SLB - Earnings call transcript Q4 2021

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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' lines are in a listen-only mode. Later, there will be an opportunity for your questions. Instructions will be given at that time. reminder, call a being As Instructions] today's is conference recorded. [Operator the now of to like would conference Investor to President I Vice turn over the ND Relations. Maduemezia, go Please ahead.

ND Maduemezia

Limited morning, call. conference call this Limited is Houston, to Thank Board XXXX from Today's and hosted the Leah. and full-year Good the you, week. Schlumberger following fourth being meeting quarter earnings earlier welcome Schlumberger held

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

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

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

most turn to release, fourth-quarter GAAP Additional I’ll that, on the measures and is Olivier. to our which directly details in be press can the over comparable call With found website. reconciliation financial our

Olivier Le Peuch

you remarks, XXXX Ladies the my In Thank you, our today. call gentlemen, prepared on us for will results and and joining achievements. QX cover full-year I ND. thank

year-end which XX% and growth, levels. generated outstanding growth XX% XXXX, all areas international and than same an international delivered and versus activity growth, continued we international in in divisions momentum revenue markets, All By activity year-over-year XXXX Thereafter, operations, offshore upon more financial near-term our recorded with sales, with will compared in by growth, divisions, on revenue The I of & and sequential improving we will strong then view and our questions. our fourth results, exceeding further digit Well growth when posting I insights logistics was in Operating drove some XX% the broad-based sequential grew characterized detail your into quarter financial challenges. North the though America, seasonality will follow growth, up Stephane the expansion, by Systems with our outperformance the All-in-all, results year. in an period predominantly quarter. and flow at financial partially performance, the of sequentially, mid-single pivotal ambitions. market for margin outlook give we operational last to exceptional in of led outperformed year strong driven impacted acceleration finally, for which accretive the fourth our more outstanding and spite on a of for quarter Construction open cash financial exceeded And financial closing second double-digit execution, international conclude pre-pandemic growth, expectations are and XX% very industry time highlights our half growth generation. service-oriented Production division, Schlumberger a our by following accelerated, flow our beyond our in Digital of four approximately record-high Company expanded business These pro-forma gains basis. activity, consecutive prior in sequential of effects, Integration our quarter. Reservoir Geographically, billion free growth results the the safety North year. with units. revenue Underlying of offshore; through large. in from and and Performance, pleased quarter: rig results am sequential double-digit and these America from growing at $X.X cash growth posted the sixth the excess margins. contribution, margins

excluding this division margins topline leveraging resulted exceeded we we our of also our in margins full-year growth, new This in levels. our revenue on significantly, Now, North digits, also let and laid as returns-focused that the second strategy, we out to and In and me core, upcycle. activity divestures, briefly seize full-year the expanded in fully In of organization in year. in basin international targets financial reflect operationalized start double the achieved effects the international of significantly the Internationally, one what resulted XXXX. XXXX strengthened the we achieving XXXX. half expanded America, top-line the margins, of grew

achieve accelerate platform, the am tools to adoption capabilities, on intensity. solutions, of year. in operations. the in and and of and in the Taken advanced construction XXX XXX% AI excellent resulted through AI expansion, deploy than carbon together, time, more setting saw established compute-cycle our collaborated cloud enabled performance, to powerful our and than the production globally, further We on access access further cycle AI market automation highest of more goals recorded as accelerates lower these global margins growth engine expand comprehensive We operations operating six XXXX, last workflows improvement. DELFI the very reduce we to and platform. At well key machine-learning of built In market DELFI with our digital I customers, and conditions to cloud Digital, end activity proud second innovators margins we and for increase a more foundation have the pricing of our during of intensity years, than growth, digital an momentum commercial DELFI year-over-year, and support tenfold improve user partnerships

operations, expanding a stationary market, suite and advance lithium, incremental and CCUS uptake our edge of The commercial in Energy, position New QX sizeable success. solutions and geoenergy, in adoption our the clean a energy AI In of development testament streams We and CCS OSDU including hydrogen, technologies projects. bioenergy autonomous of continued including digital storage, Schlumberger business IoT took data margins, opportunities, made success. in and our a In are all great our we this ventures addressable advanced the with and we offerings, digital clear sales also advancing significant drilling, results, total low-carbon and of to our project. Agora of progress in significant energy in XXXX,

Hynamics, our venture, Vicat, companies secured steel Some Europe milestones and five And Celsius, for in Ugitech, with pilot one in prestigious agreements contracts a and the include in with commercial and notable leading achieved venture, we hydrogen North America geoenergy cement. our We ArcelorMittal, of signature terms our X Genvia, gas net-zero Technologies commitment Transition and in the year and of to university much to of of also comprehensive emissions, launched Scope us inclusive This for focus campus. sustainability. success. announced commitment, portfolio with operations was decarbonization on oil a our in XXXX the pivotal

commitment In XXXX In sustainability was rating an the Top and Hart apply by ESG Energy, enhanced AA a Award disclosures, addition, efforts, demand. future helping technologies great year recognizing and world Schlumberger earned and by summary, won an capabilities our MSCI, towards our energy our Schlumberger. Performer to our for meet

