SLB - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Schlumberger Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. reminder, is a recorded. As Instructions] today's being call [Operator conference to our Relations, I like the Mr. over Investor would now of turn to President host, Vice Simon Farrant. Please go ahead.

Simon Farrant

quarter to Good call Today's meeting. hosted the Schlumberger and morning. following being year welcome Houston Limited Good Limited earnings afternoon is fourth Schlumberger and from call. full XXXX the board

and and Wells. Simon Ayat, Officer; us the on Executive President, call Joining Vice Financial are Patrick Officer; Chief Executive Paal Kibsgaard, Chairman Schorn, Chief

our through prepared after We will go as for first will we up remarks, open usual which questions.

of first For Simon results comments agenda, close quarter our discussion today's the fourth Paal technology view financial geography. before will our industry our present reviews macro. our on a with and of Patrick our remarks will performance portfolio by updated

like uncertainties our forward-looking. and I our could that you filing be However, other participants of we I therefore XX-K and begin, are results SEC to making differ in the from today refer our before risks that we to latest involve remind those statements filings. projected will materially these cause statements. to matters would These some

Our also comments financial non-GAAP today include measures. may

the on measures be press GAAP in comparable Additional reconciliations can quarter on most release, our financial fourth our is details found which website. to directly

maybe in prepared to after Finally, period follow-up for the our allow yourself question please the more queue. limit during to who order that one others Q&A you in remarks, we ask related and time one

I hand over Now, Ayat. call Simon the to

Simon Ayat

decrease $X.XX. the of thank share a of charges $X.XX year. conference same Fourth per call. and represents excluding sequentially to Thank this last compared and you, was quarter credits Simon. you quarter for $X.XX gentlemen, in participating when Ladies and earnings This

credit the marine asset we This quarter, charges. $X.XX impairment certain a of business, gain During recorded share. net on seismic WesternGeco partially the by divestiture the offset per the consisted of of

group A decline were of revenue and billion margin points reservoir quarter XX.X%. as operating Middle activity partially product end sales. by characterization Software revenue X% wireline decreased in decreased follows; offset X.X% of $X.X to seasonal quarter sequentially. Highlights SIS in fourth in basis Russia XXX revenue by Fourth were Our billion $X.X year the sequentially. East OneSurface Pre-tax reduced decreased

sequentially, increase XX% lower from systems result, X% IDS Cameron margins XX% land. as revenue East, Russia basis Cameron flat billion decreased a activity compared reflecting was sequentially, decreased pre-tax increased and the Valves offset to largely revenue margin service America decline in by driven by These by OneSubsea fracturing than revenue points in billion XX%, quarter. Latin of as points sequentially, results pricing Drilling of Russia. business a decline margin America Middle $X.X and again sales in As the operating hydraulic to primarily of revenue Measurement. mobilization essentially and XXX in were points while North billion Margins activity basis decreased seasonal higher previous in XXX to driven were OneStim more X% declined OneSubsea. $X.X the and $X.X offset activity XXX by to largely X.X%. in decreased group in of reduced group internationally. by seasonal Production & which impacted increased basis costs, driven XX.X%,

is the billion. credits similar and rate and charges tax well the bill side Cameron ratio increased quarter. the This This for the QX quarter. X.X the to bodes business XX% future. in On in backlog to the all effective OneSubsea to previous The positive book for the $X.X fourth long-cycle was increased excluding

an opinion, a but discussing repeat fact. I Profit want Before to constantly is with share within Schlumberger. you cash, something I cash is

our billion buybacks. share $X.X During of we cash through and returned shareholders to XXXX, dividends

cash of operations of price we repurchase full fourth at year million $X.X X.X million $XX.XX. $XXX quarter average the billion the billion an for $X.X quarter. XXXX and from during to flow We the spent During generated

and payments the fourth flow million billion the for approximately billion $X.X during despite $X.X for severance of making free full was $XXX This year Our XXXX. cash quarter is of all XXXX.

quarter marine cash seismic WesternGeco completed the we and $XXX sale the of of during proceeds Additionally, our received million. business

As result debt billion. of during by cash decreased $X.X $XX.X to a billion net billion. total and the quarter investments the We ended our $X.X quarter with

conference all We commitments expect to cash without year-over-year. will that we net turn our to of now, increase debt Patrick. having XXXX, the will for call I over And meet

Patrick Schorn

lines. Thank revenues morning and today the In everyone. the geographical good Simon consolidated product my commentary you, of Cameron include results

pre-tax greatest that falling the takeaway in decreased was with to by in performance a increasing weakness however America, lower with America, driven a of grew prior East our strength revenues second oil XX%. For began of constraints sequentially the the revenue for Middle fracturing more prices. the row XXXX, significantly positive middle X% of XXXX. revenues. year revenue activity X% the the but OneStim response solid, prior proved trend consolidated lower quarter seen revenue increased XX% year the XX% with year land the Performance by second North area. North dramatically to the activity cut Asia of growth due decreased of a showed in customers a the year activity flat Full seasonal XXXX operating X% three improved revenue over by essentially as business. growth pre-tax with America, income and was sequentially year. year beginning operating in although production our in international income half marking over X% in consecutive years XX% In activity declining full the year-over-year Internationally, in Full This the to Fourth Permian year. revenues of due driven was after slowdowns despite North

in response, focus fleets the the XXXX, dedicated on expecting by exacerbated warm decided In half were we cycle. prices. tendering contracts early second further of drop for quarter half in and the a for first Although to in Permian, securing stack of were weakness effects oil its we the frac the the

