Offshore basins throughout the world are driving revenue growth for SLB Ltd. amid a slowdown in the North American onshore segment, according to CEO Olivier Le Peuch.
Le Peuch hosted a conference call Friday to discuss the oilfield services giant’s second quarter 2024 earnings.
Overall North America revenue grew by 3% sequentially to $1.64 billion in 2Q. “This was led by the Gulf of Mexico [GOM], where we saw increased drilling and higher digital revenue from sales of exploration data licenses,” Le Peuch told analysts. “However, this sequential growth was partially offset by lower drilling in U.S. land as the market continues to be constrained by weaker gas prices, capital discipline and ongoing market consolidation.”
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NGI’s Henry Hub forward fixed price for August delivery averaged $2.128/MMBtu on Thursday.
On a year/year basis, North America revenue declined 6% on lower drilling and reduced sales of production systems in the GOM.
Globally, meanwhile, “Our core business continued to build on its positive momentum and our digital business accelerated, resulting in our highest quarterly international revenue since 2014,” said Le Peuch. “These results demonstrate SLB’s strong position in key, resilient markets, as we continue to benefit from elevated activity in the Middle East & Asia, particularly in gas, and our clients’ increased investments in deepwater basins, exploration, and digital.”
Le Peuch added that, “the ongoing strength of the offshore markets supported further growth in Europe and Africa, as well as Latin America. This was particularly pronounced in deepwater basins, including Brazil, West Africa and Norway…We also benefited from new projects on land, notably in Argentina and North Africa.”
Le Peuch said that if he tried to name all the deepwater basins with new projects in the pipeline, “it would be a very long list. What characterizes this cycle, it is very broad in terms of regions of the world and deepwater basins that are being either exploited, that are being explored, and that are being redeveloped.” He explained that, “deepwater assets for oil or gas are typically geologically very strong assets and advantaged assets, and so they receive the utmost focus and priority…”
Natural gas-focused projects awarded to SLB during 2Q included “a long-term contract for unconventional gas directional drilling services and drilling bits” from Saudi Arabian Oil Co., better known as Aramco.
The project is “in support of Aramco’s strategic goal to increase gas production by more than 60% by 2030, compared to 2021 levels,” SLB management said.
In Norway, meanwhile, national oil company Equinor ASA awarded subsidiary SLB OneSubsea a contract for the execution of the second stage of Phase 3 for Equinor’s Troll field development. “The objective for Troll Phase 3, Stage 2 is to accelerate production from the reservoir of approximately 55 billion standard cubic meters of gas,” SLB said.
SLB’s total revenue grew by 5% sequentially, led by the combined Middle East and Asia region, which posted 6% growth. “The increase in this area was driven by capacity expansions, gas development projects, and production and recovery, with a majority of GeoUnits in the area achieving record revenue,” said Le Peuch. “We also continued to benefit from our enhanced offshore exposure, particularly in deepwater basins across Latin America, Europe & Africa, and in the U.S. Gulf of Mexico.”
Le Peuch said that, “Beyond 2024, the fundamentals of this cycle remain in place, and there is a long tailwind of growth opportunities, including long-cycle gas and deepwater projects, production and recovery activity, and the secular trends of digital and decarbonization,” said Le Peuch. “This represents a strong backdrop to continue our margin expansion and cash generation journey.”
SLB reported net income of $1.11 billion (77 cents/share) for the quarter, versus $1.03 billion (72 cents) in the same period last year. Revenue totaled $9.14 billion, up from $8.1 billion.
