SLB (SLB) Q4 2025 Earnings Call Transcript

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Date

Friday, January 23, 2026 at 9:30 a.m. ET

Call participants

• Chief Executive Officer — Olivier Le Peuch
• Chief Financial Officer — Stephane Biguet
• Vice President, Investor Relations — James McDonald

Takeaways

• Revenue -- $9.7 billion, up 9% sequentially, with $817 million total increase including $300 million from an extra month of ChampionX consolidation.
• Adjusted EPS (excluding charges and credits) -- $0.78, a $0.09 sequential increase, but a $0.14 decrease year over year.
• Adjusted EBITDA Margin -- 23.9%, up 83 basis points sequentially, with digital performance as the primary driver; margin was constrained by a 50-basis-point loss in carbon capture projects.
• Free Cash Flow -- $2.3 billion generated in the fourth quarter, while full-year free cash flow was $4.1 billion, marking the third consecutive year above $4 billion.
• Digital Division Revenue -- $825 million, up 25% sequentially; pretax operating margin expanded by 557 basis points to 34%.
• Digital Annual Recurring Revenue -- Surpassed $1 billion, up 15% year on year.
• Reservoir Performance Revenue -- $1.7 billion, up 4% sequentially with a 19.6% pretax operating margin, a 105-basis-point sequential improvement.
• Well Construction Revenue -- $2.9 billion, down 1% sequentially; pretax operating margin 18.7%, slightly down.
• Production Systems Revenue -- $4.1 billion, up 17% sequentially; excluding ChampionX, up 11%; pretax operating margin 16%, up 20 basis points.
• Fourth-Quarter Organic Revenue Growth -- About $500 million, with ChampionX contributing an additional $300 million.
• International Organic Revenue Increase -- 7% sequentially, with North America organic revenue up 6%.
• Regional Dynamics -- Middle East (especially Saudi Arabia and UAE) and Asia showed increased activity; Saudi Arabia and Sub-Saharan Africa returned to growth, Mexico remained flat.
• Full-Year Revenue Guidance for 2026 -- $36.9 billion to $37.7 billion, assuming oil prices in the high-$50s to low-$60s range.
• ChampionX 2026 Revenue Contribution -- Expected to provide an incremental $1.8 billion to annual revenue.
• Annual Return to Shareholders -- More than $4 billion planned for 2026 through dividends and share repurchases, including a 3.5% dividend increase.
• Capital Investments -- $2.5 billion planned for 2026 including CapEx, APS, and exploration data; capital intensity expected to remain at the low end of the 5%-7% of revenue range.
• First-Quarter 2026 Outlook -- Anticipates high single-digit sequential revenue decline and adjusted EBITDA margin down by 150-200 basis points from the prior quarter due to year-end seasonality.
• Subsea Market Outlook -- Over 500 subsea tree awards expected across 2026-2027, about 20% higher than the 2025 run rate; aiming to surpass $9 billion in cumulative OneSubsea bookings over two years.
• Data Center Solutions Business -- Targeting a $1 billion annualized revenue run rate by year-end, with expansion planned internationally.
• Full-Year 2026 Adjusted EBITDA Guidance -- $8.6 billion to $9.1 billion, with overall margin in line with 2025.
• Synergy Target from ChampionX Acquisition -- Approximately $400 million targeted, with half expected by 2026 and $30 million realized in 2025; 75% of synergy benefits to production systems.
• Effective Tax Rate -- Forecasted at approximately 20% for 2026, a slight increase from 2025.

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Risks

• Stephane Biguet stated the quarter included "$0.23 of net charges," with $0.11 for goodwill impairment in carbon capture, $0.08 in merger and integration charges, $0.07 related to workforce reductions, and "$0.03 of other charges."
• Adjusted EBITDA margin was "constrained by a loss in the carbon capture project that negatively impacted margins by approximately 50 basis points."
• Well construction segment saw a sequential revenue decline of 1%, mainly "driven by declines in The Middle East and Asia," with pretax operating margin also down.

Summary

SLB N.V. (NYSE:SLB) guided for 2026 revenue between $36.9 billion and $37.7 billion, reflecting anticipated benefits from the full-year inclusion of ChampionX and an international market rebound. The company projects total shareholder returns above $4 billion for 2026, driven by continued free cash flow strength and a 3.5% dividend increase. Digital operations posted double-digit growth, with annual recurring revenue surpassing $1 billion and the launch of the Tela AI system and expanded partnerships furthering momentum in this segment. SLB N.V. highlighted strong international growth prospects in the Middle East, Latin America, and Asia, while expecting slight declines in Europe and Africa, and continued flat land activity with growth in North America focused on data center and offshore. The company expects capital investments of $2.5 billion, maintains a capital intensity target of 5%-7%, and sees margin headwinds in well construction and reservoir performance, partly offset by ChampionX synergies and digital expansion.

• Management said the subsea market may see a "20% higher" tree award run rate in 2026-2027, creating an opportunity for OneSubsea, with 2025 bookings at $4 billion and a cumulative $9 billion targeted over the following two years.
• Olivier Le Peuch conveyed, "We anticipate this will translate into a higher fourth-quarter revenue exit rate in 2026 compared to the fourth quarter of 2025," pointing to international market recovery as a key cyclical driver.
• International operations are expected to lead 2026 growth, particularly in The Middle East and Asia, with Saudi Arabia rebounding to early-2025 rig count levels, while North America growth will be weighted to offshore, ChampionX, and data centers.
• Management emphasized that capital efficiency improvements enable growth at lower capital intensity, but indicated CapEx could increase if activity outpaces expectations, while remaining within the low end of their guidance.
• SLB N.V.'s data center solutions business, launched less than two years ago, is targeting an exit run rate of $1 billion in annual revenue, planning international expansion and product diversification in 2026.
• Olivier Le Peuch stated SLB N.V. is currently "the only international service company actively operating in Venezuela," with existing assets, personnel, and customer inquiries positioning the company for rapid ramp-up if conditions allow.
• Adjusted EBITDA margin for 2026 is forecast "relatively consistent with 2025 levels," with digital and production systems margin expansion partially offset by activity mix and pricing pressures elsewhere.
• Management described production recovery, including ChampionX, digital, and data center business, as "new pathways for growth supporting a full-year revenue and margin guidance."

