Q1 2026 Schlumberger Ltd Earnings Call

April 24, 2026

Speaker #1: Good morning. My name is Megan, and I will be your conference operator today. I would like to welcome everyone to the first quarter SLB earnings call.

Operator: Good morning. My name is Megan, and I will be your conference operator today, and would like to welcome everyone to the Q1 SLB Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. You may remove yourself from the queue by pressing star two. As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Speaker #1: At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Speaker #1: You may remove yourself from the queue by pressing star 2. As a reminder, this call is being recorded. I will now turn the call over to James R.

Speaker #1: McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Speaker #2: Thank you, Megan. Good morning, and welcome to the SLB first quarter 2026 earnings conference call. Today's call is being hosted from Houston, following our board meeting held earlier this week in Midland, Texas.

James R. McDonald: Thank you, Megan. Good morning and welcome to the SLB Q1 2026 Earnings Conference Call. Today's call is being hosted from Houston, following our board meeting held earlier this week in Midland, Texas. Joining us on the call are Olivier Le Peuch, Chief Executive Officer, and Stéphane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our first quarter earnings press release, which is on our website.

Speaker #2: Joining us on the call are Olivier Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements will be making today are forward-looking.

Speaker #2: These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Speaker #2: Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our first quarter earnings press release, which is on our website.

Speaker #2: With that, I will turn the call over to Olivier.

James R. McDonald: With that, I will turn the call over to Olivier.

Speaker #3: Thank you, James. Ladies and gentlemen, thank you for joining us. Before we begin, I would like to acknowledge our people, customers, and partners in the Middle East as they navigate this challenging and uncertain time.

Olivier Le Peuch: Thank you, James. Ladies and gentlemen, thank you for joining us. Before we begin, I would like to acknowledge our people, customers, and partners in the Middle East as they navigate this challenging and uncertain time. Our strong presence in the region dates back more than 85 years, and I'm proud of the resilience and unity demonstrated by our people as they work in lockstep for customers to safeguard our teams and assets while preparing for an eventual resumption of operations. I want to commend the entire SLB team for their continued care, commitment, and support for one another and for our customers. Turning to today's call, I will start with our Q1 performance, followed by an update on the evolving situation in the Middle East and our outlook in the mid- to long-term.

Speaker #3: Our strong presence in the region dates back more than 85 years, and I'm proud of the resilience and unity demonstrated by our people as they work in lockstep for customers to safeguard our teams and assets.

Speaker #3: While preparing for an eventual resumption of operations, I want to commend the entire SLB team for their continued care, commitment, and support for one another and for our customers.

Speaker #3: Turning to today's call, I will start with our first quarter performance, followed by an update on the evolving situation in the Middle East and our outlook in the mid to long term.

Speaker #3: I will then cover our strategic initiatives, including sharpening digital and data centers, and provide our thoughts for the second quarter. Stephane will then take you through the financials, and we will open the line for your questions.

Olivier Le Peuch: I will then cover our strategic initiatives, including ShopNEX, digital, and data centers, and provide our thoughts for Q2. Stéphane will then take you through the financials, and we'll open the line for your questions. Let's begin. It was a challenging start of the year, marked by severe disruption in the Middle East that impacted our Q1 with revenue and earnings. At the onset of the conflict, customer decisions to safeguard personnel and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shutdowns. The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations, and in Iraq due to security conditions.

Olivier Le Peuch: I will then cover our strategic initiatives, including ShopNex, digital, and data centers, and provide our thoughts for Q2. Stéphane will then take you through the financials, and we'll open the line for your questions. Let's begin. It was a challenging start of the year, marked by severe disruption in the Middle East that impacted our Q1 with revenue and earnings. At the onset of the conflict, customer decisions to safeguard personnel and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shutdowns. The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations, and in Iraq due to security conditions.

Speaker #3: Let's begin. It was a challenging start to the year, marked by severe disruption in the Middle East that impacted our first quarter with revenue and earnings.

Speaker #3: At the onset of the conflict, customer decisions to safeguard personal and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shutdowns.

Speaker #3: The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations. And in Iraq, due to the security conditions.

Speaker #3: We also experienced a more gradual impact from offshoring shutdowns in other countries in the region, driven by a combination of security concerns and export capacity disruptions.

Olivier Le Peuch: We also experienced a more gradual impact from offshore rig shutdowns in other countries in the region, driven by a combination of security concerns and export capacity disruptions. In addition to the situation in the Middle East, unfavorable activity mix and higher costs further weighed on the quarter, most notably in OneSubsea. Looking across the divisions, Production Systems and Digital grew year on year, while Reservoir Performance and Well Construction declined, mostly due to the impact of the conflict. Production Systems year on year revenue increased 23% due to the acquisition of ChampionX, which continued to deliver accretive growth. Additionally, we're on track to achieve our synergies target. On a pro forma basis, ChampionX also grew year on year, demonstrating the increasing demand in the production market. Turning to Digital, revenue increased 9% year on year, driven by strong uptake in digital operations.

Speaker #3: In addition to the situation in the Middle East, unfavorable activity mix and higher costs further weighed on the quarter, most notably in OneSubsea.

Speaker #3: Looking across the divisions, production system and digital grew year on year while reserve performance and well construction declined mostly due to the impact of the conflict.

Speaker #3: Production Systems' year-on-year revenue increased 23% due to the acquisition of Sharpenings, which continued to deliver accretive growth. Additionally, we're on track to achieve our synergy target.

Speaker #3: On a pro forma basis, sharpenings also grew year on year, demonstrating the increasing demand in the production market. Turning to digital, revenue increased 9% year on year, driven by strong uptake in digital operations.

Speaker #3: Of note, automated footage drilled increased by 145% year on year, as customers continued to adopt digital and AI-powered solutions to boost operational performance and efficiency.

Olivier Le Peuch: Of note, automated footage drilled increased by 145% year on year as customers continue to adopt digital and AI-powered solutions to boost operational performance and efficiency. Also, data center solutions remains a bright spot, with 45% growth year on year. The momentum in this area continues, as you saw with our recent announcement to serve as the modular design partner for NVIDIA DGX AI factories. With our growing backlog, we remain on track to exit the year at $1 billion run rate and expect the growth rate to accelerate in 2027. Overall, despite the challenges of the quarter, I'm pleased that the strategic decisions and portfolio actions that we are taking in digital, data center solutions, and production recovery are delivering results.

Speaker #3: Also, data center solutions remained a bright spot. With 45% growth year on year, the momentum in this area continues, as you saw with our recent announcement to serve as the modular design partner for NVIDIA DSX AI factories.

Speaker #3: With our growing backlog, we remain on track to exit the year at a $1 billion run rate and expect growth to accelerate in 2027.

Speaker #3: Overall, despite the challenges of the quarter, I'm pleased that the strategic decisions and portfolio actions that we are taking in digital, data center solutions, and production recovery are delivering results.

Speaker #3: I would like to express a big thank you to our teams in the Middle East and across the world who continue to deliver each day for our customers in this very dynamic environment.

Olivier Le Peuch: I would like to express a big thank you to our teams in the Middle East and across the world who continue to deliver each day for our customers in this very dynamic environment. Now let me turn to how we expect the market to evolve as the conflict in the Middle East is resolved. Firstly, we anticipate that oil prices will settle at levels above the pre-conflict baseline. This reflects the new balance of liquid supply and demand, which has been significantly altered by more than 500 million barrels of lost production impact thus far. In this environment, energy security will remain at the forefront.

Speaker #3: Now, let me turn to how we expect the market to evolve as the conflict in the Middle East is resolved. Firstly, we anticipate that oil prices will settle at levels above the pre-conflict baseline.

Speaker #3: This reflects the new balance of liquid supply and demand, which has been significantly altered by more than 500 million barrels of lost production impacted thus far.

Speaker #3: In this environment, energy security will remain at the forefront. We expect many countries to accelerate efforts to diversify supply, strengthen domestic resource development, and rebuild strategic and commercial inventories that have been drawn down during the conflict.

Olivier Le Peuch: We expect many countries to accelerate efforts to diversify supply, strengthen domestic resource development, and rebuild strategic and commercial inventories that have been drawn down during the conflict. In short, the fragility of the global energy complex we are witnessing today demonstrates the strategic importance and long-term value of oil and gas. Together, these dynamics are expected to support a constructive macro environment for upstream investment over the coming years. In the near term, activity will be led by efforts to restore production capacity across the Middle East for both oil and gas. While some countries executed orderly shut-ins and should be able to resume production within days or weeks, other areas, particularly where disruptions were more abrupt, may require a more gradual ramp-up, including additional well intervention.

Speaker #3: In short, the fragility of the global energy complex we are witnessing today demonstrates the strategic importance and long-term value of oil and gas. Together, these dynamics are expected to support a constructive macro-environment for upstream investment over the coming years.

Speaker #3: In the near term, activity would be led by efforts to restore production capacity across the Middle East for both oil and gas. While some countries executed orderly shutdowns and should be able to resume production within days or weeks, other areas, particularly where disruptions were more abrupt, may require more gradual ramp-up, including additional waiting temperature.

Speaker #3: As a result, while the near-term recovery would be gradual and differ across countries, we see an upside in the outlook, buying demand restriction from the prolonged conflict.

Olivier Le Peuch: As a result, while the near-term recovery will be gradual and differ across countries, we see an upside in the outlook, barring demand destruction from a prolonged conflict. We are committed and ready to support our customers across the region. Beyond the region, we expect a broad-based response across both short- and long-cycle investments. Short-cycle activity is likely to strengthen first, particularly North America and parts of Latin America, where operators can respond quickly to higher prices. In addition, well intervention activities that can yield additional production will get a natural boost across oil basins. At the same time, we expect renewed momentum in long-cycle developments, especially in offshore and deepwater markets, as customers look to secure a durable, large-scale source of supply. This is also likely to improve certainty of offshore FID approvals while also supporting increased exploration activity.

Speaker #3: We are committed and ready to support our customers across the region. Beyond the region, we expect a broad-based response across both short- and long-cycle investments.

Speaker #3: Short-cycle activity is likely to strengthen first, particularly in North American parts of Latin America, where operators can respond quickly to higher prices. In addition, when international activities that can yield additional production, we'll get a natural boost across oil basins.