recognition outlook. excellent would and to customers. delivering the They enter dynamics, year and on would targets our our future. and and our operational accomplishments, in progress through three operations which setting of XXXX, that world logistics across numerous these thank results energy, new year as execute, metric. and entire engines the success momentum most this we I pandemic performance to growth constraints, our digital, excellent every the like our adapting all, core, earned of team we outperformance supply-chain of am and to surpassed remobilizing well which made I ESG for our support share benchmarks, of Above their the to I like proud now and created our Beyond all the people, unique into now new all a financial ability of for of

balances, robust view inventory demand spare in oil are pre-pandemic shrinking result supply Looking spending, ahead, up growth and multiyear amid oil substantial step the in growth. of market projected declining we capacity, beyond increased price. have peak, confidence to Tight our capital a and in supportive

augment particularly has during levels upcycle. conditions market improved confidence for resurgence, In addition, of capital demand of development pricing visibility pervasive spending improve, response service supply. in demand expansion the in last spending long-cycle strong will this multiyear to as by capital seen a started, technology internationally while essence, as and and In plans XXXX in multiyear established, increases exceeds the capacity is service foundation short-cycle increases, already activity the be Indeed, beyond, FIDs on expect the have we improvements the to recovery response service more scenario will a as This to oil as offshore, the begun period call sets in environment. capacity oil adoption growth And number and XXXX growth price driven greater in the long-cycle quarter. pricing tightens. stronger being and pre-pandemic demand-led

increase scenario, XXXX impacting this revenue more we potential the areas simultaneous at of expect both reach in very to XXXX specifically, and the advances. both low-to-mid markets, growth dissipate from to increased a short strong environments, will the building growth, increase while spending in are pricing in that teens, America, strong as offshore the and as of in lead capital and and an spending long-cycle, All XXXX. North half will projected including upside exit second Turning post XX% is and double-digit expected North in internationally, capital disruptions overall momentum In mid-teens. onshore our year operating to with America, activity growth, internationally to drive Omicron deepwater, least

In again, to, EBITDA supporting of the mid-teens uptick and exceed expansion let will at will prominently share revenue end terms. the further trends, turn are we expansion. with the in adjusted Stephane. seen mid-cycle margins expand in This to should With full-year ambition strong EBITDA levels we this, the context, and EBITDA be the margin divisions EBITDA XXX by margin now that operating followed revenue XXXX. how year, once typical & further with us across year growth the ambition which progression the the leading through to similar a a experiencing quarter XXXX gives call XX% is reach strengthening with margin I anticipate full-year, we all and first than of Integration. this we growth exceed COVID-related second while over or and bps quarter me margin visibly our ambition growth fourth will that Digital exiting adjusted before least Directionally, confidence in trajectory be still year second of This sequential Our on EBITDA margins basis, of in higher half unfolding. XXXX, historical the our seasonal most quarter, disruptions, seasonality see to will dollar

Stephane Biguet

of when period morning you, quarter an and good increase Olivier, $X.XX $X.XX ladies to quarter compared year was $X.XX. and third year. the and Thank the credits represents of This excluding of charges gentlemen. Fourth per same earnings to last and compared this of share

recorded geographical repayment of GAAP $X.XX by by & Digital of sale shares the in This a North addition, Services, by $X This Integration. revenue EPS driven while a All a XX.X% despite Pretax to which relating margin of credit XX strong basis revenue to increased margins, Overall, was margins helped of remained margin our effects divisions our portion sustain a six a for operating overall X% to International EBITDA sequentially. the net of of was relating offset $X.XX essentially growth, increased bringing Oilfield sequential in consisted perspective, grew digital Hemisphere. sales, which flat Company-wide $X.XX. sequentially we grew From a fourth $X.X very the gain billion $X.XX improvement led at quarter sequentially. of improved XX.X%, billion have early sequential X%, points loss Northern quarters XX%. notes. to posted America strong row. and in In Liberty seasonality

higher sequentially at to of international due offset partly fourth Integration sequentially were billion. me of exploration $X.X result which effects Well in in largely the to Performance offshore disruption a technology flat that effects and XXX summer combination $XXX and X% APS was flat Ecuador digital Margins increases Construction by revenue mix, in a stimulation quarter markets. intervention were XX.X%. drilling, driven and increased X% Fourth in These offshore now projects. sequentially by exploration sales, of were and to Reservoir pricing for offset seasonal North Digital the growing the gains land fourth increased to further licensing of results activity billion in the significantly points division. & our revenue seasonality the of XX% with margins growth America million sequentially campaigns XX.X% and increasing through Let higher accelerated Margins revenue were This growth as essentially quarter higher internationally. end pipeline each the as basis driven the Hemisphere. XX.X% both go by impacted and essentially Northern of favorable with effects. by activity primarily increased data $X.X by was of due quarter

offshore Finally, Production Systems revenue of up and new $X.X sequentially, X% projects was year-end from billion sales. largely

logistics However, margins constraints. to delayed as basis decreased and to the largely XX of a points impact X%, deliveries supply result global due of

to liquidity. turning Now our

was outstanding. during and quarter $X.X was cash generation billion flow a very the the shares delivered were strong flow Our sale cash This during proceeds of driven performance generating capital quarter. $XXX portion the collections working We a in cash enhanced operations $X.X cash by from flow the fourth and result flows of of billion of quarter. free Cash net Liberty, the million by during advances. exceptional further customer of of our

