Oil Field Services Giant SLB Reports International Revenue Jumped 18% in Q4

The world’s largest oil fields service company SLB (formerly known as Schlumberger) reported better than expected fourth quarter earnings before the market opened Friday. For the full year, revenue rose 18% year over year, while adjusted earnings jumped 37%. SLB also raised its quarterly dividend 10% to 27.5 cents from 25 cents. SLB reported adjusted earnings of 86 cents a share for the quarter, beating Wall Street’s call for 84 cents, according to FactSet. Revenue of $8.99 billion was above the $8.96 billion expected. International revenue jumped 18% in the quarter with its highest-ever revenue in the Middle East, led by “impressive growth” in Saudi Arabia, the United Arab Emirates (UAE), Egypt and East Mediterranean GeoUnits.

The market liked this as international and offshore markets is where SLB conducts 80% of its activity. Oilfield services (OFS) in North America onshore is 20% of SLB’s business. Shares rose 0.7% to $48.90 premarket Friday. The oil service giant’s peers Baker Hughes (BKR) and Halliburton (HAL) report next week.

Schlumberger Vintage

Schlumberger Ltd NYSE: SLB Reported Before Open Friday

“Our strong full-year performance was fueled by substantial international growth, with approximately 90% of our international GeoUnits posting year-on-year increases, complemented by sustained performance in North America,” CEO Olivier Le Peuch said in a statement.

Schlumberger Q4 24 Earnings

Q3 2023 earnings release at 6:15 a.m. ET; conference call at 8:30 a.m ET

  • Adj EPS: $0.86 beats by $0.03
  • Revenue: $8.99B (+13.8% Y/Y) beats by $50M
  • Full-year revenue of $33.14 billion increased 18%Y/Y
  • Full-year GAAP EPS of $2.91 increased 22%Y/Y.
  • Full-year adjusted EBITDA of $8.11 billion increased 25%Y/Y
  • Fourth-quarter cash flow from operations $3.02 billion and free cash flow $2.28 billion
  • Full-year cash flow from operations was $6.64 billion and free cash flow was $4.04 billion
  • SLB raised its quarterly dividend 10% to 27.5 cents from 25 cents.

SLB: Stock Market Reaction

(updated 1/26/24 with HAL & BKR earnings)

  • $52.92 +2.935 (5.87%) for week following earnings announcement.
  • $52.92 -4.05 (7.11%) past year
  • $52.92 +8.68(19.62%) past 5 years
  • 52wk High $61.82
  • 52wk Low $42.12

Geographical

  • International revenue grew 20% year on year—by more than $4 billion—and pretax segment operating margins expanded by 239 bps. Notably, we achieved our highest-ever revenue in the Middle East, led by impressive growth in Saudi Arabia, the United Arab Emirates, and Egypt & East Mediterranean GeoUnits.
  • “In the offshore basins, we benefited from long-cycle developments, capacity expansions, and exploration and appraisal activities with remarkable growth in Brazil and Angola and very solid increases in the US Gulf of Mexico, Guyana, and Norway.
  • “In North America, while activity moderated as expected in the second half of the year, revenue increased by 12% year on year, outpacing the rig count. This outperformance was driven by our technology-leveraged portfolio in both US land and the US Gulf of Mexico.

Divisions

  • Core business, comprising Reservoir Performance, Well Construction, and Production Systems accelerated, growing revenue 20% year on year and expanding pretax segment operating margin 277 bps.
  • Digital & Integration revenue increased 4% year on year. This was led by Digital, which continued strong growth momentum, delivering more than $2 billion in revenue while APS revenue declined. Our success in Digital was driven by further adoption of Delfi™ technology and customers embracing our connected and autonomous drilling, data, and AI solutions.
  • “We also saw continued adoption of our Transition Technologies™ portfolio as customers look to enhance efficiency and reduce emissions. The imperative to operate more sustainably is translating into tangible investments by our customers, resulting in the portfolio generating more than $1.0 billion of revenue.

“We are also very pleased to see our strategic focus on customer centricity continue to translate into customer satisfaction, with our performance and value creation achieving recognition in various industry surveys.

Cash Position, Dividends

  • “As a result of this exceptional free cash flow performance, we reduced our net debt by $1.4 billion during the quarter to $8 billion. This represents our lowest net debt level since the first quarter of 2016.
  • [Our] Board of Directors have approved a 10% increase in our quarterly dividend. And we’ll also increase our share repurchase program in 2024. Combined, we are targeting a return of more than $2.5 billion to shareholders in 2024, an increase of more than 25% compared to 2023.”

Outlook

“As global energy demand continues to increase, international production is expected to play a key role in meeting supply through the end of the decade. Notably, we anticipate record investment levels in the Middle East extending beyond 2025, with significant expansion in Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait. Offshore remains another distinct attribute of this durable growth cycle, serving as an important source for production growth and capacity additions, and we expect strong activity to continue in Brazil, West Africa, the Eastern Mediterranean, the Middle East, and Southeast Asia.”

Conference Call:

  • Turning to the macro. The characteristics of breadth, resilience and durability that have defined this cycle remain fully in place. This continues to be supported by the imperative of energy security to meet rising global demand, confirming our belief in the longevity of the cycle. After a year of demand growth in 2023, we anticipate further growth in 2024 that will continue to support the ongoing multiyear investment cycle.
  • In international markets, growth momentum is set to continue with more than two-thirds of total investment taking place in the Middle East, offshore and gas resource plays. In the Middle East, growth will be led by Saudi Arabia and the United Arab Emirates, which continue to commit significant investments to increase production capacity in both oil and on commercial gas, followed by Iraq and Kuwait. Meanwhile, in Asia, countries such as China, Malaysia, Indonesia and India are leading new gas exploration and development. Across our international basins, we anticipate strong activity led by Brazil and followed by West Africa and Australia.
  • Exiting the year, our international revenue and margins reached new cycle highs, marking our tenth consecutive quarter of year-on-year double-digit revenue growth on the international front…
  • We fulfilled our full year financial ambitions, growing revenue by 18%, surpassing our revenue growth target for the year and achieving adjusted EBITDA growth in the mid-20s. Additionally, we generated $4 billion in free cash flow, our highest since 2015.

Oil Prices

SLB Peer’s Earnings

About Schlumberger

SLB (formerly Schlumberger) NV is the world’s largest oil fields service company and provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. It operates through the following business segments: Digital and Integration, Reservoir Performance, Well Construction, and Production Systems. “With expertise in more than 120 countries, we collaborate to create technology that unlocks access to energy for the benefit of all.”

“Overall, 2022 was transformative for SLB as we set new safety, operational, and performance benchmarks for our customers and strengthened our market position both internationally and in North America. We launched our bold new brand identity, reinforcing our leadership position in energy technology, digital, and sustainability, and demonstrated our ability to deliver superior earnings in this early phase of a structural upcycle in energy.” SLB CEO Olivier Le Peuch commented,

Source: SLB

Live From The Pit

From The TradersCommunity News Desk