Q3 2024 Schlumberger Ltd Earnings Call
Speaker Change: Thank you everyone for standing by. Welcome to the third quarter SLB earnings conference call. At this time, all participants are in a listen-only mode. If you would like to ask a question, you may press 1, then 0. You will hear acknowledgement that your line has been placed in queue.
Operator: Quarter SLB Earnings Conference Call. At this time, all participants are in a listen-only mode. If you would like to ask a question, you may press one, then zero. You will hear acknowledgement that your line has been placed in queue. You may remove yourself from queue by repeating the same one-zero command.
Speaker Change: You may remove yourself from cue by repeating the same one-zero command. As a reminder, this conference is being recorded. I would now like to turn the conference over to James Armick Donald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.
Operator: As a reminder, this conference is being recorded.
James McDonald: 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 McDonald: Thank you, Lea.
Olivier Peuch: Good morning, and welcome to the SLB third quarter 2024 earnings conference call. Today's call is being hosted from New York following our board meeting held earlier this week. Joining us on the call are Olivier LaPouche, Chief Executive Officer, and Stephan Biguet, Chief Financial Officer.
Speaker Change: Thank you, Leia. Good morning and welcome to the SLB third quarter 2024 earnings conference call. Today's call is being hosted from New York following our board meeting held earlier this week.
Speaker Change: Join us on the call, our Olivier LaPouche Chief Executive Officer and Stepon V. Gay Chief Financial Officer.
James McDonald: Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risk and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.
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 risk and uncertainties that could cause our results to different materialy from those projected in these statements.
Speaker Change: For more information, please refer to our latest 10K filing and other SEC filings which can be found on our website.
James McDonald: Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found on our third quarter press release, which is on our website.
Speaker Change: Our comments today also include non-gap financial measures, additional details and reconciliations to the most directly comparable gap financial measures can be found in our third quarter press release, which is on a website.
James McDonald: And finally, in conjunction with our proposed acquisition, SLB and ChampionX have filed materials with the SEC, including the registration statement with the proxy statement and prospectus. These materials can be found on the SEC's website or from the party's websites.
Speaker Change: and finally, 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 party's websites.
Olivier Peuch: With that, I will turn the call over to Olivier.
Speaker Change: With that, I will turn the call over to Olivier.
Olivier Peuch: Thank you, James. Ladies and gentlemen, thank you for joining us this morning. Though in the call, I will cover a few topics. I will start by reviewing our third quarter results. Then I will discuss how we are leveraging our differentiated market positioning, digital leadership, and operating efficiency to navigate the evolving macro environment. And finally, I will provide an update on our full-year financial ambitions and our early outlook for 2025. It's a time we then provide additional details on our financial results, and we'll open the line to your questions. Let's begin. SLB delivers strong third quarter results with continued margin expansion.
Olivier LaPouche: Thank you James, Ladies and gentlemen, thank you for joining us this morning.
Olivier LaPouche: During the call, I will cover a few topics. I will start by reviewing our first quarter results. Then I will discuss how we are leveraging of differentiated market positioning, digital leadership, and operating efficiency in navigating the evolving micro on BAM.
Olivier LaPouche: And finally, I will provide them a date on a full year financial ambitions and our early outlook for 2025.
Olivier LaPouche: We then provide additional details on our financial results and we'll open the line to your questions.
Olivier LaPouche: Let's begin.
Olivier LaPouche: I said be delivered song throughout quarter results with continued margin expansion. Secondary, although revenue was flat, we expanded our register a bit more margin by more than 60 basis points to 20.5. Pretty point six.
Olivier Peuch: Secondly, although revenue was flat, we expanded our adjusted EBITDA margin by more than 50 basis points to 20.5%, 3.6% by driving efficiencies throughout the business, and we generated very strong free cash flow of 1.81 billion dollars. In international market, revenue remains steady; secondly, despite lower re-activity, as commodity prices result in a more cautious approach to discussionary short-cycle spending. The month for SLB's digital products and services continue to accelerate, and we still continue growth in the Middle East and Asia, fueled by all capacity expansions and strong gas activity, as well as offshore projects. Meanwhile, revenue in Europe and Africa was largely unchanged.
Olivier LaPouche: President by driving efficiencies throughout the business and we generated very strong thick ash flow of 1.81 billion dollars.
Olivier LaPouche: In the international market, revenue remains steady sequentially despite lower reactivity, as community prices resultant in a more cautious approach to discussion or short cycle spanning.
Olivier LaPouche: The man for SLB's digital products and services continue to accelerate and with the continuing growth in the Middle East and Asia, fueled by all capacity expansions and strong gas activity as well as offshore products.
Olivier LaPouche: Meanwhile, revenue in Europe and Africa was largely unchanged, a strong production and weakhold reactivity, not so effective, was also said by the decline in Latin America following a strong second quarter.
Olivier Peuch: A strong production and recall reactivity north of Africa was offset by a decline in Latin America following a strong second quarter.
Olivier Peuch: Walter. Turning to North America, proven to increase 3% sequentially as higher offshore activity in the Gulf of Mexico was partially offset by lower drilling activity in US land, as the market remained constrained by gas prices and ongoing capital-discipline power-porters. Next, let me touch on the performance of the divisions. In digital and integration, we have a strong second role led by our digital business, which reached a new quarterly revenue high. We also continue to increase profitability, expanding our pre-taxed segment of our team margins to 36%, driven by our digital revenue and cost optimization. Overall, our digital business remains on pace to achieve fully our revenue growth in the high teams, and we announce a number of exciting new products and partnerships during the quarter that I will discuss a little later into the school.
Olivier LaPouche: Turning to North America, opening increase creepers on sequentially, as higher offshore activities in the Gulf of Mexico was partially offset by lower drilling activity in New Zealand, as the market remains constrained by gas prices and ongoing capital discipline, more providers.
Olivier LaPouche: Next, let me touch on the performance of the divisions.
Olivier LaPouche: In digital integration, we deliver strong second-row of led by our digital business, which rich a new quarterly revenue eye. We also continue to increase profitability, expanding our free tax segment of our team margins to 36% driven by our digital revenue and cost optimization.
Olivier LaPouche: Over all of this business remain on-base to achieve full year of vinegar in the ITNs, and we are now the number of exciting new products and partnerships in the quarter that I will discuss a little later into the school.
Olivier Peuch: Turning to the core divisions, production system continues to grow, benefiting from long cycle development activity, particularly in the Middle East and Asia and in the Gulf of Mexico. I was proud to see that most production system business lines contributed to this performance as we continue to secure sizable bookings while also increasing our backlog for the future. As our performance remains steady, supported by stable production and recall-respinning, well-construction declined slightly due to weaker land activity in North America and international markets. Overall, this results demonstrate SLB's unique ability to navigate the evolving market by leveraging our differential international and offshore positioning, our broad technology portfolio, and our continued focus on capital discipline and operating efficiency.
Olivier LaPouche: To link to the Code of Legends, Collection System Continues to go.
Speaker Change: benefiting from long cycles of urban activity, particularly in the Middle East of Asia and in the Gulf of Mexico. I was proud to see that most production system business lines contribute to this performance as we continue to secure size every bookings while also increasing our backlog for the future.
Speaker Change: As our performance, it might be steady, supported by stable production and recovery spending and work construction decline slightly due to weaker land activity in North America and international markets.
Speaker Change: Oval, this was also an SMB's unique ability to navigate the evolved market by leveraging our different international and offshore positioning. A broad technology portfolio and a continued focus on capital discipline and operating efficiency.
Olivier Peuch: I want to thank the SLB team for continuing to deliver for our customers and shoulders in this dynamic environment, and make extremely proud of their contribution and dedication to our performance strategies. Next, I want to share some updates on our progress in digital. We deliver another quarter of strong digital growth as operators continue to increase their investments in digital technology to reduce cycle times and risk, enhance productivity, lower cost and carbon, and accelerate returns. This is presenting opportunities for our emerging growth, and we have taken a leading role in this space, partnering with our customers to accelerate their transition to the cloud, scaling new technology for drilling and production operations, and creating new markets by delivering disruptive solutions for data and AI.
Speaker Change: I want you to find the Saluting for continuing to deliver for customers and shareholders in this dynamic environment. I'm extremely proud of their contribution and dedication to our performance.
Speaker Change: Next, I'm going to share some updates on a progress in digital.
Speaker Change: We deliver another quarter of from digital growth, as operators continue to increase the investments in digital technology to reduce cycle times and risk and hence, quality, lower cost and carbon and accelerators.
Speaker Change: This is Presenting Opportunities for High Margin Growth, and we have taken leading role in this space, partnering with our customers to accelerate their transition to the cloud, scaling new technology for learning and pollution operations, and creating new markets by developing disruptive solutions for better NEI.
Olivier Peuch: As part of this journey, we hosted a digital foreign September where we brought more than 1,000 customers and partners to innovate solutions and shape our shared digital future. During this event, we launched the Lumix, that time AI platform, which will accelerate advanced data and generative AI capabilities at scale for SLB customers across the energy value chain. Today, we offer approximately 150 AI and machine learning capabilities across our products and solutions, and we continue to work for customers and partners to innovate and deploy new ones. We also invade the number of cross-industry enhancements during the forum.
Speaker Change: As part of this journey, we hosted a digital forum in September, where we brought more than 1,000 customers and partners to innovation and shape our shared digital future.
Speaker Change: During this event, we launched the Luming that time A.R. platform, which will accelerate advanced data and generated a capabilities at scale for SLD customers across the energy value chain.
Speaker Change: Today, we offer approximately 150 AI and machine learning capabilities across our product and solutions. And we continue to work for customers and partners to innovate and deploy new ones.
Speaker Change: Lawson varied a number of cross-industry announcements done during the fall. This includes
Olivier Peuch: This includes a collaboration with NVIDIA to develop generative AI solutions for energy, as well as a partner with Amazon Web Services to expand access to applications from the Delphi platform and to evaluate the capabilities solution from Amazon Disturbed.
