital.
Arun Jayaram: And your question on Canada, I think we have signaled before that we were looking at divesting the asset, and that's still very much the case. We have actually launched a formal process again. We are quite happy with the results. So we moved to the second phase of this process, which is that we had several offers. We have shortlisted a selected set of buyers, and we are moving to negotiate with the selected set of buyers. So far, so good. It's going well in this process, and we'll update you later. Great, thank you. Thank you, Arun, go to Neil Mehta with Goldman Sachs. Please go ahead.
Speaker Change: On Canada, I think we have signaled before that we were looking at divesting the asset, and it's very much the case. We have actually launched a formal process again.
Speaker Change: We are quite happy with the results so we move to the second phase of this process which is that we had several offers, we have shortlisted
Speaker Change: a selected set of buyers and we are moving to negotiation with this selected set of buyers. So it's so far so good, it's going well on this process and we'll update you later.
Speaker Change: Great. Thank you, gentlemen.
Aaron: Thank you, Arun.
Aaron: Next we go to Neil Mehta with Goldman Sachs. Please go ahead.
Neil Singhvi Mehta: Yeah, good morning, team. I just, Olivier, I'd love your perspective on deepwater markets and offshore, particularly given some of the incremental investment in subsea, and just how, maybe, you can characterize the different regions where deep water is growing and what activity you have, and how that fits into your long-term strategy. I think it's a longer term better outlook first. It's a market that has multiple legs, as I said, and... And actually, if I were to list all the deep water basins currently under production for future FID and future exploration, I think it would be a long list.
Neil Singhvi Mehta: Yeah, good morning team. I just, Olivier, I love your perspective on deep water markets and offshores, particularly given some of the incremental investment in subsea.
Neil Singhvi Mehta: and just how maybe you can characterize the different regions where deep water is growing and what activity you're seeing and how that fits into your long-term strategy.
Olivia: I think it's a longer for better outlook first.
Olivia: It's a market that has multiple legs, as I said, and...
Olivia: And actually, if I was to list all the deepwater basins...
Olivia: currently under production in future FIE and future exploration, I think it would be a long list.
Neil Singhvi Mehta: What characterizes this cycle is it is very broad in terms of regions of the world and deep water basins that are being either exploited, that are being explored, and that are being redeveloped. And I think there are two or three fundamental reasons for this.
Olivia: What characterizes this cycle is that it is very broad in terms of regions of the world and deepwater basins that are being either exploited, that are being explored, and that are being redeveloped. And I think there are two or three fundamental reasons for this.
Olivier Le Peuch: First and foremost, the deep water assets, be it oil or gas, are typically geologically very strong assets and advantage assets, and so they receive the utmost focus and priority. When the IOCs are hiring in a portfolio, they typically concentrate on some of these assets, followed by select international independents and some NOCs that have, for which deep water is their backyard and their center of expertise. FID growth, we see exploration growth, and we see existing deepwater basins very solid going forward, and very resilient and multi-finger and multi-legs, I would say, outlook for deepwater. That's quite unique.
Olivia: First of all, the assets of water, oil, or gas are typically geologically very strong and advantageous.
Olivia: Hence, they receive the utmost focus and priority. When the IOCs are hiring in a portfolio, they typically concentrate on some of these assets.
Olivia: followed by select international independents and some NOCs for which Deepwater is their backyard and their center of expertise. So we see...
Olivia: FID, GOLF, we see exploration, GOLF.
Olivia: And we see existing deep water basin, very solid going forward.
Olivia: a very resilient and multi-finger.
Olivia: and multi-legs, I would say, outlook for Deepwater. That's quite unique. It's not one basin. It's constrained by some rig capacity.
Olivier Le Peuch: It's not just one basin. It's constrained by some rig capacity, and it's shifting to the right to some extent, but it's longer for the better. It's elongating, I would say, as a deepwater market, and for the good reason because we have new basins emerging, like Namibia. We have a basin that is FID, like Suriname. We have a lot of exploration activity in Asia, in many parts of Asia, with some gas success and discovery in Indonesia, particularly, and we still have the hot East Med or Turkey basin, and we have new oil being explored in South Angola or in the South of Brazil in the new Pelotas basin. So, it's all hot, and it's very diverse, and I'm not forgetting about the deep formation in the Gulf of Mexico coming back, and if not Mexico as well in the south of the Gulf.
Olivia: and it's shifting to the right.
Olivia: to some extent, but it's longer for better, it's elongating.
Olivia: Fabulous, I would say, as a deep water market and for the good.
Olivia: because we have new basins emerging like Namibia, we have basins being FID like Suriname, we have a lot of explore activity in Asia.
Olivia: in many parts of Asia with some gas.
Olivia: success and discovery in Indonesia particularly.