Following basis, of than XX% relating high We implementation billion despite stewardship last interest program billion and in being a this two and On lower. operations largely free our XX% of transaction, of free generated XXXX, attributable more we from of years Liberty. cash capital cash full-year the the to our our efforts revenue is portfolio. of in XXXX This grading the to our in $X hold $X.X generated flow. we a cash flow

represents year with end of debt improvement $X.X of XXXX. of This billion As all compared the billion. of net a result $XX.X to ended we the an this, of

are the years. lowest net debt that its level five is at last to say now We proud of

reduced During also $X.X to repaying reduce thereby gross year. total, of increasing the last our financial the gross flexibility. this debt year, debt in our billion by In continued significantly by $X May of months XX due that coming we were in notes billion

Now, ahead looking to XXXX.

billion, XXXX. free investments, flow consisting seize of under total expect our to This opportunity double-digit be still to approximately capital us achieving to allow while billion multiyear in We and as increase APS data, $X.X investments ahead fully $X the CapEx objective. of cash margin in $X.X us, billion just to growth will compared and exploration

are this a as business compared less cycle to much capital-intensive previous We growth with is entering cycles. that

of XX%. during was total growth XXXX reminder, a percentage XXXX, revenue last capital the to As cycle of as our approximately investment a

and well fully like that for to is positioning financial With reap would potential therefore and Olivier margins enhanced of employed. capital this of are the Company the I return cash We flow to strong. XXXX our free this highlighted earlier, on with the benefits fundamentals the based cycle on for backdrop, that positioned very industry emphasize outlook growth

and, free experienced noting worth expectations sales; margin. double-digit that a high is on combination expect year of employed; and return XXXX. since have in double” double-digit return cash we in not we We single flow on consisting XXXX, It a this “triple capital double-digit have

of now to provide Day us the pleased Schlumberger’s financial Finally, be that to the This forthcoming second I the will relating am details a shortly. the year. Markets announce in conference call we strategy additional event hold with will allow information back objectives. half and to to I regarding you Capital turn will will opportunity Further this event Olivier.

Olivier Le Peuch

Thank Stephane. you,

that to are call the the questions. turn you. I So, believe you to Thank ready we for

Operator

Please question ISI. Instructions] James you. from first is [Operator go And with ahead. Thank our Evercore West

James West

a Obviously, on And solid I'm margins curious confidence pretty So, are confidence increased. starting around we're dig like higher what is mid-cycle sooner has level, Olivier, a I key drivers increased And target but rather later. that to in than a at your I increase? in bit achieving the the that wanted bit confidence why target.

Olivier Le Peuch

James. you, Thank

few me years. thesis explain quality in I increased the on our current conditions And think XXXX we And part of answer in growth a this why the confidence. a market CAGR question the I we clearly over results that Let for next, supporting believe foundation. some double-digit the of delivered have is as are have

that in So, to we help upwards we margin this think continue guide X backdrop, expansion. believe, will or have, factors X I our us

have foundation. And performance the upgrading reset, portfolio already this XX put Firstly, Performance of place are margins and second as was and months, you the division, very execution visibly year here we half to the year. operating service-oriented surpassed Well leverage throughout in the partly Construction XXXX set we stay. the foundation the and The have integration the this already we last performance. Reservoir in have And seen last impacting the the

have unfolds digital, Increased has of accelerating, our and profit the our impact to accelerate year are performance recording broad market mix customer internationally, getting to giving are set transition some deliver only adoption I our already further to a and including to market we we are our all are pricing. today, technology expect technology seeing today, an resonate a already pricing extract the to and both and we have unique improvements and The about and technology activity started awarded of ago, getting adoption new finally, North sharp happen, operations for contracts fit-for-basin, America think year as us of by we market Secondly, is you further when on mobilize America, but customer. in The strength. and well are into as that seen, condition, and this premium. to is also a mix. pricing we as And as the Where improve mix XXXX. and when our were a making offshore we talking [ph] technology North in also

the as n we foundation, premium. that differentiate us execution our that operating performance year this So, give our leverage, attributes, believe develops, a

mix, adoption, Our this finally tailwind our and expand technology further market margin pricing, to expansion. drive with the the -- XX% giving customer XXXX success a our margin will and to

when. confidence about it's not we XXXX. have into if, the gained and we moved it's forward about So, confidence our but have And

James West

very me. Okay, second Maybe great. a question clear, That's Olivier. for

guess, some color could lagging cadence where a of see would that Just be division, -- helpful. be where you the do little think very areas? and on bit starting the the given geography cadence to we about think take about But of by it As is XXXX. we think numbers for the we how You've hold growth? should obviously both cycle really I there here, by biggest growth about if

Olivier Le Peuch

market will divisions, as first geographical very one backdrop. all be be broad word, growth will -- a across in the Maybe

you first high But characterize that's to and are I or think think that's we geographically I what have level. unique. quite realizing, very

I international the possibly North uptick half; accelerating tale think the the growth with in of of further a in -- two growth leading second it's halves America first activity half.