Speaker Change: The collaboration with Penn Video to develop generative AI solution for energy, as well as a part-enfroof Amazon Web Services to expand access to application from the Dell Fit platform and to evaluate decabler and decablerization solution for Amazon digital infrastructure.
Olivier Peuch: structure. Each of these agreements helps to expand a capability set and positions SLB as a key partner in digital and sustainability across the industry.
Speaker Change: Each of these agreements helps to expand our capability to set and positions SLV as a key partner in digital and sustainability across the industry.
Olivier Peuch: Next, let me discuss the macro environment. Over the past few months, community prices have been under pressure. This is largely due to concern of an adverse supply market. They have been by a higher output from non-OPEC-plus producers, uncertainty around OPEC-plus super releases, weaker demand from China, and softer economic growth rates in the US and Europe. This has resulted in a cautionary approach to activity, and discussion is spent by many customers, as highlighted in our third quarter results. Despite this evolving market conditions, we believe the long-term fundamentals for all amgas remain in place. The amount for energy is increasing, and energy security remains a global priority, as witnessed by recent community prices fluctuation tied to geopolitical tension in the Middle East.
Speaker Change: Next, let me discuss the Macron Diamond.
Speaker Change: Over the past few months, community prices have been under pressure. This is largely due to concern of an immersive light market. The event by higher output from non-apak plus producers, uncertainty around opaque plus supply releases, weaker demand from China, and softer economic growth rates in the U.S. and Europe.
Speaker Change: This, as resulted in a cautionary approach to activity and discussion is spent by many customers as I lighter than our third quarter of results.
Speaker Change: Despite this evolving market conditions, we believe the long-term fundamental for OEM guys remain in place.
Speaker Change: The month for energy is increasing and energy security remains a global priority, as witnessed by recent community crisis fluctuation tied to geopolitical tension in the Middle East.
Olivier Peuch: In this environment, gas will continue to play an increase in all in the energy transition, while all remain a large part of the energy mix for decades to come. Internationally, gas investment remains strong, factory in Asia, the Middle East, and the North Sea, and is expected to grow regardless of OPEC-plus decision on all production. In a while, whereas short-cycle oil investment has been more challenge, long-cycle deprotor project globally and most capacity expansion projects in Middle East remain economically and strategically favorable. Specific to North America, we do not see US activity rebounding in the near term, and any potential increase in gas rigs could be quickly offset by further declining oil rigs due to increased operating efficiency.
Speaker Change: In this environment, gas will continue to play an increasing role in the energy transition, why all remain a large part of the energy mix for decades to come.
Speaker Change: Internationality, gas investment remains strong, part of the Indonesia, the Middle East and the North Sea. And it's expected to grow a regardless of opaque blood decisions on the whole production.
Speaker Change: Minuai
Speaker Change: We ask short cycle or investment have been more challenge, long cycle deeper towards a global and most capacity expansion project in these remains economically and strategic think further.
Speaker Change: Specific to North America, we do not see U.S. activity rebounding in a North, in a near-term. And any potential increases in gas rigs could be quickly offset by a further decline in all rigs due to increase operating efficiency.
Olivier Peuch: Overall, we expect this result in a sustained level of global upstream investment in the years to come, with the secular trends of digital and industry decarbonisation extending the investment horizon. SLB is well positioned to navigate in this evolving macro environment to a different level of portfolio and multi-plunge strategic approach across core, digital, and new energy.
Speaker Change: A whole respect this result in the system level of global upstream investment in the years to come with the secular trends of digital and industry de-capitalization, extending the investment horizon.
Speaker Change: SLB is well positioned to navigate in this evolving macro environment, to have different job portfolio and multiple strategic approach across core, digital and new energy.
Olivier Peuch: With that back, let me conclude my opening remarks by Shane. Outlook for the full year, 2024, and early thought regarding 2025. Specific to the fourth quarter, we expect muted revenue growth, with a favorable mix of yield and digital and product sales partially offset by ENP budget exhaustion in U.S. land and cautious discussion expanding from certain international cost levels. And if continued cost optimisation, we anticipate we deliver EBITA margin expansion in the fourth quarter. For a full year 2024, ongoing margin expansion will enable us to deliver full year adjusted EBITA margins at all both 25%. Additionally, our strong cash flows, coupled with the announced sale of the policy asset in Canada, support increased returns to our shareholders.
Speaker Change: With that backlog, let me conclude my opening remarks by showing you outlook for the full year, 2024 and our early folks regarding 2025.
Speaker Change: Specific to the fourth quarter, where expect muted Revenue Wolf, with a favorable mix of your antidote and proxels partially offset by ENP BJT News Land and cautious discussion that is spending from certain international customers.
Speaker Change: and its continued cost optimization, we anticipate we deliver EBITDA margin expansion.
Speaker Change: in the false quarter.
Speaker Change: For the full year 2020 full, ongoing margin expansion within Nebelus, to deliver full year Agista DeBita margins at all both 2015.
Speaker Change: Additionally, our song cash flows, coupled with an answer to a cell of the Paris A7 in Canada, we support increased returns to our shareholders.
Olivier Peuch: In 2025, we see the potential for spending in the international market to grow in the low to mid single digits, while North America's spending will be flat to slide down. This direction on Outlook will depend on the geopolitical environment and commodity prices and will be shared on the data due in January after we receive more feedback on customer.
Speaker Change: In 2015, we received a potential for a swimming spending in the international market to grow in the low 3,000,000,000 digits.
Speaker Change: Well, North America's spending would be flat to Slatida.
Speaker Change: This directional outlook with the panel on the show public, call on violence and community prices. And we'll be sharing the data you in January after we'll receive more feedback on customer budget.
Olivier Peuch: Puchette. In conclusion, SAP remains well-positioned to deliver strong financial results as a optimist, cost structure, portfolio rationalization, differential exposure to international and offshore market and digital leadership with support for further margin expansion, higher cash innovation, and increased returns to shareholders.
Speaker Change: well
Speaker Change: In conclusion, SAP remains well positioned to deliver strong financial results as an optimised cost structure for further rationalisation.
Speaker Change: The French have exposed all the international international markets.
Speaker Change: and digital leadership with support further margin expansion, higher cash innovation and increase returns to shareholders.
Stéphane Biguet: I will now turn the call over to Stephan. Thank you, Olivier, and good morning, ladies and gentlemen. Third quarter earnings per share, excluding charges and credits, was 89 cents. This represents an increase of 4 cents sequentially and 11 cents of 14% when compared to the third quarter of last year. During the quarter, we recorded 2 cents of merger and integration charges relating to the Acre, Subsea, and Champion X transactions and 4 cents of charges in connection with the program we started last quarter to realign and optimize the support and service delivery structure in certain parts of our organization.
Speaker Change: I will now turn the call over to Stephane.
Stephane: Thank you, Olivier and good morning, ladies and gentlemen.
Stephane: Perth Quarter earnings per share, excluding charges and credits, was 89 cents. This represents an increase of 4 cents sequentially and 11 cents of 14% when compared to the counter of last year.
Stephane: During the quarter, we recorded two cents of merger and integration charges.
Stephane: Relating to the accuracy of sub-c and champion-ex transactions.
Stephane: and 4th sense of challenges.
Stephane: In connection with the program we started last quarter to realign an optimized the support and service delivery structure in certain parts of our organization.
Stéphane Biguet: Overall, our fourth quarter revenue of 9.2 billion was essentially flat sequentially. However, the fourth quarter represented another quarter of both sequential and neural neural margin expansion despite revenue growth rates moderately. These improvements were driven by very strong digital and integration margins, combined with the effect of the cost optimization program I just mentioned. Additionally, the resilient, long cycle production systems business continued its top line growth and margin improvement journey, benefiting from its strong backlog. Sequentially, our pre-tax segment operating margin expanded 48 basis points to 20.8%. Company-wide adjusted the bidum margin increased 55 basis points to 25.6%.
Stephane: Overall, our first quarter revenue of 9.2 billion was essentially flat sequencer.
Stephane: However, the front quarter represented another quarter of both sequential and year-on-year margin expansion, despite revenue growth rates moderately.
Stephane: These improvements were driven by very strong digital and integration margins.
Stephane: Combined with the effect of the Customs Demisition Program I just mentioned.
Stephane: Additionally, the resilience, long cycle production systems business continued its top-line growth and margarine improvement journey benefiting from its front-back-loaf.
Stephane: Dequenchery, our free tax segment operating margin, expanded 48-bit points to 20.8%.
Stephane: Company-wide adjusted a bit the Marvin increased 55 business points to 25.6%.
Stéphane Biguet: Representing the highest level since the first quarter of 2016.
Stephane: We present in the highest level since the 1st quarter of 2016.
Stéphane Biguet: Let me now go through the third quarter results for each division. Third quarter, digital and integration revenue of 1.1 billion increased 4% sequentially. With margins, expanding 456 basis points to 35.5%. 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 the higher intake of new digital solutions and the optimization of our digital support and delivery structure. Reservoir performance revenue of 1.8 billion was flat sequentially as higher intervention activity in international markets was offset by lower evaluation revenue in Latin America and the Middle East.
Stephane: Let me now go through the third quarter results for each division.
Stephane: Third quarter digital and integration revenue of 1.1 billion, increased 4% sequencer.
Stephane: with margins, expanding 450-6 basis points to 35.5%.
Stephane: The sequencer Robin and Groff was entirely due to higher digital sales as it yesterday was planned.
Stephane: The strong margin performance was driven by improved digital profitability as a result of the higher-up take of new digital solutions and the optimization of our digital support and delivery structure.
Speaker Change: Reservoir performance revenue of 1.8 billion was flat sequentially as higher intervention activity in international markets was offset by lower evaluation revenue in Latin America and the Middle East.
