SLB - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Schlumberger Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, there will be an opportunity for your questions. Instructions will be given at that time.

conference being today’s reminder, a call recorded. is As

turn over Investor to would Please now Farrant, conference to like of I Simon the Vice ahead. go Relations. President

Simon Farrant

Schlumberger evening. Good afternoon. being this Limited hosted City, call. And Board Limited York is third New the welcome Today’s morning. call quarter Good week. to following Good from meeting earnings XXXX here the Schlumberger held

call Officer; Officer. the on are and Ayat, us Peuch, Executive Olivier Joining Chief Financial Simon Chief Le

different slightly format. earnings call a Our take will

We prepared questions. leave will after his your our results. will have time start more we financial the the Ayat on Then with for to questions. shortened give will order in remarks on up more call for quarter, Olivier your Simon prospective details which the open

we remind As of begin, that some to statem I’d participants like the the always, before

.ents involve matters other to results projected forward-looking. refer I, we risks cause SEC today differ therefore, and in materially be will our are filing and could those latest XX-K from statements. to that These filings. making these our uncertainties you

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

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

to Olivier. Now, I turn the call will over

Olivier Le Peuch

to Thank to on earnings critical I release of Ladies the some gentlemen, my quarter would you, understand. Simon. ask good points morning. the comments and like through the before covering

have these taken a again leaving to market discuss fixed and conditions Simon valuation more our Ayat the the charge remarks. the us as generate have reflects flexibility have assets. quarters goodwill release None flow of you ability morning, changes seen navigate his enough all, our as demonstrated, during intangibles on these of uncertain the will landscape. to we $XX.X strong once has of cash our of had First market This billion in non-cash of impact charge charge. this

our and update with I our by a the will outlook followed on QX strategy on performance implementation. short-term conclude now comment brief operational

Our margins strong market very in international free than positive mixed third were and flow. a driven delivered improved in environment, more quarter The cash billion by performance. we results international $X

safety our aligned recorded company, achievement for am our the very ever for performance solid industry. benchmarks setting results we I the our outstanding the that this delivered All-in-all, safety focus I new Additionally, performance vision of performance and am quarter best pleased an returns. with on very proud Schlumberger team and with performance. quarterly the

the this strength international results The quarter activity in markets. the of financial by were key driven

Some projects the in regions activity picked growth also sub-Sahara reduced Asia Latin and the Africa. and was strong Only in lower Russia, on America Far Sea, the CIS Mexico and revenue activity East North saw and new and began in North Argentina.

strong experienced the higher, was break during offshore in we from America, Canada QX. OneStim minimal up on recovering sales growth land. modestly activity offset North In by spring

of and gaps the the we award Towards in flow. end by constrained quarter, the frac increased however, saw cash programs lower customer pricing were calendar,

decline. our on Cameron approach in drilling in the at line North with of land technology on equipment offset and leasing equipped reductions despite America sales -- flat, results fit-for-basin as count revenue North essentially access as rig was which growth partially margins, quarter. most expectations. end offset operating the regions, in America declining This building were included activity by robust sequential international closed

growth. our offshore Leveraging exploration of new and the basis sequential very [indiscernible], improvement revenue points More international double-digit technology. two-third than product back Our lines GeoMarkets and deployment expansion. both sequential with high X% quarter our mix, margin performance and the and was activity of this the revenue of on in posted solid, growth margin

international This contract the posted of lingering year-to-date sustained our was of highly revenue double-digit handful of closing in of improvement effect and a the dilutive. international despite At half margins have growth. this achieved, quarter, that GeoMarkets are

our units, business underperforming greater. these would of international growth been effect margins in the even have Without

are to working to contracts, condition their collaboratively progress improve to improve on support terms engaging and and those customers enlist We making our our with operations.

weeks As coming part personal quarters. of improvement this strategy. months plan, progress few retail the our stewardship and last capital increasingly new approach actions and under and are of the focused during part visible anticipate been have I Margin deployments taking change capital during on of the the both element

create of activity As higher together international This further deployment improvements. is action returns. pricing business starting prioritized in towards increasing be market catalyst units for the which increases, is our to CapEx with activity some will tightness with a the

results QX, Now, year-to-date single-digit Based on excluding move short-term still revenue business. for and international I full will on to outlook expect growth high outlook [Cameron]. we for our our our QX the year

Northern Sequentially, seasonal the hemisphere year-end we activity and the however, include muted only QX in anticipate decline sales. will

are also recent monitoring Ecuador in the closely the further and in preparing We following situation are the Argentina. events decline for

North In fourth as in addition, we America the weakness expect seasonal quarter develops.

to are in operator budget to constraints. last due anticipating end We similar year a year North slowdown America

than activity earlier and second year more should started to in year. last last the the this anticipate has However, than decline reduction be QX we pronounced

view, view trade macro concerns are challenging that the with the remains limited both economic of demand growth. Moving challenged rate macro visibility, and oil global and medium-term environment to of growth on the the particularly in

last activity of a production a Therefore, it and international year. reduced U.S. in further firmly result place. declined the for and sort expected the At the has growth same recession, drop months remain this activity rate is the in prospects the eight growth to that’s as XXXX time, for of