Olivia: and we still have the hot East Med or Turkey.
Olivia: a basin and we have a new oil being explored.
Olivia: in South Angola or in South of Brazil in the New Polotas Basin.
Olivia: It's all hot and it's very diverse.
Olivia: and not forgetting about the deep, deep formation into the Gulf of Mexico coming back.
Olivia: and if not Mexico as well in the south of the Gulf. So, more work into the future, more bookings in the future, and I think a very key and original market for us as we are very exposed to that offshore deepwater.
Olivier Le Peuch: So, more work in the future, more bookings in the future, and I think a very key and original market for us, as we are very exposed to that offshore deepwater. Thank you. And then the follow-up is just around return of capital. Some of the dynamics around Champion X preclude you from buying back as much stock as possible, how you're thinking about taking. So, Neil, we did try to take the most advantage of this by resuming very quickly our stock buybacks in June, right after the shareholders' vote.
Speaker Change: Thank you. And then the follow-up is just around return of capital. Obviously, some of the dynamics around Champion X precluded you from buying back as much stock as you probably wanted to in the last quarter, but it seems like you're leaning into it. So just talk about your return of capital intentions and
Speaker Change: how you're thinking about taking advantage of any dislocation that might exist in the stock.
Speaker Change: O'Neill, we did try to take the...
O'neill: The most advantage of this, by resuming very quickly our stock buybacks in June , right after the shareholders vote, so we were able to...
Stéphane Biguet: So we were able to accelerate there and actually catch up to the point where we got to just about half of our full-year commitment. So the commitment remains the same for 2024 at this moment. It's a total of $3 billion between dividends and buybacks. We will continue to monitor our cash flow and continue to look at our capital allocation. For example, potential cash proceeds from divestiture, depending on their timing, can be an upside to buybacks.
Speaker Change: to accelerate there and actually catch up to the point where we go to just about half of our full year commitment.
Speaker Change: The commitment remains the same for 2024 at this moment, it's a total of $3 billion between dividends and buybacks. We will continue to monitor our cash flow, continue to look at our capital allocation.
Speaker Change: For example, potential cash proceeds from divestitures, depending on their timing, can be an upside to buybacks, but for the moment, the target for 2024 remains the $3 billion.
Stéphane Biguet: But for the moment, the target for 24 remains $3 billion. Thank you. Thank you, Neil. And our next question is from Dan Cuss with Morgan Stanley. Please go ahead. Hey, thanks, good morning. What have you got?
Speaker Change: Great guys.
Speaker Change: Thank you. Thank you, Neil.
Speaker Change: And our next question is from Dan Cutts with Morgan Stanley . Please go ahead.
Dan Cutts: Hey, thanks, good morning.
Dan Cuss: I wanted to ask a question more generally on M&A. I'd love to get a sense of, you know, kind of your appetite as it stands today for incremental acquisitions given that you guys have been pretty active recently and, to the extent that that's still the case, it seems like the theme of the recent acquisitions was kind of, you know, stability, longevity, and growth. Production or new energy related, just hope that you give us your latest thoughts on your M&A. Thanks, Dan.
Dan Cutts: Good morning, guys.
Dan Cutts: I wanted to ask a question more generally on M&A.
Dan Cutts: We'd love to get a sense of, you know, kind of your appetite as it stands today for incremental acquisitions, given that you guys have been pretty active recently, and to the extent that that's still, that M&A ranks high.
Speaker Change: On your capital allocation priority list, we'd just love if you could talk about some of the characteristics that you would look for and potential targets it seems like.
Speaker Change: The theme of the recent acquisitions was kind of stability, longevity, and growth, given that they were kind of production or new energy related. Just hoping you could kind of give us your latest thoughts on your M&A appetite. Thanks.
Stéphane Biguet: So, you mentioned we've been quite active indeed. So, at this stage, we are really focusing on making those acquisitions and various transactions, from acre subsidy to acre carbon capture to the planned acquisition of ChampionX, a success. So, the focus currently is more on integration than on new M&A. And really, in terms of prioritization for capital allocation at this moment, we are really prioritizing returns to shareholders. Great. That's very helpful.
Speaker Change: Thanks Dan. So you mentioned we've been quite active indeed so at this stage we are really focusing on
Speaker Change: on making those acquisitions and various transactions from...
Speaker Change: From Hacker Subsidies to Hacker Carbon Capture to the planned acquisition of ChampionX, a success we are.
Speaker Change: The focus currently is more on integration than on new M&A and really in terms of prioritization for the capital allocation at this moment, we are really prioritizing returns to shareholders.
Dan Cuss: And then that kind of, That was a good lead-in to my next question, acre carbon capture specifically. I mean, we can see the financials of the standalone entity, and revenue growth. revenue has nearly doubled in the last two years. I don't think folks are doubting the top line growth story or growth potential for that business. But can you just talk about some opportunities?
