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Excrept from filing document 2024-12-31

Certain information required to be furnished pursuant to Part III of this Form 10 K is set forth in and is incorporated by reference from the registrant s definitive proxy statement for its 2025 Annual General Meeting of Shareholders to be filed by the registrant with the Securities and Exchange Commission SEC pursuant to Regulation 14A within 120 days after December 31 2024 the 2025 Proxy Statement
We are SLB a global technology company driving energy innovation for a balanced planet With a global presence in more than 100 countries and employees representing almost twice as many nationalities we work each day on innovating energy technology delivering digital at scale decarbonizing industries and developing and scaling new energy systems that accelerate the energy transition
Today the world faces the challenge of providing secure and affordable energy to meet growing demand while rapidly decarbonizing for a sustainable future With nearly a century of market and technology leadership SLB is well positioned and committed to being a leader in providing solutions to address this trilemma
In October 2022 we changed our brand name to SLB and unveiled a new logo that underscores our vision for a decarbonized energy future This bold change highlighted our leadership as a global technology company focused on driving energy innovation within traditional energy sources and beyond The SLB brand builds on nearly a century of technology innovation and industrialization Our identity symbolizes SLB s commitment to moving farther and faster in facilitating the world s energy needs today and forging the road ahead for a sustainable future
Digital Integration Combines SLB s industry leading digital solutions and data products with its integrated offering of Asset Performance Solutions APS This Division enables greater performance for our customers by reducing cycle times and risk accelerating returns increasing productivity and lowering costs and carbon emissions
Reservoir Performance Consists of reservoir centric technologies and services that are critical to optimizing reservoir productivity and performance Reservoir Performance develops and deploys innovative technologies and services to evaluate intervene and stimulate reservoirs providing customers with greater insights into their assets and maximizing their return on investment
Well Construction Combines the full portfolio of products and services to optimize well placement and performance maximize drilling efficiency and improve wellbore assurance Well Construction provides operators and drilling rig manufacturers with services and products related to the design and construction of a well
Production Systems Develops technologies and provides expertise that enhances production and recovery from subsurface reservoirs to the surface into pipelines and to refineries Production Systems provides a comprehensive portfolio of equipment and services including subsurface production systems subsea and surface equipment and services and midstream production systems
SLB s four Divisions operate through a geographical structure of four Basins that are aligned with critical concentrations of activity Americas Land Offshore Atlantic Middle East North Africa and Asia The Basins are configured around common regional characteristics that enable us to deploy fit for purpose technologies operating models and skills to meet the specific customer needs in each Basin The Basins are further organized into GeoUnits which can be a region a single country or comprise several countries With a strong focus on customers the Basins identify opportunities for growth and are focused on agility responsiveness and competitiveness
Supporting the Divisions is a global network of research and development centers Through these centers we advance SLB s technology programs to enhance industry efficiency lower finding and producing costs improve productivity maximize reserve recovery and increase asset value safely securely and sustainably These centers also support SLB s investments in lower carbon energy sources and carbon capture technologies
On April 2 2024 SLB announced a definitive agreement to purchase ChampionX Corporation ChampionX in an all stock transaction ChampionX is a global leader in chemistry solutions artificial lift systems and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely efficiently and sustainably around the world Under the terms of the agreement ChampionX shareholders will receive 0 735 shares of SLB common stock in exchange for each ChampionX share At the closing of the transaction ChampionX shareholders will own approximately 9 of SLB s outstanding shares of common stock ChampionX reported revenue of approximately 2 7 billion for the nine months ended September 30 2024 The transaction which is subject to regulatory approvals and other customary closing conditions received the approval of the ChampionX stockholders at a special meeting held on June 18 2024 It is anticipated that the transaction will close in the first quarter of 2025
Consisting of our Reservoir Performance WeIl Construction and Production Systems Divisions Core remains SLB s largest engine of growth Building on decades of technology advancement we will continue innovating new products services and technologies that make the exploration development and production of oil and gas assets cleaner more cost effective and more efficient with lower carbon emissions and less impact on the environment
We continue to build on our fit for basin approach and technology access initiatives developing bespoke and custom technology tailored to the regions and environments in which we operate This strategy allows us to address the rapid evolution of our industry into more regional markets each with distinct resource plays and economics
With the continued growth of digitally enabled technologies that improve efficiency and performance including our Transition Technologies portfolio and our SLB End to end Emissions Solutions SEES methane elimination business SLB provides solutions that enable customers to increase production from their reserves at a competitive cost and at a lower carbon intensity per barrel equivalent
Digital capabilities continue to grow throughout the energy industry as a key element of the complex systems required to meet current energy demand improve efficiency and to harness the promise of a lower carbon future SLB is uniquely positioned to support customers on their digital journeys by providing an offering which spans planning and operational workflows underpinned by a data platform which allows customers to realize efficiency gains through AI
SLB s customers have access to leading digital products that help to meet their sustainability goals by driving transparency better measurement more effective planning and more impactful and reliable outcomes To continue elevating customer offerings we are accelerating the adoption of our proprietary Delfi offering an open scalable and secure cloud based software environment
Our cloud based solutions allow our customers to transition from our established software applications to our Delfi digital platform and shift from a user based license model to software as a service SaaS subscriptions This enables customers to evolve from legacy infrastructure and deliver new levels of value creation with access to key resources such as storage and increased computing power from our cloud partners and our industry leading simulators Our evolving offering of on premises solutions allows us to support the digital transition journey of customers that prefer or are required to maintain data solutions locally
Through our LumiTM data and AI platform we also enable data driven decision making for our customers across the energy industry Data from a wide variety of sources across the subsurface and operations value chain can be accessed facilitating AI driven decision making at scale The platform can connect diverse industry data sources inclusive of on premises data platforms and customer data infrastructure
We are also focused on using digital technology to enhance operational performance for our customers Our software products sold directly to customers which are agnostic to equipment provider enable automation and autonomy to reduce cost and improve performance However we also provide digital services to enhance the SLB equipment and service offering in our Core Divisions Many of these services use embedded AI to automate insights and differentiate our service delivery offering
New Energy offers a significant opportunity to use SLB s experience and scale to drive innovation for a low carbon economy spanning industries beyond oil and gas We are building a broad diverse portfolio across New Energy sectors selected for their materiality and adjacency to existing SLB strengths and our ability to offer differentiated technology
Our New Energy portfolio builds on several fundamental SLB strengths our unique subsurface domain expertise applicable beyond oil and gas our ability to design and deploy complex processing and production systems as an original equipment manufacturer our differentiated track record for innovation and industrialization and our ability to deploy at scale in any region of the world with local knowledge and talent
Critical Minerals is a business area where SLB is applying its knowledge of extraction technologies and processing to the location and sourcing of critical minerals such as lithium from brine deposits which will be required to support the energy transition An example of this is our demonstration plant in Clayton Valley Nevada which integrates direct lithium extraction concentration and conversion technologies to more sustainably produce lithium at scale This is achieved much faster than conventional methods while using significantly less land water and chemical reagents
SLB s emissions reduction strategy is at the center of our identity and vision and our commitment to a sustainable future is underscored by bold science backed targets aligned with the Paris Agreement In 2021 SLB became the first company in the energy services industry to commit to a 2050 net zero greenhouse gas GHG emissions target including all three emission scopes
There are three key components to SLB achieving the 2050 net zero target reducing operational emissions reducing customer emissions that occur while using SLB technology and taking carbon negative actions of sufficient scale to offset any residual operating and technology emissions that SLB may have in 2050
In tandem with our 2050 net zero commitment SLB introduced a portfolio of Transition Technologies in 2021 This portfolio includes a select group of products and services that quantifiably reduce our customers GHG emissions footprint while continuing to drive high performance reliability and efficiency This portfolio is supported by an impact quantification framework and will continue to grow as sustainability is further embedded in SLB s research and development process
As a leading global technology company that operates in more than 100 countries with a workforce of approximately 110 000 people from diverse backgrounds cultures and nationalities one of SLB s greatest strengths is the diversity of our people We believe that our ability to attract develop motivate and retain a highly competent and diverse workforce has been paramount to our success for many decades We recognize that cultivating diversity and promoting inclusion are essential to attracting the best talent from around the world and enabling creativity and innovation to drive business success We believe our strong culture focused on workforce diversity inclusivity and learning and development results in the best possible working environment for all our people