As due with being robust average our quarter, and lateral the from drilling XX%. other per business flat drilled result count sequentially OneStim market, to revenue a range Valves fell the the was lengths continuing remaining activity. technologies despite decline the hand, land In of this the rig increase. models stable, new during revenue Canada. rig on U.S. our by and activity the Drilling wells efficiency, Cameron proved in and largely revenue weaker both in sequentially & operational North drive service and helped America broad U.S. land from overall in business & revenue Measurements on Measurements land systems to higher lower

and XXX offset development wells and we continued from production enough North license doubled Palliser drilled rigs Cameron was more increased in XXXX with multi-client SPM lower higher to than XX,XXX activity. the per to On and asset not WesternGeco sales drilling barrels Canada, in revenue projects this on seismic Offshore drilling drove higher. America activity day. four oil But XX,XXX

Looking ahead and through first tied is new with strengthen the season to now in quarter, activity Alaska expected the Canada. equipment exploration on

area quarter. Africa, was fourth the seasonal revenue flat in Asia Europe grew Central the compared quarter to previous and slowdown increased while Middle the international in consolidated Moving despite sequentially, the Latin X% in East markets, and America and Asia. and with Russia Revenue

during up mobilization was of the reached ramp deployment complete. main year in the international quarter, One on services startup our many drilling during in being drivers full business. our fourth the integrated of with were projects continual the Further with activity costs mobilized rigs

bring. with technologies being this LSDK beginning a contract our one improvements for three market and new year to time As sum already asset a now The eight wells the days geo can rigless Stronger for revenue meant drill operational work. XX deployment success have more option led operational. increased depth. stimulation hydraulic included Eastern, totaling X.X area, turnkey signed. a Arabia, Among East result, contracts exploration further million Arab work, in are integrated the wireline during in Middle performance and on a services crew the testing has efficiencies. project award total and well we two the year were and for deficiency the primary XX feet. Iraq, contracts Asia to fracturing fully model quarter. in award revenue XX activity These of higher started for where contributed areas, has each and additional delivered evaluated spots operator. optimized the be East Oman wells new lump X% contract drilling strong a to in are Saudi to to performance for see consolidated shorten in with been United sizes Eni integrated and also from Full a sequentially In for new well to wells rigs in they the Middle XX record Time activity Emirates from already all during that drilled Iraq our almost the another

drilling activity Middle additional service Southeast Egypt the In northern lower decreased Far geo contract geo increased project the startup integrated the Sichuan revenue revenue However, were China, seven East services sequentially in of an the Revenue as including and projects in East SEP due the performance. SPM with higher from the shale strong delivered. market in gas market drilled improved sequentially to in Australia activity and and from Asia in and drilling increased wells India gas was revenue well Asia and province. geomarket construction in Kuwait one

building East more projects for than increased intervention mobilize consolidated from the decline impact. the year-end scheduled half in and in provision the sequentially North seasonal X% tender and wells. XXX in in was Cameron the was sizable sustained sales. multiple geomarket in and the flat only in in increased Africa project as Australia growth a Africa project was the The activity software Saudi across CIS In revenue the reduced offset in Africa. in XXXX. were revenue won Sea. sub-Saharan North first also on Libya In Chad. a posted seasonal minor Gabon service West revenue sales of the offset Higher benefited by the in sales is Far start revenue in SIS are and Area M-I and the area Norway by also of Angola, with region new We effect system Africa partially by despite Algeria, flat NOC technology and well Europe, the activity North quarter was both operations third from with in and Russia India in of in geomarket the from software Sea SWACO product region Arabia, activity geomarket. This activity drilling deepwater pipeline Mozambique, to and rigs this year-end an

In Bulgaria seismic Revenue multi-client the license in Mexico was integrated offset area and exploration geomarket, following Europe, Greece performance drilling quarter. performance America weaker and in while the Austria projects. America drilling increased, sequentially. and previous Netherlands. and Continental Germany revenue was the strong in Central flat in in strong Our declined Turkey, sales a the WesternGeco Latin Asia, to due in In Central lower activity

further restrictions. Many integrated awards international in On well multiple oil the on wells. December to the Shaya degraded where positive with for XXXX. and including a record million integrated companies won was project activity XXX SPM an quarter. Schlumberger, where flood that than was continuing achieved for the contract during On orders OneSubsea environment the new and sustained, inflation accelerating side, final up the projects. exploration in of South, North field day the half while integrated America were also in in management orders the in we of booked flat and sequentially, with and Latin from strong is In geomarket development the Venezuela, and Brazil, repeat America year, increasing decline awarded services note, in are delivery fourth Revenue XX,XXX to contract production production booked quarter per Ecuador of total work was strategy. flat customers drilling smaller services situation will water first barrels XX Latin sequentially, increased additional the intervention banks awarding during came more international almost Equinor start a in In second Mexico, activity

in the let the Integration Butai mile tie of Subsea from delivered OneSubsea in shortest Similarly, Equinor, for However UK install venture on the base, Paal. boosting in developments Alliance back a sizable deepwater in for industry's XX XXXX. OneSubsea forums in the Oils, over North electric Esso platform and quarter, multi-phase that, Also time awards the in growth. of boosting delivery [ph]. to for XX first a is Chevron me delivered call the longest with to And integration Mexico. tie Vigdis implementation sector The and the a projects provides Murphy TAQA by OneSubsea X back alliance Otter scheduled Field. for the Gulf Equinor contract Field miles pass due actuated this solid Sea subsea all record the Dalmatian U.S. for breaking first system the the