Industry glossary

• ChampionX: An oilfield technology and production-chemical company acquired by SLB N.V., consolidated into SLB's results as of late 2025.
• APS projects: Asset performance solutions projects, which are outcome-based commercial models where SLB shares in the production uplift and/or cost savings of customer projects.
• OneSubsea: SLB N.V.'s integrated subsea business, supplying equipment, systems, and services for offshore production and recovery, including subsea trees and related technologies.
• Subsea tree: An assembly of valves, spools, and fittings installed on a subsea wellhead to control the flow of oil or gas produced from or injected into a well.
• Lumi/Delphi/Tela: SLB N.V.'s digital and AI platforms for integrating workflow automation, data analytics, and operational intelligence across the upstream oilfield lifecycle.

Full Conference Call Transcript

James McDonald: Thank you, Megan. Morning, and welcome to the SLB N.V. Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being hosted from Houston, following our board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer, and Stephane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our fourth quarter and full year earnings press release, which is on our website. With that, I will turn the call over to Olivier.

Olivier Le Peuch: Thank you, James. Ladies and gentlemen, thank you for joining us today. I will begin by reviewing our fourth quarter performance followed by an update on market conditions and the unique opportunities we see developing for our business. I will then share our outlook for the first quarter and expectations for the full year 2026. Stephane will then provide additional details on our financial results, and finally, we will open the line for your questions. Let's begin. We ended the year with strong financial performance in the fourth quarter, achieving sequential revenue growth, margin expansion, and substantial cash flow generation. This performance reflects the breadth of our portfolio and the impact of our strategy in a challenging macro environment.

Growth internationally, sequentially, volume increased by 9% driven by high single-digit and mid-teens growth in North America. Excluding ChampionX, organic revenue increased by 7% internationally and 6% in North America. We saw sequential growth across all our geographies for the first time since 2024. This demonstrates that global upstream activity has stabilized with key markets showing early signs of a rebound. This helped us to deliver approximately $500 million of organic revenue growth this quarter, in addition to a roughly $300 million contribution from ChampionX resulting from an extra month of consolidation. Let me briefly discuss a few highlights from the quarter.

First, we benefited from strong year-end product sales in production globally, higher exploration data sales, and strong demand for digital operations across all areas. Second, activity increased across The Middle East led by Saudi Arabia and with momentum in UAE, due to a combination of sustained gas development and increased oilfield intervention activity. Third, we delivered strong results across Asia with increased activity in North Asia, East Asia, and Indonesia as these markets continue to benefit from offshore gas development. Notably, this quarter also marked the return of growth in Saudi Arabia and across Sub-Saharan Africa with flat revenue in Mexico. These three basins actually accounted for the entire organic revenue decline for the full year of 2025.

Directionally, we expect activity in these markets to improve as we move throughout 2026. Turning to the divisions, in the fourth quarter, production systems and digital led the way, while reservoir performance was up slightly and well construction revenue was steady. The strength in production systems was driven by increased demand for production chemicals, offshore lift, and process technology and solutions as well as backlog execution completions and OneSubsea. When excluding the ChampionX contribution, this division still grew by double digits sequentially and maintained its momentum with several contract awards during the quarter as you can see from today's highlights.

Digital also continued to grow at a healthy rate, driven by strong growth in digital exploration with year-end sales in the Gulf of America, Brazil, and Mongolia, as well as a robust increase in digital operations and platform applications. Digital annual recurring revenue surpassed $1 billion reflecting year-on-year growth of 15%. We also announced several exciting digital milestones in the fourth quarter, including launching Tela, an AI system purpose-built to transform the upstream energy sector and forming a partnership with ADNOC to launch an AI-powered production system optimization platform. These underscore the opportunity for AI to continue to reshape industry operations.

Meanwhile, in reservoir performance, sequential growth was a result of increased stimulation activity in the Middle East and Asia and higher intervention activity in Europe and Africa. In well construction, higher offshore drilling activity in North America and Europe and Africa was offset by declines in some land markets. Additionally, our fourth quarter revenue benefited from the resumption of production APS projects in Ecuador. Overall, our fourth quarter results are a positive indication of the opportunity that lies ahead. I want to thank the entire SLB N.V. team for delivering excellent performance for our customers throughout 2025 and finishing the year on such a strong note.

Turning to the market environment, near-term oversupply may continue to exert downward pressure on commodity prices through 2026, while elevated geopolitical uncertainties should provide a price floor. E&P operators are therefore expected to remain cautious and to backlog their 2026 budgets. As supply and demand continue to rebalance into 2027, conditions will likely support a gradual recovery in upstream investments activity in key international markets and offshore deepwater, exiting 2026 at higher levels than 2025. Indeed, economic growth, increasing population, and large-scale manufacturing and infrastructure investments, particularly in the US and China related to AI, will inherently drive more demand in both oil and gas.

