Q4 2024 Earnings Summary
- SLB's strategic investments in production recovery technologies are yielding visible growth, with production systems expected to have positive growth driven by production recovery. This area is anticipated to outpace growth in exploration and development in 2025 and beyond, providing a strong long-term earnings potential. SLB is very positive that this will become a long-term earnings potential, becoming a significant part of their mix.
- Despite a flat revenue outlook for 2025, SLB expects to maintain or exceed 2024 adjusted EBITDA levels due to positive growth in production systems, reservoir performance, digital integration, and effective cost management. This demonstrates the company's resilience in challenging market conditions and ability to deliver strong financial performance.
- SLB is well-positioned to benefit from future growth opportunities in the Middle East and deepwater projects. The Middle East remains a bright spot with commitments to expand oil and gas capacity, offsetting declines elsewhere. Additionally, deepwater projects are expected to ramp up in 2026 and 2027, with multiple FIDs (Final Investment Decisions) pending in regions like Suriname, Namibia, and Southeast China, positioning SLB for future growth.
- SLB anticipates flat revenue in 2025 on a stand-alone basis, indicating limited growth prospects in the near term.
- Declines in certain regions, such as Mexico, where "activity will decline and has already declined", may offset growth in other regions and impact overall performance.
- The well construction segment is expected to decline in 2025, which may offset growth in other segments and potentially affect profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +3% | Driven by continued international growth, notably in the Middle East & Asia, and higher demand for production systems—although at a more moderate pace than in the previous year, when revenue rose by 10–11% YoY. |
SG&A | -16% | Reflects streamlined operations, lower overhead costs, and ongoing cost-management initiatives, bringing it down from higher levels in previous periods. |
Capital Expenditures | -81% | Markedly lower due to stricter capital discipline, significant reductions in activity requiring heavy infrastructure investments compared to earlier quarters, and a shift toward digital offerings, which carry lower CapEx requirements. |
Dividend Payments | -83% | Stem from timing differences in declared dividends and higher payouts in the prior period. In the previous year, SLB significantly increased its dividend rate, which elevated the base for comparison. |
Share Repurchases | -61% | Reflect a more balanced allocation of capital compared to the prior year, when SLB accelerated buybacks. While the company remains committed to returning cash to shareholders, it has also prioritized investments and debt reduction in tandem. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Returns to shareholders | FY 2025 | $4B | $4B | no change |
Revenue | FY 2025 | no prior guidance | remain flat year-over-year | no prior guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | at or above 2024 levels | no prior guidance |
Capital Investments | FY 2025 | no prior guidance | $2.3 billion | no prior guidance |
Digital Revenue Growth | FY 2025 | no prior guidance | high-teens growth | no prior guidance |
Production Systems Revenue | FY 2025 | no prior guidance | modest growth | no prior guidance |
Reservoir Performance Revenue | FY 2025 | no prior guidance | modest growth | no prior guidance |
Well Construction Revenue | FY 2025 | no prior guidance | year-over-year decline | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Adjusted EBITDA Margin | FY 2024 | "Expected to be at or above 25%" | Approx. 23% (based on Q1–Q4 2024 revenueAnd D&ACalculations). | Missed |
Capital Investments | FY 2024 | "Expected to be approximately $2.6 billion" | ~$1.52 billion (sum of Q1 2024: $399M, Q2 2024: $463M, Q3 2024: $46M, Q4 2024: $609M). | Missed |
Returns to Shareholders | FY 2024 | "SLB expects to exceed its previous commitment of $3 billion" | ~$3.27 billion (Share repurchases: Q1 $270M, Q2 $465M, Q3 $501M, Q4 $501M; Dividends: Q1 $357M, Q2 $394M, Q3 $393M, Q4 $389M). | Surpassed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Offshore deepwater | Previously strong exploration and multi-year FID pipelines in Q3, Q2, Q1, indicating long-cycle growth. | Muted in 2025 due to "white space," with improvement expected into 2026. | Near-term softness but still a core growth driver. |
Middle East expansions | Consistently highlighted as resilient and a key growth region in Q3, Q2, Q1. | Ongoing oil & gas capacity growth in UAE, Iraq, Kuwait, albeit with some localized declines. | Remains positive despite slight regional pullbacks in Saudi Arabia and Egypt. |
Digital & Integration | Saw steady growth each quarter, improved margins from Q1’s 26.6% to Q3’s 35.5%. | 6% sequential revenue increase, margin reaching 38.3%. | Continued strong momentum and margin expansion. |
Margin & EBITDA | Emphasis each quarter on sustained margin expansion, with targets at or above 25% for 2024. | Full-year adjusted EBITDA margin up 52 bps year-on-year, at 25.7% in Q4. | Ongoing focus on margin improvement and cost efficiency. |
APS performance | Q3 mentions Palliser APS sale, Q2 noted flat revenue, Q1 saw negative impact from lower gas prices. | No specific performance details mentioned beyond total capital investments. | Not addressed in current call, previously mixed performance. |
US onshore softness | Repeated softness in earlier quarters due to low gas prices and capital discipline. | Growth in Gulf of Mexico partially offset by a moderation in upstream investment onshore. | Continuing caution but less emphasized vs. earlier quarters. |