Stéphane Biguet: Mandirins contracted 53 basis points due to the unfavorable technology. Jimics. Well-construction revenue of 3.3 billion decreased 3% sequentially on lower recurrent in U.S. land and Saudi, and the completion of drilling projects in certain offshore markets. Margin's decreased 19 basis points as a result of the lower activity. Finally, production systems revenue of 3.1 billion increased 3% sequentially, driven by higher sales of surface production systems, completions, and artificial lift led by North America and the Middle East and Asia.
Speaker Change: Madvin's contracted 53 basis points due to the unfavorable technology mix.
Speaker Change: Well construction revenue of 3.3 billion decreased 3% sequentially, on lower recounts in US land and Saudi and the completion of drilling projects in certain opportunities.
Speaker Change: Martin's decrease 19 basis points as a result of the lower activity.
Speaker Change: Finally, production systems revenue of 3.1 billion increased 3% sequentially, driven by higher sales of surface production systems, completions and artificial lift.
Speaker Change: Let by North America and the Middle East and Asia.
Stéphane Biguet: Margin's expanded 110 basis points to 16.7% on improved profitability in artificial lift, completions, surface, and midstream production systems. We regard to our liquidity. Our cash flow performance during the third quarter was very strong. As we generated 2.4 billion of cash flow from operations and free cash flow of 1.8 billion. This represents a 1 billion increase in free cash flow as compared to last quarter, largely due to significant customer collections. Capital investments, inclusive of CAPEX and investments in ATS projects and exploration data, were 644 million in the third quarter. For the full year, we are still expecting capital investments to be approximately 2.6 billion.
Speaker Change: Margines expand the 110 basis points to 16.7%
Speaker Change: An improved profitability, artificial lift, completions, surface and mainstream production systems.
Speaker Change: We regard to our liquidity, our cash flow performance during the third quarter was very strong. As we generated 2.4 billion of cash flow for operations and 3.5 billion of 1.8 billion.
Speaker Change: This represents one billion increase in free cash flow as compared to last quarter, largely due to significant customer collections.
Speaker Change: Capital Investments, inclusive of CapEx and Investments in HTS Project and Exploration Data, where 644 million in the first quarter.
Speaker Change: For the full year, we are still expecting capital investments to be approximately 2.6 billion.
Stéphane Biguet: On the MNFront, as announced yesterday, I am pleased to report that we have signed a definitive agreement to sell our interest in the Pallicer APS project in Canada. This transaction will reduce our direct exposure on to commodity prices and the associated earnings volatility, as well as reduce our capital intensity. It also allows us to eliminate significant future abandonment liabilities. Under the terms of the agreement, we will receive cash proceeds of approximately 440 million US dollars, subject to closing adjustments that are typical for such a transaction. This transaction will also result in us removing, as said, retirement obligations from our balance sheet, with a present value of approximately 280 million.
Speaker Change: On the MNF, as announced yesterday, I am pleased to report that we have signed a definitive agreement to sell our interests in the Pallisserie PS Project in Canada.
Speaker Change: This transaction will reduce our direct exposure to commodity prices and the associated earnings volatility.
Speaker Change: as well as reduce our capital intensity.
Speaker Change: It also allows us to eliminate
Speaker Change: Significant future, abandonment, liability.
Speaker Change: And of the terms of the agreements, we will receive cash proceeds of approximately 430 million US dollars, subject to closing addressments, better typical for such a transaction.
Speaker Change: This transaction will also result in us removing asset retirement obligations from our balance sheet. We represent value of approximately 280 million.
Stéphane Biguet: This transaction, which is subject to regulatory approvals and over-customary closing conditions, is expected to close before the end of this year.
Speaker Change: This transaction, which is subject to regulatory approvals and over-accustivity closing conditions.
Speaker Change: is expected to close before the end of issue.
Stéphane Biguet: Turning to the pending Champion Ex acquisition. The integration teams on both sides have been working together closely, and we are extremely pleased with the progress they are making. We now anticipate the transaction to more likely close in the first quarter of 2025.
Speaker Change: Turning to the pending championship next acquisition.
Speaker Change: The integration teams on both sides have been working together closely, and we are extremely pleased with the progress we are making.
Speaker Change: We now anticipate the transaction to more likely close in the first quarter of 2025.
Stéphane Biguet: Finally, total returns to shareholders in the form of stock report chassis and dividends was approximately 2.4 billion on a year-to-date basis. Chris. During the 4th quarter, we repurchased 11.3 million shares for a total purchase price of 501 million. As a result of our strong casual performance, we expect to maintain this level of buyback in the 4th quarter. Consequently, we will exceed our previous commitment to return $3 billion to our shareholders in 2024. Furthermore, we reaffirm that we will return a minimum of 4 billion to shareholders in 2025, reflecting our confidence in our ability to continue generating strong cash flows.
Speaker Change: Finally, total returns to shareholders.
Speaker Change: In the form of stop-free purchases and dividends was approximately 2.4 million on a year-to-date basis.
Speaker Change: During the third quarter, we reproached 11.3 million shares for a total purchase price of 501 million.
Speaker Change: As a result of our strong catch-through performance, we expect to maintain this level of back in the fourth quarter.
Speaker Change: Consequently, we will exceed our previous commitments to return $3 billion to our shareholders in 2024.
Speaker Change: For our more, we reaffirm that we will return the minimum of 4 billion to share all the earth in 2025.
Speaker Change: Reflecting our confidence in our ability to continue generating strong cash flows.
James McDonald: I will now turn the conference call back to you. Thank you, Stephane. Ladies and gentlemen, we will open the floor to your questions. And ladies and gentlemen, just as a reminder, you may press 1-0 to place your line into queue.
Speaker Change: I will now turn the conference call back to what it is.
Speaker Change: Thank you, Stephane Ladies and Gentlemen, we will open the floor to your questions.
Speaker Change: Ladies and gentlemen, this that's a reminder, you
James West: And our first question is from James West with Evercore ISI. Please go ahead. Hey, good morning, Olivia. Obviously, more muted top line growth as we go through 25 is kind of expected here, but you guys have a lot of initiatives underway that will drive, I think, margin, you know, margin expansion journey, I guess is a better way to put it. Could you talk about some of the drivers there and how you see that unfolding as we go through the year? I know you don't want to give too many specifics yet on the year given the budget rate quantified, but just maybe help us a little bit on how this could unfold.
Speaker Change: Press 1, 0.
Speaker Change: to place your line in to cue.
Speaker Change: and our first question is from James.
Speaker Change: and James West with Evercore ISI. Please go ahead.
James West: Thank you for joining us today.
James West: So, Olivier, obviously more muted top line growth as we go through 25, it's kind of expected here, but you guys have a lot of it.
James West: and this year is underway that will drive, I think, margin, you know, margin, journey, margin expansion, journey I guess is better way to put it.
Speaker Change: Could you talk about some of the drivers there and how you see, maybe you or Stephane, how you see that unfolding as we go through?
Speaker Change: The year I know you don't want to give too many specifics yet on the year given the butt to treat.
Speaker Change: Quantified, but you're just maybe help us a little bit on.
Speaker Change: and how this could have all.
Olivier Peuch: Yeah, good question. Thank you. Thank you, James.
Olivier Peuch: So yes, indeed, we have ambition to maintain our margin expansion journey as we enter 2025. Exit raised of 2024 with the results we have delivered into three, the ambition we have and the state panel have made on further expansion in the fourth quarter will both very well as we enter 2025 to start the year with a kick, if I may. And now looking forward, I think the Gannons at this point market spent will indicate that they will benefit from another year of international growth up facing North America, which again plays and plays in our favor from the margin mix.
Speaker Change: Yeah, good question. Thank you, thank you, James. So, yes indeed, we have ambition to maintain our margin acceptance journey as we enter 2025 or exit raised of 2024 with the result we have delivered in Q3, the ambition we have
Speaker Change: and the State Pandora made on further expansion in the 4th quarter, will both very well as we enter 2025 to start the year with a kick if I may. And now looking forward, I think the ganons at this point market spent will indicate that there will benefit from another year of international growth of pacing North America, which again plays and plays in our favor from the margin mix.
Olivier Peuch: And obviously, the combination of our digital technology or technology premium will continue to play favorably as we accelerate technology introduction and continue the journey and ambition we have on the digital to reach approximately three been on the hands some of our year of strong growth. And finally, I think we have initiated some cost art and operating efficiency focus for our team and third team. And this is already falling through into our results and expect this to take full scale in 2025. Got it. Okay, great.
Speaker Change: and obviously the combination of digital technology, a premium will continue to play favorably as we accelerate technology introduction and continue the journey and ambition we have on the digital to reach approximately 3 billion by hand some of your strong growth. And finally, I think we have initiated some cost-out and operating efficiency for QS4 team and this is already falling through into our results and I expect this to take full skating in 2025.
Olivier Peuch: And then, now that we're a little over a month out from your digital forum that you held recently. Could you maybe share some of your initial thoughts on the success of the forum? It seemed to me at least that the uptake in digital, clearly you just mentioned 3 billion in revenue, but the deferred extra year of the digital uptake is accelerating and the quality of the digital uptake, not just going to cloud, but also using all the AI tools and accelerating as well, but I wanted to get you know at now that we've gotten among the way your thoughts on that.
Speaker Change: Got it, okay, great, and then...
Speaker Change: Now that we're a little over a month.
Speaker Change: Out from your digital forum that you held recently.
Speaker Change: Could you maybe share some of your initial thoughts on the success of the forum? It seemed to me at least that the...
Speaker Change: The Uptake, the individual, clearly you just mentioned three billion revenue, but in the
Speaker Change: Celebrating and the quality of the digital, I'll take not just going to cloud, but also using all the AI tools, the accelerators as well, but I wanted to get sure, you know, at now that we've gotten them on the way, you're your thoughts on that.
Olivier Peuch: No fair, I think first I'm very pleased to report that this was most likely on many aspects of best forum ever and from the size, the scale of the attendance, the number of partners that came to join us, the number of customers that came and displayed their own technology. I think where, having the opportunity, we had the opportunity to show the digital value proposition we are for in industry, across the different domains, from Joseph's surface to operations, show it that we have an integrated platform, open platform, approach with partners and there are next to our extending our technology from the historical on-prem to cloud edge and now AI including generally.
