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Schlumberger Announces Third-Quarter 2022 Results

HOUSTON, Oct. 21 /BusinessWire/ -- Schlumberger Limited (NYSE:SLB) today announced results for the third-quarter 2022.

Third-Quarter Results

(Stated in millions, except per share amounts)

Three Months Ended

Change

Sept. 30,
2022

Jun. 30,
2022

Sept. 30,
2021

Sequential

Year-on-year

Revenue

$7,477

$6,773

$5,847

10%

28%

Income before taxes - GAAP basis

$1,134

$1,152

$691

-2%

64%

Net income - GAAP basis

$907

$959

$550

-5%

65%

Diluted EPS - GAAP basis

$0.63

$0.67

$0.39

-6%

62%

Adjusted EBITDA*

$1,756

$1,530

$1,296

15%

35%

Adjusted EBITDA margin*

23.5%

22.6%

22.2%

91 bps

133 bps

Pretax segment operating income*

$1,400

$1,159

$908

21%

54%

Pretax segment operating margin*

18.7%

17.1%

15.5%

161 bps

320 bps

Net income, excluding charges & credits*

$907

$715

$514

27%

77%

Diluted EPS, excluding charges & credits*

$0.63

$0.50

$0.36

26%

75%

Revenue by Geography

International

$5,881

$5,188

$4,675

13%

26%

North America

1,543

1,537

1,129

0%

37%

Other

53

48

43

n/m

n/m

$7,477

$6,773

$5,847

10%

28%

*These are non-GAAP financial measures. See sections titled "Charges & Credits", "Divisions", and "Supplemental Information" for details.

n/m = not meaningful

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
Revenue by Division
Digital & Integration

$900

$955

$812

-6%

11%

Reservoir Performance

1,456

1,333

1,192

9%

22%

Well Construction

3,084

2,686

2,273

15%

36%

Production Systems

2,150

1,893

1,674

14%

28%

Other

(113)

(94)

(104)

n/m

n/m

$7,477

$6,773

$5,847

10%

28%

Pretax Operating Income by Division

Digital & Integration

$305

$379

$284

-20%

7%

Reservoir Performance

244

195

190

25%

28%

Well Construction

664

470

345

41%

92%

Production Systems

224

171

166

31%

36%

Other

(37)

(56)

(77)

n/m

n/m

$1,400

$1,159

$908

21%

54%

Pretax Operating Margin by Division

Digital & Integration

33.9%

39.7%

35.0%

-586 bps

-119 bps

Reservoir Performance

16.7%

14.6%

16.0%

209 bps

77 bps

Well Construction

21.5%

17.5%

15.2%

403 bps

635 bps

Production Systems

10.4%

9.0%

9.9%

142 bps

55 bps

Other

n/m

n/m

n/m

n/m

n/m

18.7%

17.1%

15.5%

161 bps

320 bps

n/m = not meaningful

Schlumberger CEO Olivier Le Peuch commented, "The second half of the year is off to a great start with strong third-quarter results that reflect the acceleration of international momentum and solid execution across our Divisions and areas. Sequentially, we delivered another quarter of double-digit revenue growth and margin expansion, as the pace of growth in our international business stepped up significantly, complementing already robust levels of activity in North America.

"On a companywide basis, sequential revenue grew 10%, by more than $700 million; EPS-excluding charges and credits-increased 26%; pretax segment operating margin expanded 161 basis points (bps) to reach 18.7%; and free cash flow was $1.1 billion. Both EPS-excluding charges and credits-and pretax segment operating margin represent their highest levels since 2015, as we continue to execute on our returns-focused strategy with much success.

"Year-over-year comparisons were exceptional with revenue growing by 28%; EPS-excluding charges and credits-increasing 75%; and pretax segment operating margin expanding 320 bps."

Revenue growth was led by Well Construction and Production Systems as global activity strengthened-particularly in the offshore and international markets. Schlumberger's leading position in these markets continues to propel strong and profitable growth in the Core. The quarter was also supported by continued backlog conversion, strong technology adoption, and the growing effects of pricing improvements. Reservoir Performance also grew, while Digital & Integration declined as growth in digital solutions was more than offset by the non-repeat of exploration data transfer fees recorded in the previous quarter.