America this for North In land approach and evaluation, in the context, is under both medium- market long-term. the our

the starting and fourth quarter. we already OneStim be fleet are the We scaling to the during fit as market contracts business will

during opportunity is execution. same year. review the next market fourth quarter execution underway for the strategy strategic on early update and completed well the of gives the this will This me time, you be our At to

customers is direction. heart impact we this fostering strategy month, driving our the the four our and solutions, new leading that stewardship. from key Last transformation strategic for presented fit-for-basin Performance in industry, included of value of digital and that elements capital developing capturing performance at

off partners SIS global digital. already firm start open can excellent on Forum industry There, to customers vision we in our environment to September. of the our are E&P an the believe further at unlock commitment We presented we and digital customer an demonstrated to XXX performance. We that technology

the digital into an future and far also This chapter a intellects closing to industry. the expectations and our of our part was and digital announcement its marks of of, the from new our transformation. industry digital reinforces JV for of commitments translated beyond partners central and The Forum our The is customers our strategy already is sizable important opportunities. digital leadership

the multiple examples of there fit-for-basin drive which steerable all making are In fit-for-basin and release today, strategic also technology, our are as customer We progress Aegis such our with technology. at-bit new system drillbit NeoSteer approach. of performance,

am America, pleased tools. participation This is a success North channel report we to in the leasing access was markets minimal. to addition, of access where strategy, that early technology have our said new previously In rotary steerable I new of and

Also in North the now with scale. America, in Basin at our project Oxy Aventine operating flagship is

continuously our new a created have performance in of frac improved setting underlined is operational model example Delaware. good being We goals efficiency, new the strategy commercial and model through approach. is The shared value

few our the other base our finalize upcoming SPM we big altering that the divestiture during months. another offers are with have strategy, to party the in as in we with as of progress hand have anticipation Argentina assets Finally, we to

CEO evident. York. point commitment as visiting and locations. been the made role strategic is bode motivating people the taking New customers, our our of many direction for of The by The industry for Schlumberger, positive. our need our for I our in the the has engagements and The have reception people customers very and highly higher has been their enthusiasm is acknowledging of performance Since

have external the strategic with partner vision alignments am the with pleased and to performance steps All-in-all, we and choice internal of of I our very become our in our industry. initial execution

to now pass will Simon. over the I call

Simon Ayat

for you you, and Olivier. call. this conference Ladies Thank participating in gentlemen, thank

$X.XX per charges decrease earnings year. same last and credits. compared of to increase represents Third This quarter the an $X.XX quarter a and excluding was when $X.XX sequentially of share

goodwill, conditions. asset assets the primarily $XX.X driven pretax intangible During we fixed market and of recorded by charges impairments. quarter relate billion These to charges

this release. our end entirely charge component Details can of in be this found non-cash. such press As of the the charge the at is earnings almost of FAQs,

These the and impairments remaining group. after-tax impact terms EPS. to $X the in reflected corporate $XX and million Approximately reduction third The Accordingly, of monthly relates million production $X.XXX our in XX, item. expense. depreciation line of this as from is quarters’ one-month amortization is a reduction approximately benefited in million reduction XXXX. of The results August other this were $XX $XX calculated million of

margin to $X.X largely segment Our X% increased XX.X%. third by Pretax international quarter billion our increased driven operations. by of operating basis points XXX revenue sequentially,

follows. as Highlights by product group were

billion reservoir quarter X% $X.X characterization Third increased of sequentially. revenue

sales WesternGeco These increases XX.X%. activity While basis by North in margins international America. higher primarily XXX to license wireline and strong points increased were driven multi-client

Russia, of revenue X% in $X.X increased Drilling China activity billion and by drilling Australia. driven stronger

partially was by this North flat Arabia. land America revenue and However, offset Margins in XX.X%. were at Saudi lower

increased Production from primarily expense in margins improvement. points charge the Margin reduction basis half improved higher amortization to for a revenue X.X%, by as sequentially, accounted of XXX driven of third quarter The increased result the primarily billion activity. strong $X.X impairment of by completions international depreciation under international X% driven just activity. margin and

OneSubsea the third business revenue book-to-bill billion -- increased backlog increased of project the was billion in a increased margins quarter. reflects decreased in North long-cycle decrease $X.X The end driven QX. XX the XX.X%. OneSubsea basis This X.X sequentially primarily by at The Cameron X% to Sea. of $X.X for points to ratio cancelled Cameron the

credits the in billion the the We whole, a generated during and as Schlumberger quarter. turning cash third from flow of Now XX.X% to effective as to XX% excluding $X.X third was quarter. previous operations tax rate charges quarter, the in compared

million improved cash and million ended billion. as of venture. the the $XX.X joint investments debt with quarter the net $X.X a Sensia after and the result billion. during We cash Our received quarter closing in We total $XXX the of $XXX quarter just by of to

During the issued of million third EURXXX quarter, each. three we tranches notes the