Speaker #3: At the same time, we expect renewed momentum in long-cycle developments, especially in offshore and deepwater markets, as customers look to secure durable, large-scale sources of supply.

Speaker #3: This is also likely to improve certainty of offshore FID approvals while also supporting increased exploration activity. As you can read in third-party reports, the FID pipeline in 2026 is strengthening and directionally adding over $100 billion total investment approval visibly ahead of the last two years, and with another step up expected in 2027 with deep water resources getting a large portion of this investment.

Olivier Le Peuch: As we can read in third-party reports, the FID pipeline in 2026 is strengthening and directionally adding over $100 billion total investment approval visibly ahead of the last two years, and with another step-up expected in 2027 with deepwater resources getting a large portion of this investment. Regionally, this presents opportunities in Africa, Asia, and Latin America. Africa represents one of the most compelling long-term opportunities, with a significant base of underdeveloped oil and gas resources. We expect portfolio allocation to shift more favorably towards this region over time. Asia will continue to prioritize access to gas, both onshore and offshore, as it works to diversify supply through development of national resources. Across Latin America, from Guyana to Brazil to Suriname, we see continued strength in deepwater developments, complemented by short-cycle growth in unconventional in Argentina.

Speaker #3: Regionally, this presents opportunity in Africa, Asia, and Latin America. Africa represents one of the most compelling long-term opportunities, with a significant base of underdeveloped oil and gas resources.

Speaker #3: We expect portfolio allocation to shift more favorably towards this region over time. Asia will continue to prioritize access to gas, both onshore and offshore, as it works to diversify supply and develop national resources.

Speaker #3: And across Latin America, from Guyana to Brazil to Suriname, we see continued strength in depot developments, complemented by short-cycle growth in non-conventional in Argentina.

Speaker #3: Separately, Venezuela continues to represent an exciting growth opportunity where we can expand on our existing operation in-country. To conclude, in the context of energy security and the balancing of supply and demand, we see three primary drivers of increased investment over the coming years.

Olivier Le Peuch: Separately, Venezuela continues to represent an exciting growth opportunity where we can expand on our existing operations in country. To conclude, in the context of energy security and the rebalancing of supply and demand, we see three primary drivers of increased investment over the coming years. First, the replenishment of depleted commercial inventories and strategic reserves. Second, the diversification of supply, including greater redundancy in sourcing, and third, increased emphasis on developing local resources to enhance long-term resilience. Our core business will benefit from these dynamics, supporting a positive outlook for SLB into 2027 and 2028. Let me now describe the additional strategic growth levers for SLB. Production recovery, digital, and data centers. Starting with production recovery. This is becoming increasingly critical as the industry faces structural challenges in replacing reserves and sustaining production from existing assets.

Speaker #3: First, the replenishment of depleted commercial inventories and strategic reserves. Second, the diversification of supply, including greater redundancy in sourcing. And third, increases in phases on developing local resources to enhance long-term resilience.

Speaker #3: Our core business would benefit from these dynamics, supporting a positive outlook for SLB into 2027 and 2028. Let me now describe the additional strategic growth levers for SLB.

Speaker #3: Production recovery, digital, and data centers. Starting with production recovery, this is becoming increasingly critical as the industry faces structural challenges in replacing reserves and sustaining production from existing assets.

Speaker #3: In this context, technology that enhances recovery and extends the life of natural fields is no longer optional. It is essential. Against the macro we just discussed, this is a defining moment for production recovery.

Olivier Le Peuch: In this context, technologies that enhance recovery and extend the life of natural fields are no longer optional. They are essential. Against the macro we just discussed, this is a defining moment for production recovery. These technologies have the potential to shape the next stage of recovery in unconventional assets and to create a step change in production enhancements in every basin and resource play, from deepwater to conventional and from gas to oil. With ChampionX, we are uniquely positioned to lead in this space by combining production chemistry, artificial lift, digital capability, and subsurface domain expertise. We're helping customers unlock additional barrels from existing reservoirs in a capital-efficient manner. This is particularly relevant as operators look to maximize recovery, improve returns, and bring incremental supply to market in support of energy security.

Speaker #3: These technologies have the potential to shape the next stage of recovery in unconventional assets and create a step change in production enhancements in every basin and resource play, from deepwater to conventional.

Speaker #3: And from gas to oil. With Champagnex, we are uniquely positioned to lead in this space by combining production chemistry, offshore lift, digital capability, and subsurface domain expertise, while helping customers unlock additional barrels from existing reservoirs in a capital-efficient manner.

Speaker #3: This is particularly relevant as operators look to maximize recovery, improve returns, and bring incremental supply to market in support of energy security. We hosted our first production recovery summit in Houston a couple of weeks ago.

Olivier Le Peuch: We hosted our first production recovery summit in Houston a couple of weeks ago, and we are very pleased with the engagement from our customers from every region across the world. They increasingly recognize the potential of this domain and the opportunities present to unlock growth for the industry. Turning to Digital. This business continues to build strong momentum and is a key driver of both differentiation and long-term value creation for SLB. While still a relatively small portion of our revenue today, its impact extends well beyond its size. Our approach is grounded in domain expertise, where AI, data, and software are integrated into our platform and workflow to deliver measurable performance outcomes. This is not about standalone tools. It is about embedding intelligence across the full life cycle of reserve development and production. Our teams continue to make exciting developments, particularly in agentic AI.

Speaker #3: And we were very pleased with the engagement for our customers from every region across the world. The increasing recognition of the potential of this domain and the opportunities present to unlock growth for the industry.

Speaker #3: Turning to digital, this business continues to build strong momentum and is a key driver of both differentiation and long-term value creation for SLB. While still a relatively small portion of our revenue today, its impact extends well beyond its size.

Speaker #3: Our approach is grounded in domain expertise, where AI, data, and software are integrated into our platform and workflow to deliver measurable performance outcomes. This is not about standalone tools.

Speaker #3: It is about embedding intelligence across the full lifecycle of reserve development and production. Our teams continue to make exciting developments, particularly in agentic AI.

Speaker #3: And as the number of use cases increases, the value of this technology is proven in the field. We anticipate increased adoption. Over time, we expect digital to become an increasingly important lever for growth, both as a standalone business and as an enabler across our broader portfolio.

Olivier Le Peuch: As the number of use cases increase, the value of these technologies are proven in the field, we anticipate increased adoption. Over time, we expect digital to become an increasingly important lever for growth, both as a standalone business and as an enabler across our broader portfolio. We're excited to share more about this business during our digital investor day later in June. Finally, data centers represent a new and rapidly expanding opportunity for SLB. Building on our core strengths in engineering, manufacturing, and project execution, we're extending our scope of modular infrastructure solutions to support the accelerating demand for AI and digital capacity. In less than two years, we have established a right to play in this industry, proven by our manufacturing know-how and supply chain capabilities.

Speaker #3: And we're excited to share more about this business during our digital investor day later in June. Finally, data centers represent a new and rapidly expanding opportunity for SLB.

Speaker #3: Building on our core strengths in engineering, manufacturing, and project execution, we're extending our scope of modular infrastructure solutions to support the accelerating demand for AI and digital capacity.

Speaker #3: In less than two years, we have established our right to play in this industry, proven by our manufacturing know-how and supply chain capabilities. We are building on this expertise to support design engineering and performance optimization of the data center build-out.

Olivier Le Peuch: We are building on this expertise to support design engineering and performance optimization of the data center build-out, and we are currently scaling the business through expanded capacity, deepening partnerships, and selective international growth. While still at an early stage, this business is already demonstrating characteristics we're looking for: capitalized growth, strong demand visibility, and a clear path to becoming a meaningful contributor to earnings over time. Looking ahead, we see additional upside through opportunities such as thermal management, decarbonized power, and serving as a system integrator. These are areas where our capability can further differentiate offering and expand our addressable market. We'll also continue to assess potential opportunities to accelerate this trajectory through targeted M&A. Taken together, these three areas, production recovery, Digital, and data center solutions, reflect how we are evolving our portfolio toward higher return, technology-driven, and less cyclical growth.

Speaker #3: And we are currently scaling the business through expanded capacity, deepening partnerships, and selective international growth. While still at an early stage, this business is already demonstrating characteristics we're looking for.

Speaker #3: Capitalized growth, strong demand visibility, and a clear path to becoming a meaningful contributor to earnings over time. Looking ahead, we see additional upside through opportunities such as thermal management, decarbonized power, and serving as a system integrator.

Speaker #3: These are areas where capability can further differentiate offerings and expand our addressable markets. We're also continuing to assess potential opportunities to accelerate this trajectory through targeted M&A.

Speaker #3: Taken together, these three areas—production recovery, digital, and data center solutions—reflect how we are evolving our portfolio toward higher returns, technology-driven, and less cyclical growth.

Speaker #3: They are complementary, scalable, and aligned with the long-term trends shaping both the energy system and digital infrastructure. Let me now share our view on how the second quarter may unfold.

Olivier Le Peuch: They are complementary, scalable, and aligned with the long-term trends shaping both energy system and digital infrastructure. Let me now share our view on how Q2 may unfold. First, it is uncertain how long geopolitical disruption will last and how the recovery in the Middle East will unfold. At the same time, we are facing higher procurement and logistics costs driven by the conflict. As a result, it is challenging to provide precise guidance for this quarter. However, there is a scenario where a portion of disruption in the region persists through the middle of Q2 and then begin to gradually ease. Under this assumption, we estimate that the sequential revenue and earnings decline in the Middle East will be fully offset by all other international markets combined, where we anticipate mid to high single-digit revenue growth with improved margins.

Speaker #3: First, it is uncertain how long geopolitical disruption will last and how the recovery in the Middle East will unfold. At the same time, we are facing higher procurement and logistics costs driven by the conflict.

Speaker #3: As a result, it is challenging to provide precise guidance for this quarter. However, there is a scenario where partial disruption in the region persists through the middle of the second quarter and then begins to gradually ease.

Speaker #3: Under this assumption, we estimate that the sequence of revenue and earnings decline in the Middle East would be fully offset by all of our international markets combined, where we anticipate mid- to high-single-digit revenue growth with improved margins.

Speaker #3: Meanwhile, North America revenue is expected to be flat sequentially. By division, under the Middle East scenario just highlighted, Digital and Production Systems will grow globally, while Reservoir Performance and Well Construction will decline globally.