International Torque Ramps Up as Revenue Exceeds Third-Quarter 2019 Level

Le Peuch said, "Third-quarter revenue was driven by International, which posted 13% growth sequentially and 26% year on year. International revenue also exceeded third-quarter 2019 levels, on a rig count that is still approximately 25% lower than in 2019. This comparison highlights the significant gains we have made in strengthening our market participation and our continued growth potential as rigs mobilize internationally in the quarters to come."

Sequentially, growth was prevalent across all international areas led by Europe/CIS/Africa and Latin America, which increased 21% and 14%, respectively. This was driven by increased activity and higher pricing in Well Construction, in addition to higher Production Systems sales. Middle East & Asia revenue improved 8% sequentially due to increased multidivisional activity across Asia and higher Reservoir Performance revenue in the Middle East.

Outperforming in our Core-Strong Growth in Well Construction and Production Systems

Le Peuch said, "Our Schlumberger Core continues to perform extremely well as we continue to leverage our global breadth, leading technology portfolio, and pricing improvements to drive top- and bottom-line growth momentum."

Revenue growth by Division was led by Well Construction with revenue increasing 15% sequentially, outperforming global rig count growth due to strong activity and pricing improvements in the Europe/CIS/Africa and Latin America areas. Similarly, Production Systems revenue grew 14% sequentially on higher product deliveries and backlog conversion, mostly in international offshore basins. Reservoir Performance revenue grew 9% due to higher intervention and stimulation activity, both on land and offshore, particularly in the Middle East & Asia and Europe/CIS/Africa areas. Year on year, revenue from all Divisions experienced double-digit growth, led by Well Construction, which grew 36%.

In relation to margin performance, Well Construction and Reservoir Performance led in sequential margin expansion having posted 403 bps and 209 bps growth, respectively. Year on year, Well Construction margin expanded 635 bps to reach 22%, due to broad pricing improvements and improved operating leverage.

Constructive Energy Fundamentals and a Supply-Led Decoupling of Upstream Investment

Le Peuch said, "While concerns remain over the broader economic climate, the energy industry fundamentals continue to be very constructive. Against the backdrop of the energy crisis and limited spare global capacity, the world faces an urgent need for increased investment to rebalance markets, create supply redundancies, and rebuild spare capacity. All of these are exacerbated by geopolitics and increasing instances of supply disruptions.

"These dynamics and the urgency to restore balance are resulting in a supply-led upcycle, characterized by the decoupling of upstream investment from near-term demand volatility. Furthermore, the need for sustained investments is reinforced by the long-term demand trajectory through the end of the decade and by OPEC+ decisions that are keeping commodity prices at supportive levels.

"Concurrently, we are witnessing a significant commitment from the industry to decarbonize oil and gas, with E&P operators all over the world deploying capital and adopting technologies-including digital-at scale, to reduce emissions. Taken together, we expect these constructive fundamentals and secular trends to support multiple years of growth."

A Strong Finish in the Making for an Outstanding Year

Le Peuch said, "On a companywide basis, year-to-date revenue increased more than 20%; EPS on a GAAP basis grew 83%; EPS-excluding charges and credits-grew 67%; and pretax segment operating margin expanded 285 bps. I am very proud of these exceptional results delivered by the Schlumberger team as we approach the end of an outstanding year.

"As we close the year, we expect to deliver sequential revenue growth and margin expansion in the fourth quarter.

"To conclude, we have stronger conviction in our strategy and the opportunities across our three engines of growth-the Core, Digital, and New Energy. Constructive market fundamentals for oil and gas, energy security, and the urgency to accelerate the energy transition will support increased investment-in both clean energy technology development and lower carbon oil and gas production. We have positioned the company for long-term outperformance, with a diverse set of opportunities across the entire energy value chain. These technology-led opportunities cover oil and gas, industrial decarbonization, and new energy systems-all supported by digital transformation.

"Recent regulatory decisions and incentives reinforce our view of this compelling investment outlook and our strategic direction. We are prepared to apply our technology, global scale, and industrialization capabilities to lead in this energy landscape and deliver outstanding value for our customers and shareholders.

"I am truly excited about our future as we continue to drive innovation for a resilient and balanced energy system. I look forward to sharing at our upcoming Investor Conference, our views of the industry, revenue growth ambitions, earnings, and returns potential."

