-Revenue of $7.5 billion increased 10% sequentially and 28% year on year
-International revenue of $5.9 billion increased 13% sequentially and 26% year on year
-North America revenue of $1.5 billion was flat sequentially and increased 37% year on year
-GAAP EPS of $0.63 decreased 6% sequentially and increased 62% year on year
-EPS, excluding charges and credits, of $0.63 increased 26% sequentially and 75% year on year
-Cash flow from operations was $1.6 billion and free cash flow was $1.1 billion
-Board approved quarterly cash dividend of $0.175 per share
(BUSINESS WIRE) -- Schlumberger Limited (NYSE: SLB) today announced results for the third-quarter 2022.
Schlumberger CEO Olivier Le Peuch commented, “The second half of the year is off to a great start with strong third-quarter results that reflect the acceleration of international momentum and solid execution across our Divisions and areas. Sequentially, we delivered another quarter of double-digit revenue growth and margin expansion, as the pace of growth in our international business stepped up significantly, complementing already robust levels of activity in North America.
“On a companywide basis, sequential revenue grew 10%, by more than $700 million; EPS—excluding charges and credits—increased 26%; pretax segment operating margin expanded 161 basis points (bps) to reach 18.7%; and free cash flow was $1.1 billion. Both EPS—excluding charges and credits—and pretax segment operating margin represent their highest levels since 2015, as we continue to execute on our returns-focused strategy with much success.
“Year-over-year comparisons were exceptional with revenue growing by 28%; EPS—excluding charges and credits—increasing 75%; and pretax segment operating margin expanding 320 bps.”
Revenue growth was led by Well Construction and Production Systems as global activity strengthened—particularly in the offshore and international markets. Schlumberger’s leading position in these markets continues to propel strong and profitable growth in the Core. The quarter was also supported by continued backlog conversion, strong technology adoption, and the growing effects of pricing improvements. Reservoir Performance also grew, while Digital & Integration declined as growth in digital solutions was more than offset by the non-repeat of exploration data transfer fees recorded in the previous quarter.
International Torque Ramps Up as Revenue Exceeds Third-Quarter 2019 Level
Le Peuch said, “Third-quarter revenue was driven by International, which posted 13% growth sequentially and 26% year on year. International revenue also exceeded third-quarter 2019 levels, on a rig count that is still approximately 25% lower than in 2019. This comparison highlights the significant gains we have made in strengthening our market participation and our continued growth potential as rigs mobilize internationally in the quarters to come.”
Sequentially, growth was prevalent across all international areas led by Europe/CIS/Africa and Latin America, which increased 21% and 14%, respectively. This was driven by increased activity and higher pricing in Well Construction, in addition to higher Production Systems sales. Middle East & Asia revenue improved 8% sequentially due to increased multidivisional activity across Asia and higher Reservoir Performance revenue in the Middle East.
Outperforming in our Core—Strong Growth in Well Construction and Production Systems
Le Peuch said, “Our Schlumberger Core continues to perform extremely well as we continue to leverage our global breadth, leading technology portfolio, and pricing improvements to drive top- and bottom-line growth momentum.”
Revenue growth by Division was led by Well Construction with revenue increasing 15% sequentially, outperforming global rig count growth due to strong activity and pricing improvements in the Europe/CIS/Africa and Latin America areas. Similarly, Production Systems revenue grew 14% sequentially on higher product deliveries and backlog conversion, mostly in international offshore basins. Reservoir Performance revenue grew 9% due to higher intervention and stimulation activity, both on land and offshore, particularly in the Middle East & Asia and Europe/CIS/Africa areas. Year on year, revenue from all Divisions experienced double-digit growth, led by Well Construction, which grew 36%.
In relation to margin performance, Well Construction and Reservoir Performance led in sequential margin expansion having posted 403 bps and 209 bps growth, respectively. Year on year, Well Construction margin expanded 635 bps to reach 22%, due to broad pricing improvements and improved operating leverage.
Constructive Energy Fundamentals and a Supply-Led Decoupling of Upstream Investment
Le Peuch said, “While concerns remain over the broader economic climate, the energy industry fundamentals continue to be very constructive. Against the backdrop of the energy crisis and limited spare global capacity, the world faces an urgent need for increased investment to rebalance markets, create supply redundancies, and rebuild spare capacity. All of these are exacerbated by geopolitics and increasing instances of supply disruptions.
“These dynamics and the urgency to restore balance are resulting in a supply-led upcycle, characterized by the decoupling of upstream investment from near-term demand volatility. Furthermore, the need for sustained investments is reinforced by the long-term demand trajectory through the end of the decade and by OPEC+ decisions that are keeping commodity prices at supportive levels.
“Concurrently, we are witnessing a significant commitment from the industry to decarbonize oil and gas, with E&P operators all over the world deploying capital and adopting technologies—including digital—at scale, to reduce emissions. Taken together, we expect these constructive fundamentals and secular trends to support multiple years of growth.”
A Strong Finish in the Making for an Outstanding Year
Le Peuch said, “On a companywide basis, year-to-date revenue increased more than 20%; EPS on a GAAP basis grew 83%; EPS—excluding charges and credits—grew 67%; and pretax segment operating margin expanded 285 bps. I am very proud of these exceptional results delivered by the Schlumberger team as we approach the end of an outstanding year.
“As we close the year, we expect to deliver sequential revenue growth and margin expansion in the fourth quarter.
“To conclude, we have stronger conviction in our strategy and the opportunities across our three engines of growth—the Core, Digital, and New Energy. Constructive market fundamentals for oil and gas, energy security, and the urgency to accelerate the energy transition will support increased investment—in both clean energy technology development and lower carbon oil and gas production. We have positioned the company for long-term outperformance, with a diverse set of opportunities across the entire energy value chain. These technology-led opportunities cover oil and gas, industrial decarbonization, and new energy systems—all supported by digital transformation.
“Recent regulatory decisions and incentives reinforce our view of this compelling investment outlook and our strategic direction. We are prepared to apply our technology, global scale, and industrialization capabilities to lead in this energy landscape and deliver outstanding value for our customers and shareholders.
“I am truly excited about our future as we continue to drive innovation for a resilient and balanced energy system. I look forward to sharing at our upcoming Investor Conference, our views of the industry, revenue growth ambitions, earnings, and returns potential.”
On August 30, 2022, Schlumberger, Aker Solutions, and Subsea 7 announced an agreement to form a joint venture to drive innovation and efficiency in subsea production to help customers unlock reserves and reduce cycle time. The agreement will bring together a portfolio of innovative technologies such as subsea gas compression, all-electric subsea production systems, and other electrification capabilities that help customers meet their decarbonization goals. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2023.
In October 2022, Schlumberger redeemed $895 million of its outstanding notes, consisting of $600 million of 2.65% Senior Notes and $295 million of 3.625% Senior Notes, both due 2022.
On October 20, 2022, Schlumberger’s Board of Directors approved a quarterly cash dividend of $0.175 per share of outstanding common stock, payable on January 12, 2023, to stockholders of record on December 7, 2022.
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Investor Relations Contacts:
Ndubuisi Maduemezia – Vice President of Investor Relations, Schlumberger Limited
Joy V. Domingo – Director of Investor Relations, Schlumberger Limited
Office +1 (713) 375-3535
Josh Byerly – Vice President of Communications, Schlumberger Limited
Moira Duff – Director of External Communications, Schlumberger Limited
Office +1 (713) 375-3407