SLB Q2 2026 Earnings Report

SLB EPS Results

• Actual EPS: $0.55
• Consensus EPS: $0.51
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.74

SLB Revenue Results

• Actual Revenue: $8.97 billion
• Expected Revenue: $8.67 billion
• Beat/Miss: Beat by +$304.82 million
• YoY Revenue Growth: +5.00%

SLB Announcement Details

• Quarter: Q2 2026
• Date: 7/25/2026
• Time: Before Market Opens
• Conference Call Date: Friday, July 24, 2026
• Conference Call Time: 9:30AM ET

SLB (NYSE:SLB), formerly known as Schlumberger Limited, is a global technology and services company serving the energy industry. The company provides equipment, technology and technical expertise that help oil and gas producers locate, drill, complete and operate wells, as well as manage reservoirs and production assets.

Its offerings include seismic and subsurface evaluation, drilling and well-construction services, well completion and stimulation, artificial lift, production optimization, intervention services, subsea production systems and digital solutions. SLB also develops technologies intended to improve operational efficiency, reduce emissions and support carbon management, geothermal energy and other lower-carbon applications.

Founded in 1926 by brothers Conrad and Marcel Schlumberger, the company has grown into one of the largest oilfield-services providers in the world. SLB serves national and international oil companies, independent producers and other energy customers across major oil- and gas-producing regions, including North and South America, Europe, the Middle East, Africa and Asia-Pacific. The company is headquartered in Houston, Texas, and maintains a global operating presence.

SLB Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: SLB reported a solid second quarter with revenue up 3% sequentially to $9 billion, helped by broad international growth and a rebound in North America that more than offset weakness in the Middle East.
• Positive Sentiment: Production Systems and Digital were standout areas, with Production Systems margins moving back above 20% and Digital margins reaching about 35% on stronger exploration data licenses and recurring revenue growth.
• Neutral Sentiment: The company said the Middle East disruption remained manageable in the quarter, but full normalization will take time and recovery will vary by country; SLB’s Q3 outlook assumes only a gradual improvement there.
• Positive Sentiment: Management sees a broader upcycle in international and deepwater activity, citing expectations for roughly 30% year-over-year growth in long-cycle FIDs in 2026 and stronger spending momentum into 2027.
• Positive Sentiment: Data center solutions continued to scale rapidly, with revenue up 33% sequentially and 80% year over year, and SLB now expects the business to exit 2027 at an annualized revenue run rate above $2 billion.

Presentation

[Operator]

Good morning. My name is Sarah and I will be your conference operator today. I would like to welcome everyone to the second quarter SLB earnings call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. You may remove yourself from the queue by pressing star one again. As a reminder, this call is being recorded. I will now turn the call over to James McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

[James McDonald, Senior VP of Investor Relations and Industry Affairs at SLB]

Thank you, Sarah. Good morning and welcome to the SLB second quarter 2026 earnings conference call. Today's call is being hosted from London following our board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer, and Stephane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest Form 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter earnings press release, which is on our website.

[James McDonald, Senior VP of Investor Relations and Industry Affairs at SLB]

With that, I will turn the call over to Olivier.

[Olivier Le Peuch, CEO at SLB]

Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Today, we will begin with our second quarter performance. I will discuss the evolving macro environment and strategic growth areas for SLB. Finally, I will close by sharing our outlook for the third quarter and how we will exit the year. Stephane will then provide additional details on our financial results. After that, we will open the line for your questions. Let's begin. This was a solid quarter for SLB, marked by broad-based international growth and rebound in North America. Excluding the Middle East, revenue increased sequentially across all divisions. This was supported by higher offshore activity in Latin America, including Brazil, Guyana, and Mexico, in Europe and Africa, across Scandinavia and Nigeria, and in Asia, including China, Indonesia, India and Australia.

[Olivier Le Peuch, CEO at SLB]

Additionally, we saw a rebound in U.S. lands with higher sales of production chemicals, artificial lift, and valves driven by strong demand for production and recovery solutions. In the Middle East, we continued to navigate the conflict during the second quarter while maintaining our focus on protecting our people and facilities across the region. Activity resumed in several countries, although operations in Iraq remained constrained by security challenges. While uncertainty persists, we continue to work closely with our customers to gradually restore activity. That said, returning to full activity will take time, and the pace of recovery will vary by country, customer, and operating environment. Turning to the divisions, I was very pleased with the continued momentum in Production Systems and Digital.

[Olivier Le Peuch, CEO at SLB]

In Production Systems, growth was supported by higher demand in artificial lift, valves, surface production systems, and production chemicals, as well as stronger service activity, particularly in North America and Latin America. This reflects clear and durable customer priorities: improving production, enhancing recovery, and extending the life of existing assets, which are fully aligned with our increased focus in the quarter towards production and recovery. Production Systems adjusted EBITDA margins returned to above 20%, supported by strong execution. ChampionX also continued to provide accretive margins to Production Systems despite facing cost inflation in chemicals. Notably, ChampionX delivered sequential margin expansion for the third consecutive quarter. Digital also delivered very strong results, supported by a favorable business mix. This included higher exploration data licenses and transfer fees in Brazil and Indonesia, which helped Digital adjusted EBITDA margins to reach approximately 35% for the quarter.

[Olivier Le Peuch, CEO at SLB]

Additionally, annual recurring revenue increased by 15% year-over-year. As we shared during our Digital Investor Day last month, the future of our industry is Digital. We are confident that the key growth drivers highlighted at the event, digital operation and AI, will continue to build strong momentum across the industry. You can see several examples of recent customer contracts and deployments in the quarterly highlights, including in today's earnings press release. Meanwhile, our leading Well Construction and Reservoir Performance declined slightly as a result of activity disruption in the Middle East. However, the impact was largely offset by stronger activity in North America and across other international markets. Data center solutions also continued its strong growth trajectory. Revenue increasing 33% sequentially and 80% year-on-year.

