The operator introduces the SLB Second Quarter Earnings Conference Call, followed by James McDonald, Senior President of Investor Relations and Industry Affairs, who introduces the speakers for the call. He reminds participants that the call is being recorded and mentions the forward-looking statements and non-GAAP financial measures that will be discussed. Olivier Le Peuch, Chief Executive Officer, then thanks the participants for joining and outlines the three topics he will cover: second quarter results, harnessing the growth cycle, and driving efficiencies.

The second quarter saw strong performance for the company, with revenue and adjusted EBITDA increasing and margins expanding. International markets drove this growth, with many regions setting new records. Offshore markets and new projects on land also contributed to the growth. In North America, revenue increased in the Gulf of Mexico but was partially offset by lower drilling in U.S. land. The next section will provide more details on the financial results and the call will be opened for questions.

In the third paragraph of the article, the company discusses the growth and expansion of their core divisions, particularly in the Production Systems and Reservoir Performance divisions. This was driven by strong demand for services and equipment in the Middle East, Asia, and Latin America. Digital and Integration also saw significant growth, with a new quarterly high in revenue and plans to achieve high-teens growth for the full year. The company has also seen an increase in users on their Delfi platform and overall adjusted EBITDA for the first half of the year has grown in the mid-teens compared to the same period last year.

The company is focused on driving revenue growth and operational efficiency to increase profits and fulfill their commitment to shareholders. They are grateful for the strong results in the second quarter and first half of the year. The market is evolving and the company is investing in resilient areas such as the Middle East, Asia, and offshore projects. They are seeing opportunities in long-cycle gas and deepwater projects, production and recovery activities, and increased digital adoption. The company is benefiting from the acceleration of investments in gas development and the OneSubsea JV. They are also partnering with customers in early engineering phases to unlock the economics of assets. Customers are embracing the company's offerings in production and recovery to offset natural decline and maximize the value of their assets.

The company has various solutions to help customers access their production system and reservoir performance division, and their strong results reflect this. They are also acquiring ChampionX to further strengthen their portfolio. The company is focused on digital and AI to accelerate returns and increase efficiency for customers. They are well-positioned in resilient markets and are focused on expanding margins through revenue growth and operating efficiency. The company expects strong results for the rest of the year, with adjusted EBITDA growth of 14-15% and margins at or above 25%. They also anticipate sequential revenue growth in the low single-digits and further margin expansion in the third quarter.

In the second quarter, the company experienced a 5% increase in revenue, with strong growth in international markets. Margins also increased in all four divisions, leading to a 135 basis point expansion in pre-tax segment operating margins and a 142 basis point increase in adjusted EBITDA margin. Earnings per share also saw a significant increase compared to the previous quarter and the same quarter last year. The company also recorded charges related to a recent acquisition and a program to optimize support and service delivery.

In the second quarter, the company made adjustments to its resources in response to lower activity levels in North America, centralized certain digital delivery services, and improved efficiency in its support structure. This program will result in additional charges in the third quarter but is expected to drive margin expansion in the second half of the year and into 2025. The company saw revenue growth and margin improvement in the Digital & Integration, Reservoir Performance, Well Construction, and Production Systems divisions. Cash flow was strong, with $1.4 billion generated from operations and $776 million in free cash flow. The company expects cash flow to continue to improve for the rest of the year.

In the eighth paragraph of the article, the speaker discusses the company's free cash flow, capital investments, stock repurchase program, and bond issuance. They mention that the free cash flow in the second half of the year will be higher than the first half, and that capital investments are expected to be approximately $2.6 billion for the full year. They also mention that the company has resumed its stock repurchase program and has already repurchased 9.9 million shares. Additionally, the company issued $1.5 billion in bonds and is pleased with its current capital structure. The speaker then hands the call back to Olivier and opens the floor for questions. The first question is about a possible slight raise in the company's EBITDA guidance for the year.

The speaker confirms that the company's EBITDA growth for the year is expected to be in the range of 14% to 15%, driven by international margin expansion. The Middle East, particularly in countries like KSA, UAE, Kuwait, Iraq, and Libya, is experiencing strong growth due to capacity expansion programs.

The paragraph discusses the increase in conventional and unconventional gas projects in response to local demand and the desire to transition. The Middle East is experiencing growth in this area, and SLB is benefitting from this growth. The speaker is asked about their views on global natural gas markets and their demand assumptions through the end of the decade. They mention contracts and awards for natural gas projects and are asked if their business mix will shift towards natural gas. The speaker responds that this is not the case.

The speaker discusses the resilience of the oil and gas industry in different regions, particularly in deepwater development. They mention the emergence of new oil developments in Africa and the potential for gas resilience in the Isthmeb, Turkey, and Asia region. They also highlight the Middle East as a market for both oil and gas, with a focus on offshore development for gas security. The speaker also mentions the strong performance of OneSubsea and the potential for growth in the offshore sector in the future.

The speaker discusses the three legs of activity in the future of the deepwater market, including ongoing projects, expected FID announcements, and exploration and appraisal activity. They express confidence in their exposure to the deepwater market and note that offshore revenue represents 50% of their international revenue. The speaker then mentions a question from Scott Gruber about segmenting the portfolio next year when ChampionX comes in.