Olivier Le Peuch: Meanwhile, North America revenue is expected to be flat sequentially. By division, under the Middle East scenario I just highlighted, Digital and Production Systems will grow globally, while Reservoir Performance and Well Construction will decline globally. I will now turn the call over to Stéphane to discuss our financial results in more detail.

Speaker #3: I will now turn the call over to Stephane to discuss our financial results in more detail.

Speaker #2: Thank you, Olivier. And good morning, ladies and gentlemen. First quarter earnings per share, excluding charges and credits, was $0.52. This represents a decrease of $0.20 when compared to the first quarter of last year.

Stéphane Biguet: Thank you, Olivier, and good morning, ladies and gentlemen. Q1 earnings per share, excluding charges and credits, was $0.52. This represents a decrease of $0.20 when compared to Q1 of last year. During the quarter, we recorded $0.02 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our Q1 global revenue of $8.7 billion increased 3% year-on-year. Excluding the impact of the ChampionX acquisition in Q1 last year, revenue declined by $607 million or 7% year-on-year. When compared to Q4 of last year, revenue fell by just over $1 billion or 10.5%. This decline was approximately 200 basis points or about $200 million higher than we expected at the time of our last earnings call in January.

Speaker #2: During the quarter, we recorded $0.02 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our first quarter global revenue of $8.7 billion increased 3% year on year.

Speaker #2: Excluding the impact of the ChampionX acquisition in the third quarter last year, revenue declined by $607 million, or 7% year on year. When compared to the fourth quarter of last year, revenue fell by just over $1 billion.

Speaker #2: Or 10.5%. This decline was approximately 200 basis points, or about $200 million, higher than we expected at the time of our last earnings call in January.

Speaker #2: This was primarily due to the impact of the conflict in the Middle East, as we experienced operational disruptions throughout the month of March. Company-wide adjusted EBITDA margin for the first quarter was 20.3%.

Stéphane Biguet: This was primarily due to the impact of the conflict in the Middle East as we experienced operational disruptions throughout the month of March. Company-wide adjusted EBITDA margin for Q1 was 20.3%, down 346 basis points year-on-year. Margins were negatively affected by high decrementals on the Middle East revenue impact. We did not make any material adjustment to our cost base during the quarter as our immediate focus was the protection of our people and preserving operational capacity for the expected future rebound in activity. We also incurred additional logistics and materials costs as a result of supply chain disruptions due to the conflict. Beyond the effect of the Middle East conflict, Q1 margins were impacted year-on-year by increased tariffs, project mix, and higher costs in OneSubsea, as well as pricing headwinds in select markets, particularly in Well Construction.

Speaker #2: Down 346 basis points year on year. Margins were negatively affected by high decrementals on the Middle East revenue impact. We did not make any material adjustment to our cost base during the quarter, as our immediate focus was the protection of our people and preserving operational capacity for the expected future rebound in activity.

Speaker #2: We also incurred additional logistics and materials costs as a result of supply chain disruptions due to the conflict. Beyond the effect of the Middle East conflict, first quarter margins were impacted year on year by increased tariffs, project mix, and higher costs in one subsidiary, as well as pricing headwinds in select markets, particularly in well construction.

Speaker #2: Let me now go through the first quarter results for each division. First quarter digital revenue of $640 million increased 9% year on year, primarily driven by 87% growth in digital operations.

Stéphane Biguet: Let me now go through the Q1 results for each division. Q1 Digital revenue of $640 million increased 9% year-on-year, primarily driven by 87% growth in digital operations. This was supported by increased digital services adoption and new technology introduction, as well as the acquisition of ChampionX. Notably, annual recurring revenue for the division stood at $1.02 billion at the end of the Q1, representing year-on-year growth of 15%. Digital pre-tax operating margins of 20.9% was essentially flat year-on-year. However, adjusted EBITDA margin of 26.1% declined 473 basis points due to lower amortization relating to exploration data as a result of the mix of surveys sold during the quarter. As you know, digital margins are historically lowest in the Q1 due to seasonality, and steadily increase throughout the year, reaching their highest level in the Q4, as evidenced by last quarter's results.

Speaker #2: This was supported by increased digital services adoption and new technology introduction, as well as the acquisition of ChampionX. Notably, annual recurring revenue for the division stood at $1.02 billion at the end of the first quarter, representing year-on-year growth of 15%.

Speaker #2: Digital pre-tax operating margins of 20.9% were essentially flat year on year. However, adjusted EBITDA margin of 26.1% declined 473 basis points due to lower amortization relating to exploration data as a result of the mix of surveys sold during the quarter.

Speaker #2: As you know, digital margins are historically lowest in the first quarter due to seasonality, and steadily increase throughout the year, reaching their highest level in the fourth quarter, as evidenced by last quarter's results.

Speaker #2: This trend will continue, and consequently, we expect to achieve full-year digital adjusted EBITDA margin that is at least equivalent to last year's level of 35%.

Stéphane Biguet: This trend will continue, and consequently, we expect to achieve full year Digital & Integration adjusted EBITDA margin that is at least equivalent to last year's level of 35%. Reservoir Performance revenue of $1.6 billion decreased 6% year-on-year, while pre-tax operating margin of 16.1% decreased 47 basis points. These decreases were due to lower stimulation and intervention activity, primarily as a result of the disruptions in the Middle East. While Well Construction revenue of $2.8 billion decreased 6% year-on-year, primarily from lower activity due to the disruptions in the Middle East, partially offset by higher offshore drilling activity in Europe and Africa, Latin America, and North America. Pre-tax operating margins of 15.2% contracted 463 basis points year-on-year due to lower profitability on account of the Middle East conflict, as well as pricing headwinds in select markets. Finally, Production Systems revenue of $3.5 billion increased 23% year-on-year.

Speaker #2: Reserve performance revenue of $1.6 billion decreased 6% year on year, while pre-tax operating margin of 16.1% decreased 47 basis points. These decreases were due to lower stimulation and intervention activity, primarily as a result of the disruptions in the Middle East.

Speaker #2: Well-construction revenue of $2.8 billion decreased 6% year-on-year, primarily from lower activity due to the disruptions in the Middle East, partially offset by higher offshore drilling activity in Europe and Africa, Latin America, and North America.

Speaker #2: Pre-tax operating margins of 15.2% contracted 463 basis points year on year, due to lower profitability on account of the Middle East conflict, as well as pricing headwinds in select markets.

Speaker #2: Finally, production systems revenue of $3.5 billion increased 23% year on year. Excluding the impact of the ChampionX acquisition, first quarter revenue decreased 6% year on year.

Stéphane Biguet: Excluding the impact of the ChampionX acquisition, Q1 revenue decreased 6% year-on-year. On a pro forma basis, revenue from the ChampionX production chemicals and artificial lift businesses grew 2% compared to Q1 2025. This strong ChampionX performance was offset by the impact of the Middle East conflict, lower OneSubsea revenue, and, independent of the conflict, lower product deliveries in Saudi Arabia. Production Systems pre-tax operating margins of 14.2% declined 240 basis points year-on-year due to lower profitability in surface production systems, completions, and OneSubsea. As it specifically relates to OneSubsea, pre-tax margin in Q1 was 14.4% compared to 18.1% in Q1 2025. Margins were affected by the concurrent wind down of several large programs and the initiation of new projects with high start-up costs. OneSubsea margins are expected to increase over the remainder of the year.

Speaker #2: On a pro forma basis, revenue from the ChampionX production chemicals and artificial lift businesses grew 2% compared to the first quarter of 2025. This strong ChampionX performance was offset by the impact of the Middle East conflict, lower OneSubsea revenue, and, independent of the conflict, lower product deliveries in Saudi Arabia.

Speaker #2: Production Systems pre-tax operating margins of 14.2% declined 240 basis points year on year, due to lower profitability in Surface Production Systems, Completions, and one subsea.

Speaker #2: As it specifically relates to one subsidy, pre-tax margin in the first quarter was 14.4%, compared to 18.1% in the first quarter of 2025. Margins were affected by the concurrent wind-down of several large programs and the initiation of new projects with high startup costs.

Speaker #2: One subsidiary's margins are expected to increase over the remainder of the year. ChampionX partially offset those effects as we continued to make progress with our synergy realization.

Stéphane Biguet: ChampionX partially offset those effects as we continue to make progress with our synergy realization. As a result, ChampionX margins this quarter were higher than in both Q4 and Q1 of last year and were accretive to both Production Systems and total SLB's margins. Now turning to our liquidity. Our net debt increased $797 million sequentially to $8.2 billion. During the quarter, we generated $487 million of cash flow from operations. Free cash flow was slightly negative at -$23 million on account of the payment of annual employee incentives and the seasonal increase in working capital that we typically experience in Q1. This was compounded this year by delayed collections in the Middle East stemming from the conflict. We expect our cash flow generation to follow our historical pattern, with free cash flow gradually increasing throughout the year, with the majority coming in H2.

Speaker #2: As a result, ChampionX margins this quarter were higher than in both Q4 and Q1 of last year, and were accretive to both Production Systems and total SLB's margins.

Speaker #2: Now turning to our liquidity. Our net debt increased $797 million sequentially to $8.2 billion. During the quarter, we generated $487 million of cash flow from operations. Free cash flow was slightly negative at $23 million, on account of the payment of annual employee incentives and the seasonal increase in working capital that we typically experience in the first quarter.

Speaker #2: This was compounded this year by delayed collections in the Middle East stemming from the conflict. We expect our cash flow generation to follow our historical pattern.

Speaker #2: With free cash flow gradually increasing throughout the year, with the majority coming in the second half. Capital investments, inclusive of CapEx and investments in APS projects and exploration data, were $510 million in the first quarter.

Stéphane Biguet: Capital investments inclusive of CapEx and investments in ATS projects and exploration data were $510 million in Q1. For the full year, we are still expecting capital investments to be approximately $2.5 billion. During the quarter, we repurchased $451 million of our stock, and we still expect to repurchase a minimum of $2.4 million for the full year, in line with 2025. As a reminder, we are targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. Before I wrap up, let me come back to our Q2 outlook, and more specifically to the Middle East. I would first like to clarify that the Middle East represented approximately 70% of our Middle East and Asia business in Q1.

