Schlumberger Aktie

Good morning. My name is Sarah, and I will be your conference operator today and would like to welcome everyone to the SLB Investor Call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Sarah. Good morning, and welcome to our conference call following SLB's announced agreement to acquire Kelvion earlier today.

Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. With that, I will turn the call over to Olivier.

Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Earlier today, SLB announced an agreement to acquire Kelvion, a global provider of thermal management and heat exchange technologies.

This transaction marks an important milestone for SLB and accelerates our ambition to become an industrial technology partner to the data center industry. Kelvion adds scalable, energy-efficient and reliable thermal management technologies to our rapidly growing data center solutions business, addressing critical heat dissipation challenges and next-generation infrastructure.

The combination will deepen our technology portfolio, expand our addressable market and strengthen our position across the physical infrastructure required to scale AI. Over the next few minutes, I will discuss the market opportunity we are pursuing, how Kelvion advance our path towards more integrated data center infrastructure solutions and how this acquisition will enable us to continue scaling both our offerings and the global reach of this business.

Stephane will then discuss the financial profile of the transaction, and we will open the line for your questions. Let's begin. AI is driving the most significant infrastructure investment cycle in our lifetime. Demand for the computing capacity required to scale AI continues to accelerate with clear visibility to continued growth.

This investment cycle is being fueled by hyperscalers, AI companies, cloud providers, enterprises and governments building sovereign AI capabilities. But converting this demand into operating capacity is increasingly shaped by the physical requirements of AI infrastructure.

As computing architectures become more powerful, they concentrate greater capacity within each rack, creating larger and more consolidated loads. Thermal management is therefore becoming a critical enabling technology for next-generation computing infrastructure, including high-density data center and AI factories. Increasingly, the ability to bring new capacity online depends on cooling technologies and the broader systems required to move it through and ultimately out of the facility.

This has resulted in cooling technology, including becoming one of the fastest-growing markets in the build-out of AI infrastructure. In this context, our customers require a partner who can integrate and optimize these critical infrastructure systems. By combining our specialized engineering with high-value manufacturing adjacencies, we can industrialize complex technology and deploy them reliably at scale.

That is a strategic driver behind this acquisition. Over the past few years, SLB has established a differentiated data center solutions business by applying our strengths in engineering, modular manufacturing, supply chain execution and project delivery. We initially entered this market by providing manufacturing services, off-site fabrication and modular infrastructure to hyperscale customers, building on relationships established through our digital business.

Since then, we have expanded our offering into data center design, engineering and system integration and broaden both our customer base and geographic reach. A key element of our differentiation is our modular approach, which enables infrastructure to be manufactured, assembled and tested before it reaches the customer site. This modular approach can reduce on-site construction complexity and accelerate time to operation by up to 40%. In less than 3 years, we have established a right of play in this industry. Our cumulative deliveries are expected to exceed 2 gigawatts globally by the end of 2026, with revenue increasing at a compound annual growth rate CAGR exceeding 90% between 2024 and 2026.

And this is only accelerating with our data center solutions business on track to exit 2027 at an annualized revenue run rate exceeding $2 billion. As we move forward, our expanded role in design and system integration creates a scalable modular platform for adding critical technologies and delivering more integrated infrastructure solutions. And thermal management is a natural next step on our path to being recognized as an industrial technology partner to the data center industry.

This acquisition of Kelvion significantly advanced this strategy by adding critical thermal management technologies to our modular infrastructure offering, increasing our content per megawatt and unlocking higher margin growth globally. This broadens our high-value portfolio, creates efficiency and integration capability for customers and directly expands our total addressable market across the fast-growing infrastructure markets.

For more than [indiscernible] Kelvion has developed heat exchange and thermal management technologies, which are key for modern energy and industrial applications. Technologies perform critical function across the data center cooling system, transferring heat through and ultimately out of the facility. Importantly, Kelvion is already a leader in this area. Data centers are its largest and fastest-growing end market with revenue expected to reach between $1.2 billion and $1.3 billion in 2026, representing more than half of the company's total revenue.

Beyond data center, Kelvion has established position in key energy and industrial markets, including heat pumps, renewable, carbon capture and processing solutions where thermal management plays an increasingly important role in efficiency, reliability and performance. Underpinning these positions are scaled manufacturing capabilities, deep engineering and application expertise and established customer relationships across Europe and the United States.

These capabilities are highly complementary to what SLB has already built. Together, they expand our addressable market, strengthen our position across the physical infrastructure required to scale AI and advance our ability to deliver more integrated solutions to meet customers' needs across the data center infrastructure value chain. This combined platform also creates a natural pathway into several attractive adjacencies. This includes expanded access to the power market through partnerships for behind-the-meter generation as well as opportunities across geothermal and decarbonized power, building on established carbon solutions offering and digital asset management software capabilities. Ultimately, this positions SLB to participate in a total addressable market expected to exceed $150 billion by the end of the decade, representing more than 20% of the broader data center market, excluding IT and semiconductor.

Let me now describe 4 key areas of strategic fit that make this transaction compelling for our company and our customers. First, the acquisition expands our technology portfolio and strengthens our position across the data center infrastructure value chain. Kelvion heat exchanger, air cooling equipment and heat rejection technology give us a broader position across the data center cooling system.

This critical technology works in tandem with both traditional and liquid direct-to-chip cooling to meet the increasing thermal management challenges of data centers. Modern GPUs are already pushing rack loads beyond 100 kilowatts, while recently announced chip architecture are expected to approach 1,000 kilowatts. These higher density workloads will require cooling technology at a greater scale, making thermal management a critical enabler of next-generation AI infrastructure.

By combining Kelvion's thermal management expertise with SLB engineering and digital capabilities, we can deliver more integrated cooling solutions, accelerate innovation and improve thermal efficiency across the facility, leading to higher throughput of compute cycles or tokens to be processed by use of energy.

Second, this transaction gives us the ability to embed thermal management more directly into our modular infrastructure offering. Rather than treating cooling as a separate system to be later, we can bring Kelvion's technology and application expertise into the design phase alongside SLB's engineering and modular manufacturing capabilities.

This creates a more coherent infrastructure architecture with better alignment across performance requirements, configuration choices and deployment timing. For customers, that means faster execution, improved efficiency and greater confidence in system reliability as AI workloads continue to scale.

This is particularly relevant to engineering design work for next-generation modular AI factory architecture. A key example is our collaboration with NVIDIA, where SLB will serve as a modular design partner for NVIDIA DSX AI factories. Through this work, we are applying our engineering and industrialization capabilities at the design stage to improve quality and reliability, reduce cost and lead times and enable rapid and flexible scaling.

Bringing Kelvion's thermal management technologies and application expertise into this process will allow us to optimize not only how the infrastructure is modularized and fabricated, but also how cooling is integrated into the architecture from the outset.

Third, this transaction creates significant opportunity to scale the combined offering globally and establish a larger and more durable growth platform to meet customers' evolving needs. Kelvion's proven technology capabilities and market position complement SLB's existing data center solution portfolio, strengthening our high-value technology stack in the AI infrastructure value chain and broadening our participation across customers and geographies.

Strategically, Kelvion accelerates our organic growth, significantly expands our addressable market and has the potential to more than double our revenue opportunity per gigawatt of delivered capacity. Finally, Kelvion brings an established position across energy and industrial applications, which are benefiting from structural tailwinds and where thermal management is critical to performance, efficiency and reliability.

This market provides a diversified earnings base while creating opportunity to expand Kelvion's technology through SLB global customer relationships and operating footprint. Based on strategic fit and capabilities, Kelvion will become part of our new Energy and Industrial business led by Gavin Rennick, President of New Energy and Industrial.

This is where our Data Center Solutions business is managed as well as other related offerings, including carbon capture and storage and geothermal solutions. Overall, this transaction represents an exciting and deliberate next step in our data center strategy, opening new growth opportunity for SLB and our stakeholders.

Before I hand the call to Stephane, I want to recognize the Kelvion team and what they have built. Kelvion's culture is built on technology and innovation, values that SLB shares. And we look forward to welcoming our new team members to SLB following the completion of the transaction.

I will now turn the call over to Stephane, who will discuss the financial profile and transaction.

Thank you, Olivier, and good morning, ladies and gentlemen. As you have seen, SLB has entered into an agreement to acquire Kelvion from Apollo Managed Funds, the majority owner, and funds advised by Triton, which holds a minority interest.

Under the terms of the agreement, SLB will pay approximately $3.4 billion in cash and will assume approximately $0.7 billion of debt. The transaction is expected to close in the first half of 2027, subject to customary closing conditions and regulatory approvals. We intend to finance the transaction using existing cash balances and debt.

Today, I will cover 4 financial elements of the transaction. First, Kelvion's financial profile; second, the synergies we expect to generate; third, the impact on SLB's financials and growth profile; and fourth, our capital allocation priorities and continued commitment to returns to shareholders.

Let me begin with Kelvion's financial profile. Kelvion brings immediate scale, strong earnings and a high-growth trajectory. In 2026, Kelvion is expected to generate between $2.3 billion and $2.4 billion in revenue with adjusted EBITDA expected to reach between $350 million and $400 million. Kelvion's data center business, which consists of OEM products for heat exchange, heat rejection and recovery as well as modular data center infrastructure is expected to account for approximately 55% of total revenue in 2026.

This is Kelvion's most profitable and fastest-growing end market with revenue expected to increase by more than 50% from 2025 to 2026. The remainder of Kelvion's business consists of thermal management solutions serving energy, power and other diversified industrial end markets as well as a growing and highly profitable services business.

Demand visibility is strong across data center and industrial markets, highlighted by total H1 2026 bookings of $1.5 billion, a 43% year-over-year increase. Moving now to expected synergies and our financial ambition for the future. We expect to realize approximately $120 million in annual EBITDA synergies within 3 years following closing, with about 60% achieved in the second year. Approximately $70 million of these synergies are expected to come from cost savings and the remainder from incremental revenue opportunities.

Cost synergies will come primarily from supply chain efficiencies, manufacturing optimization, G&A savings and in-sourcing of supply for Kelvion equipment in SLB's process technologies and other existing business lines. Revenue synergies will come primarily from expanding access to Kelvion's technologies across SLB's existing customer base and introducing them into new geographies, particularly in Asia and the Middle East.

We also see opportunities to incorporate Kelvion's technologies into SLB's modular infrastructure offering and to expand their application across adjacent energy and industrial markets. Both cost and revenue synergies will be enabled by combining Kelvion's thermal management expertise with SLB capabilities in modeling, advanced manufacturing methods, AI-assisted design and digital tools.

With that in mind, we have laid out a road map to rapidly scale the combined data center business and have established some financial ambitions for the future. First, we expect the transaction to be accretive to both earnings per share and free cash flow per share in the first 12 months following closing. As a starting point, on a pro forma basis for 2026, SLBs and Kelvion data center businesses are expected to generate more than $2 billion in revenue and approximately $300 million in adjusted EBITDA.

