Q2 2026 Schlumberger Ltd Earnings Call

July 24, 2026

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

Operator: Good morning. My name is Sarah, and I will be your conference operator today. I would like to welcome everyone to the Q2 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 one again. 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.

Operator: Good morning. My name is Sarah, and I will be your conference operator today. I would like to welcome everyone to the Q2 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 one again. As a reminder, this call is being recorded. I will now turn the call over to James McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Speaker #1: At this time, all participants are in listen-only mode. After the speakers' 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 1 again. As a reminder, this call is being recorded. I will now turn the call over to James McDonald, Senior Vice President of Investor Relations and Industry Affairs.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Sarah. Good morning, and welcome to the SLB second quarter 2026 earnings conference call. Today's call is being hosted from London, following our board meeting held earlier this week.

James R. McDonald: Thank you, Sarah. Good morning, and welcome to the SLB Q2 2026 earnings conference call. Today's call is being hosted from London following our board meeting held earlier this week. Joining us on the call are Olivier Le 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 we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our Q2 earnings press release, which is on our website.

James McDonald: Thank you, Sarah. Good morning, and welcome to the SLB Q2 2026 earnings conference call. Today's call is being hosted from London following our board meeting held earlier this week. Joining us on the call are Olivier Le 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 we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our Q2 earnings press release, which is on our website.

Speaker #2: Joining us on the call are Olivier Le 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 we 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 second 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.

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

Speaker #3: Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Today, we'll begin with our second quarter performance. Then I will discuss the evolving macro environment and strategic growth areas for SLB.

Olivier Le Peuch: Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Today, we'll begin with our Q2 performance. I will discuss the evolving macro environment and strategic growth areas for SLB. Finally, I will close by sharing our outlook for Q3 and how we will exit the year. Stephane will then provide additional details on our financial results. After that, we'll open the line for your questions. Let's begin. This was a solid quarter for SLB, marked by broad-based international growth and rebound in North America. Excluding the Middle East, revenue increased sequentially across all divisions. This was supported by higher offshore activity in Latin America, including Brazil, Guyana, and Mexico, in Europe and Africa, across Scandinavia and Nigeria, and in Asia, including China, Indonesia, India, and Australia.

Speaker #3: And finally, I will close by sharing our outlook for the third quarter and how we will exit the year. Stephane will then provide additional details on our financial results, and after that, we'll open the line for your questions.

Speaker #3: Let's begin. This was a solid quarter for SLB, marked by broad-based international growth and a rebound in North America. Excluding the Middle East, revenue increased sequentially across all divisions.

Speaker #3: This was supported by higher offshore activity in Latin America, including Brazil, Guyana, and Mexico; in Europe and Africa, across Scandinavia and Nigeria; and in Asia, including China, Indonesia, India, and Australia.

Speaker #3: Additionally, we saw a rebound in US land, with higher sales of production chemicals, artificial lift, and valves, driven by strong demand for production and recovery solutions.

Olivier Le Peuch: Additionally, we saw a rebound in US land, with higher sales of production chemicals, artificial lift, and valves, driven by strong demand for production and recovery solutions. In the Middle East, we continued to navigate the conflict during Q2 while maintaining our focus on protecting our people and facilities across the region. Activity resumed in several countries, although operations in Iraq remained constrained by security challenge. While uncertainty persists, we continue to work closely with our customers to gradually restore activity. That said, returning to full activity will take time, and the pace of recovery will vary by country, customer, and operating environment. Turning to the divisions, I was very pleased with the continued momentum in Production Systems and Digital.

Speaker #3: In the Middle East, we continued to navigate the conflict during the second quarter, while maintaining our focus on protecting our people and facilities across the region.

Speaker #3: Activity resumed in several countries, although operations in Iraq remained constrained by security challenges. While uncertainty persists, we continue to work closely for our customers to gradually restore activity.

Speaker #3: That said, returning to full activity will take time, and the pace of recovery will vary by country, customer, and operating environment. Turning to the divisions, I was very pleased with the continued momentum in Production Systems and Digital.

Speaker #3: In Production Systems, growth was supported by higher demand in artificial lift, valves, surface production systems, and production chemicals, as well as stronger subsea activity—particularly in North America and Latin America.

Olivier Le Peuch: In Production Systems, growth was supported by higher demand in artificial lift, valves, surface production systems, and production chemicals, as well as stronger subsea activity, particularly in North America and Latin America. This reflects clear and durable customer priorities, improving production, enhancing recovery, and extending the life of existing assets, which are fully aligned with our increased focus in the core toward production and recovery. Production Systems adjusted EBITDA margins returned to above 20%, supported by strong execution. ChampionX also continued to provide accretive margins to Production Systems despite facing cost inflation in chemicals. Notably, ChampionX delivered sequential margin expansion for the third consecutive quarter. Digital also delivered very strong results, supported by a favorable business mix. This included higher exploration data licenses and transfer fees in Brazil and Indonesia, which helped Digital adjusted EBITDA margins to reach approximately 35% for the quarter.

Speaker #3: This reflects clear and durable customer priorities: improving production, enhancing recovery, and extending the life of existing assets, which are fully aligned with our increased focus in the core toward production and recovery.

Speaker #3: Production Systems adjusted EBITDA margins returned to above 20%, supported by strong execution. Cameron also continued to provide accretive margins to Production Systems, despite facing cost inflation in chemicals.

Speaker #3: Notably, Champonex delivered sequential margin expansion for the third consecutive quarter. Digital also delivered very strong results, supported by a favorable business mix. This included higher exploration data licenses and transfer fees in Brazil and Indonesia, which helped digital adjusted EBITDA margins reach approximately 35% for the quarter.

Speaker #3: Additionally, annual recurring revenue increased by 15% year-over-year. As we shared during our Digital Investor Day last month, the future of our industry is digital.

Olivier Le Peuch: Additionally, annual recurring revenue increased by 15% year over year. As we shared during our digital investor day last month, the future of our industry is digital. We are confident that the key growth drivers highlighted at the event, digital operation and AI, will continue to build strong momentum across the industry. You can see several examples of recent customer contracts and deployments in the quarterly highlights, including in today's earnings press release. Meanwhile, revenue in Well Construction and Reservoir Performance declined slightly as a result of activity disruption in the Middle East. However, the impact was largely offset by stronger activity in North America and across other international markets. data center solutions also continued its strong growth trajectory, revenue increasing 33% sequentially and 80% year on year.

Speaker #3: We are confident that the key growth drivers highlighted at the event—digital operation and AI—will continue to build strong momentum across the industry.

Speaker #3: You can see several examples of recent customer contracts and deployments in the quarterly highlights, including in today's earnings press release. Meanwhile, revenue and well construction reservoir performance declined slightly as a result of activity disruption in the Middle East.

Speaker #3: However, the impact was largely offset by stronger activity in North America and across other international markets. Data Center Solutions also continued its strong growth trajectory, with revenue increasing 33% sequentially and 80% year over year.

Speaker #3: Growth was supported by the addition of new hyperscaler customers and a broader scope of offerings, as we evolved beyond manufacturing into data center design, engineering, and system integration, as exemplified by the recent announcement with Meta.

Olivier Le Peuch: Growth was supported by the addition of new hyperscaler customers and a broader scope of offerings as we evolved beyond manufacturing into data center design, engineering, and system integration, as exemplified by the recent announcement with Meta. All in all, this was a strong quarter against a difficult backdrop with solid financial results and steady progress in our strategy execution. I want to thank the entire SLB team for delivering these results in a very dynamic market. I continue to be impressed by your performance, your innovation, and your commitment to our customers. Now let me turn to the macro environment, which continues to evolve following the disruption in the Middle East. There are several structural drivers of upstream investment that have been heightened by the conflict in the Middle East.

Speaker #3: All in all, this was a strong quarter against a difficult backdrop, with solid financial results and steady progress in our strategy execution. I want to thank the entire SLB team for delivering these results in a very dynamic market.

Speaker #3: I continue to be impressed by your performance, your innovation, and your commitment to our customers. Now, let me turn to the macro environment, which continues to evolve following the disruption in the Middle East.

Speaker #3: There are several structural drivers of upstream investment that have been heightened by the conflict in the Middle East. This includes the replenishment of commercial inventories and strategic reserves that have been depleted during the conflict, increased efforts to diversify supply, and the development of domestic resources to strengthen long-term energy security.

Olivier Le Peuch: This includes the replenishment of commercial inventories and strategic reserves that have been depleted during the conflict, increased efforts to diversify supply, and the development of domestic resources to strengthen long-term energy security. These priorities support a favorable investment backdrop across both short and long-cycle markets, they are bringing a renewed focus on exploration to unlock new reserves and on increasing production recovery from existing assets. In this context, we expect a range-bound commodity environment that is constructive for upstream investment. Indeed, inventory replenishment and the need to rebuild spare capacity should provide support at the low end of the range. At the same time, higher price will encourage the development of new supply while unlocking new opportunities for our business. Let me now turn to regional activity dynamics. The market is starting to exhibit the characteristics of an upcycle.

Speaker #3: These priorities support a favorable investment backdrop across both short- and long-cycle markets. They are also bringing a renewed focus on exploration to unlock new reserves and on increasing production recovery from existing assets.

Speaker #3: In this context, we expect a range-bound commodity environment that is constructive for upstream investment. Indeed, inventory replenishment and the need to rebuild spare capacity should provide support at the lower end of the range.

Speaker #3: And at the same time, higher prices will encourage the development of new supply, while unlocking new opportunities for our business. Let me now turn to regional activity dynamics.

Speaker #3: The market is starting to exhibit the characteristics of an upcycle. International and depot activity is growing, supported by fundamentals I've just discussed. Notably, according to third-party reports, final investment decisions for long-cycle projects are expected to increase by approximately 30% year-on-year in 2026.

Olivier Le Peuch: International and deepwater activity is growing, supported by fundamentals I've just discussed. Notably, according to third-party reports, final investment decisions for long-cycle projects are expected to increase by approximately 30% year on year in 2026. This will support higher exploration spending and upstream CapEx growth across deployed markets during the H2 2026, led by Africa. We expect a more meaningful impact in 2027, with growth extending to Latin America, the Mediterranean, and Asia. Meanwhile, North America land will remain tied to short-cycle market dynamics, including commodity price, inventory level, and the pace of restocking. Our position in North America has been strengthened by ChampionX and by the increasing need for technology innovation in production and recovery. In the Middle East, we view the impact as largely transitory.

Speaker #3: This will support higher exploration spending and upstream capex growth across depot markets during the second half of 2026, led by Africa. We expect a more meaningful impact in 2027, with growth extending to Latin America, the Mediterranean, and Asia.

Speaker #3: Meanwhile, North American land will remain tied to short-cycle market dynamics, including commodity price, inventory level, and the pace of restocking. Our position in North America has been strengthened by Champonex and by the increasing need for technology innovation in production and recovery.

Speaker #3: In the Middle East, we view the impact as largely transitory. Restoring production to prior levels will require prior service intensity, particularly in oil intervention, along with increased equipment demands, infrastructure repairs, and airline shipping logistics.

Olivier Le Peuch: Restoring production to prior levels will require higher service intensity, partially in well intervention, along with increased equipment demand, infrastructure repairs, and airline shipping logistics. Based on this condition and our exposure to international deepwater and exploration, production and recovery, and digital, our outlook for our business into 2027 is compelling. Against this backdrop, SLB's strategy remains closely aligned with our customers' highest investment priority. In the core, this includes restoring production capacity, developing advantage resources, including deepwater, and improving capital efficiency. Beyond the core, digital remains both a key enabler of performance and a powerful growth platform for SLB. Data and AI will increasingly touch every part of the upstream life of field. Advantage is that digital is grounded in deep domain expertise and connected to real field operations. We're embedding intelligence to the workflows that matter most, from subsurface interpretation and well delivery to production optimization and autonomous operations.

