Schlumberger(US:SLB)2023-01-20 19:34Financial Data and Key Metrics Changes - Fourth quarter earnings per share (EPS), excluding charges and credits, was $0.71, an increase of $0.08 sequentially and $0.30 or 73% year-over-year [19] - Fourth quarter revenue reached $7.9 billion, up 5% sequentially and 27% year-over-year [19] - Pre-tax operating margins improved to 19.8%, up 104 basis points sequentially and 393 basis points year-over-year [20] - Adjusted EBITDA margin for the quarter was 24.4%, exceeding guidance and up 219 basis points year-over-year [20] Business Line Data and Key Metrics Changes - Digital & Integration revenue increased 12% sequentially to $1 billion, with pre-tax operating margins expanding to 37.7% [20] - Reservoir Performance revenue rose 7% sequentially, with margins expanding 146 basis points [20] - Well Construction revenue was $3.2 billion, up 5% sequentially, while margins declined by 50 basis points to 21% [21] - Production Systems revenue increased 3% sequentially to $2.2 billion, with margins improving by 32 basis points [21] Market Data and Key Metrics Changes - International revenue grew 5% sequentially, led by the Middle East, while North America revenue grew 6% sequentially [19] - International revenue topped $6 million for the first time in over four years, with growth rates outpacing rig count growth since 2020 [5] - The second half of 2022 saw international growth exceeding 20%, almost double that of North America [6] Company Strategy and Development Direction - The company is focused on sustainability, technology innovation, and digital transformation, positioning itself to benefit from macro trends in the energy sector [7][10] - The company aims to grow revenue by over 15% in 2023, supported by international and offshore momentum [16] - The strategic focus includes enhancing technology adoption and improving operating leverage, particularly in international markets [17] Management's Comments on Operating Environment and Future Outlook - The management highlighted resilient oil and gas demand growth, with IEA forecasting an increase of 1.9 million barrels per day [13] - There is a sense of urgency around energy security, leading to increased investments in capacity expansion [13] - The management anticipates a rebound in growth in the second quarter of 2023, with further acceleration in the second half [17] Other Important Information - The company reduced net debt to $9.3 billion, the lowest level since Q1 2016, with a net debt-to-EBITDA leverage of 1.4 [25] - A 43% increase in the quarterly cash dividend to $0.25 per share was announced, along with a share repurchase program targeting $200 million for the quarter [27] Q&A Session Summary Question: Outlook for international business growth - Management indicated that international growth, particularly in the Middle East, is expected to continue, driven by commitments to oil capacity increase and gas development [32][33] Question: Offshore market dynamics - Management noted that deepwater activity is set to increase significantly, with exploration and appraisal activities expected to outpace shallow water growth [35][36] Question: Differentiation in contracts and pricing opportunities - Management emphasized that performance will dictate market share allocation and pricing premiums, with a focus on integrated contracts and technology adoption [40][44] Question: North America market outlook - Management expects North America to support growth in the first half of 2023, with increased rig activity and a typical seasonal pattern [52] Question: Service intensity and pricing trends - Management highlighted an increase in service intensity and improved asset efficiency, which supports pricing power in the Middle East and offshore markets [56][57]