SLB s long standing commitment to national and cultural diversity is reflected in our workforce composition and our philosophy to recruit and develop people from the communities in which we operate Our workforce nationality mix generally aligns with the revenue derived from the countries in which we work as reflected in the charts below This fosters a culture that is global in outlook yet local in practice
SLB also recognizes the importance of gender diversity as a source of creativity innovation and competitive advantage We are committed to leading our industry in this area and in this regard a number of years ago we established goals of having women represent 25 of our salaried workforce by 2025 and 30 by 2030 We reached our first milestone ahead of schedule as women represented 25 of our salaried workforce as of December 31 2024
SLB invests significantly in the learning and development of our people We encourage a growth mindset and provide opportunities to our people for continuous learning throughout their career This investment allows us to accelerate personal development while maximizing performance fostering an agile workforce with the skills necessary to lead SLB today and into the future
The principal methods of competition within the energy services industry are technological innovation quality of service and price differentiation These factors vary geographically and are dependent upon the different services and products that SLB offers SLB has numerous competitors both large and small
SLB owns or controls one of the industry s leading portfolios of intellectual property including but not limited to patents proprietary information trade secrets and software tools and applications that in the aggregate are material to SLB s business While SLB seeks and holds a significant number of patents covering various products and processes no particular patent or group of patents is material to SLB s business
Seasonal changes in weather and significant weather events can temporarily affect the delivery of SLB s products and services For example the spring thaw in Canada and other Northern climates and consequent road restrictions can affect activity levels while the winter months in the North Sea Russia and China can produce severe weather conditions that can temporarily reduce levels of activity In addition hurricanes and typhoons can disrupt coastal and offshore operations Furthermore customer spending patterns for exploration data software and other products may result in higher activity in the fourth quarter of the year as clients seek to fully utilize their annual budgets Conversely customer budget constraints in North America may lead to lower demand for our services and products in the fourth quarter of the year
SLB was founded in 1926 Schlumberger Limited the NYSE listed parent of the SLB family of companies is incorporated under the laws of Curaçao and has executive offices in Paris Houston London and The Hague The Company changed its brand name to SLB in 2022 but did not change the legal name of its listed parent company which remains Schlumberger Limited
The SLB website is www slb com SLB uses its Investor Relations website https investorcenter slb com as a routine channel for distribution of important information including news releases analyst presentations and financial information SLB makes available free of charge through its Investor Relations website at https investorcenter slb com access to its Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K proxy statements and Forms 3 4 and 5 filed on behalf of directors and executive officers and amendments to each of those reports as soon as reasonably practicable after such material is filed with or furnished to the SEC Alternatively you may access these reports at the SEC s website at www sec gov Copies are also available without charge from SLB Investor Relations 5599 San Felipe Houston Texas 77056 Unless expressly noted the information on its website or any other website is not incorporated by reference in this Form 10 K and should not be considered part of this Form 10 K or any other filing SLB makes with the SEC
The following discussion of risk factors known to us contains important information for the understanding of our forward looking statements which are discussed immediately following Item 7A of this Form 10 K and elsewhere These risk factors should also be read in conjunction with Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related notes included in Item 8 Financial Statements and Supplementary Data of this Form 10 K
Please carefully consider the risks described below which discuss the material factors that make an investment in our securities speculative or risky other material included or incorporated by reference in this Form 10 K and other reports and materials that we file with the SEC Additional risks and uncertainties not currently known to us or that we currently deem immaterial could also materially adversely affect our business reputation financial condition results of operations cash flows and prospects
Demand for our products and services is substantially dependent on the levels of expenditures by our customers which can change based on many factors including fluctuations in oil and gas prices Oil and gas industry downturns have resulted in reduced demand for oilfield products and services and lower expenditures by our customers which has in the past had and may in the future have a material adverse effect on our financial condition results of operations and cash flows
Demand for our products and services depends substantially on expenditures by our customers for the exploration development and production of oil and gas reserves These expenditures are generally dependent on our customers views of future demand for oil and gas and future oil and gas prices as well as our customers ability to access capital In addition the transition of the global energy sector from a primarily fossil fuel based system to a diverse system which includes renewable energy sources could affect our customers levels of expenditures
Actual and anticipated declines in oil and gas prices have in the past resulted in and may in the future result in lower capital expenditures project modifications delays or cancellations general business disruptions and delays in payment of or nonpayment of amounts that are owed to us These effects have had and may in the future have a material adverse effect on our financial condition results of operations and cash flows
The oil and gas industry has historically experienced periodic downturns which have been characterized by diminished demand for our products and services and downward pressure on the prices that we are able to charge Sustained market uncertainty can also result in lower demand and pricing for our products and services A significant industry downturn sustained market uncertainty or increased availability of economical alternative energy sources could result in a reduction in demand for our products and services which could adversely affect our business financial condition results of operations cash flows and prospects
We are a global technology company and our non US operations accounted for approximately 85 of our consolidated revenue in 2024 and 84 in 2023 and 2022 Geopolitical instability and unforeseen changes in any of the markets in which we operate could result in business disruptions or operational challenges that may adversely affect the demand for our products and services or our reputation our financial condition and our results of operations and cash flows These factors include but are not limited to the following
As an example of a risk resulting from our global operations in March 2022 we decided to immediately suspend new investment and technology deployment to our Russia operations In July 2023 we announced that we were halting shipments of products into Russia from all our facilities worldwide in response to the continued expansion of international sanctions Russia represented approximately 4 of our worldwide revenue during 2024 The carrying value of our net assets in Russia was approximately 0 6 billion as of December 31 2024 This consisted of 0 1 billion of cash and short term investments 0 3 billion of receivables 0 2 billion of fixed assets 0 3 billion of other assets and 0 3 billion of current liabilities
We continue to actively monitor the dynamic situation in Russia and Ukraine and applicable laws sanctions and trade control restrictions resulting from the conflict The extent to which our reputation operations financial results and cash flows including the ability to repatriate cash may be affected by the ongoing conflict in Ukraine will depend on various factors including the extent and duration of the conflict the effects of the conflict on regional and global economic and geopolitical conditions the effect of further laws sanctions and trade control restrictions on our business the global economy and global supply chains and the impact of fluctuations in the exchange rate of the ruble Continuation or escalation of the conflict may also exacerbate this and other risk factors identified in this Form 10 K including cybersecurity regulatory and reputational risks
Our long term success depends on our ability to effectively address the energy transition which will require adapting our technology portfolio to changing customer preferences and government requirements developing solutions to decarbonize oil and gas operations and scaling innovative low carbon and carbon neutral technologies If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate demand for our products and services as well as our relationships with various stakeholders could be adversely affected Furthermore if we fail or are perceived to not effectively implement an energy transition strategy or if investors or financial institutions shift funding away from companies in fossil fuel related industries our access to capital or the market for our securities could be negatively impacted
Our success depends in part on our ability to provide effective cybersecurity protection in connection with our digital technologies and services as well as our internal digital infrastructure We operate information technology networks and systems for internal purposes that incorporate third party software and technologies We also connect to and exchange data with external networks that may be operated by our customers suppliers alliance partners or other third parties We provide digital technologies that allow us or our customers to remotely perform wellsite and field operations We also develop software and other digital products and services that store retrieve manipulate and manage our customers information and data external data personal data and our own data