[Olivier Le Peuch, CEO at SLB]

Growth was supported by the addition of new hyperscaler customers and a broader scope of offerings as we evolved beyond manufacturing into data center design, engineering, and system integration, as exemplified by the recent announcement with Meta. All in all, this was a strong quarter against a difficult backdrop with solid financial results and steady progress in our strategy execution. I want to thank the entire SLB team for delivering these results in a very dynamic market. I continue to be impressed by your performance, your innovation, and your commitment to our customers. Now let me turn to the macro environment, which continues to evolve following the disruption in the Middle East. There are several structural drivers of upstream investment that have been heightened by the conflict in the Middle East.

[Olivier Le Peuch, CEO at SLB]

This includes the replenishment of commercial inventories and strategic reserves that have been depleted during the conflict, increased efforts to diversify supply, and the development of domestic resources to strengthen long-term energy security. These priorities support a favorable investment backdrop across both short- and long-cycle markets, and they are bringing a renewed focus on exploration to unlock new reserves and on increasing production recovery from existing assets. In this context, we expect a range-bound commodity environment that is constructive for upstream investment. Indeed, inventory replenishment and the need to rebuild spare capacity should provide support at the low end of the range. At the same time, higher price will encourage the development of new supply, while unlocking new opportunities for our business. Let me now turn to regional activity dynamics. The market is starting to exhibit the characteristics of an upcycle.

[Olivier Le Peuch, CEO at SLB]

International and deepwater activity is growing, supported by fundamentals I've just discussed. Notably, according to third-party reports, final investment decisions for long-cycle projects are expected to increase by approximately 30% year-on-year in 2026. This will support higher exploration spending and upstream CapEx growth across deepwater markets during the second half of 2026, led by Africa. We expect a more meaningful impact in 2027, with growth extending to Latin America, the Mediterranean, and Asia. Meanwhile, North American land will remain tied to short-cycle market dynamics, including commodity price, inventory level, and the pace of restocking. Our position in North America has been strengthened by ChampionX about increasing need for technology innovation in production and recovery. In the Middle East, we view the impact as largely transitory.

[Olivier Le Peuch, CEO at SLB]

Restoring production to prior levels will require higher service intensity, particularly in well intervention, along with increased equipment demand, infrastructure repairs, and [audio distortion] shipping logistics. Based on this condition and our exposure to international deepwater and exploration, production and recovery, and Digital, our outlook for our business into 2027 is compelling. Against this backdrop, SLB strategy remains closely aligned with our customers' highest investment priority. In the core, this includes restoring production capacity, developing advantage resources, including deepwater, and improving capital efficiency. Beyond the core, Digital remains both a key enabler of performance and a powerful growth platform for SLB. Data and AI will increasingly touch every part of the upstream life cycle. Our advantage is that Digital is grounded in deep domain expertise and connected to real field operations. We're embedding intelligence to the workflows that matter most, from subsurface interpretation and well delivery to production optimization and autonomous operations.

[Olivier Le Peuch, CEO at SLB]

Finally, we're accelerating a data center solution strategy around three priorities: diversifying our customer base, expanding internationally, and increasing the scale and scope of our offerings. This quarter, we delivered on our strategic pathways, adding new hyperscaler customers to our portfolio, diversifying our end markets across Canada and Asia, and expanding our capabilities to include design, engineering, and system integration. At the same time, we continue to leverage our off-site fabrication capabilities to scale up in response to accelerating demand and to compress delivery time for our customers. Our differentiated capabilities have resulted in our backlog growing ahead of expectations with new contract awards, strong customer engagement, and international expansion. This momentum gives us the confidence that we'll finish this year strong as we had previously guided, and we now foresee that data center solution will exit 2027 at an annualized revenue run rate exceeding $2 billion.

[Olivier Le Peuch, CEO at SLB]

This is just the start. Our ambition is to become an industrial technology partner to the data center industry. Our expanding role in design and integration provides us a platform to add adjacent capabilities, including decarbonized power and cooling solutions. These are natural extensions of our domain expertise in process engineering and complex energy systems. Given the pace of market development, we can accelerate this strategy further through partnerships and acquisitions. Example of this includes our recent alliance with Liberty Energy that will combine SLB modular infrastructure solution and global market reach with Liberty behind-the-meter power generation system in addition to our pilot for next-generation geothermal power development to support future data center demand. These are exciting steps towards becoming a critical infrastructure partner for the AI economy.

[Olivier Le Peuch, CEO at SLB]

Together, these strategic investments offer SLB a broader and more resilient growth profile for the future, anchored in the core, accelerated by Digital, and expanded through data center solutions. Let me now turn to our outlook for the third quarter, followed by a preliminary view of the fourth quarter. Turning to our third quarter outlook, our base case assumes a gradual recovery in Middle East activity, consistent with the pace we observed toward the end of the second quarter, as we continue to remobilize operations across the countries affected by the conflict. Based on this trajectory, we expect global sequential revenue growth between 3% and 4%, with adjusted EBITDA margin expansion of approximately 75 basis points. At the division level, we anticipate revenues of the core divisions to increase sequentially in the low- to mid-single digits, while Digital revenue is expected to grow in the low single digits.

[Olivier Le Peuch, CEO at SLB]

The heightened tension recently observed in the Middle East have not had a material impact on our current activity. However, we have developed a downside scenario to help model the potential impacts of the ongoing geopolitical volatility. In the event of a significant re-escalation that disrupts ongoing re-mobilization efforts and results in flat sequential Middle East revenue, we estimate third quarter revenue will be approximately $150 million lower than our base case assumption. This would translate into an adjusted EBITDA headwind of approximately $75 million. The impact of this downside scenario would be concentrated primarily in the Well Construction and Reservoir Performance divisions. Looking ahead to the fourth quarter, our preliminary outlook assumes that Middle East activity reaches between $2.1 billion and $2.2 billion, or approximately 95% of the revenue achieved in the fourth quarter of 2025.