Speaker Change: great that's helpful and then that kind of good lead-in to my next question so so on acre carbon capture specifically I mean we can see the financials of the standalone entity the I think the revenue growth is
Speaker Change: The revenue has nearly doubled in the last two years. I don't think folks are doubting the top-line growth story or growth potential for that business, but can you just talk about some opportunities?
Olivier Le Peuch: kind of drive margin improvement given, following the transaction and given the SLB combined. I think we see this as a very attractive market for us considering the adjacency to the sequestration and considering the integration capability we have acquired and the technology that we have acquired to occur carbon capture. So the market independently, and at this point, we see this market growing at more than 50% a year and is very attractive to our growth. And we don't see this necessarily slowing down necessarily soon.
Speaker Change: to kind of drive margin improvement given, you know, following the transaction and given the resources of SLB combined with acre carbon capture.
Speaker Change: Thank you. Thank you, Dan. First, I would comment maybe stepping up on the CCS as a market. I think we see this as a...
Speaker Change: as a very attractive market for us considering the adjacency on a second session and considering the integration capability we have acquired.
Speaker Change: and the technology that we acquired through Hacker Carbon Capture. So the market independently and at this point, we see this market growing at more than 50% a year and very attractive to our growth.
Speaker Change: And we don't see this slowing down necessarily soon. And obviously the addition of Hacker Carbon Capture gives us an opportunity to participate.
Olivier Le Peuch: And obviously, the addition of accurate carbon capture gives us an opportunity to participate in a growing market where accurate carbon capture was not exposed to, partly in North America, where we're getting a lot of inbound requests as we form this combination, a unique combination of what we have invested in our own capture technology with carbon capture commercial technology. We are seeing a lot of inbound requests, and we have been awarded and are part of two DOE-funded projects in North America, and a lot of inbound requests from companies that are exploring and or pursuing some carbon capture in North America. We see the same in the Middle East, and this will complement the strong pipeline that carbon capture, accurate carbon capture, has already developed in Europe with three active projects and, most likely, more to come.
Speaker Change: at Skelly Market, where Hacker Karma Capture was not exposed to. Partly in North America, where we're getting a lot of inbound requests as we form this...
Speaker Change: This unique combination with what we have invested into our own capture technology, with carbon capture commercial technology, we are seeing a lot of inbound requests and we have been awarded and part of two DOE funded projects in North America and a lot of inbound requests from companies that are exploring and or pursuing some carbon capture in North America. We see the same in the Middle East.
Speaker Change: And this will complement the strong pipeline that Acre Carbon Capture has already developed in Europe with three active projects and most likely more to come. So we see that we will combine...
Olivier Le Peuch: So we see that we will combine our strengths in technology deployment at scale in every basin in the world, combining this with the subsurface sequestration technology leadership we have to offer customers an all-in capability from sequestration design execution to carbon capture, combining our technology with the technology for accurate carbon capture. So we are very positive about this, and we believe that as this business scales, as we will be in a position to add many new innovative technologies to it, this will result in margin expansion and the ability to extract a lot of value from this acquisition. Great Thanks a lot.
Speaker Change: our strengths in technology deployment at scale.
Speaker Change: in every basin in the world.
Speaker Change: combining this with the subsurface sequestration technology leadership we have to offer customers an all-in capability from sequestration design execution to carbon capture, combining our technology with the technology of our carbon capture. So we are very positive on this and we believe that as this business will scale, as we will be in a position to add on many new innovation technology on it.
Speaker Change: This will result into margin expansion and into ability to extract a lot of value from this acquisition.
Speaker Change: Great. Thanks a lot. That's really helpful. I'll turn it back.
Dan Cuss: That's really helpful. I'll turn it back. Thank you, Dan. Next, we go to Luke Lemoine with Piper Sandler.
Dan Cutts: Thank you, Dan.
Dan Cutts: Next we go to Luke Lemoine with Piper Sandler. Please go ahead.
Luke Lemoine: Please go ahead. Hi, good morning. Arun touched on it a little earlier with his question, but you mentioned cost efficiency programs a couple of times in the. It sounded like maybe these were primarily support costs. First, is that correct? Secondly, would it be possible to maybe frame the question, Luke? Thanks for the question, Luke.
Luke Lemoine: Hi, good morning.
Luke Lemoine: Arun touched on it a little earlier with his question, but you mentioned cost efficiency programs a couple of times in the release. It sounded like maybe these were primarily support costs. I guess first, is that correct? And secondly, would it be possible to maybe frame the magnitude of these?