Speaker Change: So...
Speaker Change: No, I think first I'm very pleased to report that this was most likely on many aspects of best for a member and from the size, the scale of the attendance.
Speaker Change: the number of partners that came to join us, the number of customers that came and displayed their own technology. I think we are having the opportunity, we have the opportunity to show the digital value proposition we are for in industry across the different domains, from just answer face to operations, show it that we have an integrated platform, open platform approach with partners.
Speaker Change: and there are two outstanding technologies from the historical on-prem to cloud edge and AI into the engineering. So I think this resulted into an open realization by many customers that we can impact all aspect of the operation. Unlock value in productivity in the Joe Sound Space, in operation for performance and in reducing cost and carbon going forward. So...
Olivier Peuch: So I think this resulted into not really a realization by many customers that we can impact all aspects of the operation, unlock value in productivity in the geosound space, in operation for performance and in reducing cost and carbon going forward. So the pickup, if any, that I have is that this market in term of time will expand going forward with accessibility expansion, as customers realize that there is maturity into offering, there is maturity into the partnership ecosystem that we have developed and there is opportunity for them to capture this as they want to extract efficiency, as they want to be more competitive. I believe that our opportunity is to accelerate the adoption of the toolbox that we have invested in the last 10 years, to particularly benefit from digital operation.
Speaker Change: The Pickups, if any, that's a Harley's that this market.
Speaker Change: In terms of time, we'll expand going forward, we'll accelerate the expansion as customers realize that there's maturity into offering, there's maturity into the partnership ecosystem that we have developed, and there's opportunity for them to capture this as they want to extract efficiency, as they want to be more competitive.
Speaker Change: and I believe that our opportunity here is to accelerate the adoption of the toolbox that we have invested in last ten years.
Speaker Change: to particularly benefit from digital operation. There is one domain that I think has really blossomed in the last 18 months is digital operation, in production, in drilling, autonomous operation, optimization, edge AI application that really game-changing the way we can perform with our customers and that that's where I see the future. So longer term going beyond the cycle growing for the long term as a business for us.
Olivier Peuch: There is one domain that I think has really blossomed in the last 18 months: digital operation, in production, in drilling, autonomous operation, optimization, edge AI application that are really game-changing the way we can perform with our customers, and that's where the future. So longer term, going beyond the cycle, growing for the long term as a business for us. Thanks very much. Thank you, James.
Speaker Change: Thanks for up.
David Anderson: Next question we have is from David Anderson with Barclays. Please go ahead. Good morning, Olivier. Good morning, honey. So your customers are being more cautious, though you're saying larger projects are still moving ahead. It seems pretty clear the cycle is kind of plateauing here, international spending. You're saying I was low mid to single digits next year. But you know if you look at the prior cycle, the second half of that was really driven by sustained deep water development. So my question is: do you think deep water can once again be a driver of growth, say beyond 25?
James West: Thank you James.
Speaker Change: Next question we have is from David Anderson with Barclays. Please go ahead.
Speaker Change: I don't know what it is.
David Anderson: Thank you.
David Anderson: Good morning, honey.
David Anderson: So, customers are being more cautious, so you're saying a larger project system that I had. It seems pretty clear the cycle is...
David Anderson: Kind of plateauing here, international spending, you're saying that was low mid to single digits next year. But if you look at the prior cycle, the second half of that was really driven by sustained deep-water development.
Speaker Change: So my question is, do you think deep water can once again be a driver of growth, say, beyond 25? There's something like 300 billion in FID for the last few years. You just announced a slew of petrobustal voice today and I have Namibian sternum on horizon. So my question is is that enough to drive growth's overall spending higher or is it just really a function of the oil prices of the destruction improved in order to kind of get the cycle kind of re-accelerating?
Olivier Peuch: There's something like 300 billion in FIDs the last few years. You just announced a slew of Petrobras awards today, and I have Namibian sternum on horizon. So my question is, is that enough to drive growth's overall spending higher, or is it just really a function of the oil prices, the destruction improved in order to kind of get the cycle kind of re-excelerated? Yeah, I think that you have seen your realization that when Community Prize is under pressure, there is some pressure on short cycle that is suppressed, and that may come back and will come back as soon because it impact in field trainings, it impact intervention activity, it impact short cycle on promotion in some region, but it will most likely come back as soon as the Community Prize regains traction. But the long cycle, apart from some decision on timing and project execution, have been untouched, and we have had your strong exploration activity that has unlocked a new reserve that has appraised a new future pipeline of a deep water, as you have heard and seen across America, across South Africa, across East Mediterranean, across Asia where gas is critical. And the combination of these, as you know, is representing every year, this year I think the total offshore FID will approach $100 billion, and we expect that this rate of $100 billion FID for offshore will maintain that level or higher for the next two or three years. So the cumulative over 23 to 26 offshore will exceed $100 billion of offshore FID, and that's a sign that this project will execute beyond 25, beyond 26, and will be a growth engine for the industry going forward.
Speaker Change: Yeah, I think that you have seen your realization that when Community Price is under pressure, there is some pressure on Short Cycle that is suppressed and that may come back and will come back as soon because it impact in field trainings, it impact intervention activity, it impact Short Cycle on commercial in some region, but it will and most likely come back as soon as the Community Price regain traction, but the long cycle apart from some decision on timing and project execution, I've been in touch and we have had your strong exploration activity that has unlocked a new reserve that has appraised a new feature of Pipeline of Deepwater as you have heard and seen.
Speaker Change: [inaudible]
Speaker Change: As you know, he's representing every year, this year I think the total offshore FID will approach $100 billion and we expect that this rate of $100 billion FID for offshore will remain at that level or higher for the next two or three years. So the cumulative over 23 to 26 offshore will exceed $500 billion of offshore FID and that's a sign that this project will execute beyond 25, beyond 26 and will be a growth engine for the industry going forward.
Olivier Peuch: That's great to hear. The also great to hear is the sale of the Power Shipbox. Glad to put that behind us, and now we can kind of focus much more on the digital business, of course, and I guess one of the things that you had talked about at that forum was that digital has been accretive, accretive to growth and margin is going forward to clear this in that way already. So you're well on your way to hitting your $3 billion target ready next year, and naturally, I have to ask you what's next. I don't think you're ready to give out the new target yet; otherwise, you probably would have already done that. But I guess I'm just wondering about it. Where do you see that growth coming from?
Speaker Change: That's great to hear, you're also great to hear is the sale of the power should block. Glad to put that behind us and now we can kind of focus much more on the digital business of course.
Speaker Change: And I guess one of the things that you had talked about at that forum was that a digital has been accretive, accretive to growth and margin is going forward and clear it's been that way already. So you're well on your way to you're hitting your $3 billion target ready next year. And naturally I have to ask you what's next. I don't think you're ready to give out the new target yet. Otherwise you probably would have already done that. But I guess I'm just wondering about is where do you see that growth coming from? You just talked about center on that production site. So maybe that's another like growth. But a big part of this has been coming from that. From the construction. And I'm wondering if deep water can be also a huge driver of the digital business going forward.
Olivier Peuch: You just talked about center on that production site, so maybe that's another like growth, but a big part of this has been coming from the well-construction. I'm wondering if deep water can be also a huge driver of the digital business going forward. It is already, I think we are already deploying a well-construction automation and optimization, autonomous operations, some offshore rigs, and making huge defense when the cost of rig operation matters, and this is something that will unlock the future. But I think I will split in three categories. I think you have a platform transition, cloud transition, that has happened that affect the more than 1,000, 1,500 customers we have, and it's a long transition that will continue to happen one customer at a time, cloud transition that will continue to drive our Delphi adoption across our customer space, in Joe's sense, and will continue to see this affecting and being a long cycle, a long tail of growth for years to come as a driver.
Speaker Change: It is already, I think we are already deploying our work construction automation and optimization of telemys exploration in some offshore rigs and they can use the films when the cost of rig operation matters. And this is something that will unlock the future.
Speaker Change: I think I will split in three categories. I think you have a platform transition, cloud transition that has happened that affect the more than 1,000, 1,500 customers we have, and it's a long transition that will continue to happen one customer at a time, cloud transition that will continue to drive our Delphi adoption across our customer space in Joe Sands, and will continue to see this affecting and being a long second, a long tail of growth for years to come as a driver. The second is a, as you mentioned, as I mentioned, the digital operation, beating production and drilling with the emergence of edge application, the emergence of autonomous optimization application, and it is both seen by the...
Olivier Peuch: The second is, as you mentioned, as I mentioned, the digital operation, beating production and drilling with the emergence of edge application, the emergence of autonomous optimization application, and this is both seen by the digital services that are core. Kurt's division offering a well-construction production system and what other problems with having a much success with this digital offering that they are putting on the back of our Delphi and we see it into the pickup of our production and drilling operation capability by the customer themselves. And finally, and the third leg of growth in our digital portfolio, we see the emergence of new data and AI capability, as you have seen the lumi that we have put in place.
Speaker Change: Digital Service Data Core.
Speaker Change: called Division of Frame, a well-conception, a pollution system, and was up at home with having a much success with these digital frame that they are putting in the back of our Delphi.
Speaker Change: and we see it into the pick-up of our production and drilling operation capabilities by the customer themselves.
Speaker Change: And finally, and the third leg of growth in our digital portfolio, we is the emergence of new data and AI capability, as you have seen the looming that we have put in place. So we combine these three over the future horizon, this will continue to be digital as a consequence, we will continue to be a growing term for us, and will be an engine of growth that will be accretive to the top line, and we'll deliver accretive margin to the company. So that's the way we see it, and I will not at this point set the target for the next, but we'll continue to see growth beyond 2025 with this context.
