Key Projects and Technology deployments in Q2: The key projects received by SLB in Q2 include a $1 billion land and shallow water exploration and development project in Mexico, a contract in Saudi Arabia from Saudi Aramco, a five-year exclusive contract in Qatar from Qatargas, a critical subsea equipment supply deal from Petrobras, and an EPCI contract award in offshore Egypt. In technological development, it introduced the XR-Perf expanded-range wireline perforating system and the OneSTEP EF sandstone stimulation solution. It combined its Gyrodata Quest gyro-while-drilling (GWD) system with the PowerDrive X6 rotary steerable system. It also deployed various digital technology products during the quarter.
Segment revenue increased; management stays optimistic about 2H 2023: The company’s Reservoir Performance segment saw the sharpest quarter-over-quarter revenue rise in Q2 (9% up), followed by Digital & Integration (6% up). Revenues from the Well Construction segment increased the least (3% up). Overall, the company’s adjusted EBITDA increased by ~10% in Q2 compared to Q1. The company’s management was upbeat about the momentum in 2H 2023 due to robust “international and offshore markets.” The primary drivers for the anticipated growth will be “offshore developments, production capacity expansions, the return of global exploration and appraisal……” Activity in North America, on the other hand, can moderate in 2H 2023.
Impressive cash flow growth but leverage unchanged: SLB’s cash flow from operations increased by 198% in 1H 2023 compared to a year ago. Its FCF turned remarkably positive compared to a negative FCF a year ago. Debt-to-equity (0.70x), however, remained unchanged. You may read more about the company in our previous article here.
Thanks for reading the SLB take three, designed to give you three critical takeaways from SLB’s earnings report. Soon we will present a second update on SLB earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