Stéphane Biguet: So really, this program is about extracting the most margin expansion and returns out of this growth cycle. And it's not just support, even though it's one of the key elements of it. So you have three main components. First, there's a more tactical adjustment, if you want, of our operational resources, mostly in US land, to account basically for the lower than expected recount levels. The second one relates to digital.
Speaker Change: Thanks for your question, Luke. So really this program is about extracting the most margin expansion and returns out of this growth cycle.
Speaker Change: And it's not just support, even though it's one of the key elements of it. So you have three main components. So first, there's a more...
Speaker Change: tactical adjustment if you want of our operational resources in mostly in US land to account basically for the lower than expected recount levels
Stéphane Biguet: We are centralizing or regionalizing a certain number of delivery services to improve resource utilization so that we can better respond to the rapid adoption of our digital solutions. And indeed, the third one, not a small component, about half of it, if you want, is increasing efficiency in our functional support structure. It's something we do all the time, but here we are completing the deployment of our new ERP system, so we really want to extract the most out of this, and it allows us to streamline some of the support structure. In terms of magnitude, you've seen the charge this quarter. It's slightly over 100 million dollars pre-tax.
Speaker Change: The second one relates to digital, we are centralizing or regionalizing a certain number of delivery services.
Speaker Change: to improve resource utilization so that we can better respond to the...
Speaker Change: rapid adoption of our digital solutions.
Speaker Change: And indeed, the third one is not a small component, about half if you will.
Speaker Change: is increasing efficiency in our functional support structure. It's something we do all the time, but here we are completing the deployment of our new ERP system, so we really want to extract the most.
Speaker Change: out of this, and it allows us to streamline some of the superstructure. In terms of magnitude, you've seen the charge this quarter. It's slightly over 100 million pre-tax.
Stéphane Biguet: I don't expect that this will exceed this amount in the third quarter. We will give you a number. We are still in the process of finalizing all the plans, so I cannot give you a number now, but it should not be of a greater magnitude, and this will result in great savings and optimization of our cost lines, which you will see gradually towards the end of the year and, of course, in 2025. OK. All right. Thanks, Stephane. Thank you. Thank you, Luke.
Speaker Change: I don't expect that this will exceed this amount in the...
Speaker Change: In the third quarter, we are still in the process of finalizing all the plans, so I cannot give you a number now, but it's it.
Speaker Change: It should not be of a bigger magnitude and this will result in great savings and optimization of our cost lines, which you will see gradually towards the end of the year and of course in 2025.
Speaker Change: Okay, all right, thanks, Stephan.
Speaker Change: Thank you.
Luke Lemoine: Next, we go to Saurabh Pant with Bank of America. Please go ahead. Hi, good morning, Olivier and Stephan. I guess I just want to go back to the One Sub C. Joint Venture, especially the all-electric, groundbreaking award you announced with Norway. That's a big deal, I think, from both a technical and a commercial opportunity standpoint. Olivier, if you don't mind spending a little time on that, how should we think about that opportunity unfolding? What are the constraints, especially on the regulatory side of that?
Luke Lemoine: Thank you, Luke.
Luke Lemoine: Next we go to Saurabh Pant with Bank of America. Please go ahead.
Saurabh Pant: Hi, good morning Olivier and Stephan. I guess I just want to go back to the One Sub C.
Speaker Change: a joint venture, especially on...
Speaker Change: The All Electric, the groundbreaking award you announced with Norway, that's a big deal, I think, from both a technical and a commercial opportunity standpoint.
Speaker Change: Olivier, if you don't mind spending a little time on that, how should we think about that opportunity unfolding? What are the constraints, especially on the regulatory side of that? Just talk to the opportunity on just that all-electric subsidy side of things.
Saurabh Pant: Just talk about the opportunity for just that all-electric subseason. Yeah, this is a great question, Saurabh. We are very excited. We are very excited because we believe this is one of the legs of technology deployment that could change the game in the long term in subsea infrastructure deployment. First, because it allows a lower footprint, a smaller footprint, reducing and eliminating hydraulics into the subsea and ultimately eliminating cost.
Olivier Le Peuch: Yeah, this is a great question.
Olivier Le Peuch: Saurabh, we are very excited. We are very excited because we believe this is one of the leg of technology deployment that could change the game in the long term in the subsea infrastructure deployment.
Speaker Change: First, because it allows a lower footprint, a smaller footprint, reducing and eliminating hydraulics.
Speaker Change: into the subsea and ultimately eliminating costs. And secondly, allowing full digital control of the subsea infrastructure.
Olivier Le Peuch: And secondly, allowing full digital control of the subsea infrastructure. And last, obviously, having an impact on the carbon footprint of these infrastructures. So we believe that for recovery, cost, and low carbon, we believe that there is a future for deepwater all-electric, be it on the subsurface. And as you may have seen, you might have seen that we announced earlier in the year and last year that we had made progress on and were awarded several contracts on a completion subsurface all-electric solution.