Both businesses are seeing unprecedented levels of customer orders. Combined data center bookings in the first half of 2026 increased by more than 130% compared to the first half of 2025, resulting in a combined book-to-bill ratio of 1.8x for the first half of 2026. Considering this growth profile, visibility in bookings for the rest of 2026 and into 2027 and the anticipated impact of synergies, we expect the combined data center businesses to generate revenue of $4.5 billion to $5 billion and adjusted EBITDA of $700 million to $800 million in 2028.

To provide appropriate visibility into our progress towards these ambitions, we intend to combine Kelvion's data center results with those of SLB's existing Data Center Solutions business and report the consolidated financial results as soon as practically feasible following the close of the transaction.

We will determine the appropriate timing for this reporting change as part of our integration planning activities. Let me now move to the last item I want to discuss today, capital allocation. In short, this transaction does not change SLB's capital allocation priorities. We will continue to provide our core divisions with the appropriate level of capital expenditures to support the underlying market growth we expect in 2027 and beyond. Likewise, we will continue to support the secular growth we see in our digital business.

Investments in our Data Center Solutions business, now augmented by Kelvion, will be fully funded by cash flows generated by the business. These investments will not affect the capital allocated to our core divisions of digital. Both SLB and Kelvion participate in the high-growth data center value chain through capital-light business models that deliver strong free cash flows and returns on capital employed.

Capital expenditures are focused primarily on manufacturing capacity and associated equipment, while customer contracts typically include payment milestones aligned with cash expenditures. Regarding the impact of the transaction on SLB's balance sheet, the associated debt financing and assumed debt will increase leverage. However, we will remain within our previously stated full cycle target of up to 1.5x net debt to EBITDA, consistent with maintaining a strong investment-grade profile. And finally, this transaction does not change our commitment to deliver more than $4 billion in total returns to shareholders in 2026 between dividends and share repurchases.

In addition, we are establishing $4 billion as a floor for total returns to shareholders in 2027. We will provide a more precise amount as we progress through our annual planning cycle for next year. Together, these commitment reflects our confidence in SLB's cash flow outlook and our ability to invest in growth while maintaining a strong balance sheet and returning value to shareholders.

To conclude, this is a strategically compelling and financially attractive transaction for SLB. It significantly increases our participation in the fast-growing build-out of data center infrastructure and positions us to accelerate earnings growth over the next few years through a low capital intensity business model. We expect the transaction to be accretive to both earnings per share and free cash flow per share in the first 12 months following closing, and it is being completed at a valuation we believe is attractive with a transaction multiple of approximately 11x estimated 2026 adjusted EBITDA before synergies and 8.5x after synergies. I will now turn the conference call back to Olivier.

Thank you, Stephane. Ladies and gentlemen, I think we'll be ready to open the floor for your questions.

[Operator Instructions] Your first question comes from James West of Melius Research.

Olivier, Stephane, congrats on the transaction.

Good morning.

Good morning, thank you.

So first question for me, Olivier, is that it looks like you're adding more to your modular offering. It also looks to me like the modular offering is clearly taking off as a key driver or a key part of the strategy here, keeping things modular, make it more simplified for the customers and then you're delivering more content yourself.

Is that a fair statement that the customers are looking for kind of more of a one-stop shop? And then secondarily, if I could, your agreements or partnerships with companies like [ Ormont ] and Liberty and some others on the power side become also very interesting here because there could be some -- or could there be some integration with those partners as you look to scale the data center offering further as you kind of work with them and ultimately data center owners?

No. Thanks, James. Quite a complex set of questions here. So let me try to unfold it [indiscernible]. No, I got it. I think indeed, I think the ability we have to design, to manufacture, to deliver and to commission modular fabricated assembly, I think has been a cornerstone of our growth and I think has been distinctly differentiated.

And I think we are seeing this has been underpinning the significant growth that we have seen for SLB over the last 3 years, 90% CAGR and a very rich set of opportunity and design contract award as well as capacity committed contracts in the future.

But nevertheless, I think adding thermal management, adding a set of technology that are across not only the modular, but also the nonmodular solution for the data center significantly expands our right of play, significantly expand our TAM in the market and help us to not only combine this cooling technology into the modular offering and then drive on this wave of adoption, but also expand and give us opportunity to integrate and provide more system solution that includes thermal management optimization that includes fit engineering that combines modular and cooling into a solution that will achieve significant impact for the customer.

So that's what we see the path forward. And I think the feedback we are getting and the early engagement we have, I think, indicates that this is where the customer are looking for value creation and is where they believe that SLB has differentiated engineering, technology innovation capability as well as combined with Kelvion's portfolio, unique ability to expand and create FEED solution for the market, modular at first, but also expanding and expanded and optimized.

Now when it comes to power behind the meter or decarbonized solution through [indiscernible] or decarbonized gas to power using carbon capture in the future. We see it as an adjacency that we believe we will be able to leverage, providing alliance capability to the hyperscalers and to the key customers that would want to secure power provision as well as integrate the solution, modular solution and cooling solution at once.

Hence, having partners, integrated partners that will provide end-to-end scope to our customers. So that we believe is an opportunity for adjacency growth into pulling through our core solution in geothermal, pulling through our carbon capture and diversifying our customer base going forward.

Your next question comes from Scott Gruber with Citigroup.

Congrats on the deal. So obviously, Kelvion appears to be a good fit within your broader strategy. But in order to maximize your capture of this expanding TAM in data center infrastructure, are there still other pieces that you would like to add to the portfolio? And would you look to M&A to do so?

I think our focus -- I think this was a very big step that we took in our strategy, very deliberate, very intentional. And I think this is a step up into our TAM.

I think we'll focus for the foreseeable future into integration, successfully closing and leveraging the anticipated new offering, expanded offering to offer our customers the combination of both.

And I think we believe that a combination of both, one plus one will equal more than two for our customers going forward. So that's our focus going forward. We have enough momentum. We have enough growth, enough [ roofline ] that we have access to substantiate a significant growth as you have seen in our targets -- financial targets announced this morning by Stephane.

That's great. And then your commercial momentum appears very robust in this space, especially after securing the Meta award in Canada and some work in Asia. And obviously, Kelvion [ showing ] help accelerate that effort.

But I believe you're also piloting with another hyperscaler. Are you able to comment on that pilot and when you may be in a position to expand that into a full contract?

No, we don't comment on the [indiscernible] contract unless and until they are ready to come previously with us. So we have several engagements indeed.

And I think Kelvion also has a lot of hyperscaler, colocator and AI factory customers that have provided them with significant capacity commitments. We have the same. So we'll continue to work with our customers, demonstrating our -- not only our fabrication -- prefabrication modular solution, but also our engineering design capability.

And when they are realizing that we are adding now a very broad portfolio of heat exchange and thermal management solution from Kelvion, clearly, we will get more adoption. We'll get more TAM, we will get more market penetration across this customer base, joint customer base between Kelvion and SLB.

Your next question comes from Alexa Bruno with Goldman Sachs.

We wanted to touch on the long-term revenue opportunities. Can you talk a little about how much of that $150 billion TAM you can capture? And then is there a recurring revenue component from this offering?

I think our ambition is clearly to establish ourselves as an industrial partner and as a market leader to integrate the thermal management and modular solution to the market.

We believe indeed that the total cumulative TAM at that time in 2030 will be approximately or in excess of $150 billion. Our ambition would be to capture quite a part share of this. And as you can see, our rate of growth to date in SLB has been 90% CAGR, more than 50% for Kelvion. We are announcing our 2028 target is already at 50% or more.

And we believe this is -- will continue to accelerate going forward because I think we are seeing that the majority of our 2028 is already contracted. We have on top of it a rich opportunity set of pipeline with existing and future prospective customers. So I think this is a very exciting moment for us because I think the momentum we have gained put us on a trajectory to indeed have a visible market share position on this time that we are commenting.

That's helpful. And maybe just a follow-up. As you think about the international opportunity set and the geographic footprint this adds, are there any regions you're seeing key opportunities that we should be keeping in mind?

I think the dynamic is obviously at this moment, dominated by the U.S., which is investing at scale. And this is where we started our business. This is where we have established SLB modular manufacturing. But I think Kelvion has a very, very solid position in Europe where the market is acting and sovereign AI solutions are being developed.

But more interestingly, I think the Asia market, I think, has the ambition as well as the Middle East market have the ambition to develop and have the soaring solution or get additional AI capacity using the energy solution in the region. So we see the combination of U.S. first, Europe as a foundation for the customer base of Kelvion and technology there and Asia and Middle East being the area where we believe our footprint, our current contract that we have won that will start the business there in Asia and Middle East will help us to develop and expand the reach of this solution.

So it's in that order, I would say, U.S., Europe and then Asia and then Middle East.

Your next question comes from Carlos Escalante with Wolfe Research.

My question would be on -- it looks like the deal is purely complementary to what you're already doing on the data center front. So it would seem almost as if the overlap with your current business line is not a ton.

And I say that wanting to really understand what are the underlying assumptions that go into the -- into your synergy target where roughly $50 million on annual EBITDA coming from revenue. Roughly how much of that -- or if you can state the inputs and assumptions to that number and maybe expanding on some of the prior questions. How you think that could benefit in the future with cross-selling opportunities?

Yes, Carlos, thanks for highlighting revenue synergies. As usual, we do try to be a bit conservative on revenue synergies as we start the integration process because they unfold a bit later.

We will start with cost synergies and those cost synergies are procurement, indirect spend, logistics optimization, service center footprint and some G&A savings. So indeed of the $120 million, $70 million of it is cost. But again, $50 million in revenues at least within the 3 years, and then, hopefully, this will accelerate within that period or after that period where our revenue synergies will become more important. And Olivier, if you want to comment on the nature of those.

Yes. I think you are correct in saying this is complementary and complementary in many ways. I think the portfolio of customers of Kelvion is complementary to our customer portfolio. And as such, we create a pull-through of customers on both sides will be in a position to expand and explore opportunity with Kelvion's customer to modular manufacturing and modular solution that we are providing to the market as well as the [indiscernible] and us giving Kelvion's opportunity to expand into Asia or Middle East customer base where they are not so much operating today.

But more importantly, I think the ability we have to co-engineer thermal management and cooling technology into the modular solution will not only reinforce and strengthen our modular solution offering, but also give the opportunity to accelerate the penetration of this as a solution, as a FEED solution to the market to create not only the impact of 40% lead time reduction, but also significant thermal efficiency and significant efficiency in deployment of this solution to the market.

So it is customer synergy. It is including the region and across both SLB and Kelvion. And it is very importantly ability to co-engineer, design, innovate the cooling technology integration into the modular fabrication offering that we are putting to the market. So this is where we will create [ Kelvion ] synergy going forward.

And if I may add on this, quantifying that later piece of improved engineering, co-engineering, as you will understand, is quite difficult. So it's not really included in the synergy target we have laid out today. And hopefully, it will crystallize as soon as possible.

Your next question comes from Marc Bianchi with TD Cowen.

Congratulations on the deal. I wanted to first ask on the margins here. It looks like they're a bit below where SLB's margins are, but you mentioned the business is capital light, so maybe on a returns basis, that's still quite good. But just curious how you see the margins playing out over time? Is this something that as the business expands and you have better cost absorption, we could see those approach SLB type margins?

Yes, Marc, as we highlighted actually last month on our own data center business, yes, this is not a business -- the business model is different.