Paal Kibsgaard

off industry upside and by in equity sell Thank and a the quarter activity as driven with factors markets you, out U.S. large fourth to The sentiments. the concerns created demand geopolitics view, in XXXX. the macro global largely together close to interest balance Starting the in was U.S. perfect negatively of in prices earlier the Patrick. with by in storm a surprising the rates surge drop the impacting supply and due around global growth the increasing of these off a result near significant to combination shale year, oil production

the the the oil the cuts the of impact XXXX production and the year, ongoing growth, expire to from sanctions to forward are full a solution and dispute. take trade XXXX, Looking The the work North Iran and dispensations not Russia U.S. as lower over we continue second their in activity to America course and towards renewed effect. half in supply export as and the of land and expect sentiment OPEC the prices improve balance to demand China

in that the outlook broad with again months approach improving E&P uncertainty introduced three conservative for has year, a generally oil of we the So more the around expected recent ago. prices January volatility recovery visibility more XXXX, up around the in Brent Not customers spend the and taking only the to this oil surprisingly, supporting spend are based already far delaying $XX E&P price less outlook. start

Nigeria present, see to at producing resource in starting production activity production UK, oil in invest maintain the underlying from our as exploration providing key their decline cash discussions, more project the heading for in Norway, sustainable E&P investment in Middle and this customer normalize years resource global In four the and signs stewardship are However, starting sentiments the means various Russia that towards focus parts financial markets, like well Brazil the growth need new At as our seeing independents from coming we the and clear of being simply levels. to by are to of outside short-term are to startups, NOCs the business after countries on underinvestment base. aging base and solid and flow, the world East international a year. the more offset of base the opportunities of current maximizing

investment as volatility. due We seeing Asia investment first kicked in new for off in growth these market the solid XXXX, price Angola, take digits decline starting off on programs production America in recovery oil the of would in our Indonesia year-over-year Growth rates noticeable still Based as regions. year, to are like Latin backdrop, half markets by are in supporting in also where in lines now, the conservative for countries customers a and this approach Mexico, several these international Africa, new mid-single and a our activity regions. led start total the China, been the expect has the product be recent to programs also years we oil already revenue for

While increased operators, more and for suggests see at we growth E&P to return can be in future and what borrowing closer free capacity flow. America capital East existing nominal to investments much by that will E&P likely the activity Sea, be and but on rates of lower Middle investors for covered cash the discipline continue capital, Russia to higher looking of Conversely land North projects as capital, levels the expand. North cost continue solid

operators XXXX, this the in drive wells. drilling with a barrels as recover a to XXXX further in focus XXXX, million in oil to XXXX on This growth rate day likely rate with investments U.S. the still land it to uncompleted drilled substantially of and potentially X.X investments seen than reduction would steadily per the steep XXXX. wells prices U.S. with of at production, XXXX, offset production scenario large gradually from trend the growth average the lower expect In It realized or discipline existing the instead relatively is continued compared slow the start in we drawing are to E&P in likely year. approach growth the is continues a to capital the activity land down an E&P also that from drilled lower same inventory U.S. that and decline WTI percentage base. being consumed be noting but in new Assuming would worth to down increasing slightly in and shale the production the flat level increased

optimistic emerging of XXXX, shale expected in The is this XX% XX% oil clearly treadmill in drilling and work views we as of but unavoidable out activity was the between proppant in and expect to core parent suggesting. is CapEx this, production than the number XXXX, and of starting production. drilling third party steps a Add stage the slow creates per U.S. that years steadily a as demonstrating effect fracturing infield well shows and coming we to in could been the increase the plateau, facing acreage steady a to growth the have challenges length in most production total to growth shale moderate wells, XXXX analysis year. the as of child interference of per From what more course standpoint, X U.S. over be recovery hydraulic from lateral the Tier land

of fourth that pricing quarter of the took reset lingering the XXXX. in the impact place Although

potentially expect rig business some a count. impact land For drilling, lower we U.S. from to our

balance. expecting year XX hydraulic for from XX insulated activity. lift lift business of still relatively for ESP lower sold and penetration drilling a are artificial low a U.S. which rod sentiment to U.S. business, market and second shale to any half of technologies. solid a from environment With flexibility quite no for Russia a be means at should giving both to our plan rate our business, tech growth expect major fracturing month lag global change operates is a global the high picture, lower our our a XXXX, scenario. with And activity tackle therefore out in However, we inventory and production see from and the remains global operating and the significant rig at improving this together cut the In to into OPEC the and for built demand confidence supporting investments from supply XXXX effectively we we have us market current in an growth demand

sufficient In in program terms field billion and flat activity capacity projects capital CapEx which continue we handle XXXX be together allocations to of with range we be the gains from to on. efficiency and transformation of will will be equipment Multi-client for $X.X customer seek to $X.X our with see. to range growth prefunding the take the drive significant of the would billion, decide we investments OpEx will

