SLB Limited (Schlumberger Limited) — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing also reports fourth-quarter results; it is an annual report, not a standalone Q4 filing. Unless noted, amounts are U.S. dollars.
Business context and reporting period
SLB is a global energy technology and services company operating in more than 100 countries. Its four reporting divisions are Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. The company’s strategy emphasizes its core oilfield businesses, digital offerings, and new-energy activities.
On October 2, 2023, SLB, Aker Solutions, and Subsea7 formed OneSubsea. SLB owns 70% and consolidates the joint venture. The Aker subsea business contributed approximately $0.5 billion of revenue from acquisition through year-end.
Financial results and key metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $33.1 billion | $28.1 billion |
| Income before taxes | $5.3 billion | $4.3 billion |
| Net income attributable to SLB | $4.2 billion | $3.4 billion |
| Diluted earnings per share | $2.91 | $2.39 |
| Cash flow from operations | $6.6 billion | $3.7 billion |
| Free cash flow | $4.0 billion | $1.4 billion |
| Capital investments | $2.6 billion | $2.3 billion |
| Net debt | $8.0 billion | $9.3 billion |
Revenue rose 18% year over year. Pretax segment operating margin increased 185 basis points to 20%. International revenue grew 20%; North America revenue increased 12%. The effective tax rate was 19%, versus 18% in 2022.
For Q4 2023, revenue was $9.0 billion, up 8% sequentially, and pretax segment operating margin was 21%. International revenue rose 10% sequentially and 18% year over year; North America revenue was flat sequentially and relatively flat year over year. The acquired Aker subsea business accounted for most of the sequential revenue increase.
Segment revenue for 2023 was: Digital & Integration $3.9 billion (+4%); Reservoir Performance $6.6 billion (+18%); Well Construction $13.5 billion (+18%); and Production Systems $9.8 billion (+25%). Digital & Integration pretax operating margin declined 397 basis points to 32%, while margins expanded in the other three divisions.
At year-end, cash and short-term investments totaled $4.0 billion; gross debt was approximately $12.0 billion, including $1.1 billion of current debt. SLB had $5.0 billion of available, unused committed credit facilities. Management said liquidity, together with operating cash flow, should cover business requirements for the next 12 months and beyond.
Material changes versus the prior comparable period
- Revenue, net income attributable to SLB, and diluted EPS increased from 2022; operating cash flow rose by approximately $2.9 billion. Management attributed much of the cash-flow improvement to stronger receivables collections and a smaller working-capital use.
- All divisions except Digital & Integration reported higher full-year pretax segment income. Digital & Integration’s margin fell partly because 2022 included $95 million of exploration-data transfer fees and because APS project profitability was lower.
- SLB reduced net debt by $1.4 billion. It paid $1.3 billion in dividends and repurchased $694 million of shares in 2023; it made no share repurchases in 2022.
- OneSubsea’s formation increased Production Systems revenue and assets and added acquisition-related goodwill and intangible assets.
Outlook, commentary, risks, and unusual items
Management expects another year of strong growth in 2024, led by international markets. It anticipates growth in Production Systems, Reservoir Performance, Well Construction, and Digital, and further margin expansion. Capital investments in 2024 are expected to be approximately $2.6 billion. SLB also plans to increase share repurchases in 2024. In January 2024, the board approved a 10% quarterly dividend increase, from $0.25 to $0.275 per share, beginning with the April 2024 payment.
Management cited expected sustained investment in the Middle East, offshore developments, and gas resources, and said these long-cycle investments are expected to be relatively insulated from short-term commodity-price changes. These expectations are forward-looking and subject to the risks described in the filing.
- Unusual 2023 items: SLB recorded a $90 million charge related to Argentina’s peso devaluation and $56 million of merger and integration costs, partly offset by a $36 million gain on Liberty share sales. The net pretax charges and credits were $110 million. Argentina represented less than 5% of revenue; peso-denominated net assets were approximately $75 million at year-end.
- Geopolitical exposure: Russia represented approximately 5% of 2023 revenue. SLB halted product shipments to Russia in July 2023; net assets there were approximately $0.6 billion at year-end. Further effects depend on the conflict, sanctions, and related economic conditions.
- Principal risks: Customer spending is sensitive to oil and gas prices and activity levels; other identified risks include geopolitical disruption, energy-transition shifts, cybersecurity incidents, regulation and sanctions, environmental liabilities, severe weather, and competition for skilled personnel.
- Contingencies and controls: Management said a material loss from currently pending legal proceedings was remote, while noting litigation is inherently uncertain. The independent auditor issued an unqualified opinion on the financial statements and internal controls; uncertain tax positions were identified as a critical audit matter.
- Other transition commitments: SLB targets net-zero greenhouse-gas emissions by 2050, with interim Scope 1 and 2 reduction targets for 2025 and 2030 and a Scope 3 reduction target for 2030, all against a 2019 baseline. The filing notes that these goals depend on factors outside the company’s control.
Important facts for investors to verify
- Whether international growth, especially in the Middle East and offshore markets, continues at the pace management expects, and how exposed results remain to customer budgets and commodity prices.
- Whether OneSubsea delivers the expected growth and synergies, and how final purchase-accounting valuations compare with the preliminary estimates.
- Whether 2024 cash generation supports planned investment, dividend growth, and increased repurchases while reducing net debt.
- How Digital & Integration margins and APS project performance recover, given the division’s 2023 margin contraction and Ecuador and Canada project challenges.
- Developments in Russia, Argentina, and uncertain tax positions, including the potential effects on cash access, earnings, and asset values.
- Progress against emissions targets and the extent to which changing energy-transition policy or customer demand affects the core business.