Coupled with the natural decline of existing oil and gas assets, we believe this will be the key driver for the rebalancing of supply and demand. In the meantime, our customers are focused on delivering the lowest cost incremental barrels. This means capturing efficiencies at scale, and in our view, that requires more technology, more integration, and more digital solutions. Today, operators are increasingly prioritizing performance assurance across the asset life cycle, reducing development timelines, and accelerating optimization through digital solutions. SLB N.V. is uniquely positioned to deliver value in this environment by integrating equipment with intelligent and autonomous digital capabilities to reduce downtime, improve efficiency, and increase productivity as witnessed by the rapid uptake in our digital operations.

Additionally, production recovery has emerged as a critical domain for value creation, not only in brownfield and mature assets but also across greenfield developments and tiebacks. This is not an either-or proposition between CapEx and OpEx, but an opportunity to increase our share of CapEx spend and capture OpEx white space with new solutions. With SLB N.V.'s expanded production portfolio, including the addition of ChampionX, we are uniquely positioned to meet the developing demand in the production space. Globally, the international markets are stabilizing and trending upwards directionally, with Latin America and The Middle East and Asia leading the rebound in 2026. Regionally, The Middle East continues to operate on the largest international scale with a positive investment outlook.

Indeed, there is a resurgence of oil production across the region, driven by OPEC plus policy, while gas remains a strategic priority to meet seasonal demand and long-term capacity expansion. In 2025, we witnessed double-digit growth in The United Arab Emirates, Iraq, and Kuwait, which was more than offset by the decline in Saudi Arabia. In 2026, the Middle East market will be characterized by a rebound in drilling and more cove activity in Saudi Arabia, with rig counts potentially returning to early 2025 levels by 2026. And this has already begun. Offshore also continues to present compelling long-term growth opportunities for SLB N.V., particularly in deepwater, where we expect activity to inflect toward 2026 as white space subsides.

With OneSubsea, we have the unique ability to combine subsea processing capabilities, digital solutions, and SLB N.V.'s integrated port-to-process expertise across subsea intervention and integrated well construction to create differentiated value for customers. Specific to the subsea market, more than 500 subsea trees are expected to be awarded across 2026 and 2027, about 20% higher than the 2025 run rate. And this is an opportunity we aim to capitalize on. In 2025, OneSubsea was awarded approximately $4 billion in subsea bookings, and we see a path to cumulative bookings exceeding $9 billion over the next two years supported by this tendering activity.

Finally, we are excited about the strong progress in our data center solutions business since its launch less than two years ago. This year, we plan to expand our range of offerings, our customer base, and the geographies we serve, paving the way for future growth. The opportunity is growing faster than anticipated, and we expect to exit the year at a quarterly revenue run rate of $1 billion per year. Overall, SLB N.V. is clearly positioned to fully benefit from a rebound in international activity as supply and demand rebalance, supported by ongoing investments for oil capacity, gas expansion projects, and a constructive long-term outlook for the quarter.

Regional activity dynamics further reinforce the favorable directional trajectory beginning in 2026. Let me now share our outlook for the year. The headwinds we faced in 2025 in certain markets may become tailwinds for our business this year. We anticipate this will translate into a higher fourth-quarter revenue exit rate in 2026 compared to the fourth quarter of 2025. For the full year, assuming oil prices remain range-bound in the high fifties to low sixties range, we expect 2026 revenue to be between $36.9 billion to $37.7 billion.

North America will benefit from the addition of seven months of activity from ChampionX, stronger offshore activity tied to customer plans, and accelerated growth in data centers, while upstream land activity will continue to decline year on year. International markets' revenue is expected to trend upwards over the year, resulting in a slight year-over-year increase. Growth will come from Latin America and The Middle East and Asia, while Europe and Africa are anticipated to decline slightly. Let me now describe how these dynamics will unfold across the divisions. In digital, revenue is expected to grow at the same pace as 2025, driven by digital operations. Production systems will increase, mostly benefiting from the full year of ChampionX revenue.

Reservoir performance will be flattish, while well construction will decline slightly. Revenue in the all-other category will be flat year on year, considering the loss of revenue from the divested Palliser assets will be offset by growth in the data center solutions. This revenue outlook translates into adjusted EBITDA between $8.6 billion to $9.1 billion, with margins remaining in line with full-year 2025 levels. Finally, with visibility into another year of strong cash flow, we will return more than $4 billion to shareholders in 2026 through the combination of the increased dividend that we announced this morning and share repurchase.

Turning to the first quarter, we anticipate revenue to decline by high single digits sequentially, similar to the prior year, due to outsized year-end product sales and project milestones in production systems in the prior quarter. We also expect adjusted EBITDA margin to decrease by 150 to 200 basis points versus the prior quarter. This seasonal dip will be followed by a rebound in activity during the second quarter, with further expansion into the second half driven primarily by international markets. Finally, before I hand over to Stephane, let me briefly touch on Venezuela.

SLB N.V. is the only international service company actively operating in Venezuela today, as we are delivering a diverse set of services for NRC under their license. With nearly a century of experience in Venezuela, we have maintained active facilities, equipment, and local personnel on the ground. Historically, we have been linear in the country and remain confident that with appropriate licensing, safety parameters, and compliance measures in place, we can rapidly ramp up activities in support of the oil and gas industry in Venezuela. We are excited and we are already receiving a lot of inquiries from our customers. I will now turn the call over to Stephane to discuss our financial results in more detail.

Stephane Biguet: Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, was $0.78. This represents an increase of $0.09 sequentially and a decrease of $0.14 compared to the fourth quarter of last year. We recorded $0.23 of net charges during the fourth quarter. This includes an $0.11 goodwill impairment charge relating to our carbon capture business, $0.08 of merger and integration charges, $0.07 related to workforce reductions, and $0.03 of other charges. Offsetting these charges is a $0.06 credit relating to the reversal of a valuation allowance that was recorded against certain deferred tax assets. Overall, our fourth quarter revenue of $9.7 billion increased $817 million or 9% sequentially.