Lastly SPM around parallel in interested monetization second we for being our down by parties. the positive business consecutive year, with and $XXX our while discuss produce SPM to opportunities cash will investments flow free million XXXX from continue be will

In cash in all clear discipline improve the in on to this M&A, our share growth we for generate foundation working where with ability any terms consumption are increasing fourth margins, focus Needless cash is very through without flow on say we management capital. sufficient to $X in confident of flow of XXXX top commitment to further needs incremental capital a cash XXXX careful business continued in we a cover plans per net alone, of half second and the do in XXXX the international of quarter free After generated performance debt. improving not line to our foresee strong significant XXXX. our our

our behind objective and Schlumberger program the relating clearly that changes clear transformation exceeding and corporate the the entire you. lies well now challenges a to and opportunities organizational is With stakeholders. ahead, organization Thank us streamlining expectations primed the ready for fully the of the business all with of

for now up open questions. will We

Operator

West Evercore Instructions] with [Operator the first Please from of Our go ahead. question James is ISI. line

James West

Paal. good Hey, morning,

Paal Kibsgaard

Good morning, James.

James West

previously cash free comment multi-client. on financial CapEx, I lot Paal, looking largest North particularly especially large there's the But you very and So returns lack strong Simon's kind are me versus so question have big discipline North guess, see contracts then that the developing to a you prefunding for of much it probably asset in that the you market cash. we're to markets, in the lower unbelievable those in international you you whereas the way -- particularly of market, in are American of loved haven't profit can that handle of at, market is dichotomy I starved a that flow, is, looks are in capital the XXXX And good spent focused how internationally. that international seems positives heavy characterization versus the like differences fair and almost base your the comfortable seems competitor the whereas two, coming with it your here. one, strategy your America. and

Paal Kibsgaard

Thanks the James. for question,

So, think representation the a it's our at I how of first we look starting strategy fair with and things. part,

around how we down an to always terms having to We've we low I four of now revenue, At or us now. work terms to which of as firstly of the been last need drive elevate higher have working the in focus program, think our can and and spend obviously activity. have new disciplined to us deploy the lot a of work which a think be made off years approach I allows done five have is But what benefits transformation take take capital we I lot this. we same percentage CapEx from the clear prudent further very time as all-time think the capital. in basically We more

more some obviously we efficiency of now. fruition plans programs coming a and And to this on driving our growth. focused see on I'm is working are have you lot from in what have this years when the happy So very that recent been are standpoint along and effective to visible

visible. declining, flat are you If are these you’re obviously less or

seeing growth since market in that is are we this XXXX. the year the So first international XXXX

have, capacity focused for have the are right we we pointing capability we actively actually our not forth. through same the CapEx. are new underlying the we turn are, But on tools out how lot and for and efficiency capacity we in only things have up effective times and and highly to the effective we which have time on through down level increase ability improving. lead the are to we field also investments, investments the they're our of equipment in time, cyclical scalable have drive business. at the working But shorter are workforce And the drawing steadily also utilization they have you now The at very lot of OpEx is which in lead and we more also scale the we discipline. our very to like ready needed our that same to also so capital So a down, this firstly program, is opportunity the time, modernization

we continuing much on direction. this point with you agree focused very are truly and out, I along what So,

James West

some could Is that XXXX? the so end that the you'd comments sold Okay, made then that's the and great the toward of would year XXXX international, hear, based capacity to we I see effectively to lead pricing it Paal. year case? tighter is guess, internationally awards. today much that still the power what even last of towards, of utilization some on be out And end you by in assets of And -- contract early

Paal Kibsgaard

those the we offering and think lines lines. the product for are high-tech I high-end Yes, around

be a think enough present you'll I to to I pricing and sold to and do markets we capacity budget or absolutely, our have customers. opportunities that large more in there the that to we bring work. -- take for are is on out end on focused get it's going at of We assume sure where value and be making to balance think But where part less the wise, going capacity performance at the we to CapEx are are XXXX also safer for technology that

starting would think around go we discussions. to to significant that out, XXXX the And think into we're world also I a to between And of So need the point basis actually as I I XXXX for those in that drop a opportunities is to have we see and the investments as now part have America. XXXX. actually North discussions James, the CapEx just continue

So there no allocations international. is real our towards drop significant in

James West

perfect. you, Thank Okay, Paal.

Paal Kibsgaard

Thanks.

Operator

go Gruber we Next Please Citigroup. ahead. with of Scott go to line

Scott Gruber

Yes. Good morning.

Paal Kibsgaard

Good morning.

Scott Gruber

reserve the international potential do majors years? over independents, low, your outlook forecast growth you this And the abroad, has for general, majors on well? few increase a our sized the we just you increases spending if them as improve In you inflection And NOCs first replacement as been there mention sense one Paal, that you actually abroad important release, the time by quite the roughly this of much? which was mentioned CapEx by group see know, any in spending as team the greater increasing ratio, and outside increased up spending wasn’t cycle. what's So past but by the U.S.? do, Do you how urgency front. by for the this by group to the

Paal Kibsgaard

visible most that's the where we around we present, highlight expect have in Well, and because clarity IOCs. the there being see the most place. that plans -- a and they the we will be some programs They at are still increase I are did NOCs commentary, where on independents, I'm in I'm of pronounced. little opportunities decide our the to at plans have, But plenty sure bit of and opportunities that continuing all less sure to. ramp their visible less a IOCs spend budgets to maybe look bit and and if through their they kind up are work little and customers the

in we’re obviously working areas closely are new quite Some and already of with the active IOCs them.