Our digital technologies and services as well as third party products services and technologies that we rely on including emerging technologies such as AI programs are subject to the risk of cyberattacks and given the nature of such attacks some incidents can remain undetected for a period of time despite efforts to detect and respond to them in a timely manner Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools including AI that circumvent controls evade detection and even remove forensic evidence of the infiltration There can be no assurance that our cybersecurity risk management program processes or systems we have designed to prevent or limit the effects of cyber incidents or attacks will be sufficient to prevent or detect material consequences arising from such incidents or attacks or to avoid a material adverse impact on our systems after such incidents or attacks do occur We have experienced and will continue to experience varying degrees of cyber incidents in the normal conduct of our business including attacks resulting from social engineering such as phishing and ransomware infections Even if we successfully defend our own digital technologies and services we also rely on providers of third party products services and networks with whom we may share data and services and who may be unable to effectively defend their digital technologies and services against attack
control of our clients operations could result in significant damage to our reputation or disruption of the services we provide to our customers or of our customers businesses In addition allegations reports or concerns regarding vulnerabilities affecting our digital products or services could damage our reputation This could lead to fewer customers using our digital products and services which could have a material adverse impact on our financial condition results of operations cash flows and future prospects In addition if our systems or third party products services and network systems for protecting against cybersecurity risks prove to be insufficient we could be adversely affected by among other things loss of or damage to our intellectual property proprietary or confidential information loss of customer supplier or our employee data breach of personal data interruption of our business operations disruption of our customers businesses increased legal and regulatory exposure including fines and remediation costs and increased costs required to prevent respond to or mitigate cybersecurity attacks These risks could harm our reputation and our relationships with our employees our customers our suppliers our alliance partners and other third parties and may result in claims against us
The energy industry is highly competitive and rapidly evolving Our business may be adversely affected if we fail to continue developing and producing innovative technologies in response to changes in the market including customer and government requirements or if we fail to deliver such technologies to our customers in a timely and cost competitive manner If we are unable to maintain technology leadership in our industry our ability to maintain market share defend maintain or increase prices for our products and services and negotiate acceptable contract terms with our customers could be adversely affected Furthermore competing or new technologies may accelerate the obsolescence of our products or services and reduce the value of our intellectual property
There can be no assurance that the steps we take to obtain maintain protect and enforce our intellectual property rights will be adequate Some of our products or services and the processes we use to produce or provide them have been granted patent protection have patent applications pending or are trade secrets Our business may be adversely affected when our patents are unenforceable the claims allowed under our patents are not sufficient to protect our technology our patent applications are denied or our trade secrets are not adequately protected Patent protection on some types of technology such as software or machine learning processes may not be available in certain countries in which we operate Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets
The tools techniques methodologies programs and components we use to provide our services and products may infringe upon or otherwise violate the intellectual property rights of others or be challenged on that basis Regardless of the merits any such claims generally result in significant legal and other costs including reputational harm and may distract management from running our business Resolving such claims could increase our costs including through royalty payments to acquire licenses if available from third parties and through the development of replacement technologies If a license to resolve a claim were not available we might not be able to continue providing a particular service or product
Our operations are subject to international regional national and local laws and regulations in every place where we operate relating to matters such as environmental protection health and safety labor and employment human rights import export controls currency emissions reporting exchange bribery and corruption anti money laundering data privacy and cybersecurity intellectual property immigration antitrust and taxation These laws and regulations are complex frequently change have tended to become more stringent over time and could conflict among one another In the event the scope of these laws and regulations expands in the future the incremental cost of compliance could adversely affect our financial condition results of operations or cash flows
Our operations are subject to anti corruption and anti bribery laws and regulations such as the Foreign Corrupt Practices Act the UK Bribery Act and other similar laws We are also subject to trade control regulations and trade sanctions laws that restrict the movement of certain goods to and certain operations in various countries or with certain persons Our ability to transfer people products and data among certain countries is subject to maintaining required licenses and complying with these laws and regulations
The internal controls policies and procedures and employee training and compliance programs we have implemented to deter prohibited practices may not be effective in preventing employees contractors or agents from violating or circumventing such internal policies or from material violations of applicable laws and regulations Any determination that we have violated or are responsible for violations of applicable laws including securities environmental trade control trade sanctions or anti corruption laws could have a material adverse effect on our financial condition Violations of international and US laws and regulations or the loss of any required licenses may result in fines and penalties criminal sanctions administrative remedies or restrictions on business conduct and could have a material adverse effect on our business operations and financial condition In addition any major violations could have a significant effect on our reputation and consequently on our ability to win future business and maintain existing customer and supplier relationships
Continuing political and social attention to the issue of climate change has resulted in both existing and proposed international agreements and national regional and local legislation and regulatory measures to limit GHG emissions and mitigate the effects of climate change The implementation of these agreements including the Paris Agreement the Europe Climate Law and other existing or future regulatory mandates may adversely affect the demand for our products and services impose taxes on us or our customers require us or our customers to reduce GHG emissions from our technologies or operations or accelerate the obsolescence of our products or services
In addition increasing attention to the risks of climate change has resulted in an increased possibility of litigation or investigations brought by public and private entities against oil and gas companies in connection with their GHG emissions as well as descriptions of their sustainable products and services As a result we or our customers may become subject to court orders compelling a reduction of GHG emissions or requiring mitigation of the effects of climate change or requiring other mitigation actions
There is also increased focus by our customers investors and other stakeholders on climate change sustainability and energy transition matters Actions to address these concerns or negative perceptions of our industry or fossil fuel products and their relationship to the environment have led to initiatives to conserve energy and promote the use of alternative energy sources which may reduce the demand for and production of oil and gas in areas of the world where our customers operate and thus reduce future demand for our products and services In addition initiatives by investors and financial institutions to limit funding to companies in fossil fuel related industries may adversely affect our liquidity or access to capital Any of these initiatives may in turn adversely affect our financial condition results of operations and cash flows
We are subject to numerous laws and regulations relating to environmental protection including those governing GHG and other air emissions water discharges and waste management as well as the importation and use of hazardous materials radioactive materials chemicals and explosives The technical requirements of these laws and regulations are becoming increasingly complex stringent and expensive to implement These laws sometimes provide for strict liability for remediation costs damages to natural resources or threats to public health and safety Strict liability can render us liable for damages without regard to our degree of care or fault Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances and as a result we could be liable for the actions of others
We use and generate hazardous substances and wastes in our operations In addition many of our current and former properties are or have been used for industrial purposes Accordingly we could become subject to material liabilities relating to the investigation and cleanup of potentially contaminated properties and to claims alleging personal injury or property damage as a result of exposures to or releases of hazardous substances In addition stricter enforcement or changing interpretations of existing laws and regulations the enactment of new laws and regulations the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business operations and financial condition
The technical complexities of our operations expose us to a wide range of significant health safety and environmental risks Our operations involve the use of radioactive materials chemicals explosives and other equipment and services that are deployed in challenging exploration development and production environments Accidents or acts of malfeasance involving these services including remotely operated services or equipment or a failure of a product or service including as a result of a cyberattack could cause personal injury loss of life damage to or destruction of property equipment or the environment or suspension of operations which could materially adversely affect us Any well incidents including blowouts at a well site or any loss of containment or well control may expose us to additional liabilities which could be material Generally we rely on contractual indemnities releases and limitations on liability with our customers and insurance to protect us from potential liability related to such events However our insurance may not protect us against liability for certain kinds of events including events involving pollution or against losses resulting from business interruption Moreover we may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate Any damages caused by our services or products that are not covered by insurance or are in excess of policy limits or subject to substantial deductibles could adversely affect our financial condition results of operations and cash flows