X%, X.X%. weighted due in into at average U.S. and is third swapped The X.XX% X.X%. interest rate due of These were notes at first at with due the in subsequently second XXXX the XXXX dollars in XXXX

During of repurchased XXXX structure. the due our $XXX in These of $XXX have our improve outstanding served we the in notes capital X.XXX% notes million company’s X% also million and quarter, outstanding actions to XXXX. due

million million average events $XX to an spent relating liquidity of and quarter, quarter included, X.X of million $XXX CapEx of at capitalized we shares during price significant the repurchase to SPM $XX.XX. projects the Other costs million. During $XXX

$XXX During be and we and billion. made $X.X billion between Full client payments. is $X.X the also dividend SPM excluding year market quarter, XXXX CapEx, million expected of to

over operator turn to will I now, for the And conference Q&A.

Operator

ISI. line we Thank James with the to West you. of [Operator ahead. First go Instructions] go Evercore Please

James West

Olivier. Good Hey. morning,

Olivier Le Peuch

James. Good morning,

James West

market the sounds what So, were, should down. as describe fourth how conditions Olivier, to exited could the And quarter? third quarter, up? the like view, It starting in about how is you XXXX, sequentially shape also, we you think your then

Olivier Le Peuch

Yeah. No.

comment me James. this, on Let

international So separate North I land, my between will and specifically. comments America

So winter due to we Hemisphere is effect primarily first I think, to it the Sea. see similar on what the that then international in a China every seasonal North affects there Northern year, the Russia, side, the season affects and

every on and see collect regions. we that affect we And revenue from rig the our year those activity and

for. So this to every is than any minimal have not is but don’t We I year, think account other unusual. expect this we impact something

annual three We and year-ends as or in cautious product this the seen but for years, we their as equipment have fairly preparation could sales believe of budget will happen, two be this on last XXXX. will on muted have the years operator remain typically year-end sales also we

side, to be [inaudible] believe my I will two remarks, at the did North in year rate that reasons. decline the risk The as America be as comment I the On higher on last than introduction flip a in land, of for on also discipline holiday looming. than operator did we to has cease operating within think, the seen last led absorption usual cash that season winter, they earlier flow break is I year. operation the have and But

of from operation rate the has have started notice to of and gap been the September We accelerating. decision give

America North as expect rate the last in decline we consequence than So be of year higher might sequential delcine. that a quarter-on-quarter

believe foresee year, of some growth major, We at event major Now think, international commented, I offshore deepwater cease possibly strength in geopolitical and albeit that overnight major I But a the shallow different XXXX not or we place, to support international possibly. continue lower a next events. remain as or a recession will to we of or at turning activity will growth. rate that -- economic

the call. QX North rebounds comes strengthening January, to rebounds too early in foresee holiday believe America, of can too early season to is possibly that happening, but it’s is stability market pricing, on the activity When it strengthening and lacks call. this only that that comment to the usual I is from the we of from still we

James West

Okay. helped the during of here. you. to especially about Thank kind drove understanding taken That’s quarter, with EPS midyear, charges that respect very And of end the of $X.XXX by here the were timing helpful, Olivier. charges year? then What taking last they only why not these

Simon Ayat

I Simon this. James, here. take will

James West

Hey, Simon.

Simon Ayat

-- Basically hi.

During the we assets. quarter closely events continue third look -- go and that us we announced took of One been there carrying which two as the at place develop it is by Olivier, strategy to has and discussed, our new at are the in that value made publicly forward.

seen. is that we one the market valuation have other The

reason we and points Although, have lower the then second touched first the I one. first will discuss take before,

James West

Sure.

Simon Ayat

and during third very valuations us value. look to before, lower consistent are quarter intangible point, forced low we goodwill That carrying unfortunately. Although, and more see we at frankly -- but were have the our

As acquisitions. and we shares from were The the was stock. at for XXX% acquisition, of the two Cameron goodwill per Smith value in $XX comes book time, those issued share, at paid two paid XXXX, booked intangible almost $XX acquisitions We then, for almost which Smith In most per Cameron XXXX, at that aware, where share. and you XXX are XX% in million by we did stock. major of

reached of As long given number. valuation such, and value And very goodwill where our taken intangible carrying pretty has it’s this scientific inflated, actually is. we analysis, our the and this

given timing. we event. QX? QX. have is Because this are -- We of a end by normally happen. we Why in the do things review. record they more a seen as QX it But influenced don’t QX in in at the thorough We review you Yes, is year the not we changes it thorough did

which America, our impairment is The seen, North mainly increased in toward is asset and reflection you a have other this items that OneStim of actions mainly activity.

at are looking As this activity. Olivier mentioned, we

and we And We decision have this in that future as capacity excess took decision it is the it we don’t reactivated the there. We unfair. have write off. near taken see to the

everybody in asked, the I it is So real mind. I a it. sure the why covered had that more I reflection what not behind approach It’s than that took understands to a I make just is answered but wanted know of It quarter. issues reasons a our because you we QX. of and change place third

James West

Thanks, it. Got gentlemen.