Olivier Peuch: So we combine these three over the future horizon. This will continue to be digital as a consequence, we will continue to be going time for us and will be an engine of growth that will be accretive to the top line and will deliver accretive margin to the company. So that's the way we see it, and I will not at this point set the target for this next, but we will continue to see growth beyond 2025 with this context.
Olivier Peuch: Thank you very much.
Operator: Thank you.
Speaker Change: Thank you very much.
Scott Gruber: Our next question is from Scott Gruber with Citigroup. Please go ahead. Yes, good morning, and glad to hear that you still see growth from next year.
Speaker Change: Thank you.
Speaker Change: Our next question is from Scott Gruber with City Group. Please go ahead.
Speaker Change: Yes, good morning. I'm glad to hear that you still see some growth next year. I'm going to ask a question that we're, we're trying to separate, you know, operating leverage that results from growth from other margin drivers. So if we assume that upstream spending is, is quite a issue for the next three years, is there a certain level of margin expansion that you think could achieve through further cost optimization and further growth in digital I assume that you would challenge the organization to continue expanding margins in a flat backdrop. Just, here's what that potential raise of margin improvement could be.
Stéphane Biguet: I'm going to ask a question that we're trying to separate, you know, operating leverage that results from growth from other margin drivers. So if we assume that upstream spending is the radish for the next three years, if there's a certain level of margin expansion that you think will be achieved through further cost optimization and further growth in digital, I assume that you would challenge the organization to continue to expand the margins in a flat backdrop, just curious what that potential rate of margin improvement could be. So yes, first we do see not only in Q4 and in 2025 further margin expansion on that upstream spending outlook.
Speaker Change: So, yes, first we do see not only in Q4 and in 2020-25, further margin expansion on that.
Stéphane Biguet: And, as you actually mentioned, it comes from several components. It comes primarily, I would say, from the mix of activities in various divisions. As Olivier indicated, digital is a booster to overall company margins; technology mix, performance contract, or performance in general pushes margins as well. And yes, there's an element of cost optimization, not only from the program we started at the end of a, last quarter, sorry, at the beginning of last quarter of Q3, but also from our continuous focus on costs. We will continue to adjust delivery resources based on level activities. And we will continue to look for further optimization in our structure.
Speaker Change: on what the upstream spending outlook can.
Speaker Change: And as you actually mentioned, it comes from several components, it comes primarily, I would say, from the mix of activities and various divisions.
Speaker Change: As Olivier indicated digital, he's a booster to overall company margins.
Speaker Change: technology mix, performance contract or performance in general pushes margins as well. And yes, there's an element of cost optimization, not only from the program we started at the end of last quarter, sorry, at the beginning of last quarter of Q3, but also from our continuous focus on cost, we will continue to adjust delivery resources based on level activities and we will continue to look for further optimization in our structures. So it's a mix of all these components that will continue to push on margins into 2025.
Stéphane Biguet: So it's a mix of all these components that will continue to push our margins into 2025. Got it.
Stéphane Biguet: It's the fun.
Stéphane Biguet: How would the financials be, in fact, about the policy or sale? How much capital comes on? How much CAPEX comes out? Yeah, so we on the policy, we generate approximately 500 million of revenue per year on the asset. And this comes with three tax margins in the high 30s.
Speaker Change: is Stephane.
Speaker Change: I'm the financials, you know, being factored by the policy or sale, how much have a dot come down, how much cat decks.
Speaker Change: comes out.
Speaker Change: from the New Peugeot on the SATAN and Viscums with three tax marines in the...
Speaker Change: in the high firties. Now, you mentioned something very important, it also removes quite a bit of investment, but we need to inject every year to maintain this number, so it's the CapEx is about 150 million per year.
Stéphane Biguet: Now you mentioned something very important. It also removes quite a bit of investment that we need to inject every year to maintain this number. So it's, the CAPEX is about 150 million per year. And as I mentioned as well in my prepared remark, something not to underestimate is removing future abandonment liabilities, which discounted about 280 million dollars, but on discounted are close to a billion dollars. So that's, it's a good thing this is going away from our balance sheet and TNL, and it will reduce both earnings, volatility, and capital income.
Speaker Change: and as I mentioned as well in my prepare remark something not to underestimate his removing future abandonment flyability with a...
Speaker Change: which discounted about $280 million, but on discounted are close to $1 billion. It's a good thing this is going away from our balance sheet and TNL and it will reduce both earnings, volatility and capital intensity.
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you.
Arun Jayaram: Thank you. Next, we go to Arun Jayaram with JP Morgan. Please go ahead.
Speaker Change: Next we go to Arun Jairam with JP Morgan, please go ahead.
Speaker Change: Yeah, good morning. Olivier, you framed that you're seeing a little bit of cautiousness in some of the short cycle markets, North America, international oil, with some resiliency and long cycle gas and deep water opportunities. I was wondering how would you characterize the current pricing dynamics internationally, just relative to your expectations of margin expansion from here?
Olivier Peuch: Yeah, good morning. Olivier, you framed that you're seeing a little bit of cautiousness in some of the short cycle markets, North America, international oil, with some resiliency and long cycle gas and deep water opportunities.
Olivier Peuch: I was wondering how, how would you characterize the price, the current pricing dynamics internationally, just relative to your expectations of margin expansion from here? I think we believe that the plastic environment is still a positive constructive, I would say. I think first realizing that the industry is capital discipline and the industry has no spare capacity to move and to place. And the second performance technology and integration capabilities still give us the opportunity to support our pricing. And I don't see it in the current environment changing very much.
Olivier LaPouche: I think we believe that the plastic environment is still positive, constructive, I would say. I think first realizing that the industry is capital discipline, and industry has no spare capacity to move and to place. And the second performance, technology, and integration, capability, still give us the opportunity to support pricing, and I don't see it in the current environment changing very much.
Speaker Change: Fair enough. I had to follow up on new energy. You guys press release and update on your lithium DLE pilot in the quarter Nevada, which highlighted a very high kind of recovery rate. I was wondering if you could talk about Olivier the next steps to commercialize this technology, how competitive are the lithium?
Olivier Peuch: Fair enough, I had to follow up on new energy.
Olivier Peuch: You guys press release and update on your lithium, a DLE pilot in the quarter Nevada, which highlighted a very high kind of recovery rate.
Olivier Peuch: I was wondering if you could talk about Olivier the next steps to commercialize this technology, how competitive are the extraction costs today versus existing technologies. I was wondering if you could just maybe frame the growth opportunity from lithium. As you pointed out, I think we're very pleased to have achieved these milestones. Again, the milestones has been to produce lithium carbonate from our demonstration plant in Nevada using direct lithium extraction from wine and using concentration and purification process that we have integrated with our NIP and using some textile technology and putting this together and working for months to tune it to digitally optimize it and to realize this.
Speaker Change: So, as you pointed out, I think we're first, we are very pleased to achieve this milestone.
Speaker Change: Again, the milestones has been to produce the term carbonate from a demo session plant you never are using a direct lithium extraction from Brian and using concentration and purification process that we have integrated with our own ID and using some textile technology and putting this together and the morning for months to tune it.
Speaker Change: to digital optimize it and to realize this. So a plan for war is to work with prospective partners and customers.
Olivier Peuch: So our plan forward is to go to work with prospective partners and customers to see how this technology can be used and scaled to respond to big demands that exist and some plants that some of our customers and partners have announced to use DLE as a method to extract lithium and produce lithium in large quantities in the coming years. So we are looking forward to use this technology to scale it for application as a license technology or as a partner where we will develop and run going forward this technology with our customers and partners. That's the way we look into it, and again, very good first and benchmark performance for such a daily plant and exactly long-term prospect for us in this new space.
Speaker Change: To see how this technology can be used and scaled to respond to big demands that exist and some plans that some of our customers and partners have announced to use DLE as a method to extract lithium and produce lithium in large quantity in the coming years. So we are looking forward to use this technology to scale it for application as a license technology or as a partner where we will develop and run going forward this technology with our customers and partners. That's the way we look into it. And again, very good.
Speaker Change: First, then Benchmark performance for such a daily plant and exactly in prospect, long-term prospect for us in this new space.
Speaker Change: Great, thanks a lot.
Olivier Peuch: Great. Thanks a lot.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Neil Mehta with Goldman Sachs. Please go ahead. Yeah, good morning team. A couple of financial questions. Maybe as we think about 2025 over the summer, you had talked about that $10 billion. You put that target for 25 on a 20% take or just, you know, in light of some of the macro commentary. Can you just talk about some of those moving pieces as it relates to that guy? And I think you've given us a lot of moving pieces, but I'd like to just kind of tie that out.
Operator: Thank you.
Neil Mehta: And our next question comes from Neil Mehta with Goldman Sachs. Please go ahead. Yeah, good morning team. A couple of financial questions.
Stéphane Biguet: Maybe as we think about 2025 over the summer, you had talked about that $10 billion EBITDA target for 25 on a 20% take or just in light of some of the macro commentary. Can you just talk about some of those moving things? Are there any other pieces as it relates to that guy? And I think he's given us a lot of moving pieces, but I'd like to just kind of tie that out. It's going to make sense, Neil. So really, yeah, again, margin expansion is; we are laser focused on this. We've been increasing EBITDA margins for year on year for 15 consecutive quarters, and we don't intend to stop service.
Speaker Change: George will make sense, so really, yeah, again, margin expansion is we are laser focused on this, we've been increasing a bit of margins for year on year for 15 consecutive quarters and we don't intend to stop so this.
Speaker Change: This is our mission and as I explained, it's made of a...
Stéphane Biguet: This is our mission.
Speaker Change: of several types of components now to your specific question on 2025 and the absolute value of a bit that compared to war.
Stéphane Biguet: And, as I explained, it's made of several types of components. Now, to your specific question on 2025 and the absolute value of EBITDA compared to our long term 21 to 25. It is possible that indeed with the with the current macro outlook again to be to be refined. And if we exclude for the moment, just to compare apples to apples with apples, sorry, if we exclude champion eggs, it's possible that the 21 to 25 finish more in the high teams, rather than breaking that 20% bar. Thanks. That's really helpful.