at present more me IOCs. out lack visibility of So, point it's think I for me for to

we relationship where the have their with is independents. And right them. that pretty and I'm We out the investments. what at might present But close stands opportunities, sure the they have a visibility also increase NOCs clear working very for

Scott Gruber

to Got it. should XXXX? I down this should is think cash about it? in for And sounds in the budget outlook, about how how but it's great heard remarks. I may hear. free like think some, we coming But it But positive have we the SPM missed the prepared which

Paal Kibsgaard

Well, this the maturing, about of -- roughly CapEx million. down is And stage. a remarks said is of like SPM by projects our I reaching in our it’s several $XXX $XXX prepared million of investments more the plateau all combination to for a

the made all obviously of every have investments been we business scrutinizing and that very also we dollar we're the in of including SPM. effective spend Some parts

nothing very the has other programs we than coming on of of So how allocate there prudent projects, that deployments in successful dramatic many there's it as we on are as down been capital. well

Scott Gruber

thank you. it, Got

Paal Kibsgaard

you. Thank

Operator

a Next we Kurt go question from RBC. ahead. Hallead with have Please

Kurt Hallead

Hey. morning. Good

Paal Kibsgaard

morning. Good

Kurt Hallead

Hey, color the for thanks here. all

I I when customer had I was, do region XXXX? you again if and the in general outside about be order could you about that you it was up a kind think the kind in top and because probably areas. talk East the markets I Maybe three best the those growth think base, reference give Russia, expect growth highest the Middle see you you be four or think offering international can of opportunity of type could the market of wondering, set Paal us and of of you rank follow what

would be that So helpful. color on any

Paal Kibsgaard

Okay.

far sustainably today Russia if our is much through. East business invested it by North in where it say the and So been Sea, compression two in Asia. Both revenue activity the through Middle in is I we the Africa where, think America, more downturn Latin XXXX, and look we've you have split compared buckets highest is have to into it I'll still it here at the and

and us it's it's to the is clear in and America, very growth in in it's rate where coming is that actually highest Africa Asia. So from Latin

very solid coming from -- regions. Now these rates so growth

Sea, of from growth we rates, the big businesses. significant lower Middle Russia, at spite but have these regions in rate. North But expecting the a in also we're lower presence East Now very the and

So in what the contributions, terms America, Latin lower growth quite actual even of Asia. meaningful actually these somewhat Africa and earnings from regions we it's in rate see is than although

Kurt Hallead

free use emphasis and Okay, great, capital. on flow prudent cash significant then of and generation

after those generating expenditures be -- in the in data, investment XXXX. and you in expect cash when to So cash SPM what of context CapEx, in extent you factor dividends, multi-client to do that positive

Paal Kibsgaard

you Yes, to Simon, take do want that?

Simon Ayat

Yes, sure.

I probably my bit little Look on the Okay. in I repeat -- comment. said what will a

exceptional from was extremely cash we of that always mainly expected saw return planned. little you in When our plans cash to some we during you also a we plan some enough Maybe like back. proceeds make people, these what back severance came made is stock flow. So of it the options we It bit get year and We some that discounted what million. to the purchase but capital. to in, strong cash surprise and payment this about We produce $XXX brings flow. factor have QX expected other

So if as we see XXXX good as better. not XXXX

As we flow. will debt. our net meet mostly said, cash that be This free our all commitments we increasing without will

before. Our we can working capital to what have low compared at very done significantly as

During we $XXX receivables million. the over quarter, improved by

So just back our we're on about better XXXX, we’ll for than we’re your and XXXX, question commitments do yes to all what expecting. going probably meet

Kurt Hallead

provide vis-à-vis some to think consensus past the headed maybe you appreciate up, been about street willing one you've where that. numbers. qualitative commentary Yes, the Schlumberger is follow Paal, in

So to XXXX first you all whack willing that for of and quarter a would take both XXXX. for at be

Paal Kibsgaard

do I'm going XXXX, full take No, not to we say is or at that the would year whack in the growth I international. directionally, on a expect What solid XXXX.

flat I it's fairly in America on think to be tough total down, The early North going to earnings, too the North year to in it's expect say. E&P impact investments this America. which We investments be of I to think means,

ready some first and And that cycle closely the going to for stage the second to of Cameron year. I And start and should on of now we in monitor we International. deal But the of terms of main think at this act in is focus we're positive dropping Cameron, the the I mean think growth from see opportunities capitalize just it. to to half to us with have year. I get businesses the long overall rates this also growth in half be contributions

bit a in of think North the is challenge growth to I year land, fully which main America full So direction equipped internationally, handle. we are solid

XX% sales the from first have This product typically to to also Now search in QX And due fourth. quarter generally in drop winter after seasonal lower about weather. we XX% in a for QX. the we QX, normally slowdown to see typically to is the the EPS due

to of we be end XXXX, expect QX in for low Now of the this range.

impact the of going to the likely land. think sales from sequential I product quite given U.S. the going strong but positive we're we'll think lower going continued to year-end in in is QX. performance that is on have see to the we're normal relatively parts effect low a of impact This growth start to from was I international winter, be offset Now by in a relatively in QX. the see which continuing we slow But saw

say QX and again in America, of And year-over-year driven be Africa historical should QX sequential in into lowest and -- range to Latin going sequentially the obviously of the would is be low Asia. and then the I So growth quarter XXXX. we and drop by should EPS

Kurt Hallead

Thank so much, you it. excellent. That's appreciate

Paal Kibsgaard

you. Thank

Operator

with Please have Jaffray Piper Bill ahead. go Next we question from a Simmons. Herbert

Bill Herbert

Good morning, Paal.