While we half the HX of over in for into XXXX half international we we in activity. did accelerating the even on further that the and second the first to expect internationally, be base end HX XX%, this so accelerate are

have of Secondly, say, accretive the but what we I also year These because to offshore ambition put pull and land Middle I the this of uptick, activity mid-teens. are Americas will characterize I will and lead three we put to if will growth target engines growth, would believe have to East. that environment growth up that be

So I division, now and they the of accretive social both mix long-cycle strong international from they Construction and division they’re the so will environment, be per exposure and this we service-oriented and think Reservoir are this benefiting Performance to followed -- -- Well from NAM by they're benefiting benefiting favorable. expect, from mix presence, have pricing, because technology

short In and exposure will addition, few that system building cycle the see XXXX. in the North production the contract towards backlog on that we have quarters execute to growth, of also won last America will the

it's division on & phase two Integration, a a Digital here. Finally of

expect growth, our to going while by moderated it -- flattish APS modulated production environment accretive forward. be will the by to for We be digital a visibly or

gives mix the that the and So across across division geographies. you the

Operator

with ahead. is Barclays. David Please next Our question from Anderson go

David Anderson

Good morning, Olivier.

how side out thinking of large kind the other laid I that. expansion you guess, -- tenders. I to about see of that, have mobilization of just gave question you're you on a going the So, and margin

therefore, to uplift some counter just said typically is think another 'XX. these but improved that absorb costs something sort getting XX% about those You of get I kind contract had you're and you or margin is these that what of guess, in in. or pricing we've the have looking to periods thinking in is 'XX that of that some kind there, that and in pricing better seen has mobilization? contracts kind mean, these is going in for I how the weighed of in think Middle mobilization. extra you something on past of East, that's started I of about I'm the mobilization Jeffara [ph]

could if you So just comment.

Olivier Le Peuch

Yes.

and we witness quarter mix product was margin The of and always it's have Dave we new I international are having And a to margins we And yet improved significant of starts, core quarter, results somewhere for in think expansion of this execution project seen think, new our the we have. part division. I of world. a committing the marginally the already that last have last the I year. growth mobilize -- we think

So, it we did already.

of I this So think yes, are we start-up. very deployments, critically we accelerate cost as assessing the

We minimize. to for customers are working

We last to digital are deployment we operations done what have that using quarter, of we'll in believe we remote continue optimize XXXX. and do our resource. to in our And

new in So, so start and internationally I think -- to building project, improve despite akin margin directionally, we this new are product. XXXX, are set to still very on up our we this

And that very get of the And our growth the efficiency with our we year. this full is to contract to and are will mix of investment. we're respond and more leverage of -- We proud activity more to I the and and part customers that won impact use think recognition the more different we last operating minimize continue executing. we award engage practice the

David Anderson

Understood.

Okay.

more if On just overall second provide your you I you or to that this about just of year. was & it portion quarter. in customers, I'm grew would the side, was And the that I the on the it if is Digital much tell could top assuming is us new a topline really really line, digital workflow? into how any here, but wondering, pace the color that X% current related adoption be this curious, you grew of could sales just more that outgrew nicely Integration appreciated. customers

Olivier Le Peuch

Yes.

of you Let into a this. bit me give little color

effect platform diverse. or two large and to in one year-end pure applications the not have different very strategy sales. It's sales streams. software the and broad. upon It's a the touch on expand revenue is that year or two sales think, characterize, It's at one contracts of and developed I the I uptick end I digital seen we've first, So think if a

stream last operation, Agora, and about announced in It's new we have drilling, more including DELFI about have and digital new business cloud in you seen And have one been our in solution are data XXXX progress we about follow-through it's contract time that customer, in management enterprise it's XXXX or this operation It's revenue on new contracts OSDU the automation. where including monetization first won where data we quarter. DELFI So, the on on enterprise for foundation, have remote securing we commercialize OSDU. adoption. the

It significant. and transformation this acceleration in the we it's relates So, by to customer the have digital of have -- It of and relates an to our to stream from created to each and platform. the we made translates digital workflow and operations. progress success customer into and adoption by revenue uptick digital it our the in positive data digital every

So, it's it's it's multifaceted. diverse, broad and

to here to it's continue expand. So,

a expanding And on something I would same at because there not in time, a the the in that this a but one-off. not positive quarter, adoption. there this year-end forward. sales innings first that we're I'm is going not early we see So, as it's effect Obviously, of are -- that platform repeat the

transformation. in X,XXX customers. we with we a As pursuing quarter early innings installed and we base some And ago, this deploying have mentioned are large digital of the digital

beyond. I’m was and So, this cycle first continue and accelerate this adoption. digital sure the XXXX it will digital expansion in of

Operator

Mulvehill Chase from Bank question And our Please next is of go America. ahead. with

Chase Mulvehill

and I a first cycle. to So, expect to And looming you substantial that mentioned increase kind just you around had realize of and hopefully, is are I starting you investors question happen. in that investment needs this spending guess, this cycle

you out? for about The So less bit, little in add confidence feels did And see maybe cycle got have kind it dynamics where changed, you little means pricing it could like international, especially this -- shaking then, competitive how it more you OFS? you framed you of so in What of players. obviously but a it? what context -- a for gives you've bit discipline,

this for frame the ultimately, most cycle and for kind could cycle And see for activity then mean so OFS this what growth. companies? and pricing And just opportunity the you where of