We or ChampionX may terminate the merger agreement between the parties the merger agreement in certain circumstances as described in our Current Report on Form 8 K filed with the SEC on April 2 2024 If the proposed acquisition is not completed for any reason including as a result of failure to obtain required regulatory approvals the market price of our common stock may be adversely affected we may experience negative reactions from the financial markets customers suppliers and other constituencies we will be required to pay certain costs relating to the acquisition and we may be required to pay a termination fee under certain circumstances set forth in the merger agreement
If the acquisition is completed the success of the acquisition will depend on among other things our ability to combine our business with that of ChampionX in a manner that facilitates growth opportunities and realizes anticipated synergies If we are not able to successfully achieve these objectives the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected
We have developed and will continue to develop and set goals targets and other objectives related to sustainability matters including our net zero emissions target and our energy transition strategy Statements related to these goals targets and objectives reflect our current plans and aspirations and do not constitute a guarantee that they will be achieved Our efforts to research establish accomplish and accurately report on these goals targets and objectives expose us to numerous operational reputational financial legal and other risks Our ability to achieve any stated goal target or objective including with respect to emissions reduction is subject to numerous factors and conditions some of which are outside of our control Our targets are based on empirical data and estimates that reflect our understanding of current best practices for measuring or estimating emissions or other metrics but we anticipate that future innovations in both measurement technologies and estimation methodologies could cause us to revise our baseline as well as re calculate progress toward our targets
Our business faces increased scrutiny from certain investors and other stakeholders related to our sustainability activities including the goals targets and objectives that we announce and our methodologies and timelines for pursuing them If our sustainability practices do not meet investor or other stakeholder expectations and standards including any third party ratings used by stakeholders which continue to evolve our reputation our ability to attract or retain employees our ability to access capital and our attractiveness as an investment or business partner could be negatively affected Similarly our failure or perceived failure to pursue or fulfill our sustainability focused goals targets and objectives to comply with ethical environmental or other standards regulations or expectations or to satisfy various reporting standards with respect to these matters within the timelines we announce or at all could adversely affect our business or reputation as well as expose us to government enforcement actions and private litigation
Our future success depends on our ability to recruit train and retain qualified personnel We require highly skilled personnel to operate and provide technical services and support for our business Competition for the personnel necessary for our businesses intensifies as activity increases technology evolves and customer demands change In periods of high utilization it is often more difficult to find and retain qualified individuals This could increase our costs or have other material adverse effects on our operations
Our business has been and in the future will be affected by severe weather events in areas where we operate which could materially affect our operations and financial results Extreme weather conditions such as hurricanes flooding landslides and heat waves have in the past resulted in and may in the future result in the evacuation of personnel stoppage of services and activity disruptions at our facilities in our supply chain or at well sites or result in disruptions to our customers operations Particularly severe weather events affecting platforms or structures may result in a suspension of activities Climate change may impact the frequency and or intensity of such events In addition acute or chronic physical impacts of climate change such as sea level rise coastal storm surge inland flooding from intense rainfall and hurricane strength winds may damage our facilities Any such extreme weather events may result in increased operating costs or decreases in revenue
SLB maintains a cyber risk management program designed to identify assess manage mitigate and respond to cybersecurity threats This program is integrated within the Company s enterprise risk management system and addresses both the corporate information technology environment and customer facing products and services
The underlying controls of the cyber risk management program are based on recognized best practices and standards for cybersecurity and information technology including the National Institute of Standards and Technology NIST Cybersecurity Framework CSF and the International Organization Standardization ISO 27001 Information Security Management System Requirements SLB has an annual assessment performed by a third party of the Company s cyber risk management program against the NIST CSF
SLB has a Cybersecurity Operations Center operating in three locations to provide 24 7 monitoring of its global cybersecurity environment and to coordinate the investigation and remediation of alerts A program for staging incident response drills is in place to prepare support teams in the event of a significant incident
Cyber partners are a key part of SLB s cybersecurity infrastructure SLB partners with leading cybersecurity companies and organizations leveraging third party technology and expertise SLB engages with these partners to monitor and maintain the performance and effectiveness of products and services that are deployed in SLB s environment as well as if necessary assist in responding to cyber attacks
SLB s Cybersecurity Director reports to SLB s Chief Information Officer and is the head of the Company s cybersecurity team The Cyber Security Director is responsible for assessing and managing SLB s cyber risk management program informs senior management regarding the prevention detection mitigation and remediation of cybersecurity incidents and supervises such efforts The cybersecurity team has decades of experience selecting deploying and operating cybersecurity technologies initiatives and processes around the world and relies on threat intelligence as well as other information obtained from governmental public and private sources including external consultants engaged by SLB
The Audit Committee of the Board of Directors oversees SLB s cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks The cybersecurity team briefs the Audit Committee on the effectiveness of SLB s cyber risk management program typically on a quarterly basis In addition cybersecurity risks are reviewed by the SLB Board of Directors at least annually as part of the Company s enterprise risk management process
SLB faces risks from cybersecurity threats that could have a material adverse effect on its business financial condition results of operations cash flows or reputation SLB has experienced and will continue to experience cyber incidents in the normal course of its business However prior cybersecurity incidents have not had a material adverse effect on SLB s business financial condition results of operations or cash flows See Risk Factors Business and Operational Risks Our operations are subject to cyber incidents that could have a material adverse effect on our reputation business financial condition results of operations and cash flows
The following graph compares the cumulative total stockholder return on SLB common stock with the cumulative total return on the Standard Poor s 500 Index S P 500 Index and the cumulative total return on the Philadelphia Oil Service Index It assumes 100 was invested on December 31 2019 in SLB common stock in the S P 500 Index and in the Philadelphia Oil Service Index as well as the reinvestment of dividends on the last day of the month of payment The stockholder return set forth below is not necessarily indicative of future performance The following graph and related information shall not be deemed soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 as amended or the Securities Exchange Act of 1934 as amended except to the extent that SLB specifically incorporates it by reference into such filing
The following discussion and analysis contains forward looking statements including without limitation statements relating to our plans strategies objectives expectations intentions and resources Such forward looking statements should be read in conjunction with our disclosures under Item 1A Risk Factors of this Annual Report on Form 10 K
This section of the Form 10 K generally discusses 2024 and 2023 items and year to year comparisons between 2024 and 2023 Discussions of 2022 items and year to year comparison between 2023 and 2022 that are not included in this Form 10 K can be found in Management s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of SLB s Annual Report on Form 10 K for the fiscal year ended December 31 2023
2024 was a strong year for SLB as we successfully navigated evolving market conditions to deliver revenue growth margin expansion and solid free cash flow Year on year revenue increased by 10 and pretax segment operating income grew by 12 while we generated 6 6 billion in cash flow from operations and 4 0 billion in free cash flow enabling us to return 3 3 billion to shareholders and reduce net debt by 571 million These results demonstrate SLB s ability to deliver consistent financial performance despite moderating upstream investment growth driven by our global scale unmatched digital offerings and ongoing focus on cost optimization
Our full year results were highlighted by 12 international revenue growth This performance was led by the Middle East Asia and Europe Africa which grew 18 and 13 respectively The Middle East Asia achieved record revenues while growth in Europe Africa was bolstered by the Aker subsea business which was acquired in the fourth quarter of 2023 Excluding this acquired business international revenue increased 7 year over year outperforming the rig count over the same period
Our Core divisions Reservoir Performance Well Construction and Production Systems delivered 9 revenue growth compared to the prior year led by 24 growth in Production Systems largely due to the subsea acquisition Production Systems grew 9 organically due to double digit increases in surface systems completions and artificial lift Reservoir Performance also delivered 9 growth underpinned by strong stimulation and intervention activity in the production space