[Olivier Le Peuch, CEO at SLB]

Based on this assumption, supported by deepwater momentum and a typical year-end Digital end product sales, we'd expect fourth quarter revenue to surpass $10 billion, representing approximately 5% growth year-over-year. We also expect adjusted EBITDA margin to be approximately 24%, in line with the fourth quarter of last year. While this outlook remains dependent on certain conditions, primarily related to the Middle East conflict, we view it as an encouraging indicator of the underlying strength of the business and believe it will position us well to deliver solid growth in 2027. I will now turn the call over to Stephane to discuss our financial results in more detail.

[Stephane Biguet, CFO at SLB]

Thank you, Olivier, and good morning, ladies and gentlemen. Second quarter earnings per share, excluding charges and credits, was $0.55. This represents an increase of $0.03 sequentially and a decrease of $0.19 when compared to the second quarter of last year. During the quarter, we recorded $0.03 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our second quarter revenue of $9 billion increased 3% sequentially, despite severe disruptions in the Middle East. Strong performance in Latin America, Europe and Africa, U.S. land, and Asia more than offset the decline in the Middle East, where revenue fell 13% sequentially to $1.66 billion. Despite the headwinds from the Middle East, our pre-tax segment operating margin increased 49 basis points sequentially, and our adjusted EBITDA margin increased 83 basis points sequentially.

[Stephane Biguet, CFO at SLB]

As it relates specifically to the Middle East, while the revenue shortfall was close to our expectations, we took some temporary cost actions to alleviate the detrimental effect on our earnings. As a result, the sequential impact on our earnings per share was slightly below the low end of the $0.06-$0.08 range that we originally indicated for the second quarter. Let me now go through the second quarter results for each division. Second quarter Digital revenue of $697 million increased 9% sequentially, driven by higher digital exploration revenue and higher sales in platforms and applications. Digital pre-tax operating margin of 27.8% expanded 683 basis points, while adjusted EBITDA margin of 34.7% increased 860 basis points. These increases were due to higher sales of exploration data licenses and transfer fees, as well as improved profitability in digital operations and platforms and applications.

[Stephane Biguet, CFO at SLB]

Reservoir Performance revenue of $1.6 billion declined 2% sequentially, while pre-tax operating margin of 14.9% decreased 121 basis points. These decreases were primarily due to operational disruptions related to the Middle East conflict. Well Construction revenue of $2.7 billion decreased 2% sequentially, primarily as a result of the disruptions in the Middle East, partially offset by higher drilling activity in Latin America. Pre-tax operating margin of 15.2% was essentially flat sequentially, as lower profitability in the Middle East was offset by improved profitability in North America and Latin America. Finally, Production Systems revenue of $3.8 billion increased 7% sequentially, driven by higher revenue from OneSubsea, as well as increased sales of artificial lift, valves, surface production systems, and completions. Production Systems pre-tax operating margin increased 138 basis points to 15.5%, primarily due to improved profitability in OneSubsea and artificial lift.

[Stephane Biguet, CFO at SLB]

Margin also benefited from the accretive contribution of ChampionX's Production Chemicals and Artificial Lift businesses. Turning to our liquidity. We ended the quarter with net debt of $8.7 billion. We generated $1.4 billion of cash flow from operations and free cash flow of $716 million during the quarter. This represents a $739 million increase in free cash flow compared to the last quarter, which is largely due to seasonal improvements in working capital, including the absence of the annual employee incentive payouts in the first quarter. Consistent with our historical trends, we expect our free cash flow in the second half of the year to be materially higher than in the first half on improved earnings, higher customer collections, and lower inventories. Capital investments, inclusive of CapEx and investments in ATS projects and exploration data, were $643 million in the second quarter.

[Stephane Biguet, CFO at SLB]

For the full year, we still expect capital investments to be approximately $2.5 billion. During the quarter, we repurchased $648 million of our stock and still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. Lastly, we are still targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. I will now turn the conference call back to Olivier.

[Olivier Le Peuch, CEO at SLB]

Thank you, Stephane. I believe we are now ready for the questions session. Thank you.

[Operator]

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Scott Gruber with Citigroup. Your line is open.

[Scott Gruber, Analyst at Citigroup]

Yes. Good afternoon on your end, Olivier and Stephane.

[Stephane Biguet, CFO at SLB]

Yeah.

[Olivier Le Peuch, CEO at SLB]

Good morning.

[Stephane Biguet, CFO at SLB]

Good morning, Scott.

[Scott Gruber, Analyst at Citigroup]

Thank you. We all appreciate the guidance on 3Q and 4Q given the moving pieces. You mentioned the Middle East getting back to, I think it was $2.1 billion-$2.2 billion in 4Q, 95% of last year. How much of a step up is that from 3Q, and how do you see the other geo markets stepping up in 4Q, if you can unpack that, then move to $10 billion? As we start to think about 2027, is that $10 billion a good run rate to think about the potential for your top line in 2027, so call it something close to a $40 billion top-line run rate next year. Is that reasonable?

[Olivier Le Peuch, CEO at SLB]

I think I will not comment at this point on 2027, but I can comment on Q4 and what it means for the setting and accompanying outlook that we see. First, to comment very broadly on the Q3 sequence and the Q4 sequence. You see Q4 step up from the third quarter will be characterized by a combination of factors, the first being the further Middle East recovery that will indeed, we believe, step up and the assumption it will reach up to 95% of last year Q4. The second factor will be the usual year-end sales into Digital and Production Systems and finally data center.

[Olivier Le Peuch, CEO at SLB]

Underlying all of this, as we will expect growth sequentially both in North America and international at that stage, are the fundamentals of the market that I believe give us a business outlook that is very compelling, that combines not only the rebound on Middle East that will continue, but also the setting up of the offshore deepwater environment that will add to it and the strengths we have developed into production recovery to come into benefits in short cycle. It will be a long and short cycle exposure, long cycle to deepwater, short cycle to production recovery, and the kick of the Middle East recovery developing at scale in the fourth quarter and continuing throughout 2027. Indeed, it is highly compelling, adding to the secular trends of Digital and to the significant strengths and scale that we are foresee in data center going forward.