Other Events

On August 30, 2022, Schlumberger, Aker Solutions, and Subsea 7 announced an agreement to form a joint venture to drive innovation and efficiency in subsea production to help customers unlock reserves and reduce cycle time. The agreement will bring together a portfolio of innovative technologies such as subsea gas compression, all-electric subsea production systems, and other electrification capabilities that help customers meet their decarbonization goals. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2023.

In October 2022, Schlumberger redeemed $895 million of its outstanding notes, consisting of $600 million of 2.65% Senior Notes and $295 million of 3.625% Senior Notes, both due 2022.

On October 20, 2022, Schlumberger's Board of Directors approved a quarterly cash dividend of $0.175 per share of outstanding common stock, payable on January 12, 2023, to stockholders of record on December 7, 2022.

Revenue by Geographical Area

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
North America

$1,543

$1,537

$1,129

0%

37%

Latin America

1,508

1,329

1,160

14%

30%

Europe/CIS/Africa

2,039

1,691

1,481

21%

38%

Middle East & Asia

2,334

2,168

2,034

8%

15%

Eliminations & other

53

48

43

n/m

n/m

$7,477

$6,773

$5,847

10%

28%

International

$5,881

$5,188

$4,675

13%

26%

North America

$1,543

$1,537

$1,129

0%

37%

n/m = not meaningful

International

Revenue in Latin America of $1.5 billion increased 14% sequentially due to higher Well Construction revenue from increased drilling activity and improved pricing. Increased Production Systems sales in Brazil contributed to the sequential revenue growth. Year on year, revenue grew 30% due to higher drilling activity and increased pricing across the area. Increased stimulation and drilling activity in Argentina as well as higher Production Systems sales in Brazil also contributed to the year-on-year revenue growth.

Europe/CIS/Africa revenue of $2.0 billion increased 21% sequentially. This significant growth was driven by strong Well Construction activity and improved pricing across the area, higher Production Systems sales in Europe and Scandinavia, and multidivisional activity increases in Sub-Sahara Africa. Year on year, revenue grew 38%, from higher Production Systems sales in Europe and Scandinavia, increased Well Construction activity, and improved pricing.

Revenue in the Middle East & Asia of $2.3 billion increased 8% sequentially due to increased multidivisional activity across Asia and higher Reservoir Performance revenue in the Middle East. Year on year, revenue increased 15% due to increased multidivisional activity across Asia and higher activity from new projects in the Middle East-notably, increased drilling activity in Iraq and the United Arab Emirates and higher stimulation revenue in Oman.

North America

North America revenue of $1.5 billion was essentially flat sequentially as double-digit growth in US land revenue was offset by reduced exploration data sales in the US Gulf of Mexico due to the significant transfer fees recorded in the previous quarter. US land revenue growth outperformed the rig count increase sequentially due to higher drilling activity, increased sales of well and surface production systems, and improved pricing.

Compared to the same quarter last year, North America revenue grew 37%. All Divisions experienced significant year-on-year revenue growth, led by Well Construction and Production Systems, which grew 62% and 23%, respectively.

Third-Quarter Results by Division

Digital & Integration

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
Revenue
International

$671

$627

$615

7%

9%

North America

229

327

196

-30%

17%

Other

-

1

1

n/m

n/m

$900

$955

$812

-6%

11%

Pretax operating income

$305

$379

$284

-20%

7%

Pretax operating margin

33.9%

39.7%

35.0%

-586 bps

-119 bps

n/m = not meaningful

Digital & Integration revenue of $900 million experienced a 6% sequential decline with a change in revenue mix compared to the previous quarter. Revenue grew internationally, driven by higher digital sales in the Middle East & Asia, Europe/CIS/Africa, and Latin America areas while revenue was lower in North America on lower exploration data sales.

Year on year, revenue growth of 11% was driven primarily by higher digital sales across all areas and higher Asset Performance Solutions (APS) project revenue, particularly in Canada.

Digital & Integration pretax operating margin of 34% contracted 586 bps sequentially and 119 bps year on year due to a less favorable revenue mix.

Reservoir Performance

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
Revenue
International

$1,335

$1,222

$1,112

9%

20%

North America

119

111

79

7%

49%

Other

2

-

1

n/m

n/m

$1,456

$1,333

$1,192

9%

22%

Pretax operating income

$244

$195

$190

25%

28%

Pretax operating margin

16.7%

14.6%

16.0%

209 bps

77 bps

n/m = not meaningful

Reservoir Performance revenue of $1.5 billion increased 9% sequentially primarily due to higher intervention and stimulation activity, both on land and offshore, particularly in the Middle East & Asia and Europe/CIS/Africa areas. North America growth was due to higher intervention activity in the US Gulf of Mexico.