Speaker #3: Based on these conditions, and our exposure to international deepwater and exploration, production, and recovery, our digital outlook for the business into 2027 is compelling.

Speaker #3: Against this backdrop, SLB's strategy remains closely aligned with our customers' highest investment priorities. In the core, this includes restoring production capacity, developing advantageous sources—including deepwater—and improving capital efficiency.

Speaker #3: Beyond the core, digital remains both a key enabler of performance and a powerful growth platform for SLB. Data and AI will increasingly touch every part of the upstream lifecycle.

Olivier Le Peuch: Beyond the core, digital remains both a key enabler of performance and a powerful growth platform for SLB. Data and AI will increasingly touch every part of the upstream life of field. Advantage is that digital is grounded in deep domain expertise and connected to real field operations. We're embedding intelligence to the workflows that matter most, from subsurface interpretation and well delivery to production optimization and autonomous operations.

Speaker #3: The advantage is that digital is grounded in deep domain expertise and connected to real field operations. We're embedding intelligence into the workflows that matter most.

Speaker #3: From subsurface interpretation and well delivery to production optimization and autonomous operations. Finally, we're accelerating a data center solution strategy around three priorities: diversifying our customer base, expanding internationally, and increasing the scale and scope of our offerings.

Olivier Le Peuch: Finally, we're accelerating our data center solutions strategy around three priorities: diversifying our customer base, expanding internationally, and increasing the scale and scope of offerings. This quarter, we delivered on our strategic pathways, adding new hyperscaler customers to our portfolio, diversifying our end markets across Canada and Asia, and expanding our capabilities to include design, engineering, and system integration. At the same time, we continue to leverage our offsite fabrication capabilities to scale up in response to accelerating demands and to compress delivery time for our customers. Our differentiated capabilities have resulted in our backlog growing ahead of expectations with new complex awards, strong customer engagement, and international expansion. This momentum gives us the confidence that we'll finish this year strong as we have previously guided, and we now foresee that data center solutions will exit 2027 at an annualized revenue run rate exceeding $2 billion.

Speaker #3: This quarter, we delivered on our strategic pathways—adding new hyperscaler customers to our portfolio, diversifying our end markets across Canada and Asia, and expanding our capabilities to include design, engineering, and system integration.

Speaker #3: At the same time, we continue to leverage our offsite fabrication capabilities to scale up in response to accelerating demands and to compress delivery time for our customers.

Speaker #3: Our differentiated capabilities have resulted in our backlog growing ahead of expectations, with new contract awards, strong customer engagements, and international expansion. This momentum gives us the confidence that we'll finish this year strong, as we had previously guided, and we now foresee that Data Center Solution will exit 2027 at an annualized revenue run rate exceeding $2 billion.

Speaker #3: But this is just the start. Our ambition is to become an industrial technology partner to the data center industry, and our expanding role in design and integration provides us with a platform to add adjacent capabilities, including decarbonized power and cooling solutions.

Olivier Le Peuch: But this is just the start. Our ambition is to become an industrial technology partner to the data center industry, and our expanding role in design and integration provides us a platform to add adjacent capabilities, including decarbonized power and cooling solutions. These are natural extension of our domain expertise in process engineering and complex energy systems. Given the pace of market development, we can accelerate this strategy further through partnerships and acquisitions. Example of this includes our recent alliance with Liberty Energy that will combine SLB modular infrastructure solution and global market reach with Liberty behind the meter power generation system. In addition to our pilot project for next generation geothermal power development to support future data center demand. These are exciting steps toward becoming a critical infrastructure partner for the AI economy.

Speaker #3: These are natural extensions of our domain expertise in process engineering and complex energy systems. Given the pace of market development, we can accelerate this strategy further through partnerships and acquisitions.

Speaker #3: An example of this includes our recent alliance with Liberty Energy that will combine SLB’s modular infrastructure solution and global market reach with Liberty’s behind-the-meter power generation system.

Speaker #3: In addition to our pilot reformat for next-generation geothermal power development to support future data center demand, these are exciting steps toward becoming a critical infrastructure partner for the AI economy.

Speaker #3: Together, this strategic investment offers SLB a broader and more resilient growth profile for the future—anchored in the core, accelerated by digital, and expanded through data center solutions.

Olivier Le Peuch: Together, these strategic investments offer SLB a broader and more resilient growth profile for the future, anchored in the core, accelerated by digital, and expanded through data center solutions. Let me now turn to our outlook for Q3, followed by our preliminary view of Q4. Turning to our Q3 outlook, our base case assumes a gradual recovery in Middle East activity, consistent with the pace we observed toward the end of Q2 as we continue to remobilize operation across the countries affected by the conflict. Based on this trajectory, we expect global sequential revenue growth between 3% and 4%, with adjusted EBITDA margin expansion of approximately 75 basis points. At the division level, we anticipate revenues of the core divisions to increase sequentially in the low to mid-single digits, while digital revenue is expected to grow in the low single digits.

Speaker #3: Let me now turn to our outlook for the third quarter, followed by our preliminary view of the fourth quarter. Turning to our third quarter outlook, our base case assumes a gradual recovery in Middle East activity, consistent with the pace we observed toward the end of the second quarter, as we continue to remobilize operations across the countries affected by the conflict.

Speaker #3: Based on this trajectory, we expect global sequential revenue growth between 3% and 4%, with adjusted EBITDA margin expansion of approximately 75 basis points. At the division level, we anticipate revenues of the core divisions to increase sequentially in the low to mid-single digits, while digital revenue is expected to grow in the low single digits.

Speaker #3: The heightened tension recently observed in the Middle East has not had a material impact on our current activity. However, we have developed a downside scenario to help model the potential impacts of the ongoing geopolitical volatility.

Olivier Le Peuch: The heightened tension recently observed in the Middle East has not had a material impact on our current activity. However, we have developed a downside scenario to help model the potential impacts of the ongoing geopolitical volatility. In the event of a significant re-escalation that disrupts ongoing remobilization efforts and results in flat sequential Middle East revenue, we estimate Q3 revenue will be approximately $150 million lower than our base case assumption. This would translate into an adjusted EBITDA headwind of approximately $75 million. The impact of this downside scenario would be concentrated primarily in the Well Construction and Reservoir Performance divisions. Looking ahead to Q4, our preliminary outlook assumes that Middle East activity reaches between $2.1 billion and $2.2 billion, or approximately 95% of the revenue achieved in Q4 2025.

Speaker #3: In the event of a significant re-escalation that disrupts ongoing remobilization efforts and results in flat sequential Middle East revenue, we estimate third quarter revenue will be approximately $150 million lower than our base case assumption.

Speaker #3: This will translate into an adjusted EBITDA headwind of approximately $75 million. The impact of this downside scenario will be concentrated primarily in the Well Construction and Reservoir Performance divisions.

Speaker #3: Looking ahead to the fourth quarter, our preliminary outlook assumes that Middle East activity reaches between $2.1 billion and $2.2 billion, or approximately 95% of the revenue achieved in the fourth quarter of 2025.

Speaker #3: Based on this assumption, and supported by deepwater momentum and typical year-end digital end product sales, we expect fourth quarter revenue to surpass $10 billion.

Olivier Le Peuch: Based on this assumption, and supported by deepwater momentum and a typical year-end Digital & Integration product sales, we'll expect Q4 revenue to surpass $10 billion, representing approximately 5% growth year-over-year. We'll also expect adjusted EBITDA margin to be approximately 24%, in line with Q4 of last year. While this outlook remains dependent on certain conditions, primarily related to the Middle East conflict, we view it as an encouraging indicator of the underlying strength of the business and believe it will position us well to deliver solid growth in 2027. I will now turn the call over to Stephane to discuss our financial results in more detail.

Speaker #3: Representing approximately 5% growth year over year. We also expect adjusted EBITDA margin to be approximately 24%, in line with the fourth quarter of last year.

Speaker #3: While this outlook remains dependent on certain conditions, primarily related to the Middle East conflict, we view it as an encouraging indicator of the underlying strengths of the business and believe it will position us well to deliver solid growth in 2027.

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. Second quarter earnings per share, excluding charges and credits, was $0.55. This represents an increase of $0.03 sequentially and a decrease of $0.19 when compared to the second quarter of last year.

Stephane Biguet: Thank you, Olivier, and good morning, ladies and gentlemen. Q2 earnings per share, excluding charges and credits, was $0.55. This represents an increase of $0.03 sequentially and a decrease of $0.19 when compared to Q2 of last year. During the quarter, we recorded $0.03 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our Q2 revenue of $9 billion increased 3% sequentially despite severe disruptions in the Middle East. Strong performance in Latin America, Europe and Africa, US Land, and Asia more than offset the decline in the Middle East, where revenue fell 13% sequentially to $1.66 billion. Despite the headwinds from the Middle East, our pre-tax segment operating margin increased 49 basis points sequentially, and our adjusted EBITDA margin increased 83 basis points sequentially.

Stéphane Biguet: Thank you, Olivier, and good morning, ladies and gentlemen. Q2 earnings per share, excluding charges and credits, was $0.55. This represents an increase of $0.03 sequentially and a decrease of $0.19 when compared to Q2 of last year. During the quarter, we recorded $0.03 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our Q2 revenue of $9 billion increased 3% sequentially despite severe disruptions in the Middle East. Strong performance in Latin America, Europe and Africa, US Land, and Asia more than offset the decline in the Middle East, where revenue fell 13% sequentially to $1.66 billion. Despite the headwinds from the Middle East, our pre-tax segment operating margin increased 49 basis points sequentially, and our adjusted EBITDA margin increased 83 basis points sequentially.

Speaker #2: During the quarter, we recorded $0.03 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our second quarter revenue of $9 billion increased 3% sequentially, despite severe disruptions in the Middle East.

Speaker #2: Strong performance in Latin America, Europe, and Africa, US land, and Asia more than offset the decline in the Middle East, where revenue fell 13% sequentially to $1.66 billion.

Speaker #2: Despite the headwinds from the Middle East, our pre-tax segment operating margin increased 49 basis points sequentially and our adjusted EBITDA margin increased 83 basis points sequentially.

Speaker #2: As it relates specifically to the Middle East, while the revenue shortfall was close to our expectations, we took some temporary cost actions to alleviate the detrimental effect on our earnings.

Stephane Biguet: As it relates specifically to the Middle East, while the revenue shortfall was close to our expectations, we took some temporary cost actions to alleviate the detrimental effect on our earnings. As a result, the sequential impact on our earnings per share was slightly below the low end of the $0.06 to $0.08 range that we originally indicated for Q2. Let me now go through the Q2 results for each division. Q2 Digital & Integration revenue of $697 million increased 9% sequentially, driven by higher Digital & Integration exploration revenue and higher sales in platforms and applications. Digital & Integration pre-tax operating margin of 27.8% expanded 683 basis points. While adjusted EBITDA margin of 34.7% increased 860 basis points. These increases were due to higher sales of exploration data licenses and transfer fees, as well as improved profitability in Digital & Integration operations and platforms and applications.

