10-Q: Schlumberger Limited Reports Q1 2025 Results; Announces ChampionX Transaction Progress

Schlumberger Limited's Q1 2025 revenue decreased 3% year-over-year to $8.5 billion, with growth in North America offset by softer international performance, while the ChampionX acquisition is expected to close in Q2 or early Q3 2025.

Summary

• Schlumberger Limited (SLB) reported its first-quarter 2025 financial results, showing a revenue decrease of 3% year-over-year, reaching $8.5 billion.
• North America's revenue increased by 8% to $1.7 billion, driven by digital sales and production systems, while international revenue declined by 5% to $6.7 billion.
• Latin America experienced a 10% revenue decrease due to reduced drilling activity in Mexico, while Europe & Africa saw a 4% decrease due to reduced activity in offshore Africa and Russia.
• The Middle East & Asia revenue decreased by 3% due to reduced drilling and stimulation activity in Saudi Arabia, Egypt, Australia, and India.
• Net income attributable to SLB was $797 million, or $0.58 per share, compared to $1.068 billion, or $0.75 per share, in Q1 2024.
• Digital & Integration revenue increased by 6% year-on-year, driven by digital revenue growth, but was offset by lower APS revenue due to a pipeline disruption in Ecuador.
• Reservoir Performance revenue declined 1% year-on-year, while Well Construction revenue declined 12% year-on-year.
• Production Systems revenue increased 4% year-on-year due to strong demand in North America.
• SLB's effective tax rate was 22% for Q1 2025, compared to 19% in the same period of 2024.
• The company's capital investments were $0.6 billion during the first three months of 2025 and are expected to be approximately $2.3 billion for the full year.
• SLB completed an accelerated share repurchase (ASR) program, repurchasing $2.3 billion of its common stock.
• The acquisition of ChampionX is anticipated to close in the second quarter or early third quarter of 2025.
• SLB is selling its interest in the Palliser APS project in Canada for approximately $430 million, expected to close in Q2 2025.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive aspects like growth in North America and progress on the ChampionX acquisition, the overall revenue and net income decreased, indicating a subdued start to the year.

Positives

• North America revenue increased by 8% year-over-year, driven by higher digital sales and sales of production systems.
• Digital & Integration revenue increased by 6% year-on-year, supported by greater adoption of digital technologies and higher sales of exploration data.
• Production Systems revenue increased 4% year-on-year due to strong demand in North America.
• SLB has $3.9 billion of cash and short-term investments on hand and $5.0 billion in committed debt facility agreements.
• SLB increased its quarterly cash dividend by 3.6% from $0.275 to $0.285 per share.

Negatives

• Overall revenue decreased by 3% year-over-year.
• International revenue declined by 5% year-over-year.
• Net income attributable to SLB decreased from $1.068 billion to $797 million year-over-year.
• Latin America revenue declined 10% year-on-year due to reduced drilling activity in Mexico.
• Europe & Africa revenue decreased 4% due to reduced activity in offshore Africa and Russia.
• Well Construction revenue declined 12% year-on-year.

Risks

• Fluctuating commodity prices and evolving tariffs could impact upstream oil and gas investment and affect demand for SLB's products and services.
• A temporary pipeline disruption on an Asset Performance Solutions (APS) project in Ecuador negatively impacted Digital & Integration revenue.
• Reduced drilling and stimulation activity in Saudi Arabia, Egypt, Australia, and India contributed to a decline in Middle East & Asia revenue.
• The ongoing conflict in Ukraine and other geopolitical factors could impact global energy supply and demand.

Future Outlook

SLB anticipates the ChampionX transaction will close in the second quarter or early third quarter of 2025 and remains committed to protecting its margins, generating strong cash flow and delivering consistent value to its customers and shareholders in 2025.

Industry Context

The report acknowledges potential shifts in industry priorities due to changes in the global economy, fluctuating commodity prices, and evolving tariffs, which could impact upstream oil and gas investment.

Comparison to Industry Standards

• The document does not contain specific comparisons to industry standards or benchmarks.
• However, it mentions companies listed on the Philadelphia Oil Service Sector Index as potential competitors in the context of non-compete agreements for employees.
• The performance share unit award agreements also define a peer group for relative TSR performance, including companies such as [ ], [ ], [ ] and [ ].

Legal Proceedings

• SLB is party to various legal proceedings from time to time.
• Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote.

Stakeholder Impact

• Shareholders: Impacted by the decrease in net income and earnings per share, but also by the increased dividend and share repurchase program.
• Employees: Affected by the restructuring program and workforce reductions.
• Customers: Potentially impacted by changes in SLB's service delivery structure and product offerings.
• Suppliers: Could be affected by changes in SLB's procurement strategies and supply chain management.

Next Steps

• Closing the acquisition of ChampionX, anticipated in Q2 or early Q3 2025.
• Completing the sale of SLB's interest in the Palliser APS project in Canada, expected to close in Q2 2025.
• Monitoring and adapting to changes in the global economy, commodity prices, and tariffs.
• Continuing to execute the share repurchase program.

Key Dates

Keywords

Schlumberger, financial results, Q1 2025, revenue, net income, ChampionX, acquisition, oilfield services, capital investments, share repurchase, digital, production systems, drilling activity