Speaker Change: And last, obviously, having an impact on the carbon footprint of these infrastructures. So we believe that for recovery...
Speaker Change: Thank you.
Speaker Change: And as you have seen, you might have seen that we have announced earlier in the year and last year that we have made progress.
Speaker Change: and being awarded several contracts on the completion of a subsurface all-electric solution. I will continue to lead in this domain and combine it with an all-electric subsea tree or subsea infrastructure that then, when combined together with the subsurface, give us an opportunity to fully digitize and fully control and provide our customers and the operators the ability to optimize recovery and control.
Olivier Le Peuch: And we continue to lead in this domain and combine it with all-electric subsea trees or subsea infrastructure that then, when combined together with the subsurface, give us an opportunity to fully digitize and fully control and provide our customers and operators with the ability to optimize recovery and control and optimize maintenance as well in this field. So that's part of the future of deepwater, which is electric, and we are very pleased to have been awarded this as a result of our consortium. Fekuna and other operators
Speaker Change: and optimize the maintenance as well in this field. So, that's part of the future of Deepwater, is electric, and we're very pleased to have been awarded this as a result of our consortium, actually.
Olivier Le Peuch: So this will take place in several basins, we believe, in Brazil and other places, and we will be ready to deploy this for our customers. Okay, that's fantastic, Olivier. Maybe I have a quick unrelated follow-up on the DNI side of things. I think in the press release you mentioned in a couple of places about just the second quarter being held by Exploration Data License sales. I know these tend to be lumpy, but is there anything to read into this on what's happening on the exploration side of things?
Speaker Change: Fekuna and other operators. So this will take place in several basins, we believe, in Brazil and other places, and we'll be ready to deploy this for our customers.
Speaker Change: Okay, that's fantastic, Olivier. Maybe I have a quick unrelated follow-up on the DNI side of things. I think in the press release you mentioned in a couple of places about
Speaker Change: Just the second quarter being held by Exploration Data License Sales. I know these tend to be lumpy, but is there anything to read into this on what's happening on the exploration side of things?
Olivier Le Peuch: It does sound like there are more exploration rounds across the globe, but is it just lumpiness in the second quarter? Or is there anything we can read into just where exploration... No, I think the trend has been up, and I think it has been contributing in line with our ambition for digital growth as data exploration sales have been a success, and we foresee this to continue to grow going forward in the quarters to come. Sometimes it will be up, and sometimes it will be slightly down, but we foresee growth, and I think this is driven by frontier exploration. This is driven by infrastructure-led exploration in natural basins.
Speaker Change: It does sound there are more exploration rounds across the globe, but is it just lumpiness in the second quarter, or is there anything we can read into on just where exploration is going?
Speaker Change: No, I think the trend has been up and I think it has been contributing in the line with our ambition for digital growth as the data exploration itself has been a success and we foresee this.
Speaker Change: to continue to grow going forward in the quarters to come. Sometimes it will be up and sometimes it will be slightly down, but we foresee growth and I think this is driven by the frontier exploration.
Speaker Change: This is driven by infrastructure-led exploration in metro basins.
Olivier Le Peuch: And this is driven by a new generation of software digital applications that can relook at an existing basin and extract more value for understanding and finding new hydrocarbon or new gas finds in the existing basins. So we're very pleased to have a leading offering, both in terms of digital capability to reprocess existing data sets and also to be able to enhance the vintage data sets and to be having this in the right basin at the right place.
Speaker Change: And this is driven by a new generation of software, digital application, that can relook an existing basin and extract more value for understanding and finding new hydrocarbon or new gas finds into the existing basins.
Speaker Change: So we are very pleased to have a leading offering, both in terms of digital capability to reprocess
Speaker Change: existing datasets and also to be able to enhance the vintage datasets and to be having this
Olivier Le Peuch: And parts are linked to many of these licensing rounds. You're right to say that many licensing rounds expected this year, no less than 70 licensing rounds, are being announced across many parts of the world. And I think some of them are highly successful.
Speaker Change: in the right basin at the right place.
Speaker Change: and parts linked to many of these licensing rounds. You're right to say that many licensing rounds expected this year, no less than actually 70 licensing rounds are being announced across many parts of the world and I think some of them are highly successful.
Olivier Le Peuch: Deepwater has been a success for critical finds and critical hydrocarbons, both oil and gas, in the last few quarters. And we expect this to continue. There's increased interest in the Polo Tas, which is the last hot spot south of Brazil. You have the Namib Basin south of Angola, north of Namibia.
Speaker Change: Deepwater has been a success for critical fines and critical hydrocarbon both oil and gas in the last few quarters and we expect this to continue.