Approximately $300 million of this increase is due to an additional month of activity from the acquired ChampionX businesses. Excluding the impact of this transaction, SLB N.V.'s fourth quarter global revenue increased 6% sequentially. The sequential revenue step-up was higher than expected and was driven by strong year-end digital sales, significant backlog deliveries, and project milestones in production systems, as well as higher reservoir performance activity in international markets. Fourth quarter adjusted EBITDA margin of 23.9% increased 83 basis points sequentially, primarily driven by very strong digital performance. Margin growth during the quarter was, however, constrained by a loss in the carbon capture project that negatively impacted margins by approximately 50 basis points.

Let me now go through the fourth quarter results for each division. Fourth quarter digital revenue of $825 million increased 25% sequentially, while pretax operating margin expanded 557 basis points to 34%. These results were driven by strong year-end sales in digital exploration and increased revenue in both digital operations and platforms and applications. Notably, for the full year, digital revenue of $2.7 billion grew 9%. The combination of this growth rate and the full-year EBITDA margin of 35% well exceeded the widely recognized rule of 40. In addition, digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%. Finally, trailing twelve months net recurring revenue was 103% at the end of the fourth quarter.

Reservoir performance revenue of $1.7 billion increased 4% sequentially, driven by strong international activity, particularly in Saudi Arabia, East Asia, Qatar, and Indonesia. Pretax operating margin of 19.6% increased 105 basis points, largely due to a favorable activity mix in The Middle East. Well construction revenue of $2.9 billion decreased 1% sequentially, primarily driven by declines in The Middle East and Asia, while pretax operating margin of 18.7% was slightly down. Production systems revenue of $4.1 billion increased 17% sequentially, reflecting a full quarter of activity from ChampionX. Excluding the impact of this acquisition, production systems revenue increased 11%, driven by strong sales of completions and artificial lift, as well as project milestones in process technologies, subsea, and valves.

Pretax operating margin of 16% increased 20 basis points due to improved profitability in completions and production chemicals. Now turning to liquidity. During the fourth quarter, we generated $3 billion of cash flow from operations and $2.3 billion of free cash flow. This strong performance was due to the unwinding of working capital, significant customer collections, and reduced inventory driven by year-end product deliveries. For the full year, we generated free cash flow of $4.1 billion, marking the third year in a row with free cash flow at or above $4 billion. As a result, net debt reduced by $1.8 billion during the quarter to end the year at $7.4 billion.

Capital investments, including CapEx and investments in APS projects and exploration data, were $716 million in the fourth quarter and $2.4 billion for the full year. For the full year, we returned a total of $4 billion to our shareholders, with approximately $2.4 billion in stock repurchases and $1.6 billion in dividends. Looking ahead, let me now provide some additional color on our outlook for 2026, building on the details Olivier shared earlier. We expect revenue to benefit from a full year of ChampionX, which will result in incremental revenue of approximately $1.8 billion in 2026.

This increase will be partially offset by the effects of the 2025 divestitures of our interest in the Palliser APS project in Canada and of our RIG business in The Middle East. These two businesses accounted for approximately $350 million in combined revenue in 2025. As Olivier mentioned, adjusted EBITDA margin for 2026 will be relatively consistent with 2025 levels, with differing dynamics by division. Digital margin will increase slightly year on year on continued top-line growth. Production systems margin will increase, primarily driven by synergies from the ChampionX acquisition, where we still expect to achieve approximately half of the $400 million of total synergies by 2026, $30 million of which were achieved in 2025.

About 75% of the synergies will benefit production systems, with the remaining portion benefiting well construction and reservoir performance. The positive effect of ChampionX synergies on production systems margins will be partially offset by unfavorable technology mix within the division. In reservoir performance and well construction, despite activity levels stabilizing, margins will be down year on year due to activity mix and pricing headwinds in select markets. From a below-the-line perspective, corporate costs will increase year on year, driven by an incremental $70 million of intangible asset amortization expense as a result of a full year of ChampionX. Additionally, we expect our effective tax rate to be approximately 20%, representing a slight increase from 2025.

While we expect overall activity to stabilize and increase from today's level in certain key international markets, we will remain disciplined in our capital allocation. In this regard, we expect our total capital investments to be approximately $2.5 billion in 2026. This should lead to another year of strong free cash flow generation. As a result, today, we announced a 3.5% dividend increase, and we expect to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. We are currently targeting to buy back the same $2.4 billion that we repurchased in 2025.

However, this amount could increase as the year unfolds, depending on our free cash flow generation progress and our visibility on the business outlook. I will now turn the conference call back to Olivier.

Olivier Le Peuch: Thank you, Stephane. I believe, Megan, that we are ready for the Q&A session.

Operator: We will now begin the Q&A session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. Your first question comes from the line of Steve Richardson from Evercore ISI. Your line is open.

Steve Richardson: Hi. Good morning. Good morning, Olivier and Stephane.

Olivier Le Peuch: Good morning, Steve.

Steve Richardson: Hi. I was wondering if we could talk a little bit about CapEx. I understand and appreciate you've given some outlook here on 2026. There seems to be something with investors of an old rule of thumb about your CapEx leading revenue expectations. And I thought it'd be helpful if you could maybe give us some context around the trend line of CapEx, but also how is the capital intensity of your forward business different than perhaps it was in the past?

Stephane Biguet: Thanks for the question. Yes. So we increased CapEx slightly compared to last year to a total with APS and exploration to $2.5 billion, as I just said. We think this is what we need to operate this year and to capture new opportunities as activity recovers gradually throughout the year, particularly in international markets. So, yes, compared to the past, our capital efficiency has improved quite a bit in the last few years. We can do more with less, basically, but clearly, we will not miss any opportunity. In fact, if activity recovers faster, we want to be ready for the ramp-up. We'll bring more equipment and tools as needed.