Paal Kibsgaard

morning. Good

Bill Herbert

do to in stand regard mentioned at you this With acquisition stage? XXXX. M&A to of M&A Where the you significant regard no EDC with

Paal Kibsgaard

is stand our authorities. satisfied the working transaction on we to transaction Russian the now July we XXXX. relating approval where So back have of the for announced we We've process that all been since the with in this obligations

obtain yet the the able Now needed Russian from we regulatory not have been to unfortunately authorities. approval

the going participation we weeks. instead Eurasia to an to our attractive. withdraw the we avenues likely attempt our see are to which will again path So application. we in still very to our with final But no plan coming is in in are here make Russia, we conventional Drilling drilling the over if alternative as land see going approach further obtaining partnership approvals needed clear seek that market we one And

in will we we’ll And successful coming make line withdraw. bottom we one basically final So likely there weeks. attempt aren’t the if

Bill Herbert

Patrick, And most Okay, time with not hospitable oil. thank of you. regard monetization the for this to SPM portfolio, the the is

for curious So is to dispositions think an realistic you assets I'm as timeline of magnitude? of the what order just

Patrick Schorn

Yes.

a fair is question, Bill. that think I

to be we is would you're program you. that on the talking something that work visible So continue and this the clearly to that when sizable we deals about currently, have

and to the that moment count ones make that we the in related it intent XXXX full this generation XXXX projects necessarily There is some in in and headline, might the significant at looks talking is largest have. the might about some one that really ones on have conclude one to not of XXXX this one smaller field. in some one of in where the value and way XXXX We the but in we be are

make that limitations I mentioned the some that some have have, we timeline most the appropriate And fields contractual the just that of one.

Bill Herbert

And when kind significant, broad range mean, exactly just what of you does say that expectations. of a

Patrick Schorn

So have that means Argentina. one instance that the that activity could in include that in well have very would would the we Canada for that we be that fields be

the ones Palliser about as Bandurria Africa some the might So smaller there and think be about is projects there Sur in and well. on focusing But field, be some we'll North ones think Canada mainly that Argentina. and

Bill Herbert

Okay, thank you.

Patrick Schorn

you. Thank

Operator

Next James Suisse. line of is Credit Please the Wicklund ahead. with go

James Wicklund

morning, guys. Good

Paal Kibsgaard

Good morning, James.

James Wicklund

quarter lowest XXX X% the You down production revenues. of about the be is I And in business XX% basis to have it's it XX% was segment think points. margin to grown this

the potential? where Can QX to can they as five bottom? us go the here's estimates first good been in in and to And what's might pumping When cut years they the you importantly, up pressure one. noted market, slowdown in only reset a in what more idea never an production give might get in in You career, my quarters? next margins over a the to the several U.S. pricing three

Paal Kibsgaard

I that parts working actively would think, the if of are with. we group, And I at I look Good it margin performance say that happy quite parts think production are there the think question. I of there are, you we are that other on improving.

significant obviously total the production the of that we land lot did we out, surrounding U.S. have deployment year would -- XXXX. had impacted we are we And XXXX, in say that at land, which side as capacity in look you the some But it. costs carried heading into on point U.S. margins. you I we going a headwinds focus If on into

think the we and have of commercial aspects are where all handle know We execution upsides how I the in our both we of terms business. the

of thought first, question of couple should could the would the margins forward. I So sure part around second a double-digits where I going quarters answer over what would I the production be from the it is to is think caveat in to drive there today U.S. into in And lot double-digits is happen years, to it clear going coming And and how very next our steadily But how we improving to say priority something urgent for there I say with that. of think in these the us. do an that's on land? have upwards. a And for is that view going are gone are getting a work into we we

James Wicklund

trailing pragmatic think recently eight of even in a a of follow there little Okay, you months on thank capital while. screen are I companies and if that. XX of cost for only their oilfield did out return arguably we that here up be positive. may service was view public trailing very for the guys peak little out you companies of the And putting is My the today XX like that months. XX invested earn capital, could, I And results the

a to value XX of years and forms last different than to industry for championed contracting get for peak a going value to I've cost years, they and that the does their industry trip where earn can the use How And the a value the of seven whole the at six point, cycle? trying does the industry. basically capturing leader E&P in payment. capital has points themselves. get change have guys got industry industry does -- the the forward? none You of market the tripling and the that of some you're How of in year industry round other How finally

Paal Kibsgaard

that we do the way drive I forward. that think to continue is to

the contractual one. But think performance that's that generate. number fair having and and service to customers it's terms our the what the I of a value where contractual that, products we underlying beyond matter the Firstly, arrangement, value we of we a of capture sell

James Wicklund

Are you making any progress on that?

