425: SLB Announces Strong First-Quarter 2024 Results, Plans $7 Billion Shareholder Returns

SLB reports a robust first quarter with revenue up 13% year-on-year and announces plans to return $7 billion to shareholders over the next two years.

Summary

• SLB announced its first-quarter 2024 results, reporting revenue of $8.71 billion, a 13% increase year-on-year.
• GAAP EPS was $0.74, up 14% year-on-year, while EPS excluding charges and credits was $0.75, a 19% increase.
• Net income attributable to SLB was $1.07 billion, a 14% increase year-on-year.
• Adjusted EBITDA was $2.06 billion, up 15% year-on-year.
• The company's board approved a quarterly cash dividend of $0.275 per share.
• SLB is targeting to return $7 billion to shareholders over 2024-2025, with $3 billion in 2024 and $4 billion in 2025.
• International revenue grew 18% year on year, while North America revenue declined 6%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic acquisitions, and a commitment to shareholder returns. While there are some challenges in North America, the overall tone is optimistic and confident.

Positives

• Strong revenue growth driven by international markets and the Aker subsea business.
• Significant increase in adjusted EPS and EBITDA.
• Commitment to return substantial capital to shareholders through dividends and share repurchases.
• Strategic acquisitions, including ChampionX and Aker Carbon Capture, to enhance portfolio and capture growth opportunities.
• Successful technology deployments and contract awards in key regions.
• Focus on decarbonization and new energy solutions.

Negatives

• North America revenue declined by 6% year-on-year due to reduced drilling activity in US land and lower APS revenue in Canada.
• Sequential revenue declined 3% both in North America and in the international markets due to seasonality.
• Digital & Integration pretax operating margin contracted 300 bps year on year and 735 bps sequentially.
• Cash flow from operations was $327 million and free cash flow was negative $222 million.

Risks

• Changing global economic and geopolitical conditions could impact demand and spending.
• Fluctuations in oil and natural gas prices could affect customer investment decisions.
• The integration of acquired businesses, such as ChampionX and Aker Carbon Capture, may present challenges.
• Regulatory changes and environmental concerns could impact operations and profitability.
• The ongoing conflict in Ukraine could disrupt global energy supply and markets.

Future Outlook

SLB remains confident in its global revenue growth outlook for 2024, with softness in North America being offset by upside in the international markets. The company affirms its previous guidance of mid-teens EBITDA growth for the full year and expects broad sequential margin expansion across all Divisions and geographies in the second quarter.

Management Comments

• SLB CEO Olivier Le Peuch commented, 'We have had an exciting start to the year with our announced agreement to acquire ChampionX Corporation (ChampionX), which will bolster our production and recovery portfolio.'
• Le Peuch stated that the company continued its growth momentum, with a strong first-quarter performance resulting from robust year-on-year revenue and EBITDA growth consistent with their first quarter and full-year guidance.
• Le Peuch noted that the oil and gas industry continues to benefit from strong market fundamentals driven by a growing demand outlook.

Industry Context

The announcement reflects the ongoing recovery in the oil and gas industry, particularly in international and offshore markets. SLB's strategic acquisitions and focus on technology and decarbonization align with industry trends towards efficiency, sustainability, and emissions reduction. The planned acquisition of ChampionX positions SLB to capitalize on the increasing importance of production and reservoir recovery investments.

Comparison to Industry Standards

• SLB's revenue growth of 13% year-on-year is competitive compared to other major oilfield service companies.
• The company's focus on international markets aligns with the broader industry trend of increased investment outside of North America.
• The planned acquisition of ChampionX is similar to other consolidation efforts in the oilfield services sector, such as Halliburton's acquisition of Baker Hughes (which was later terminated) and TechnipFMC's formation through a merger.
• SLB's commitment to decarbonization and new energy solutions is in line with the growing emphasis on sustainability among its peers, including Baker Hughes and Halliburton.

Stakeholder Impact

• Shareholders will benefit from increased dividends and share repurchases.
• Employees may experience new opportunities and challenges related to acquisitions and strategic initiatives.
• Customers will have access to a broader range of technologies and services.
• Suppliers may see changes in procurement strategies and relationships.
• The company's focus on decarbonization could positively impact the environment and communities.

Next Steps

• Complete the acquisition of ChampionX, subject to shareholder and regulatory approvals.
• Integrate Aker Carbon Capture into SLB's carbon capture business.
• Continue to execute on digital transformation projects and deploy new technologies.
• Advance decarbonization initiatives and new energy solutions.
• Return $7 billion to shareholders over the next two years.

Key Dates