Schlumberger Limited (NYSE:SLB) Q1 2023 Earnings Call Transcript - Page 2 of 5 - InvestingChannel

Schlumberger Limited (NYSE:SLB) Q1 2023 Earnings Call Transcript

And the intensity of activity in Middle East, that is a mix of short-cycle and long-cycle development project, this combination is unique and I think will be putting more resource, more equipment, more technology and will drive revenue forward up.David Anderson And was the North America uptick, was that more offshore-driven than onshore this quarter?Olivier Le Peuch Yes, it was, indeed, absolutely. I think offshore is not only international, I think offshore is happening in North America. North America as northeast Canada, Alaska offshore and go from Mexico, the combination of which is set to grow and our pace this year, the — I would say, the U.S. land and North America (NAM) activity. So we are also getting the benefit of our fit for basin success in North America that continues to hold and help us maintain, grow our share and come on a premium on pricing.David Anderson And then, Olivier, in the D&I business, APS obviously impacted the performance this quarter.

I was wondering maybe you could kind of pull back a little bit and help us understand how the Digital business is performing. I think the goal is at a $3 billion revenue target. Wondering if you can kind of tell us where we are now in terms of that run rate. And in order to hit those targets, I’m just curious, is that about your existing customers using Digital more? Is it adding more apps to DELFI? Is it adding more customers? Is it all of the above? Maybe help us understand a little bit more…Olivier Le Peuch All of the above.David Anderson Digital. I had a feeling you would say that.Olivier Le Peuch Indeed. But I think, indeed, Dave, I think first, in this quarter, obviously, the growth, and we have seen growth rate in Digital that is aligned with our expectations, aligned with our ambition to double revenue from 2021 to 2025.We have seen, as Stephane mentioned, during his prepared remarks that the new technology edge and cloud is growing at more than 50%, continuing on the trajectory that we have set in the last couple of years.

And we don’t see any sign of this slowing down. And indeed, expansion will come from multiple dimension. Obviously, getting more consumption from the existing customer we have. And we are today deploying one of the largest contractor in Petrobras, where we were and we are meeting with the team here, very satisfied deployment and growing number of users. That’s an axis then growing number of applications, and that’s where we want to deploy and go beyond geoscience, our petrotechnical suite, if you like, to digital operation, production and digital operation into the drilling domain, automating the full rig well construction process.And again, in Brazil, we are very pleased to meet with Equinor and look after the Peregrinoplatform, we’re about to deploy for the first time in the world a full automated top side to bottom assembly, fully automated autonomous digital journey that we’ll realize this year.So we have both the geoscience application deployment, the digital operation, and we have new customers coming in, and you have seen some new contracts that we announced this quarter.

So we are growing to the pace we are expecting to be our trajectory to double. And in this quarter, this was unfortunately masked fully by the APS setback, but we expect this to resume and to be actually one of the leading growth sequential that you would see in the second quarter.David Anderson Fantastic. Thank you.Olivier Le Peuch Thank you.Operator Next, we go to the line of Chase Mulvehill with Bank of America. Please go ahead.Chase Mulvehill Good morning, Olivier.Olivier Le Peuch Good morning, Chase.Chase Mulvehill So a quick question. I guess coming back to international and just kind of focusing there. We get questions on this international ramp. And because the last six months, we’ve seen some oil price volatility. We’ve seen a couple of OPEC+ cuts.

And so we kind of get a lot of investor questions if there’s been any signs of OPEC slowing down, any kind of planned projects or CapEx plans. So let me just ask you if you’ve seen any indications of OPEC+ members slowing things down at all in the Middle East.Olivier Le Peuch No, we have not seen it. We have not seen any impact of businesses, and we don’t believe there will be any we believe that these companies and the national companies are really set and fully focused on mobilizing resource to execute their very ambitious capacity expansion plan. I think you are aware all the commitments. And it’s not only UAE and Saudi. This is across many countries in GCC. And I think this is to grow both oil capacity and also gas and commercial and gas across the region.So I think I have — I’ve been recently in the Middle East and have not seen any sign of and challenging.

And again, the multiplicity of contract awards that were tendered in the last 18 months and most of them multiyear, if not beyond five years, are really indicative of the commitment and the capacity expansion plan that have started. Inflection has happened and you will see this growing for the rest of the year. So we don’t foresee any impact.Chase Mulvehill Okay, awesome. Appreciate the color there. The follow-up is really kind of on CCUS. You had a lot of announcements in your press release, which really highlighted your experience on the sequestration side. But there are other parts, obviously, of the value chain. And are there other parts that you would actually think that would be a good fit for SLB, like possibly the capture technology side?Olivier Le Peuch No, absolutely.

I think we have indeed a unique right of play into the sequestration that have translated into a significant number of studies and services and modeling and digital that we have provided to a lot of customers. And these customers have approached us to participate, some of them emitters, that are non-oil and gas as you have seen some of the examples we gave in the press release earlier today.And then we are using our technology and innovation capability to explore and to invest into capture technology or to partner as we are partnering with Linde into the application of CCS project across the domain of blue hydrogen and ammonia for decarbonizing the natural gas, ammonia and halogen production.So we are indeed either associating or investing into capture technology, hence broadening our scope beyond sequestration and using our right of play to expand and create a business that will stand on its own in the years to come.Chase Mulvehill Okay.

Awesome. Appreciate the color there. I’ll turn it back over. Thanks Olivier.Olivier Le Peuch Thank you, Chase.Operator Next, we go to the line of Arun Jayaram with JPMorgan. Please go ahead.Arun Jayaram Olivier, I wanted to get some insights on what you’re seeing within the Subsea segment of Production System. I think you highlighted broadly within Production Systems, $10 billion to $12 billion of backlog growth potential this year or bookings potential. I was wondering if you could maybe characterize SLB’s technology offering and integration capabilities relative to your peers as well as provide any update on the strategic transaction that you announced last summer.Olivier Le Peuch Yes. Let me take it at the level of Production System first and let me give a quick zoom.

So the booking we are talking about is at the Production System level, which is the division encompassing our production system equipment capability from Subsea, as you pointed out, from actually in well completion, in well actually, subsea surface system processing capabilities.So when you put all of this together, you get an end-to-end from port to process, from send phase to processing that is quite unique in integration and delivery capability, hence, the opportunity we have to participate at scale and be a provider with our partner, Subsea 7, into the product of TPAO that you heard about where the first gas to flare was realized yesterday and celebrated by the — in country.And this is quite unique so that’s differentiated. We have end-to-end integration capability.

We can design and deploy and develop a gas facility, and we have done this in the past and we can link it to with our partners to our subsea development and participate to the completion architecture. So this end-to-end is quite unique and give us opportunity to participate at a large scale into development.Now very specific to Subsea, I think we are also quite differentiated into the way that we can connect to the subsurface and we have this integration capability from the sub to the completion architecture. And one thing in particular I would like to highlight or two things. First is the electrical capability of transforming this Subsea 3, the subsea control and the subsea and well completion control into electric — full electric capability.This is a game changer for the deepwater industry, game changer for low carbon and control — digital control of subsea equipment and control of zone equipment and completion.

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