Key Projects and Technology Deployments in Q4: During Q4, SLB benefited from project awards, including a five-year well construction contract in Canada, a two-year wellhead and mudline systems contract in Mexico, a contract for providing valves in Argentina, and well construction and EPC contracts in Libya. In Saudi Arabia, it received a shallow-water subsea award. It received similar project contracts worldwide, including Kazakhstan, Malaysia, China, Australia, and other regions.
In decarbonization and digitization, Eni selected SLB’s End-to-end Emission Solutions for methane emissions measurement and reporting during Q4. SLB and Geminus AI announced a technology partnership to produce an AI model that can be used in reservoir systems. SLB and NBR announced a collaboration for automated drilling solutions. Eni will use SLB’s Delfi digital platform in Angola and Colombia. Similar technologies will also be used in Kuwait. In the UAE, SLB received a CCS (Carbon capture and storage) consultancy project from Sharjah National Oil Corporation, while in Japan, a similar pilot project was completed.
A Steep Segment Revenue Growth in Q4: SLB saw impressive growth in its operating segments in Q4, except Well Construction. Its Production Systems segment saw the sharpest quarter-over-quarter revenue rise in Q4 (24% up), followed by Digital & Integration (7% up). The company’s adjusted EBITDA increased by 9.4% in Q4 compared to Q3. Geographically, the company’s North American market held remarkably steady in Q4 despite softer drilling activity. Technological innovations in the US onshore and the US GoM operations produced such resilient performance. Revenue-wise, its Europe/CIS/Africa geography made strides following long-cycle developments, capacity expansions, and increased activities in Saudi Arabia, the UAE, Egypt, and the East Mediterranean regions.
Despite geopolitical unrest, the company’s management continues to place high hopes on long-cycle developments across the Middle East and global offshore activities, led by further growth in Production Systems.
Cash Flow Grows While Leverage Declines: SLB’s cash flow from operations increased by 78% in FY2023 compared to a year ago. Its FCF more than doubled over this period. Debt-to-equity (0.56x) decreased from 0.68x a year earlier. The company also increased its quarterly dividends by 10%. You may read more about the company in our previous article here.
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.