Currently, the margins are not accretive to the overall SLB business, but it's not something we want to compare with. It's totally different. And indeed, as you highlight, this is capital light. So in terms of free cash flow generation and return on capital employed, this business is quite attractive. And for Kelvion, the margin profile is a bit different because there's a large portion of the data center business, which has more technology content.

So of course, this brings higher margins. We have laid out the 2028 ambition. You can guess the level of margin. Is it our ultimate margin goal? No. Again, with engineering, system integration potential, et cetera. Of course, we want to participate or to bring up the margin profile in the value chain and capture more value. So it will be our intention through technology and system integration to improve the margin profile.

The other question I have was just on Kelvion's competitive landscape. Maybe you could talk about a little bit about what that competitive landscape looks like for the products that they sell. And to the extent that they may sell products to companies that are competing with SLB, what gives you confidence that you'll be able to retain that business once the deal closes?

Suffice to say, Marc, that what is unique about Kelvion is the broad nature of their technology portfolio and the broad application across various industry. Obviously, today, we are talking about data center where I think it's all about heat exchange, heat extraction and the integration into the cooling system of the data center. And I think they have a fairly relevant and fairly powerful offering there. That's the reason why and a key element of this strategic move.

But it's not only what they have. And I think they have different market application across energy, across industrial process application. And I think the customer -- the competitive landscape is not one set of customers. It's many competitors across each of these segments. So -- and that's a good thing is that it's not one single market and dependency on the customer or competitor landscape. It's fairly broad.

And I think we aim at maintaining that way. Now we're not very concerned about competitors or solutions that will affect the profile of Kelvion going forward. But there is enough momentum in data center, there's enough momentum and structural tailwinds into energy, into application, into power applications, which they participate at scale that we believe that all of this will consume and create growth going forward.

So we are very pleased and very interested into the portfolio of the very broad, very large and very diverse portfolio of Kelvion with this diverse set of market applications. It's not only data centers.

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

Olivier, maybe, Stephane, you want to answer this, but I want to touch on your 2028 target a little bit because clearly, the growth is phenomenal on that side of the business. So $4.5 billion, $5 billion in revenues, $700 million to $800 million in EBITDA.

First, just to clarify, that does not include the non-data center business of Kelvion, right? And then second part of it is to achieve that kind of a growth over the next 2 years, how should we think about the CapEx requirement, maybe any R&D spending that you need to incur to fully realize that growth potential?

Saurabh, you're absolutely right. First on your first statement, the $4.5 billion to $5 billion revenue in 2028 does not include Kelvion so-called diversified industrial business, the non-data center.

We have not laid out targets for this, but we fully intend to sustain this business and hopefully even grow it. So that's data center only. Now to your second piece of the question, the CapEx, as we have highlighted, it is capital light in the sense where as a percentage of revenue, you have to think about CapEx between 2% to 3% of revenue, if you want.

And currently, it can get closer to 3% because Kelvion is adding capacity which is a very good thing to be ready for the ongoing growth. The steady state is actually probably closer to 2% revenue. Then you have some R&D, by the way, which is critical, especially to realize the revenue synergies that we discussed earlier and the industrial logic of this deal. And -- but again, the R&D are just part of the operating margins.

And compared to other businesses, again, as a percentage of revenue, they are pretty low, even though we have room to increase it, and we'll probably do that. This will be part of our margin objective.

Fantastic. No, that's very helpful, Stephane. And then quickly a little bit on the non-data center side of Kelvion's business. It's almost half, I think, 45% or so of the company right now. How should we think about that business going forward? Maybe you can give us a little color about the geographical distribution of that business, product lines, end markets? And then just how should we think about that side of the business as we go forward?

I think first, I think we look at this as complementary to the data center. I think there's a lot of common ground of technology, heat exchange and thermal management solutions that are shared across.

So there's a lot of -- there is a body of knowledge. There is a body of capacity that I think shared across both companies, both part of that company. And I think that's the second thing is that we are intrigued if not excited about the capability set that they have built there as it applies to energy, as it applies to process technology across the value chain of renewable across the value chain of gas, power.

And these are exciting prospects that I think will aim to better understand as we review and doing the integration phase to better understand how to position it and to be in a position to grow it going forward. But very importantly, I think it's something that has a very good business today.

And we believe that technology that are being shared and developed there have application in data center. And hence, we are very interested to retain it and to look into it in quite some detail.

Your next question comes from David Anderson with Barclays.

A quick question on the backlog. I think you said 1.8 book-to-bill this year. What's the typical conversion rate on that to revenue? How long does that typically take to roll through?

So yes, thank you, Dave. Just to clarify, the 1.8 is combined both SLB Data Center and Kelvion's Data Center book-to-bill ratio for the first 6 months of 2026.

And by the way, if you split it out, it's very similar as the book-to-bill. It's relatively short cycle process in terms of bookings. So meaning that you will see these orders convert into revenue in the next 6 to 9 months. The way the work is contracted is a bit peculiar in this business. You have -- you get awarded a very large scope with certain volumes, which are pretty fixed, but the POs and the bookings come a bit gradually as you work through the contract.

And if I recall correctly, on your last call, you talked about a $2 billion run rate in your existing data center business. I believe you had said most of that was already in backlog for 2028 revenue. Can you just talk about how much of your 2028 guide that you just talked about this $4.5 billion to $5 billion is in backlog today?

So likewise, in backlog, it comes gradually. It doesn't mean that the volumes are not committed by the customer. So this $4.5 billion to $5 billion, it's either already secured in backlog or its projects which are already awarded with specific volumes committed by the customer.

But the PO is not there yet because again, POs are issued only gradually by the hyperscaler. So bottom line, if you look at both '27 and '28, a large portion is pretty secured and it's allocated by specific customers, specific projects with the corresponding capacity and volume.

So we are not just assuming taking a market growth. We are here doing it by customer and projects, and this is why we are pretty confident about the range for the combined business.

So it sounds like a really good line of sight on '27 and '28.

Your next question comes from Keith MacKey of RBC Capital Markets.

Maybe just to start out with the time line to close the first half 2027 guidance. Can you just maybe talk about some of the required regulatory approvals and other things that might have to happen in order to get to that time line? And is it truly a June 30 sort of time line? Or is there likely some cushion built in there?

Well, look, we are not going to comment. We are quite well versed into regulatory process. This is our estimate. Again, the overlap is, we believe, minimal.

So we will -- we will go through the process, go as fast as possible, of course, and we cannot be sure whether it will be the beginning of the first half or the end, but it will be within the first half.

Yes. Got it. Understood. And maybe just if we step back a little bit more broadly, what types of opportunities or potential might there be with -- for some type of integration between the industrial and data center business and the digital business.

Certainly, digital has been a very good enabler of your core business. Is there some digital opportunity on the back end of your data center business that you're tracking currently? Or is it still too early to discuss that?

As you may have seen one of the slides that we have shown earlier today, we see there's a potential adjacency and the ability we have to use some of our digital solutions, partly around our data production facilities and AI capability and to adjust it and to port it to apply to some of the integrated solutions we deploy to our customers is reality.

And I think it's something that we are not only considering but working on it. And we see customers willing to explore what we could do into adding some value onto the optimization, but also into all the data and using the AI capability as well as our modeling capability, both across the boundary of the cooling system, but also the broader set.

And as we engage in more and more in [indiscernible] scope, we'll get the opportunity to bring this capability to the forefront and then develop if we believe there is a market, develop a FEED solution market or apply our [indiscernible] solution and our solution for production data sets into this context.

So we are, yes, actively looking into it, and we expect this to become an adjacent market opportunity in the future.

That is all the time we have for questions. I will now turn the call over to Olivier for closing remarks.

Thank you. Ladies and gentlemen, as we conclude today's call, I would like to leave you with 3 takeaways. First, this acquisition is the direct execution of the strategy we have already set in motion.

It builds on our momentum in data center solutions by integrating critical cooling technology, further strengthening our footprint across the physical infrastructure required to scale AI. Second, the combination enhanced our ability to deliver integrated modular solution options for our customers. By bringing together Kelvion's thermal management technology with SLB's design, engineering and modular manufacturing capabilities, we'll be positioned to integrate cooling from initial design to final deployment.

And third, the transaction creates significant opportunity to scale across customers and geographies, accelerate innovation and deliver profitable growth. Looking ahead, as our pipeline of pending hyperscale opportunities convert into full commercial contracts, we expect this momentum to provide meaningful operational and financial, providing SLB's investors with direct exposure to the AI infrastructure build-out. I'm confident in the strategic and financial rationale for this transaction, and I look forward to welcoming the Kelvion team to SLB following closing. With that, we will conclude our call this morning. Thank you all for joining us.

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

All right. Hello, everyone, and welcome to the final panel of EnterCom 2026 Denver. Thanks for being here. We are AI and energy intersect. I'm Noah Pollak, I'm a partner at Willkie Farr & Gallagher, it's a law firm. I've been helping people buy, build and finance power and infrastructure for the past 20 years, mostly power gen than about 7 years ago, started getting into data centers. So really kind of getting where the rubber hits the road, where the technology hits the dirt and where the electrons flow into the system.

We have a great panel here today from across 3 different areas of the industry. We have Brian Demet. He is one of our -- he's a key developer. We have Richard who's going to give the power, and we have Amy who's going to bring some prefab fantastic this to each data center that she works on. So Brian, we're going to start with you. We're going to start building for the ground up. Why don't you tell us a little bit about yourself and your company.

Excellent. Thank you. My name is Brian Demet. I represent VERO 3 is a single site developer in Wyoming. We are making the transition from rural and to power land, basically, with the intention of hosting a data center that has a pathway to decarbonize power as well as integrations of our lithium brine resource such that the data center anchor is a critical mineral supply. So a big part of our offering that makes us unique, and we feel is truly exceptional is that our site has basically all of the nuts and bolts infrastructure that you need for a data center, abundant natural gas supply, excellent fiber connectivity, almost unlimited flat developable land.

But what really sets us apart is that we have a very well studied subsurface resource that can allow for large-scale geologic carbon storage. And those reservoirs are also saturated with lithium rich brine. So we can tie our data center development to national security incentives like domestic critical mineral supply and also channel that message to address some of the social license issues that are occurring with data centers on a local level. So we will be a data center facility that actually demonstrates tangible industrial development and jobs. And through that, we are sort of the living, single-site representation of the promises of the AI infrastructure build-out.

Super. Richard, why don't you tell us about you're bringing the power to these sites? So tell us what you do and how you got involved in that.

Sure. Thanks for having me. Ron Gusek, our CEO, had the pleasure of addressing the crowd yesterday and talking a bit about Liberty. I'm here, obviously, to talk more about the power side of what we're seeking to do. But it's built on the foundation that created Liberty 15 years ago, and that is we need to create an entity or a company, an institution that has a culture that grabs the best people and keeps them. We think that doing that will demonstrate and develop a differential service offering and a differential financial performing company. And I think we've shown over the last 15 years, we've done that. We're now second in market share in North America to -- in terms of pressure pumping, completions and frac however you choose to define it -- and we're also now in Australia.