By division, clearly, reservoir performance is probably the highest capital intensity, followed by well construction and production systems, especially with the addition of ChampionX, which has quite lower capital intensity.

Steve Richardson: Thank you. And on The Middle East, your comments are appreciated about the other regions picking up the slack in Saudi and your view on the full year improving. I was wondering if you could talk about what we're seeing as the IOCs are seeing a lot more opportunity across North Africa and The Middle East. And I was wondering if you could talk a little bit about your mix or your expectation of your customer mix as you go into '26 and how much of that is driving some of this optimism on improvement versus some of your traditional customers on the national oil companies?

Olivier Le Peuch: No. At first, I would comment to reinforce the trust and the confidence we have with our national company to continue to execute their capital program. And I think indeed, we are foreseeing and already witnessing the rebound of the Saudi rig and drilling and workover activity, which is very probable. And I think, as I said, coming from a dip in 2025, rebounding in 2026 to, as we expect, to the level of entry of 2025, which is a V-shaped recovery. I think that will set the year very well and also the 2027 as a much stronger year going forward.

So beyond that, obviously, the region still continues momentum, high momentum in Kuwait, in UAE, and has been witnessing significant growth. But coming to international, indeed, India, I think that parking is confirmed this week and next week. And Libya is attracting a lot of investment, and we are in the early benefit of this, and we see Libya as a high product of growth. We have seen it in the last couple of years, and we foresee this will continue well into 2026-2027, driven by investment coming back in-country from international companies. Algeria has been successful in the licensing round, and I think it's exploring commercial in the South and also getting additional independents coming back into the country.

So we see a rebound in Asia that will strengthen in 2027. Egypt, in the region, I think, is back in offshore. Additional rigs will mobilize in deepwater offshore Egypt as well as in Egypt due to the support that the government has provided and again, the return of investment into Egypt. Finally, Iraq, I think, has been our growth last year and will continue to be significant going forward. So Iraq is where some international companies are investing, and I think we are associated with this directly. So we have a strong exposure in all of these markets where international companies are joining.

And finally, I would say that the unconventional UAE is a place where newcomers are appraising the resource and ready to scale the investments from appraisal in '26 to 2027 development and going forward. So a combination of oil attractiveness in the region, Iraq, particularly for international companies, and gas in the region, Qatar, obviously, steady, but also the upcoming UAE and unconventional and deepwater offshore is met. So that's the template, and I've said the favorable outlook from NOC and international companies in The Middle East.

Steve Richardson: Thanks so much.

Olivier Le Peuch: Thank you. Thank you.

Operator: Your next question comes from the line of James West with Melius Research. Your line is open.

James West: Thanks. Good morning, Olivier and Stephane.

Olivier Le Peuch: Good morning, James.

James West: So, Olivier, curious. So with the new headwinds bottoming here, you know, Saudi, Mexico, some of the white space in deepwater, Sub-Saharan Africa, and everything looking kind of up into the right. How are you thinking about the exit rate for '26 versus the exit rate we saw in '25? Certainly, it's gonna be higher, but what kind of if you give us some observations or thoughts on the magnitude of how this upcycle will begin?

Olivier Le Peuch: I think first, I think we have guided into our prepared remarks that we expect 2026 to be higher than 2025. And this would be led by the international rebound. So only as we gathered the first quarter as a marked decline compared to last year Q4, we will see gradual recovery. Again, driven mostly by international markets throughout the year. That is setting the scene, I will say, for 2027 to be favorable. Driven by first and foremost continuous regain momentum in The Middle East with the addition of the rebound activity in Saudi and a combination of what the factors I mentioned before. Asia, I think, has been on a momentum. Latin America, as well.

I think a bit the offshore base in Latin America or a bit in Argentina. We are experiencing a slight rebound of Mexico driven by deepwater activity in Mexico coming back. And we will see, we expect that gradually and into 2027, the activity in Sub-Saharan deepwater will resume to higher levels. This will be higher levels. The combination of FID in Namibia, in Mozambique, in Angola, and the early pickup of activity in Nigeria are already showing signs of a very promising 2027-2028 cycle. So directionally, international gradually recovering. And exit rates at the end of this year to be driven by international addition so that it will result in Q4 of this year being higher than last year.

James West: Okay. That's helpful. Thank you. Thanks, Olivier. And then maybe a follow-up on the digital side of the business. Obviously, strong results in the fourth quarter, but my sense is we're still fairly underpenetrated on Lumi and Delphi and the cloud platforms, and the AI platform that you have. I, you know, my numbers may be a little bit dated, but I think, you know, a couple, you know, 300 or so customers out of your 1,500 or so customers were on the cloud as of maybe a year ago. Could you give us a sense of kind of where that stands now or where you see that heading? I'm assuming everybody, you know, eventually goes there.

Most everybody goes there. But just the magnitude of what that could mean for your digital business. I'm assuming it's pretty accretive.

Olivier Le Peuch: No. Long term, I think, I think we believe that the potential of digital to transform our industry from the asset team productivity to the efficiency of these operations between drilling and producing assets is very significant. I think we are just touching the early innings of that transformation. And we're using multiple approaches towards this first and foremost strategy built on a platform approach to it. And I think you mentioned the combination of Delphi, Lumi, and Tela.

