Schlumberger(SLB) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter earnings per share, excluding charges and credits, was $0.74, representing a sequential increase of $0.02 and a decrease of $0.11 compared to the same quarter last year [21] - The second quarter revenue was $8.5 billion, a 1% sequential increase driven by 2% growth in international markets [22] - Adjusted EBITDA margin for the second quarter was 24%, reflecting a sequential increase of 21 basis points [22] Business Line Data and Key Metrics Changes - Production Systems revenue increased by 3% sequentially to $3 billion, driven by strong sales in artificial lift and midstream production systems [24] - Digital and Integration revenue decreased by 1% sequentially to $1 billion, with margins expanding by 240 basis points to 32.8% [22][23] - Reservoir Performance revenue declined by 1% sequentially to $1.7 billion, while Well Construction revenue was essentially flat at $3 billion [24] Market Data and Key Metrics Changes - In international markets, revenue grew by 2%, with strong growth in Iraq, UAE, Kuwait, East Asia, China, and Australia [7] - North America saw a revenue decline, primarily due to seasonal spring breakup in Canada and a non-repeat of exploration data sales in U.S. offshore [8] - The macro environment remains uncertain, particularly with OPEC plus supply releases impacting market dynamics [12][13] Company Strategy and Development Direction - The acquisition of ChampionX is expected to enhance the company's portfolio, providing capabilities in producing chemicals and naturalist, which are critical for long-term asset performance [15][16] - The company aims to integrate ChampionX's capabilities to deliver a fully integrated service offering from reservoir to surface facility [18] - The focus is on creating a less cyclical and growing market opportunity that is more OpEx driven and less sensitive to short-term commodity cycles [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth of the offshore market despite current project delays, citing a steady backlog in OneSubsea [9] - The company anticipates second half revenue to be between $18.2 billion and $18.8 billion, driven by the contribution of ChampionX and steady revenue in legacy business [19][33] - Management noted that while the macro environment is uncertain, there is resilience in the Middle East and Asia markets, driven by lower breakeven costs and a focus on energy security [13][57] Other Important Information - The company generated $1.1 billion of cash flow from operations and free cash flow of $622 million during the quarter, representing a significant increase compared to the previous quarter [25] - Capital investments for the full year are expected to be approximately $2.4 billion, reflecting the impact of the ChampionX acquisition [26] - The company plans to start reporting digital business results as a separate segment beginning in the third quarter [23] Q&A Session Summary Question: Insights on customer behavior and spending trends - Management indicated that major adjustments in international markets are largely behind them, with customers prepared to adjust spending rates due to uncertainty and declining commodity prices [39] Question: Concerns about deepwater activity - Management acknowledged some near-term activity slowing but expressed optimism about a robust pipeline of advantageous projects in the Americas and other regions [44] Question: Growth outlook for the production business - Management highlighted that the focus is on extracting more value from the production recovery phase, with expectations for long-term resilience and growth in the production market [49] Question: Expectations for synergies with ChampionX - Management expects to achieve $400 million in annual pre-tax synergies within the first three years post-acquisition, with a significant portion coming from cost synergies [29][80] Question: Insights on Mexico's gas supply growth - Management noted the need for Pemex to address restructuring issues and expressed readiness to respond to gas development opportunities in Mexico [87]