But the foundation besides our culture and the 6,000 people who deliver that differential performance is also technology. Liberty has been on the front end of technological developments in fracking and completion services from pump efficiency, moving from 12-hour operations to 24-hour operations. introducing quiet fleets, introducing a transition from diesel to natural gas to electricity. We developed our own electric frac pump. And to do so, we developed our own power generation capability. That led to the license to enter this new space of permanent power facilities. In addition to what we've done inside the oil field, we also have that capability in commercial and industrial applications, including the facility that is driving the Pittsburgh International Airport came from the legacy of companies that now make up Liberty.

So we're bringing that technological mindset to the power space to lead it from the front and look to the future.

Super. And last but not least, Amy, who also SLB identified greatness 29 years ago and has also promoted heavily from within. Can you tell us about SLB and how it fits into the AI puzzle. .

Thank you, Noah. Good afternoon, everyone. My name is Amy. So as Noah was introducing I've been with SLB for 29 years, all those glorious 29 years in oil and gas. This year marks the 100-year anniversary for SLB. So we've been around oil and gas a really long time. And it's only more recently that we started participating in the data center builds, right, infrastructure to be more specific. It started for us because hyperscaler was looking for partners and looking to qualify suppliers who could help them build multi-gigawatt data center campuses, right? And we were invited to support them in terms of this build-out and unbeknown to us.

We have some really nice foundational capabilities in terms of our manufacturing, our supply chain network. It's a global one. We've been able to tap into that -- and then also our engineering and design capabilities, right? A lot of the expertise that we bring into the oil and gas industry, packaging, in the modular form that is optimal because their footprint on a rig in an offshore platform is limited. So you don't have the luxury of the biggest largest design, right? So a combination of this expertise that were transferable over the past 3 years, we have gotten quite a lot of validation and encouragement from multi hyperscalers now in terms of utilizing this discipline from oil and gas, including helping them to establish certain standards, which does not quite exist, like in oil and gas, you may have API, ISO, certain metallurgy standards. It doesn't quite exist yet because it's evolving so fast in data centers, right?

So we find ourselves in a position where actually we could bring a lot of value in terms of bringing speed to market in the bills. Time compression is important. And hopefully, we will discuss some of the challenges in the industry today, power availability, just a shortage of skill set as well. in the marketplace for licensed electricians, mechanical fitters and what we do, which is essentially now we are system integrators for hyperscale and we do it at a multi-gigawatt level. So it's been big. Actually, it's been a very pleasant experience for us to be able to tap into our existing capabilities and expertise and to bring value -- real tangible value for hyperscaler clients?

Super. Well, thanks for the introductions. So when we're building a data center, we need land, we need permits, we need equipment, we need capital, we need people and probably a few other things that I didn't mention. One of those things is kind of the biggest constraint right now in data center development.

I think Richard should speak first because he's trying to address the single largest constraint at the moment, which is power origination?

Yes. The simple answer is define power need. There's a process that many of you may have been following in ERCOT called batch 0. And batch 0 was a process to request large loads off of the Texas grid off of AerCap and over 65 gigawatts went through that batch 0 process, but that process is now suspended. It was suspended because the transformation through that, right? It's a process. December. Yes. Theoretically, December. Theoretically after the election.

That's one of the questions. That's one of the answers, I should say, of what is the critical issue, certainty. There's very little certainty from the grid -- there's a lot of certainty in what we're bringing to the table to provide on-site power generation that derisks the arrival. It provides certainty for the price and we engineer and provide a bespoke solution for the on-site needs for that power facility. .

Over time, that will become complementary to the grid depending on the customer and the situation with the utility or co-op. -- you're providing behind the meter. So you're profiting a behind-the-meter service, right? So if you're getting power from the grid, that's grid provided and if you're getting it off grid, generating on your own site, that's behind the meter. So you're behind the meter solution.

Yes. So I describe our solution is -- there's 2 ways to look at it. Being the meter islanded completely behind the meter, where we're not connected to the grid or will not be connected to the grid. On-site is a way that I describe it quite frequently because we'll be on location, potentially isolated, but potentially interconnected. Over the life cycle of these facilities, most of our hyperscale customers will desire at least some interaction with the grid.

So what we're doing that I believe is differential and unique for Liberty is bringing the ability for a vertically integrated solution, we facilitate the gas supply will build and operate the gen for the facility and then ultimately manage and control various sources of power, whether it's just us or other complementary sources and then interact with the grid -- and the last kind of leg of that stool is to manage the wholesale relationship with the grid and optimize for the original sponsoring user of the power to optimize any excess or balance the needs across the utility and the facility. So originally behind the meter, probably connected. .

Brian, you mentioned that you have gas supplies and you were touting that as part of the call on your property. How does that dovetail with what Richard was talking about here?

Well, it's certainly not a bottleneck. And I think that's the mindset that we try to take is eliminate any potential bottlenecks, including, not limited to social license bottlenecks in the future. So I would say Richard is spot on. In our case, we'll almost certainly have to begin as behind the meter, whether interconnect would be required, I think, is to be decided, but it would not occur right away. So we would have to start behind the meter, which we're totally okay with. And you're going to start behind the meter, having a pipeline to tie into on-site with day 1 capacity is a major advantage. And so yes, I guess, going forward, we see that access to that molecule, the hydrocarbon molecules is just simply not a bottleneck for us.

Richard, what kind of technology are you -- what are the different technology types behind the meter. Let's stick with behind the meter because I think that's what we're really focused on here today rather than trying to interconnect. We'll talk a little bit about that. It has to be part of the story. But what are the different types of behind-the-meter technologies out there? And which of those do you focus on and why?

Sure. I'll start with what we focus on and why our reciprocating engine natural gas fuel generators. There are several reasons. They're advantaged for especially this first stage of AI development. A reciprocating engine will follow load fluctuations. The load fluctuations in AI learning are actually quite wild. I can't claim that the engine itself will do this. But the engine in combination with a battery energy storage solution at best, will manage very wide swings. An example might say it this way. We have a 100-megawatt load trying to keep the math simple. That AI center will have what's called a PUE or a power what is the useful effectiveness efficiency, yes, usage efficiency. Call that 1.5. So that means the data center needs 150 megawatts of load that it could call upon. At any time, that load fluctuation for the chip, a certain variety of chip can swing by 70% in milliseconds.

An engine can't do that at all. That's where the battery comes into play. But as the PUE moves up and down, the engine has to respond quickly. This is where a reciprocating engine has quite a bit of an advantage over a turbine, which cannot follow load nearly as quickly. The reciprocating engine also has a heat rate of roughly, say, 9,000 BTUs per kilowatt. The turbine is closer to 11,000, 12,000. It has quite a bit more fuel consumption until that's converted to a combined cycle where steam is powering a turbine as well. So the fuel efficiency of the reciprocating engine, the ability to follow load -- the other benefit is the way we install or design a facility, the amount of N plus number of additional engines to achieve super high reliability is not as intense as a turbine. The other -- so turbines are also a viable option and are being used for behind-the-meter solutions. They do consume more fuel, and fuel cells are also a part of the mix and likely in places that have severe ozone attainment issues that will participate, I believe they'll be part of the mix of what we will do down the road as well.

And so what's the fuel you guys are using? How are you getting it there?

Yes. Our fuel source is.

Stock molecules for everyone in the audience.

Yes, it's just completely natural gas. Our sources will be primarily off of major interstate pipelines. And as many locations as we can to provide diversity and reliability for the data center. When we're talking about the needs of 99.9% or higher, the single most likely disruption to that facility will be fueled.

Yes. And for folks who aren't aware, if you're going for critical data center infrastructure, they look for a 2N scenario. So you're literally having double your generation capacity. -- there can be basically 0 tolerance for any disruption for critical infrastructure, which is what the big dollars are being paid for. If you're looking for some smaller ones, it's a very different story and the economics are just very, very different. I mean I want to get you into this conversation. Can you -- how do you think about power? How does your business interact with the energy that's coming in.

Thanks for the question. Before that, let me just provide a little bit of grounding because it was a big learning for me when I first came into the industry, right, to build 1 gigawatt of a data center, right? How big do you think that is, right? That's a pretty big number, try 44 football fields, right? So not too long ago, all these data centers and still quite a majority of these data centers are being stick build. So that's kind of the terminology. As you would build a house, you would bring pieces of material, your brakes and your cement or whatever and you will build it brick by break or in this instance, we will say stick by stick, right? So think about 44 football fields, think about the number of people, electricians, mechanical fitters, that you'll have to bring on board to site to build this data center is tremendous.

So it's not a surprise. If you look at states like Texas or Virginia or where quite a number of the data centers are being built that there is a massive shortage of about 2x, right, in terms of the demand versus the availability of these trade spend, right? So what the SLB does is to take that building that infrastructure build off-site. So now think imagine you have a center, a center of excellence, as we would like to call it. Out in Shreveport, Louisiana, it is 3 million square feet. And then we do the fabrication as the industry referred to it off-site assembly, off-site from the campus, right? So we build it in our facility is air condition. We do the quality control. We do the system integration, and we test it.

Now think about a 1 gigawatt data center and the amount of transportation and logistics that's involved in a single day, how many trips or trucks do you think goes in and out that location? 1,000 going in and out delivering equipment. So we are talking about operation of massive scale, right? So the second challenge and -- so Richard kind of talked about power availability and the long time to interconnect to the grid, right? The other real challenge is just the availability of these people. How do you find 3,000 electricians to stick build a data center and think about how many data centers that are being built. So the hyperscalers now are moving to this modular off-site assemblies, they call it. And the amount of time compression that it gives to do that off-line, right?

As -- and you do some parallel activities, right? The developers come in, they lay the site, they build a shell and then when we are ready with the modules, we ship it, and then it's in well pulled out modular form, and we are able to compress time line by about 40% for all the server hall infrastructure, for example. Now once it gets onto the campus, we are able to also accelerate the installation and commissioning by another, I would say, 30%, 40% as well, right? So the amount of value by shifting to this way of bill is tremendous. Now when we bring it to the site, it doesn't have power and hence our alliance with Liberty Power because ideally, we want to be able to streamline this building process of a data center. We don't build the shell or the slab and shell as we call it.

But we can go to a customer and we can say we will help you design it in a way that is most efficient, effective, and it will come powered, right? So I think it's a fantastic value proposition for a customer who's trying to look for speed, but not just beat of any clients, speed with reliability, speed with quality, speed with track record, which we both bring to the table.

You talked about efficiency of design, what are some elements to an efficient so that you guys put together.

This is very interesting. When you think about building a house on site, the first one of our clients, right, took it off-site. So they're doing the same thing, but they're doing it offsite, which doesn't actually solve the problem because then you still have to bring it on site. And it's a big problem because you're not thinking about modularity from a standpoint of sourcing. So the supply chain element of it, the transportability, some of these early designs when we built it, we had to get a 2-flat bed truck. So your cost of logistics actually increases, right? So this particular client was saying, I didn't see the time compression and it didn't see the cost savings. Why is that?

So we looked into the design and said, well, it's because it's not modular, just because you do it off-site, it does not automatically give you the benefits you actually have to think through, can I lift it? Can I put it on an automation line? Can I lift it? If you have a data center like in Virginia for invoice, it's quite common to have a 2-story data center. Can you lift it? There are no cranes on site, no overhead cranes, right? So it's about designing for this whole value chain and being able to bring it on site and to connect and have those interfaces done in an efficient and effective manner as well.