[Stephane Biguet, CFO at SLB]

Scott, to clarify your specific question on the Middle East, just to put the numbers back together. First, Q2 actual revenue in the Middle East was $1.66 billion, and we have assumed in our base case scenario where the global revenue grows between 3% and 4% sequentially, that the Middle East will recover gradually in the third quarter. If it doesn't, if current escalation sees the ongoing mobilization, that Middle East revenue would be $150 million lower than in our base case, and it would bring it back to more or less the level of Q2. That gives you the range where it could end up in the third quarter.

[Scott Gruber, Analyst at Citigroup]

Well, I appreciate that color. My follow-up is on exploration. You're witnessing a nice pickup currently in your data library sales, and I would assume kind of across wireline, et cetera. How are you thinking about the durability of the exploration cycle? Is this just a reaction to higher crude prices, or do you think we'll see a multi-year improvement in exploration activity, given the need for the industry to locate new reserves, shale production growth slows, and in order to improve the diversity of supply, given the Middle East conflict? Just your thoughts on the durability of the exploration cycle would be great.

[Olivier Le Peuch, CEO at SLB]

Yeah. I think indeed, the fundamental firsts are favorable and constructive for the global exploration, and it's driven by the energy security, by the exploiting resource, national resource, and to the need for certain, if not the majority of the customer to replace their reserve and to bring and build a long-term portfolio that includes deepwater, highly valuable resource. We see that the exploration cycle and exploration appraisal is developing nicely, and I think we see this not being a trend of one quarter, but a long-term trend that we support reserve replacement across different basins, both in frontier, in infrastructure-led exploration, deepwater, but also in some land exploration to further secure eventual development in some region. We see this as an underlying strength, and we have the portfolio to match it.

[Olivier Le Peuch, CEO at SLB]

We have the reserve performance wireline portfolio with unique differentiated technology that are being used on the vast majority of the high-value wells, exploration wells that happen. We have the digital offering, both in our platform and application, but also obviously into our exploration data, as it was highlighted this quarter. We are introducing new technology in Well Construction, including AlphaSight, which is the latest generation of our geosteering tool that provides the best performing tool to place exploration well in the spot for maximum success. We believe we are very well placed to benefit from this global trend.

[Scott Gruber, Analyst at Citigroup]

Great. I appreciate the color. Thank you.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Stephane Biguet, CFO at SLB]

Yep.

[Operator]

Your next question comes from James West of Melius Research. Your line is open.

[James West, Analyst at Melius Research]

Thanks. Hi, Olivier, Stephane.

[Stephane Biguet, CFO at SLB]

Hey.

[Olivier Le Peuch, CEO at SLB]

Good morning, James.

[James West, Analyst at Melius Research]

So-

[Stephane Biguet, CFO at SLB]

Yes.

[James West, Analyst at Melius Research]

No problem. Olivier, I wanted to just hone in on the Middle East situation. Obviously, people want to get back to work. We want to see a recovery post-conflict. You've probably been in the region recently, and I'm sure you're in touch with everybody in the region. What's kind of the level of urgency to get things flowing again, get back to work, get drilling activity and production activity going? I know you've talked about your 95% of fourth quarter last year levels, but what do you think we look like after we get back to activity?

[Olivier Le Peuch, CEO at SLB]

Clearly, we see that the engagement level and frequency of engagement for customers in recent weeks and days actually is increasing. To secure mobilization resource to plan and to tailor solution to the recovery of the wells that have been shut, or to plan for accelerating the deployment of resource to do the infill drilling to catch up and expand capacity. I think it varies from country to country. Some like Iraq are more concerned and are constrained by security. We have seen activity restored and starting to be strengthening in UAE, in Qatar, to a certain extent in Saudi. I think these are the sign that I think activity is being built gradually. We have not seen a material impact in the recent conflict re-escalation as we have seen in the last 12 days.

[Olivier Le Peuch, CEO at SLB]

Customers are eager to restore production, and hence they are looking for solutions for well intervention. They're looking for solutions that can assure that the shutting well can be restored and the solution that fit the production recovery solution or the intervention solution can be deployed at scale in the coming weeks and coming months. Yes, activity engagement is happening, and I think we are getting the strong signal that aside from re-escalation and worsening of the conflict as it stands today, we see a gradual recovery unfolding in the third quarter.

[James West, Analyst at Melius Research]

Great. Then maybe to hone in a little bit more on the exact nature of the work you think you'll see initially. I'm assuming it's going to be a lot of production-related work. Is that a fair assumption that there will be a lot of interventions and a lot of the ChampionX business getting active first before we see new well drilling?

[Olivier Le Peuch, CEO at SLB]

I think I see threefold and three vector of activity.

[James West, Analyst at Melius Research]

Okay

[Olivier Le Peuch, CEO at SLB]

Indeed, the combination of production recovery that includes well intervention, includes ChampionX capability, that includes coiled tubing intervention to restore or to kick wells back into production. I see also Digital being considered and being a new catalyst. This crisis being an occasion, a catalyst for accelerating digital deployment to unlock the potential of existing wells and to assure best performance. We are being involved in several contracts in region to make it happen. Finally, for the company and the region or the country that can mobilize rigs for infill drilling and expansion of capacity, going beyond the intervention, going beyond restoring production and accelerating capacity response to the lost supply in the last few months.

[James West, Analyst at Melius Research]

Great. Thanks, Olivier.

[Olivier Le Peuch, CEO at SLB]

Thank you, James.

[Operator]

Your next question comes from David Anderson with Barclays. Your line is open.

[David Anderson, Analyst at Barclays]

Hi, good morning, gentlemen. An improving offshore business is clearly an underlying theme for you this quarter. FIDs this year have already surpassed full year 2025. Deepwater rig count is higher as well. I would think you'd have better visibility here than just about any other part of your business for 2027. The question I'm just wondering is, should we at least see double-digit growth in offshore next year for both production side with OneSubsea and higher activity in Well Construction?