Speaker Change: to our long-term 21 to 25, Kagger Ambition. It is possible that indeed with the current macro outlook again to be refined, and if we exclude for the moment, just to compare apples to apples, and with apples, or if we exclude championships, it's possible that the 21 to 25 Kagger will finish more in the high teams rather than breaking that 20
Speaker Change: Thanks, that's really helpful. And then it was a super quarter for free cash flow. He has beat our model by quite a bit. Very strong collections can just talk about how you're thinking about, you know, first of all, I'll talk about the go forward for working capital. And just the free cash flow profile into next year as well, including CapEx, which has been, again, trending.
Stéphane Biguet: And then it was a super quarter for free cash flow. He has beat our model by quite a bit. Very strong collections. You can just talk about how you're thinking about, you know, first of all, talk about the go forward for working capital. And just the free cash flow profile into next year as well, including cat backs, which has been again trending in a constructive way. Yeah, totally. So, yeah, we maintain capital discipline from four. So this is this is quite predictable. And it's a bit too soon to talk about Capex for next year, but rest assured, it's going to the theme of capital discipline. Clearly, this will be very considering the macro environment.
Speaker Change: and a constructive way.
Speaker Change: Yeah, totally, so yeah, we maintain capital discipline from flow, so this is quite predictable and it's a bit too soon to talk about, get a text from next year but...
Speaker Change: Rest assured, it's going through. The film of capital discipline clearly will be very considering the macro environment so now specifically to our Q3 free cash flow. Yes, always in the second half we generate most of the year of free cash flow and in Q3. This was in a way more than exacerbated compared to over year. So yes, Q3 was very strong and as we highlighted and as you mentioned it.
Stéphane Biguet: So now specifically to our work you free free cash flow. Yes, always in the second half, we generate most of the year of free cash flow. And in Q3, this was in a way more than exacerbated compared to over year. So yes, Q3 was very strong. And as we highlighted and as you mentioned, it's really it was really driven by customer collections. In a way, Q2 was a little bit low on collections of a bit of a catch up effect. And Q4 will essentially be dependent on it will be strong. It will also be dependent on customer collection.
Speaker Change: It was really driven by customer collections in a way Q2 was a little bit low on collections of a little bit of a catch up effect and Q4 will essentially be dependent on it will be strong it will also be dependent on customer collection but
Speaker Change: As you can see, we do experience volatility in those collections from the quarter to another, so we will continue to push, we will definitely finish the...
Stéphane Biguet: But, as you can see, we do experience volatility in those collections from a quarter to another. So we will continue to push; we will definitely finish the year on a high note as it relates to working capital. And and free cash flow working up will continue to to to release as we finish the year. And going into next year, again, a bit too soon to give you a number for free cash flow, but definitely it will be higher than 2024. Not only from our own operations, but of course, with the addition of champion X, and this is why we are quite comfortable to reaffirm our four billion.
Speaker Change: The year on a high note as it relates to working up and free cash flow, working up will continue to release as we finish the year. And going into next year, again, to give you a number of free cash flow, but definitely it will be higher than 2024, not only from all operations, but of course, with the addition of champion eggs. And this is why we are quite comfortable to be a firm or for billion target returns to share all the effort for next year, because free cash flow will increase in 25.
Stéphane Biguet: Target returns to shareholders for for next year because free cash flow will increase in in 25.
Speaker Change: Square, thanks team.
Speaker Change: Thank you.
Operator: Craig, thanks, team. Thank you. Thank you, Kurt.
Speaker Change: Thank you, thank you girl. Thank you, Neil.
Operator: Thank you, need.
Kurt Hallead: Next, we go to Kurt Hallead with Benchmark. Please go ahead. Morning, Kurt. Mr. Hallead, do you have your phone muted? Good morning. Good to hear everybody this morning. Olivier, you did highlight a more tempered outlook as you go out into 20.25, so appreciate that. In the context of those dynamics, usually as the industry kind of goes into a more moderate growth or some markets kind of going to a little bit slow down, there's some pricing pressures that maybe come along with that. I'm just wondering if you're starting to see or starting to have some of those conversations with your customer base, and what if not, what may be different.
Speaker Change: Morning Kirk.
Speaker Change: Mr. Halid, do you have your phone muted?
Speaker Change: Hi, good morning, so I'm hurting, sorry about that, but did I... I'm hurting, I'm hurting.
Speaker Change: Good to get to everybody this morning.
Speaker Change: So, Olivier, you did, you know, highlight more.
Speaker Change: Tempered, you know, outlook has you go out into 2021-25, so appreciate that. In the context of those dynamics, usually as the industry kind of goes into a more more moderate growth or some markets kind of go into a little bit of the slowdown, there's...
Speaker Change: you know some pricing pressures that maybe you know come along with that just wondering if you're starting to see or starting to have some of those conversations with your customer base and what if not what may be different.
Speaker Change: and the kind of driving discussions with the customers that go round.
Olivier Peuch: It's kind of driving the discussions with the customers that go around. Yeah, I think in all cycle at any point in the cycle, I think we will always get on the competitive pressure and on the pressure from our customer to the other cost of operation or improve and put the value. We believe that I think first and foremost, as long as we continue to perform, create the value and exceed expectation on the performance of operation, we will relieve that any pressure that could come from the competitive and or from a customer aspect. Secondly, we believe that the industry is tight on capacity, capacity equipment, capacity of critical new technology, and the industry has demonstrated lately strong capital discipline that has restrained this risk, I would say.
Speaker Change: I think in all cycles at the time of the cycle, I think it will always get on the competitive pressure and on the pressure for more customers to load a cost of operation or improve the value. We believe that...
Speaker Change: I think first and foremost, as long as we continue to perform.
Speaker Change: Credit Value Exit, the expectation on the performance of our operation, we will relieve that any pressure would come from a competitive and all from a customer aspect. Secondly, we believe that the industry...
Speaker Change: and his title on Capacity, Capacity Equipment, Capacity of Critical New Technology. And the industry has demonstrated their capital discipline that has restrained this risk, I would say.
Speaker Change: but as long as we maintain a very high customer satisfaction through our performance.
Olivier Peuch: But as long as we maintain a very high customer satisfaction through our performance, continue to deliver our technology, continue to deliver our integrated value proposition, I think we will relieve any pressure that could arise into a moderating growth environment and different pricing, and further improve our pricing when and as it matters, and hence protect our margins going forward.
Speaker Change: continued to deliver our technology, continued to deliver our integrated value proposition. I think we will relieve any pressure that could arise into a moderating growth environment and defends our pricing and further improve our pricing when and as it matters and hence protect our margins going forward. So it's a matter of execution, it's a matter of relationship but it's also a matter of a capital discipline, a constant issue and a belief, the conditions in this act are a bit different than what you have to find in the past and I'm looking at this constructively.
Olivier Peuch: So it's a matter of relationship, but it's also a matter of capital discipline, a constant issue, and I believe the condition in this cycle is a bit different than what we have seen in the past, and I'm looking at this constructively. That's great; it's great. Maybe follow up, coming full circle to your digital forum. Great event, by the way. In the context of the kind of post meetings and so on and so forth, what were one or two things that came out of those meetings or discussions with potential clients, viewers, for your generous AI product, what was surprising to you that you maybe didn't anticipate? I think the customers were, I think, first many of them participated themselves, and 150 papers were presented by our customers.
Speaker Change: and that's great. Maybe it follow up, you know, coming full circle to your digital forum, great events, by the way, what?
Speaker Change: in the context of the kind of post the post.
Speaker Change: Meeting someone so forth, you know, what were, you know, one or two things that, you know, came out of those meetings with discussions with potential clients, yours, for your generous AI product, you know, what was surprising to you, that you maybe didn't anticipate going in.
Speaker Change: I think the customers were, I think, first, millions of them passed by themselves and the 160 papers were from the Bar customers.
Speaker Change: More than 10 of them presented their own application of digital to other customers that I think was from a lot of learnings from for customers to watch each other and to learn from each other and how do they use digital technology to unlock value. So if anything take away I think at high high level, I think customer realized that we are more than just one Joe sounds application on the cloud and we have a digital value proposition that expands across a different domain and across different technology stack on-prem cloud edge AI and across the different domain Joe sounds doing and production. So the full field, the full value proposition we have on digital, I think did surprise.
Olivier Peuch: More than 10 of them presented their own application of digital to other customers. I think it was from a lot of learnings from our customers to watch each other and learn from each other on how to use digital technology to unlock value. So if anything, take away, I think at high high level. I think customer realized that we are more than just one Joe sounds application in the cloud, and we have a digital value proposition that expands across a different domain and across different technology stack on prem cloud, edge AI and across the different domain, Joe sounds doing and production.
Olivier Peuch: So the full field, the full, a value proposition we have on digital, I think did surprise me, the customers as we continue to expand and have now a very comprehensive offering. That's the first takeaway, I think. The second is, I think the emergence of AI as an expactor for the industry to unlock more value of digital, this industry data reach, I would say. And as we have deployed, as you heard, 150 engineered AI full of domain, full of physics, and full of the latest data sounds technique to unlock more performance into our digital application. And the latest announcement of Lumi has a platform that complements the LSI and has a platform for putting and accessing only NP data in one framework to integrate all the applications across seamlessly and finally to create a framework that allows our customers to use AI.
Speaker Change: A million of the customers as we continue to expand and have now very comprehensive offering. That's the first take of our thing. The second is, I think, the emergence of AI as a...
