SLB N.V. Q2 FY2025 earnings call

• Welcomed the ChampionX team to Schlumberger Limited as the transaction was complete. - Second quarter was solid with steady revenue and slight EBITDA margin expansion despite macro headwinds. - International markets revenue grew 2%, with growth in Middle East, Asia, and North Africa offsetting headwinds in some regions. - Production Systems led with increased sales of artificial lift and midstream production systems. - Wireline construction had flat revenue sequentially with regional growth and decline. - Reservoir performance revenue declined slightly. - Digital revenue steady with double-digit growth in platforms, etc., but offset by lower exploration data. - Over 7,800 users on Delphi platform. - CCS had growth with large-scale project execution. - Macro environment uncertain with OPEC+ supply releases, but Middle East and Asia resilient. - ChampionX addition enhances portfolio in production chemicals and artificial lift, expands global reach, and complements Schlumberger's capabilities. - Digital business to be reported as separate segment from third quarter.

In the second quarter, Schlumberger Limited's revenue was $8.5 billion, up 1% sequentially, driven by 2% growth in international markets. Production Systems led the way with revenue of $3 billion, increasing 3% sequentially, benefiting from strong sales in artificial lift, midstream production systems, and valves. Wireline construction revenue was flattish sequentially, with growth in Iraq, UAE, North Africa, and Nigeria offset by lower activity in Namibia and North America. Reservoir performance revenue of $1.7 billion declined 1% sequentially due to lower evaluation and stimulation activity. Digital and integration revenue was $1 billion, down 1% sequentially, with digital revenue steady but offset by lower exploration data sales. CCS exhibited growth with successful execution of large-scale projects. Production Systems contributed 35.3% of total revenue ($3 billion / $8.5 billion), Digital and Integration contributed 11.8% ($1 billion / $8.5 billion), Reservoir Performance contributed 20% ($1.7 billion / $8.5 billion), and Well Construction contributed 35.3% ($3 billion / $8.5 billion).

• Second-half revenue expected to be between $18.2 billion and $18.8 billion, back-loaded with fourth quarter higher due to full quarter of ChampionX and seasonal uplift from year-end digital and product sales. - Second-half EBITDA margins flat compared to second quarter, inclusive of ChampionX contribution and tariff impact. - From August 2025, will consolidate ChampionX results, with second half revenue growth when considering legacy portfolio and ChampionX compared to first half.

• OPEC+ supply releases could exert pressure on commodity prices in near term. - Geopolitical risk and lingering tight negotiations. - Activity decline in US and certain offshore markets. - Ecuador pipeline disruption impact.

Q: David Anderson asked about second half guidance and customer behavior change since OPEC+ brought barrels back.

A: Olivier said guidance reflects growth with production system and ChampionX combination offsetting headwinds, major adjustments in international markets largely behind us but short-cycle markets reactive to lower commodity prices.

Q: David Anderson asked about deepwater activity.

A: Olivier said Namibia effect is temporary, Americas have upside with Guyana, Brazil, Mexico; Eastern Hemisphere has gas market opportunities.

Q: Scott Gruber asked about production business growth outlook.

A: Olivier said production market is more resilient, inclusive of OPEX, with integrated offering and digital enhancing growth.

Q: Scott Gruber asked about CapEx to sales free cash conversion.

A: Olivier said 2025 CapEx at maintenance level, below 5% - 7% of revenue range, free cash flow margin expected above 10% of revenue.

Q: Arun Jayaram asked about global upstream spending and timing of inflection.

A: Olivier said 2025 upstream spending slight decline, more in North America, Middle East and Asia resilient, future has cycle rebound with energy market, gas supply, deepwater projects.

Q: Arun Jayaram asked about Q3 vs Q4 outlook.

A: Olivier said Q3 has two months of ChampionX, absence of Palliser, activity decline impact; Q4 higher due to full ChampionX quarter and seasonal uplift.

Q: Neil Mehta asked about ChampionX synergies and margins.

A: Olivier said ChampionX complementary, production systems margins to maintain, digital margins to increase.

Q: Roger Read asked about Mexico business and accounts receivable.

A: Olivier said waiting to see Mexico rebound steps, working with Pemex and independents.

Q: Josh Silverstein asked about digital business growth and AI products.

A: Olivier said digital growth on track, Lumi platform for data and AI adoption showing early momentum.