Simon Ayat

Sure.

Olivier Le Peuch

Thank you.

Operator

go go Angie ahead. with Sedita we to Sachs. Please Next Goldman

Angie Sedita

Good morning, Olivier.

Olivier Le Peuch

Good morning, Angie.

Angie Sedita

I guess, of on do little revenues So the is growth single-digit markets comfortable would appreciate impact or also, both tell growth pace international mid on revenue early, that, in feel it’s the the you still know to color then XXXX to of the XXXX. XXXX, a sure? asset bit for it a and bit that on a follow-up but still sales I there in I with I and early margins? And occurred add for

Olivier Le Peuch

Yeah.

one. address Let then will second me I take first and that the

clear be high. low or mid to I single-digit -- think it’s as than So, rather

that point. in customer XXXX think to setting macroeconomic don’t of vision I all too early the and know for pull the this cautious the you are at visibility. have be it’s we to think about are that still and But have I factor process we Not think good call and here. serving I their

or think to here and activity more deepwater that is of reject other some offshore other activity a the year. some But would has for the risk in in next continuum industry side. set and at stop, believe not there We decline the on the basin momentum decline of that region particularly be I

year. international but clearly, too see call, growth it’s So in next we early to

have comes That underway. Sensia. announced weeks already two three is divestiture, the ago. divestitures closed of been -- the it closed, announcement the when One impact So we has so to

one to that The and second to own one we divesting. asset to we JV tubes relates that with the of third shape EDC. divestiture the to drilling tubular the And accessories are relates

impact the the on when and global you yearly X% $X.XX combine revenue the The the when be a when So these for three of be at and impact the earnings you year. closed the basis, to be the short will three on will impact $X.XX completed revenue. will completely look three, of

year but impact may the want on to add basis. So, Simon, full more, that’s a

Simon Ayat

that of basically JVs or one the East. creating to other Drilling just transactions divestitures of one the I creating explain are or want enhancing of Middle EDC the the two the Sensia, the JV is JV in

pickup is So we our and JVs. in much will are are higher earnings not have losing because the participation a the revenue the in as reason losing equity we of we two

year the to Olivier really $X.XX third the it’s minimal impact $X.XX on a therefore, as And profitability. per has impact on margin. mentioned, And one

is a total. the of revenue the less However, X% than impact, larger

Angie Sedita

Perfect. digital, and given color. appreciate on growth and on very, pace? international a transformation, margins of obviously, year And contracts -- then, your the the around further these That’s next XXXX, trying address the in talk little on so margin about for very initiatives are Okay. well? you But helpful. for bit international pace as thoughts guess, asset just I Middle side, I the then sales East, these the to that and the

Olivier Le Peuch

work the will I continue target using basis expand comment the ambition improvement year. high the our continue So But seen to point will expansion margin grow during that the not on have target’s quarter. for the internationally strategy of margin double-digit a the set. we execute is to and have look not we have we and I to to to -- and part the

buckets high -- see. it look you level, three at that very if we a from So there what are

our impacting to relates some first that business highly the one underperforming ability are of units, The results. contracts the resolve and to our lingering dilutive

that to that not a expected think, but on we pace confident We path have this necessarily would improve this I I very will being year. ambitious have year, have made the the next results some impact I am to progress,

our think a the forward on with are system. years some impact pull-through have also in first complete efficiency I self-help, margins. it, transformation execute setting modernized on Similarly, to of would model I bucket we our to continuing operating two to call put operating new using our and as And that look I internationally platform rollout of we

will and bucket of technology, accessing North the replicate in CapEx who we trying access markets. lieu all success regional obviously, of of have in seen are the digital it America oversees third-party and our I technology terms next in in the technology to some And call players is, to using it the

we we where the done as the digital gained outcome to will the the And momentum that such an share months expect in of and just contributing of give have margin. increased what have digital will the be that and last industry we market us

but So last international these I ambition is our growth the buckets will But would other next we will disclose margin indeed. it’s difficult two be later. impact year, outlook and years to three two But next grow further model to years, performance moment. this at that and or believe long-term say horizon of clearly the the

Angie Sedita

turn guys. will I it over, Thanks.

Simon Ayat

you. Thank

Olivier Le Peuch

Thank you.

Operator

Anderson ahead. to Barclays. we David go go Next with Please

David Anderson

Olivier. Hi. Good morning,

So on focused are more the fourth now a right North and in the talked down about quarter, you review of business American on assets strategy, you your quarter. strategic obviously, fit-for-basin the during writing after

the like, review guys strategic parts the should you kind the get but hard broader in next changes are a there it’s of retrenchments We parts talking kind and U.S. what North of expect bit kind lay business business of XXXX little all of you out year? we about in are I just wondering could at, to certain what with if America looking of these happening was are America. land under numbers, of North

Olivier Le Peuch

question, A No. good very David.

