SLB’s topline witnessed a slowdown in Q1 as its Mexico, Saudi Arabia, offshore Africa, and Russia operations faced challenges. However, it sees scope for revenue expansion in the digital business. Also, its cash flows improved sharply. Share repurchases accelerated in Q1.
Key Awards And Outlook: SLB won significant contracts in Q1, including an ultra-deepwater project in Mexico, scoping work for a subsea production system and a Well Intervention and Stimulation Alliance extension in Norway, a two-year contract extension for well construction in Azerbaijan, an award for drilling fluid chemicals in Saudi Arabia, and another major service contract in Australia. SLB also introduced several new technologies, including EWC electric well control technologies and NovoSphere – a sourceless formation evaluation LWD service. In the UAE, ADNOC initiated its electric completions campaign in partnership with SLB.
SLB’s management expects changes in the global economy, fluctuating commodity prices, and evolving tariffs to lower upstream investments. As energy operators increase their digital capabilities and invest in digital and AI solutions, SLB’s revenues from the digital business will likely expand and become a significant part of its portfolio. In February, it acquired Interactive Network Technologies, which provides data visualization technology. The acquisition will complement SLB’s Delfi digital platform, Lumi data, and AI platform.
International Sales Down in Q1: SLB’s Digital & Integration segment witnessed the steepest quarter-over-quarter revenue and operating income decline in Q1 (13% and 31% down, respectively), followed by Well Construction. The Reservoir Performance segment was relatively resilient in Q1 (6% sales down). Overall, the company’s adjusted EBITDA decreased by 15% in Q1’25 compared to Q4’24. Geographically, the company’s international businesses registered a sharper fall than North America in Q1.
Activity slowdown in Mexico, Saudi Arabia, offshore Africa, and Russia led to a revenue fall in Q1. Lower drilling revenues from the US onshore also added to the concerns. However, higher digital sales, subsea production systems in offshore US, and increased demand for data center infrastructure solutions partially mitigated the sales loss in North America.
Cash Flows and Shares Buyback: SLB’s cash flow from operations doubled in Q1 2025 compared to a year ago, despite revenues remaining unchanged. Its FCF also turned positive over this period. Due to the higher debt and lower shareholders’ equity, debt-to-equity increased (0.67x) substantially compared to 0.54x in FY2024. Armed with improved cash flows, it plans to increase total return to a minimum of $4 billion in 2025. In February, it repurchased $2.3 billion of its common stock in an accelerated share buyback program.
Thanks for reading the SLB take three, which is 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.
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