SLB’s international business brings in revenue for the third quarter

Despite reduced drilling activity in the US, SLB built a positive first half of the year in the third quarter of 2023, with total revenues related to international and offshore operations increasing by 3% compared to the second quarter.

“Overall, our third quarter revenue of $8.3 billion was up 3% sequentially.” International sequential revenue growth of 5% was led by the Middle East and Asia, which increased 8%, while revenue in North America decreased 6%,” Stefan Bige, executive vice president and CFO of SLB, said on the call for the company’s earnings on October 20.

North America revenue of $1.64 billion decreased 6% sequentially due to reduced drilling activity in the US onshore and Gulf of Mexico (GoM) areas. Offshore revenue declined as a result of lower subsea sales and reduced drilling activity. However, North America revenue was up 6% from last year, driven by strong onshore and offshore sales of production systems.

The real driver of SLB’s overall revenue was its offshore business. Offshore operations grew in the third quarter due to increased supply, accelerated cycle times and increased asset productivity – evidenced by growth in offshore Africa, Brazil and Scandinavia. The Middle East has also contributed significantly to the company’s international growth.

“We achieved our highest international revenue quarter since 2015, growing revenue in this market for the ninth consecutive quarter year-over-year,” said Olivier Le Peuch, SLB’s CEO, on the earnings call. “This was particularly evident in the Middle East and Asia, where we reported revenue growth of 22% year-on-year, led by significant growth in Saudi Arabia, the United Arab Emirates, Kuwait and Egypt.”

Three engines, three sources of income

SLB also got promising results from what Le Peuch calls the company’s “three growth engines” – core, digital and new energy.

SLB’s core business is working in the oil and gas sector, including reservoir performance, production systems and well construction. This division of the company has grown 22% since the third quarter of 2022 and has expanded its margins.

“Reservoir performance delivered outstanding results with stronger valuation activity. Production systems achieved their highest level of margins in the cycle … and the well construction maintained impressive results through new technological innovations and differentiated performance,” said Le Peuch. “Overall, it was a very strong quarter across our core divisions.”

Growth in SLB’s digital division is driven by Delfi, the company’s digital E&P platform. Delfi’s AI capabilities serve as the foundation of SLB’s customer planning and operations.

“We are seeing increased digital adoption in the industry today. Delfi continued its annual growth momentum with a 49% increase in users and an 86% increase in computing hours compared to the third quarter of last year,” said Le Peuch. “Additionally, our customers are embracing our connected and autonomous drilling solutions, with 1.9 million feet of automated drilling completed in the third quarter.”

Digital technology and integration revenue for the third quarter increased 4% from the prior quarter, reaching $982 million.

SLB’s new energy division is also involved in over 20 carbon capture, utilization and storage projects worldwide and has invested heavily in technology to reduce methane emissions.

SLB is also undertaking a joint venture with Aker and Subsea7 known as OneSubsea. OneSubsea now includes the subsea business of SLB and Aker Solutions, which includes a complementary portfolio of subsea production and processing technologies, production scale and capacity, access to reservoir and digital domain expertise, pore-to-process integration capabilities and R&D capabilities. development activity. This venture is expected to contribute approximately $400 million to $500 million in additional revenue in the fourth quarter, with pretax operating margins in the low-teens.

“We are very excited about the prospects of this venture, which strengthens our offshore portfolio and has the potential to provide more than $100 million in net annual synergies beginning in the third year after closing,” Bige said.

Cash flow from operations for SLB was $1.68 billion, up from $1.61 billion last quarter, and free cash flow was $1.04 billion, up $986 million from last quarter.

Adjusted EBITDA increased 6% from last quarter to $2.08 billion. Adjusted net income for the third quarter was $1.12 billion, up 8% from the second quarter and up 24% from last year. For the full year, SLB expects capital investments of between $2.5 billion and $2.6 billion.

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