Speaker Change: There's increased interest into the Polo Tas, which is the last hot spot south of Brazil. You have the Namib Basin south of Angola, north of Namibia. You have Indonesia, India, you have Bangladesh.
Olivier Le Peuch: You have Indonesia, India, Bangladesh, many, many spots that are being discovered and being explored with fresh data sets and the opportunity to indeed boost and support participation in this market going forward. And I think we will continue to participate in and maximize this. And this will, on occasion, be lumpy.
Speaker Change: many, many spots that are being discovered and being explored with fresh data sets and the opportunity to indeed boost and support participation to this market going forward. And I think we will continue to participate and maximize this.
Olivier Le Peuch: But we believe this will continue to grow. Perfect. No, that's a very thorough answer, Olivier.
Speaker Change: And this will be, on occasion, lumpy, but we believe this will continue to grow.
Saurabh Pant: Thank you. And I know you have made this business as an asset-lighter, so it's creative for your returns, and for your margins. Yes.
Speaker Change #100: That's a very thorough answer, Olivier. Thank you. And I know you have made this business asset-light, so it's credo to your returns, to your margins. That's all very good to hear. Thank you, Olivier. I'll turn it back.
Olivier Le Peuch: That's all very good to hear. Thank you, Olivier. I'll turn it back.
Saurabh Pant: Thank you. Thank you, Saurabh. And next, we go to Marc Bianchi with T.D.
Speaker Change #100: Thank you. Thank you, Saurabh.
Speaker Change #100: Next we go to Marc Bianchi with T.D. Cohen. Please go ahead.
Marc Gregory Bianchi: Cohen, please go ahead. Thank you. I didn't catch if you said, could you, hello Olivier, could you update us on your outlook for international and North America revenue growth in 2020? I think we have been getting better earlier this year, and we remain confident on this guidance, that internationally, we foresee double-digit growth when excluding Hacker and Russia. In North America, we have been getting, originally, positive up to mid-single growth, and we have been realizing this down, as North America has been clearly impacted going forward.
Marc Gregory Bianchi: Thank you. I didn't catch if you said, could you, hello Olivier, could you update us on your outlook for international and North America revenue growth in 2024?
Olivier Le Peuch: I think we have been getting earlier this year, and we remain fit on this guidance, that internationally we foresee WTG growth when excluding Hacker and Russia.
Speaker Change #102: North America we have been getting originally positive...
Speaker Change #102: Up to mid-single golf and we have been realizing this down as the North America has been clearly impacted.
Marc Gregory Bianchi: But we still have an opportunity to grow in the second half and to improve our margin as well in this basin, as we adjust our resources and get the most out of the deepwater marketing from Mexico, as well as our participation with technology intensity in some parts of the North American land market. So no change international, and lower growth in North America compared to original gain. And then, maybe for Stephane, back on the cost savings.
Speaker Change #102: going forward, but we still have an opportunity to...
Speaker Change #102: to grow in the second half and to improve our margin as well in this Basin as we adjust our resource and get the most
Speaker Change #102: out of the deep water market in Gulf of Mexico, as well as our participation with technology intensity in some part of the North American land market. So, no change international, and lower growth in North America compared to original guidance.
Speaker Change #103: Yep, makes sense. And then maybe for Stephane,
Olivier Le Peuch: So you mentioned that, um, you know, another charge in three, not to exceed what we saw in the second quarter for the actions you're taking. Can you help us with how much of a profit uplift or cost-saving benefit you may get on a quarterly basis in the back half of the year, and then once everything, you know, finally reaches its full implementation.
Speaker Change #104: Back on the cost savings, so you mentioned that, you know, another charge in 3Q not to exceed what we saw in second quarter for the actions you're taking.
Speaker Change #105: Can you help us with how much of a profit uplift or cost-saving benefit you may get on a quarterly basis in the back half of the year and then once everything, you know, finally reaches its full implementation?
Stéphane Biguet: Yes, sure. So, yeah, as I said, we will really complete everything. All the actions will be taken by the end of the year, but you will see gradually the effect on our margins in the second half. And, by the way, this is, of course, why we are confident in the updated, more precise guidance we gave for full-year EBITDA. We will update you more precisely on the savings once we are done at the end of Q3, but in general, as a rough rule of thumb, if you want, you can assume that the payback on these actions is between 9 to 12 months.
Speaker Change #106: Yes, so as I said, we will really complete everything. All the actions will be taken by the end of the year, but you will see gradually the effect on our margins in the second half. And by the way, this is of course why we are confident in...
Speaker Change #106: in the updated, more precise guidance we gave for the full year EBITDA.
Speaker Change #106: We will inform you more precisely about the expenses at the end of Q3, but in general, as a rule of thumb, if you wish, you can assume that the reimbursement of these actions is between 9 and 12 months.
Marc Gregory Bianchi: Very good. Thank you. I'll turn it back.