[Olivier Le Peuch, CEO at SLB]

I think directionally, it's fair to say that the acceleration of the FID we see finally setting in place this year and the pipeline of ongoing next year that will set the tone for indeed a deepwater activity that will certainly grow directionally well into next year. We have set an ambition, as you know, that our subsea booking will reach $9 billion over two years, and hence being visibly accretive to our current revenue rate into 2026 and 2027. Yes, globally and directionally, we expect visible growth. Difficult to say at this point, depending on the whole mobilization and timing of mobilization throughout the second half of this year and throughout next year and the exact timing of FID that will still depend upon all parties and including the host country to sign agreement. This will still push or pull some FID approval here and there.

[Olivier Le Peuch, CEO at SLB]

We see significant activity already starting in Africa, West Africa, and East Africa in the coming months. We see Mediterranean to be a nice setup in 2027. We see East Asia following the FID and some contract award to be also very prolific for gas development. We continue to see Latin America, from Brazil to Guyana and Suriname, to continue to grow and to be an engine of growth. Not forgetting the mature basin of North Sea, Norwegian sector and Gulf of Mexico that they continue to look for a capital-efficient solution, including boosting, as you have seen some announcement, and we continue to develop at pace the proven reserve and focus on the infrastructure to lead development.

[Olivier Le Peuch, CEO at SLB]

You combine all of this, you have a setting that is highly favorable, that was in the making, and that to some extent, this crisis created the catalyst to secure and accelerate going forward as energy security, exploring resource has become a priority and gas development continue to be a driver as well.

[David Anderson, Analyst at Barclays]

Appreciate that color there. If I could make my second question more of a macro question here. On the Middle East, you had mentioned production's going to take longer to return. I think that's a little bit controversial. I think the broader market seems to think that production comes right back very quickly within a couple of months. Can you tell us why you think that's going to take a little bit longer? Is that certain countries that are a little bit different? I know we're talking about this intervention work and everything happening. If you could just provide a little bit more detail on what you're seeing at the ground level and why you've come to that conclusion.

[Olivier Le Peuch, CEO at SLB]

Yeah. We believe that it would not be prudent to assume that the things will restore in weeks. We believe that the condition that has not met yet, and particularly around security in some countries, specifically Iraq, and for production capacity in Kuwait, will not necessarily give, in short term, the capability to unlock and come back to the full production. We are not only talking about the export capacity from the Strait or pipelines. I think this would take time now. The well intervention and the capacity that many country have to restore, yes, it will take weeks and months, and yes, as we exit this year, certain countries will already be well on their way to have restored full capacity, if not being on their way to expand capacity beyond. I think we know that.

[Olivier Le Peuch, CEO at SLB]

It's a mix, and I think here I cannot do more than comment on grading the mix from the one that are untouched, like Oman or the one that are severely damaged, like Bahrain, Iraq, and Kuwait, and in between UAE and Saudi Aramco. You put all this into a different phasing, and depending on the mobilization resource, you'll have a grading of recovery of production. Yes, gradually it will improve, and gradually it will be over weeks, months, or quarter, depending on the condition that are set and depending on the resolution of the conflict will pan out to be always positive, in my opinion, and always gradually growing going forward. It's very difficult to pinpoint a time where this will intersect the previous capacity or the previous production total.

[David Anderson, Analyst at Barclays]

Okay. Appreciate your thoughts. Thank you.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your next question comes from Neil Mehta with Goldman Sachs. Your line is open.

[Neil Mehta, Analyst at Goldman Sachs]

Hey, good morning, Olivier and team. I really appreciate all the color you provided around data center opportunity set and the path to $2 billion of exit rate revenue. I guess there are a couple components around it, but for those of us who have probably spent less time on these modular systems, can you just simplify what exactly is the product that you're providing here for every part of the data center, and what's the value add to customers? Then can you just talk about how we should think about the economics of this? I would imagine it's a little bit lower EBITDA margin, but higher free cash flow conversion. Just thinking about the economics and then helping us simplify what the product offering is.

[Olivier Le Peuch, CEO at SLB]

Yeah. I think to keep it simple and to explain how did we develop the right of play into this market, I think you have to undertake for two or three years. I think we have realized that we could deliver a high-quality, high-availability, modular construction equipment offsite to package this modular equipment destined towards the server hall of the data center, or destined towards the cooling equipment of the data center. Then package this with modular construction so that they are delivered from an offsite, large-scale manufacturing site to the diversity of the data center site in any state or ultimately in any country. The benefit it brings to the hyperscaler, it brings a reliable, scalable and value assurance of delivering at a short lead time, flexibly across different data centers.

[Olivier Le Peuch, CEO at SLB]

We have delivered, as we noted into the one announcement we did last week, a 1.3 GW of various equipment capacity across more than 20 or 30 different data centers from one single site of manufacturing large scale. That's the beauty of it. The value proposition and economics from the hyperscaler is that it provides valuable delivery at the shorter lead time, and it can demonstrate scalability for any data center in any state. It brings simplicity, it brings quality, and I think that's what we built on. It's both for server infrastructure or cooling solution. It's built on a capability that we can transfer from our engineering processing capability, both the logistics, the manufacturing and the engineering capability. We are starting to add design capability to it, as you have seen from the NVIDIA announcement.

[Olivier Le Peuch, CEO at SLB]

Future fitting of equipment, commissioning equipment as well, as you will see into the Meta announcement that we have made. All in all, very interesting capability for the hyperscaler and something that they look for. We are getting a lot of requests and a lot of pull, actually.

[Stephane Biguet, CFO at SLB]

Now, Neil, on the financial profile of this business, to your question, yes, from a pure margin standpoint, this business is currently not accretive to SLB's overall margins. Of course, it's very accretive to top-line growth and very accretive to earnings growth. As you alluded to, it is a capital-light business model that we have, and the type of contract and contractual terms we have result into very strong free cash flow generation. We are quite happy to see the earnings growth and the free cash flow of this business.