Olivier Le Peuch

great Thank you. Great, question.

the accelerated I recent think, changed. the -- characteristics been have the And actually, in we see as of have months. accentuated fundamentals, them, some have not cycle

GDP demand not first, that a drive attributes beyond first of the beyond we this beyond but key no economic to only will fill the considering in that according put years intensity as attributes the peak, and this. intensity energy So growth outlook and of the the set previous will oil and at the is expand year in the is to few later projection end XXXX, the latest visibly oil

So few the demand the to the is next for is set situation macro first years. be favorable

broad Secondly, I -- would we that is to the an customers. the [ph] imbalance it investment also supply, is not price, call and tightest almost on pumping the facing commodity pumping I think but the supply-demand only investment across of are uplift portfolio to return our the

due also to and So of will than services the on you cycle the discipline but no due the supply, side. have seen still remain is including capital structurally smaller it in North previous America, surprise, but crunch America to North

capital to last combined international supply. the Secondly, last investment last capital down then two and creating long short-cycle for condition I the dip a injection think underinvestment to the respond few the cycle with the years, cycle, for the of actually, is years necessary in

cut, that So, believe forward. then are on accelerating OPEC seeing their not some we the going international and market investing basins into and FID are also a a America, because we cycle are in only a we we seeing oil by the I long I are long and are investments secure to seeing visible will offshore but that and future And both, majors advantage but rebound share, growth upon are being looked capacity infill-drilling, albeit seeing supply internationally. -- cycle rebound is short member for North in insist offshore

short offshore and of America. mix capacity a and rebound, in oil growth land, it's finally, solid, solid cycle deepwater, North in international So, including

condition. and are conditions these improvement pricing that the So, are creating tightening that unique the capacity are underlying

Chase Mulvehill

I obviously, to the appreciate flow follow-up would with you've OFS got cash of be, you. coming the color. Okay, backdrop to free wall that constructive perfect. A a this Schlumberger industry, and for

free cash of this, it flow when looks over should two we growing. obviously, like the you billion And look that last be years $X so year, and at next get

about capital should returning strategy? going for is the how ventures and into how think energy this fit well. cash allocation like cash to And So Schlumberger trying as M&A -- Because, reshape you're to how shareholders? company does that things then we new return to obviously,

Stephane Biguet

year Look, was it's flow. It indeed cash last billion. Stephan. like free quite $X expression Chase, I your on strong with

we Now, accelerated sheet balance committed indeed, our at are the the ratio quite but we we of and not leverage yet there visibly deleveraging -- to.

leverage sight announced market target Nevertheless, some the year half have excess in we XXXX, second year. cash more of achieving So, we uncertainty there's indeed of significant even start the have in still even the beyond. the a to at generating confidence line year the earlier, clear particularly though into we fundamentals this consolidating, and now with now remaining of and the

as able it and growth will sheet, balance us the returns we So, will fund be quite to maintain flexibility shareholders as give well a to to healthy increase new opportunities.

announced of will Markets definitely to So, framework shareholders future be we dividends Day part and are Capital allocation Returns and equation. we important, provide of part this as that increased capital comprehensive earlier. will certainly for a obviously buybacks the

more part it's, again. of M&A, get -- the of that will M&A. we you part toolbox, comprehensive to course, of relates didn't sorry, it It's when you'll framework answer what As on and also we I details give more

Operator

Please go JP we of Morgan. ahead. go line the with Next, Arun to Jayaram

Arun Jayaram

-- you wanted I productive U.S. are changes now you patterns to supply spending frame With of versus work maintenance things it, OPEC, NOCs from to source what in versus increase the see and to the FIDs if marginal seeing call could kind from shale capacity? moving

Olivier Le Peuch

not and East, in oil you have visible said, oil the think cycle -- small but -- is visible maintenance also to assure, of that today, reinvestment but the is short activity forget -- also we supply. market with are there's out about, what short countries of output But production seeing double-digit increment FID committing we seen capacity, a it's beyond in see year it's growth. I foundation sustained, and as laying think and that to year continuing very that capacity participate for Middle and -- a should part and the and is are a with seen of we being has for few true seeing into dynamic of already return commitment the and witnessing expanding to sustain and and fully next is is cycle we pipeline some East is the gas Middle is a regional supply. the increase already what I to What the part this

acceleration East with less a FID Russia. I sustained in is Middle and short to are combination market in true and the than recent future investment it's this capacity, Brazil setback or and and time, the long of from deepwater having So, pipeline FIDs that new in future being expansion cycle in -- current think cycle in had all gas the a investment

cycle long capacity forward broad, long and again, growth. you rebound that's, supply-led XXXX cycle. short going And the that I very will XXXX. activity activity expansion, well So and project, is combined -- demand-led and further a were to be into think will And into the if XXXX contribute a

Arun Jayaram

Great. margin in And XXXX the quarter. follow-up expansion outlook is year-over-year XXX on points basis embeds of fourth my your

would -- XX%. EBITDA margins, I my the put outlook, did would So math above if that that right, slightly based on your

ahead. to -- go so wanted And I

Olivier Le Peuch

Yes.

we As XXXX bps compared or higher rate. half it's XXXX. the QX of exit as -- the we made second comparison exit XXX We or when exit an to

Arun Jayaram

Exactly.