Speaker #2: For the full year, we are still expecting capital investments to be approximately $2.5 billion. During the quarter, we repurchased $451 million of our stock.

Speaker #2: And we still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. As a reminder, we are targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks.

Speaker #2: Before I wrap up, let me come back to our second quarter outlook, and more specifically to the Middle East. I would first like to clarify that the Middle East represented approximately 70% of our Middle East and Asia business in the first quarter.

Speaker #2: Under the specific scenario that Olivier highlighted earlier, where operational disruption in the region continues until the middle of the quarter and then starts to alleviate, we estimate that it would negatively impact our second quarter earnings per share by an incremental $0.06 to $0.08 when compared to the first quarter.

Stéphane Biguet: Under the specific scenario that Olivier highlighted earlier, where operational disruption in the region continues until the middle of the quarter and then starts to alleviate, we estimate that it would negatively impact our Q2 earnings per share by an incremental -$0.06 to -$0.08 when compared to the Q1. This is the result of lost revenue as well as higher procurement and logistics costs associated with the conflict.

Speaker #2: This is the result of lost revenue, as well as higher procurement and logistics costs, associated with the conflict. I will now turn the conference call back to Olivier.

Olivier Le Peuch: I will now turn the conference call back to Olivier. Thank you, Stéphane. I believe we are now ready for taking your questions.

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

Speaker #1: Thank you, Stephane. I believe we are now ready to take your questions.

Olivier Le Peuch: Thank you, Stéphane. I believe we are now ready for taking your questions.

Speaker #3: We will now begin the Q&A session. If you would like to ask a question, please press star, followed by the number one on your telephone keypad.

Operator: We will now begin the Q&A session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of David Anderson with Barclays. Your line is open.

Speaker #3: Your first question comes from a line of Dave Anderson with Barclays. Your line is open.

Speaker #1: Hi. Good morning, Olivier. How are you?

David Anderson: Hi. Good morning, Olivier. How are you?

Olivier Le Peuch: Morning, Dave. Morning.

Speaker #4: Good morning. Morning, Dave. Good morning.

Speaker #1: So, looking past some of the near-term disruptions, I was wondering if you could expand a bit more on your views on how the investment cycle has changed?

David Anderson: Looking past some of the near-term disruptions, I was wondering if you could expand a bit more on your views on how the investment cycle has changed. You mentioned a broad-based recovery in 2027 and 2028. Is that predicated on oil prices being structurally higher now? And can you also comment on kind of which end markets that you see the most upside in as you sit here today?

Speaker #1: You mentioned a broad-based recovery in 2007 and 2008. Is that predicated on oil prices being structurally higher now? And can you also comment on which end markets you see the most upside in, as you sit here today?

Speaker #4: I think there are multiple reasons why I think we believe that the industry will benefit from an uptick in investment. First, indeed, I think we are projecting that the commodity price will be higher after this than they were before.

Olivier Le Peuch: I think there are multiple reasons why I think really that the industry will benefit from an uptick in investment first. Indeed, I think we are projecting that the commodity price will be higher after this than they were before. More importantly, I think the significant impairment of the supply-demand balance, I think, has created the need for replenishing these inventories, replenishing the structural reserve, and also have heightened the risk of energy security. Hence, as a reason, as a consequence of this, there will be multiple factors that will play into an increased investment outlook. Firstly, to replenish the inventory and structural reserve will supplement the natural demands in oil and gas.

Speaker #4: But more importantly, I think the significant impairment of the supply-demand balance, I think, has created a need for replenishing this inventory, replenishing the structural reserve, and also has heightened the risk of energy security.

Speaker #4: And hence, as a reason, as a consequence of this, there will be multiple factors that will play into an increased investment outlook. Firstly, to replenish the inventory, and the structural reserve will supplement the natural demand in oil and gas.

Speaker #4: Secondly, energy security will draw national decisions to reinvest into local resources, and to diversify the source of supply, including creating some redundancy if and as necessary, and clearly maintaining in the future higher inventory stock spares to prevent future shocks of supply.

Olivier Le Peuch: Secondly, the energy security will draw national decision to reinvest into local resource and to diversify the source of supply, including creating some redundancy, if and as necessary, and clearly maintaining, in the future, higher inventory stock spare to prevent future shock of supply. I believe that these are aligning with trends that are already in play, that we're already indicating that offshore was set for rebound as we exit 2026 into 2027. We believe that this combination will both affect the short cycle impact in a shorter time and the long cycle at scale into 2027 and 2028. We are set, in our opinion, for an uptick into the cycle strength going forward.

Speaker #4: So, I believe that these are aligning with trends that are already in play, that were already indicating that offshore was set for a rebound as we exit 2026 into 2027.

Speaker #4: So I believe that this combination will both affect the short-cycle impact in a shorter time, and the long-cycle at scale into 2027 and 2028.

Speaker #4: So, we are set in our opinion for an uptick into the cycle strength going forward.

Speaker #1: So Olivier, you had talked about deepwater looking particularly attractive in that outlook. Obviously, that's part of the long-cycle story there. Can you talk about where you see the most upside in terms of SLB's business?

David Anderson: Olivier, you had talked about deepwater looking particularly attractive in that outlook. Obviously, that's part of the long cycle story there. Can you talk about where you see the most upside in terms of SLB business? Is it more on the Well Construction and reservoir analysis side? Could OneSubsea be a big driver? Just trying to think about who's the biggest of your business that would be most impacted.

Speaker #1: Is it more on the well construction and reservoir analysis side? Could OneSubsea be a big driver? Just trying to think about it through the bigger picture.

Speaker #1: Of your business, that would be most impacted.

Speaker #4: So first, I think we are confident that offshore, I think, has been very attractive economically now. And I think where the large resources are set for operator to unlock and develop going forward, I think, is the reason why we are seeing this uptick into the FID pipeline and the prediction by many reports saying that this will, at scale, exceed what we have seen in the last couple of years.

Olivier Le Peuch: First, I think we are confident that offshore, I think, is being very attractive economically now. I think where the large resources are set for operators to unlock and develop going forward, I think is the reason why we're seeing this uptick into the FID pipeline and the predictions by many reports saying that this will, at scale, exceed what we have seen in the last couple of years. The macro is very positive for deepwater, and this is true, of course. I want to be very clear, across Africa, Asia, East Asia, and Americas for different reasons. Africa, as I stated in my remarks, I think is set to certainly be one of the most beneficial for this. It has vast, still undeveloped resources, both oil and gas, on the west and on the east, and clearly set to be developed.

Speaker #4: So the macro asset is very positive for deepwater. And this is true across—I would be very clear—across Africa, Asia, East Asia, and the Americas, for different reasons.

Speaker #4: Africa, as I stated in my remarks, I think is set to be one of the most beneficiary for this—it's the last vast undeveloped, still-resource, both oil and gas, on the west and on the east.

Speaker #4: And clearly, set to be developed. And this is where we see potential acceleration of FID in the coming quarters. Americas is very strong, from Brazil to Gulf of America.

Olivier Le Peuch: This is where we see potential acceleration of the funding in the coming quarters. Americas is very strong from Brazil to Gulf of Mexico, and I believe this will continue to be a play, particularly in Central America, that we see support in Asia because of gas. We see a double down on the development of gas, deepwater resource, and we have seen a lot of development happening these days in Indonesia. We have seen some of the announcements we have made earlier today in the earnings press release, and with Subsea being awarded in Malaysia and in South China Sea, clearly got award. I believe that core at large will benefit from this rebound. We have strong market position across the different division. Yes, indeed, Subsea, we expect the OneSubsea to benefit at scale.

Speaker #4: And I believe this will continue to play a part in Central America, where we see support. And in Asia, because of gas, we see a doubling down on the development of gas deepwater resources.

Speaker #4: And we have seen a lot of development happening these days in Indonesia. And we have seen some of the announcements we have made earlier today in the earnings press release.

Speaker #4: And with subsea being awarded in Malaysia and in the South China Sea, critical award. So I believe that core at large will benefit from this rebound.

Speaker #4: We have a strong market position across the different divisions. But yes, indeed, Subsea—we expect OneSubsea to benefit at scale. And as guided historically, previously, I think we expect OneSubsea to benefit and to have higher bookings this year than last year, visibly.

Olivier Le Peuch: As guided historically, previously, I think we expect OneSubsea to benefit to have a higher booking this year and last year visibly, and to then have a growth trajectory in 2026 and into 2027 and 2028 as we see the scale of this offshore cycle developing.

Speaker #4: And to then have a growth trajectory in 2026 and into 2027 and 2028, as we see the scale of this offshore cycle developing.

Operator: Thank you. Your next question comes from the line of James West with Evercore ISI. Your line is open.

Operator: Thank you. Your next question comes from the line of James West with Melius Research. Your line is open.

Speaker #3: Thank you. Your next question comes from the line of James West with Melius Research. Your line is open.

James West: Hey, good morning, Olivier and Stéphane.

Speaker #5: Hey, good morning, Olivier and Stephane.

Olivier Le Peuch: Good morning, James.

James West: Olivier, the Middle East is your backyard. You guys have owned that market for a century or more. You don't leave conflict zones when conflicts happen, and you're always there for the recovery. As you think about the recovery and how it could unfold, I know you made some comments in your prepared remarks about this, but as you talk to the customers, what do they want to do? What do they need you for initially, and how do you think the kind of momentum builds, assuming that the conflict resolves in the timeline that you kind of laid out and others have laid out?

Speaker #4: Good morning, James.

Speaker #5: Olivier, the Middle East is your backyard. You guys have owned that market for a century or more. You don't leave conflict zones. One conflict happens, and you're always there for the recovery.

Speaker #5: As you think about the recovery and how it could unfold—and I know you made some comments in your prepared remarks about this—but as you talk to the customers, what do they want to do?

Speaker #5: What do they need you for initially? And how do you think the kind of momentum builds, assuming that the conflict resolves and the timeline that you kind of laid out—and others have laid out?

