Schlumberger : Q2 2023 Earnings Press Release

SLB Announces Second-Quarter 2023 Results

• Revenue of $8.10 billion increased 5% sequentially and 20% year on year
• GAAP EPS of $0.72 increased 11% sequentially and 7% year on year
• EPS, excluding charges and credits, of $0.72 increased 14% sequentially and 44% year on year
• Net income attributable to SLB of $1.03 billion increased 11% sequentially and 8% year on year
• Adjusted EBITDA of $1.96 billion increased 10% sequentially and 28% year on year
• Cash flow from operations was $1.61 billion and free cash flow was $986 million
• Board approved quarterly cash dividend of $0.25 per share

PARIS, July 21, 2023-SLB (NYSE: SLB) today announced results for the second-quarter 2023.

Second-Quarter Results

						(Stated in millions, except per share amounts)
	Three Months Ended			Change
	Jun. 30,		Mar. 31,		Jun. 30,
	2023		2023			2022		Sequential Year-on-year
Revenue	$8,099		$7,736			$6,773		5%	20%
Income before taxes - GAAP basis	$1,293	$1,161			$1,152	11%	12%
Income before taxes margin - GAAP basis	16.0%	15.0%			17.0%		96 bps		-105 bps
Net income attributable to SLB - GAAP basis	$1,033	$934			$959	11%	8%
Diluted EPS - GAAP basis	$0.72	$0.65			$0.67	11%	7%
Adjusted EBITDA*	$1,962	$1,788			$1,530	10%	28%
Adjusted EBITDA margin*	24.2%	23.1%			22.6%		111 bps		163 bps
Pretax segment operating income*	$1,581	$1,391			$1,159	14%	36%
Pretax segment operating margin*	19.5%	18.0%			17.1%		154 bps		240 bps
Net income attributable to SLB, excluding charges & credits*	$1,033	$906			$715	14%	44%
Diluted EPS, excluding charges & credits*	$0.72	$0.63			$0.50	14%	44%
Revenue by Geography
International	$6,297	$5,985			$5,188	5%	21%
North America	1,746	1,698			1,537	3%	14%
Other	56		53			48		n/m		n/m
	$8,099	$7,736			$6,773		5%		20%

*These are non-GAAP financial measures. See sections titled "Charges & Credits", "Divisions", and "Supplementary Information" for details. n/m = not meaningful

1

								(Stated in millions)
	Three Months Ended		Change
	Jun. 30,		Mar. 31,		Jun. 30,
	2023	2023	2022		Sequential		Year-on-year
Revenue by Division
Digital & Integration	$947	$894	$955	6%	-1%
Reservoir Performance	1,643	1,503	1,333	9%	23%
Well Construction	3,362	3,261	2,686	3%	25%
Production Systems	2,313	2,207	1,893	5%	22%
Other	(166)	(129)		(94)		n/m		n/m
	$8,099	$7,736	$6,773	5%	20%
Pretax Operating Income by Division
Digital & Integration	$322	$265	$379	22%	-15%
Reservoir Performance	306	242	195	26%	57%
Well Construction	731	672	470	9%	55%
Production Systems	278	205	171	36%	63%
Other	(56)	7		(56)		n/m		n/m
	$1,581	$1,391	$1,159	14%	36%
Pretax Operating Margin by Division
Digital & Integration	34.0%	29.6%	39.7%		438 bps		-572 bps
Reservoir Performance	18.6%	16.1%	14.6%		248 bps		396 bps
Well Construction	21.8%	20.6%	17.5%		115 bps		424 bps
Production Systems	12.0%	9.3%	9.0%		274 bps		300 bps
Other	n/m		n/m		n/m		n/m		n/m
	19.5%	18.0%		17.1%		154 bps		240 bps

n/m = not meaningful

International- and Offshore-Led Growth Fueling Strong Margin Expansion and Cash Flows

SLB CEO Olivier Le Peuch commented, "I am very pleased with our second-quarter results, which reflect significant growth in the international markets, particularly in the Middle East & Asia, and offshore. North America revenue also grew sequentially benefiting from our agility across the most resilient basins and market segments, although the rig count in the area declined. As the upcycle continues to unfold, we are excited about the opportunities for our business, with international- and offshore-led growth fueling strong pretax segment operating margin expansion and cash flows as highlighted in this quarter's results. We are very well positioned in these markets, as international represents nearly 80% of our global revenue, and offshore constitutes approximately half of that. Both sequentially and year on year, we saw broad international revenue growth that resulted in margins expanding across all Divisions and geographical areas.

"Our focus on the quality of our revenue continues to drive margins, and during the second quarter, we received numerous multiyear contract awards. This is bolstering our outlook for long-term growth that will outlast near-term commodity price volatility, and it is reinforcing our belief in the breadth, resilience, and durability of the upcycle.

"Compared to the same period a year ago, international revenue grew 21%, outpacing North America which increased 14%. Year on year, revenue grew 20% and pretax segment operating margin expanded 240

2

basis points (bps), representing the tenth straight quarter that we have increased our pretax segment operating margin year on year. This was driven by the international markets, where we posted our highest year-on-year incremental margin in the last three years, demonstrating the earnings power of our operations in these markets."

Middle East & Asia and Offshore Drove Strong Sequential Performance

"Sequentially, our revenue grew 5%-more than $350 million-driven largely by the Middle East & Asia area which increased 10%, or $249 million. This increase was propelled by strong double-digit growth in Saudi Arabia, Kuwait, United Arab Emirates, Egypt, India, and China. Similarly, our offshore businesses in the US Gulf of Mexico, Brazil, Angola, Namibia, and the Caspian Sea posted double-digit growth sequentially.