Digital Integration revenue increased 10 year on year driven by 20 growth in digital which reached 2 44 billion for the year Accelerated adoption of our digital technologies marked a milestone year highlighted by strategic collaborations with cross industry leaders the launch of the Lumi data and AI platform new Performance Live centers to enable remote operations and the achievement of fully autonomous drilling operations
Our fit for basin approach domain expertise and integration capabilities have established us as the performance partner of choice for addressing the operating challenges our customers face throughout the life cycle of their assets As operators across the industry increasingly prioritize production and recovery our strengths are more critical than ever With the anticipated completion of our announced acquisition of ChampionX we are set to further strengthen our production and recovery capabilities enabling us to deliver even greater value to our customers This strategic acquisition will also enhance the resilience of the SLB portfolio providing some stability against the cycles in the years to come
While upstream investment growth will remain subdued in the short term due to global oversupply we anticipate that the oil supply imbalance will gradually abate Global economic growth and a heightened focus on energy security coupled with rising energy demand from AI and data centers will support the investment outlook for the oil and gas industry throughout the rest of the decade
In our Core business we are making unmatched contributions to the discovery development and extraction of oil and gas reserves fueling global energy supply We have the leading offering in digital And we are pursuing a meaningful opportunity in New Energy and decarbonization where we have established a differentiated market position Together this is laying a strong foundation for our business
Given our confidence in the business outlook and our ability to continue generating strong cash flows in January 2025 our Board of Directors approved a 3 6 increase to our quarterly dividend Additionally we entered into accelerated share repurchase transactions to repurchase 2 3 billion of SLB common stock This positions us to increase total return to shareholders in the form of dividends and share repurchases from 3 3 billion in 2024 to at least 4 billion in 2025
Fourth quarter revenue of 9 3 billion increased 1 sequentially driven by digital sales in North America and higher activity in the Middle East Europe and North Africa On a divisional basis Digital Integration led the growth driven by increased demand for digital products and solutions while Production Systems benefited from strong backlog conversion as customers continued to invest in maximizing recovery from existing assets
International revenue of 7 5 billion increased 1 sequentially driven by the Middle East Asia and Europe Africa The Middle East Asia grew 2 sequentially driven by strong activity in the United Arab Emirates higher drilling in Egypt and increased stimulation intervention and evaluation activity in Qatar These gains were offset by weaker performance in Saudi Arabia and Australia Europe Africa also grew 2 sequentially largely driven by increased activity in Europe and North Africa Revenue in Latin America declined 3 sequentially primarily due to reduced drilling activity in Mexico
Reservoir Performance revenue of 1 8 billion declined 1 sequentially driven by reduced intervention and stimulation activity partially offset by stronger evaluation activity Revenue was impacted by lower stimulation and intervention work in Saudi Arabia which was offset by increased activity in the rest of the Middle East Asia and North America
SLB has entered into accelerated share repurchase ASR transactions to repurchase 2 3 billion of its common stock Under the terms of the ASR agreements on January 13 2025 SLB received an initial share delivery of approximately 80 of the shares to be repurchased based on the closing price per share of its common stock on the preceding day SLB expects the remainder of the shares to be delivered no later than the end of May 2025 Under certain circumstances SLB may be required to deliver shares or pay cash at its option upon settlement of the ASR agreements The total number of shares ultimately purchased under the ASR agreements will depend upon the final settlement and will be based on volume weighted average prices of SLB s common stock during the terms of the ASR transactions less a discount
After a lock up period of three years ACC is entitled to sell its 20 interest in ACCH to SLB during a period of six months for a price based on the fair market value of the combined business subject to a floor of NOK 1 0 billion and a ceiling of NOK 2 1 billion the put option Additionally after the expiration of the put option SLB has the right to purchase ACC s 20 interest in the combined business during the following six months for a price based on the fair market value of the combined business subject to a floor of NOK 1 5 billion and a ceiling of NOK 2 6 billion
As of December 31 2024 SLB had 4 67 billion of cash and short term investments and committed credit facility agreements with commercial banks aggregating 5 0 billion all of which was available SLB believes these amounts along with cash generated by ongoing operations will be sufficient to meet future business requirements for the next 12 months and beyond
On October 17 2024 SLB entered into a definitive agreement to sell its interest in the Palliser APS project in Canada Under the terms of the agreement SLB will receive cash proceeds of approximately 430 million subject to closing adjustments that are typical for such a transaction The transaction which is subject to regulatory approval and other customary closing conditions is expected to close in the first quarter of 2025 SLB recorded revenue of approximately 0 5 billion relating to this project during 2024
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires SLB to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent liabilities and the reported amounts of revenue and expenses The following accounting policies involve critical accounting
SLB bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources Actual results may differ from these estimates under different assumptions or conditions
SLB maintains an allowance for doubtful accounts in order to record accounts receivable at their net realizable value Judgment is involved in recording and making adjustments to this reserve Allowances have been recorded for receivables believed to be uncollectible including amounts for the resolution of potential credit and other collection issues such as disputed invoices Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved or if the financial condition of SLB s customers were to deteriorate resulting in an impairment of their ability to make payments
As a large multinational company with a long history of operating in a cyclical industry SLB has extensive experience in working with its customers during difficult times to manage its accounts receivable During weak economic environments or when there is an extended period of weakness in oil and gas prices SLB typically experiences delays in the payment of its receivables However except for a 469 million write off during 2017 as a result of the political and economic conditions in Venezuela SLB has not historically had material write offs due to uncollectible accounts receivable SLB has a global footprint in more than 100 countries As of December 31 2024 three of those countries individually accounted for greater than 5 of SLB s net accounts receivable balance of which only one the United States accounted for greater than 10 of such receivables
As of December 31 2024 the United States represented 11 of SLB s net accounts receivable balance As of December 31 2024 Mexico represented 9 7 of SLB s net accounts receivable balance See Note 10 to the Consolidated Financial Statements SLB s receivables from its primary customer in Mexico are not in dispute and SLB has not historically had any material write offs due to uncollectible accounts receivable relating to this customer
SLB records the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill The goodwill relating to each of SLB s reporting units is tested for impairment annually as well as when an event or change in circumstances indicates an impairment may have occurred
Under generally accepted accounting principles SLB has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount If after assessing the totality of events or circumstances SLB determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount there is no need to perform any further testing However if SLB concludes otherwise then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit If the fair value of the reporting unit is less than its carrying value an impairment loss is recorded based on that difference
SLB elected to perform the qualitative assessment described above for purposes of its annual goodwill impairment test in 2024 Based on this assessment SLB concluded it was more likely than not that the fair value of each of its reporting units was greater than its carrying amount Accordingly no further testing was required
Long lived assets including fixed assets intangible assets and investments in APS projects are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable In reviewing for impairment the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition If such cash flows are not sufficient to support the asset s recorded value an impairment charge is recognized to reduce the carrying value of the long lived asset to its estimated fair value The determination of future cash flows as well as the estimated fair value of long lived assets involves significant estimates on the part of management If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value SLB could be required to recognize impairment charges in the future
SLB conducts business in more than 100 tax jurisdictions a number of which have tax laws that are not fully defined and are evolving SLB s tax filings are subject to regular audits by the tax authorities These audits may result in assessments for additional taxes that are resolved with the authorities or potentially through the courts SLB recognizes the impact of a tax position in its financial statements if that position is more likely than not of being sustained on audit based on the technical merits of the position Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits Estimates of these tax liabilities are judgmental and are made based upon prior experience and are updated in light of changes in facts and circumstances However due to the uncertain and complex application of tax regulations the ultimate resolution of audits may result in liabilities that could be materially different from these estimates In such an event SLB will record additional tax expense or tax benefit in the period in which such resolution occurs
SLB recognizes revenue for certain long term construction type contracts over time These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer specific applications Under this method revenue is recognized as work progresses on each contract Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs Approximately 9 of SLB s revenue in 2024 6 in 2023 and 5 in 2022 was recognized under this method
The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project Revenue and profits on contracts can also be significantly affected by change orders and claims Profits are recognized based on the estimated project profit multiplied by the percentage complete Due to the nature of these projects adjustments to estimates of contract revenue and total contract costs are often required as work progresses Any expected losses on a project are recorded in full in the period in which they become probable