Year on year, revenue growth of 22% was broad across all areas due to increased activity. The revenue growth was led by the Middle East & Asia area, which grew 30%. Intervention and stimulation services experienced double-digit growth, both on land and offshore.

Reservoir Performance pretax operating margin of 17% expanded 209 bps sequentially. Profitability was boosted by higher offshore and development activity, particularly in the North America, Middle East & Asia, and Latin America areas.

Year on year, pretax operating margin expanded 77 bps with profitability improving both in intervention and stimulation, and geographically in the North America and Europe/CIS/Africa areas.

Well Construction

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
Revenue
International

$2,406

$2,083

$1,839

16%

31%

North America

621

553

382

12%

62%

Other

57

50

52

n/m

n/m

$3,084

$2,686

$2,273

15%

36%

Pretax operating income

$664

$470

$345

41%

92%

Pretax operating margin

21.5%

17.5%

15.2%

403 bps

635 bps

n/m = not meaningful

Well Construction revenue of $3.1 billion increased 15% sequentially, outperforming global rig count growth due to strong activity from new projects and solid pricing improvements internationally, particularly in the Europe/CIS/Africa and Latin America areas. In North America, sequential revenue growth outpaced the rig count increase in both US land and offshore. Double-digit growth was pervasive across its measurement, drilling, fluids, and equipment business lines.

Year on year, revenue growth of 36% was driven by strong activity and solid pricing improvements, led by North America and Latin America, both of which grew more than 60%. Europe/CIS/Africa revenue increased 28% while Middle East & Asia revenue grew 16% year on year. High double-digit growth was recorded across the Division's business lines led by drilling fluids and measurements-both on land and offshore.

Well Construction pretax operating margin of 22% expanded 403 bps sequentially, due to improved profitability in all business lines and across all areas, most prominently in Latin America. Margin expansion was due to higher offshore and exploration activity, favorable technology mix, and solid pricing improvements.

Year on year, pretax operating margin expanded 635 bps, with profitability improving across all areas, driven by higher activity and boosted by improved pricing.

Production Systems

(Stated in millions)
Three Months Ended Change
Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Sequential Year-on-year
Revenue
International

$1,569

$1,341

$1,205

17%

30%

North America

578

550

469

5%

23%

Other

3

2

-

n/m

n/m

$2,150

$1,893

$1,674

14%

28%

Pretax operating income

$224

$171

$166

31%

36%

Pretax operating margin

10.4%

9.0%

9.9%

142 bps

55 bps

n/m = not meaningful

Production Systems revenue of $2.2 billion increased 14% sequentially on higher product deliveries and backlog conversion-mostly offshore internationally as supply chain and logistics constraints continue to ease. The increase was driven by double-digit revenue growth across most business lines: in Europe/CIS/Africa on higher deliveries of subsea and well production systems; in Latin America due to higher sales of subsea and midstream production systems; in Middle East & Asia on higher sales of well, surface, and midstream production systems; and in North America, mainly in US land, on increased sales of well and surface production systems.

Year on year, double-digit growth was driven by new projects and increased product deliveries mainly in Europe/CIS/Africa, North America, and Latin America.

Production Systems pretax operating margin of 10% expanded 142 bps sequentially due to improved operating leverage from higher volume of sales.

Year on year, pretax operating margin was slightly higher by 55 bps as higher sales volume was partially offset by increased logistics costs and unfavorable revenue mix.

Quarterly Highlights

As the strong growth cycle in oil and gas advances, Schlumberger continues to secure new contracts in North America and internationally, particularly in the Middle East and in offshore basins. During the quarter, Schlumberger secured the following notable projects:

Schlumberger continuously seeks new applications for its technologies in adjacent industries, applying its domain expertise to solutions that support sustainable energy production:

As customers continue to advance their digital transformation and apply digital solutions that improve efficiency and productivity, Schlumberger's digital platform strategy is a key engine of growth. The Schlumberger Digital Forum 2022 brought together more than 1,250 industry leaders, domain experts, and digital professionals and showcased the power of Digital to accelerate the industry's transformation, delivering higher value and lower carbon.