And we have been indeed gradually gaining a lot of traction in customers to recognize that a platform is the approach to have the most benefit to combine the geosounds, the production, the drilling, the operation workflow improvement that everybody is looking for. But if we look at the momentum that we are benefiting from today, momentum comes from digital operations, that I think you have seen is getting significant benefit. Because it's a way I think the river hits the ground and where the customers are seeing and materializing the savings in the training performance, in production and prediction, in production optimization, we have anything from that.

But, obviously, we are pursuing adoption of data and AI, Lumi, which we launched four or five quarters ago, is already having more than 50 customers of an adoption. Tela, that we launched less than three months ago, has already more than a dozen customers that are engaging and working with us to create this foundation model that can transform their geosounds workflow or that can automatically detect and optimize autonomously some producing assets as you have seen with ADNOC announcement that we have done. So, well, we are pleased with progress. Surprised with the tech digital portion, believe this momentum continues.

And they're very confident that the secular trend that the industry is continuing to witness will benefit our platform approach and that Lumi, Delphi, and Tela will be at the core of this industry transformation going forward.

James West: Thanks, Olivier.

Olivier Le Peuch: Thank you.

Operator: Thank you. Your next question will go to the line of Arun Jayaram with JPMorgan. Your line is open.

Arun Jayaram: Yeah. Good morning, Olivier. I was wondering if you could frame your thoughts on the near-term and longer-term opportunity for SLB N.V. in Venezuela. You mentioned you're the only international service company now actively operating. But talk to us about what type of product lines could benefit if we do get a revitalization of the oil industry in Venezuela?

Olivier Le Peuch: Obviously, we have to preface this with the right conditions, including licensing, including payments, and operating licenses will have to be put in place. But assuming that the conditions are set for investment to resume and to accelerate, hopefully, from the customer that we are serving today and from new customers reentering or entering the country. We have historically been the largest supplier, the largest partner of the national company, the largest supplier in sales technology in the country. Historically, we have had about ten years ago, more than 3,000 people, and we were recording visibly more than $1 billion in revenue at that time. So we have the track record in integration.

We have a unique subsurface digital leading all that we had at that time that we can resume, and we have today a significant set of assets that are ready to be deployed across the drilling services, across production with no less than 10 production sets across rig operation with rigs that we are ready to mobilize. And I think across intervention, across drilling, for infill drilling, or production optimization, we believe to have a capacity in-country and we believe that we have access to the village and nationals, about 80 of them already in-country. We have more than 1,000 Venezuelan country employees in the company. And some of them will be welcoming to work back in Venezuela.

We have almost 2,000 alumni that I think we have kept in touch with that will be also ready to be joining us as we move forward. So as I said, long term, under the right conditions, we can be the leading partner for customers there, and I think I've quoted the number where we were before. And I think the future will tell us when and as this can accelerate. But we are ready. And we're already seeing a lot of incoming calls, as I would say, to explore options going forward.

Arun Jayaram: Great. That's helpful. Olivier, my follow-up is wondering if you could talk a little bit about your data center infrastructure business. You mentioned that you expect to reach a $1 billion run rate in revenue, if I heard you correctly, by year-end? Can you talk a little bit about the solutions you're providing today and maybe how you're thinking about organic and even inorganic opportunities to grow that business over time?

Olivier Le Peuch: Yeah. I think and you heard me correctly. I think this is amazing what we have put together in less than eighteen months. I think the rate of growth, the customer engagement that we are getting, the partnerships we're getting with hyperscalers, I think, is amazing. And yes, we put together a setup that is focused on the modular manufacturing capability and co-engineering of data center solutions. From several and cooling solutions. And we are aiming at increasing not only our scope but also our footprint as we have announced last quarter. Doubling our capacity to respond to the pipeline and to respond to the backlog we have.

And we continue to be expanding both in terms of scope, in terms of around this manufacturing design capability for modular data center solutions. We will be this year going and going internationally. We'll be this year adding new customers to our portfolio and preparing ourselves to go in throughout the year in 2027. $1 billion is their own rate, but it will be significant to above this in 2027. And we believe that we see growth today, rest of the decade internationally. And indeed, as we explore and respond to the request from our customers who are looking for integrators in this space. We will look for complementing our current capability that we have built organically.

And to look at what could help complement this and accelerate market penetration. And make us a fulfilled partner for customers going forward. Technology throughout the life cycle of the data center for construction and operation.

Arun Jayaram: Great. Thanks.

Operator: Thank you. Your next question comes from the line of David Anderson with Barclays. Your line is open.

David Anderson: Great. Thank you. Good morning, Olivier. You know, if we compare SLB N.V. today versus ten years ago, in addition to digital, I think the biggest shift is now the emphasis on production recovery. Was wondering if you could talk a little bit more specifically about the growth opportunity in the next few years as we think about OneSubsea, ChampionX, artificial lift. If I think about OneSubsea, I'm thinking about backlog conversion accelerating. You know, in Guyana, Venezuela, potentially Venezuela could be growth engines, chemicals, and then artificial lift in The Middle East. Could you sort of frame this growth opportunity for us over the next few years on this side of your business?

Olivier Le Peuch: No. Absolutely, Dave. I think production recovery, as we call it, is a new chapter for the company, something that we have strategically invested in because we believe that first, it is a market that has significant opportunity for value creation through technology, through integration, through digital, and we believe that we needed to own and have access to a broader portfolio, hence, the access to the ChampionX chemical, OpEx, and full lift technology and the digital platform addition that put us very well placed into that market. So now, the customer response is very positive.

And indeed, I think as you see, look at the priority of our customers today into a challenging commodity pricing environment, it's all about getting more from the asset that they have on production. And hence, the return of the higher barrier for lower cost is a priority. So I am getting a lot of intake into our lift solution, into our digital production, as you have heard, and indeed, trying to realize and realizing today the benefit of chemistry. Chemistry for not only assurance, production assurance, chemistry for but also chemistry for reservoir performance or recovery. So we believe that the integrated capability that we have built together will give us a positive trade solution for the market.