Thank you. So we've talked about 2 constraints. We started listing out kind of what are some of the main elements to a data center that's land, there's power, there's equipment, there's permitting, there's money people. So we've really hit on the power bit. We've hit on the people a bit. Let's talk -- and Richard, you actually hit on the permitting and the kind of the permitting regulatory and government risk a little bit when you brought up batch 0. So batch 0 was supposed to be a way for Texas to prioritize and allocate grid power to data centers. And applications were due and there were decisions that were supposed to come out on August 8 and just -- there was a ton of activity I closed 5 deals in that week, trying to maximize that.

And then all of a sudden, the governor put a pause on it and we still don't know technically when the answer is going to be, but the rumblings are sometime after the election. So that's Red State Republican governor is pausing data center development effectively in the state, not fully, but putting a pretty strong break on it. And that's -- so that's in a state that had been very open to it. So Brian, you've been talking about how you have a great setup up in Wyoming. Can you talk to us about what's so great about Wyoming and permitting and government regulatory relationships and just that whole kind of nugget for people to think about.

Sure. Yes. No, it's a great question. I mean the way we see it at VERO3, all the activity going on in other states, while you haven't had really any major headlines coming out of Wyoming during that same period of time, I think just goes to show and provide the signal of stability for the and perhaps maybe pushes interest towards Wyoming away from other states that are now placing barriers. We definitely see at every level that we interface with an immense amount of support on the permitting entities here a willingness to work with us, speak with us, go through the technical details even going above and beyond in many cases, to make time to see us face to face when we're in -- so that's been really special. You definitely feel welcome. Obviously, there's the tax structures in the state of Wyoming that are very pro data center. And then I think finally, Wyoming is very clear about what they want to emphasize how they want to generate tax revenue, what types of industries they want to be in.

And I think that's where VERO 3 is -- can really accelerate within the state incentive process because our project is aligned with Wyoming State goals of establishing a strong critical mineral industry and Qualy, Wyoming is extremely supportive of carbon initiatives. Actually, on our property, we have a pre-permitted CO2 pipeline corridor, which is very -- so any CO2 pipeline operations won't require that permitting step that we can just begin building. So we just feel an immense amount of support at every level and what we plan to address going forward is really making a compelling argument to the local community that look, yes, there will be a data center facility here. It's also going to come with an abundant job opportunities that build on existing local skill set like drilling and rig work. There's several different industrial sites in the area that are going -- that are similar plans to what we intend to build for that will be required to desalinate our brine resource and process the lithium out.

So I would say we just have a top-to-bottom approach. And at every level so far, it's been incredible. And just the final note, on the local level, we did just receive written consent from local landowners for advancement of our poor space lease state blocks. So we do actually have documented local support now.

Fantastic. We have people in the audience, who I presume, have a lot of land and a lot of expertise in building things. Brian, what would be the process if someone out here in the audience is wanting to get into the game and think about how to start thinking about their land as a data site. What would data center site, what would they -- what would the opening stages of that kind of thought exercise be for them?

Sure. I would say, Richard brought up a great point, not only do you want pipeline -- nearby pipeline access, but you also want redundancy. So ideally 2 pipelines that you can tie in, so that your facility never goes down when those pipelines are under maintenance. And the same principles apply for your fiber access you want a diversified fiber connection. You don't want to be at the behest of 1 single carrier on that fiber line and then you want a kind of 2-way access. Ideally, you're somewhat close to a large metropolitan area, but that's becoming less and less of a requirement as the different sort of AI training data centers don't necessarily need to be as dependent on the latency like your cloud providing data centers.

So I would say those are the first 2 gates to look at. The next would be land availability and size. Can that land be acquired at a reasonable price? Can you make an agreement there. And then I think as you go further, it's very clear to us that there are, I would say, 3 clocks going at once that we see. We have the speed to power clock which is controlled by -- in part by your permitting clock. And then finally, you have the clock of actually financing and agreeing to terms with all the counterparties that are involved. And a lot of that comes down to the balance sheet of the entities that you're looking at because as you get further down the road in that documentation, the financial commitments become very real, and you need balance sheet behind that.

Richard, what size data centers are you working on right now? Or what's the range of data center size. They range wildly from anything from a 5-, 10-, 20-megawatt site to these theoretical or in very few instances, real gigawatt size data centers. What's the space that you play in?

Yes. Good question. We've announced a collaboration with an entity called Power Bridge in Pecos, Texas, where our original installation could be grid facing, but I think that will likely switch to an on-site generation for a hyperscale customer. And that's of a size of piece of land like Brian was mentioning that can accommodate a campus size that could grow to multiple gigawatts. So this first phase starts with commitments that will likely be closer to 450, 500 megawatts, but we'll have the ability to scale and grow -- as we work on projects that could be -- when Amy talks about a gigawatt, I sit here thinking of myself, the largest data center for all of us probably started becoming interested in this was maybe 300 megawatts.

And now all of a sudden, a small data center is a gigawatt. Well, when you think about the sequence that Amy described to develop the campus and to build those buildings, this will not happen overnight. So as we think about it, it's that scaling and sequence. And we're approaching a lot of what we do in a similar modular fashion. So we're not stick building most of what we start with. They're coming modular -- they're coming in a modular way. So they're preengineered and they're much less complicated, but they will take up more space and they're smaller engines. So as that campus matures and that need matures, so will the evolution of the technology that supports it.

So you talked a little bit about how it used to be a big data center was 200, 300 megawatts was enormous. Now we're talking multiple gigawatts. What does -- what's going to be -- not everything is going to be a gigawatt data center, right? That's going to be your Metas, your Googles, your Amazon. What's the other space that's out there for people to think about that's not just those -- the hyperscalers because it's got to be a universe out there, just like there isn't just 1 oil and gas producer as I've seen today, there's more than a few of you out here. And so like where does that -- what does that universe look like? And that will be to anyone who can answer that. .

Yes, I might art and then I'll hand it over. We're involved in some projects that -- what the world -- the data world has called inference computing, which is that cloud activity that we're mostly familiar with that -- we're seeing the cat videos come to us in a nanosecond. More seriously, it's related to financial transactions or defense or some that sits close by to the major consumption areas. Those inference or cloud centers will also grow, but they're not at the forefront of what's being pushed today. We have a project that we'll continue to advance hopefully, get to the finish line that is exactly what you're describing, and it will be more modest to the 30 to 40-megawatt size. So those are -- those are certainly being developed. They're just not grabbing the headlines.

So there's training and there's inference. So training is the super high-intensity workload where they're building the models and they're getting the refining that the inferences what we give them, for the most part, ballpark. So what you're saying is the 2 power is that's the training, but the inference doesn't necessarily need that because it's not as mission-critical. Is that kind of what you are saying?

The inference will also need that type of reliability. It just won't be built on the scale. It's compute power won't be as intense as it's just holding the cloud and delivering versus the computational intensity of learning.

And Amy, you guys, I'm sure, have been thinking about this, about what the universe looks like. Obviously, focusing on these hyperscale, but what's the smaller world? Or what's the universe looking like in 7 -- 5, 7 years for you?

There is an opposite end to what we are seeing today, which is this multi-gigawatt bills in March size campuses. And it's quite fascinating for me because it impacts you and I. And it's notion that down the road, 10 years down the road, right, that the agents, these AI agents are going to maybe run the world, right? And I'm not trying to scare anyone here. But there's also this conversation now about me as a person, I have so much data, whether it's financial, whether it's my medical records and my family and all that. And I know one might -- out in a cloud so nations are talking about it, sovereign AI, you would have heard this term and nations like in the Middle East, actually any nation, including the U.S., wanting to build their own sovereign AI data center, right, for the reasons of national security, et cetera.

Now for the individual around the world as adoption of agentic AI increases, then do you want all your information sitting in a cloud. And so there is this potential shift. We don't know how it's going to evolve yet that a smaller size maybe 3 megawatts. But it will be highly dispersed. It will be plentiful and then you could power it from your own home. And you could go the other way, right? The mega scale of today could be very different. And is it 10 years? Is it 15 years? I think this is what's interesting about this sector that is evolving every day, right? And so I'm kind of more interested in seeing how that pans out of course, you hear about data center in the space or as the Chinese are doing, building data centers underwater, which, by the way, we can do as well, SLB, right? So lots of things that's possible. I think it's just an adoption kind of trend now see?

All right. So data center is underwater possible. Now let's go data centers and space happening, not happening. We've heard it. who's going to weigh in on that. I'm hearing laser, so I'm hearing a no-go on data centers and space. .

Maybe when fusion works.

Okay. Okay. So we've talked, again, land power. We haven't really talked about Whitman as a bottleneck a little bit with you, Amy. But what about the bottleneck. Is that -- how real is that? Who is it real for? Who is it not real for? Who's kind of secured up their pipeline, who hasn't? Like I know my son was buying a new computer. He was -- and how expensive the chip cost now apparently -- so what's the reality there with the compute? Is that a bottleneck? .

It's drill -- and the compute is not the bottleneck. The bottleneck is power, it's infrastructure, it's the ability to scale to the demand. We have been studying this in SLB for a good 15 months now, right? So we think we have fairly good understanding of the dynamics of the marketplace. The demand is real because they are not building on speculation, when I speak to my hyperscale clients, they are not building and waiting for people to come. There's actual demand. So I believe it. I also think that -- the issue is scaling, scaling is a big problem, scaling with quality, scaling with reliability, scaling with standards, right?

And more and more, I'm getting phone calls actually that from smaller companies that have been encouraged by hyperscalers to come speak to someone like SLB who's now around for 100 years. And we've done multi projects, whether it's offshore or deepwater out in the middle of nowhere in the desert in Saudi Arabia and all that, right? And their whole goal is to figure out how to scale with us. So scaling is actually a really big challenge, right, on top of all the other constraints of resources. I don't actually think compute is the first problem to solve. You have to solve for the others first.

Okay. So I don't have the numbers in front of me, but I read or heard somewhere that the new data centers, one of -- just one of the new data centers will be the largest capital infrastructure project in American history. Does anyone hear something along those lines? The like one, like 5 gigawatt data center, just to build the shell is going to be what, $5 billion, $10 billion just for the powered shell. Then you put the equipment in there, that's going to be another $50 billion. right? My numbers aren't -- don't quote me on the numbers, but just in terms of scale and size, the real numbers we're talking about here. So capital is probably a constraint, anyone weighing on that?

I'm not the expert on capital. Yes, it has to be a consideration -- there's only so much to go around. The numbers for the data center, I think if you do it well, you're talking $10 million a megawatt just for the data center. That doesn't include power. So depending on the power solution, you're talking probably starting at 5x what the power investment is. And all of these projects are seeking similar sources of financing being backed by the same balance sheets. So that's where the scarcity could come. But today, as Amy mentioned, I don't think that's the bottleneck. I think, Amy -- I think Amy answered that excellently. That the scaling and the practicalities of building at this scale are going to be the bottleneck.