Stéphane Biguet: As it relates specifically to the Middle East, while the revenue shortfall was close to our expectations, we took some temporary cost actions to alleviate the detrimental effect on our earnings. As a result, the sequential impact on our earnings per share was slightly below the low end of the $0.06 to $0.08 range that we originally indicated for Q2. Let me now go through the Q2 results for each division. Q2 Digital & Integration revenue of $697 million increased 9% sequentially, driven by higher Digital & Integration exploration revenue and higher sales in platforms and applications. Digital & Integration pre-tax operating margin of 27.8% expanded 683 basis points. While adjusted EBITDA margin of 34.7% increased 860 basis points. These increases were due to higher sales of exploration data licenses and transfer fees, as well as improved profitability in Digital & Integration operations and platforms and applications.

Speaker #2: As a result, the sequential impact on our earnings per share was slightly below the low end of the $0.06 to $0.08 range that we originally indicated for the second quarter.

Speaker #2: Let me now go through the second quarter results for each division. Second quarter digital revenue of $697 million increased 9% sequentially, driven by higher digital exploration revenue and higher sales in platforms and applications.

Speaker #2: Digital pre-tax operating margin of 27.8% expanded 683 basis points, while adjusted EBITDA margin of 34.7% increased 860 basis points. These increases were due to higher sales of exploration data licenses and transfer fees, as well as improved profitability in digital operations, platforms, and applications.

Speaker #2: Reservoir performance revenue of $1.6 billion declined 2% sequentially, while pre-tax operating margin of 14.9% decreased 121 basis points. These decreases were primarily due to operational disruptions related to the Middle East conflict.

Stephane Biguet: Reservoir Performance revenue of $1.6 billion declined 2% sequentially, while pre-tax operating margin of 14.9% decreased 121 basis points. These decreases were primarily due to operational disruptions related to the Middle East conflict. Well Construction revenue of $2.7 billion decreased 2% sequentially, primarily as a result of the disruptions in the Middle East, partially offset by higher drilling activity in Latin America. Pre-tax operating margin of 15.2% was essentially flat sequentially, as lower profitability in the Middle East was offset by improved profitability in North America and Latin America. Finally, Production Systems revenue of $3.8 billion increased 7% sequentially, driven by higher revenue from OneSubsea, as well as increased sales of artificial lift valves, surface production systems, and completions. Production Systems pre-tax operating margin increased 138 basis points to 15.5%, primarily due to improved profitability in OneSubsea and artificial lift.

Stéphane Biguet: Reservoir Performance revenue of $1.6 billion declined 2% sequentially, while pre-tax operating margin of 14.9% decreased 121 basis points. These decreases were primarily due to operational disruptions related to the Middle East conflict. Well Construction revenue of $2.7 billion decreased 2% sequentially, primarily as a result of the disruptions in the Middle East, partially offset by higher drilling activity in Latin America. Pre-tax operating margin of 15.2% was essentially flat sequentially, as lower profitability in the Middle East was offset by improved profitability in North America and Latin America. Finally, Production Systems revenue of $3.8 billion increased 7% sequentially, driven by higher revenue from OneSubsea, as well as increased sales of artificial lift valves, surface production systems, and completions. Production Systems pre-tax operating margin increased 138 basis points to 15.5%, primarily due to improved profitability in OneSubsea and artificial lift.

Speaker #2: Well Construction revenue of $2.7 billion decreased 2% sequentially, primarily as a result of disruptions in the Middle East, partially offset by higher drilling activity in Latin America.

Speaker #2: Pre-tax operating margin of 15.2% was essentially flat sequentially, as lower profitability in the Middle East was offset by improved profitability in North America and Latin America.

Speaker #2: Finally, Production Systems revenue of $3.8 billion increased 7% sequentially, driven by higher revenue from OneSubsea as well as increased sales of artificial lift, valves, surface production systems, and completions.

Speaker #2: Production systems' pre-tax operating margin increased 138 basis points to 15.5%, primarily due to improved profitability in one subsea and artificial lift. Margin also benefited from the accretive contribution of ChampionX's production chemicals and artificial lift businesses.

Stephane Biguet: Margin also benefited from the accretive contribution of ChampionX's production chemicals and artificial lift businesses. Turning to our liquidity. We ended the quarter with net debt of $8.7 billion. We generated $1.4 billion of cash flow from operations and free cash flow of $716 million during the quarter. This represents a $739 million increase in free cash flow compared to the last quarter, which is largely due to seasonal improvements in working capital, including the absence of the annual employee incentive payouts in Q1. Consistent with our historical trends, we expect our free cash flow in H2 of the year to be materially higher than in H1 on improved earnings, higher customer collections, and lower inventories. Capital investments, inclusive of CapEx and investments in APS projects and exploration data, were $643 million in Q2.

Stéphane Biguet: Margin also benefited from the accretive contribution of ChampionX's production chemicals and artificial lift businesses. Turning to our liquidity. We ended the quarter with net debt of $8.7 billion. We generated $1.4 billion of cash flow from operations and free cash flow of $716 million during the quarter. This represents a $739 million increase in free cash flow compared to the last quarter, which is largely due to seasonal improvements in working capital, including the absence of the annual employee incentive payouts in Q1. Consistent with our historical trends, we expect our free cash flow in H2 of the year to be materially higher than in H1 on improved earnings, higher customer collections, and lower inventories. Capital investments, inclusive of CapEx and investments in APS projects and exploration data, were $643 million in Q2.

Speaker #2: Now turning to our liquidity. We ended the quarter with net debt of $8.7 billion. We generated $1.4 billion of cash flow from operations and free cash flow of $716 million during the quarter.

Speaker #2: This represents a $739 million increase in free cash flow compared to the last quarter, which is largely due to seasonal improvements in working capital, including the absence of the annual employee incentive payouts in the first quarter.

Speaker #2: Consistent with our historical trends, we expect our free cash flow in the second half of the year to be materially higher than in the first half.

Speaker #2: On improved earnings, higher customer collections, and lower inventories. Capital investments, inclusive of CapEx and investments in APS projects and exploration data, were $643 million in the second quarter.

Speaker #2: For the full year, we still expect capital investments to be approximately $2.5 billion. During the quarter, we repurchased $648 million of our stock and still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025.

Stephane Biguet: For the full year, we still expect capital investments to be approximately $2.5 billion. During the quarter, we repurchased $648 million of our stock and still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. Lastly, we are still targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. I will now turn the conference call back to Olivier.

Stéphane Biguet: For the full year, we still expect capital investments to be approximately $2.5 billion. During the quarter, we repurchased $648 million of our stock and still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. Lastly, we are still targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. I will now turn the conference call back to Olivier.

Speaker #2: Lastly, we are still targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. I will now turn the conference call back to Olivier.

Speaker #3: Thank you, Stephane. I believe we are now ready for the questions session. Thank you.

Olivier Le Peuch: Thank you, Stephane. I believe we are now ready for the questions session. Thank you.

Speaker #1: Thank you. 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: Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Scott Gruber with Citigroup. Your line is open.

Speaker #1: We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Scott Gruber with Citigroup. Your line is open.

Scott Gruber: Yes. Good afternoon on your end, Olivier and Stephane.

Speaker #3: Yes, good afternoon. On your end, Olivier and Stephane.

Speaker #2: Yeah, good morning—and good morning, Scott.

Olivier Le Peuch: Yeah. Good morning.

Stephane Biguet: Good morning, Scott.

Stéphane Biguet: Good morning, Scott.

Speaker #3: Thank you. We all appreciate the guidance on Q3 and Q4, given the moving—getting back to what I think was $2.1 to $2.2 billion in Q4, or 95% of last year.

Scott Gruber: Thank you. We all appreciate the guidance on Q3 and Q4, given the moving pieces. You mentioned the Middle East getting back to, I think it was $2.1 to 2.2 billion in Q4, 95% of last year. How much of a step-up is that from Q3, and how do you see the other geo markets stepping up in Q4, if you can unpack that, then move to $10 billion. As we start to think about 2027, is that $10 billion a good run rate to think about the potential for your top line in 2027, so call it something close to a $40 billion top-line run rate next year. Is that reasonable?

Speaker #3: How much of a step-up is that from 3Q and how do you see the other geo markets stepping up in 4Q with you can unpack that move to 10 billion and, you know, as we start to think about 2027, you know, is that 10 billion a good run rate to think about, you know, the potential for your top line in '27, you know, so-called you know, something close to a $40 billion top line run rate next year.

Speaker #3: Is that reasonable?

Speaker #2: I think I will not comment at this point on ’27, but I can't comment on Q4 and what it means for the setting and accompanying outlook that we see.

Olivier Le Peuch: I think I will not comment at this point on 2027, but I can comment on Q4 and what it means for the setting and accompanying outlook that we see. First, to comment very broadly on the Q3 sequence and the Q4 sequence. You see Q4 step-up from Q3 will be characterized by a combination of factors. The first being the further Middle East recovery that will indeed, we believe, step up and the assumption it will reach up to 95% of last year Q4. The second factor will be the usual year-end sales into Digital & Integration and Production Systems, and finally, data center.

Speaker #2: First, to comment very broadly on the Q3 sequence and the Q4 sequence. Obviously, the Q4 step-up from the third quarter will be characterized by a combination of factors.

Speaker #2: The first being the further Middle East recovery that will, indeed, we believe, step up, and the assumption that it will reach up to 95% of last year's Q4.

Speaker #2: The second factor will be the usual year-end sales into Digital and Production Systems, and finally, Data Center. But underlying all of this—as we will expect growth sequentially both in North America and international at that stage—are the fundamentals of the market that I believe give us a business outlook that is very compelling.

Olivier Le Peuch: Underlying all of this, as we would expect, growth sequentially both in North America and international at that stage, are the fundamental of the market that I believe give us a business outlook that is very compelling, that combines not only the rebound on Middle East that will continue, but also the setting up of the offshore deepwater environment that will add to it, and the strengths we have developed into production recovery to continue benefits in short cycle. It will be a long and short cycle exposure, long cycle to deepwater, short cycle to production recovery, and the kick of the Middle East recovery developing at scale in Q4 and continuing throughout 2027. Indeed, it is highly compelling, adding to the secular trend of Digital & Integration and to the significant strength and scale that we are foresee in data center going forward.

Speaker #2: That combines not only the rebound in the Middle East that will continue, but also the setting up of the offshore depot environment that will add to it.

Speaker #2: And the strengths we have developed into production recovery will contribute benefits in the short cycle. So, it will be both a long and short cycle exposure.

Speaker #2: Long cycle to the border, short cycle to production recovery, and the kickoff of the Middle East recovery developing at scale in the fourth quarter and continuing throughout '27.

Speaker #2: So indeed, it is highly compelling, adding to the circular trend of digital, and to the significant strengths and scale that we are fostering in data center going forward.

Speaker #3: And Scott, to clarify your specific question on the Middle East, just to put the numbers back together. So, first, Q2 actual revenue in the Middle East was $1.66 billion.

Stephane Biguet: Scott, to clarify your specific question on the Middle East, just to put the numbers back together. First, Q2 actual revenue in the Middle East was $1.66 billion, and we have assumed in our base case scenario where the global revenue grows between 3% and 4% sequentially, that the Middle East will recover gradually in Q3. If it doesn't, if current escalation cease the ongoing mobilization, that Middle East revenue would be $150 million lower than in our base case, and it would bring it back to more or less the level of Q2. That gives you the range where it could end up in Q3.

Stéphane Biguet: Scott, to clarify your specific question on the Middle East, just to put the numbers back together. First, Q2 actual revenue in the Middle East was $1.66 billion, and we have assumed in our base case scenario where the global revenue grows between 3% and 4% sequentially, that the Middle East will recover gradually in Q3. If it doesn't, if current escalation cease the ongoing mobilization, that Middle East revenue would be $150 million lower than in our base case, and it would bring it back to more or less the level of Q2. That gives you the range where it could end up in Q3.