Olivier Le Peuch: First, I think to be clear, I think we are working in lockstep for customers every day, every week. We continue to work closely with them to understand as they are contemplating all options for recovery, and I continue to observe the outcome of the discussion and the geopolitical event happening in the background. We stand ready. I think we are more in standby as we speak. Yes, multiple scenarios are being considered. There are some countries where the resumption of operations will be relatively fast and could turn into days and weeks. There are countries where a facility and/or a field have been stopped and shut abruptly, where we'll be needing to intervene on those fields. Hence, it will be an initial phase of assessment, initial phase of intervention before the production can come back to full capacity.

Speaker #4: First, I think to be clear, we are working in lockstep for customers every day. Every week, we continue to work closely with them to understand, as they are contemplating all options for recovery.

Speaker #4: And I continue to observe the outcome of the discussion and the geopolitical event happening in the background. And we stand ready. So I think we are more in standby as we speak.

Speaker #4: But yes, multiple scenarios are being considered. And there are some countries where the resumption of operation will be relatively fast and could turn in two days or weeks.

Speaker #4: And there are countries as facility and/or field have been stopped and shutting abruptly, where it will be needing to intervene on those fields—hence, it will be an initial phase of assessment, an initial phase of intervention, before the production can come back to full capacity.

Olivier Le Peuch: There are countries or zones in the region where security will remain a concern and will delay further the recovery. It's a gradual recovery. Yes, we are working very closely with customers, both to mobilize equipment or resources and also to anticipate the reservoir consequences and the type of services they need to provide as the conflict starts to stabilize and as the customers have the confidence to remobilize. We see long-term clear upside in the region, and we see that some countries will actually use it to catch up and maybe expand their capacity to recover the market share and the production lost during this period.

Speaker #4: And there are countries or regions, or not regions, but zones in the region where security will remain a concern and will delay further the recovery.

Speaker #4: So, it's a gradual recovery. But yes, we are working very closely with customers both to mobilize equipment or resources, and also to anticipate the reservoir consequences and the type of services they need to provide as the conflict starts to be stabilizing, and as the customer has the confidence to remobilize.

Speaker #4: So we see long-term clear upside in the region, and we see that some countries will actually use it to catch up and maybe expand their capacity to recover from the market share and the production loss during this period.

James West: Got it. Okay. Very helpful. Maybe a quick follow-up. Understanding that most energy countries and of course, companies and countries want to diversify supplies now, do you see more of your customers that are Middle East-based, maybe stepping outside of the region? They've already started to do that a little bit, but stepping outside more post-conflict?

Speaker #5: Got it. Okay. Very, very helpful. And then maybe a quick follow-up. Understanding that most energy countries and of course, companies and countries want to diversify supplies, now do you see more of the your customers that are Middle East based maybe stepping outside of the region?

Speaker #5: They've already started to do that a little bit, but are they stepping outside more post-conflict?

Olivier Le Peuch: No, generally, I think operators will continue to diversify their options across the entire world. I think there are plenty of basins that still stand undeveloped. I think I highlighted Africa. I think there's a lot of oil and gas resource that are set to be developed. I think the fiscal terms and the security condition has improved actually in the region and will make it very critical. The Middle East remain a low-cost barrel and low-cost gas country at scale, and hence it will continue to attract investment as well. I think the national resource holder in the region will continue to develop at scale the resource.

Speaker #4: No, I think that generally, operators will continue to diversify the options across the entire world. And I think there are plenty of basins that still stand undeveloped.

Speaker #4: And I think I highlighted the gas resources that are set to be developed. And I think the fiscal terms and the security conditions have improved.

Speaker #4: Actually, in the region, it will make it very critical. But the Middle East remains a low-cost buy and low-cost gas country at scale, and hence, it will continue to attract investment as well.

Speaker #4: And I think the national resource holder in the region will continue to develop at scale the resource. So we see a mix, but I think the beneficiary of this—and I think maybe additional investment will go into Africa, and to Americas offshore, and to Asia deepwater.

Olivier Le Peuch: We see a mix, but I think beneficiary of this, and I think maybe additional investment will go into Africa, into Americas offshore, into Asia deepwater, and into production recovery across all regions, we believe, because this is where the fastest incremental barrel can come from.

Speaker #4: And into production recovery across all regions, we believe, because this is where the fastest incremental buy can come from.

Operator: Thank you. Your next question comes from the line of Stephen Richardson with Evercore ISI. Your line is open.

Speaker #3: Thank you. Your next question comes from the line of Steve Richardson with Evercore ISI. Your line is open.

Stephen Richardson: Good morning.

Olivier Le Peuch: Morning, Steve.

Stephen Richardson: I was wondering if we could talk a little bit about Digital. You made this acquisition with S&P Global. From what we understand, this is a largely US-centric data business and data set. Can you talk about what the longer-term vision is there and be sure to hit on how and if that's an enabler of some of the other things you're doing in the broader business outside of Digital?

Speaker #4: Good morning.

Speaker #5: Morning, Steve.

Speaker #4: I was wondering if we could talk a little bit about digital. You made this acquisition with S&P, and to what we understand, this is a largely US-centric data business.

Speaker #4: And data set. So, can you talk about what the longer-term vision is there, and be sure to hit on how and if that's an enabler of some of the other things you're doing in the broader business outside of digital?

Olivier Le Peuch: Yeah, absolutely. Now, as described in our press release this morning, I think we have come to an agreement with S&P Global Energy to acquire actually their upstream petrotechnical software suite, not their data. This is mostly deployed in North America with independents, and the workflows are quite specific to unconventional markets. This is highly complementary to the offering we have. As we go forward, this will complement our offering in North America, give us support to expand the reach of this petrotechnical workflow solution internationally for the offshore markets. Also will help us to maybe expand and address the next challenge into the unconventional development and recovery and use this new software suite to complement what we have and add science, add domain, and create and unlock new unconventional workflow into the North America. It give us a broader market access.

Speaker #5: Yeah, absolutely. As described in our press release this morning, I think we have come to an agreement with S&P Global Energy to acquire, actually, their upstream petrotechnical software suite—not their data.

Speaker #5: And this is mostly deployed in North America, with independence and with workflows that are quite specific to unconventional markets. So, this is highly complementary to the offering we have.

Speaker #5: And as we go forward, this will complement our offering in North America, give us the opportunity to expand the reach of this petrotechnical workflow solution internationally for the Ivorian markets.

Speaker #5: And also, I will help us to maybe expand and address the next challenge into the uncommercial development and recovery. And use this new software suite to complement what we have, and add the sounds, add domain, and create and unlock new uncommercial workflow into North America.

Olivier Le Peuch: It gives us a tool that is fit for the unconventional market where we're not having the same offering today. This just expands our product suite into the domain. Now, separately, as you may have seen also into the earnings press release announcement, we have entered an agreement to pursue a strategic partnership with S&P Global Energy with AI, giving an opportunity to use the power of Lumi and Tela, including specific domain foundation models that we build using the datasets, the global datasets of S&P Global Energy, so that we together provide our customers with unique insights to AI, applying AI capability, applying our domain and our domain foundation model, our capability on the full datasets of S&P Global Energy. That's unique, and I think that will be very appreciated by customers and benefit the customer greatly going forward.

Speaker #5: So, it gives us a broader market access. It gives us tools that fit for the uncommercial market, where we are not having the same offering today.

Speaker #5: And this just expands our product suite into the domain. Now, separately, as you may have seen also in the earnings press release announcement, we have an agreement to pursue a strategic partnership with S&P Global Energy with AI.

Speaker #5: Given the opportunity to use the power of LUMI and TELA, including specific domain foundation models that we'll build using the data sets—the global data sets of S&P Global Energy—so that we, together, provide our customers with unique insights to AI. Applying AI capability, applying our domain and our domain foundation model, our capability on the full data sets of S&P Global Energy.

Speaker #5: So that's unique, and I think that will be very, very appreciated by customers and benefit the customer greatly going forward.

Stephen Richardson: That's great. I suspect we'll hear much more about that at the analyst day in June. I'm wondering if you could give us a brief update on the data center business, and your outlook there in terms of securing additional customers, your commercial approaches there, and expectations for the balance of the year, relative to what you talked about a quarter ago. Thanks.

Speaker #4: That's great. And I suspect we'll hear much more about that at the analyst day in June. I'm wondering if you could give us a brief update on the data center business.

Speaker #4: And your outlook there in terms of securing additional customers, commercial approaches there, and expectations for the balance of the year relative to what you talked about a quarter ago.

Olivier Le Peuch: Yeah. I think you have seen things continue to progress. I think we continue to reiterate our ambition and our goal that we'll reach or exceed $1 billion run rate as we close this year. Actually, we have made great progress this quarter to secure additional customers that give us further visibility into the demand for our capacity in 2027 and 2028, and as indicated, developing more growth and scaling more than what I've mentioned as an exit rate going forward. You have seen one announcement on NVIDIA that shows they selected us as their design partner for the DGX AI factory. It means a lot.

Speaker #4: Thanks.

Speaker #5: Yeah, I think you have seen, I think we continue to progress. I think we continue to reiterate our ambition and our goal that we will reach or exceed the one beyond our run rate as we close this year.

Speaker #5: And actually, we have made great progress this quarter to secure additional customers. That gave us further visibility into the demand for our capacity in 2027 and 2028.

Speaker #5: And as indicated, developing more growth and scaling more than what I've mentioned as an exit rate going forward. So you have seen one announcement on NVIDIA that shows us as—they selected us as their design partner for the DSX AI Factory.

Olivier Le Peuch: It means that we have been selected amongst others as a partner they believe they can trust to develop this modular infrastructure solution for DGX center, large scale future Vera Rubin solution center that will need to be scaled fast, and we will add a capability to build this site, manufacture this equipment offsite, and bring this modular infrastructure to this NVIDIA customer in the future. That's great. I think you will see additional announcement coming that will show the breadth of our customer reach and the scale of our operation going forward. We are very pleased with progress, and this will continue to grow in 2026 and clearly at scale in 2027.

Speaker #5: It means a lot. It means that we have been selected amongst others. As a partner, they believe they can trust us to develop this modular infrastructure solution for the DSX Center, the large-scale, future Rubin Vera Solution Center that will need to be scaled fast.

Speaker #5: And we will add our capability to build this site and manufacture this equipment off-site, and bring this modular infrastructure to this NVIDIA customer in the future.

Speaker #5: So that's great. And I think you will see additional announcements coming that will show the breadth of our customer reach and the scale of our operation going forward.