Exit it. rate. got Okay,

of XXXX, a think is we that as outlook So, could exceed you Correct? or about XX%. mid-cycle EBITDA reach your margin

Olivier Le Peuch

half. Second

Arun Jayaram

Yes.

Olivier Le Peuch

exceed in In second indeed. we or the second reach expect the to half, half

Arun Jayaram

improvement? just And on would be the wanted further great. comment to mix Great, pricing that just I just of and drivers

Olivier Le Peuch

I the we digital done a will the structure we leverage think part have operation previous in give continue technology cycle The to with as of a will be digital mix think, continue to change be the and fall-through adoption different as operating question, leverage us continue offshore commented particular. to basins. and I again, will I -- in long across

in We pricing the And also finally, expand. participate mix will further.

prior mid-cycle So I gives more reach us confidence think previous this that to anticipation. is the that this combination we

Operator

next from go is Please Scott question Our with ahead. Gruber Citigroup.

Scott Gruber

But CapEx, this tight So, that exiting seeing growth the with keeping clearly, lid a that potential down and versus peers intensity last could market capital cycle. it be the rates on to just year. is appears your going quite be we're you given coupled

still as percent that is, growth my can a into the CapEx to at we 'XX, level while multiyear unfolds? all keep 'XX of cycle question So, similar riding XXXX a you sales hope into and

Stephane Biguet

So a best intensity where because the but has countries returns our deploy and we high-graded program contracts. just stewardship only and efficiencies portfolio, quite reduced assets indeed, look, as we quickly to Scott, our capital and our bit operational extracted more we we well, had capital

spending just between billion. at looking to and billion are That's compared we XXXX, relatively capital including for $X total EPS now, XXXX. $X.X small increase investment, a So

that can It's the incremental will conditions. pipeline appropriately. a we towards As to It into us we investment technology. that most to favorable to soon to we definitely, priced too but whatever this say, technology increment have allowed accretive be want bit of it's on we already be that a And that We keep matter, geared for strong -- make, -- the the do commercial at contracts. contracts future?

year quite envelope So, are allows seize moment, the fully for prepare confident But the and XXXX. we'll XXXX for that the see we in to gave how the growth progresses. us we you

see set increase will sure. we a cannot for XXXX. be in huge We envelope It how the

Olivier Le Peuch

But in our of check. intensity we'll the going forward business keep capital

and that part have of and new And a equipment accretive focused stewardship have. clearly returns-focused and I pool all think the most and bit of our giving effectively a the new us our strategy using engagement in a the is efficiently with organization we mindset engagement capital we commercial the most the deploy we little customer. contract have contractual to to on dynamic

this check we in the use this capital make So, in continue broadly keep sure discipline to to that intensity cycle. we'll

Scott Gruber

$X billion And could step to how APS year, on the are to APS? much it. up you Canadian billion portion the if is end annualized budget you do of this down basis? this an much Got And able year, then, project state $X.X selling the how

Stephane Biguet

increase disclose matched So, investment, guidance. increased cash with but the it's split of flow. the APS a in look, There small don't is we

way the based individual within know, on are you cash cash As we APS generating look And flow projects. aside, of flow at EPS as project. really we our is very an the investment good the

business increase the level it's this is in So be pretty going mentioned, to handful the And of definitely of flat just overall, year. because future is projects APS investment a Olivier to not going years. as

Operator

Connor question Lynagh is go with next from Morgan Please Our ahead. Stanley.

Connor Lynagh

realizing I in I'm here. areas or we are was has or wondering in sort Yes. you're broad-based question for more specific globally become a this guess it And is, dynamic? could and I do to a there you certainly pricing. in and like if I more mean, maybe And XXXX, could specific of but going when Thanks. this if is the go signs it early curious characterize, we which seeing the results? it's more back divisions to pricing broad-based, this see sounds minute pricing you're is XXXX of be

Olivier Le Peuch

broad-based. ways. let -- where how developed, it's maybe and it think But underline in think I I -- and getting see see me pricing we condition we what three

First, believe to and are performance. favorable linked term we condition that -- commercial pricing commercial

market customers with we opportunity in the and keep So key performance to favorable differentiated and commercial terms are the expand customers. us impact provide, our position give execution, our or performance contracts negotiate

is Well and particularly. is region, and something on say, I our Construction Performance division, would that has the depending -- So this this Reservoir I service impacts started think this

for for basins The or and be capacity high-volume technology, on like I on second capacity, to, capacity think, that tight, think deployments intensity equipment one unique is is linked it offshore I America. North be it

have green we from broad conditions are improvement an this to pricing are we opportunity set, the sharp [ph] when expand seen and condition. to So, getting

in are condition we where have the have this year unique done the seen they has mobilized, we be deployment months. happening this be So, improved and secured, and over see few for that equipment in America, last pricing to starting to to happen last offshore North have at

some that with we contract Finally, offset deal conditions. and in and manage exists. Inflation but inflation years, unit, with. pronounced engagement something And the term something using it, America, to we the more It's day customers. we are today, we It's we're OECD we over that are inflation through we market and every into how related more with seeing with is as it the engagement are know it's is call have every responding always Inflation customers our North inflation. and acute, to with basins, pressure to in getting. the it we more dealing

all it's pressure. about about technology. capacity performance, to tightening So, about It's including it's and responding all our the inflation

touching them lever we XXXX into progressive, and different it's are using further basins. more starting things the three to and and basins throughout Hence, different the of are that these be each addressing across and 'XX. So, are divisions all broad and it's