I just want to kind of -- we're running out of time here and end of the day, end of the whole conference. We were talking a lot about bottlenecks. But at the same time, the reality is we're talking about that because there just isn't the ability to build as much as the demand is there, which is actually a great story, like you can look at the net, which is we can't build enough but the other is there is so much opportunity there. That's not me trying to do a sales pitch. That's just there was just so much to do, and there are so many opportunities. So any final words or final questions from the audience in the last 2.5 minutes.

All right. Well, thank you all. We got one.

You say our use of AI or using AI or...

Yes, you're using AI in your work?

Yes, 100%. We've actually been using it for quite some time for predictive maintenance. We collect a couple of billion pieces of data a day throughout our frac operations. And that's led into how we will operate with our remote operating centers. It's similar equipment. So that AI model really lends a hand to predictive maintenance and how we will excel at reliability that's one area where AI is a current part and will be a meaningful part of our future endeavors.

We're obviously just a touch smaller than some of the other entities on stage here, but extremely dependent on AI, and it's been immense in terms of the efficiencies that we've gained. Basically, we have a forever brain set up for the company. So everything that comes in and out categorized in there and can be drawn upon in within the team at any time. And we've talked a lot about all these different bottlenecks all the various building blocks that you need. For every 1 building block that you get or a strategic counterparty, you may have to talk to 40 or 50 before you find the right one and managing all those relationships, understanding what they bring and don't bring what their capabilities are, keeping track of all that.

Certainly, it benefits greatly from having it be supported by this AI sort of forever brain concept for the company.

But none of you use AI for your legal advice. So just to be clear, that's a bad idea -- it's a very bad idea. That is my sales pitch. Thank you all.

Thank you. I'm Blanca Andres and I and the EnterCom team would like to walk -- I'm sorry, the EnterCom team along with our global sponsor, Netherlands, Sewell and Associates. Ada, Alaska Industrial Development and Export Authority, First Horizon, Willkie Farr & Gallagher, ATB Comic Capital Markets, CAC Beatty & Wozniak, One Nexus, Piper Sandler, Petrie Partners -- Associates, IMA and our media partner, Oil and Gas 360 would like to thank all of you for attending Entercom Denver 2026 and making it such a huge, huge success once again. And at this time, EnterCom Denver 2026 concludes, and we'd like to invite you to attend EnterCom Denver 2027 next August and also invite you to our reception downstairs in Augusta, for a little bit more conversation, if you'd like, and maybe a few beverages. Thank you so much. We appreciate you, and have a great day.

Good morning. My name is Sarah, and I will be your conference operator today. I would like to welcome everyone to the Second Quarter SLB Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Sarah. Good morning, and welcome to the SLB Second Quarter 2026 Earnings Conference Call. Today's call is being hosted from London, following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause the results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter earnings press release, which is on our site.

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

Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Today, we'll begin with our second quarter performance. Then, I will discuss the evolving macro environment and strategic growth areas for SLB. And finally, I will close by sharing our outlook for the third quarter and how we will exit the year. Stephane will then provide additional details on our financial results. And after that, we'll open the line for your questions.

Let's begin. This was a solid quarter for SLB, marked by broad-based international growth and rebound in North America. Excluding the Middle East, revenue increased sequentially across all divisions. This was supported by higher offshore activity in Latin America, including Brazil, Guyana and Mexico; in Europe and Africa, across Scandinavia and Nigeria; and in Asia, including China, Indonesia, India and Australia. Additionally, we saw a rebound in U.S. land with higher sales of production chemicals, artificial lift and valves, driven by strong demand for production and recovery solutions.

In the Middle East, we continued to navigate the conflict during the second quarter while maintaining our focus on protecting our people and facilities across the region. Activity resumed in several countries, although operations in Iraq remained constrained by security challenge. While uncertainty persists, we continue to work closely with our customers to gradually restore activity. That said, returning to full activity will take time and the pace of recovery will vary by country, customer and operating environment.

Turning to the divisions. I was very pleased with the continued momentum in Production Systems and Digital. In Production Systems, growth was supported by higher demand in artificial lift, valves, surface production systems and production chemicals, as well as stronger subsea activity, particularly in North America and Latin America. This reflects clear and durable customer priorities, improving production, enhancing recovery and extending the life of existing assets, which are fully aligned with our increased focus in the core toward production and recovery. Production Systems adjusted EBITDA margins returned to above 20%, supported by strong execution. ChampionX also continued to provide accretive margins to Production Systems despite facing cost inflation in chemicals. Notably, ChampionX delivered sequential margin expansion for the third consecutive quarter.

Digital also delivered very strong results, supported by a favorable business mix. This included higher exploration data licenses and transfer fees in Brazil and Indonesia, which helped Digital adjusted EBITDA margins to reach approximately 35% for the quarter. Additionally, annual recurring revenue increased by 15% year-over-year.

As we shared during our Digital Investor Day last month, the future of our industry is digital. We are confident that the key growth drivers highlighted at the event, Digital Operation and AI, will continue to build strong momentum across the industry. You can see several examples of recent customer contracts and deployments in the quarterly highlights, including in today's earnings press release.

Meanwhile, revenue in Well Construction and Reservoir Performance declined slightly as a result of activity disruption in the Middle East. However, the impact was largely offset by stronger activity in North America and across other international markets.

Data Center Solutions also continued its strong growth trajectory, revenue increasing 33% sequentially and 80% year-on-year. Growth was supported by the addition of new hyperscaler customers and a broader scope of offerings as we evolve beyond manufacturing into data center design, engineering and system integration as exemplified by the recent announcement with Meta.

All in all, this was a strong quarter against a difficult backdrop with solid financial results and steady progress in our strategy execution. I want to thank the entire SLB for delivering these results in a very dynamic market. I continue to be impressed by your performance, your innovation and your commitment to our customers.

Now let me turn to the macro environment, which continues to evolve following the disruption in the Middle East. There are several structural drivers of upstream investment that have been heightened by the conflict in the Middle East. This includes the replenishment of commercial inventories and strategic reserves that have been depleted during the conflict, increased efforts to diversify supply and the development of domestic resource to strengthen long-term energy security.

These priorities support a favorable investment backdrop across both short- and long-cycle markets, and they are bringing a renewed focus on exploration to unlock new reserves and on increasing production recovery from existing assets. In this context, we expect a range-bound commodity environment that is constructive for upstream investment. Indeed, inventory replenishment and the need to rebuild spare capacity should provide support at the low end of the range. And at the same time, higher price will encourage the development of new supply while unlocking new opportunities for our business.

Let me now turn to regional activity dynamics. The market is starting to exhibit the characteristics of an upcycle. International and deepwater activity is growing, supported by fundamentals I've just discussed. Notably, according to third-party reports, final investment decision for long-cycle projects are expected to increase by approximately 30% year-on-year in 2026. This will support higher exploration spending and upstream CapEx growth across the broader markets during the second half of 2026, led by Africa. And we expect a more meaningful impact in 2027, with growth extending into Latin America, the Mediterranean and Asia. Meanwhile, North America land will remain tied to short-cycle market dynamics, including commodity price, inventory level and the pace of restocking. Our position in North America has been strengthened by ChampionX and by the increasing need for technology innovation in production and recovery.

In the Middle East, we view the impact as largely transitory. Restoring production to prior levels will require higher service intensity, particularly in well intervention, along with increased equipment demand, infrastructure repairs and realigned shipping logistics. Based on this condition, and our exposure to international, deepwater and exploration, production and recovery and digital outlook for our business into 2027 is compelling.

Against this backdrop, SLB strategy remains closely aligned with our customers' highest investment priority. In the core, these include restoring production capacity, developing advantaged resources, including deepwater and improving capital efficiency. Beyond the core, Digital remains both a key enabler of performance and a powerful growth platform for SLB. Data and AI will increasingly touch every part of the upstream life cycle. Our advantage is that Digital is grounded in deep domain expertise and connected to real field operations. We're embedding intelligence to the workflows that matter most, from subsurface interpretation and well delivery to production optimization and autonomous operations.

Finally, we are accelerating our Data Center Solutions strategy around three priorities: diversifying our customer base, expanding internationally, and increasing the scale and scope of our offerings. This quarter, we delivered on our strategic pathways, adding new hyperscaler customers to our portfolio, diversifying our end markets across Canada and Asia and expanding our capabilities to include design, engineering and system integration. At the same time, we continue to leverage our off-site fabrication capabilities, to scale-up in response to accelerating demand and to compress delivery time for our customers.

Our differentiated capabilities have resulted in our backlog growing ahead of expectations with new contract awards, strong customer engagement and international expansion. This momentum gives us the confidence that we'll finish this year strong as we had previously guided, and we now foresee that Data Center Solutions will exit 2027 at an annualized revenue run rate exceeding $2 billion.

But this is just the start. Our ambition is to become an industrial technology partner to the data center industry, and our expanding role in design and integration provides us a platform to add adjacent capabilities, including decarbonized power and cooling solutions. These are natural extensions of our domain expertise in process engineering and complex energy systems, and given the pace of market development, we can accelerate this strategy further through partnerships and acquisitions.

Examples of this include our recent alliance with Liberty Energy that will combine SLB modular infrastructure solutions and global market reach with Liberty behind-the-meter power generation system in addition to our pilot with Ormat for next-generation geothermal power development to support future data center demand. These are exciting steps towards becoming a critical infrastructure partner for the AI economy.

Together, these strategic investments offer SLB a broader and more resilient growth profile for the future, anchored in the core, accelerated by Digital and expanded through Data Center Solutions.

Let me now turn to our outlook for the third quarter, followed by our preliminary view of the fourth quarter. Turning to our third quarter outlook, our base case assumes a gradual recovery in Middle East activity, consistent with the pace we observed towards the end of the second quarter as we continue to remobilize operation across the countries affected by the conflict. Based on this trajectory, we expect global sequential revenue growth between 3% and 4%, with adjusted EBITDA margin expansion of approximately 75 basis points.

At the division level, we anticipate revenues of the core divisions to increase sequentially in the low to mid-single digits, while Digital revenue is expected to grow in the low single digits. The heightened tension recently observed in the Middle East have not had a material impact on our current activity. However, we have developed a downside scenario to help model the potential impacts of the ongoing geopolitical volatility.

In the event of a significant reescalation that disrupts ongoing remobilization effort and results in flat sequential Middle East revenue, we estimate third quarter revenue will be approximately $150 million lower than our base case assumption. This would translate into an adjusted EBITDA headwind of approximately $75 million. The impact of this downside scenario would be concentrated primarily in the Well Construction and Reservoir Performance divisions.

Looking ahead to the fourth quarter. Our preliminary outlook assumes that Middle East activity reaches between $2.1 billion and $2.2 billion or approximately 95% of the revenue achieved in the fourth quarter of 2025. Based on this assumption and supported by deepwater momentum and the typical year-end Digital and product sales, we would expect fourth quarter revenue to surpass $10 billion, representing approximately 5% growth year-over-year. We also expect adjusted EBITDA margin to be approximately 24%, in line with the fourth quarter of last year.

While this outlook remains dependent on certain conditions, primarily related to the Middle East conflict, we view it as an encouraging indicator of the underlying strength of the business and believe it will position us well to deliver solid growth in 2027.