deep not and back part have on are month-and-a-half we land entire presentation of operating So America business of doing explained are a is there. North as OneStim we our every this a only we the review but ago, strategy the during business

market we thing are the not first scale. we that a are view, to doing doing is the we And doing approach scale-to-fit meaning up are to

it business every scale for up we doing to are where fits believe in basin. every We

where the and in in of basins the we for this speak we are where the So land. currently of North each operate for the America middle we is as each in are operating OneStim of doing what lines product we

more our the is the our our change treat fit operating make that portfolio review one the or that point reduced on position, to to as to technology strengths, approach a to opportunity the as a decision review up and for and to So technology our this to all our to anticipate market basins opposed how to with at opposed a to multiple scale-to-fit with forward access, or strategy technology basin customers, making portfolio move technology. to grow outlook, review business decision model and setting

the we So approach are taking. that’s

and As basin need have technology by recognizing we we speak, technologies developed we are to some differentiate feed are what we the are highly complement successful that to there our impact. this to that create performance continue team that we with in

of had We excluding to release us -- some effect land slightly North quarter, the of actually helped maintain have this effect have due the our the the success. term America success and seen improve of of the last have technology not we margin, is in

will we us in making looking portfolio new to we exit model. technology and expand continue our a at or America business a and to business move are continue North or bring to decision of and So

OneStim, in know, to America. on but as it table, our as you partly North for is all business So to yes, they say, the all early option dilutive certainly business the to are

David Anderson

seismic of slightly made Thank But for some some a America, surprise a next different the a comments and was you. you a strength offshore here. question you a offshore granted highlighted there’s year. on being few market which Kind about of North bit support

tie that just that a offshore highlighted But this just Cameron wondering trying subsea the I am actually You into lower harbinger if general come is to international of orders things and in to for mouth there. I you optimistic words are do like on over your don’t it two the How to see quarter. next because want but you offshore, somewhat quarters, into trending this there? sounds put

Olivier Le Peuch

No.

on me this. Let comments

it monthly steady on partially It’s doesn’t more or quarterly that’s compact and basis. longer is offshore have is a I expand the So is a long on and true cycle market deepwater. more the and that for that -- view a market

have slow for deepwater the So we growth last we because recovery of seen XX months.

the faster seen shale recovery of months. have XX We last in the

So that it’s but the call, the it will medium-term these place. Not to early necessarily some we too believe of in stay fundamentals case. is long-term, to

is So the six to to too believe has that momentum for the stay market foreseeable here months, months early I that nine that say. this beyond is to

The rate subsea for necessarily of down. FID and the have FID slowed not

been I early be think we technical some key them expect to later of year. the approved for have of FID delayed But some reasons. year, part of next this

OneSubsea, or comes matter subsea scheduling I how a is The this of when seconds. think, looking this quarter, of and in booking

still a are largely having We year-to-date X book-to-bill OneSubsea. ratio above for

So unfold. in to can we recovery you place and that the subsea continue as is see

David Anderson

Okay. Thank you.

Operator

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

Scott Gruber

Good morning. Yeah.

Olivier Le Peuch

Good morning, Scott.

Scott Gruber

improve. outlook in around strategy? around grow to provide free obviously But some assets margins color to the and are assuming assistance? Can cash for color being market In limited ability cash improvement provide some under flow will around could optimize EBITDA core, you cash you dollars, from flow dollars, since the dollars, the new the your removed portfolio free

Olivier Le Peuch

to this and first have which cash working next cash grow and flow we The of think foremost. have our is the to we both clearly, that I ability ability that’s margins, one capital demonstrated for to efficiency, first quarter. the flow improve foremost improve is

the and seen have growth Long-term, obviously, depends in it where margin on we improvement. mix

to America. still we place premium a is in I where So compared growth that have margin that believe still North international we on fundamental

modernization combined to net to strategy, fix in enhance dollar, and North America margin The margins. scale both as improved to fit our that of efficiency and well last have effect to working were our to improve on over as positive in we percentage continue execution our years our effects We believe have transformation, to due our -- combined of with efficiencies. couple platform the the capital will to asset that of working

combine believe improve forward. to still a absent going and this, the total recession improve ability that will deliver you the all of only So I cash will conserving, cash

add Simon? to want anything, You

Simon Ayat

working flow as normally the second things. it the first seen. the and the you most very have our earnings well of definitely do said of issue then is We capital cash half, in the management You structure and of The capital.

quarter even the Third quarter we anticipate was billion to be than fourth this performance. $X.X and better

cautious In continue have capital. performance on next cash we to capital flow be free terms deployment, to of in this continue and very our and working help our a plan the year, will the

of Our receivables inventories. normally working subject capital is

of our We to always soften meet the intend we and sufficient our be the and our pockets from coming know than more and stand. cash including of comfortable here them. collections generation are some to we there divestitures operations have where We of that the And feel commitments, -- will we between all dividend.

and One to of more because divest the have are going thing what in going year, as are current investments -- we lower year. announced we doesn’t see we add SPM about much to don’t you already next to we done that it require as

Scott Gruber

you this in with SPM the at of point CapEx? mentioning the are And comfortable it. Got drop