[Neil Mehta, Analyst at Goldman Sachs]

Maybe you can unpack the new announcement here around the gigawatts data center in Canada with Meta. How many more opportunities like that are there, and can you give us a sense of what are the constraints to scaling this business? I would imagine that demand for prefab work is enormous. What is the constraint? Is it the facility size in Shreveport, for example? What's the limitation?

[Olivier Le Peuch, CEO at SLB]

I think we have been able to scale this beyond what we had planned originally by expanding, by improving, by optimizing, and by starting to scale within the constraints or the compass we have set. For the specific Canada setup that we are preparing with Meta, we set up a sister center if you like, sister campus to what we have done in Shreveport. We know how to start from scratch easily. This is collectively speaking, a low capital intensity. We'll be ready to scale this because we have the lesson learned. We have done it at scale. We're delivering quarter capacity every month from the Shreveport campus. We'll expand this into Canada, and we will continue to do that as new business and new project unfolds. In this particular case, we are doing a little bit more than just delivering module.

[Olivier Le Peuch, CEO at SLB]

We are fitting the module in place onto the data center. We are commissioning this, we are pursuing to a level of system integration design that expand our capability set and prepare us for the next project award.

[Neil Mehta, Analyst at Goldman Sachs]

Yes.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your next question comes from Arun Jayaram with JPMorgan. Your line is open.

[Arun Jayaram, Analyst at JPMorgan]

Yeah. Olivier, good morning. I was wondering if you could.

[Olivier Le Peuch, CEO at SLB]

Morning.

[Arun Jayaram, Analyst at JPMorgan]

Talk a little bit more about your Middle East pipeline. We've seen a number of, call it, tender announcements from some of your OFS peers in Saudi Arabia and Iraq. I was wondering if you could just talk a little bit about your pipeline of potential opportunities, and maybe just general relative positioning in light of some of these awards.

[Olivier Le Peuch, CEO at SLB]

No, we feel very good about our position in Middle East. First, we have built quite a backlog of contracts in the last 18 months in the multi-bid award, including some award in Saudi, in Iraq, in UAE, and in Kuwait that we're executing and part of our backlog. We feel very good about those wins and those contracts award. We believe that we have maintained, if not reinforced, in most of the country, our market position. You'd expect more award to be coming in the coming weeks or coming months that will solidify our market position. Again, we are proud of what we are delivering to our customers in the Middle East. We have a lot of fit for basin capability that are in place that are recognized.

[Olivier Le Peuch, CEO at SLB]

We have a pretty large integration capability set in Saudi Aramco, in Saudi, and in other, including in Kuwait or in Iraq, that I think we're leveraging. We are more and more successful with our digital capability in the region. The current recovery of Middle East is calling upon our production and recovery capability, well intervention, chemistry, and production solution that we can fit for the market. We're very pleased, and you see the size and the scale of our business today. We're not concerned about leaving behind opportunity. We will have a nice growth in the second half of this year as we have guided, and we expect this to only expand into 2027.

[Arun Jayaram, Analyst at JPMorgan]

Got it. My follow-up, offshore, clearly a theme with this sprint. Olivier, I was wondering maybe you could give us a little bit of an update on the OneSubsea JV. We did notice quite a number of awards this quarter. You mentioned the $9 billion order ambitions. How is SLB evolving your product and solutions capabilities within the JV? Love to hear more about that.

[Olivier Le Peuch, CEO at SLB]

No, I think we're indeed very happy the momentum that we are seeing in the OneSubsea JV. I think we're benefiting from the portfolio we have. I think the portfolio that includes now what we needed to expand to be having a more complete portfolio of trees and manifold and the umbilicals, as you have seen, that I think that complements what we used to have in OneSubsea before. I think we have a more comprehensive portfolio that address all the basins and make us competitive to all the basins, and that have a fit solution for all the water condition and all the geology and all the characteristics of the fluids, gas, oil assets that we are addressing. In addition, I think we continue to see significant momentum in our processing solution, and we have seen some recently announced award on the boosting solution.

[Olivier Le Peuch, CEO at SLB]

We continue to work with customers in the domain of production recovery to link the future recovery capability of their reserve with subsea processing capability that we have that are unique. We continue to develop processing to differentiate. We continue to develop digital capability, and we continue to standardize and modularize our solution to make it more effective for deployment and to be more competitive into the standard trees and manifold solutions. Again, we are successful across different basin, in Africa, in Asia, in Latin America. We are continuing to build on our legacy, Gulf of America and the North Sea.

[Olivier Le Peuch, CEO at SLB]

You have seen that we have also strategically entered into alliance with Equinor and with BP particularly, to develop and to work side by side in early feed and design to optimize the subsea architecture to leverage the long-term solution that we foresee could unlock more economics for the customer and to position ourselves for life-of-field solution. Life-of-field solution is the last part where we are investing to find a solution to intervene those wells, and done some acquisition in that sense, and also continue to work with partners, like Subsea7, to provide end-to-end alliance solution for development or for intervention going forward. Very pleased with progress, and certainly at the right time in this new product cycle rebound.

[Arun Jayaram, Analyst at JPMorgan]

Great. Thank you.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your next question comes from Derek Podhaizer with Piper Sandler. Your line is open.

[Derek Podhaizer, Analyst at Piper Sandler]

Hey, good morning. I wanted to ask about your margin outlook. In the core, OneSubsea, ChampionX, some of the synergy pulls through there. Well Construction held up really well. Just thinking about this margin momentum as you head into 2027 off that 24% EBITDA margin that you stated for your expectation for fourth quarter this year. Maybe just talk towards the core as far as momentum you're seeing into next year.

[Stephane Biguet, CFO at SLB]

Sure. On the OneSubsea side, if you remember, we had a few transitory issues and startup costs in the first quarter, the good news is that the margins increased in the second quarter. This is why you see Production Systems increasing margins as well. In the second half, OneSubsea will continue to increase margin as well. It's a gradual increase throughout the quarters for OneSubsea. You mentioned ChampionX as well, as Olivier indicated, we are quite happy to see quarter after quarter ChampionX margins continuing to increase despite some inflationary pressure we have on chemicals that mostly come from the Middle East conflict, by the way. Regardless, because synergies are unfolding, we continue to see ChampionX margins increasing. Well Construction, yeah.