Speaker #5: So, we are very pleased with the progress. And this will continue to grow in '26, and clearly, at scale in '27.

Operator: Thank you. Your next question comes from the line of Arun Jayaram with J.P. Morgan. Your line is open.

Speaker #3: Thank you. Your next question comes from the line of Arun Jayaraman with JP Morgan. Your line is open.

Arun Jayaram: Yeah, good morning. Olivier, production recovery seems to be an important theme this morning. I was wondering if you could highlight some of the industrial and technical challenges in restoring production which is offline in the Middle East. Do you think that, assuming that we get to an improvement in the situation in the Middle East in Q2, could this be a driver of SLB's H2 2026 results?

Speaker #6: Yeah, good morning. Olivier, production recovery seems to be an important theme this morning. I was wondering if you could highlight some of the industrial and technical challenges in restoring production which is offline in the Middle East.

Speaker #6: And do you think that, assuming we get to an improvement in the situation in the Middle East in Q2, could this be a driver of SLB's second half '26 results?

Olivier Le Peuch: Firstly, I will not be commenting on behalf of our customers in the Middle East as they go through the assessment of their facilities. Some of them, as you know, have been damaged by this crisis. I will more comment on the engagement, collaboration, and close partnership we have with our customers to prepare for, and as they are ready to mobilize, as they believe the security concern are no more present. I think first and foremost, I think some, as I said, the shutting were done orderly, and I think this will just be a resumption of operation that will just be redeployment of resource, remobilization of resource, and I think with no necessary significant impact in short term.

Speaker #4: So, firstly, I will not be commenting on behalf of our customers in the Middle East as they go through the assessment of their facilities. Some of them, as you know, have been damaged by this crisis.

Speaker #4: I will add more comment on the engagement, collaboration, and close partnership we have with our customers to prepare for, and as they are ready to mobilize, as they believe the security concerns are no more present.

Speaker #4: And I think, first and foremost, I think some, as I said, the shutting was done orderly. And I think this could just be a resumption of operation that will just be redeployment of resources, remobilization of resources.

Olivier Le Peuch: Others will need well intervention activity, and that's where we have an upside and we'll want to work with our customers to see how we can help restore the production and add and use the production recovery technology set to help us regain the capacity production that was pre-conflict. Long term, as we said earlier, we see more upside. I think once this resumption of operation gradually resume throughout the following months and possibly quarter for some country, we see that there is an upside into the desire for some country there to uplift their capacity and to participate the replenishment of the depleted inventory and strategic reserve. We are seeing gradual intervention first, recovery, production recovery focus, and then large scale development and expansion of capacity for some country.

Speaker #4: And I think with no necessarily significant impact in the short term. Others will need well intervention activity, and that's where we have an upside. And we'll want to work with our customers to see how we can help restore the production and add, and use the production recovery technology set to help us regain the capacity production that was pre-conflict.

Speaker #4: So, long term, as we said earlier, we see more upside. I think once this resumption of operation gradually resumes throughout the following months, and possibly quarter for some countries, we see that there is an upside in the desire for some countries there to uplift their capacity and to participate in the replenishment of the depleted inventory and strategic reserve.

Speaker #4: So, we are seeing gradual intervention first; then recovery, a focus on production recovery, and finally large-scale development and expansion of capacity for some countries.

Arun Jayaram: Great. I have a follow-up to Steve's question on Digital. If I look at year-over-year trends, Olivier, your revenue was up 9%, but your margins fell by 473 basis points. I wonder if you could talk about what you saw on the margin front and perhaps the recovery potential for Digital margins over the balance of the year.

Speaker #6: Great, I have a follow-up to Stephen's question on digital. If I look at year-over-year trends, Olivier, your revenue was up 9%, but your margins fell by 473 basis points.

Speaker #6: So I wonder if you could talk about what you saw on the margin front, and perhaps the recovery potential for digital margins over the balance.

Olivier Le Peuch: I'll take this question now, Stéphane. As you know, we closed last year in Digital with full year EBITDA margin of 35% and the pre-tax operating margins of 28%. There's a bit of a distinction between the pre-tax margin and the EBITDA here. We started 2026 with pre-tax margin of just about 21%, which is essentially in line with where we started in Q1 2025. EBITDA margins, however, were indeed lower, and this is exclusively due to lower amortization from the mix of exploration data that we sold during the quarter. If you step back anyway, as I said earlier, Q1 is typically the lowest for Digital margin. If you look at where we started, same as last year, and we fully expect to see the same pattern we have seen over the years.

Speaker #1: Of the year

Speaker #2: I'll take this question , Stefan . So as you know , we we closed last year in digital with a with full year EBITDA margin of 35% .

Speaker #2: And the operating, the pre-tax operating margins of 28%. There's a bit of a distinction between the pre-tax margin and the De.

Speaker #2: Here we started 2026 with a pre-tax margin of just about 21%, which is essentially in line with where we started in the first quarter of 2025.

Speaker #2: EBITDA margins, however, were indeed lower, and this is exclusively due to lower amortisation from the mix of exploration data that we sold during the quarter.

Speaker #2: So if you step back anyway, as I said earlier, the first quarter of the year is typically the lowest for digital margin.

Speaker #2: So if if you look at where we started . Same as last year and we fully expect to see the , the the same pattern we , we have seen over the years and we will reach the highest margins in the fourth quarter .

Olivier Le Peuch: We will reach the highest margins in Q4, and it is clearly our ambition to deliver the total EBITDA margins from Digital of at least 35% this year as well. This is the choppiness of quarterly movements that it's not a concern to us.

Speaker #2: And it is clearly our ambition to deliver the total EBITDA margins for digital of at least 35% this year as well . So this is the choppiness of the of quarterly movements that it's not a concern to us

Operator: Thank you. Your next question comes from the line of Scott Gruber with Citi Research. Your line is open.

Speaker #3: Thank you. Your next question comes from the line of Scott Gruber with Citi Research. Your line is open.

Scott Gruber: Yes, good morning, Olivier and Stéphane. I got a couple more questions on digital.

Olivier Le Peuch: Good morning, Scott.

Speaker #4: Yes . Good morning . Olivier and Stephane . I got a couple more questions on digital . Good morning So in a world where code writing becomes easier and more commoditized , can you speak to the resilience of the value add of your digital portfolio And as you kind of take moves to shape the portfolio like you've done with the S&P acquisition , how do you think about kind of expanding that value add and enhancing that resilience ?

Scott Gruber: Good morning. In a world where code writing becomes easier and more commoditized, can you speak to the resilience of the value add of your digital portfolio? As you take moves to shape the portfolio like you've done with the S&P acquisition, how you think about expanding that value add and enhancing that resilience?

Olivier Le Peuch: No, I think the customer are accelerating the adoption of digital because they believe that, no matter what the cycle is turning into, a highly favorable cycle or challenging cycle, they believe they need to differentiate. They need to add and extract efficiency, productivity in the geosciences and planning workflow, operational performance and efficiency into the drilling and into the production and recovery space. They have seen that the digital capability, and you can see it by the adoption of digital operation growing very nicely year on year, and is driven by drilling, is driven by production, operation workflow, where customer are adopting AI solution, adopting software solution that can transform the performance of doing operation like drilling automation, can transform production workflow to render ESPs autonomous. I think this capability will be looked for every customer.

Speaker #2: Well, I think the customers are accelerating the adoption of digital because they believe that, no matter what the cycle is—whether it's turning into a highly favorable cycle or a challenging cycle—they believe they need to differentiate. They need to add and extract efficiency and productivity in the science and planning workflow.

Speaker #2: Operational performance and efficiency into the drilling and into the production and recovery space . And they have seen that the digital capability . And you can see by the adoption of digital production growing at a a very nicely year on year and is driven by drilling , is driven by production , operational workflow , where customers are , are adopting AI solution , adopting a software solution that can transform the performance of drilling operation , like during automation can transform a production workflow to render ESPs autonomous .

Olivier Le Peuch: Every use case we see is resonating across customers in every basin. I think we see this not only resilience, we see this as a long-term tail of any cycle and something that digital will continue to have a tailwind in our industry because we have data like no other industry has. We have scientists and engineers that love to play with data, and we have AI that is starting to come into play as a catalyst to become an X factor, if you like, to unlock productivity. We are, I think, unique in our capability. We have the domain knowledge that is deep, and we have the platform that can help scale this AI capability going forward. We feel that I think it is the right time for the industry to adopt AI at scale.

Speaker #2: And I think this capability will be will be looked for for every customer . So every use case we we see is resonating across customers in every basin .

Speaker #2: And I think we see this not only as resilience, we see this as a long-term tale of any cycle. And something that digital will continue to have as a tailwind in our industry, because we have data like no other industry has.

Speaker #2: We have scientists and engineers that love to play with data , and we have AI that is starting to come at play as a catalyst to , to become an X factor , if you like , to unlock productivity .

Speaker #2: So we are , I think , unique in our , in our capability . We have the domain knowledge . There is deep and we have the platform that can help scale this AI capability .

Olivier Le Peuch: We think that we have the platform, we have the deep domain, and the first use case that are starting to be realized recently, and the power of adjacency in our industry will only reinforce this growth opportunity. It's not only resilience, it's growth going forward. We show more of this during our event in the Digital Investor Forum.

Speaker #2: Going forward . So we feel that I think it is the right time for the industry to adopt AI at scale . We think that we have the platform , we have the deep domain .

Speaker #2: And the first use case that are starting to be realized in recently . And the power of agentic in , in our industry will only reinforce this , this growth opportunity .

Speaker #2: And it's not only resilience, it's growth going forward. And we show more of this during our event in the Digital Investor Forum.

Scott Gruber: I definitely look forward to it. A follow-up here, just with an outlook for higher oil prices, at least over the medium term, how does that impact the digital business? I assume your seismic sales could improve. How meaningful could that be? Then kind of more importantly, would you anticipate customers taking some of this excess cash that they're generating and spend it on more software, more applications to get a bigger boost for their own internal efficiency?

Speaker #4: And definitely look forward to it A follow up here . You know , just with an outlook for higher oil prices , at least over the medium term , how does that impact the digital business ?