Production recovery | Part of Production Systems growth in Q3, integration with chemical solutions in Q2, synergy with ChampionX in Q1. | Growing importance, leveraging tech and digital integration for better recovery factors. | Increasingly bullish as a long-term earnings driver. |
Mexico region declines | Not specifically flagged in Q3, Q2, Q1. | Explicitly cited declines in activity, with offsetting growth in Brazil and Argentina. | New explicit mention of Mexico softness in Q4. |
Flat 2025 revenue | Initially mentioned in Q3 as limited North America growth and cautious international pickup. | Flat revenue outlook but adjusted EBITDA expected to stay at or above 2024 levels. | Reiterated flat top-line for 2025 with stable EBITDA. |
Well construction | Q3 also saw a 3% decline, while Q2 and Q1 were more stable or growing. | 1% sequential decline in revenue, margin down 70 bps due to lower Saudi & Mexico activity. | Continued softness after prior growth. |
Digital adoption | Consistent acceleration each quarter, driven by AI workflows and cloud platforms. | Customers embracing cloud, AI, and digital operations, 20% YoY growth in digital. | Sustained adoption with expanded offerings like Lumi. |
Margin compression | Discussed in Q3 and Q1 as manageable due to technology leadership, while not specifically flagged in Q2. | Addressed concerns via cost optimization, segment-based margin gains & pricing discipline. | Actively mitigated through efficiency and pricing. |
ChampionX synergy | Reaffirmed synergy targets in Q3, Q2 integration plan, Q1 cited $400M synergy potential. | Regulatory approvals advancing, integration expected to strengthen production recovery portfolio. | Positive with long-term upside in production and chemicals. |
Cost management | Emphasized in every quarter, with tactical adjustments in operations, G&A streamlining, and ERP-driven efficiencies. | Ongoing cost optimization program, continuous resource alignment, and capital discipline. | Central pillar for margin expansion and shareholder returns. |
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2025 Revenue Outlook
Q: Is 2025 revenue expected to be flat, with adjusted EBITDA at or above 2024 levels?
A: Management confirmed they expect flat revenue for 2025 on a stand-alone basis, with adjusted EBITDA at or above 2024 levels, excluding the impact of the ChampionX acquisition. -
Share Repurchase Program
Q: How will the accelerated share repurchase program affect returns to shareholders?
A: The company paid $2.3 billion upfront to accelerate share repurchases, removing approximately 48 million shares from the outstanding count. This is part of returning at least $4 billion to shareholders in 2025, with potential to exceed this amount depending on free cash flow and M&A opportunities. -
Production Systems Growth
Q: What is the growth outlook for the production-driven business, including ChampionX?
A: Management expects positive growth in production systems, driven by production recovery. They anticipate growth to be high single-digit to low double-digit, outpacing exploration and development in 2025. Investments in technology, portfolio expansion, and the integration of ChampionX will contribute to this growth. -
International Activity Outlook
Q: Is international activity expected to improve sequentially or be second-half weighted?
A: A typical pattern is expected, with a low first quarter, followed by a rebound. Activity will be higher in H2, with potential upside from deepwater projects emerging later in the year. -
Russia Operations and Sanctions
Q: What is the impact of sanctions on Russia operations and revenue contribution?
A: Revenue from Russia has declined to 4% of global revenue in 2024, down from 5% the previous year. The company has curtailed activities and believes their measures align with new U.S. sanctions. -
Low Carbon Solutions Growth
Q: How is growth in low carbon solutions and new energy segments expected in 2025?
A: New energy activities generated more than $850 million in 2024 and are growing faster than the core business. Significant growth is expected, particularly in carbon capture and sequestration, geothermal, and data center infrastructure solutions. -
Digital Business Outlook
Q: Is there an update on isolating the value of the digital business and its outlook?
A: Management is confident in the digital business's growth, anticipating it to continue growing above and beyond the upstream market spend. They plan to provide more details on performance, margins, and capital in the coming months. Growth will be driven by cloud transitions and AI capabilities. -
Pricing Dynamics
Q: Are there concerns about pricing softening in 2025, affecting margins?
A: Management expects pricing to be resilient, supported by a disciplined market and high international activity levels. They remain constructive, leveraging performance technology and integration capabilities to defend and support pricing. -
Cost Structure Optimization
Q: Is there an opportunity to reduce costs to improve margins?
A: The company has executed cost-out programs that supported margin expansion in 2024. They will continue to monitor and adjust resources, using digital tools to extract efficiencies and enhance margins. -
International Upside Regions
Q: Which regions have the most upside and downside in the international outlook?
A: The Middle East is a bright spot, with ongoing commitments to expand oil capacity and gas production in countries like UAE, Iraq, and Kuwait, offsetting declines in other areas. Deepwater opportunities in Suriname, Namibia, Indonesia, and Southeast China are also expected to contribute to long-term growth.