The speaker discusses the potential for re-segmenting the company's portfolio to highlight the digital business after the ChampionX acquisition. They also mention low single-digit revenue growth in the third quarter and potential for stronger margin expansion in the fourth quarter, driven by an acceleration of top-line growth and year-end sales. This will provide a good exit point for the company as they enter 2025 with ambitions for continued growth and margin expansion.

In the concluding year, SLB is focused on achieving growth and margin expansion in 2025. They plan to do this through quality revenue growth, digital advancements, and efficiency gains. This includes selectively targeting areas with the most potential for operational leverage and using technology and integration capabilities. SLB has also made adjustments to their support structure and assets to support their growth. They have seen a rebound in margins for their D&I sector and maintain their high-teens growth outlook.

Stephane Biguet discusses the D&I margin progression and the APS business in Canada. He mentions that they expect digital margins to continue improving and are in the process of divesting their Canadian asset. Olivier Le Peuch is asked about deepwater markets and offshores and he discusses the regions where deepwater is growing and how it fits into their long-term strategy.

The deepwater market is experiencing growth and diversification across multiple regions and basins. This is due to the strong geological advantages of deepwater assets, which are a priority for major oil companies and some national oil companies. This has resulted in increased FIDs and exploration activities, making the deepwater market resilient and multi-faceted. New basins, such as Namibia and Suriname, are emerging, while existing basins in Asia, the East Mediterranean, and South America continue to see activity. The Gulf of Mexico and Mexico are also seeing a resurgence in deepwater exploration. This market is important for the speaker's company, as they have a strong presence in the offshore deepwater sector.

Stephane Biguet, speaking on behalf of the company, discusses their plans for return of capital and stock buybacks in the upcoming year. They have a commitment to $3 billion in dividends and buybacks for 2024, and will continue to monitor their cash flow and capital allocation. In terms of M&A, the company has been active and is still open to potential acquisitions, with a focus on stability, longevity, and growth.

At this stage, the focus is on successfully integrating recent acquisitions and transactions, such as Aker Subsea and Aker Carbon Capture, as well as the planned acquisition of ChampionX. The company is prioritizing returns to shareholders in terms of capital allocation. The market for carbon capture and sequestration is seen as very attractive and is expected to continue growing at a rate of more than 50% per year. The company's capabilities and technology in this area make it well-positioned for growth.

The addition of Aker Carbon Capture will allow the company to participate in the scaling market in North America and the Middle East. They have already received requests from companies in these regions and have a strong pipeline in Europe. The company plans to combine their technology with Aker Carbon Capture's to offer customers a complete carbon capture and sequestration solution. They believe this acquisition will result in margin expansion and the ability to add new innovative technologies. The cost efficiency programs mentioned in the release are focused on extracting the most margin expansion and returns out of the company's growth cycle.

The company is focusing on three main components to improve efficiency and reduce costs, including tactical adjustments to account for lower rig counts, centralizing and regionalizing digital delivery services, and increasing efficiency in the functional superstructure. The deployment of a new ERP system is expected to result in significant cost savings. The OneSubsea joint venture's groundbreaking award for all-electric subsea technology in Norway is a major opportunity for the company, but there may be regulatory constraints to consider.

The company is excited about their new technology deployment for subsea infrastructure, which will have a smaller footprint, reduce costs, and have a lower carbon footprint. They have already been awarded several contracts for this solution and plan to combine it with all-electric subsidiary infrastructure for better control and optimization. Additionally, the company has seen success in exploration data license sales in the second quarter.

The CEO of the company states that there has been an upward trend in exploration and the company's digital data exploration sales have been successful. This growth is driven by frontier exploration, infrastructure-led exploration, and new software applications. There are also many licensing rounds happening globally, with successful discoveries in deepwater and hotspots such as the Apollo pass and Namibe Basin. The company expects to continue participating in these markets with their digital capabilities.

The speaker, Saurabh Pant, asks about the company's participation and growth in the future. Olivier Le Peuch responds that they will continue to participate and maximize growth, although it may be inconsistent. He also mentions that the business is asset-light and accretive to margins. Marc Bianchi asks about the company's outlook for international and North American revenue growth in 2024. Olivier Le Peuch states that they remain on track for double-digit growth internationally and lower growth in North America. Stephane Biguet adds that there will be another charge in the third quarter, but the actions taken will result in cost savings and uplift in profits in the second half of the year.

The speaker is confident in the updated guidance for full year EBITDA and will provide more precise information on savings at the end of Q3. They also mention the shift in game plan by Saudi Arabia towards unconventional gas and their commitment to increasing gas production by 60%. The company has recently won projects in this area and is pleased with their exposure to this market. However, the market is not solely reliant on one project or aspect.

In summary, Schlumberger's international markets are experiencing strong growth and the company is well-positioned to continue this trend. Their differentiated operating footprint, advanced technology, and commitment to efficiency and value creation set them apart from competitors. With a successful first half of the year and confidence in future revenue growth, Schlumberger is focused on expanding margins, generating cash, and returning value to shareholders.

The speaker expresses confidence in the company's performance and thanks the participants for joining the call. The operator then concludes the call.

This summary was generated with AI and may contain some inaccuracies.