Speaker #4: I assume your seismic sales , you know , could improve . How meaningful could that be ? And then kind of more importantly , would you anticipate customers taking some of this excess cash that they're generating and spend it , you know , on more software , more applications to get a bigger boost , you know , for , for their own internal efficiency

Olivier Le Peuch: Yeah, obviously, when the commodity prices are high, and I think the customers have more optionality with their discretionary spend, they use it in two domains, they use it in digital, and they accelerate exploration. I think we foresee that, we have seen it, and we have seen signals that exploration is coming back. We have seen some announcements of some companies reinvesting in exploration at scale because they believe they want to secure reserves to participate in long-term energy security. At the same time, yes, they use this discretionary spend smartly, using this to, on occasion, buy data sets to accelerate the exploration and will benefit from that, but also participate in more pilots, and then make decisions faster to accelerate their platform software deployment in their organization.

Speaker #2: Yeah, obviously, when the commodity prices are high, and I think the customers have more optionality with their discretionary spend, they use it in two domains.

Speaker #2: They use it in digital, and they accelerate exploration. And I think we foresee that. And we have seen it, and we have seen signals that exploration is coming back.

Speaker #2: We have seen some announcements of some company reinvesting in exploration at scale, because they believe they want to secure reserves to participate in long-term energy security.

Speaker #2: And at the same time , yes , they use this discretionary spend smartly and using this to on occasion to buy a data sets to accelerate the exploration and will benefit from that , but also participate to more pilots and and then make a decisions faster to accelerate their platform software deployment in their organization .

Operator: Thank you. Your next question will go to the line of Sebastian Erskine with Rothschild & Co Redburn. Sebastian, your line is open.

Speaker #3: Thank you. Your next question will go to the line of Sebastian Erskine with Rothschild Company in Redburn. Sebastian, your line is open.

Sebastian Erskine: Hi. Hi, good morning.

Olivier Le Peuch: Good morning.

Sebastian Erskine: Thanks for taking my questions. Good morning. I just want to start on SLB OneSubsea. It's really one of the jewels in the SLB crown. You guided at full year 2025 results and $9 billion in sort of order intake over the next two years. I wonder if you could give perhaps some outlook on the margin expansion potential within the OneSubsea business, particularly with comparisons to sort of broader offshore E&C universe. Is there more room for integration with the rest of your portfolio or further efficiencies related to your, the existing kind of Aker Solutions business? Any color on the margin outlook for OneSubsea?

Speaker #5: Hi Hi . Good morning . Good morning gentlemen . Thanks for taking my questions . Good morning . I just want to start on SLB one subsea .

Speaker #5: It's really one of the jewels in the SLB crown. You guided it. Full year '25 results for $9 billion in, sort of, order intake over the next two years.

Speaker #5: But I wonder if you could give perhaps some outlook on the margin expansion potential within the OneSubsea business, particularly with comparisons to the broader offshore Inc. universe?

Speaker #5: Is there more room for integration with the rest of your portfolio or further efficiencies related to your the existing subsea business ? Any color on on the margin outlook for one subsea .

Olivier Le Peuch: Yeah, sure, Sebastian. You have noticed that actually for the first time, we gave you our margins in OneSubsea for Q1. Unfortunately, they were not as brilliant this quarter, but these are temporary effects due to the timing of project completions and startups. You've seen where the margins were in the same quarter of last year, pre-tax margins of 18%, which means EBITDA margins are very close to 20%. This is what we expect from this business over the cycle at the minimum. Even though we started on a rough note in Q1, we expect the margins to normalize in the coming quarter. Hopefully on the back of a backlog that is increasing year on year, we are actually up 5% year on year on the backlog. We have better visibility on the growth going forward and potential margins increase.

Speaker #2: The . Sure . Sebastian . So you have noticed that actually , for the first time we are . We gave you our margins for in one subsea .

Speaker #2: For the first quarter . Unfortunately , they were they were not as as brilliant this quarter . But these are temporary effects for due to the timing of of project completions and start ups .

Speaker #2: So, you've seen where the margins were in the same quarter of last year. Pre-tax margins of 18%, which means EBITDA margins are very close to 20%.

Speaker #2: So this is what we expect from this business over the cycle . At the minimum . And even though we started on a rough note in the first quarter , we we expect the margins to , to normalize in the coming quarters .

Speaker #2: And, hopefully, on the back of a backlog that is increasing year on year, we are actually up 5% year on year on the backlog.

Speaker #2: We have better visibility on the growth going forward than potential margin uplift. Yeah, I just want to add a couple of things.

Olivier Le Peuch: Yeah, I just want to add a couple of things on.

Sebastian Erskine: Yeah, sure. Thank you.

Olivier Le Peuch: Yeah, Sebastian, production recovery. I think I just want to add that obviously subsea as a domain of deepwater, I think is essential for our customers, and production recovery plays a great role. I think we have a unique subsea floor processing portfolio. We have seen one more announcement that we are continuing to renovate and to enhance the project. We have Gullfaks with Equinor in Norway. We have done one acquisition that complements our offering to help us better participate into the intervention world of deepwater subsea. We believe indeed that our production recovery strategy and the connection with our overall core capability is essential going forward. As we develop, it will help customers leverage OneSubsea to enhance the production of existing fields and provide more life-of-field services, as we call it, including digital capability to this subsea installation.

Speaker #5: Yeah, sure. Thank you.

Speaker #2: Yes, Sebastian, production recovery. I think I just want to add that, obviously, subsea has a domain of deepwater I think is essential for our customers.

Speaker #2: And production recovery plays a great role. And I think we have a unique subsea flow processing portfolio. We have seen one more announcement that we are continuing to renovate and to enhance the project.

Speaker #2: We have gullfaks in with Equinor in Norway , and we have done one acquisition that complements offering to help us better participate into the into the , the intervention world of deepwater subsea .

Speaker #2: So we believe indeed that our production recovery strategy and the connection with our over core capability is essential . Going forward as it will help customers leverage a one subsea to enhance the production of existing fields and provide more life of field services , as we call it , including digital capability to this subsea installation .

Olivier Le Peuch: It's both on the E&C cycle, and then on the life-of-field services long term that will benefit.

Speaker #2: So it's both on the NC cycle and then on the life of field services, long term, that will benefit.

Sebastian Erskine: Really appreciate the color there. Just to follow up, I think Olivier, in the prepared remarks you mentioned towards the end of the data center solutions section, you were kind of considering potential further M&A following the closure of, or the announcement of the S&P Global deal. What areas are you seeking to add in terms of your portfolio? Any color on that would be helpful.

Speaker #5: Really appreciate the color there . And then just a follow up , I think Olivier in the in the prepared remarks , you mentioned towards the end of the data center solutions section , you were kind of considering potential further M&A following the , the closure or the announcement of the S&P global deal .

Olivier Le Peuch: Yeah. We are looking at everything where we believe that we could build a portfolio that give us a more technology anchor into our portfolio, so that as we build more modular infrastructure solution across the full space, thermal management is one that obviously come to mind. We're looking at opportunity we believe could complement the offering we have and the go-to-market that we have created and height of play we have created into the space.

Speaker #5: What areas are you seeking to add in terms of your portfolio? Any color on that would be helpful.

Speaker #2: Yeah . We are looking at everything where we believe that we could build a portfolio that gives us a more technology anchor into our , our portfolio so that as revealed , more modular infrastructure solutions across the full space .

Speaker #2: Thermal management is one that obviously come , come to mind . And we look in opportunity , we believe could complement the offering we have and the go to market that we have created and right of play we have created into the space

Operator: Thank you. Your next question will go to the line of Marc Bianchi with TD Cowen. Your line is open.

Speaker #3: Thank you. Your next question will go to the line of Marc Bianchi with TD Cowen. Your line is open.

Marc Bianchi: Hi. Thank you very much. I just first wanted to quickly clarify on the outlook here for Q2. You're essentially saying that results will be the same as Q1, and there's sort of a $0.06 to 0.08 incremental hit from Middle East that's being offset elsewhere. Is that the message you're trying to deliver here?

Speaker #6: Hi . Thank you very much . I , I just first wanted to quickly clarify on on the outlook here for second quarter .

Speaker #6: So you're essentially saying that results will be the same as first quarter, and there's sort of a 6 to 8 cent incremental hit from Middle East that's being offset elsewhere.

Stéphane Biguet: Yeah, no, that's a good summary, Marc. Just to be clear, this is under the specific scenario that we highlighted where the operational disruptions start to ease more or less at the middle of the quarter and then gradually recover. In this scenario, we can offset the negative impact of -$0.06 to -$0.08 incremental effect of Middle East with the rest of the international operations.

Stéphane Biguet: Yeah, no, that's a good summary, Marc. Just to be clear, this is under the specific scenario that we highlighted where the operational disruptions start to ease more or less at the middle of the quarter and then gradually recover. In this scenario, we can offset the negative impact of $0.06 to $0.08 incremental effect of Middle East with the rest of the international operations.

Speaker #6: Is that—is that the message you're trying to deliver here?

Speaker #2: Yeah . No that's a good summary . Marc . Just to be clear , this is under the specific scenario that we highlighted where the operational disruptions start to ease more or less at the middle of the quarter .

Speaker #2: And then gradually recover. So, in this scenario, we can offset the negative impact of $0.06 to $0.08. Incremental effect of Middle East.

Marc Bianchi: Yeah. Great. Thanks for that, Stéphane. The other question I had, going back to OneSubsea and sort of the $9 billion of awards over 2026 and 2027, given sort of the outlook here, do you see upside to that now? How are you sort of thinking about your competitive positioning? We hear a lot from your other competitor about their integrated capabilities. Can you kind of talk about how you see OneSubsea positioned from a competitive perspective?

Speaker #2: With the rest of the international operations,

Speaker #6: Yeah . Great , great . Thanks for that , Stephane . The other question I had going back to one subsea and sort of the the 9 billion of awards over 26 and 27 is given sort of the outlook here .

Speaker #6: Do you do you see upside to that ? Now ? And how are you sort of thinking about your competitive positioning ? We hear a lot from your other competitor about their integrated capabilities .