Speaker #3: And we have assumed in our base case scenario, where the global revenue grows between 3% and 4% sequentially, that the Middle East will recover gradually.

Speaker #3: In the third quarter—if it doesn't, if the current escalation sees the ongoing mobilization, that Middle East revenue would be $150 million lower than in our base case, and it would bring it back to more or less the level of Q2.

Speaker #3: So that gives you the range where it could end up in the third quarter.

Speaker #2: Well, I appreciate that color. And then my follow-up is on exploration. You're witnessing a nice pickup currently in your data library sales, and I would assume kind of across wireline, etc.

Scott Gruber: Well, I appreciate that color. My follow-up is on exploration. You're witnessing a nice pickup currently in your data library sales, and I would assume kind of across wireline, et cetera. How are you thinking about the durability of the exploration cycle? Is this just a reaction to higher crude prices? Do you think we'll see a multi-year improvement in exploration activity, given the need for the industry to locate new reserves as shale production growth slows and in order to improve the diversity of supply, given the Middle East conflict? Just your thoughts on the durability of the exploration cycle would be great.

Speaker #2: How are you thinking about the durability of the exploration cycle? Is this, you know, just a reaction to higher crude prices, or do you think we'll see a multi-year improvement in exploration activity, given the need for the industry to locate new reserves as shale production growth slows, and in order to improve the diversity of supply given the Middle East conflict?

Speaker #2: Just your thoughts on the durability of the exploration cycle would be great.

Speaker #3: Yeah, I think indeed the fundamental first are favorable and constructive for the global exploration. And it's driven by the energy security, by the resource exploiting resource national resource to and to the need for certain, if not the majority of the customer to replace their reserve.

Olivier Le Peuch: Yeah, I think indeed, the fundamental first are favorable and constructive for the global exploration, and it's driven by the energy security, by the exploiting resource, national resource, and to the need for certain, if not the majority of the customer, to replace their reserve and to bring and build a long-term portfolio that includes deepwater, highly valuable resource. We see that exploration cycle and exploration appraisal is developing nicely, and I think we see this not being a trend of one quarter, but a long-term trend that will support reserve replacement across different basins, both in frontier, infrastructure-led exploration, deepwater, but also in some land exploration to further secure eventual development in some region. We see this as an underlying strength, and we have the portfolio to match it.

Speaker #3: And to bring and build the long-term portfolio that includes Depoter, a highly valuable resource. So we see that the exploration cycle and appraisal is developing nicely.

Speaker #3: And I think we see this not being a trend of one quarter, but a long-term trend that will support reserve replacement across different basins, both in frontier and infrastructure-led exploration, but also in some land operation to further secure even shale development in some regions.

Speaker #3: So we see this as an underlying strength, and we have the portfolio to match it. We have the reserve performance wireline portfolio with unique differential technology that is being used on the vast majority of the high-value exploration wells that happen.

Olivier Le Peuch: We have the Reservoir Performance wireline portfolio with unique differentiated technology that are being used on vast majority of the high-value wells, exploration wells that happen. We have the Digital offering, both in our platform and application, but also obviously into our exploration data, as it was highlighted this quarter. We are introducing new technology in Well Construction, including AlphaSight, which is the latest generation of our geosteering tool that provides the best performing tool to place exploration well in the spot for maximum success. We believe we are very well placed to benefit from this global trend.

Speaker #3: We have the digital offering both in our platform and application, but also obviously in our exploration data, as was highlighted this quarter. And we are introducing new technology in well construction, including our Facade, which is the latest generation of our Jousting tool that provides the best performing tool to place exploration wells in the spot for maximum success.

Speaker #3: So, we believe we are very well placed to benefit from this global trend.

Scott Gruber: Great. I appreciate the color. Thank you.

Speaker #2: Great. I appreciate the color. Thank you.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Stephane Biguet: Yep.

Stéphane Biguet: Yep.

Speaker #2: Yep.

Speaker #1: Your next question comes from James West of Melius Research. Your line is open.

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

Speaker #4: Thanks. Hi Olivier, Stephane.

James West: Thanks. Hi, Olivier, Stephane.

Speaker #2: Hey.

Olivier Le Peuch: Hey, good morning, James.

Speaker #3: Good morning guys.

Speaker #4: So, no problem. So, Olivier, I wanted to just hone in on the Middle East situation. Obviously, people want to get back to work. We want to see a recovery post-conflict.

James West: So-

James West: James.

Olivier Le Peuch: James.

James West: No problem. Olivier, I wanted to just hone in on the Middle East situation. Obviously, people want to get back to work. We want to see a recovery post conflict. You've probably been in the region recently, and I'm sure you're in touch with everybody in the region. What's the level of urgency to get things flowing again, get back to work, get drilling activity and production activity going? I know you've talked about 95% of Q4 last year levels, but what do you think we look like after we get back to activity?

Speaker #4: You've probably been in the region recently, and I'm sure you're in touch with everybody in the region. What's the level of urgency to get things flowing again, get back to work, and get joint activity and production activity going?

Speaker #4: And I know you've talked about 95% of fourth quarter last year levels, but what do you think we look like, kind of, after we get back to activity?

Speaker #3: Well, clearly we see that the engagement, the engagement level and frequency of engagement for customers in recent weeks and days, actually is increasing. And to secure mobilization of resources to plan and to tailor solutions to the recovery of the wells that have been shut, or to plan for accelerating the deployment of resources to do the infiltrating to catch up and expand capacity.

Olivier Le Peuch: Clearly, we see that the engagement level and frequency of engagement for customers in recent weeks and days actually is increasing. To secure mobilization resource to plan and to tailor solution to the recovery of the wells that have been shut, or to plan for accelerating the deployment of resource to do the infill drilling to catch up and expand capacity. I think advice from country to country, some like Iraq, are more concerned and are constrained by security. We have seen activity restored and starting to be strengthening in UAE, in Qatar, to a certain extent in Saudi. I think these are the sign that I think activity is being built gradually. We have not seen a material impact in the recent conflict re-escalation as we have seen in the last 12 days.

Speaker #3: And I think it varies from country to country. Some, like Iraq, are more concerned and are constrained by security. But we have seen activity restored and starting to be strengthened in the UAE and Qatar, and to a lesser extent in Saudi.

Speaker #3: And I think these are the signs that activity is being built gradually. We have not seen material impact in the recent conflict re-escalation as we have seen in the last 12 days.

Speaker #3: And customer are eager to restore production and hence they are looking for solution for well intervention they're looking for solution that can assure that the shutting well can be restored and the solution that are fit be it production recovery solution or be it intervention solution can be deployed at scale in the coming weeks and coming months.

Olivier Le Peuch: Customer are eager to restore production, hence, they are looking for solutions for well intervention. They're looking for solutions that can assure that the shutting well can be restored, the solution that are fit, be it production recovery solution or be intervention solution, can be deployed at scale in the coming weeks and coming months. Yes, activity engagement is happening, I think we are getting the strong signal that, aside from re-escalation and worsening of the conflict as it stands today, we see a gradual recovery unfolding in Q3.

Speaker #3: So yes, activity engagement is happening, and I think we are getting the strong signal that, aside from re-escalation and worsening of the conflict as it stands today, we see a gradual recovery unfolding in the third quarter.

Speaker #4: Okay, great. And then maybe to hone in a little bit more on the exact nature of the work you think you'll see initially, I'm assuming it's going to be a lot of production-related work.

James West: Okay, great. Maybe to hone in a little bit more on the exact nature of the work you think you'll see initially. I'm assuming it's going to be a lot of production-related work. Is that a fair assumption that there will be a lot of interventions and a lot of the ChampionX business getting active first before we see new well drilling?

Speaker #4: Is it a fair assumption that there will be a lot of interventions and a lot of the ChampionX business getting active first before we see new well drilling?

Speaker #3: I think I see threefold and three vectors of activity. One is indeed the combination of production recovery, which includes well intervention, includes ChampionX capability, and includes cultivating intervention to restore or to kick wells back into production.

Olivier Le Peuch: I think I see threefold, and three vector of activity.

James West: Okay

James West: the combination of production recovery that includes well intervention, includes ChampionX capability, that includes coiled tubing intervention to restore or to kick wells back into production. I see also digital being considered, being a new catalyst, this crisis being an occasion, a catalyst for accelerating digital deployment to unlock the potential of existing wells and to assure best performance. We are being involved in several contracting region to make it happen. Finally, for the company and the region or the country that can mobilize rigs for infill drilling and expansion of capacity, going beyond the intervention, going beyond restoring production and accelerating capacity to respond to the lost supply in the last few months.

Olivier Le Peuch: the combination of production recovery that includes well intervention, includes ChampionX capability, that includes coiled tubing intervention to restore or to kick wells back into production. I see also digital being considered, being a new catalyst, this crisis being an occasion, a catalyst for accelerating digital deployment to unlock the potential of existing wells and to assure best performance. We are being involved in several contracting region to make it happen. Finally, for the company and the region or the country that can mobilize rigs for infill drilling and expansion of capacity, going beyond the intervention, going beyond restoring production and accelerating capacity to respond to the lost supply in the last few months.

Speaker #3: I also see digital being considered as a new catalyst, with this crisis acting as an occasional catalyst for accelerating digital deployment to unlock the potential of existing wells and to ensure best performance. We are involved in several contracting regions to make it happen.

Speaker #3: And finally, for the company and the region or the country that can mobilize rigs for infill drilling and expansion of capacity—going beyond intervention, going beyond restoring production, and accelerating capacity to respond to the lost supply in the last few months.

Speaker #4: Great. Thanks, Olivier.

James West: Great. Thanks, Olivier.

Speaker #3: Thank you, James.

Olivier Le Peuch: Thank you, James.

Speaker #1: Your next question comes from David Anderson with Barclays. Your line is open.

Operator: Your next question comes from David Anderson with Barclays. Your line is open.

Speaker #2: Hi, good morning, gentlemen. Improving offshore businesses is clearly an underlying theme for you this quarter. FIDs this year have already surpassed the full year 2025.

David Anderson: Hi. Good morning, gentlemen. An improving offshore business is clearly an underlying theme for you this quarter. FIDs this year have already surpassed full year 2025. Deepwater rig count is higher as well. I would think you'd have better visibility here than just about any other part of your business for 2027. The question I'm just wondering is, should we at least see double-digit growth in offshore next year for both production side with OneSubsea and higher activity in Well Construction?

Speaker #2: Deepwater recount is higher as well. I would think you'd have better visibility here than just about any other part of your business for '27.

Speaker #2: So, kind of the question I'm just wondering is, should we at least see double-digit growth in offshore next year for both the production side, with OneSubsea and higher activity, and well construction?

Speaker #3: I think, directionally, it's fair to say that the acceleration of the FID we see finally setting in place this year, and the pipeline growing next year, will set the tone for, indeed, a deepwater activity that will certainly grow directionally well into next year.

Olivier Le Peuch: I think directionally it's fair to say that the acceleration of the FID we see finally setting in place this year and the pipeline even going next year, that will set the tone for indeed a deeper activity that will certainly grow directionally well into next year. We have set an ambition, as you know, that our subsea booking will reach $9 billion over two years, and hence, being visibly attractive to our current revenue rate into 2026 and 2027. Yes, globally and directionally we expect visible growth. Difficult to say at this point, depending on the whole mobilization and timing of mobilization throughout the second half of this year and throughout next year and the exact timing of the FID are still dependent upon all parties and including the host country to sign agreement. This will still push or pull some FID approval here and there.