[Stephane Biguet, CFO at SLB]

True, despite the severe disruption in the Middle East, they managed to hold the margins flat because we had a good mix of activities in Latin America and North America. You put all this together, you of course will have an end-of-year sales in Digital as well. Digital is always recording the best quarter margins in the fourth quarter. That's what will get us to this, more or less, the same level in Q4 as we were in Q4 of last year, around 24%.

[Derek Podhaizer, Analyst at Piper Sandler]

Got it. Great. That's helpful. Maybe sticking on digital, very solid quarter growth across all four of your sub-segments. I understand expiration can be a little lumpy for the year, clear adoption and momentum across the other three segments. It's this dynamic you really laid out for us at the recent Digital Day. Maybe if you could talk to us about some of your recent wins and really the primary drivers behind that growth and how you see adoption evolving over time.

[Olivier Le Peuch, CEO at SLB]

I think you have seen in the prepared remarks, I'm reiterating what we have highlighted during the Digital Market Day. I think digital operation and AI will be the key lever of growth and dynamic and adoption in the market. In addition to this, our platform approach from Delfi to Lumi to Agora, which is our edge platform, and Tela, which is our AI platform, I think are combining to give us the, I would say, the comprehensive differentiated offering that I think is attracting market award. I think you have seen the diversity of what you have announced across the different geographies, across the different customer landscape. We expect this to continue because we see track record, we see we can help customer create value through digital solution, be it in the geoscience planning cycle or be it in operation.

[Olivier Le Peuch, CEO at SLB]

Partly in drilling operation, we are seeing a lot of success of adoption of autonomous or automated solution drilling. We're starting to unlock the value on production solution by establishing new autonomous solution that can unlock, and we do that with a customer actually in Middle East, and we are expanding this in other regions. All across digital operation AI will shape the future of adoption, but it is built on our platform, it is built on our domain, our partnership, and our global scale.

[Derek Podhaizer, Analyst at Piper Sandler]

Great. Thank you for all the comments. I'll turn it back.

[Stephane Biguet, CFO at SLB]

Thank you.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your next question comes from Keith Mackey with RBC. Your line is open.

[Keith Mackey, Analyst at RBC]

Hey, thanks, good morning. We've been hearing more about conversations happening in Venezuela. You also announced a framework agreement with PDVSA recently. Can you just discuss how that agreement is important to growing your business in Venezuela and just what is happening there more broadly and when you think that it could start to become a little bit more of a major contributor?

[Olivier Le Peuch, CEO at SLB]

I think first, I wanted to give a word to the situation in Venezuela. Unfortunately, two weeks back, there was an earthquake that really shattered the whole country. I think this is still a country under recovery. I think first a word to the whole industry there and to the whole country as we all witness this, and it's a tragic incident. We have been, I would say, for the last two years working already in country, scaling our source, scaling our capability, working under the OFAC license with an IOC, Chevron, and I think having a large scope to support them. We have used this to continue to develop our capability, to continue to prepare for the recovery, and to work side by side with the new entrants that are preparing a re-entry and scaling to the country.

[Olivier Le Peuch, CEO at SLB]

On this year, it means that we are securing contracts, we are securing a work scope with international company that either were there or that are reinforcing their position in country. We are accompanying them into preparing and planning and mobilizing resource as we speak, with significant scaleup that will happen during the next few months to give us a significant exit rate that will enter at present 2027 with multiple customers and multiple contracts that will shape 2027 in a significant growth curve compared to where we were in 2025 and where we are in 2026. As a reminder, I think we used to have more than 3,000 people. At the peak, we used to generate visibly more than $1 billion in this country.

[Olivier Le Peuch, CEO at SLB]

Difficult to say when we will reach this level. It's clear that having the dynamic of reinvestment under the right condition will support high growth. We have positioned ourselves very well. We already are securing the contract and the additional work scope beyond what we have done for the last two years to scale in 2026 H2 and to scale in 2027.

[Keith Mackey, Analyst at RBC]

Okay. Appreciate the comments there. Just maybe stepping back a little bit on the FID comment. 30% increase in long-cycle FIDs and bodes well for 2027. Can you just comment generally on the revenue conversion to SLB of FIDs of this nature? Does it generally lead to multi-years of growth? What is the time lag between an FID and sort of when your revenue off of that might peak?

[Olivier Le Peuch, CEO at SLB]

The only good answer to this is depends. Depending on the FID, depending on the order contract, depending on the position we earn on that FID, between any FID and the first well drilled, there is typically at least 12 months. The FID are typically these days are two to three years as a minimum, if not three to five years, depending on number of wells, number of subsidiaries, and the number of phases of those projects. Between contractor world and first revenue, a few quarters, and then the duration of any of this FID deepwater is typically to the order of two or three years as a minimum. Typically, they come in phases as the customer are prudent in the way they plan and scale this large deepwater investment.

[Olivier Le Peuch, CEO at SLB]

This deepwater go to two or three phases typically that last in excess of five to six years and hence create a momentum for the years to come. That's where it is.

[Keith Mackey, Analyst at RBC]

Perfect. Yeah. Sounds like we're setting up for multi-year upcycle offshore. Thanks for the color. Appreciate it.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your next question comes from Saurabh Pant with Bank of America. Your line is open.

[Saurabh Pant, Analyst at Bank of America]

Hi. Good afternoon, Olivier.

[Olivier Le Peuch, CEO at SLB]

Good morning.

[Saurabh Pant, Analyst at Bank of America]

Olivier, I want to touch on the Middle East a little bit. It's kind of a two-part question, but these are some of the recent themes that we have been hearing. First part is on the pricing dynamics in the Middle East. There was a little bit of noise around some LSTK contracts being awarded. I know that's a pretty old, mature business model in the country, right? Maybe just talk to the broader pricing dynamics in the Middle East that you're seeing. The other part of the question is around the logistics disruption, then the cost inflation that we saw early in the conflict. It sounds like things might be getting a little better as you learn to live with it, you sort out your supply chain, everything rewires and your costs start to moderate a little bit.