Paal Kibsgaard

how of on these translate it are. But this at environment we facing, to visible in again commercial And underlying been particular results we I do Obviously contractual the performance upside well. businesses, we return look potential are all to that well. key has the in capital is into into of convert and through performing improvements of international how we there continue technically very commercial terms difficult in employed. have market, the significant think as you performance arrangements been that in if technical in both again we

on view I to what we So again, good happen. have think a needs

in this general have with the is it it. of turnkey there has our sum is shift customer smaller performance elements way And a base. a these smaller off of all acceptance performance-based We good lump whether or to towards dialogue contracts, moving

demonstrating believe to the investment we contract head have least So to rest internationally longer and of start the have going you contractual when no so pricing we into technical at I environment and the in the now improving right base direction. to and can this market the community performance, that framework you If that stable stabilizes I think pricing headwinds. get a is the

James Wicklund

much. you you. Appreciate guys. Thank thank it, Paal, very

Paal Kibsgaard

Thank you, Jim.

Operator

Our with next question Edward Generale. Societe from is ahead. go Please Muztafago line of

Edward Muztafago

bit we're production ability I of the thought think figuring gave like risk we're out the the think to the a get to trying technology effectively and see technology, you on a processes of to call. we subsurface costs production. a The wanted little maybe better, Paal, you to offset to that's or now. all it focus and is on some a the in your U.S. really data that with guys. the this another, whether sauce little call other can upside subsurface genesis, this I'd heads here if our the industry of to on around the One bit get lot is highlighted I insight you've starting challenges things great to Hi, Appreciate and in

Paal Kibsgaard

using and things standpoint to things I doing we our think believe and higher are get and beyond efficiency more innovations faster clear just technologies from and it's production. higher very there

of the I on done. and are there's what's in the invested things this. we get subsurface rock be think good beyond lot stage has likely a years I proliferation mean, every how think to you for and today. clusters are and conformity around obviously fracking itself for production understanding I understanding a a get that down can today to of tracking lot don't we with whole a there of other that are we going that dynamics, starting much do we we that think that it And number more the of quite propagate. reaching fraction of with the then effort conformity there Things -- the not do of the are, that of I measurements have and optimal

our can how I of a terms wells, of And done the orientation the think of understanding be down the terms in subsurface things there are you into other in completion with can can we've this interference more I probably design the sure on there's think both things fracking, So least child as that done, lot mitigated. work in science of on for behalf do at so be you well put forth. already technologies, as production like and hole parent right? part and how

in the need I of industry. So again, outcome continued on of we significant capacity, be be business want there the a still if deployment is upside game, terms into have pitch to because think to shale this And the to into invest why, this technology having is the of in you you potential part changing playing.

and to continue continue that in in we question a customers land. So I that and on good very think U.S. it's something our invest we particular with engage to into

Edward Muztafago

a handful companies only do that. there's who of unfortunately can Well,

do. the So offshore well, I NOCs as highlighted you the market shift think to maybe bit gears a if what certainly good. that's little may wonder can we

to Given it backdrop, not number where the cliff, of specifically to going at the fact that market recovery the the to reserve largely years see XXXX? shake price continue or market these but also of the facing feel is deepwater companies and off the offshore ahead? progress deepwater the point in is the and Do too commodity going we're you commodity really price kind like are many

Paal Kibsgaard

drilling think between have down I surge I step to not in is, answer in in activity, think dramatic We're the activity, nice direction. deepwater going probably to simple a X% deepwater XX% is yes. we right it increase which have

deepwater. the around now We I tie that the that mentioned opportunities lot focus the these we've on in product sits shortens through projects A and our cash several offshore existing obviously several line. cycle. think done is of operators OneSubsea which into this awards infrastructure, what on back

So we these are think prices in I see projects think quite a deepwater continuous kind many valuable. of current oil of I at and even of Brent, recovery the $XX steady

and is, over And I terms think the now, I think floor. a at least, with Brent. shorter think of potential visible backdrop, done past where can years floor make by into the to prepared if investment have in couple the as I nervousness tying more the think, production I that at roughly $XX I of them facilities. think And of existing operators investments, we they has to what are fairly where is a make establish, cycle is been having

I think what's this seeing is think in I is the driving the deepwater. trend activity we're and increased this

Edward Muztafago

Paal. Thank Appreciate you, Okay. that.

Paal Kibsgaard

you. Thank

Operator

Next Bank with go America. ahead. line we Mulvehill of go Please to of Chase

Chase Mulvehill

drilling how you see adoption technology in And talk morning. guess, more technology side completion or about maybe shale. here Can over good just opportunity of follow I Very past the couple I'll do for on you quarters. the up shale? you've technology seen adoption kind the of in on the side U.S.

Paal Kibsgaard

opportunities actually both. in We see

to and but system. we high goes This by part designed I U.S. deploy also our with continuing CapEx technologies Rotary bits together end have into had steerable Rotary land. in with would steerable big of say is primarily XXXX, our deployment, We a drilling basically driven that purpose priority investments

the the use lot systems. is But think fast in efficiency, digital obviously high the spread. operate solutions a we inferior the how largely getting obviously both there a drill laterals Surface a at of be in the actually just about motor to things the think think same to long all I done frac entire -- can which frac space lot downhole. time side, and are is these drilling steerable compared there's simple think to surface So I drive solution we is be And on of Rotary I now, done on super to I do. that how complicated in more terms we how the end