Speaker Change: as an expactor for the industry to unlock more value of digital. This industry is data rich, I would say, and hence we have deployed as you heard, 150 engineers, AI full of domain, full of physics and full of the latest data science technique to unlock more performance into our digital application. And the latest announcement of Lumi has a platform that complements Belfie and has a platform for putting and accessing only NP data in one framework to integrate all the application across seamlessly. And finally, to create a framework [inaudible]
Speaker Change: and now our customer to use AI, application on their data sets across the different domains and unlock new insights, create new performance, that's sort of lumi data and AI is getting a lot of inbound requests as we have just announced it. And we'll certainly be a factor of growth in the future as the industry will recognize that there's a lot to unlock from data, to liberate data, and to realize value to AI, including generic application that we develop as we have heard with partners like Nvidia, who are not at all nervous.
Olivier Peuch: Application of their data sets across the different domains and unlock new sites, create new performance. That's sort of Lumi data and AI is getting a lot of inbound requests as we have just announced it. And will certainly be a factor of growth in the future as the industry will recognize that there is a lot to unlock from data to liberate data and to realize value through AI, including general application that we develop, as you have heard. So we start those like NVDA, Ms. Kyle, and others. That's great. Appreciate that inside. Thank you.
Speaker Change: That's great. Appreciate that insight. Thank you.
Speaker Change: Thank you.
Speaker Change: Next we go to the rob of a pant with Bank of America. Please go ahead.
Saurabh Pant: Next, we go to Sarabha Pant with Bank of America. Please go ahead. Hi. Good morning, Olivia and Stefan. Yes, Sarabha. Good morning, Sarabha. Hi.
Speaker Change: Hi, good morning, Olivier and Stephane.
Speaker Change: Hi, I know there have been a lot of questions on digital, but I had one conceptual one, if you don't mind Olivier, as we think about the upstream cycle maturing and growth slowing, I know digital has its own secular drivers, SLB specific drivers, so growth and digital should be very different versus upstream pending, but conceptually Olivier, how should we think about the variance, the sensitivity to digital growth opportunities? So, if growth in upstream spending flows from 10% to let's say low room, mid single digit, does it do too much to digital growth outlook or they are like materially unrelated to each other?
Saurabh Pant: I know there have been a lot of questions on digital, but I had one conceptual one, if you don't mind, Olivia. As we think about the upstream cycle, maturing and growth slowing, I know digital has its own secular drivers, SLB specific drivers. So growth and digital should be very different versus upstream spending. But conceptually, Olivia, how should we think about the variance, the sensitivity to digital growth opportunity relative to what the upstream market is doing? So if growth in upstream spending flows from 10% to let's say low to mid single digit, does it do too much to digital growth outlook or they are like materially.
Speaker Change: I think as we are very early in the...
Olivier Peuch: I think as we are very early in the curve of adoption of digital, I believe there are largely uncorrelated at this point and we see the time total of some market of digital in industry in upstream actually growing as the market may be moderating from upstream capex. We believe that the size of digital will actually by contrast grow and our ability to open in participate fully but also gain a share in this market and unlock white space in this market such as with Lumi Data and AI and all for edge autonomous operation. I think we'll create for us a long growth opportunity that will be largely decarolated.
Speaker Change: In the curve of adoption of digital, I believe they are largely incorporated at this point.
Speaker Change: and we see the thumb, total of some market of digital in industry, in upstream, actually growing, as the market may be moderating from upstream capex, we believe that the size of digital will actually by contrast grow and our ability to not only participate fully but also gain share in this market and unlock white space in this market such as with Lumidata and AI and all for edge autonomous operations. I think we'll create for us a long growth opportunity that will be largely decolated. Now, the aspect of short-term, I will say discoloration.
Olivier Peuch: Now there are aspects of short-term, I would say discussionally decision on that can affect digital but I think the long trend, I think I believe is positive and long trend will continue to be a secular investment opportunity for customers that are now realizing create value today and hence is an opportunity to differentiate their performance for tomorrow. Right, right.
Speaker Change: and the decision on that can affect digital, but I think the long trends, I think, believe is a positive and long trend will continue to be a secular investment opportunity for customers that are now realizing great value today. And hence, it's an opportunity to differentiate their performance for tomorrow.
Speaker Change: Right, right. Okay, okay. No, that makes a lot of sense, Olivier. Thank you. And I follow up, Stephane, maybe for you, obviously you are accelerating a cash return to shareholders this year. You have your four billion dollar, at least four billion dollar target for next year. But just conceptually, we think about the percentage of your free cash flow that you might want to return to shareholder as the cycle materials. This year it looks like you're going to be pretty close to 80% which is a lot higher than your target. Conceptually, is it fair to us? It assumes to fund that that percentage of free cash flow continues to go up as the cycle materials. Thank you very much.
Stéphane Biguet: Okay, okay, no, that makes a lot of sense, Olivier. Thank you, and I follow up, Stephane. Maybe for you, obviously, you are accelerating cash return to shareholders this year. You have your four billion dollar, at least four billion dollar target for next year, but just conceptually, let me think about the percentage of your free cash flow that you might want to return to shareholder as the cycle materials. This year it looks like you're going to be pretty close to 80% which is a lot higher than your target. Conceptually, is it fair to assume Stephane that that percentage of free cash flow continues to go up as the cycle materials?
Speaker Change: But you know, it is true we...
Stéphane Biguet: Well, you know, it is true; we set a minimum a few years back of 50%. So yeah, we have clearly accepted that, and I'm quite happy we were actually able to exit that. So I mean, it really depends on investment opportunity. I think 80% is already a very good number; it's hard to tell you if it can get to 100% in 2025. I mean, it's really, we are happy with where our balance sheet is. The leveraging has been a focus for a few years. We have turned that focus from the leveraging to return. So, depending on investment opportunities, returns to shareholders remains the priority at the moment.
Speaker Change: We set the minimum fewer smack of 50% so we have clearly exit at, I'm quite happy we were actually able to exit Vazo, I mean, it really depends on investment opportunity, I think it's a little bit more than 70%.
Speaker Change: He's already a very good number. It's hard to tell you if it can get to 100% in 2025. I mean, it's really, we are happy with where our balance sheet is. Deliveraging has been a focus for a few years. We have turned that focus from delivering to return. So, depending on investment opportunities, returns to shareholders first, remains the priority at the moment. So, yes, you will see that percentage. Clearly, above our initial guidance of 50%, that's for sure.
Stéphane Biguet: So yes, you will see that percentage. Clearly, above our initial guidance of 50% that's for sure. Yeah, no, that's that's that's that's perfect. I was not expecting you to raise it to 80% from 50%, but conceptually that all makes a lot of sense, Stephane. Thank you.
Speaker Change: Yeah, that's that's that's perfect, that was not expecting you to raise it to 80% from 50% but can certainly that all makes a lot of sense, Stephane, thank you all, turn it back.
Speaker Change: Thank you. Thank you.
Operator: I'll turn it back.
Speaker Change: Next, we go to Roger Reed with Wells Fargo. Please go ahead.
Roger Reed: Next, we go to Roger Reed with Wells Fargo. Please go ahead. Yeah, thank you. Good morning. I'm going to I'm going to come back to digital. It's the theme of the day. So let me ask the question slightly differently for you, Olivier, as you think about it. High growth, you've got to get customers on board, you've got to have the opportunities available internally right in terms of people and offerings.
Speaker Change: I'm going to make a video on the screen.
Roger Reed: Thank you, good morning. I'm going to come back to digital. It's the theme of the day. So let me ask the question slightly differently for you Olivier, as you think about it.
Roger Reed: Hi, Growth. You've got to get customers on board. You've got to have the opportunities available internally, right, in terms of people and offerings. So as we think not just the growth rate in 25 to 3 billion, but beyond that, what do you see is, you know, potential bottlenecks be the internal or external that you really got to deal with here. You know, the front and center items about having the right people in the right place and, you know, making the roads to your client base.
Olivier Peuch: So as we think not just the growth rate in 25 to 3 billion, but beyond that, what do you see is, you know, potential bottlenecks, be they internal or external, that you've really got to deal with here, you know, the front and center items about having the right people in the right place and, you know, making the inroads to your client base. No, Roger, thanks for the question. I think there's not nothing new. I think we've been working on going and understanding what can we do to unlock both from the go-to-market and from our internal capability, the digital growth.
Speaker Change: Well, Roger, thanks for the question. I think there's nothing new. I think we've been working on going and understanding what can we do to unlock both from the go-to market and from our internal capability, the digital growth. And I think we've been more successful in the last few quarters. And I think it comes down to, I think engaging for customers, better understanding what... And I think we've been more successful in the last few quarters. I think we've been more successful in the last few quarters. And I think we've been more successful in the last few quarters.
Olivier Peuch: And I think we've been more successful in the last few quarters. And I think it comes down to, I think engaging for customers, better understanding what I think offering they're looking for. And I think this is the going for multi clouds environment, going for hybrid cloud environment, on-prem and cloud, I think has been an evolution that we have taken two to three years back. And I think he's paying off and is unlocking the growth. The other realization is that some customers don't necessarily focus on the application, but are focused on the data. And they are willing to sort out and unlock the data.
Speaker Change: I think offering, they are looking for, and I think this going for multiclouds on Vaman, going for hybrid cloud environment on Prayman and Cloud I think has been an evolution that we have taken two to three years back and I think he is paying off and he is unlocking the growth.
Speaker Change: We have a realization that some customers don't necessarily focus on the application but the focus on data and they are willing to sort out and unlock the data.
Speaker Change: The creation of the Rumi as a platform to address the customer that are more interested in looking at and directly accessing AI to a data platform as opposed to adding to a not the full suite. And I think we have already listened to this. We have done...
Olivier Peuch: Hence the creation of Roomy as a platform to address the customer that are more interested in unlocking data and directly accessing AI to a data platform as opposed to having to adopt the full suite. And I think we have seen this. We have done investment into our innovation factory to help collaborate for customers to tailor some feedback based on application to their needs. So we have already gone through this. Is it all obstacles resolved? No. I think, as I said, it's one customer time adoption on the cloud. However, I think something that helps us a lot, and I think is accelerating.
Speaker Change: Investment into innovation factor in to help collaborate for customers to tailor some feed for base in application to their needs.