I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Second quarter earnings per share excluding charges and credits was $0.55. This represents an increase of $0.03 sequentially and a decrease of $0.19 when compared to the second quarter of last year. During the quarter, we recorded $0.03 of merger and integration charges, primarily related to the ChampionX transaction.

Overall, our second quarter revenue of $9 billion increased 3% sequentially, despite severe disruptions in the Middle East. Strong performance in Latin America, Europe and Africa, U.S. land and Asia more than offset the decline in the Middle East where revenue fell 13% sequentially to $1.66 billion. Despite the headwinds from the Middle East, our pretax segment operating margin increased 49 basis points sequentially and our adjusted EBITDA margin increased 83 basis points sequentially.

As it relates specifically to the Middle East, while the revenue shortfall was close to our expectations, we took some temporary cost actions to alleviate the detrimental effect on our earnings. As a result, the sequential impact on our earnings per share was slightly below the low end of the $0.06 to $0.08 range that we originally indicated for the second quarter.

Let me now go through the second quarter results for each division. Second quarter Digital revenue of $697 million increased 9% sequentially driven by higher digital exploration revenue and higher sales in platforms and applications. Digital pretax operating margin of 27.8% expanded 683 basis points, while adjusted EBITDA margin of 34.7% increased 860 basis points. These increases were due to higher sales of exploration data licenses and transfer fees as well as improved profitability in digital operations and platforms and applications.

Reservoir Performance revenue of $1.6 billion declined 2% sequentially, while pretax operating margin of 14.9% decreased 121 basis points. These decreases were primarily due to operational disruptions related to the Middle East conflict.

Well Construction revenue of $2.7 billion decreased 2% sequentially primarily as a result of the disruptions in the Middle East, partially offset by higher drilling activity in Latin America. Pretax operating margin of 15.2% was essentially flat sequentially as lower profitability in the Middle East was offset by improved profitability in North America and Latin America.

Finally, Production Systems revenue of $3.8 billion increased 7% sequentially, driven by higher revenue from OneSubsea as well as increased sales of artificial lift, valves, surface production systems and completions. Production Systems pretax operating margin increased 138 basis points to 15.5% primarily due to improved profitability in OneSubsea and artificial lift. Margin also benefited from the accretive contribution of ChampionX's production chemicals and artificial lift businesses.

Now turning to our liquidity. We ended the quarter with net debt of $8.7 billion. We generated $1.4 billion of cash flow from operations and free cash flow of $716 million during the quarter. This represents a $739 million increase in free cash flow compared to the last quarter, which is largely due to seasonal improvements in working capital, including the absence of the annual employee incentive payouts in the first quarter.

Consistent with our historical trends, we expect our free cash flow in the second half of the year to be materially higher than in the first half on improved earnings, higher customer collections and lower inventories.

Capital investments, inclusive of CapEx and investments in APS projects and exploration data were $643 million in the second quarter. For the full year, we still expect capital investments to be approximately $2.5 billion.

During the quarter, we repurchased $648 million of our stock and still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. Lastly, we are still targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks.

I will now turn the conference call back to Olivier.

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

[Operator Instructions] Your first question comes from Scott Gruber with Citigroup.

We all appreciate the guidance on 3Q and 4Q given the moving pieces. You mentioned the Middle East getting back to, I think it was $2.1 billion to $2.2 billion in 4Q, 95% of last year. How much of a step-up is that from 3Q? And how do you see the other geo markets stepping up in 4Q? If you can unpack that move to $10 billion. And as we start to think about 2027, is that $10 billion a good run rate to think about the potential for your top line in '27, so call it something close to a $40 billion top line run rate next year. Is that reasonable?

I think I will not comment at this point on '27, but I can comment on Q4 and what it means for the setting and accompanying outlook that we see. First, to comment very broadly on the Q3 sequence and the Q4 sequence. Obviously, Q4 step-up from the third quarter will be characterized by a combination of factors, the first being the further Middle East recovery that will indeed, we believe, step up and have the assumption that it will reach up to 95% of last year Q4.

The second factor will be the usual year-end sales into Digital and Production Systems and finally, Data Center. But underlying all of this, as we will expect the growth sequentially both in North America and international at that stage are the fundamental of the market that I believe give us a business outlook that is very compelling. That combines not only the rebound on Middle East that will continue but also the setting up of the offshore deepwater environment that will add to it and the strengths we have developed into production recovery [ to bring ] benefits in short cycle.

So it will be a long- and short-cycle exposure, long cycle to deepwater, short cycle to production recovery and the kick of the Middle East recovery developing at scale in the fourth quarter and continuing throughout '27. So indeed, it is highly compelling, adding to the secular trends of Digital and to the significant strength and scale that we are foreseeing in Data Center going forward.

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

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

Yes. I think indeed, the fundamental, first, are favorable and constructive for the global exploration. And it's driven by energy security, by the resource -- exploiting resource -- natural resource and to the need for certain, if not the majority, of the customer to replace the reserve and to bring -- and really the long-term portfolio that includes deepwater, a highly valuable resource. So we see that exploration cycle and appraisal is developing nicely. And I think we see this not being a trend of 1 quarter, but a long-term trend that we support replace -- reserve replacement across different basins, both in frontier, in infrastructure-led exploration, deepwater but also in some land operation to further secure [ even shale ] development in some regions.

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

Your next question comes from James West of Melius Research.

So Olivier, I wanted to just hone in on the Middle East situation. Obviously, people want to get back to work. We want to see a recovery post-conflict. You've probably been in the region recently, and I'm sure you're in touch with everybody in the region. What's kind of the level of urgency to get things flowing again, get back to work, get drilling activity and production activity going? And I know you've talked about 95% of fourth quarter last year levels. But what do you think we look like kind of after we get back to activity?

No. Clearly, we see that the engagement level and frequency of engagement with our customers in recent weeks and days actually is increasing and to secure mobilization resource, to plan and to tailor solutions to the recovery of the wells that have been shut or to plan for accelerating the deployment of resource to do the infill drilling to catch up and expand the capacity.

And I think it varies from country to country. Some like Iraq are more concerned and are constrained by security but we have seen activity restored and starting to be strengthening in UAE, in Qatar, to a lesser extent in Saudi. And I think these are the signs that I think activity is being built gradually. We have not seen a material impact in the recent conflict reescalation as we have seen in the last 12 days and customers are eager to restore production. And hence, they are looking for solutions for well intervention. They are looking for solutions that can assure that the shut-in well can be restored and the solutions that are fit, be it production recovery solution or be it intervention solution, can be deployed at scale in the coming weeks and coming months.

So yes, activity engagement is happening. And I think we are getting the strong signal that aside from reescalation and worsening of the conflict as it stands today, we see a gradual recovery unfolding in the third quarter.

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

I think I see threefold and three vectors of activity. One, indeed the combination of production recovery that includes well intervention, includes ChampionX capability that includes coiled tubing intervention to restore or to kick wells back into production. I see also Digital being -- consider being a new catalyst, this crisis being an occasion, a catalyst for accelerating digital deployments to unlock the potential of existing wells and to assure best performing -- best performance, and we are being involved in several contracts in the region to make it happen.

And finally, for the company and the region or the country that can mobilize rigs for infill drilling and expansion of capacity, going beyond the intervention, going beyond restoring production and accelerating capacity to respond to the lost supply in the last few months.

Your next question comes from David Anderson with Barclays.

So an improving offshore business is clearly an underlying theme for you this quarter. FIDs this year have already surpassed full year '25, deepwater rig count is higher as well. I would think you'd have better visibility here than just about any other part of your business for '27. So kind of the question I'm just wondering is, should we at least see double-digit growth in offshore next year for both the Production side with OneSubsea and higher activity in Well Construction?

I think directionally, it's fair to say that the acceleration of FID, we see finally setting in place this year and -- the pipeline even growing next year that will set the tone for, indeed, a deepwater activity that will certainly grow directionally well into next year. We have set an ambition, as you know, that our subsea booking will reach $9 billion over 2 years, and hence, being visibly accretive to our current revenue rate into '26 and '27.

So yes, globally and directionally, we expect visible growth, difficult to say at this point, depending on the whole mobilization and timing of mobilization throughout the second half of this year and throughout next year and the exact timing of the FID that are still dependent upon all parties and including the host country to find agreement and this will still push or pull some FID approval here and there, but we see significant activity already starting in Africa, West Africa and East Africa in the coming months. We see Mediterranean to be a nice setup in 2027. We see East Asia following the FID and some contract award to be also very prolific for gas development. And we continue to see Latin America from Brazil to Guyana and Suriname to be -- continue to grow and to be an engine of growth. And not forgetting the mature basin of North Sea, Norwegian sector and Gulf of America that continue to look for a capital-efficient solution, including boosting, as you have seen some announcements and continue to develop at pace the proven reserve and focus on the infrastructure-led development.

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

I appreciate the color there. If I could make my second question, more of a macro question here. On the Middle East, you had mentioned production is going to take longer to return. I think that's a little bit controversial. I think the broader market seems to think that production comes right back very quickly within a couple of months.

Can you tell us why you think that's going to take a little bit longer? Is that certain countries that are a little bit different? Is it -- I mean, I know we're talking about the intervention work and everything happening. If you could just provide a little bit of -- a little bit more detail on kind of what you're seeing at kind of the ground level and why you come to that conclusion?

Yes. We believe that it's -- it will not be prudent to assume that the things will restore in weeks. And we believe that the condition that have not met yet and particularly around security in some countries, specifically Iraq, and for production capacity in Kuwait will not necessarily give in short term the capability to unlock and come back to the full production, not only talking about the export capacity from the Strait or pipelines. But -- so I think this will take time.

Now the well intervention and the capacity that many countries have to restore, yes, it will take weeks and months. And yes, as we exit this year, certain countries will already be well on their way to have restored full capacity, if not being on their way to expand capacity beyond, and I think we know that. But it's a mix. And I think here, I cannot do more than comment on the grading the mix from the one that are untouched like Oman or the ones that are severely damaged like Bahrain, Iraq and Kuwait and in between UAE and Saudi Aramco.

So you put all this into different phasing and depending on the mobilization of resource, you'll have a grading of recovery of production. But yes, gradually, it will improve and gradually it will be over weeks, months or quarter depending on the condition that are set and depending on the resolution of the conflict will pan out to be always positive in our opinion and always gradually growing going forward. But it's very difficult to pinpoint a time where this will intersect the previous capacity or the previous production total.

Your next question comes from Neil Mehta with Goldman Sachs.

I really appreciate all the color you provided around data center opportunity set and the path to $2 billion of exit rate revenue. I guess there are a couple of components around it, but for those of us who have probably spent less time on these modular systems, can you just simplify what exactly is the product that you're providing here for every part of the data center and what's the value-add to customers?

And then, can you just talk about how we should think about the economics of this? I would imagine it's a little bit lower EBITDA margin, but higher free cash flow conversion. So just thinking about the economics and then helping us simplify what the product offering is.

