Key projects in Q1 and clean energy initiatives: The key projects received by the company in Q1 include SLB and Saudi Aramco’s nine-year master service agreement for wireline and mud-logging, an agreement between Petrobras and OneSubSea (a division of SLB) related to the subsea production system, a well construction and reservoir evaluation in various countries from Shell. In the company’s initiatives in oil decarbonization, it deployed SLB Transition Technologies, introduced the EcoShield geopolymer cement-free system, and collaborated with BP to evaluate multiple wells to avoid excessive cement remediation.
Segment revenue declined, but management stays positive about Q2: The company’s Digital & Integration segment saw the steepest quarter-over-quarter revenue decline in Q1 (12% down), followed by Reservoir Performance (3% down). Revenues from the Well Construction and Production Systems segment remained nearly unchanged. Overall, the company’s adjusted EBITDA declined by 7% in Q1 2023 compared to Q4 2022. Despite the benign performance, the company’s management expects “strong growth with seasonal recovery in the Northern Hemisphere, capacity expansion projects in the Middle East……” and “robust activity in Asia and Sub-Sahara Africa” to result in margin expansion in Q2 2023.
Impressive cash flow growth but leverage goes up: SLB’s cash flow from operations increased by 152% in Q1 2023 compared to a year ago. Its FCF remained in the negative territory but showed remarkable improvement year-over-year. Debt-to-equity (0.70x), however, deteriorated marginally from a quarter ago due to lower cash & cash equivalents. 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.