Speaker Change #107: Got it. Got it. Very good. Thank you. I'll turn it back.
Kurt Kevin Hallead: Thank you, Marc. Thank you, Marc. And our final question comes from Kurt Hallead with Benchmark. Please go ahead.
Marc Gregory Bianchi: Thank you, Marc. Thank you, Marc.
Marc Gregory Bianchi: And our final question comes from Kurt Hallead with Benchmark. Please go ahead.
Olivier Le Peuch: Hey, thanks for fitting me in here. Olivier, I think, from my standpoint, Olivier, I'm kind of curious, right? We've now had five or six months or so to kind of digest the shift in the game plan by Saudi Arabia from offshore to kind of conventional gas. You kind of referenced that very explicitly in your commentary about, you know, unconventional gas being a growth market for you. But I guess from where I sit, we're five or six months into this process. Yeah, what kind of leg do you have?
Kurt Kevin Hallead: Appreciate the insights, as always. Thank you.
Kurt Kevin Hallead: Hi.
Kurt Kevin Hallead: From my standpoint, Olivier, I'm kind of curious, right, we've now had cyber...
Kurt Kevin Hallead: 6 months or so to kind of digest the shift in game plan by Saudi Arabia from offshore to conventional gas. You kind of referenced that very explicitly.
Speaker Change #109: in your commentary about, you know, unconventional gas being a growth market for you. But I guess from where I sit, right, we're five or six months into this process, what have you picked up incrementally, you know, with respect to that opportunity? And more importantly, you know, what kind of, you know,
Speaker: You know, what kind of leg do you see for that, for that dynamic for you in Saudi and particular? I think you may have been reading and don't want to speak on behalf of Saudi Hanko, but I think there are commitments to that program to increase gas production by 60% from the totally totally is very clear. I think this touch both the conventional and the conventional gas reserve in Saudi.
Kurt Kevin Hallead: for that for that dynamic for you in Saudi. I think you may have been reading, and I don't want to speak on behalf of Saudi Aramco, but I think their commitment to their program to increase gas production by 60 percent from 2020 is very clear. I think this affects both the conventional and unconventional gas reserve in Saudi.
Speaker Change #109: Yeah, what kind of legs do you see for that for that dynamic for you in Saudi in particular?
Speaker Change #110: I think you may have been reading, and I don't want to speak on behalf of Saudi Aramco, but I think their commitment to their program to increase gas production by 60% from 2020 is very clear.
Speaker Change #111: I think this touched both the conventional and unconventional gas reserve.
Olivier Le Peuch: The most visible element of this is obviously the unconventional gas large Jaffa project. You may have seen they have also explored successfully new finds, both oil and gas, in recent months. So the country is set to expand in gas to complement the oil sustained capacity and slight expansion. And we are, as I said, favorably exposed, and we have reinforced this exposure, strengthened this exposure with our recent wins, as you may have seen in the earnings press release this morning. So we are very pleased. But the market is not only one project. The market is not only about one aspect. The market is much more diversified in Saudi Arabia and, furthermore, in the Middle East.
Speaker: The most visible element of this is obviously the conventional gas larger Jaffaura project. You may have seen that also explored successfully a new new finds both oil and gas in the recent recent months. So the country is set to expand in gas, to complement the oil capacity, sustain capacity and slide expansion. And we are, as I said, favorably exposed, and we have reinforced this exposure. We have strengthened this exposure with our recent winds, as you may have seen in the early earnings press release from this morning.
Speaker Change #111: in Saudi. The most visible element of this is obviously
Speaker Change #111: The unconventional gas large Jaffa project, you may have seen that also explored
Speaker Change #112: successfully new finds, both oil and gas, in the recent months. So the country is set to expand in gas to complement the oil sustained capacity and slight expansion. And we are, as I said, favorably exposed.
Speaker Change #112: And we have reinforced this exposure, strengthened this exposure with our recent winds, as you may have seen in the early...
Speaker: So we are very pleased, but the market is not only one project; the market is not only one aspect; the market is much more diversified in Saudi and furthermore in the release. So we are exposed to many aspects of the Saudi activity, both production recovery, exploration, CCS, as well as well construction and production equipment, both offshore and offshore. So we are very, we have a very diversified exposure to this and we benefit furtherably to the exposure of the growth accelerated growth in Jaffaura. So we are very pleased to where we are, and we are one of the most beneficial of the sort of the gas expansion. As I said, you know, if you are I like.
Speaker Change #112: Earnings press release from from this morning, so where they
Speaker Change #113: Very pleased.
Speaker Change #113: But the market is not only one project, the market is not only one aspect, the market is much more diversified in Saudi, and furthermore...