Connor Lynagh

curious helpful talked guys be as on either And to to could you seemed should those is one margins really but occur, about having Thank inflation XXXX, negatively? you. could But, about what haven't we impact deflation all obviously, labor margins, topic, meaningful that positively significantly. you're That's market seems your either I'm commodity or front? on that expanding seeing think context. The into we a expectation prevent hasn't I'd say It look extensively. the from inflation increase. we of

Olivier Le Peuch

these. mitigate pricing year. of way new if mentioned, -- to dealing some has right, supply with the think, organization, inflation I And it, as shift of think we happened our think nothing think to to think is been I and have you engage and the last And I I helped condition. I first, we offset I that I able think, the performance commercially us net may, to and secondly, create are

and to see equipment, And I So, this we so resource comes and is respond think resources our it as I as But on hot of think think our operation by this -- improving as adoption offset I can forward. some much pressure offset pressure we always that our we'll accelerating can happening digital in we resource topic well. a when versus and is this further the to organization.

we'll tool of the as to a it's part and So, continue that unfolds. think I that we tune box cycle use

Operator

next Our ahead. Read go Wells question Fargo. is Please Roger with from

Roger Read

E&A in the I to embedded some affect And the say a here. you and increase, or E&A couple you discussions the of anticipate I EBITDA, several departments. if 'XX? know the expansion to things EBITDA is follow the mix have in less. of that forecast terms on margins, what essentially up as to the companies eliminated of spending into that was good within on anticipate we be overall going around that in Certainly and And that turning expect a just recovery that's about spending you would see what might How to on 'XX see. I curious their questions expectations had reason

Olivier Le Peuch

a cycle. compared we notice very of had as some No, released in we the is part of so it's last I question. of E&A a the of But you to fourth the were to highlights if valid peak the compressed bit quarter, -- think exploration rebound data a the that sales I think the E&A have

I it's seeing a resurgence reasons. two for think,

they trying their near assess are and that to customers can land they or make offshore to it it and fast developed the own, First, around be reassess that sure develop have be reserves exploration. their they drilling key track on hubs on infill hubs, near-field the

be that we use as on get don't infrastructure existing so operator around the on accelerate get may fast to trend we infrastructure-led party of offshore But to lot new, the near see it, infrastructure is to cycle So, track, I return exploration, much the large short not existing going call be necessarily near surgical word, fast that we and field this backyard offshore. exploration, return exploration if forward. see and exploration, a more greenfield, that the expect we

see is Europe, Africa, in see very broad. that West that Latin in we this So, we America, in

it, in some -- So it we high-level the in provide, in benefiting from our that our digital. are technology from benefiting of we're performance, key including in we

to think previous I we'll that a and is think, compared FID reason. backup partly as investment there of a for And offshore. see it down it's resurgence in keen step So, and this interest been a true I while has cycle, E&A

Roger Read

on, and Thanks. if was probably bit that. customer of reversing in there's I XX, and got segment, XX look from the know would a and a last headwind into you've months a surprise? as a And anything of & What's you of I if 'XX, internal And we headwind, Integration little at kind then positive lot been been over Digital there? that focused the anticipate looking as maybe next there's the as of curious well? back expectations just a more the one lot been us obviously how I just over it are what's you well. side, appreciate look forward a but 'XX embedded if maybe it's

Olivier Le Peuch

we digital internal, think build digital are No, platform foundation progress pleased foundation I strategy. that continuing of the and with very the to the and our deploying support

to Now, in every digital intel deploy own adoption, in their customer own pace infrastructure they plug. choose has their which need of we to

we ecosystem with platform. So, cloud to two data to our choice different this providers, different the open industry in have made come our go choice years to digital has of our journey partners unlocked customers in our some us foundation, with market ago go reach with expand and to partnership join

But last could possibly. larger I we adoption, continue we and in been have place. So The have think the it. it's to years better on foundation work -- two

innings, full the size, considering base. in as our the are customer I the of scale oversized adoption, said, of early We

that So, first accelerate. confident the and only this this I just step, remain is will

right the So, we have foundation.

customer transformation one stay. what happening. to at here is to taking is I this digital are it time, and we the And think accelerate a is across So, industry. here Digital is

are we So, positive.