SLB s pension and postretirement benefit obligations are described in detail in Note 17 to the Consolidated Financial Statements The obligations and related costs are calculated using actuarial concepts which include critical assumptions related to the discount rate and the expected rate of return on plan assets These assumptions are important elements of expense and or liability measurement and are updated on an annual basis or upon the occurrence of significant events
The discount rate that SLB uses reflects the prevailing market rate of a portfolio of high quality debt instruments with maturities matching the expected timing of payment of the related benefit obligations The following summarizes the discount rates utilized by SLB for its various pension and postretirement benefit plans
The expected rate of return for SLB s retirement benefit plans represents the long term average rate of return expected to be earned on plan assets based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rate of return The average expected rate of return on plan assets for the United States pension plans was 6 00 in both 2024 and 2023 The weighted average expected rate of return on plan assets for the international pension plans was 5 91 in 2024 and 6 00 in 2023 A higher expected rate of return decreases pension expense
SLB s functional currency is primarily the US dollar Approximately 70 of SLB s revenue in 2024 was denominated in US dollars However outside the United States a significant portion of SLB s expenses is incurred in foreign currencies Therefore when the US dollar weakens in relation to the foreign currencies of the countries in which SLB conducts business the US dollar reported expenses will increase
SLB is exposed to risks on future cash flows relating to its fixed rate debt denominated in currencies other than the functional currency SLB uses cross currency interest rate swaps to provide a hedge against these cash flow risks and effectively convert the debt to US dollar denominated fixed rate debt
SLB maintains a foreign currency risk management strategy that uses derivative instruments to manage the impact of changes in foreign exchange rates on its earnings SLB enters into foreign currency forward contracts to provide a hedge against currency fluctuations on certain monetary assets and liabilities and certain expenses denominated in currencies other than the functional currency
A 10 appreciation in the US dollar from the December 31 2024 market rates would decrease the unrealized value of SLB s forward contracts by 121 million Conversely a 10 depreciation in the US dollar from the December 31 2024 market rates would increase the unrealized value of SLB s forward contracts by 133 million In either scenario the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction and therefore would have no impact on future earnings
This Form 10 K as well as other statements we make contains 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 SLB s financial and performance targets and other forecasts or expectations regarding or dependent on its business outlook growth for SLB 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 SLB and the oil and gas industry the business strategies of SLB including digital and fit for basin as well as the strategies of SLB s customers SLB s capital allocation plans including dividend plans and share repurchase programs SLB s APS projects joint ventures and other alliances the impact of the ongoing conflict in Ukraine on global energy supply access to raw materials future global economic and geopolitical conditions future liquidity including free cash flow 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 SLB s customers and changes in the level of oil and natural gas exploration and development the results of operations and financial condition of SLB s customers and suppliers SLB s inability to achieve its financial and performance targets and other forecasts and expectations SLB s inability to achieve 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 changes in monetary policy by governments pricing pressure weather and seasonal factors unfavorable effects of health pandemics availability and cost of raw materials operational modifications delays or cancellations challenges in SLB s supply chain production declines the extent of future charges SLB s inability to recognize efficiencies and other intended benefits from its business strategies and initiatives such as digital or new energy as well as its 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 Form 10 K and other filings that we make with the SEC
This Form 10 K also includes forward looking statements relating to the proposed transaction between SLB and ChampionX including statements regarding the benefits of the transaction and the anticipated timing of the transaction Factors and risks that may impact future results and performance include but are not limited to and in each case as a possible result of the proposed transaction on each of SLB and ChampionX the ultimate outcome of the proposed transaction between SLB and ChampionX the ability to operate the SLB and ChampionX respective businesses including business disruptions difficulties in retaining and hiring key personnel and employees the ability to maintain favorable business relationships with customers suppliers and other business partners the terms and timing of the proposed transaction the occurrence of any event change or other circumstance that could give rise to the termination of the proposed transaction the anticipated or actual tax treatment of the proposed transaction the ability to satisfy closing conditions to the completion of the proposed transaction other risks related to the completion of the proposed transaction and actions related thereto the ability of SLB and ChampionX to integrate the business successfully and to achieve anticipated synergies and value creation from the proposed transaction the ability to secure government regulatory approvals on the terms expected at all or in a timely manner litigation and regulatory proceedings including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction
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 Form 10 K 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 Form 10 K are made as of January 22 2025 and SLB disclaims any intention or obligation to update publicly or revise such statements whether as a result of new information future events or otherwise
Schlumberger Limited Schlumberger N V incorporated in Curaçao and its consolidated subsidiaries collectively SLB form a global technology company that drives energy innovation for a balanced planet With a global footprint in more than 100 countries and employees representing almost twice as many nationalities SLB works each day on innovating energy technology delivering digital at scale decarbonizing industries and developing and scaling new energy systems that accelerate the energy transition
On April 2 2024 SLB announced a definitive agreement to purchase ChampionX Corporation ChampionX in an all stock transaction ChampionX is a global leader in chemistry solutions artificial lift systems and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely efficiently and sustainably around the world Under the terms of the agreement ChampionX shareholders will receive 0 735 shares of SLB common stock in exchange for each ChampionX share At the closing of the transaction ChampionX shareholders will own approximately 9 of SLB s outstanding shares of common stock ChampionX reported revenue of approximately 2 7 billion for the nine months ended September 30 2024 The transaction which is subject to regulatory approvals and other customary closing conditions received the approval of the ChampionX stockholders at a special meeting held on June 18 2024 It is anticipated that the transaction will close in the first quarter of 2025
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period On an ongoing basis SLB evaluates its estimates including those related to collectibility of accounts receivable revenue recognized for certain long term construction type contracts over time recoverability of fixed assets goodwill intangible assets Asset Performance Solutions investments and investments in affiliates income taxes exploration data contingencies and actuarial assumptions for employee benefit plans SLB bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources Actual results may differ from these estimates under different assumptions or conditions
SLB recognizes revenue upon the transfer of control of promised products or services to customers at an amount that reflects the consideration it expects to receive in exchange for these products or services The vast majority of SLB s services and product offerings are short term in nature The time between invoicing and when payment is due under these arrangements is generally between 30 to 60 days
Revenue is recognized for certain long term construction type contracts over time These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer specific applications Revenue is recognized as work progresses on each contract Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project Revenue and profits on contracts can also be significantly affected by change orders and claims Due to the nature of these projects adjustments to estimates of contract revenue and total contract costs may be required as work progresses Progress billings are generally issued upon completion of certain phases of work as stipulated in the contract Any expected losses on a project are recorded in full in the period in which they become probable
Investments in companies in which SLB does not have a controlling financial interest but over which it has significant influence are accounted for using the equity method SLB s share of the after tax earnings of equity method investees is included in Interest other income Investments in privately held companies in which SLB does not have the ability to exercise significant influence are accounted for using the cost method Investments in publicly traded companies in which SLB does not have the ability to exercise significant influence are reported at fair value with unrealized gains and losses reported as a component of Interest other income
SLB s exploration data library consists of completed and in process seismic surveys that are licensed on a nonexclusive basis SLB capitalizes costs directly incurred in acquiring and processing the exploration data Such costs are charged to Cost of services based on the percentage of the total costs to the estimated total revenue that SLB expects to receive from the sales of such data However an individual survey generally will not carry a net book value greater than a 4 year straight line amortized value
The carrying value of the exploration data library is reviewed for impairment annually as well as when an event or change in circumstance indicating impairment may have occurred Adjustments to the carrying value are recorded when it is determined that estimated future cash flows which involve significant judgment on the part of SLB would not be sufficient to recover the carrying value of the surveys Significant adverse changes in SLB s estimated future cash flows could result in impairment charges in a future period