Olivier Le Peuch

sorry? I am

Scott Gruber

SPM Are is you where year? going willing mention CapEx next to

Olivier Le Peuch

around start Well, of don’t finalized the but year. anticipate SPM not I probably. lower plans, next we mean, XXX, be And CapEx exactly I where, this have XXX, XXX. much all that year we this is -- will when know

Scott Gruber

And markets sell additional selectively service the what wellsite and competition comfortable or tweak is are a technologies Can And one how which you the get it. color you lease you to seems strategy question, provide some to then Got willingness one will the to then provide of to third in deployment. be strategy breadth various line? new the importantly, looking creating of to these tweak various not this additional strategy? Which do the markets? in around this geographies by-product on at deploying parties, strategy

Olivier Le Peuch

required that capital condition access. subset we believe the is that there market fit-for-basin, in hybrid the basin, we competitiveness of high intensity local technology Yeah. prosper capping where is call in the particularly our Scott, target the and and both fulfill this to players basin access by strategy, that in basins, out is

realized we were we accessing that accelerating help have technology we access sell believe North So America or before. can the that have tested us and lease not in selective this to and markets we we are opportunity

So two consequences. these are

model these typically is our business goals And, we capital new assets. to lower attributive is is secondly, intensity, Our that as our to first sell and our returns.

expand So don’t in to CapEx we require marketplace. this

So there where we take located local competitors where this? were set a where competing which are for there in services. drilling do highly one, more competitors, the is than space, local do if to drilling of is Typically, you North XX in America,

We regional the in be to where where other case are and Middle the there of East expect there hybrid parts world basin. this players

started. it when this is there. we obviously, product the comes one, line, But But where to is we drilling not stop will

it to perforating doing line. The our sell designed lease expand and every to third-party. in Wireline strategy and or and was to a we some product equipment we of the portfolio that specifically for accessing part are of sell waiting for are are currently We to continue

tool we have par on that is detailed the as with provide retooling this to so this capacity performance up because of and the helps This we capability equipment, services this of well assure technology. of technology

Yes. scope set So put third-party to When of right am different in we the customer. condition a operate comfortable? and different company the I term with with those

supporting them and becoming are are, clear our as in are our comfortable, and successful market then they access. deploying We are and are they as we increasingly we as successful expanding technology well in

Scott Gruber

Appreciate it. the Got you. color. Thank

Olivier Le Peuch

you. Welcome. Thank you. Thank

Operator

to go Lynagh we go Stanley. with ahead. Please Morgan Next Connor

Connor Lynagh

Thank you. morning Good

Olivier Le Peuch

Good morning.

Connor Lynagh

down, around the group XXXX out with with amount about sustaining reduction a how to be here. of services the CapEx would obviously in coming thoughts you any wanted production can decent think I activity how that. stick business, but I In would there, oil spending, you think CapEx would there much take team core

Olivier Le Peuch

group I to at too think it and got down it’s to the stage. specific be production early this

production volumes yet advanced the America too where there similar is in group of activity We this North pretty operating are on not We level America and that. and there execute some the as strategy popular. is early of are North for set

guidance. the as stay independently line we Globally speaking, announced the recent the been anticipated in the combined product to the with line, shared mean that some we would X% has what believe will almost asset, execution, America. I strategic we divestiture of we of say mix that North believe. of that heavy We have, we we X% within with before product

Connor Lynagh

helpful. a question guess Okay. highlight Thank continue you. you digital That’s here, strategy. broader your to I have

investors that business? big for How the many you is this for think or what hard view be could multiyear opportunity about the thinking a set through do have addressable in market think business a how a I time you?

Olivier Le Peuch

Actually, big market. it’s very a

industry, long-term for if is and the had think, biggest next I of the years. the which alignment the all from said, us oil industry, business. to to years will the desire work oil leader customers, our aligning the believe from or market first in by a judge industry one I gas cost XX they and response are that with I technology you diesel oil grow of to the over partners five have

the is big. So price

challenge the to Now is monetize.

as of a there. of by growth -- three credit said, only customer factor accelerating as at it business growth a a the about our established side margin in and One the expansion portfolio they digital the what rate and we direction is is today has to segment Sensia adoption the everywhere. is comes revenue leadership there expand into our are are So and we of in DELFI believe three one other a that -- will remain this workflows, and only

believe this I continue and accelerate. So will only

WesternGeco exchanging technologies an with we heavy as joining last you product and by us WesternGeco this an data light where platform. line -- the year established -- into released, is we first branch Markit will and IHS think asset reference have and have an of data have we and that digital become announcement are with the detailed on line seen data aggressive platform our that data strategy I have monetizing GAIA the we industry transformed termed with of of from business our digital success, asset

this to we operation. deploy deal the will the will into that continue -- that space sense see digital at finally, The space in production operation. will for expanding in you of edge you to continue we that make production have ring, ambition seen that And the are and announcement this

digital full success and of and Wireline, sampling is is this generation the will factor become latest expansion Ora, And fleet of becoming success. a key characterization

are space. So leading its and in long-term this large multi-dimension is we and this

Connor Lynagh

very you much. Thank

Operator

Hallead go go Please we Kurt to Next RBC. with ahead.

