SCHLUMBERGER LIMITED/NV SEC 10-K Report

Schlumberger Limited/NV (SLB), a global leader in the energy services sector, has released its 2024 10-K report, showcasing a year of robust financial growth and strategic advancements. The report highlights significant revenue increases, strategic acquisitions, and a focus on digital transformation and decarbonization, positioning the company for continued success in the evolving energy landscape.

Financial Highlights

Total Revenue: $36,289 million, reflecting a 10% increase year-on-year driven by strong international growth and the acquisition of the Aker subsea business.

Net Income: $4,579 million, an increase from the previous year, supported by revenue growth and operational efficiencies.

Diluted EPS: $3.11, up from $2.91 in 2023, indicating improved profitability per share.

Income before taxes: $5,672 million, showing a robust performance with a focus on cost optimization and digital integration.

Tax expense: $1,093 million, reflecting the effective tax management strategies in place.

Business Highlights

Revenue Segments: SLB is organized into four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. Each division focuses on specific aspects of the energy value chain, offering tailored solutions to enhance performance and efficiency.

Geographical Performance: SLB operates through a geographical structure of four Basins: Americas Land, Offshore Atlantic, Middle East & North Africa, and Asia. The Middle East & Asia achieved record revenues, with significant growth driven by strong activity in the United Arab Emirates and increased operations in Qatar.

Sales Units: The Production Systems division saw a 24% revenue growth, largely due to the subsea acquisition, with strong international sales across the portfolio, including artificial lift and midstream production systems.

New Product Launches: SLB launched the Lumi™ data and AI platform, enhancing digital capabilities and supporting data-driven decision-making across the energy industry.

New Production Launches: The formation of the OneSubsea joint venture with Aker and Subsea7 aims to drive innovation and efficiency in subsea production, leveraging a comprehensive subsea production and processing technology portfolio.

Future Outlook: SLB anticipates further strengthening its production and recovery capabilities with the completion of the ChampionX acquisition, enhancing resilience against industry cycles and supporting a balanced energy transition.

Strategic Initiatives

SLB has focused on strategic acquisitions and partnerships to enhance its portfolio and capabilities. In 2024, SLB announced the acquisition of ChampionX Corporation, a leader in chemistry solutions and artificial lift systems, in an all-stock transaction. This acquisition is expected to close in the first quarter of 2025 and will strengthen SLB's production and recovery capabilities. Additionally, SLB formed a joint venture with Aker and Subsea7, named OneSubsea, to drive innovation in subsea production. SLB also entered into a joint venture with Aker Carbon Capture ASA to accelerate carbon capture adoption, highlighting its commitment to decarbonization and new energy systems.

SLB has actively managed its capital through share repurchases and dividend increases. In 2024, SLB repurchased $1.7 billion of its common stock and announced a 10% increase in its quarterly dividend. The company also issued $1.5 billion in senior notes to refinance existing debt and support its capital structure. SLB's liquidity position was bolstered by $4.67 billion in cash and short-term investments, along with $5.0 billion in committed credit facilities. The company has also engaged in accelerated share repurchase transactions to repurchase $2.3 billion of its common stock.

Looking ahead, SLB plans to continue its strategic focus on digital transformation, decarbonization, and expanding its new energy portfolio. The anticipated completion of the ChampionX acquisition will further enhance SLB's capabilities in production and recovery. SLB expects to maintain strong cash flows, enabling further dividend increases and share repurchases. The company is also poised to benefit from global economic growth and increased energy demand, supporting its investment outlook in the oil and gas industry for the rest of the decade.

Challenges and Risks

The company faces significant business and operational risks due to its dependency on customer expenditures in the oil and gas sector, which are influenced by fluctuating oil and gas prices. The transition to renewable energy sources could further impact customer spending. Geopolitical instability, particularly in regions where the company operates, poses risks of business disruptions and financial impacts. The ongoing conflict in Ukraine and international sanctions on Russia have already affected operations, with Russia accounting for 4% of worldwide revenue in 2024.

The energy transition presents a challenge, requiring adaptation of technology portfolios and development of low-carbon solutions. Failure to effectively address this transition could harm the company's reputation and financial condition. Cybersecurity threats are a growing concern, with potential impacts on operations and customer trust if digital technologies are compromised.

Legal and regulatory risks include compliance with complex and evolving laws across multiple jurisdictions, including anti-corruption, trade sanctions, and environmental regulations. Climate change-related regulations and initiatives could reduce demand for fossil fuel-related products and services, impacting revenue.

The company anticipates subdued upstream investment growth in the short term due to global oil oversupply, but expects a gradual abatement of the oil supply imbalance. The acquisition of ChampionX is expected to enhance production and recovery capabilities, providing stability against industry cycles.

SLB is exposed to market risks primarily associated with changes in foreign currency exchange rates. A significant portion of expenses is incurred in foreign currencies, and fluctuations in exchange rates can impact financial results. The company uses derivative instruments to manage these risks, but a 10% change in the US dollar could significantly affect the value of forward contracts.

SEC Filing: SCHLUMBERGER LIMITED/NV [ SLB ] - 10-K - Jan. 22, 2025