Asset Performance Solutions APS projects are generally focused on developing and co managing production of customers assets under long term agreements SLB invests its own services and products into the field development activities and operations and is compensated on a fee per barrel basis or based on cash flow generated This includes certain arrangements whereby SLB is only compensated based on incremental production that it helps deliver above a mutually agreed baseline
SLB capitalizes its investments in a project including the direct costs associated with providing its services or products These capitalized investments are amortized to the Consolidated Statement of Income as the related production is achieved based on the units of production method whereby each unit produced is assigned a pro rata portion of the unamortized costs based on estimated total production resulting in a matching of revenue with the applicable costs
SLB is exposed to concentrations of credit risk primarily relating to cash short term investments receivables from clients and derivative financial instruments SLB places its cash and short term investments with financial institutions and corporations and limits the amount of credit exposure with any one of them SLB regularly evaluates the creditworthiness of the issuers in which it invests By using derivative financial instruments to hedge certain exposures SLB exposes itself to some credit risk SLB minimizes this credit risk by entering into transactions with high quality counterparties limiting the exposure to each counterparty and monitoring the financial condition of its counterparties
As a large multinational company SLB s accounts receivable are spread over many countries and customers The United States represented 11 of SLB s net accounts receivable balance at December 31 2024 No other country accounted for greater than 10 of SLB s accounts receivable balance SLB maintains an allowance for uncollectible accounts receivable based on expected collectibility and performs ongoing credit evaluations of its customers financial condition If the financial condition of SLB s customers were to deteriorate resulting in an impairment of their ability to make payments adjustments to the allowance may be required
During the second quarter of 2024 SLB commenced a program to realign and optimize its support and service delivery structure in certain parts of its organization As a result SLB recorded severance charges of 111 million during the second quarter 65 million during the third quarter and 61 million during the fourth quarter which are classified in Restructuring other in the Consolidated Statement of Income SLB may record additional charges relating to workforce reductions in 2025 as it continues to realign and optimize its structure
On October 2 2023 SLB Aker and Subsea7 closed their previously announced joint venture The new business OneSubsea will drive innovation and efficiency in subsea production by helping customers unlock reserves and reduce cycle time OneSubsea now comprises SLB s and Aker s subsea businesses which include an extensive complementary subsea production and processing technology portfolio world class manufacturing scale and capacity access to industry leading reservoir and digital domain expertise unique pore to process integration capabilities and strengthened research and development capabilities
In addition to contributing its subsea business to the joint venture at closing SLB issued 5 1 million shares of its common stock valued at 306 5 million to Aker Concurrently Subsea7 purchased a 10 interest in exchange for 306 5 million in cash to Aker The joint venture also issued a promissory note valued at 87 5 million to Aker SLB owns 70 of the joint venture while Aker owns 20 and Subsea7 owns 10
The formation of the joint venture was accounted for as a business combination As the majority owner and controlling entity SLB is considered the acquirer and reflects OneSubsea as a consolidated subsidiary in its Consolidated Financial Statements The transfer of the SLB subsea business to the joint venture was accounted for at historical cost while the Aker subsea business was recorded based on the fair value of the assets acquired and liabilities assumed of approximately 1 3 billion
The combination of the historical cost and fair value discussed above resulted in net assets of the joint venture of approximately 2 8 billion upon formation Aker and Subsea7 s combined 30 interest in the initial net assets of OneSubsea of 0 8 billion was recognized in Noncontrolling interests in the Consolidated Balance Sheet The 0 1 billion difference between the noncontrolling interest recognized and the fair value of Aker s net assets acquired less the fair value of the SLB shares of common stock issued to Aker was recorded as an increase to Common stock in the Consolidated Balance Sheet
Aker reported revenue for its subsea business of approximately 1 5 billion for the year ended December 31 2022 and 1 4 billion for the nine months ended September 30 2023 Assuming SLB had acquired Aker s subsea business as of January 1 2022 Net income attributable to SLB and diluted earnings per share on a pro forma basis would not be materially different from SLB s reported results for the years ended December 31 2023 and 2022 respectively
At December 31 2024 SLB had committed credit facility agreements with commercial banks aggregating 5 0 billion of which 2 0 billion matures in February 2028 and 3 0 billion matures in December 2029 These committed facilities support commercial paper programs in the United States and Europe There were no borrowings under these facilities at December 31 2024 and 2023
Commercial paper borrowings are classified as long term debt to the extent they are backed up by available and unused committed credit facilities maturing in more than one year and to the extent it is SLB s intent to maintain these obligations for longer than one year There were no borrowings under the commercial paper programs at December 31 2024 and 2023
SLB s functional currency is primarily the US dollar Approximately 70 of SLB s revenues in 2024 were denominated in US dollars However outside the United States a significant portion of SLB s expenses is incurred in foreign currencies Therefore when the US dollar weakens strengthens in relation to the foreign currencies of the countries in which SLB conducts business the US dollar reported expenses will increase decrease
Changes in foreign currency exchange rates expose SLB to risks on future cash flows relating to its fixed rate debt denominated in currencies other than the functional currency SLB uses cross currency interest rate swaps to provide a hedge against these risks These contracts are accounted for as cash flow hedges with the fair value of the derivative recorded on the Consolidated Balance Sheet and in Accumulated other comprehensive loss Amounts recorded in Accumulated other comprehensive loss are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings
SLB is exposed to risks on future cash flows to the extent that the local currency is not the functional currency and expenses denominated in local currency are not equal to revenues denominated in local currency SLB uses foreign currency forward contracts to provide a hedge against a portion of these cash flow risks These contracts are accounted for as cash flow hedges
SLB is also exposed to changes in the fair value of assets and liabilities denominated in currencies other than the functional currency While SLB uses foreign currency forward contracts to economically hedge this exposure as it relates to certain currencies these contracts are not designated as hedges for accounting purposes Instead the fair value of the derivative is recorded on the Consolidated Balance Sheet and changes in the fair value are recognized in the Consolidated Statement of Income as are changes in the fair value of the hedged item Transaction losses of 139 million in 2024 154 million including 90 million related to the Argentina devaluation see Note 3 Charges and credits for further details in 2023 and 96 million in 2022 were recognized in the Consolidated Statement of Income net of related hedging activities
SLB has issued credit default swaps CDSs to certain financial institutions that have an aggregate notional amount outstanding of approximately 1 15 billion as of December 31 2024 The CDSs relate to borrowings provided by the financial institutions to SLB s primary customer in Mexico The borrowings were used by this customer to pay certain of SLB s outstanding receivables Approximately 350 million of the outstanding CDSs reduces on a monthly basis over its remaining 14 month term while the remaining 800 million reduces on a monthly basis over its remaining 18 month term The fair value of these derivative liabilities was not material at December 31 2024
SLB is authorized to issue 4 500 000 000 shares of common stock par value 0 01 per share of which 1 400 850 420 and 1 427 394 843 shares were outstanding on December 31 2024 and 2023 respectively Holders of common stock are entitled to one vote for each share of stock held SLB is also authorized to issue 200 000 000 shares of preferred stock par value 0 01 per share which may be issued in series with terms and conditions determined by the SLB Board of Directors No shares of preferred stock have been issued
SLB grants performance share units to certain key employees The number of shares earned is determined at the end of each performance period based on SLB s achievement of certain predefined targets as described in the underlying performance share unit agreement In the event SLB exceeds the predefined target shares for up to a maximum of 250 of the target award may be awarded In the event SLB falls below the predefined target a reduced number of shares may be awarded If SLB falls below the threshold award performance level no shares will be awarded As of December 31 2024 2 4 million performance share units were outstanding assuming the achievement of 100 of target
Restricted stock awards do not pay dividends or have voting rights prior to vesting and generally vest at the end of three years or ratably in equal tranches over a three year period The fair value of a restricted stock award is generally the quoted market price of SLB s stock on the date of grant less the present value of the expected dividends not received prior to vesting
SLB recorded net pretax charges of 540 million in 2024 188 million of charges in the US and 352 million of net charges outside the US 110 million in 2023 2 million of net credits in the US and 112 million of charges outside the US and 347 million in 2022 379 million of net credits in the US and 32 million of net charges outside the US These charges and credits are included in the table above and are more fully described in Note 3 Charges and Credits
A number of the jurisdictions in which SLB operates have tax laws that are not fully defined and are evolving SLB s tax filings are subject to regular audit by the tax authorities These audits may result in assessments for additional taxes that are resolved with the tax authorities or potentially through the courts Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits Due to the uncertain and complex application of tax regulations the ultimate resolution of audits may result in liabilities which could be materially different from these estimates