End-to-end solution that will help to improve the performance of existing producing assets. We'll have to transform existing assets into a solution for eco recovery solution for team and we'll have the cost to bring digital solutions. So, yes, lift solutions in the metro basin or into the most producing oil basin in the world, including The Middle East. Yes. Subsea as a beneficiary for the long-term deepwater, but also the boosting processing capability we have in subsea, that are quite unique. And contribute to this recovery production, gain, and goal we have. So, yes, it is a new story for us. It's a new chapter. We're excited.

Customer feedback is very strong because they believe that they need somebody that has the subsurface, has the technology, and has the full integrated portfolio to respond to the transformation of operation recovery landscape as we have contributed and that the industry transformed the well construction or exploration historically.

David Anderson: That makes a lot of sense. Shifting gears a little bit to another area of potential growth in geothermal. You've been dabbling there for a number of years. But now you, as you noted in the release here, you're working with Ormat on a pilot project, I believe, later this year in enhanced geothermal. It looks a lot of this. When we look at geothermal, a lot of this sounds a lot like shale in the early days. We know the resources there. But it's a matter of process and technique to solve for the economics. Do you agree with that conceptually?

And where is your confidence that this can be scaled up to create, say, hundred-plus megawatt geothermal plants in the next few years?

Olivier Le Peuch: Let me know. Absolutely. I think, Dave, let me first step back and explain the reason why we have partnered with Ormat and the potential we've seen in this partnership first. Is to put together the two leading companies in their field. We are subsurface leaders in geothermal, being able to characterize the geothermal source and then develop the wells and develop the solution to produce the heat and the hot water from those wells, and Ormat is leaders into building geothermal power plants and understanding the full life cycle. Putting this together and providing industry for one integrated offering, I think, was very well received by the industry.

And will help accelerate providing conventional geothermal bridge power or base power for some of the data centers in the future. So that's clearly one of the first aspects. The second, obviously, we have put this together because we believe that we want to together optimize, explore, and optimize through the development of an asset. Or two assets in the future in a recent near future. Into the unconventional geothermal. And, yes, we believe this is a field that has significant potential, but we want to do it right. We want to do science. We want to do technology. We want to do digital modeling.

Of the process so that we get it right, and we understand how to scale it economically. How to make it viable, how to make it safe, and then how to afford together to the market, in the near future. So that's the ambition. So we have done this for a reason. And I think we will be developing this asset. It would be experimenting with these assets, appraising. And then getting ready for with technology of digital and with joint offering. To offer this at scale to the market in The US and beyond.

David Anderson: Very exciting. Thank you.

Olivier Le Peuch: Thank you. Thank you.

Operator: Your next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Neil Mehta: Yes. Thank you so much, Olivier, and team. I guess the first question is more of a macro question, Olivier. You have a unique perspective on this big debate that's in the market right now about how much OPEC spare capacity really lives there in markets like The Middle East and, you know, of course, recognizing that there's probably limitations about what you could say. Your perspective on that question, I think, would be helpful for us. As we think about the back end of the oil curve.

Olivier Le Peuch: No, I think you have been reading what I'm reading, and I think I don't want to read anymore. But I think OPEC plus has been unwinding 2.2 million barrels. And I think when you fast forward in a year from now when the imbalance that still exists today will start to subside and then the market will balance itself. I don't think there will be much spare capacity available. A sign of which you see by the reinvestment into oil capacity sustenance investment that is happening across The Middle East, and all intervention and interventional activity in which we have a strong exposure is benefiting from this.

So, yes, I don't think you have some of the OPEC members beyond The Middle East that are not necessarily having an easy path towards sustaining their existing production. So I think it bodes very well to focus on production recovery, which is focusing on providing technology, the integrated capability to sustain production, enhance recovery. And I think that's where we will see the adoption of this. But I don't think there is significant spare beyond what has been released back to the market. Hence, the market will tighten in the balance into '27 and beyond. Hence, we set the condition for a better outlook as an investment backdrop for the industry from '27 and beyond.

Neil Mehta: Yeah. That makes sense. And then another market I would love to get your perspective on is Mexico. Olivier, this is probably the most constructive I've heard you on Mexico in a little bit, but we're in a bottoming phase and even a cash recovery phase. Perspective on that market and how it should evolve from here? As we think about SLB N.V.

Olivier Le Peuch: Yeah. The market that we say has normalized from a market that has dropped significantly and has had a need for getting the confidence of the whole industry to reinvest. I think it has normalized in the last few months. I think it's we anticipate it to be steady from the land activity for the foreseeable short to midterm, and we expect the conditions are gradually in place getting in place for investment going forward. In 2020, however, where we see the upside is in offshore activity in Mexico where the deepwater asset that we are developing with that is being developed by the which side will give us an upside.

Whereas the activity in land now will make the assumption it is steady. But we've got potential to start to strengthen as moving to 2027.

Neil Mehta: Thank you, sir.

Operator: Thank you. Your next question comes from the line of Mark Bianchi with TD Cowen. Your line is open.

Mark Bianchi: Hey. Thank you. Good morning. I wanted to ask on Good morning, Bob. So we've got these activity increases in your outlook for '26 for certain international markets. Earlier, I think a few months ago, there was some discussion of some pricing potential weakness. Can you talk about what that looks like today and what your expectation is embedded in the outlook here?