Customer adoption of Schlumberger technology is accelerating and continues to significantly impact performance in drilling, production, and integrated operations. Our innovative solutions contribute to making the exploration and development of oil and gas assets more resilient and more efficient, with lower carbon and less impact on the environment. Examples from the quarter include:

In new energy technologies, Schlumberger is uniquely positioned to apply its domain expertise and experience in technology industrialization to be a leader in the energy transition at large. We continue to build partnerships across various industries to develop clean energy solutions.

FINANCIAL TABLES

Condensed Consolidated Statement of Income

(Stated in millions, except per share amounts)

Third Quarter Nine Months
Periods Ended September 30,

2022

2021

2022

2021

Revenue

$7,477

$5,847

$20,213

$16,704

Interest & other income (1)

75

56

436

91

Expenses
Cost of revenue

6,042

4,862

16,623

14,135

Research & engineering

160

140

456

409

General & administrative

94

80

277

231

Interest

122

130

369

402

Income before taxes (1)

$1,134

$691

$2,924

$1,618

Tax expense (1)

215

129

514

301

Net income (1)

$919

$562

$2,410

$1,317

Net income attributable to noncontrolling interest

12

12

33

37

Net income attributable to Schlumberger (1)

$907

$550

$2,377

$1,280

Diluted earnings per share of Schlumberger (1)

$0.63

$0.39

$1.65

$0.90

Average shares outstanding

1,418

1,402

1,414

1,399

Average shares outstanding assuming dilution

1,439

1,424

1,436

1,422

Depreciation & amortization included in expenses (2)

$533

$530

$1,598

$1,588

(1)

See section entitled "Charges & Credits" for details.

(2)

Includes depreciation of property, plant, and equipment and amortization of intangible assets, exploration data costs, and APS investments.

Condensed Consolidated Balance Sheet

(Stated in millions)

Sept. 30,

Dec. 31,

Assets

2022

2021

Current Assets
Cash and short-term investments

$3,609

$3,139

Receivables

6,650

5,315

Inventories

4,143

3,272

Other current assets

1,209

928

15,611

12,654

Investment in affiliated companies

1,762

2,044

Fixed assets

6,407

6,429

Goodwill

12,990

12,990

Intangible assets

3,043

3,211

Other assets

4,280

4,183

$44,093

$41,511

Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities

$9,034

$8,382

Estimated liability for taxes on income

938

879

Short-term borrowings and current portion
of long-term debt

899

909

Dividends payable

263

189

11,134

10,359

Long-term debt

12,452

13,286

Postretirement benefits

233

231

Other liabilities

2,763

2,349

26,582

26,225

Equity

17,511

15,286

$44,093

$41,511

Liquidity

(Stated in millions)

Components of Liquidity Sept. 30,
2022
Jun. 30,
2022
Sept. 30,
2021
Dec. 31,
2021
Cash and short-term investments

$3,609

$2,816

$2,942

$3,139

Short-term borrowings and current portion of long-term debt

(899)

(901)

(1,025)

(909)

Long-term debt

(12,452)

(12,946)

(14,370)

(13,286)

Net Debt (1)

$(9,742)

$(11,031)

$(12,453)

$(11,056)

Details of changes in liquidity follow:

Nine

Third

Nine

Months

Quarter

Months

Periods Ended September 30,

2022

2022

2021

Net income

$2,410

$920

$1,317

Charges and credits, net of tax (2)

(265)

-

(36)

2,145

920

1,281

Depreciation and amortization (3)

1,598

533

1,588

Stock-based compensation expense

236

76

229

Change in working capital

(1,814)

70

(798)

US federal tax refund

-

-

477

Other

(59)

(32)

(58)

Cash flow from operations (4)

2,106

1,567

2,719

Capital expenditures

(1,046)

(382)

(694)

APS investments

(420)

(109)

(305)

Exploration data capitalized

(77)

(13)

(21)

Free cash flow (5)

563

1,063

1,699

Dividends paid

(600)

(248)

(524)

Proceeds from employee stock plans

171

78

137

Business acquisitions and investments, net of cash acquired plus debt assumed

(45)

(37)

(98)

Proceeds from sale of Liberty shares

513

-

-

Proceeds from sale of real estate

120

-

-

Taxes paid on net settled stock-based compensation awards

(92)

(7)

(21)

Other

(118)

(32)

(58)

Decrease in net debt before impact of changes in foreign exchange rates

512

817

1,135

Impact of changes in foreign exchange rates on net debt

802

472

292

Decrease in Net Debt

1,314

1,289

1,427

Net Debt, beginning of period

(11,056)

(11,031)

(13,880)

Net Debt, end of period

$(9,742)

$(9,742)

$(12,453)

(1)

"Net Debt" represents gross debt less cash and short-term investments. Management believes that Net Debt provides useful information regarding the level of Schlumberger's indebtedness by reflecting cash and investments that could be used to repay debt. Net Debt is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, total debt.