Speaker #3: We have set an ambition, as you know, that our subsea bookings will reach $9 billion over two years, and hence be visibly attractive compared to our current revenue rate.

Speaker #3: Into '26 and '27. So yes, globally and directionally we expect visible growth. It's difficult to say at this point, depending on the whole mobilization and timing of mobilization throughout the second half of this year and throughout next year, and the exact timing of the FID that is still dependent upon all parties, including the host country, to find agreement.

Speaker #3: And this will still push or pull some FID approval here and there, but we see significant activity already starting in Africa—West African and East African—and in the coming months we see the Mediterranean to be a nice setup in 2027.

Olivier Le Peuch: We see significant activity already starting in Africa, West Africa and East Africa in the coming months. We see Mediterranean to be a nice setup in 2027. We see East Asia following the FID and some contractor award to be also very prolific for gas development. We continue to see Latin America from Brazil to Guyana and Suriname to continue to grow and to be an engine of growth. Not forgetting the mature basin of North Sea, Norwegian sector and Gulf of Mexico that continue to look for a capital-efficient solution, including boosting, as you have seen some announcement, and we continue to develop at pace the proven reserve and focus on the infrastructure-led development.

Speaker #3: We see East Asia following the FID, and some contact abroad to be also very prolific for gas development. And we continue to see Latin America, from Brazil to Guyana and Suriname, to continue to grow and to be an engine of growth.

Speaker #3: And not forgetting the mature basin of the North Sea Norwegian sector and Gulf of Mexico that continue to look for capital-efficient solutions, including boosting, as you have seen from some announcements.

Speaker #3: And we continue to develop at pace the proven reserve and focus on the infrastructure-led development. So you combine all of this, you have a setting that is highly favorable, that was in the making, and that to some extent, this crisis created the catalyst to secure and accelerate going forward as energy security—exploding resource—has become a priority, and gas development continues to be a driver as well.

Olivier Le Peuch: You combine all of this, you have a setting that is highly favorable, that was in the making. That to some extent, this crisis created the catalyst to secure and accelerate going forward as energy security, exploring resource has become a priority. Gas development will continue to be a driver as well.

Speaker #2: I appreciate the color there. If I could make my second question more of a macro question here—on the Middle East, you had mentioned production is going to take longer to return. I think that's a little bit controversial.

David Anderson: Appreciate that color there. If I could make my second question more of a macro question here. On the Middle East, you had mentioned production is going to take longer to return. I think that's a little bit controversial. I think the broader market seems to think that production comes right back very quickly within a couple of months. Can you tell us why you think that's going to take a little bit longer? Is that certain countries that are a little bit different? I know we're talking about this intervention work and everything happening. If you could just provide a little bit more detail on what you're seeing at the ground level and why you come to that conclusion.

Speaker #2: I think the broader market seems to think that production comes right back very quickly—within a couple of months. Can you tell us why you think that's going to take a little bit longer?

Speaker #2: Are there certain countries that are a little bit different? I mean, I know we're talking about this intervention work and everything happening.

Speaker #2: If you could just provide a little bit of a little bit more detail on kind of what you're seeing at kind of the ground level and why you come to that conclusion.

Speaker #3: Yeah, we believe that it will not be prudent to assume that things will be restored in weeks. And we believe that the condition has not been met yet, particularly around security in some countries, specifically Iraq, and for production capacity in Kuwait. This will not necessarily give, in the short term, the capability to unlock and come back to full production.

Olivier Le Peuch: Yeah. We believe that it would not be prudent to assume that the things will restore in weeks. We believe that the condition that has not met yet, and particularly around security in some countries, specifically Iraq, and for production capacity in Kuwait, will not necessarily give, in short term, the capability to unlock and come back to the full production. We are not only talking about the export capacity from the Strait of Hormuz or pipelines. I think this would take time. Now, the well intervention and the capacity that many countries have to restore, yes, it will take weeks and months. Yes, as we exit this year, certain countries will already be well on their way to have restored full capacity, if not being on their way to expand capacity beyond. I think we know that.

Speaker #3: Not only talking about the export capacity from the Strait or pipelines, but I think this will take time. Now, the well intervention and the capacity that many countries have to restore—yes, it will take weeks and months.

Speaker #3: And yes, as we exit this year, certain countries will already be well on their way to having restored full capacity, if not being on their way to expanding capacity beyond.

Speaker #3: And I think we know that. But it's a mix, and I think here I cannot do more than comment on grading the mix, from the ones that have been untouched, like Oman, to the ones that are severely damaged, like Bahrain, Iraq, and Kuwait, and in between, UAE and Saudi Aramco.

Olivier Le Peuch: It's a mix. I think here I cannot do more than comment on grading the mix from the one that are untouched, like Oman, or the one that are severely damaged, like Bahrain, Iraq, and Kuwait, and in between, UAE and Saudi Arabia. You put all of this into a different phasing, and depending on the mobilization resource, you'll have a grading of recovery of production. Yes, gradually it will improve, and gradually it will be over weeks, months, or quarter, depending on the condition that are set and depending on the resolution of the conflict will pan out to be always positive, in my opinion, and always gradually growing, going forward. It's very difficult to pinpoint a time where this will intersect the previous capacity or the previous production total.

Speaker #3: So, you put all of this into a different phasing, and depending on the mobilization resource, you'll have a grading of recovery of production. But yes, gradually it will improve.

Speaker #3: And gradually, it will be over weeks, months, or quarters depending on the conditions that are set and depending on how the resolution of the conflict pans out. It will always be positive, in my opinion.

Speaker #3: And it's always gradually growing, going forward. But it's very difficult to pinpoint a time when this will intersect the previous capacity or the previous production.

David Anderson: Okay. Appreciate your thoughts. Thank you.

Speaker #2: Okay, I appreciate your thoughts. Thank you.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Speaker #1: Your next question comes from Neil Mehta with Goldman Sachs. Your line is open.

Operator: Your next question comes from Neil Mehta with Goldman Sachs. Your line is open.

Speaker #4: Hey, good morning, Olivier and team. I really appreciate all the color you provided around data center opportunities and the path to $2 billion of exit rate revenue.

Neil Mehta: Hey, good morning, Olivier and team. I really appreciate all the color you provided around data center opportunity set and the path to $2 billion of exit rate revenue. I guess there are a couple components around it, but for those of us who have probably spent less time on these modular systems, can you just simplify what exactly is the product that you're providing here for every part of the data center, and what's the value add to customers? Can you just talk about how we should think about the economics of this? I would imagine it's a little bit lower EBITDA margin, but higher free cash flow conversion. Just thinking about the economics and then helping us simplify what the product offering is.

Speaker #4: I guess there are a couple of components around it, but for those of us who have probably spent less time on these modular systems, can you just simplify what exactly is the product that you're providing here for every part of the data center?

Speaker #4: And what's the value-add to customers? And then, can you just talk about how we should think about the economics of this? I would imagine it's a little bit lower EBITDA margin, but higher free cash flow conversion.

Speaker #4: So just thinking about the economics, and then helping us simplify what the product offering is.

Speaker #3: Yeah. So I think, to keep it simple and to explain how we developed the right of play into this market, I think you have to rewind the tape for two or three years.

Olivier Le Peuch: I think to keep it simple and to explain how did we develop the right of play into this market, I think you have to run the tape for two or three years. I think we have realized that we could deliver high quality, high availability modular construction equipment offsite to package this modular equipment destined towards the server hall of the data center, or destined towards the cooling equipment of the data center, and then package this with modular construction so that they are delivered from an offsite, large scale manufacturing site to the diversity of the data center site in any state or ultimately in any country. The benefit it brings to the hyperscaler, it brings reliable, scalable, and value assurance of delivering at a short lead time, flexibly across different data centers.

Speaker #3: And I think we have realized that we could deliver highly high-quality, high-reliability modular construction equipment offsite to package this modular equipment destined towards the server hall of the data center, destined towards the cooling equipment of the data center.

Speaker #3: And then package this in with modular construction so that they are delivered from an offsite, large-scale manufacturing site to the diversity of the data center site in any state, or ultimately in any country.

Speaker #3: So it brings the benefit to the hyperscaler. It provides reliable, scalable, and value assurance of delivery, with a shorter lead time, flexibly across different data centers.

Speaker #3: We have delivered, as we noted in the announcement we made last week, 1.3 gigawatts of various equipment capability across more than 20 or 30 different data centers from one single site of manufacturing at large scale.

Olivier Le Peuch: We have delivered, as we noted into the one announcement we did last week, a 1.3 GW of various equipment capacity across more than 20 or 30 different data centers from one single site of manufacturing large scale. That's the beauty of it. The value proposition and economics from the hyperscaler is that it provides reliable delivery at the shorter lead time, and it can demonstrate scalability for any data center in any state. It brings simplicity, it brings quality, and I think that's what we built on. It's both for server infrastructure or cooling solutions. It's built on a capability that we can transfer from our engineering processing capability, both the logistics, the manufacturing, and the engineering capability. We are starting to add design capability to it, as you have seen from the NVIDIA announcement.

Speaker #3: And that's the beauty of it. So the value proposition and economics from the hyperscaler is that it provides reliable delivery with a shorter lead time, and it can demonstrate scalability for any data center in any state.

Speaker #3: So it brings logistics simplicity. It brings quality, and I think that's what we built on. And it's both for several infrastructure or cooling solutions, and it's built on a capability that we can transfer from our engineering processing capability—both the logistics, the manufacturing, and the engineering capability. And we are starting to add design capability to it, as you have seen from the NVIDIA announcement: future-fitting of equipment, commissioning equipment, as well as you will see in the Meta announcement that we have made.

Olivier Le Peuch: Future fitting of equipment, commissioning equipment as well, as you will see into the Meta announcement that we have made. All in all, very interesting capability for the hyperscaler and something that they look for, and we are getting a lot of requests and a lot of pull, actually. Now, Neil, on the financial profile of this business, to your question. Yes, from a pure margin standpoint, this business is currently not accretive to SLB's overall margins. Of course, it's very accretive to top-line growth and very accretive to earnings growth. As you alluded to, it is a capital light business model that we have, and the type of contract and contractual terms we have result into very strong free cash flow generation. We are quite happy to see the earnings growth and the free cash flow of this business.

Speaker #3: So, all in all, very interesting capability for the hyperscaler and something that they look for, and we are getting a lot of requests and a lot of pull, actually.

Speaker #5: So now, Neil, on the financial profile of this business and to your question—yes, from a pure margin standpoint, this business is currently not accretive to SLB’s overall margins. But, of course, it's very accretive to top-line growth and very accretive to earnings growth.

Speaker #5: And as you alluded to, it is a capital-light business model that we have. And the type of contract and contractual terms we have result in very strong free cash flow generation.

Speaker #5: So we are quite happy to see the earnings growth and the free cash flow of this business.

Speaker #4: And maybe you can unpack the new announcement here around the gigawatt data center in Canada with Meta. How many more opportunities like that are there?

Neil Mehta: Maybe you can unpack the new announcement here around the GW data center in Canada with Meta. How many more opportunities like that are there? Can you give us a sense of what are the constraints to scaling this business? I would imagine that demand for prefab work is enormous. What is the constraint? Is it the facility size in Shreveport, for example? What's the limitation?

Speaker #4: And can you give us a sense of what the constraints are to scaling this business? I would imagine the demand for prefab work is enormous.