Kurt Hallead

morning. Good

Olivier Le Peuch

morning. Good Good Kurt. morning,

Kurt Hallead

in fit-for-basin Thank strategy presentation the the mapping month -- that on XXX some that curiosity strategy And a presentation, context outlined, my that back basis I that models, and can you North see sales additional to points. execution international kind here this in vis-à-vis intention at improvement had that you American I you of the how of in least you great? how the by of the contractual increase that great dynamics if digital, Olivier much you. the follow-up for -- And of and be margins basis to performance point stated, to specifically ago. from through the the kind the could provide you color improvement does clearly of be half attributed a Thank morning. current the question color to all the you XXX

Olivier Le Peuch

Kurt, the comment one addressing would or Angie at and expansion buckets. is our them performance ability performance of being gone before, the I EPS one are of if for want. that’s help we the is that the self two as addressing and think, you one I internally is three and I transformation to And that’s to contractual, short-term unit No. operate benchmark and the personal is did doing is more the underperforming business see the performance

all focus the of our and is on high personal our the very team each of our target is every that these this -- So of on quarter. overview and

next assets of have technology years next, mix I the one bucket, the internationally. be For think most that the you five impact the three certainly fit-for-basin digital, will the mentioned, and years the next to and will

technology East, America to Mexico. fit-for-basin some Latin We assets have we have digital China from Russia we in from to have everywhere Middle and will will

few this. model expect digital as what to on I next confident deploy that’s we and performance three the and will this that These we years. am over fit-for-basin, contribute So

Kurt Hallead

follow-up Right. of had direction. I in that. business And you then I a appreciate terms general was some broad the, gave on guidance

was only was just when month. for one you guess the So that about I depreciation, of core lower $X.XXX at the quarter kind I look the a curious, impact for it am

you kind head seems like that if on So share headwinds it annualize that? potentially don’t you assumption of on kind of gut benefit on any is depreciation. to instinct should you I per initial benefit offset get know into you me my Do Do the lower perspectives out as that? you the my $X.XX is have a from think, market correct XXXX. positive

Olivier Le Peuch

So, first, I correct. your maths think are

this generate annualizing scope. $X.XXX same the net think impact more will in I or less the $X.XX

be decline. it would offsetting Now the to

I to think too say. early it’s early

I think are again outlook. the looking we at

I XXXX this likely early we outlook on call to that reached in in is we in outlook As The international that or too the bottom and both. to at platform, to before early XXXX too commented the point expect with outlook on expecting remain positive on the say. that regional XXXX

quite but I remain this. about calling for assumption point, think impact the this cautious this I at So will in strong your

Kurt Hallead

Great. one it release that maybe there earlier a subsea, last one, that then I year one Okay. the -- through in And in cancellation or kind you press mentioned noticed a came was that a project was in the project dynamic? of was

Olivier Le Peuch

No.

Kurt Hallead

Yeah.

Olivier Le Peuch

from the than back simple to more sold and Actually have such the the its asset on that. That year booking two option subsequently for from operator, booking backlog. decided one to or the the operator and burner said the on future was one gain rethink as other next than It’s and from -- next as actually and and awarded the remove to we ago. cancel FID next was was and to order an as that That’s no. this years ago No. sometime OneSubsea FID put the

Kurt Hallead

Okay. it. for That’s great. Appreciate that. so much Thank you

Operator

Sean to with go ahead. we JPMorgan. go Meakim Please Next,

Sean Meakim

morning. Thanks. Good

Olivier Le Peuch

Sean. Good morning,

Sean Meakim

just affecting So in asset of it’s in Ecuador, does wrote CapEx SPM assets, whole are maybe still terms then have Olivier and lower macro sale now on CapEx just And on you next the the suggest impact smaller XXXX a positively, spend SPM, terms a confident impact up Argentina elaborate -- on challenging flow are in some near-term? in been Ecuador? that your of follow also few in and as their and based still you comments Argentina that SPM cash the we can to year, months some we of on and is you confident for exiting production

Olivier Le Peuch

Yeah.

comment me by let one So one.

is Argentina for So process -- of in the Bandurria Sur first, asset divestiture progressing. the in

phase, We in others have received the and hand offer first as have that where looking speak. completed offers we few we are actually we we

So and get the closing still do to and step every anticipate signing in work following months. we we

for as we for yes, So, an XXXX. this impact account

remained other the divest SPM will the portfolio. are making to The Ecuador, on a assets. We decision not the at any Torxen that point this asset be main

CapEx meaningful the smaller, the much SPM. we of term production that in are on asset interim -- of in years with other back initiated nor not we working are few are terms a for in The are impact revenue to

compared will are are yes, our will the flow So, operate to flow, is, SPM commitment keep considering and the so and in committed cash cash lower to the divestiture term it be within increased contribution. this year to of be next we positive flow to CapEx cash we cash from we and flow making. is And improving year continue