"Overall, our second-quarter pretax segment operating margin expanded 154 bps sequentially. Margin expansion was driven by operating leverage, increased technology adoption, and pricing that stemmed from contracts being adjusted for inflation and tight service capacity in key markets.

"Second-quarter cash flow from operations vastly improved to $1.61 billion-$1.28 billion higher sequentially-and free cash flow was $986 million. Contributing to this very strong cash flow performance were higher earnings, robust receivable collections, improved inventory turnover, and continued capex discipline. We expect free cash flow generation in the second half of the year to be visibly higher than the first half, firmly positioning us to outperform last year's free cash flow.

"I am very proud of the exceptional results delivered by the SLB team."

Confidence in the Long-Term Outlook

"We continue to see positive upstream investment momentum in the international and offshore markets. These markets are being driven by resilient long-cycle offshore developments, production capacity expansions, the return of global exploration and appraisal, and the recognition of gas as a critical fuel source for energy security and the energy transition.

"This is resulting in a significant baseload of activity as you can see from the number of contract awards in our quarterly highlights. The nature of these awards displays the duration and magnitude of this upcycle, both on land and offshore. We remain proud to be the partner of choice for our customers.

"As international spending builds further momentum in the second half of 2023 and North America moderates as anticipated, this cycle continues to align closely with SLB's strengths, affirming our confidence in our full-year financial ambitions.

3

"This is a compelling environment for our industry, and SLB is a disciplined and efficient company that is moving in sync with our customers and our shareholders. We believe we are well positioned to execute our returns-focused strategy and commitment to shareholder returns."

Other Events

During the quarter, SLB repurchased approximately 4.5 million shares of its common stock at an average price of $47.33 per share for a total purchase price of $213 million.

Also during the quarter, SLB issued $500 million of 4.500% Senior Notes due 2028 and $500 million of 4.850% Senior Notes due 2033.

On July 20, 2023, SLB's Board of Directors approved a quarterly cash dividend of $0.25 per share of outstanding common stock, payable on October 12, 2023, to stockholders of record on September 6, 2023.

Second-Quarter Revenue by Geographical Area

													(Stated in millions)
		Three Months Ended			Change
		Jun. 30,			Mar. 31,		Jun. 30,
	2023		2023		2022		SequentialYear-on-year
North America		$1,746			$1,698		$1,537	3%			14%
Latin America	1,624	1,617	1,329	-	22%
Europe & Africa*	2,031	1,974	1,691	3%	20%
Middle East & Asia	2,642	2,394	2,168	10%	22%
Eliminations & other	56			53		48		n/m				n/m
		$8,099			$7,736		$6,773	5%		20%
International	$6,297	$5,985	$5,188	5%	21%
North America	$1,746	$1,698	$1,537	3%	14%

*Includes Russia and the Caspian region

n/m = not meaningful

International

Revenue in Latin America of $1.62 billion was essentially flat sequentially as higher drilling activity offshore Brazil, increased stimulation activity in Argentina, higher sales of midstream production systems offshore Guyana, and increased Asset Performance Solutions (APS) revenue in Ecuador were offset by lower revenue in Mexico. Year on year, revenue grew 22% led by higher drilling activity in Mexico and Brazil, increased sales of production systems in Guyana, and increased intervention and stimulation activity in Argentina.

4

Europe & Africa revenue of $2.03 billion grew 3% sequentially due to higher offshore activity in Angola and Namibia, increased drilling in Scandinavia, and higher sales of subsea production systems in the Caspian Sea. These increases were partially offset by the non-repeat of last quarter's significant midstream production systems project milestones. Year on year, revenue grew 20% resulting from increased exploration, drilling, and production activity offshore Africa and higher drilling in Scandinavia and Europe.

Revenue in the Middle East & Asia of $2.64 billion increased 10% sequentially driven by double-digit revenue growth in Saudi Arabia, Egypt, United Arab Emirates, Kuwait, China, and India. This was a result of higher drilling, intervention, stimulation, and evaluation activity, both on land and offshore. Year on year, revenue grew 22% with double-digit growth across Saudi Arabia, United Arab Emirates, Qatar, Egypt, Oman, Iraq, India, East Asia, and Australia.

North America

North America revenue of $1.75 billion grew 3% sequentially-despite the decrease in rig count- benefiting from our agility across the most resilient land basins and market segments. In addition, our strong offshore position in the US Gulf of Mexico contributed to our revenue growth as activity increased sequentially. US land revenue grew sequentially, outperforming the rig count decline, while offshore experienced double-digit growth, boosted by increased sales of completions and subsea production systems as well as higher drilling and evaluation activity. In contrast, Canada land revenue decreased due to the spring breakup. Year on year, North America revenue grew 14% due to strong land and offshore drilling and higher sales of production systems, although this was partially offset by lower APS project revenue in Canada due to lower commodity prices.

Second-Quarter Results by Division

Digital & Integration

										(Stated in millions)
	Three Months Ended			Change
	Jun. 30,			Mar. 31,	Jun. 30,
	2023	2023			2022		Sequential	Year-on-year
Revenue
International	$712	$642			$627	11%	14%
North America	234	251			327	-7%	-29%
Other	1		1			1		n/m		n/m
	$947		$894			$955		6%		-1%
Pretax operating income	$322	$265			$379	22%	-15%
Pretax operating margin	34.0%	29.6%			39.7%		438 bps		-572 bps

n/m = not meaningful

5