Olivier Le Peuch: So we are exposed to many aspects of Saudi Arabian activity, both pollution recovery, exploration, CCS, as well as construction and pollution equipment, both offshore and onshore. So we have a very diversified exposure to this, and we benefit favorably from the exposure of the accelerated growth in Jaffa. So we are very pleased with where we are, and we are one of the most beneficiaries of the accelerated gas expansion, as highlighted in our EPR highlights. So that's where we stand. Great. That's great, Colin. I always appreciate it. Thank you, and I'll be turning it back to you. Thank you very much. Thank you. Thank you, Léa.
Speaker Change #113: So we are exposed to many aspects.
Speaker Change #113: of the Saudi activity, both pollution recovery, exploration, CCS.
Speaker Change #113: as well as well construction and pollution equipment both offshore and onshore. So we are very, we have a very diversified exposure to this and we benefit favorably to the exposure of the growth, accelerated growth.
Speaker Change #113: in Jaffa, so we are very pleased to where we are and we are one of the most beneficiary of the accelerated gas expansion as highlighted in our EPR highlights. So that's where we stand.
Speaker: So that's that's where we stand.
Speaker: Okay, that's great color. I always appreciate it. Thank you.
Speaker Change #113: Great. That's great, Calvin. Always appreciate it. Thank you.
Speaker: And I'll be turning back to Olivier for closing remarks. Thank you.
Speaker Change #113: And I'll now be turning it over back to Olivier for closing remarks.
Olivier Peuch: So, ladies and gentlemen, as we conclude today's call, I would like to review the following takeaways. First, the growth momentum continues, with many of our international units reaching new cycle highs. Combined with the increase adoption of digital technologies, the stage is set for server growth and margin expansion throughout the rest of 2024 and into 2025. Second, in these environments, no company is better positioned than SLB to capture quality growth. Our differentiated operating footprint, leading technical and digital offerings, and sustained commitment to operating efficiency and evaluation, I've said as a part throughout the cycle. Moving ahead, we remain favorably positioned in the highest quality care of the market, supported by differential technologies, employment, integration, capabilities, and performance.
Olivier Le Peuch: So, ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, the growth momentum continues with many of our international geounits reaching new cycle heights. Combined with the increased adoption of digital technologies, the stage is set for further growth and margin expansion throughout the rest of 2024 and into 2025. Second, in this environment, no company is better positioned than SLB to capture quality growth.
Olivier Le Peuch: Thank you. Thank you, Léa. So, ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, the growth momentum continues with many of our international geounits reaching new cycle highs.
Olivier Le Peuch: Combined with the increased adoption of digital technologies, the stage is set for further growth and margin expansion throughout the rest of 2024 and into 2025.
Olivier Le Peuch: Second, in this environment, no company is better positioned than SLB to capture quality growth. Our differentiated operating footprint, leading technical and digital offerings, and sustained commitment to operating efficiency and value creation have set us apart throughout the cycle.
Olivier Le Peuch: Our differentiated operating footprint, leading technical and digital offerings, and sustained commitment to operating efficiency and value creation have set us apart throughout the cycle. Moving ahead, we remain favorably positioned in the highest quality areas of the market, supported by our differential technology deployment, integration capabilities, and performance. And third, with a strong first half of the year behind us and full confidence in further international revenue growth, we are optimally positioned to continue our margin expansion journey to generate cash and to fulfill our commitment to return to shareholders, both in 2024 and in 2025.
Olivier Le Peuch: Moving ahead, we remain favorably positioned in the highest quality area of the market, supported by our differential technology deployment, integration capabilities, and performance.
Olivier Peuch: And third, with a strong first half of the European and full confidence in preventing international revenue growth, we are optimally positioned to continue margin expansion journey to generate cash and to fulfill our commitment to return to shareholders, both in 2024 and in 2025.
Olivier Le Peuch: And third, with a strong first half of the year behind us and full confidence in further international revenue growth, we are optimally positioned to continue our margin expansion journey to generate cash and to fulfill our commitment to return to shareholders both in 2024 and in 2025.
Olivier Peuch: This is the next Senate on Diamond for our business, and I'm confident that we continue to develop something performance for customers and our shareholders in a quarter as a head. With that, I will conclude this morning's call. Thank you very much for joining.
Olivier Le Peuch: This is an excellent environment for our business, and I'm confident that we will continue to deliver stunning performance for our customers and our shareholders in the quarters ahead. With that, I will conclude this morning's call. Thank you very much for joining us. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation.
Olivier Le Peuch: This is an excellent environment for our business, and I am confident that we will continue to deliver outstanding performance for our customers and our shareholders in the quarters ahead. With that, I will conclude this morning's call.
Speaker: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now dis-
Speaker Change #114: Thank you very much for joining.
Speaker Change #115: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.
Speaker Change #115: [inaudible]