Sean Meakim

product growing quantify to the able I Thank some you baseline be the know can margin today. of OpEx you go-forward is mostly respect importance just very the the but higher then, with in you well. given parts contribution difficult benefit software, that. helpful. common margin digital are That’s And for to of or accretion get from reference quantify, to strategy it investor internal of digital point question. in And just impact, as your would their

Olivier Le Peuch

has Sean, from digital look No. that I as characteristics. think, a it at we a business two

for First, it is something is is price having industry the transformative high something that all and is operator. that for

on accelerator. growth business need digital So in we the we rate is to stay of here and the of be to this believe

-- be will part and important really it one most factor. that’s of So the the that

years operated has case with the for the able we to when to that years have model and XX XX accretive, that is be have characteristic right highly other been there, we we which generating size. last well operating the and been are IP the The margin

see So contribution cannot come following but have I outcome plan forward, leads it going that last point, out at will reached see its the score. the and months SI this the that we and during all the opportunity of continue until increase, XXXX we we to

Sean Meakim

you. enough. Thank Okay. Fair

Operator

Mulvehill go Chase with come will and from our ladies final of gentlemen, America. Bank ahead. question And Please

Chase Mulvehill

to number the North commentary. your fourth and much a help of of if us gross about down? for significantly fourth will Thanks EPS the on XQ in bridge the quarter. $X.XX about in. wasn’t have quarter, me could for be am But for can that up gap it That’s not quarter. I guess the will for from you think potentially lower down be I it squeezing I be like full $X.XX I D&A I international the or will and trying XQ. sure $X.XX one, Hey. from we number first it sounded outlook how kind the the you start kind America if up of just and $X.XX guess maybe

Olivier Le Peuch

stay the we the guidance I on what activity, comment I repeat I to in The is see will see during down this Hemisphere an introduction year. sequentially, once would due rigs what decline I on shared activity at anticipated will be will season activity Northern seasonal international we not large that in and every effect, quantitative give winter is remarks. can to my -- point here up EPS on and

also there. further could China to counted in could extent decline That or year this this investment depend that don’t partially this see a if before and We we North have it Sea, as particularly the of the fully will have that sales Russia, Russia due some has end offset any Argentina. tangible, effect. magnitude to moved exposure climate mentioned to in as The in anticipate and

week, combination about for Ecuador. increase stage. half a of But production which that a than means happened we some heard activity you this That we for sure. so for a a unrest finally, international. -- restored that where And our less week, foresee have this not on the Ecuador bit ago, a civil at is impact week consequence about and operation

the end of than that was accelerated. in The weeks it’s the decline internal year-on-year year. the in up that QX July the the difficult such, be think, of we the to but pulling the anticipate from three from the point on months pin it where commitment America will the rate to few on in on point and following activity, decision America, has QX rate last risk to the North accelerated for rate -- I decline more of September. Now, the last permits, market has And decline North days pipe will as greater sequential exactly

Chase Mulvehill

forward And question as that right. the Sean’s digital back have then digital just like and for Could side, which then side medium revenue Schlumberger? we Understood. you that. revenue of Got on opportunity see got to all on the of over lot the you think a businesses, kind move of sounds coming Okay. opportunity All digital the this could most to you to do be longer how it term. leverage talk opportunity you about ultimately a meaningful

Olivier Le Peuch

the The line one and that the marketplace. and digital SIS into first business is will digital foremost WesternGeco, and data the benefit then are workflow which invested fully already

and needs to there momentum encouraging. the success is continue will the are seen, -- quite expand, think be early early I to that be but growth indications relative So to

see create I operator make announced but one, of to software at drilling. self we the the plan digital a Hilox a this The including And as are platform productized and including to give platform -- we combined [ph] a the to with assessment. meaningful operation, impact speak the some process this rig full and it accelerate a to week, and during to to the would hand. scale and be scale productization when platform and That can of the happen offshore Drilling. and in applied that this drilling in working the automation rig in we of the commercial We have say, drill is opportunity future next

will success Board and create be build with to -- JV Sensia Sensia very are we a that And JV I sure willing support JV. will this with production to be to their the Fair the Chicago Rockwell finally, month to to Automation. on fully Automation we closely are the speaking and in in building make aligned working meeting

Chase Mulvehill

All right. back Thanks. I turn it. it Got Understood. over. will

Olivier Le Peuch

much. Thank you very

reiterate key call the like conclude I three would points. to we before So today,

very QX our First, was performance solid.

headwind. delivered flow recall while America safety expect We mitigating performance. North activity margins, land We and the international strong cash free

initial the vision new gaining wide company progress and execution the strategic very encouraging. is Second, is acceptance the industry on

an margin strategy capital adopted terms, mindset have of increase to and expansion. discipline, to deliver optimization operational capital we working investment overall Third, as the

gentlemen, thank call. your conclude and for the today. you Ladies may Lya, now you very much participation

Operator

conference and for does Ladies you. Thank you for conclude today. that Thank your your participation. gentlemen,

disconnect. now may You

Schlumberger Limited (SLB) 18 Oct 192019 Q3 Earnings call transcript