(2)

See section entitled "Charges & Credits" for details.

(3)

Includes depreciation of property, plant, and equipment and amortization of intangible assets, exploration data costs, and APS investments.

(4)

Includes severance payments of $60 million and $22 million during the nine months and third quarter ended September 30, 2022, respectively; and $226 million and $42 million during the nine months and third quarter ended September 30, 2021, respectively.

(5)

"Free cash flow" represents cash flow from operations less capital expenditures, APS investments, and exploration data costs capitalized. Management believes that free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of Schlumberger's ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations.

Charges & Credits

In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this third-quarter 2022 earnings release also includes non-GAAP financial measures (as defined under the SEC's Regulation G). In addition to the non-GAAP financial measures discussed under "Liquidity", net income, excluding charges & credits, as well as measures derived from it (including diluted EPS, excluding charges & credits; Schlumberger net income, excluding charges & credits; effective tax rate, excluding charges & credits; and adjusted EBITDA) are non-GAAP financial measures. Management believes that the exclusion of charges & credits from these financial measures enables it to evaluate more effectively Schlumberger's operations period over period and to identify operating trends that could otherwise be masked by the excluded items. These measures are also used by management as performance measures in determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. The following is a reconciliation of certain of these non-GAAP measures to the comparable GAAP measures. For a reconciliation of adjusted EBITDA to the comparable GAAP measure, please refer to the section titled "Supplemental Information" (Question 9).

(Stated in millions, except per share amounts)

Second Quarter 2022
Pretax Tax Noncont.
Interests
Net Diluted
EPS
Schlumberger net income (GAAP basis)

$1,152

$182

$11

$959

$0.67

Gain on sale of Liberty shares (1)

(216)

(13)

-

(203)

(0.14)

Gain on sale of real estate (1)

(43)

(2)

-

(41)

(0.03)

Schlumberger net income, excluding charges & credits

$893

$167

$11

$715

$0.50

Nine Months 2022
Pretax Tax Noncont.
Interests
Net Diluted
EPS *
Schlumberger net income (GAAP basis)

$2,924

$514

$33

$2,377

$1.65

Gain on sale of Liberty shares (1)

(242)

(17)

-

(225)

(0.16)

Gain on sale of real estate (1)

(43)

(2)

-

(41)

(0.03)

Schlumberger net income, excluding charges & credits

$2,639

$495

$33

$2,111

$1.47

Third Quarter 2021
Pretax Tax Noncont.
Interests
Net Diluted
EPS
Schlumberger net income (GAAP basis)

$691

$129

$12

$550

$0.39

Unrealized gain on marketable securities (1)

(47)

(11)

-

(36)

(0.03)

Schlumberger net income, excluding charges & credits

$644

$118

$12

$514

$0.36

Nine Months 2021
Pretax Tax Noncont.
Interests
Net Diluted
EPS *
Schlumberger net income (GAAP basis)

$1,618

$301

$37

$1,280

$0.90

Unrealized gain on marketable securities (1)

(47)

(11)

-

(36)

(0.03)

Schlumberger net income, excluding charges & credits

$1,571

$290

$37

$1,244

$0.88

There were no charges & credits during the third quarter of 2022 or during the first six months of 2021.

* Does not add due to rounding.