Speaker Change: So we have already gone through this. Is it all obstacle resolve? No. I think as I said, it's one customer time adoption on the cloud. However, I think something that helps us a lot and I think is accelerating is the fact that digital operation led by our core division, production system, work construction and and result performance are becoming new agents of digital transformation for customers as they are pushing and getting successful into the adoption of digital services
Olivier Peuch: Is the fact that the digital operation led by our core division, production system, well construction and result performance are becoming new agents of digital transformation for customers as they are pushing and getting successful into the adoption of digital services that are being delivered real time at the age. Such as autonomous drilling, operational, well-boined sites, or surveillance and optimization of some of our production system equipment. And this is one well at the time. This is one transaction at the time. So the right of adoption here, I think, and push we have made to colleagues, if I may, offering on the on the office in the planning to offering to operation and at least on the one umbrella.
Speaker Change: Search has autonomous drilling, operation or well-bowing site, or surveillance and optimization of some of our production system equipment. And this is one, well at the time. This is one transaction of time, so the ready for adoption here, I think, can push we have made to you.
Speaker Change: to call a Stephane offering on the office in the planning to offer into operation and at least on the one umbrella of platform, I think it's unlocking the place of an option and hence we see this happening today and we believe this will continue. So that's what we are doing to your knock if you like.
Olivier Peuch: Of platform, I think is unlocking the pace of adoption, and hence we see this happening today, and we believe this will continue. So that's what we are doing to unlock, if you like, and working with partners to provide more options to our customers. So that they are, they recognize the ecosystem they work with.
Speaker Change: and working with partners to provide more option to our customers, so that they are the recognised ecosystem they work with. So these are the two other three dimensions that we have worked with in the last 18 months, two or three years and that are starting to bear fruits and are starting to translate into growth and we don't see it changing going forward.
Stéphane Biguet: So these are the two or three dimension that we have work with in the last 18 months, two or three years and that are starting to wear fruits and are starting to translate into growth, and we don't see the changing going forward. I appreciate that. Yeah, it sounds like incremental, and then eventually we get to cascade with this. As a follow-up to that, Stephan, you know, you mentioned capital intensity; obviously, declines with the sale here of the Canada EMP ops. What's the right way for us to think about capital intensity in terms of digital investments?
Speaker Change: I appreciate that. Yeah, it sounds like incremental and then eventually we get the cascade with this.
Speaker Change: is a follow-up to that. Stephane, you know, you mentioned Capital Intensity obviously declines with what the sale here of the Canada, EMP ops. What's the right way for us to think about capital intensity in terms of digital investments? Does it?
Speaker Change: Just capital and CapEx investment, trail the revenue growth for a period of time, exceed it, you know, is there a way to think about maybe, you know, across over eventually in that, where the growth continues, but the capital intensity would decline, or does it rely so much on capital investment elsewhere? There's not an easy way to think about that.
Stéphane Biguet: Does capital and CAPEX investment trail the revenue growth for a period of time exceeded the, you know, is there a way to think about maybe, you know, a crossover eventually in that where the growth continues, but the capital intensity would decline, or does it rely so much on capital investment elsewhere? There's not an easy way to think about that. So it's clearly different from our core business, the little lag or reasonable lag between investment, CAPEX in our core business and the related deployment of the tool in the field in digital. It's a much longer cycle.
Speaker Change: So it's clearly different from our core business, there's a little lag or reasonable lag between investment, capex, you know, core business and the related deployment of the tooling in the field in digital, it's a much longer cycle, so first it's not capex as you know we experience.
Stéphane Biguet: So first, it's not CAPEX, as you know, we expand all the investments because the investments are basically, you can categorize them if you want in product development, research and development. And this has been done over, tempted to say, the last 30 years. So there's always, of course, to come up with new solutions to enrich the platform. We need to continue investing every year, but we are not seeing spikes in where we make arbitrages within a given envelope. So our growth in digital doesn't trigger incremental capital intensity because it's really smooth over many, many years. I would say that the heavy investments have been made in the past; already, now is just enriching the platform and supporting the enriched offering for the customer.
Speaker Change: All the investments, because the investments are basically, you can categorize them if you want in product development, research and development, and this has been done over.
Speaker Change: Tempted to say the last 30 years, so there's always a chance to come up with new solutions to enrich the platform we need to continue investing every year.
Speaker Change: We are not seeing spikes in there, we make our be-tragies, we've been given a lot, so our growth in digital doesn't trigger.
Speaker Change: Incremental capital intensity because it's really smooth to over a many, many years I would say that the heavy investments have been made in the past already now, it's just enriching the platform and supporting the enriched offering for the customer.
Speaker Change: Great, appreciate it that's making it.
Stéphane Biguet: Great. Appreciate it. That makes us. Thank you.
Speaker Change #100: Thank you.
Speaker Change #101: and our last question will come from Stephen, Jengaro with Stephel. Please go ahead.
Steve Folt: And our last question will come from Steven Jengaro with Steve Folt. Please go ahead. Thanks. Good morning, everybody. Good morning, Sir.
Speaker Change #102: Thanks for morning, everybody.
Stephen Jengaro: Mollison. Two for me, the first just sort of thinking about the short term in the fourth quarter. Can you talk a little bit about the sort of the puts in takes as we look at the fourth quarter and maybe even versus sort of normal seasonality that we get every year. And I'm just also curious on the Gulf of Mexico. If there's been any big impact from the storm activity. Thank you.
Olivier Peuch: Two for me, the first, just sort of thinking about the short term in the fourth quarter. Can you talk a little bit about the sort of the puts and takes as we look at the fourth quarter and maybe even versus sort of normal seasonality that we get every year. And I'm just also curious on the Gulf of Mexico, if there's been any big impact from the storm activity. You're not sure we got your second question. You're concerned about, oh, just the second part of the question, whether there's been much impact from the Gulf of Mexico storms. So I'll start with this to say that we have seen muted impact on the Gulf of Mexico's storm operation.
Speaker Change #104: Not sure we got you a second question, you are concerned about it? Oh, just a second question.
Speaker Change #105: So, I will start with this to say that we have seen muted impact on the Gulf of Mexico's terminal operation and the Gulf of Mexico has been the driver for growth in the third quarter sequentially. As it comes to the fourth quarter and your question, I think the Putin takes, I think, yes, there is an element of seasonality, both on a positive side which is the digital and product from production system here and sales that will normally and will create a boost to our to our revenue and there is a seasonality effect on some part of the novel in this fair that are starting to see either part of the sequence of budget exhaustion, part in the U.S. land, we will see an offset and I think this
Olivier Peuch: And the Gulf of Mexico has been the driver for growth in the third quarter sequentially. As it comes to the fourth quarter and your question, I think the put and takes, I think yes, there is an element of seasonality, both on the positive side, which is the digital end product from production system here and sales that will normally and will create a boost to our revenue. And there is a seasonality effect on some part of the novel in this fair that are starting to see either part of the second sort of budget exhaustion, part in the U.S.
Speaker Change #105: As we commented, we'll be a partial of sex and we'll see as we can see a mutual growth going forward but that's the put-and-take that we're seeing going forward.
Olivier Peuch: Lands, you will see an offset. And I think these two, as we commented, will be partially offset. And we see as a constant muted growth going forward sequentially. But that's the put and take that we are seeing going forward.
Speaker Change #106: Great, thank you, and then the second question was really, I'm not sure you're willing to comment on this, but as you've mentioned earlier, you've kind of been going through the integration team on the CHX front, has there been anything that you can talk about that has sort of increased or changed your thought process or optimism on the synergies?
Olivier Peuch: Great. Thank you.
Stéphane Biguet: And then the second question was really, I'm not sure you're willing to comment on this, but as you mentioned earlier, you've kind of been going through the integration team on the CHX front. Has there been anything that you can talk about that has sort of increased or changed your thought process or optimism on the synergies? Well, as we said, we have been working quite a bit on both sides. We've been integration teams, and what we're seeing is really giving us even more confidence than we had originally on the transaction and on the synergies. So we are not going to change our synergy target at this time, but we clearly confirm it, and we're quite happy with what we're seeing in that integration planning process.
Speaker Change #107: Well, we are, as we said, we have been working quite a bit on both sides with the integration teams and what we are seeing is really giving us even more confidence than we had originally on the transaction and on the synergy. So we are not going to change our synergy target at this time, but we clearly confirm it and we are quite happy with what we are seeing in that integration planning process.
Speaker Change #107: Thank you, thank you for the cover.
Operator: Great. Thank you.
Speaker Change #108: and I'll turn the conference back to SLB for closing.
Olivier Peuch: And I'll turn the conference back to SLB for closing comments. Thank you, Leia.
Speaker Change #108: Comment.
Speaker Change #109: Thank you, Leia. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways, fake operating footprint. Moving forward, we will continue to harness our technical deployment and integration capabilities to capture high marginal opportunities in international, deep order and gas markets.
Olivier Peuch: Ladies and gentlemen, as we conclude today's goal, I would like to leave you with the following takeaways. First, SLB remains well positioned to navigate community-deprized fluctuations, benefiting from our unique operating footprint. Moving forward, we will continue to harness our technical deployment and integration capabilities to capture high-margin opportunities in the international deep water and gas markets. Second, our digital business remains a key differentiator in industry. This will continue to drive higher margin growth while opening the door to new markets.
Speaker Change #109: Second, a digital business remains a key differential there in the industry. This we continue to drive higher margin growth while opening the door to new markets. And third, with our solid financial performance and focus on operating efficiency, we look forward to today's further margin expansion, higher cash innovation, and increase returns to shareholders.
Operator: Third, with our solid financial performance and focus on operating efficiency, we look forward to deliver further margin expansion, higher cash generation, and increased returns to shareholders. Thank you for joining us this morning. That will conclude our call.
Speaker Change #109: Thank you for joining us this morning with that, and we'll conclude our call.
Speaker Change #110: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect. We're sorry, your conference is ending now. Please hang on.