So activity we the and same on the in and we we drive in terms we've do a reliability done run and time start the we of conformity at the in lot control how completion up cluster how of software get getting the pumps, of maximum optimization and do how we stage both terms pumps, how proliferation use minimize the each how also we work in each hitting time between terms the downhole of of the connectivity fracture. up

more So, we the again, to really the are technologies around relatively and that and we here get I some we and is think success low. with be deploy. studies more to performance penetration engage is on But starting tells but still of case the our seeing this, customers what continue the will story uptake the

Chase Mulvehill

technology more of pricing go to Do see to you more strategy kind adoption. think to performance-based that change has towards the to

Paal Kibsgaard

don't think bit need to a I necessarily land dramatic more U.S. commercial In framework. That take time. a we change would the probably

to is -- long long value a as type are there is as what of think value contractual ready the as sharing reasonable conventional that on happy that of and additional our standpoint, in a customers our we I see from the brings technology setups. are to created, as do

that's problem. not a So

the of between demonstrate gets having the us the I technology and a who reasonable value been customer then And into to who think split the invested the of the the benefit. technology. main upside thing value is have

Chase Mulvehill

just about forward like your shale move down scaling and forward. we does of we up quick change scaling up going to Okay. shale scaling kind as going down? seems One follow cost there's up, strategy U.S. and be as the think U.S. more given just of scaling How

Paal Kibsgaard

like a up and is scaling I think to significant think full going and say is effectively part cost do I you of drive important. returns be being down to cycle you that, able scaling how

obviously to the I increments growth more scale trajectory doing probably more which think So having in and a change this which you carry in a to what's turn integration, be cost what and for how XXXX with think us think then continuously. up in vertically of up to for and we will key lot vertical transportation we’re product activity a and a steady highly having I good And time down. accretive case we increase we and as plans frac own The on up rather doing step okay very our focus of we investment over than part I in maybe make cycle. view we a of -- out This our here you in a margins is is actually use us it is scale when scale will place system. has integrated

in mothball below low we actually to and downturn if will a in it price cycle. the costs this, are However at in in can fair cost are just bit sell and product the other quite a some market the we off cases buy all transportation of down providers mothball way level willing

thereby lot up scale eye to on returns. we and cycle the effectively of scale the built have maximizing full with and able think I So flexibility down these plans and a we have being

Chase Mulvehill

Got it, very helpful. Thanks, Paal.

Paal Kibsgaard

you. Thank

Operator

And ahead. JPMorgan. our Meakim of final go Please the Sean from with question is line

Sean Meakim

Hi, thank you.

bit a preserve concession your pricing margins for staking fleets demand you to versus specifically could how Somewhat maybe you on to just if the talk year, this group. some plan there scenarios in which little utilization related And up sure about approach can OneStim production are to near-term, unfolds. depending end I'm balancing

Paal Kibsgaard

stacked Yes, a we've fourth obviously number fleets of quarter. warm the in

a speak, we that as ready activity dictates. quite cold if already them have to back brought have we capacity few but go beyond of also stack We

of a on on market now backend Those what So of priorities reasonable are today. short we and of going the and we view to have -- that quarters operations I towards where XXXX again period cash flow. stage we're at and this two very to out in might opportunities during activate focus this again coming And margins stand we're out drive XXXX. that a look have I two to more things. see much XXXX you'll business where But And is we time to margins then a growth the take ample pursue this going good then sure capacity is we're saying say we at two number into but from in four fleets probably and make stabilize of have think that. would with to increments a to

have cash Initial a the now focus and strong of we operating in lot attack So flow. market. going flexibility of system we margins is how this are to

Sean Meakim

And of or the of services, cementing. thinking product lines some how about unfold in teams that. in in other you then talk seeing XXXX? market's for Thank parts positions for of helpful. your Can field your pricing what That's terms the that pressure leading your in those going you expectations drilling about to

Paal Kibsgaard

drilling haven't Yes, any in of we real pricing pressure yet. as seen

wells. no this conservative and product dropped the drawing and impact balances think from activity. lift nothing here there lag price a sort seen side, rigs operates customers to artificial have But Little And XXXX, drilling. I as some XX we'll really spend a off duct approach nothing probably bit on really few price, on the new months yet. on taking mainly activity, to at down impact the now dramatic We on as of of with frac prioritize XX [ph] their of instead line drilling

So XXXX. we lift expect solid artificial actually to a on see in year

Sean Meakim

thank Great, you.

Paal Kibsgaard

Thank you.

let So summarize messages. the before we me main close call, today's

We expect recent oil due varied. spending the solid is year-over-year more taking the despite a In range probably in hand, to of customers the conservative spending customer to America in North other volatility. likely revenue on approach growth XXXX, price international markets

discipline to our relatively start slow foundation And the the on U.S. year. We compared XXXX be to a expect generate very you slightly flat through in continued the to capital E&P commitment our needs is business for down much a Thank XXXX debt. land cover to clear net with investments flow cash listening plan in. all for finally, without to sufficient increasing to

Operator

after February Ladies today available conference am is for gentlemen replay X:XX XXth, through and this Central at midnight. Time

the XXXXXX. conclude your any today. That You may you XXX-XXX-XXXX International again of conference service code participation. participants that's and for access use your X-XXX-XXX-XXXX enter for XXXXXX. same the does access code, replay and the Thank at dial calling may by time access

may You now disconnect.

Schlumberger Limited (SLB) 18 Jan 192018 Q4 Earnings call transcript