(1)

Classified in Interest & other income in the Condensed Consolidated Statement of Income

Divisions

(Stated in millions)

Three Months Ended
Sept. 30, 2022 Jun. 30, 2022 Sept. 30, 2021
Revenue Income
Before
Taxes
Revenue Income
Before
Taxes
Revenue Income
Before
Taxes
Digital & Integration

$900

$305

$955

$379

$812

$284

Reservoir Performance

1,456

244

1,333

195

1,192

190

Well Construction

3,084

664

2,686

470

2,273

345

Production Systems

2,150

224

1,893

171

1,674

166

Eliminations & other

(113)

(37)

(94)

(56)

(104)

(77)

Pretax segment operating income

1,400

1,159

908

Corporate & other

(155)

(148)

(145)

Interest income(1)

8

3

8

Interest expense(1)

(119)

(121)

(127)

Charges & credits(2)

-

259

47

$7,477

$1,134

$6,773

$1,152

$5,847

$691

(Stated in millions)

Nine Months Ended
Sept. 30, 2022 Sept. 30, 2021
Revenue Income
Before
Taxes
Revenue Income
Before
Taxes
Digital & Integration

$2,713

$976

$2,401

$805

Reservoir Performance

3,999

598

3,312

448

Well Construction

8,168

1,522

6,319

827

Production Systems

5,647

509

4,946

475

Eliminations & other

(314)

(151)

(274)

(176)

Pretax segment operating income

3,454

2,379

Corporate & other

(468)

(434)

Interest income(1)

13

17

Interest expense(1)

(360)

(391)

Charges & credits(2)

285

47

$20,213

$2,924

$16,704

$1,618

(1)

Excludes amounts which are included in the segments' results.

(2)

See section entitled "Charges & Credits" for details.

Supplementary Information
Frequently Asked Questions

1)

What is the capital investment guidance for the full-year 2022?

Capital investment (composed of capex, exploration data costs, and APS investments) for the full-year 2022 is expected to be approximately $2.2 billion.

2)

What were cash flow from operations and free cash flow for the third quarter of 2022?

Cash flow from operations for the third quarter of 2022 was $1.6 billion, and free cash flow was $1.1 billion.

3)

What was included in "Interest and other income" for the third quarter of 2022?

"Interest and other income" for the third quarter of 2022 was $75 million. This consisted of interest income of $33 million and earnings of equity method investments of $42 million.

4)

How did interest income and interest expense change during the third quarter of 2022?

Interest income of $33 million for the third quarter of 2022 increased $14 million sequentially. Interest expense of $122 million decreased $2 million sequentially.

5)

What is the difference between Schlumberger's consolidated income before taxes and pretax segment operating income?

The difference consists of corporate items, charges and credits, and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets, certain centrally managed initiatives, and other nonoperating items.

6)

What was the effective tax rate (ETR) for the third quarter of 2022?

The ETR for the third quarter of 2022, calculated in accordance with GAAP, was 18.9% as compared to 15.8% for the second quarter of 2022. Excluding charges and credits, the ETR for the second quarter of 2022 was 18.6%. There were no charges and credits in the third quarter of 2022.

7)

How many shares of common stock were outstanding as of September 30, 2022, and how did this change from the end of the previous quarter?

There were 1.418 billion shares of common stock outstanding as of September 30, 2022, and 1.414 billion shares outstanding as of June 30, 2022.

(Stated in millions)

Shares outstanding at June 30, 2022

1,414

Shares issued under employee stock purchase plan

3

Shares issued to optionees, less shares exchanged

-

Vesting of restricted stock

1

Shares outstanding at September 30, 2022

1,418

8)

What was the weighted average number of shares outstanding during the third quarter of 2022 and second quarter of 2022? How does this reconcile to the average number of shares outstanding, assuming dilution, used in the calculation of diluted earnings per share?

The weighted average number of shares outstanding was 1.418 billion during the third quarter of 2022 and 1.414 billion during the second quarter of 2022. The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution, used in the calculation of diluted earnings per share.

(Stated in millions)

Third Quarter
2022

Second Quarter
2022

Weighted average shares outstanding

1,418

1,414

Unvested restricted stock

21

22

Average shares outstanding, assuming dilution

1,439

1,436

9)

What was Schlumberger's adjusted EBITDA in the third quarter of 2022, the second quarter of 2022, and the third quarter of 2021?