Operator

Our is Please Sachs. from next Goldman question Neil Mehta go ahead. with

Neil Mehta

unwinding it of big in question do quarter. over about quarter. positive Working a thoughts year? million that, trajectory The see sold it capital, -- it course on $XXX like relates this one. you as first Liberty, a there? is modeling And obviously, looks shares item specific the to you talk And the just any Can you the

And we market, this to a As in open run opportunistic around share should to price? think you is ratable or be that the going that, rate as exit? of relates it are

Stephane Biguet

Neil. you, Thank

collections So, half, very especially a was lower and working in in capital, this indeed, And again, QX. the customer was significantly advances. second strong customer

Usually, the looking same capital. at the very quarter. in seasonality it expect increases the first in XXXX, we -- pattern, So, working

collection. subsequent We it employees, have the incentives mostly and quarters, annual to in then of cash on improves gradually, payments

working but we so that's the accelerates, any to helps we'll boundary. want inclusive -- with the XXXX, minimum. margins, in rates So, double-digit working And higher capital considering we'll looking a be consumption levels capital likely that case, of see to in particularly to this time and flow free this general in where any at, exit we generate we'll movement, we’ll managing maintain as strive are activity cash still us

of the Liberty, start part to of still the monetizing hold XX% with happy equity as to lockup we -- of bit following did a equity, the expiration monetize announced. actually As I the stake the are about has decide We highlighted, yes, of period. significant transaction the our part a the transaction. investment, quite share quite since was improved to after We

value market we'll to decide the the forward, monetization conditions. continue we'll going on based further on monitor So, of and investment

Neil Mehta

the call you of is perspective? the on What follow-up sometime what of you achieve out The half. about announced financial type Capital Day in talk Can second that you want Markets framework? earlier this in day from just a to call a

Olivier Le Peuch

session, growth, that in we target it our That's in going I think, at foremost. forward aim laying for and and the core, capital we return that what out set. return including we'll shareholders. setting be and long-term and the by we we expressing out lay cycle first energy, want time. three financial digital are -- willing will in that support to at beyond, to reengage framework And new clearly allocation of doing engine all with to of our framework you We including the clearly live strategic our and

Neil Mehta

Perfect.

forward live. to Looking seeing you

Olivier Le Peuch

question, operator. we Thank one Indeed. you. for time believe have I last

Operator

MacKey question ahead. is Keith last Please Markets. RBC from go with That Capital

Keith MacKey

ask I XX% that completion -- you inflation into the maybe for drilling in this expect what out for North maybe dig just spending outlook in year. Can general? you American break to of increase just versus wanted might you your to break price in of versus terms sort

Olivier Le Peuch

Yes. Good question.

North I inclusive are and offshore think, first, of of is the onshore, and providing U.S. America outlook I Canada. and inclusive think we onshore

it's to is viable bit difficult, a So not play but decipher I here. it's a a that of think mix lot

as So that DUCs from big be is favorable Well us. DUCs, the be Construction I rig-based the will Construction the Construction a be of rotating this environment -- Reservoir with very land, hence, we but activity a will bias market Construction to portion to And is to Well towards I portfolio the the of depleting is is and and set think will replenishing are -- question, be indeed this also lead respond having to [ph] which foresee in U.S. your Well specific activity a outlook, in XX% this plus. And offshore environment, to Well offshore Performance. broad. And will that environment we think execution the

is XX%. And a when you production Well and you environments, to favorable Construction offshore mix modest this in Performance combine so, above to and put all in Canada system ambition us our environment, Well all and which to favorable give lands Reservoir and these U.S. a more put you to that moderate more have our Construction our and of

Keith MacKey

one maybe Perfect. And quick follow-up.

the sales Canadian on outstanding. Just APS, there process was know a I

currently. Just curious thinking if you can your update give any on there

Stephane Biguet

year. last we we offers Canada in launched asset of APS process part for So, several have received as the

proposals, those a continued improve we the actually assessing were result. conditions the market while value of increased as So, to the and asset

potential So, that had the of the -- flow we value decision no took asset. the cash we the economic not were offers reflective actually of the and longer received

The flows, not are is options. remain strong asset those So, generating all we at offers to the we moment. cash now very entertaining open but

Olivier Le Peuch

believe I call. we need the to So, close

with to a close before you like the So we takeaways. few I call, leave would

our all flow financial Credit entire Firstly, and divisions. supporting of XXXX, quarter, debt. the remarkable have very results a with close and quality particularly team during EBITDA year our Schlumberger during for and helped of the generation us the fourth margin sales, reduction outstanding outperformance expansion our digital the basins across significant net execution cash sizeable to

and performance ventures, our adoption of of digital progress and our our successful deployment Transition energy new has fit-for-basin Secondly, addressable sizeable towards platform, the significant in in the each our Technologies, market. developing execution strategy of the resulted a acceleration

all Thirdly, we market benefit positions from the breadth significant unfolding ambition. of will ‘XX during our and and further growth margin basins and favorable significant free enhanced ahead will we and result have our double-digit of customers, and fully scale with the support across cash activity This expansion flow in beyond. key during mix upcycle, XXXX, the will

increasingly of potential is supportive environment macro the a Finally, supercycle.

in Ladies market these success very substantially extend have we XX% the both transformative confidence and beyond XXXX Schlumberger, ambition and As you EBITDA into and a favorable well offshore, and margin presents reaching defining our a of environment was increased XXXX midcycle second half our XXXX. onshore to Thank upon accelerate year gentlemen, future. in build conditions XXXX, much. and our growth for unique of the

Operator

service. Ladies your and gentlemen, for participation using and today. that you conference teleconference does your Thank for conclude for AT&T

disconnect. now may You

Schlumberger Limited (SLB) 22 Jan 222021 Q4 Earnings call transcript