Margin Expansion in Flat Spending Environment
Q: Can you still expand margins if upstream spending is flat?
A: Yes, we expect further margin expansion in Q4 and into 2025 even with flat upstream spending. " This will come from activity mix, with digital boosting margins, technology mix, performance contracts pushing margins, and continuous cost optimization efforts. "

2025 EBITDA Target Amid Macroeconomic Changes
Q: How does macro outlook affect your $10B EBITDA target for 2025?
A: With the current macro outlook, excluding ChampionX, it's possible the 2021-2025 CAGR may finish in the high teens rather than hitting 20%. " However, we remain laser-focused on margin expansion and have increased EBITDA margins for 15 consecutive quarters. "

Pricing Pressure in Moderating Markets
Q: Are you seeing pricing pressure as growth moderates?
A: While competitive and customer pressure on pricing exists, we believe continuing to deliver value and exceed performance expectations will alleviate such pressures. " The industry is tight on capacity and has strong capital discipline, which helps defend and even improve pricing, thus protecting margins. "

Future Growth in Digital Business
Q: Where will future digital growth come from beyond $3B target?
A: Growth will come from three areas: ongoing cloud transition affecting over 1,000 customers; digital operations in production and drilling with edge applications and autonomous optimization; and new data and AI capabilities like the Lumi platform. " Combining these, digital will continue to be a growing TAM and an engine of accretive growth for revenue and margins. "

Sensitivity of Digital Growth to Upstream Spending
Q: Is digital growth sensitive to upstream spending slowdowns?
A: Digital growth is largely uncorrelated with upstream spending at this point. " The early stage of digital adoption and the expanding TAM, especially with Lumi data and AI, create a long-term growth opportunity regardless of upstream spending trends. "

Free Cash Flow Returned to Shareholders
Q: Will the percentage of free cash flow returned to shareholders increase?
A: We have exceeded our minimum return of 50% of free cash flow to shareholders, reaching about 80% this year. " While it's hard to say if it will reach 100%, returns to shareholders remain a priority, and the percentage will be clearly above our initial guidance. "

Financial Impact of Palliser Sale
Q: How does the Palliser sale impact financials?
A: Palliser generates approximately $500 million in revenue per year with pretax margins in the high 30s%. " The sale removes about $150 million in annual CapEx " , and eliminates future abandonment liabilities of about $280 million discounted, or close to $1 billion undiscounted. " This reduces earnings volatility and capital intensity. "

Integration with ChampionX Progress
Q: Has the ChampionX integration increased synergies optimism?
A: Yes, integration planning is giving us even more confidence in the transaction and synergies. " Although we are not changing the synergy target at this time, we are happy with what we are seeing. "

Offshore Deepwater Projects Driving Growth
Q: Can deepwater drive growth beyond 2025?
A: Yes, despite pressure on short-cycle projects, long-cycle deepwater projects remain untouched. " Total offshore FIDs are expected to reach $100 billion this year and stay at that level or higher for the next 2-3 years. " Cumulative offshore FIDs over 2023-2026 will exceed $500 billion, fueling growth beyond 2025. "

Free Cash Flow Profile and CapEx Next Year
Q: What's the outlook for free cash flow and CapEx into next year?
A: We maintain capital discipline and expect free cash flow in 2025 to be higher than in 2024, especially with the addition of ChampionX. " While it's early to specify CapEx for next year, capital discipline will remain a theme considering the macro environment. " We are comfortable reaffirming our $4 billion returns to shareholders target for next year. "

Capital Intensity of Digital Investments
Q: Does digital growth require significant capital investment?
A: Digital investments are expensed as product development and R&D, not CapEx. " Heavy investments have already been made; ongoing investments are smooth over many years. " Growth in digital doesn't trigger incremental capital intensity. "

Potential Bottlenecks to Digital Growth
Q: What bottlenecks could hinder further digital growth?
A: We don't see major bottlenecks ahead. " We have engaged customers to understand needs, moved to multi-cloud environments, and developed platforms like Lumi to unlock data. " Digital operations led by core divisions are accelerating adoption. "

Key Takeaways from Digital Forum and AI
Q: What were surprising takeaways from the digital forum regarding AI?
A: Customers realized our digital value proposition spans across domains and technology stacks, offering a comprehensive suite. " The emergence of AI is unlocking more value from data-rich industries. " Our Lumi platform complements Delphi, integrating applications and enabling AI across datasets, generating significant interest. "

Lithium DLE Pilot and Growth Opportunity
Q: What's next for your lithium DLE technology?
A: We achieved milestones producing lithium carbonate from our Nevada pilot plant using direct lithium extraction (DLE). " We plan to work with partners to scale the technology, applying it as licensed technology or in partnership to meet large demand in coming years. "

International Pricing Dynamics and Margins
Q: How are current international pricing dynamics affecting margins?
A: Pricing remains positive and constructive. " The industry's capital discipline and lack of spare capacity support pricing. " Performance, technology, and integration capabilities offer opportunities to maintain and support pricing. "

Fourth Quarter Outlook and Gulf Storm Impact
Q: What are the Q4 expectations and Gulf storm impacts?
A: Gulf storms had muted impact on operations; the Gulf of Mexico drove growth in Q3. " For Q4, year-end sales in digital and production systems will boost revenue, while some seasonal budget exhaustion might offset this. " We expect modest sequential growth going forward. "