Olivier Le Peuch: First, I think commenting on the cycle, I think the more this dynamic plays favorably as the conflict ends, the more we believe that the investment will be attractive into the deepwater market as it is a majority actually of what we foresee as FID in 2027 and 2028. Hence, the more it will play into the size of the addressable market. Hence, if FID have firmed up, if not accelerated in 2027 or even in 2026, this will give us a potential to outperform the guidance we have given. Yes. Now on the position, we feel very good with the position we have. Extremely good. We have a partner with Subsea 7, gave us when and as customer ask for integrated offering, the integrated capability to deliver, and we have done it at scale for many customers.

Speaker #6: Can you kind of talk about how you see OneSubsea's position from a competitive perspective?

Speaker #2: So first , I think commenting on the cycle , I think the , the more this the dynamic plays superbly as the conflict ends , the more we believe that the investment will be attractive the the deepwater market as it is a majority actually of what we foresee as a filly in 27 and 28 .

Speaker #2: And hence , the more it will play into the size of the market . Hence , if if idea firmed up , if not accelerated in 27 or even in 26 , this will give us a potential to outperform the guidance we have .

Speaker #2: We have given . So yes . Now , on the position we feel very good with the position we have extremely good . We .

Speaker #2: We have a partner with Subsea 7 who gave us one, and a US customer asked for integrated offering. The integrated capability to deliver.

Olivier Le Peuch: We feel that we have developed partnership and collaborative engagement with several customers that have led us to be getting working jointly with our customers to help and provide support to increase and improve the design of the Subsea architecture and unlock FID. This is true with the partner we have with Equinor and with BP. We believe that we have unique portfolio with Subsea processing that is having no match on the market. You have seen announcement today, and you will continue to see a pipeline of project that will make it pretty unique in the marketplace. You have seen the Aasta Hansteen Subsea gas compression that unlock a new level of recovery for the field of Aasta Hansteen in Norway.

Speaker #2: And we have done it at scale with many customers. We feel that we have developed partnership and collaborative engagement with several customers that have led us to working jointly with our customers to help.

Speaker #2: And provide support to, in and improve the design of the architecture, and unlock FID. And this is true with the partner we have in with, with BP.

Speaker #2: And we believe that we have unique portfolio with subsea processing that is having no match on the market . And you have seen an announcement today and you could you will continue to see a pipeline of , of projects that will make it pretty unique in the marketplace .

Speaker #2: You have seen the Oman longer subsea gas compression that unlocks a new level of recovery for the field of Oman in Norway. You have seen the additional announcement we did today on the Gullfaks project.

Olivier Le Peuch: You have seen the additional announcement we did today on the Gullfaks project, where we'll rework with our customer to make sure that we extend the life and improve the performance of this capacity of Subsea processing so that it unlocks next level of recovery. Yes, we feel good about our integration capability. We feel good about the pipeline that you have seen. We were awarded in Malaysia, in South China Sea, in Suriname, and in Norway, announced today. We'll continue to have a pipeline of exciting projects going forward across the basins I mentioned earlier, Americas, Asia, and Africa. We are pleased with the OneSubsea progress and continue to support them fully.

Speaker #2: We will rework with our customer to make sure that we extend the life and improve the performance of this capacity of subsea processing so that it unlocks the next level of recovery.

Speaker #2: So yes , we feel good about our integrated capability integration capability . We feel good about pipeline of that . You have seen we were awarded in Malaysia , in South China Sea , in Suriname , and in Norway .

Speaker #2: Announced today . And we'll continue to have a pipeline of exciting projects going forward across the basin . As I mentioned earlier , Americas , Asia and Africa .

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

Speaker #2: So we are pleased with the OneSubsea progress, and we continue to support them fully.

Speaker #3: Thank you. Your last question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Olivier Le Peuch: Morning, Neil.

Neil Mehta: Thanks so much. Morning, my friend. You guys talked a lot about some of the cost impacts that you're seeing in the Middle East and how that's impacting margins. I think we all understand at a conceptual level things like freight, but can you just kind of give us some of the line items that might be causing the pressure point and help us understand what are some of the specific items that are pressure points?

Speaker #7: Morning . Morning , my friend . You know , you guys talked a lot about some of the cost impacts that you're seeing in the Middle East and how that's impacting margins .

Speaker #7: And I think we all understand, at a conceptual level, things like freight. But can you just kind of give us some of the line items that might be causing the pressure points and help us understand, you know, what are some of the specific items that are pressure points?

Olivier Le Peuch: Sure, we can do that. Clearly from the situation in the Middle East, it introduced quite some strain on supply chain networks locally, but with ripple effects in other places in the world. Probably the line item that's the most impacted is logistics and transportation costs, clearly. Coming next is raw materials, those which are derived from petroleum products, of course, and that would also include chemicals. It's raw materials and logistics mostly. This has impacted our margins in Q1 and it will linger for a while. Now, we are not going to let just that hit our costs. We have mobilized our commercial organization to recover some of these increased costs, and we are activating inflation pass-through clauses that we have in our contracts.

Speaker #8: Sure , sure . We can do that . So , so clearly from the , the situation in the Middle East , it introduced quite some strain on supply chain networks locally , but with ripple effects in other places in the world .

Speaker #8: So probably the line item that's the most impacted is logistics , transportation costs . Clearly coming next is , is raw materials . Those which are derived from from petroleum products , of course .

Speaker #8: And that that would also include chemicals . So it's raw materials and logistics mostly . So this has impacted our margins in the first quarter .

Speaker #8: And , and it will linger for a while . Now . We are not going to let just that hit or cost . We have mobilized our commercial organization to recover some of his increased costs .

Olivier Le Peuch: If we don't, we are in direct negotiations with both our supplier and our customers to offset these effects. We are kind of used to these spikes in cost coming from inflation, and we try to recover as much as we can.

Speaker #8: We are activating inflation , pass through clauses that we have in our contracts . And if we don't , we are in direct negotiations with with both our suppliers and our customers to to offset these effects .

Speaker #8: So we we are kind of used to the spikes in , in , in costs coming from inflation . And we , we try to recover as much as we can

Neil Mehta: My last question. It's been a couple of months now that ChampionX has officially been in the SLB portfolio. Just any observations about what it's bringing to the table here and how you've been able to integrate the system into the broader company.

Speaker #7: And my last question, it's been a couple of months now that Champion X has officially been in the SLB portfolio. Just any observations about what it's bringing to the table here, and how you've been able to integrate the system into the broader company?

Olivier Le Peuch: First, I think I will reiterate the results part of the ChampionX addition to our portfolio, as Stephane highlighted. I think ChampionX has been as a portfolio accretive to the company in Q1, and I think that has been growing year on year and expanding margin year on year. Second, I will come back to the three days we spent with our board in Midland. I think it was a pleasure to see in action our ChampionX employee integrating fully in a pull-through pipeline, if you like. A tool that we made for our customer with our board of directors to showcase our fit for basin technology in a timeline. Highly integrated, already getting pull-through or getting synergy, revenue synergy and technology synergy that customer are appreciative. The second highlight of this trip was a meeting of our customers.

Speaker #2: First, I think I will reiterate the results of the addition to the portfolio. As Stefan highlighted, I think Champion has been portfolio accretive to the company in the first quarter.

Speaker #2: And I think that has been growing year on year, and expanding margin year on year. Second, I will come back to the three days we spent with our board in Midland.

Speaker #2: I think it was a pleasure to see in action our champion and x champion employee integrating fully in a , in a , in a four two pipeline , if you like tool that we made with our customers , with our with our board of directors to showcase our fit for basin technology in the highly integrated already getting pulled through or getting getting synergy revenue synergy and technology synergy that customers are appreciative .

Olivier Le Peuch: We hosted many customers with our board of director in Midland, and I think it was a pleasure to get feedback, very direct and transparent feedback from our customer. They were very pleased with the integration progress, and they have seen the lights of the potential that ChampionX with the greater SLB can bring to their operation in the timeline. We are seeing the benefits on the financial results. We are seeing an exciting opportunity for operational recovery as we commented on a summit that we hosted lately. We see the enthusiasm of our team, SLB, and the ChampionX employees and the customers that are appreciative and recognize this is something unique that we have and something that can unlock the potential of operational recovery, partly in unconventional, but in all of our basin in the world as well.

Speaker #2: The second highlight of this trip was meeting of our customers . We . Many customers with our Board of Directors in Midland and I think it was a pleasure to give to get the feedback very direct and transparent feedback from our customers .

Speaker #2: They were very pleased with the integration progress, and they have seen the light of the potential that Champion X with the SLB can bring to the operation in the Paramount.

Speaker #2: So we are seeing the benefit on the on the financial results . We are seeing exciting opportunity for operational recovery . As we commented on the summit that we hosted lately , and we see the enthusiasm of our team , starting with the champion X employees and the customers that are .

Speaker #2: And recognized. This is something unique that we have, and something that can unlock the potential of pollution recovery. Partially unconventional, but in all of our bases in the world as well.

Operator: Thank you. I will now turn the call over to SLB for closing comments.

Olivier Le Peuch: Thank you very much. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflection. First, while recent events have created near-term disruption, they have also reinforced the need for secure and reliable energy, which will support oil prices above pre-conflict levels and create an enduring backdrop for oil and gas investment. Second, production recovery, digital and data-centric solutions are creating the foundation for accelerated growth. Finally, I want to take a moment to recognize that this year marks 100 years of SLB. As we celebrate this milestone, I'm proud that we are not only honoring an extraordinary legacy, but also building the foundation for the next century of innovation, performance, and leadership. With this, I will conclude today's call. Thank you all for calling.

Speaker #3: Thank you. I will now turn the call over to SLB for closing comments.

Speaker #2: So thank you very much . So , ladies and gentlemen , as we conclude today's call , I would like to leave you with the following reflection First , while recent events have created near-term disruption , they have also reinforced the need for secure and reliable energy , which will support oil price above Pre-conflict levels and create an ongoing backdrop for oil and gas investments .

Speaker #2: Second , production recovery , digital and data center solutions are creating the foundation for accelerated growth . And finally , I want to take the moment to recognize that this year marks 100 years of SLB .

Speaker #2: As we milestone, I'm proud that you are not only honoring an extraordinary legacy, but also building the foundation for the next century of innovation, performance, and leadership.

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

Speaker #2: With this, I will conclude today's call. Thank you all for joining.

Q1 2026 Schlumberger Ltd Earnings Call

Request DemoDemo

SLB

Earnings