Speaker #4: So, what is the constraint? Is it the facility size and tree port, for example? What's the limitation?

Speaker #3: I think we have been able to scale this beyond what we had planned originally by expanding, improving, and optimizing, and by starting to scale within the constraints—or the compass—we have set.

Olivier Le Peuch: I think we have been able to scale this beyond what we had planned originally by expanding, by improving, by optimizing, and by starting to scale within the constraints of the campus we have set. For the specific Canada setup that we are preparing with Meta, we set up a sister center, if you like, a sister campus to what we have done in Shreveport. We know to start from scratch easily. This is, relatively speaking, a low capital intensity. We'll be ready to scale this because we have the lesson learned. We have done it at scale. We're delivering quite a capacity every month from the Shreveport campus. We'll expand this into Canada, and we will continue to do that as new business and new project unfold. In this particular case, we are doing a bit more than just delivering module.

Speaker #3: But for the specific Canada setup that we are preparing with Meta, we'll set up a sister center—if you like, a sister campus—to what we have done in Shiftport, in order to start from scratch easily.

Speaker #3: This is, relatively speaking, a low capital intensity, and we'll be ready to scale this because we have the lessons learned. We have done it at scale.

Speaker #3: We're delivering quite a capacity every month from the Shiftport campus, so we'll expand this into Canada. And we will continue to do that as new business and new projects unfold.

Speaker #3: I mean, in our case, we are doing a little bit more than just delivering the module. We are fitting the module in place onto the data center.

Olivier Le Peuch: We are fitting the module in place onto the data center. We are commissioning this, and we are passing into a level of system integration design that expand our capability set and prepare us for the next project award.

Speaker #3: We are commissioning these, and we are moving into the level of system integration design that expands our capability set and prepares us for the next project at work.

Neil Mehta: Yes.

Speaker #4: Yes.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Speaker #2: Your next question comes from Arun Jayaram with JP Morgan. Your line is open.

Operator: Your next question comes from Arun Jayaram with JPMorgan. Your line is open.

Speaker #3: Yeah, Olivia, good

Arun Jayaram: Yeah. Olivier, good morning.

Speaker #4: Good morning. I was wondering if you could talk a little bit more about your Middle East pipeline? We've seen a number of, call it, tender announcements from some of your OFS peers in Saudi Arabia and Iraq.

Olivier Le Peuch: Good morning.

Arun Jayaram: I was wondering if you could talk a little bit more about your Middle East pipeline. We've seen a number of, call it tender announcements from some of your OFS peers in Saudi Arabia and Iraq, and I was wondering if you could just talk a little bit about your pipeline of potential opportunities, and maybe just general relative positioning in light of some of these awards.

Speaker #4: And I was wondering if you could just talk a little bit about your pipeline of potential opportunities, and maybe just your general relative positioning in light of some of these awards.

Olivier Le Peuch: I feel very good about our position in Middle East. First, we have built quite a backlog of contract in the last 18 months, including the Mutriba award, including some award in Saudi, in Iraq, in UAE, and in Kuwait that we're executing and part of our backlog, and we feel very good about those wins and those contracts award. We believe that we have maintained, if not reinforced, in most of the country, our market position. You'd expect more award to be coming in the coming weeks or coming months that will solidify our market position. Again, we are proud of what we are delivering to our customers in the Middle East. We have a lot of fit for basin capability that are in place, that are organized.

Speaker #3: No, pretty very good about position Middle East. We have first we had built quite a backlog of contract in the last 18 months in the Mutriba award including the summer award in Saudi, in Iraq, in UAE.

Speaker #3: That we, and in Kuwait, that we're executing, and part of our backlog. We feel very good about those wins and those contract awards, and we believe that we have maintained, if not reinforced, in most of the countries, our market position.

Speaker #3: And we expect more awards to be coming in the coming weeks or months that will solidify our market position. So again, we are proud of what we are delivering to our customers in the Middle East.

Speaker #3: We have a lot of fit for base in capability that are in place that are recognized. We have a pretty large integration capability set in Saudi Aramco in Saudi and in other including in Kuwait or in Iraq that I think we're leveraging.

Olivier Le Peuch: We have a pretty large integration capability set in Saudi Aramco, in Saudi, and in other, including in Kuwait or in Iraq, that I think we're leveraging. We are more and more successful with our digital capability in the region. The current recovery of Middle East is calling upon our position and recovery capability, well intervention, chemistry, and production solution that we can fit for the market. We're very pleased. You see the size and the scale of our business today. We're not concerned about leaving behind opportunity. We will have a nice growth in H2 of this year as we have guided. We expect this to only expand into 2027.

Speaker #3: And we are more and more successful with our digital capability in the region. The current recovery in the Middle East is calling upon our production and recovery capability, well intervention chemistry, and production solutions that we can fit for the market.

Speaker #3: So we're very pleased, and you see the size and the scale of our business today. We're not concerned about leaving behind opportunity, and we will have nice growth in the second half of this year as we have guided, and we expect this to only expand into 2027.

Arun Jayaram: Got it. My follow-up, offshore, clearly a theme with this print. Olivier, I was wondering maybe you could give us a little bit of an update on the OneSubsea JV. We did notice quite a number of awards this quarter. You mentioned the $9 billion order ambitions. How is SLB evolving your product and solutions, the capabilities within the JV? Love to hear more about that.

Speaker #4: Got it. My follow-up: offshore is clearly a theme with this print. Olivia, I was wondering if you could give us a little bit of an update on the OneSubsea JV. We did notice quite a number of awards this quarter, and you mentioned the $9.9 billion order ambitions.

Speaker #4: How is SLB evolving? Your product and solutions capabilities within the JV—I’d love to hear more about that.

Speaker #3: No, I think we're indeed very happy with the momentum that we are seeing in the OneSubsea JV. I think we're benefiting from the portfolio we have.

Olivier Le Peuch: I think we're indeed very happy with the momentum that we are seeing in OneSubsea JV. I think we're benefiting from the portfolio we have. I think the portfolio that includes now what we needed to expand to be having a more complete portfolio of trees, manifold, and umbilicals, as you have seen, that I think that complements what we used to have in OneSubsea before. I think we have a more comprehensive portfolio that address all the basins and make us competitive to all the basins, and that have a fit solution for all the water condition and all the geology and all the characteristics of the fluids, gas or oil assets that we are addressing. In addition, we continue to see significant momentum in our processing and boosting solution, and we have seen some recently announced award on the boosting solution.

Speaker #3: I think the portfolio that includes now what we needed to expand to have a more complete portfolio of trees and manifold and umbilicals, as you have seen. I think that complements what we used to have in OneSubsea before.

Speaker #3: So I think we have a more comprehensive portfolio that addresses all the basins and that makes us competitive in all the basins, and have fit solutions for all the water conditions and all the geology, and all the characteristics of the fluids—gas or oil assets—that we are addressing.

Speaker #3: In addition, I think we continue to see significant momentum in our processing solution, and we have seen some recently announced awards on the boosting solution.

Speaker #3: And we continue to work with customers in the domain of production recovery to link the future recovery capability of their reserve with subsea processing capability that we have that is unique.

Olivier Le Peuch: We continue to work with customers in the domain of production. We can wait to link the future recovery capability of their reserve with subsea processing capability that we have that are unique. We continue to develop processing to differentiate. We continue to develop digital capability, and we continue to standardize and modularize our solution to make it more effective for deployment and to be more competitive into the standard trees, and manifold solutions. Again, we are successful across different basins in Africa, Asia, and Latin America. We are continuing to build on our legacy, Gulf of Mexico and the North Sea.

Speaker #3: So we continue to develop processing differentiators. We continue to develop digital capability, and we continue to standardize and modularize our solution to make it more effective for deployment and to be into the standard trees and manifold solution.

Speaker #3: So, again, we are successful across different basins—in Africa, in Asia, in Latin America. We'll continue to build on our legacy, Gulf of Mexico, and the North Sea.

Speaker #3: And you have seen that we have also strategically entered into alliance with Total and with BP, particularly to develop and to work side by side early in early FEED and design, to optimize the subsea architecture, to leverage the long-term solution that we foresee could unlock more economics for the customer and to position ourselves for life-of-field solution.

Olivier Le Peuch: You have seen that we have also strategically entered into alliance with Equinor and with BP, particularly, to develop and to work side by side in early FEED and design to optimize the subsea architecture, to leverage the long-term solution that we foresee could unlock more economics for the customer and to position ourselves for life of field solution. Life of field solution is the last part where we are investing to find a solution to intervene those wells and done some acquisition in that sense, and also continue to work with partners like Subsea 7 to provide end-to-end alliance solution for development or for intervention going forward. Very pleased with progress and certainly at the right time in this deepwater cycle rebound.

Speaker #3: Life of field solution is the last part where we are investing, to find solutions to intervene in those wells. We've done some acquisition in that sense and also continue to work with partners like Subsea 7 to provide end-to-end allowance solutions for development or for intervention going forward.

Speaker #3: So, we're very pleased with the progress and certainly at the right time in this deepwater cycle rebound.

Speaker #4: Great. Thank you.

Arun Jayaram: Great. Thank you.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Speaker #2: Your next question comes from Derek Podiser with Piper Sandler. Your line is open.

Operator: Your next question comes from Derek Podheiser with Piper Sandler. Your line is open.

Derek Podheiser: Hey, good morning. I wanted to ask about your margin outlook. Morning, in the core, OneSubsea, ChampionX, some of the synergy pulls through there. Well Construction held up really well. Just thinking about this margin momentum as you head into 2027 off that 24% EBITDA margin that you stated for your expectation for Q4 this year. Maybe just talk towards the core as far as momentum you're seeing into next year.

Derek Podhaizer: Hey, good morning. I wanted to ask about your margin outlook. Morning, in the core, OneSubsea, ChampionX, some of the synergy pulls through there. Well Construction held up really well. Just thinking about this margin momentum as you head into 2027 off that 24% EBITDA margin that you stated for your expectation for Q4 this year. Maybe just talk towards the core as far as momentum you're seeing into next year.

Speaker #5: Hey, good morning. One of the asks is about your margin outlook, so good morning. In the core, one subsea champion X, I'm wondering if the synergy pulls through there.

Speaker #5: Well construction held up really well. Just thinking about this margin momentum as you head into 2027 off that 24% EBITDA margin that you stated for your expectation for fourth quarter this year.

Speaker #5: So maybe you could just speak to the core in terms of the momentum you're seeing going into next year.

Stephane Biguet: Sure. On the OneSubsea side, if you remember, we had a few transitory issues and startup costs in Q1. The good news is that the margins increased in Q2. This is why you see Production Systems increasing margins as well. In H2, OneSubsea will continue to increase margin as well. It's a gradual increase throughout the quarters for OneSubsea. You mentioned ChampionX as well. As Olivier indicated, we are quite happy to see quarter after quarter ChampionX margins continuing to increase despite some inflationary pressure we have on chemicals that mostly come from the Middle East conflict, by the way. Regardless, because synergies are unfolding, we continue to see ChampionX margins increasing. Well Construction, yeah.

Stéphane Biguet: Sure. On the OneSubsea side, if you remember, we had a few transitory issues and startup costs in Q1. The good news is that the margins increased in Q2. This is why you see Production Systems increasing margins as well. In H2, OneSubsea will continue to increase margin as well. It's a gradual increase throughout the quarters for OneSubsea. You mentioned ChampionX as well. As Olivier indicated, we are quite happy to see quarter after quarter ChampionX margins continuing to increase despite some inflationary pressure we have on chemicals that mostly come from the Middle East conflict, by the way. Regardless, because synergies are unfolding, we continue to see ChampionX margins increasing. Well Construction, yeah.