SLB s leasing activities primarily consist of operating leases for administrative offices manufacturing facilities research centers service centers sales offices and certain equipment Total operating lease expense which approximates cash paid and includes short term leases was 1 4 billion in each of 2024 and 2023 and 1 2 billion in 2022
SLB is party to various legal proceedings from time to time A liability is accrued when a loss is both probable and can be reasonably estimated Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote However litigation is inherently uncertain and it is not possible to predict the ultimate disposition of any of these proceedings
In addition to the US defined benefit pension plans SLB sponsors several other international defined benefit pension plans The most significant of these international plans are the International Staff Pension Plan and the UK pension plan collectively the International plans The International Staff Pension Plan covers certain international employees hired prior to July 1 2014 and is based on years of service and compensation on a career average pay basis The UK plan covers employees hired prior to April 1 1999 and is based on years of service and compensation on a final salary basis
The asset represents the difference between the plan assets and the projected benefit obligation PBO The PBO represents the actuarial present value of benefits based on employee service and compensation and includes an assumption about future compensation levels The accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation but does not include an assumption about future compensation levels
The expected rate of return on assets assumptions reflect the long term average rate of return expected to be earned on plan assets The assumptions have been determined based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rates of return The appropriateness of the assumptions is reviewed annually
SLB s funding policy is to contribute amounts that are based upon a number of factors including the funded status of the plans amounts that are deductible for income tax purposes legal funding requirements and available cash flow SLB does not expect to make any material contributions to its postretirement benefit plans in 2025
SLB management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a 15 f of the Securities Exchange Act of 1934 as amended the Exchange Act SLB s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
SLB management assessed the effectiveness of its internal control over financial reporting as of December 31 2024 In making this assessment it used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework Based on this assessment SLB s management has concluded that as of December 31 2024 its internal control over financial reporting is effective based on those criteria
We have audited the accompanying consolidated balance sheet of Schlumberger Limited and its subsidiaries the Company as of December 31 2024 and 2023 and the related consolidated statements of income comprehensive income stockholders equity and cash flows for each of the three years in the period ended December 31 2024 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of December 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of December 31 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended December 31 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of December 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the COSO
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control Over Financial Reporting Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As described in Note 13 to the consolidated financial statements the Company s tax filings are subject to regular audit by the tax authorities and those audits may result in assessments for additional taxes that are resolved with the tax authorities or potentially through the courts Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits
The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are the significant judgment applied by management in determining these liabilities including a high degree of estimation uncertainty due to the uncertain and complex application of tax regulations which in turn led to a high degree of auditor judgment subjectivity and effort in performing procedures to evaluate management s estimates
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the identification and recognition of uncertain tax positions These procedures also included among others i evaluating management s process for determining the estimated liabilities for uncertain tax positions ii testing the completeness and reasonableness of uncertain tax positions recorded in the consolidated financial statements and iii evaluating assessments received from the relevant tax authorities Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of assumptions used by management including management s assessment of whether tax positions are more likely than not of being sustained
SLB has carried out an evaluation under the supervision and with the participation of SLB s management including the Chief Executive Officer CEO and the Chief Financial Officer CFO of the effectiveness of SLB s disclosure controls and procedures as such term is defined in Rules 13a 15 e and 15d 15 e under the Exchange Act as of the end of the period covered by this report Based on this evaluation the CEO and the CFO have concluded that as of the end of the period covered by this report SLB s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that SLB files or submits under the Exchange Act is recorded processed summarized and reported within the time periods specified in the Securities and Exchange Commission s rules and forms SLB s disclosure controls and procedures include controls and procedures designed so that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to its management including the CEO and the CFO as appropriate to allow timely decisions regarding required disclosure There has been no change in SLB s internal control over financial reporting that occurred during the fourth quarter of 2024 that has materially affected or is reasonably likely to materially affect SLB s internal control over financial reporting
SLB s residual transactions or dealings with the government of Iran in 2024 consisted of payments of taxes and other typical governmental charges Certain non US subsidiaries of SLB maintained depository accounts at the Dubai branch of Bank Saderat Iran Saderat and at Bank Tejarat Tejarat in Tehran and in Kish for the deposit by NIOC of amounts owed to non US subsidiaries of SLB for services rendered in Iran prior to the wind down and for the maintenance of such amounts previously received One non US subsidiary also maintained an account at Tejarat for payment of local expenses such as taxes SLB anticipates that it will discontinue dealings with Saderat and Tejarat following the receipt of all amounts owed to SLB for prior services rendered in Iran
See Item 1 Business Information About Our Executive Officers of this Report for information regarding SLB s executive officers The information set forth under the captions Election of Directors Corporate Governance Process for Selecting New Directors and Corporate Governance Board Committees in SLB s 2025 Proxy Statement is incorporated herein by reference The information set forth under the caption Stock Ownership Information Delinquent Section 16 a Reports in SLB s 2025 Proxy Statement is incorporated herein by reference to the extent any disclosure is required
SLB has a Code of Conduct that applies to all of its directors officers and employees including its principal executive financial and accounting officers or persons performing similar functions SLB s Code of Conduct is posted on its website at https www slb com about who we are our code of conduct SLB will provide without charge upon request copies of our Code of Conduct Requests for copies of our Code of Conduct should be sent in writing to SLB Chief Legal Officer and Secretary 5599 San Felipe Houston Texas 77056 SLB intends to disclose future amendments to the Code of Conduct and any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules at https www slb com about who we are our code of conduct
SLB has a securities transactions policy governing the purchase sale and other dispositions of its securities by directors officers and employees SLB believes that its securities transactions policy is reasonably designed to promote compliance with insider trading laws rules and regulations and any applicable listing standards A copy of SLB s securities transactions policy is filed as Exhibit 19 to this Form 10 K
The information under the captions Stock Ownership Information Security Ownership by Management and Our Board Stock Ownership Information Security Ownership by Certain Beneficial Owners and Executive Compensation Tables Equity Compensation Plan Information in SLB s 2025 Proxy Statement is incorporated herein by reference
Second Supplemental Indenture dated as of June 26 2020 by and among Schlumberger Investment S A as issuer Schlumberger Limited as guarantor and The Bank of New York Mellon as trustee including form of global notes representing 2 650 Senior Notes due 2030 incorporated by reference to Exhibit 4 1 to SLB s Current Report on Form 8 K filed on June 26 2020
Third Supplemental Indenture dated as of May 15 2023 by and among Schlumberger Investment S A as issuer Schlumberger Limited as guarantor and The Bank of New York Mellon as trustee including form of global notes representing 4 500 Senior Notes due 2028 and form of global notes representing 4 850 Senior Notes due 2033 incorporated by reference to Exhibit 4 1 to SLB s Current Report on Form 8 K filed on May 15 2023
Fourth Supplemental Indenture dated as of May 29 2024 by and among Schlumberger Investment S A as issuer Schlumberger Limited as guarantor and The Bank of New York Mellon as trustee including form of global notes representing 5 000 Senior Notes due 2034 incorporated by reference to Exhibit 4 1 to SLB s Current Report on Form 8 K filed on May 29 2024
Officers Certificate dated as of August 11 2020 executed by Schlumberger Investment S A as issuer and Schlumberger Limited as guarantor including form of global notes representing 2 650 Senior Notes due 2030 incorporated by reference to Exhibit 4 1 to SLB s Current Report on Form 8 K filed on August 11 2020
First Supplemental Indenture dated as of September 18 2020 by and among Schlumberger Finance Canada Ltd as issuer Schlumberger Limited as guarantor and The Bank of New York Mellon as trustee including form of global notes representing 1 400 Senior Notes due 2025 incorporated by reference to Exhibit 4 2 to SLB s Current Report on Form 8 K filed on September 18 2020
Addendum to Restricted Stock Unit Award Agreements Performance Share Unit Agreements Incentive Stock Option Agreements and Non Qualified Stock Option Agreements Issued Prior to July 19 2017 incorporated by reference to Exhibit 10 27 to SLB s Annual Report on Form 10 K for the year ended December 31 2018
The Exhibits filed herewith do not include certain instruments with respect to long term debt of Schlumberger Limited and its subsidiaries inasmuch as the total amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of Schlumberger Limited and its subsidiaries on a consolidated basis SLB agrees pursuant to Item 601 b 4 iii of Regulation S K that it will furnish a copy of any such instrument to the SEC upon request

Company Name	SCHLUMBERGER LIMITED/NV Vist SEC web-site
Category	OIL, GAS FIELD SERVICES, NBC
Trading Symbol	SLB