Olivier Le Peuch: Yeah. I think first, first to comment on that, I think the industry has been under pricing pressure. In the last couple of years starting with North America, and I don't see a change there. I think although we believe in North America, we are shifted to the mix of the portfolio we have and exposure where data center and digital and our exposure in deepwater and Gulf of America is proportionally bigger and also the OpEx exposure where ChampionX is a bit of a shield towards some of the pricing pressure in North America internationally.

The model has been, and I keep repeating every time I get to comment on this, has remained highly competitive for large tenders in international markets. And the market has been keeping pressure considering that the market has been declining. The last eighteen months or twelve months in the international market. And supply share pricing pressure has been sustained and, in some critical markets. And we have been responding to this pressure when we felt it was the appropriate thing to do to keep us in the market, but at the same time, I think we are able to maintain our margin steady in 2026 compared to 2025. Building on the ChampionX synergy, on the digital growth margin accretive business.

And therefore, we are going to continue to use technology performance as a differential to protect where we can margin against the pricing pressure.

Mark Bianchi: Okay. Thank you for that. And the other question I had was related to the offshore outlook. So you've talked about an expectation for improvement in offshore. And I think if we go back a year or two, there was an expectation for offshore improvement that didn't really materialize. So what are you seeing now that you think is different from that prior period and gives you the confidence to make those comments?

Olivier Le Peuch: Well, the comments I'm making is that I believe that the FID and the booking will improve in 2026. Setting the right setup and context for 2027, 2028 offshore cycle rebound. Whether this is material in 2026, yes, in certain markets, in East Asia, the activity of Indonesia, the market will strengthen in deepwater, and I think this reflects into this year. In South Africa, this is more a trend of FID of projects from Namibia to Angola and Mozambique that will set the context for a marked rebound going forward, and these FIDs are happening as we speak. Being negotiated and being pending.

And in the Americas, I think the continuous momentum in Brazil, in Guyana or Suriname, and I think I have to stay with the metro basin, Gulf of America metro basin of the North Sea remaining steady somehow. Although with a slight decline in the North Sea. So we believe that the FID economics are favorable. And the pipeline of FID across Africa and Asia are set to create a rebound of activity going forward from as we turn into 2027.

Mark Bianchi: Thank you very much.

Olivier Le Peuch: Thank you.

Operator: Your last question comes from the line of Scott Gruber with Citigroup. Your line is open.

Scott Gruber: Yes. Good morning. So I want to come back to the data center solutions business. Olivier, you mentioned expanding the business abroad. So does the billion-dollar target capture any of that international growth opportunity? Or would that be future upside? And how quickly could this materialize? And ultimately, you know, as you leverage your global relationships, you know, could the international opportunity become even larger than your US business?

Olivier Le Peuch: Difficult to say whether it could become larger. But easy to tell you that it will grow. And this year will be the first step into establishing ourselves in Asia. And to provide this modular manufacturing solution to our customers there. Also, we initiate partnerships to design a next-generation data center in one country in the Asia region. And then we expect to also look at our relationships to embed and go further, including The Middle East in the near future. So these are the places where we have ambition to leverage our hyperscale relationships and modular manufacturing capability.

The ability to source locally, the ability to manufacture everywhere, I think it's something unique that not so many companies can do and scale. And replicate what we have done in the last eighteen months. So that's what we look forward to and that's where I about the international market. But the US is still the hot market, and the US is where we believe we have the most exciting pipeline in '26 and '27 coming our way. I will not miss that market.

Scott Gruber: Oh, got it. Appreciate that color. And I want to come back to the question Steven asked at the beginning on CapEx. So your $2.5 billion of CapEx this year will support the second-half growth rate that you'll achieve, which will be led by digital and data center solutions. Some contribution from the core. But overall, the capital intensity of the portfolio is improving. So my question is, can you sustain similar growth rates for a couple of years into the future at a CapEx level that's still broadly around $2.5 billion given those kind of less capital-intensive drivers of growth? Or do you think CapEx would need to creep a bit higher?

Stephane Biguet: Look, as I said before, we'll do what it takes to not miss any opportunity. But again, we have really improved our capital efficiency over the last five to six years, so we can really operate with less. But if growth really comes at high growth rates, we will have to increase beyond the $2.5 billion for sure. But as a percentage of revenue, that will still remain pretty low compared to what we were doing before and still quite in the low range of in the low end of the range we had guided before of 5% to 7% of revenue. That's excluding APS and exploration data.

So, yes, we'll increase as necessary, but will go with increased cash flow as well. And some of the growth that we will be seeing is production and recovery as we elaborated on before as well as digital. And that doesn't require as much CapEx as the well-centric businesses. So this is how we can maneuver within that range, basically.

Scott Gruber: So it's without some acceleration in the kind of core business, you would expect the CapEx to sales ratio to continue to improve over the next couple of years? Is that fair?

Stephane Biguet: It will be more or less a percentage of revenue, which will stay within that 5% to 7% we've guided before, but it's more below. As you have seen, we've been closer to 5% to 7%. So we will remain at the low end of that range in the future.

Scott Gruber: Okay. I appreciate the call. Thank you.

Stephane Biguet: Thank you.

Olivier Le Peuch: Thank you, Scott. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our strategy focused on production recovery, including ChampionX, digital, and data center solutions present new pathways for growth supporting a full-year revenue and margin guidance. Second, I'm confident that we continue to generate strong cash flow enabling us to return more than $4 billion of shareholder return in 2026. Third, in the longer term, the outlook is becoming more positive for SLB N.V. The recovery of Saudi Arabia, the positive pipeline in subsea, growth dynamics in both digital and data centers, are all catalysts. And Venezuela represents an upside.

In summary, the current cycle is recovering towards the strength of SLB N.V. With this, I will conclude today's call. Thank you all for joining.

Operator: This concludes today's conference call. You may now disconnect.

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