Speaker #3: Sure. So, on the OneSubsea side, if you remember, we had a few transitory issues and startup costs in the first quarter. And the good news is that the margins increased in the second quarter.

Speaker #3: This is why you see production systems increasing margins as well. So, in the second half, OneSubsea will continue to increase margin as well.

Speaker #3: So, it's a gradual increase throughout the quarters for OneSubsea. You mentioned ChampionX as well. And, as Olivier indicated, we are quite happy to see, quarter after quarter, ChampionX margins continuing to increase despite some inflationary pressure we have on chemicals.

Speaker #3: But mostly come from the Middle East conflict, by the way. But regardless, because synergies are unfolding, we continue to see champion X margins increasing.

Speaker #3: And well construction, yeah. True, despite the severe disruption in the Middle East, they managed to hold the margins flat because we had a good mix of activities in Latin America and North America.

Olivier Le Peuch: True, despite the severe disruption in the Middle East, they managed to hold the margins flat because we had a good mix of activities in Latin America and North America. You put all this together, you of course will have end-of-year sales in Digital as well. Digital is always recording the best quarter margins in Q4. That's what will get us to this, more or less the same level in Q4 as we were in Q4 of last year, around 24%.

Stéphane Biguet: True, despite the severe disruption in the Middle East, they managed to hold the margins flat because we had a good mix of activities in Latin America and North America. You put all this together, you of course will have end-of-year sales in Digital as well. Digital is always recording the best quarter margins in Q4. That's what will get us to this, more or less the same level in Q4 as we were in Q4 of last year, around 24%.

Speaker #3: So, if you put all these together, you, of course, will have end-of-year sales in digital as well. Digital is always recording the best quarter margins in the fourth quarter.

Speaker #3: So that's what will get us to more or less the same level in Q4 as we were in Q4 of last year, around 24%.

Speaker #4: Yeah, great. That's helpful. And then, maybe sticking with digital—a very solid quarter, with growth across all four of your subsegments. I understand expiration can be a little lumpy through the year, but there's clear adoption and momentum across the other three segments.

Derek Podheiser: Got it. No, great. That's helpful. Maybe sticking on Digital, very solid quarter growth across all four of your subsegments. I understand exploration can be a little lumpy through the year, but clear adoption and momentum across the other three segments. It's this dynamic you really laid out for us at the recent Digital Day. Maybe if you could talk to us about some of your recent wins and really the primary drivers behind that growth and how you see adoption evolving over time.

Derek Podhaizer: Got it. No, great. That's helpful. Maybe sticking on Digital, very solid quarter growth across all four of your subsegments. I understand exploration can be a little lumpy through the year, but clear adoption and momentum across the other three segments. It's this dynamic you really laid out for us at the recent Digital Day. Maybe if you could talk to us about some of your recent wins and really the primary drivers behind that growth and how you see adoption evolving over time.

Speaker #4: It's this dynamic you really laid out for us with the recent Digital Day. Maybe if you could talk to us about some of your recent wins, and really the primary drivers behind that growth, and how you see adoption evolving over time.

Speaker #3: I think you have seen in the prepared remarks, and reiterating what we have highlighted during the Digital Market Day, I think digital operations and AI will be the key levers of growth, dynamism, and adoption in the market.

Olivier Le Peuch: I think you have seen in the prepared remarks, I am reiterating what we have highlighted during the digital market day. I think digital operation and AI will be the key lever of growth and dynamic and adoption in the market. In addition to this, our platform approach from Delfi to Lumi to Agora, which is our edge platform, and Sena, which is our AI platform, I think are combining to give us the, I would say the comprehensive differentiator offering that I think is attracting market award. I think you have seen the diversity of what you have announced across the different geographies, across the different customer landscape. We expect this to continue because we see track record, we see we can help customer create value through digital solution, be it in the geoscience planning cycle or be it in operation.

Speaker #3: But in addition to this, our platform approach—from Delphi to Lumi, to Agora, which is our H platform, and Tella, which is our AI platform.

Speaker #3: I think, combined, this gives us what I would say is the comprehensive, differentiated offering that is attracting market awards. And I think you have seen the diversity of what we have announced across the different geographies and across the different customer landscapes.

Speaker #3: And we expect this to continue because we see a track record—we see we can help customers create value through digital solutions, be it in the geoscience planning cycle or in operations, particularly in drilling operations.

Olivier Le Peuch: Particularly in drilling operation, we are seeing a lot of success of adoption of autonomous or automated solution drilling. We are starting to unlock the value on production solution by establishing new autonomous solution that can unlock. We do that with a customer actually in Middle East, and we are expanding this in other region. All across digital portion, AI will shape the future of adoption, but it is built on our platform, it is built on our domain, our partnership, and our global scale.

Speaker #3: We are seeing a lot of success with the adoption of autonomous or automated solution drilling. And we're starting to unlock value on production solutions by establishing new autonomous solutions that can unlock— and we do that with a customer actually in the Middle East, and we're expanding this in other regions.

Speaker #3: So, all across the digital portion of AI, we shape the future of adoption, but it is built on our platform. It is built on our domain.

Speaker #3: Our partnership and our global scale.

Speaker #4: Great. Thank you for all the comments. I'll turn it back.

Derek Podheiser: Great. Thank you for all the comments. I will turn it back.

Derek Podhaizer: Great. Thank you for all the comments. I will turn it back.

Speaker #3: Thank you. Thank you.

Stephane Biguet: Thank you.

Stéphane Biguet: Thank you.

Stephane Biguet: Thank you.

Stéphane Biguet: Thank you.

Speaker #2: Your next question comes from Keith Mackey with RBC. Your line is open.

Operator: Your next question comes from Keith Mackey with RBC. Your line is open.

Speaker #6: Hey, thanks, and good morning. We've been hearing more about conversations happening in Venezuela. You also announced a framework agreement with PDVSA recently. Can you just discuss how that agreement is important to growing your business in Venezuela, and just what is happening there more broadly, and when you think that it could start to become a little bit more of a major contributor?

Keith Mackey: Hey, thanks, and good morning. We've been hearing more about conversations happening in Venezuela. You also announced a framework agreement with PDVSA recently. Can you just discuss how that agreement is important to growing your business in Venezuela? Just what is happening there more broadly, and when you think that it could start to become a little bit more of a major contributor?

Speaker #3: I think, first, I wanted to say a word about the situation in Venezuela. Unfortunately, a few weeks back, there was an earthquake that really shattered the whole country.

Olivier Le Peuch: I think first, I wanted to give a word to the situation in Venezuela. Unfortunately, a few weeks back, there was an earthquake that really shuttered the whole country. I think this is still a country under recovery. I think first, a word to the whole industry there and to the whole country as we all witness this, and it's a tragic incident. Now, we have been, I would say, for the last 2 years, working already in country, scaling our source, scaling our capability, working under the OFAC license with an IOC, Chevron, and I think having a large scope to support them. We have used this to continue to develop our capability, to continue to prepare for the recovery, and to work side by side with the new entrants that are preparing a re-entry at scale into the country.

Speaker #3: And I think this is still a country under recovery. And I think, first, I think a word to the oil industry there and to the whole country as we witness this, and it's a tragic incident.

Speaker #3: Now, we have been, I would say, for the last two years, working already in-country, scaling, working under the OFAC license with an IOC, Chevron, and I think having a large scope to support them.

Speaker #3: And you have used this to continue to develop our capability, to continue to prepare for the recovery, and to work side by side with the new entrants that have been preparing a re-entry at scale into the country.

Speaker #3: So this year, it means that we are securing contracts—we are securing work scope with international companies that are either already there or are reinforcing their position in the country.

Olivier Le Peuch: On this year, it means that we are securing contracts, we are securing work scope with international company that either were there or that are reinforcing their position in country. We are accompanying them into preparing and planning and mobilizing resource as we speak with significant setup that will happen during the next few months to give us a significant exit rate that will enter at percent till 2027 with multiple customers and multiple contracts that will shape 2027 in a significant growth curve compared to where we were in 2025 and where we are in 2026. As a reminder, I think we used to have more than 3,000 people. At the peak, we used to generate visibly more than $1 billion in this country.

Speaker #3: And we are accompanying them into preparing, planning, and mobilizing resources as we speak, with significant scale-up that will happen during the next few months to give us a significant exit rate that will help us enter 2027 with multiple customers and multiple contracts. That will shape 2027 into a significant growth curve compared to where we are in 2025 and where we will be in 2026.

Speaker #3: So, as a reminder, I think we used to have more than 3,000 people at the peak. We used to generate visibly more than $1 billion in this country.

Speaker #3: It's difficult to say when—or whether—we will reach this level, but it's clear that having the dynamic of reinvestment under the right conditions will support high growth, and we are positioning ourselves very well.

Olivier Le Peuch: Difficult to say when we will reach this level, it's clear that having the dynamic of reinvestment under the right condition will support high growth, we have positioned ourselves very well. We already are securing the contract and the additional work scope beyond what we have done for the last two years to scale in 2026 H2 and to scale in 2027.

Speaker #3: And we have already secured the contract and the additional work scope beyond what we have done for the last two years, to scale in 2026, H2, and to scale in 2027.

Speaker #6: Okay, appreciate the comments there. And just maybe stepping back a little bit on the FID comment. So, 30% increase in long-cycle FIDs, and bodes well for 2027.

Keith Mackey: Okay. Appreciate the comments there. Just maybe stepping back a little bit on the FID comment. 30% increase in long cycle FIDs and bodes well for 2027. Can you just comment generally on the revenue conversion to SLB of FIDs of this nature? Does it generally lead to multi-years of growth? What is the time lag between an FID and sort of when your revenue off of that might peak?

Speaker #6: Can you just comment generally on the revenue conversion to SLB of FIDs of this nature? Does it generally lead to multiple years of growth? And what is the time lag between an FID and when your revenue from that might peak?

Olivier Le Peuch: I think the only good answer to this, it depends. I think, depending on the FID, depending on the deepwater contract, depending on the position we earn on that FID, I think between any FID and the first well drilled, I think there is typically at least 12 months. The FIDs are typically these days 2 to 3 years as a minimum, if not 3 to 5 years, depending on number of wells, number of subsidiaries, and the number of phases of those projects. Between contract award and first revenue, a few quarters, the duration of any of this FID deepwater is typically to the order of 2 or 3 years as a minimum. Typically, they come in phases, as the customer are prudent in the way they plan and scale this large deepwater investment.

Speaker #3: I think the only good answer to this is 'it depends.' I think, depending on the FID, depending on the product contract, depending on the position we earn on that FID, I think between any FID and the first well drilled, there is typically at least 12 months. And the FIDs are typically these days, I would say, 2 to 3 years as a minimum, if not 3 to 5 years, depending on the number of wells, number of subsidiaries, and the number of phases of those projects.

Speaker #3: So, between contract award and first revenue, it's typically a few quarters. Then the duration of any of these FID deployments is typically on the order of two or three years at a minimum.

Speaker #3: And typically, they come in phases, as the customers are prudent in the way they plan and scale this large deployer investment. And hence, this deployer goes to two or three phases, typically, that last visibly in excess of five to six years.

Olivier Le Peuch: Hence, this deepwater go to 2 or 3 phase typically, that last visibly in excess of five to six years, hence create momentum for the years to come. That's where it is.

Speaker #3: And hence, create momentum for the years to come. So that's where it is.