[Saurabh Pant, Analyst at Bank of America]

Maybe if you can touch on those two points, it'll be pricing dynamic and then just the cost set up and if that's improving as we go forward.

[Olivier Le Peuch, CEO at SLB]

Yeah, indeed. Building on your second part of the question first, I think indeed we are learning how to hear, just as I said in my prepared remark, the logistics and the supply, and localize the logistics and the supply differently to avoid some of the excessive costs and at the same, to continue to operate and provide business continuity and efficiency into the scalable solution that provide as we mobilize back within every country. This will fade away, and as we gradually recover, we'll put these behind us, and I think we'll have an impact. We'll gradually remove this impact. From the pricing has been, generally speaking, globally a headwind in 2026, and particularly in large competitive tenders, bid in integration, in stimulation or in subsidies has been something that has been with us.

[Olivier Le Peuch, CEO at SLB]

As the market is tightening, as the market is trying to mobilize for additional growth and additional capacity, naturally and gradually the outlook will improve as capacity will tighten. We expect this to be something that will not necessarily being a headwind as we go forward in 2027 and beyond.

[Saurabh Pant, Analyst at Bank of America]

Fantastic. No, Olivier, that's good. I want to just switch here a little bit towards your data center solutions business. Just on the point you made about widening your scope, trying to capture a bigger portion of the pie. You noted for the Canada data center you would be doing engineering and design, and then I think thermal management, decarbonized power would come later on. Maybe just give us some context on what portion of the pie of the overall data center spending is addressable for SLB right now, and where do you think that can go and-

[Olivier Le Peuch, CEO at SLB]

I-

[Saurabh Pant, Analyst at Bank of America]

How can you capture that organically versus inorganically?

[Olivier Le Peuch, CEO at SLB]

I don't think we'll have time to go into detail and to explain this in a detailed way that could address your question. I think the simplest way to answer this is that we have the confidence that we would exit rate and continue to grow organically to the diversity of that scale, the solution, and the scope expansion, including international, including Asia and Canada and the U.S. to support an exit rate that will exceed $2 billion by the end of next year. That is, in essence, giving us a significant growth, and I think the time will continue to grow obviously as we expand the scope. The sky is the limit at the moment, and our growth rate.

[Saurabh Pant, Analyst at Bank of America]

Right. Okay. Fantastic, Olivier. I'll turn it back. Thank you.

[Olivier Le Peuch, CEO at SLB]

Thank you.

[Operator]

Your last question comes from the line of Marc Bianchi with TD Cowen. Your line is open.

[Marc Bianchi, Analyst at TD Cowen]

Thank you very much. Saurabh caught me having this question I had. Maybe Olivier, you could talk a little bit more on the point to get to the $2 billion run rate. How much of that currently sits in backlog, and how much do you need to go get? Maybe you could talk a little bit more about the pipeline of opportunities, maybe how many different projects you're looking at. Does it include other parts of the equation besides the cooling that you're talking about?

[Olivier Le Peuch, CEO at SLB]

First, to keep it simple, I think the backlog is already in place to support this $2 billion or more. That give us opportunity to chase for more to prepare for more future and to high-grade. To continue to develop our scope from design to expanding our capability set. To try to participate to design and start to expand as well. No, it's already in the pipeline. That's the reason why we feel confident to announce it.

[Olivier Le Peuch, CEO at SLB]

We will continue to build, we'll continue to explore, we'll continue to work with different customers we have secured in the last six to nine months to explore how we can develop this further, how we can add value and not only scaling manufacturing on, but also scaling to the product and the technology offering that can help optimize the performance of those data centers and expand beyond the inner side of the data center to start to touch the cooling loop, full optimization, as well as touch into the decarbonized power provision for some of the centers. That's the combination of expansion that we are looking in that will go beyond the $2 billion I've just mentioned.

[Marc Bianchi, Analyst at TD Cowen]

Yep. Very good. Thank you, Olivier. I'll leave it there.

[Olivier Le Peuch, CEO at SLB]

Thank you very much. Thank you, Marc.

[Operator]

I will now turn the call over to SLB for closing comments.

[Olivier Le Peuch, CEO at SLB]

Thank you. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflections. First, the market is beginning to exhibit the characteristics of an upcycle. The need to replenish inventories, diversify supply, develop domestic resources, and rebuild spare capacity is supporting increased customer investment across both short- and long-cycle markets. This will drive higher activity, with deepwater in particular expected to accelerate into 2027. Combined with the increased activity that will be required to restore production capacity in the Middle East as conditions allow, these dynamics create a compelling outlook for our core business. Second, we continue to capture exciting growth beyond our core. Our digital and AI solutions are becoming increasingly critical to our customers' operations, while data center solution is expanding our reach into critical infrastructure for the AI economy.

[Olivier Le Peuch, CEO at SLB]

Both business are gaining momentum, extending capabilities into new markets and creating additional revenues for long-term growth. Third, we're well-positioned to capture the opportunities ahead. Our leadership in international and deepwater, combined with our expanded capabilities in production recovery, aligns SLB with where our customers have direct investments. As the cycle strengthens, we expect this position to translate into differential growth and performance. With this, I will conclude today's call. Thank you all.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• James McDonald, Senior VP of Investor Relations and Industry Affairs
• Olivier Le Peuch, CEO
• Stephane Biguet, CFO

Analysts

• Scott Gruber, Analyst at Citigroup
• James West, Analyst at Melius Research
• David Anderson, Analyst at Barclays
• Neil Mehta, Analyst at Goldman Sachs
• Arun Jayaram, Analyst at JPMorgan
• Derek Podhaizer, Analyst at Piper Sandler
• Keith Mackey, Analyst at RBC
• Saurabh Pant, Analyst at Bank of America
• Marc Bianchi, Analyst at TD Cowen