Schlumberger's adjusted EBITDA was $1.756 billion in the third quarter of 2022, $1.530 billion in the second quarter of 2022, and $1.296 billion in the third quarter of 2021, and was calculated as follows:

(Stated in millions)

Third Quarter
2022
Second Quarter
2022
Third Quarter
2021
Net income attributable to Schlumberger

$907

$959

$550

Net income attributable to noncontrolling interests

12

11

12

Tax expense

215

182

129

Income before taxes

$1,134

$1,152

$691

Charges & credits

-

(259)

(47)

Depreciation and amortization

533

532

530

Interest expense

122

124

130

Interest income

(33)

(19)

(8)

Adjusted EBITDA

$1,756

$1,530

$1,296

Adjusted EBITDA represents income before taxes, excluding charges & credits, depreciation and amortization, interest expense, and interest income. Management believes that adjusted EBITDA is an important profitability measure for Schlumberger and that it allows investors and management to more efficiently evaluate Schlumberger's operations period over period and to identify operating trends that could otherwise be masked. Adjusted EBITDA is also used by management as a performance measure in determining certain incentive compensation. Adjusted EBITDA should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP.

10)

What were the components of depreciation and amortization expense for the third quarter of 2022, the second quarter of 2022, and the third quarter of 2021?

The components of depreciation and amortization expense for the third quarter of 2022, the second quarter of 2022, and the third quarter of 2021 were as follows:

(Stated in millions)

Third Quarter
2022
Second Quarter
2022
Third Quarter
2021
Depreciation of fixed assets

$343

$340

$350

Amortization of intangible assets

76

75

75

Amortization of APS investments

96

87

82

Amortization of exploration data costs capitalized

18

30

23

$533

$532

$530

About Schlumberger

Schlumberger (NYSE: SLB) is a technology company that partners with customers to access energy. Our people, representing over 160 nationalities, are providing leading digital solutions and deploying innovative technologies to enable performance and sustainability for the global energy industry. With expertise in more than 120 countries, we collaborate to create technology that unlocks access to energy for the benefit of all.

Find out more at www.slb.com

*Mark of Schlumberger or a Schlumberger company. Other company, product, and service names are the properties of their respective owners.

Conference Call Information

Schlumberger will hold a conference call to discuss the earnings press release and business outlook on Friday, October 21, 2022. The call is scheduled to begin at 9:30 a.m. US Eastern Time. To access the call, which is open to the public, please contact the conference call operator at +1 (844) 721-7241 within North America, or +1 (409) 207-6955 outside North America, approximately 10 minutes prior to the call's scheduled start time, and provide the access code 8858313. At the conclusion of the conference call, an audio replay will be available until November 20, 2022, by dialing +1 (866) 207-1041 within North America, or +1 (402) 970-0847 outside North America, and providing the access code 1942759. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same website until November 20, 2022.

This third-quarter 2022 earnings press release, as well as other statements we make, contain "forward-looking statements" within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as "expect," "may," "can," "believe," "predict," "plan," "potential," "projected," "projections," "precursor," "forecast," "outlook," "expectations," "estimate," "intend," "anticipate," "ambition," "goal," "target," "scheduled," "think," "should," "could," "would," "will," "see," "likely," and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and performance targets and other forecasts or expectations regarding, or dependent on, our business outlook; growth for Schlumberger as a whole and for each of its Divisions (and for specified business lines, geographic areas, or technologies within each Division); oil and natural gas demand and production growth; oil and natural gas prices; forecasts or expectations regarding energy transition and global climate change; improvements in operating procedures and technology; capital expenditures by Schlumberger and the oil and gas industry; our business strategies, including digital and "fit for basin," as well as the strategies of our customers; our effective tax rate; our APS projects, joint ventures, and other alliances; our response to the COVID-19 pandemic and our preparedness for other widespread health emergencies; the impact of the ongoing conflict in Ukraine on global energy supply; access to raw materials; future global economic and geopolitical conditions; future liquidity; and future results of operations, such as margin levels. These statements are subject to risks and uncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by our customers, and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers and suppliers; the inability to achieve its financial and performance targets and other forecasts and expectations; the inability to achieve our net-zero carbon emissions goals or interim emissions reduction goals; general economic, geopolitical, and business conditions in key regions of the world; the ongoing conflict in Ukraine; foreign currency risk; inflation; pricing pressure; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays, or cancellations; challenges in our supply chain; production declines; the extent of future charges; the inability to recognize efficiencies and other intended benefits from our business strategies and initiatives, such as digital or Schlumberger New Energy; as well as our cost reduction strategies; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, and climate-related initiatives; the inability of technology to meet new challenges in exploration; the competitiveness of alternative energy sources or product substitutes; and other risks and uncertainties detailed in this press release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this press release regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this press release are made as of the date of this release, and Schlumberger disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise.

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