Speaker #6: Perfect. Yeah, sounds like we're setting up for a multi-year upcycle offshore. Thanks for the color—appreciate it.

Keith Mackey: Perfect. Yeah. Sounds like we're setting up for multi-year upcycle offshore. Thanks for the color. Appreciate it.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Speaker #2: Your next question comes from Sora Pant with Bank of America. Your line is open.

Operator: Your next question comes from Saurabh Pant with Bank of America. Your line is open.

Saurabh Pant: Hi, good afternoon, Olivier.

Speaker #7: Hi. Good afternoon, Olivier.

Speaker #3: Good morning.

Olivier Le Peuch: Good morning.

Saurabh Pant: Olivier, I want to touch on the Middle East a little bit. It's kind of a two-part question, but these are some of the recent themes we have been hearing. First part is on the pricing dynamics in the Middle East. There was a little bit of noise around some LSTK contracts being awarded. I know that's a pretty old, mature business model in the country, right? Maybe just talk to the broader pricing dynamics in the Middle East that you're seeing. The other part of the question is around the logistics disruptions and the cost inflation that we saw early in the conflict. It sounds like things might be getting a little better as you learn to live with it, you sort out your supply chain, everything rewires, and your costs start to moderate a little bit.

Speaker #7: Olivier, I want to touch on the Middle East a little bit. It's kind of a two-part question, but these are some of the recent themes we have been hearing.

Speaker #7: So, the first part is on the pricing dynamics in the Middle East. There was a little bit of noise around some LSTK contracts being awarded.

Speaker #7: I know that's a pretty old, mature business model in the country, right? But maybe just talk to the broader pricing dynamics in the Middle East that you're seeing, and then the other part of the question is around the logistics disruptions and the cost inflation that we saw early in the conflict.

Speaker #7: But it sounds like things might be getting a little better as you learn to live with it. You sort out your supply chain, everything rewires, and your costs start to moderate a little bit.

Speaker #7: But maybe if you can touch on those two points, Olivier: pricing dynamics, and then just the cost setup, and if that's improving as we go.

Saurabh Pant: Maybe if you can touch on those two points, Olivier, pricing dynamic and then just the cost setup and if that's improving as we go forward.

Speaker #3: Yeah, indeed. And building on your second part of the question first, I think, indeed, we are learning how to readjust, as I said in my prepared remarks, the logistics and the supply, and localize the logistics and the supply differently.

Olivier Le Peuch: Yeah, indeed. Building on your second part of the question first, I think indeed we are learning how to readjust, as I said in my prepared remark, the logistics and the supply, and localize the logistics and the supply differently to prevent and to avoid some of the excessive costs, and at the same, to continue to operate and provide business continuity and efficiency into the scalable solution that we provide as we mobilize back within every country. This will fade away, and as we gradually recover, we'll put these behind us, and I think we'll have an impact. We'll gradually remove this impact. Now, from the pricing has been, generally speaking, globally a headwind in 2026, and particularly in large competitive tenders, be it in integration, in stimulation, or in subsea, has been something that has been with us.

Speaker #3: To prevent and avoid some of the excessive costs, and at the same time continue to operate and provide business continuity and efficiency in the scalable solution that we provide as we mobilize back within every country.

Speaker #3: So this is this will fade away and as we gradually recover, we'll put this behind us. And I think we'll have an impact will gradually remove this impact.

Speaker #3: Now, on pricing—pricing has generally speaking been a global headwind in 2026. Particularly in large competitive tenders, be it in integration, stimulation, or in subsea, this has been something that has been with us.

Speaker #3: Now, as the market is tightening, as the market is starting to mobilize for additional growth and additional capacity, naturally and gradually, the outlook will improve.

Olivier Le Peuch: Now as the market is tightening, as the market is starting to mobilize for additional growth, additional capacity, naturally and gradually, the outlook will improve as capacity will tighten. Then we expect this to be something that will not necessarily being a headwind as we go forward in 2027 and beyond.

Speaker #3: As capacity will tighten, we expect this to be something that will not necessarily be a headwind as we go forward in 2027 and beyond.

Speaker #7: Fantastic. No, Olivier, that’s good color. I want to just switch gears a little bit toward your data center solutions business. Just from the point you made about widening your scope, trying to capture a bigger portion of the pie. You noted for the Canada data center you would be doing engineering and design, and then I think thermal management and decarbonized power would come later on.

Saurabh Pant: Fantastic. No, Olivier, that's good color. I want to just switch here a little bit towards your Data Center Solutions business. Just on the point you made about widening your scope, trying to capture a bigger portion of the pie. You noted for the Canada data center, you would be doing engineering and design, then I think thermal management, decarbonized power would come later on. But maybe just give us some context on what portion of the pie of the overall data center spending is addressable for SLB right now. Where do you think that can go, and how can you capture that organically versus inorganically?

Speaker #7: But maybe just give us some context on what portion of the pipeline of the overall data center spending is addressable for HLV right now, and where do you think that can go? And how can you capture that organically versus inorganically?

Olivier Le Peuch: I don't think we'll have time to go into detail and to explain this in an intelligent way that could address your question. I think the simplest way to answer this is that we have the confidence that we will execute rate and we continue to grow organically to the diversity of the offer scale, the solution, and the scope expansion, including international, including Asia and Canada and the US, to support an exit rate that will exceed $2 billion by the end of next year. That is, in essence, giving us a significant growth. I think the time will continue to grow, obviously, as we expand the scope, but the sky is the limit at the moment on our growth rate.

Speaker #3: I think it's—I don't want—I don't think we'll have time to go into detail and explain this, in a traditional way, that could address your question.

Speaker #3: I think the simplest way to answer this is that we have the confidence that there would be exit rate and continued growth organically, due to the diversity of the hyperscaler, the solution set, and the scope expansion—including international, including Asia, Canada, and the US.

Speaker #3: To support an exit rate that will exceed $2 billion by the end of this year, next year. So that is, in essence, giving us significant growth, and I think the time is—I don't want to—the time will continue to grow, obviously, as we expand the scope.

Speaker #3: But the sky is the limit at the moment with our growth rate.

Speaker #7: Right. Okay. Okay. Fantastic, Olivier. I'll turn it back. Thank you.

Saurabh Pant: Right. Okay. Fantastic, Olivier. I'll turn it back. Thank you.

Speaker #3: Thank you.

Olivier Le Peuch: Thank you.

Speaker #2: Your last question comes from the line of Mark Bianchi with TD Cowen. Your line is open.

Operator: Your last question comes from the line of Marc Bianchi with TD Cowen. Your line is open.

Marc Bianchi: Thank you very much. Saurabh caught me having this question that I had. Maybe Olivier, you could talk a little bit more on the point to get to the $2 billion run rate. How much of that currently sits in backlog, and how much do you need to go get? Maybe you could talk a little bit more about the pipeline of opportunities, maybe how many different projects you're looking at. Does it include other parts of the equation besides the cooling that you're talking about?

Speaker #5: Thank you very much, Sora. You caught me—I had this question that I wanted to ask. Maybe, Olivier, you could talk a little bit more about the point on getting to the $2 billion run rate: how much of that currently sits in backlog, and how much do you still need to go get?

Speaker #5: And maybe you could talk a little bit more about the pipeline of opportunities, maybe how many different projects you're looking at, does it include other parts of the other parts of the equation besides the cooling that you're talking about?

Speaker #3: First, to keep it simple, I think the backlog is already in place to support this $2 billion more. So that gives us opportunity to chase for more and to prepare for more in the future, and to high grade, and to continue to develop our scope.

Olivier Le Peuch: First, to keep it simple, I think the backlog is already in place to support this $2 billion more. That give us opportunity to chase for more and to prepare for more future and to high-grade and continue to develop our scope from design to expanding our capability set and to try to participate to design and start to expand as well. No, it's already in the pipeline. That's the reason why we feel confident to announce it.

Speaker #3: From design to expanding our capability set, and to try to participate in design and start to expand as well. So no, it's already in the pipeline.

Speaker #3: That's the reason why we feel confident to announce it. Now we will continue to build. We'll continue to explore. We'll continue to work with the different customers we have secured in the last six to nine months.

Olivier Le Peuch: Now, we will continue to build, we'll continue to explore, we'll continue to work with the different customers we have secured in the last six to nine months to explore how we can develop this further, how we can add value, and not only scale in manufacturing, but also scale into the product and the technology offering that can help optimize the performance of those data centers and expand beyond the inner side of the data center to then start to touch the cooling loop, full optimization, as well as touch into the decarbonized power provision for some data centers. That's the combination of expansion that we are looking in that will go beyond the $2 billion I've just mentioned.

Speaker #3: To explore how we can develop this further, how we can add value and not only scale in manufacturing, but also scale into the product and the technology offering that can help optimize the performance of those data centers and expand beyond the inner side of the data center to then start to touch the cooling loop full optimization, as well as touch into the decarbonized power provision for some of the centers.

Speaker #3: So that's the combination of expansion that we are looking at that will go beyond the $2 billion just mentioned.

Speaker #5: Yeah, very good. Thank you, Olivier. I'll leave it there.

Marc Bianchi: Yeah. Very good. Thank you, Olivier. I'll leave it there.

Speaker #3: Thank you very much. Thank you, Mark.

Olivier Le Peuch: Thank you very much. Thank you, Marc.

Speaker #2: I will now turn the call over to SLB for closing comments.

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

Speaker #3: Thank you. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflections. First, the market is beginning to exhibit the characteristics of an upcycle.

Olivier Le Peuch: Thank you. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflections. First, the market is beginning to exhibit the characteristics of an upcycle. The need to replenish inventories, diversify supply, develop domestic resources, and rebuild spare capacity is supporting increased customer investment across both short and long cycle markets. This will drive higher activity, with deepwater in particular expected to accelerate into 2027. Combined with the increased activity that will be required to restore production capacity in the Middle East as conditions allow, these dynamics create a compelling outlook for our core business. Second, we continue to capture exciting growth beyond our core. Our digital and AI solutions are becoming increasingly critical to our customers' operations, while data center solution is expanding our reach into critical infrastructure for the AI economy.

Speaker #3: The need to replenish inventories, diversify supply, develop domestic resources, and rebuild spare capacity is supporting increased customer investment across both short- and long-cycle markets.

Speaker #3: This will drive higher activity, with deepwater in particular expected to accelerate into 2027. Combined with the increased activity that will be required to restore production capacity in the Middle East as conditions allow, this dynamic creates a compelling outlook for our core business.

Speaker #3: Second, we continue to capture exciting growth beyond our core. Our digital and AI solutions are becoming increasingly critical to our customers' operations, while our data center solution is expanding our reach into critical infrastructure for the AI economy.

Speaker #3: Both businesses are gaining momentum, expanding external capabilities into new markets, and creating additional revenues for long-term growth. And third, we're well positioned to capture the opportunities ahead.

Olivier Le Peuch: Both business are gaining momentum, extending capabilities into new market, and creating additional revenues for long-term growth. Third, we're well-positioned to capture opportunities ahead. Our leadership in international and deepwater, combined with our expanded capability in production recovery, aligns SLB with where our customers have direct investment. As the cycle strengthens, we expect this position to translate into differentiated growth and performance. With this, I will conclude today's call. Thank you all for joining.

Speaker #3: Our leadership in international and deepwater, combined with expanded capabilities in production recovery, aligns SLB with where our customers are directing investment. And as the cycle strengthens, we expect this position to translate into differential growth and performance.

Speaker #3: With this, I will conclude today's call. Thank you all for joining.

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

Q2 2026 Schlumberger Ltd Earnings Call

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