Yes. So I think to keep it simple and to explain how did we develop a right of play into this market, I think you have to rewind the tape for 2 or 3 years. And I think we have realized that we could deliver highly -- high-quality, high-reliability modular construction equipment off-site to package this modular equipment destined towards the server hall of the data center or destined towards the cooling equipment of the data center and then package this in -- with modular construction so that they are delivered from an off-site large-scale manufacturing site to the diversity of the data center site in any state or ultimately in any country.

So it brings -- the benefit it brings to the hyperscaler, it brings a reliable, scalable and value assurance of delivering at a shorter lead time flexibly across different data centers. We have delivered, as we noted, into the one announcement we did last week, 1.3 gigawatts of various equipment capacity across more than 20 or 30 different data centers from one single site of manufacturing at large scale and that's the beauty of it.

So the value proposition and economics from the hyperscaler is that it provides reliable delivery at a lower -- at a shorter lead time and it can demonstrate scalability for any data center in any state. So it brings logistics simplicity. It brings quality. And I think that's what we built on, and it's both for server hall infrastructure or cooling solutions. And it's built on a capability that we can transfer from our engineering processing capability, both the logistics, the manufacturing and the engineering capability, and we are starting to add design capability to it, as you have seen from the NVIDIA announcement, future fitting of equipment, commissioning equipment as well as you will see into the Meta announcement that we have made. So all in all, a very interesting capability for the hyperscaler and something that they look for, and we are getting a lot of requests and a lot of pull actually.

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

And maybe you can unpack the new announcement here around the 1 gigawatt data center in Canada with Meta, how many more opportunities like that are there? And can you give us a sense of what are the constraints to scaling this business? I would imagine the demand for prefab work is enormous. So what is the constraint? Is it the facility size in Shreveport, for example? What's the limitation?

I think we have been able to scale this beyond what we had planned originally by expanding, by improving, by optimizing and by starting to scale within the constraints of the campus we have set, but for the specific Canada setup that we are preparing with Meta, we'll set up a sister center, if you like, sister campus, to what we have done in Shreveport. We know how to start from scratch easily.

This is, relatively speaking, a low capital intensity, and we'll be ready to scale this because we have the lesson learned. We have done it at scale. We're building quite a capacity every month from the Shreveport campus. So we'll expand this into Canada and we will continue to do that as a new business and new project unfold. And in this particular case, we are doing a little bit more than just delivering module. We are fitting the module in place on to the data center. We are commissioning this. We are passing to a level of system integration and design that expand our capability set and prepare us for the next project award.

Your next question comes from Arun Jayaram with JPMorgan.

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

No, we feel very good about our position in Middle East. We have -- first, we have built quite a backlog of contract in the last 18 months. I mean, the Mutriba award, including some award in Saudi, in Iraq and UAE that we -- and in Kuwait that we're executing and part of our backlog, and we feel very good about those wins and those contract awards. And we believe that we have maintained and reinforced in most of the countries, our market position.

And you should expect more award to be coming in the coming weeks or coming months that will solidify our market position. So again, we are proud of what we are delivering to our customers in the Middle East. We have a lot of fit-for-basin capability that are in place that are recognized. We have a pretty large integration capability set in Saudi Aramco in Saudi and in other -- including in Kuwait or in Iraq that I think we're leveraging.

And we are more and more successful with our digital capability in the region. And the current recovery of Middle East is calling upon our production and recovery capability, well intervention, chemistry and production solution that we can fit for the market. So we're very pleased and you see the size of our -- and the scale of our business today, and we're not concerned about leaving behind an opportunity, and we will have a nice growth in the second half of this year as we have guided, and we expect this to only expand into 2027.

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

No, I think we're indeed very happy with the momentum that we are seeing in OneSubsea JV. I think we are benefiting from the portfolio we have. I think the portfolio that includes now what we needed to expand to be having a more complete portfolio of trees and manifold and umbilicals as you have seen that I think that complements what we used to have in OneSubsea before. So I think we have a more comprehensive portfolio that address all the basins and make us competitive in all the basins, have a fit solution for all the weather conditions and all the geology and all the characteristics of the fields, gas or oil assets, that we are addressing.

In addition, I think we continue to see significant momentum in our processing solution, and we have seen some recently announced award on the boosting solution. We continue to work with customers in the domain of production recovery to link the future recovery capability of their reserve with processing -- subsea processing capability that we have that are unique. So we continue to develop processing to differentiate, we continue develop digital capability, and we continue to standardize and modularize our solution to make it more effective for deployment and to be more competitive into the [ standard trees ] and manifold solutions.

So again, we are successful across different basins in Africa, in Asia, in Latin America, while continuing to build on our legacy Gulf of America and the North Sea. And you have seen that we have also strategically entered into alliance with Equinor and with BP particularly to develop and to work side-by-side early -- in early FEED and design to optimize the subsea architecture to leverage long-term solution that we foresee, could unlock more economics for the customer and to position ourselves for life-of-field solution.

Life-of-field solution is the last part where we are investing to find a solution to intervene those wells and done some acquisition in that sense. And also continue to work with partners like Subsea7 to provide end-to-end alliance solution for development or for intervention going forward. So very pleased with progress and certainly at the right time in this deepwater cycle rebound.

Your next question comes from Derek Podhaizer with Piper Sandler.

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

So on the OneSubsea side, if you remember, we had a few transitory issues and start-up costs in the first quarter and the good news is that the margins increased in the second quarter. This is why you see Production Systems increasing margins as well. So in the second half, OneSubsea will continue to increase margin as well. So it's a gradual increase throughout the quarters for OneSubsea.

You mentioned ChampionX as well. And as Olivier indicated, we are quite happy to see quarter after quarter ChampionX margins continuing to increase despite some inflationary pressure we have on chemicals, but mostly come from the Middle East conflict by the way. But regardless, because synergies are unfolding, we continue to see ChampionX margins increasing. And Well Construction, yes, true, despite the severe disruption in the Middle East, they managed to hold the margins flat because we had a good mix of activities in Latin America and North America.

So you put all this together, you, of course, will have end-of-year sales in Digital as well. Digital is always recording the best quarter margins in the fourth quarter. So that's what will get us to this more or less the same level in Q4 as we were in Q4 of last year, around 24%.

Got it. Great. That's helpful. And then maybe sticking on Digital, a very solid quarter. Growth across all 4 of your subsegments. I understand exploration can be a little lumpy through the year, but clear adoption and momentum across the other three segments. It's this dynamic you really laid out for us at the recent Digital day. Maybe if you could talk to us about some of your recent wins and really the primary drivers behind that growth and how you see adoption evolving over time?

I think you have seen in the prepared remarks and reiterating what we have highlighted during the Digital Market Day. I think Digital Operations and AI will be the key lever of growth and dynamic and adoption in the market. But in addition to this, our platform approach from Delfi to Lumi to Agora, which is our edge platform and Tela, which is our AI platform, I think, are combining to give us the -- I would say, the comprehensive differentiated offering that I think is attracting market award.

And I think you have seen the diversity of what we have announced across the different geographies, across the different customer landscape, and we expect this to continue because we see track record, we see -- we can help customers create value through digital solutions, be it in the geoscience planning cycle or a be it in operation, particularly in drilling operation, we are seeing a lot of success of adoption of autonomous or automated solution in drilling. And we're starting to unlock the value in production solution by trying to -- by establishing new autonomous solution that can unlock and we do that if a customer are actually in Middle East, and we are expanding this in other regions. So all across, Digital Operations and AI will shape the future of adoption, but it is built on our platform, it's built on our domain, our partnership and our global scale.

Your next question comes from Keith MacKey with RBC.

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

I think first, I wanted to give a word to the situation in Venezuela. Unfortunately, a few weeks back, there was an earthquake that really [ shattered ] the whole country. And I think this is still a country under recovery. And I think -- first, I think a word to the whole industry there and to the whole country as we witnessed this and it's a tragic incident.

Now we have been, I would say, for the last 2 years, working already in country, scaling our resource, scaling our capability, working under OFAC license with an IOC, Chevron, and I think having a large scope of -- to support them, and we have used this to continue to develop our capabilities, continue to prepare for the recovery and to work side-by-side with the new entrants that have preparing a reentry at scale into the country.

So this year, it means that we are securing contracts. We are securing work scope with international company that are -- that either were there or that are reinforcing their position in country, and we are accompanying them into preparing and planning mobilizing resources as we speak with significant scale-up that will happen during the next few months to give us a significant exit rate that will enter -- help us enter 2027 with multiple customers and multiple contracts that would shape 2027 in a significant growth curve compared to where we were in '25 and where we are in '26.

So as a reminder, I think we used to have more than 3,000 people. At the peak, we used to generate more -- visibly more than $1 billion in this country. Difficult to say when we will reach -- whether we will reach this level, but it's clear that having the dynamic of reinvestment under certain right condition will support high growth, and we have positioned ourselves very well and we already are securing the contract and the additional work scope beyond what we have done for the last 2 years to scale in '26 H2 and to scale in '27.

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

The only good answer to this is it depends. I think depending on the FID, depending on deepwater contract, depending on the position we earn on that FID. I think between any FID and the first well drilled, I think there is typically at least 12 months. And FID, are typically this year -- these days, 2 to 3 years as a minimum, if not 3 to 5 years, depending on number of wells, number of subsea trees and the number of phases of those projects.

So between contract award and first revenue, a few quarters and then the duration of any of this FID deepwater is typically to the order of 2 or 3 years as a minimum. And typically, they come in phases as the customer are prudent in the way they plan and scale this large deepwater investments. And hence, this deepwater go to 2 or 3 phase typically that last visibly in excess of 5 to 6 years, and hence, create momentum for the years to come. So that's where it is.

Perfect. Yes. It sounds like we're setting up for a multiyear upcycle offshore.

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

Olivier, I want to touch on the Middle East a little bit. It's kind of a 2-part question, but these are some of the recent themes that we have been hearing. So the first part is on the pricing dynamics in the Middle East. There was a little bit of noise around some LSTK contracts being awarded. I know that's a pretty old mature business model in the country, right? But maybe just talk to the broader pricing dynamics in the Middle East that you're seeing.

And then the other part of the question is around the logistics disruption and the cost inflation that we saw early in the conflict, but it sounds like things might be getting a little better as you learn to live with it, you sort out your supply chain or everything rewires and your costs start to moderate a little bit. But maybe if you can touch on those two points, Olivier, pricing dynamic and then just the cost setup and if that's improving as we go forward?

Yes. Indeed, and building on your second part of the question first, I think indeed, we are learning how to readjust, as I said in my prepared remarks, the logistics and the supply and localize the logistics and the supply differently to prevent -- to avoid some of the excessive costs and at the same to continue to operate and provide business continuity and efficiency into the scalable solution that we provide as we mobilize back within every country. So this is -- this will fade away. And as we gradually recover, we'll put this behind us, and I think we'll have an impact -- we'll gradually remove this impact.

Now from the pricing, pricing has been, generally speaking, globally a headwind in 2026, and particularly in large competitive tenders, be it in integration, in stimulation or in subsea, this has been something that has been with us. Now as the market is tightening, as the market is starting to mobilize for additional growth, additional capacity, naturally and gradually, the outlook will improve as capacity will tighten, and then we expect this to be something that will not necessarily be a headwind as we go forward in 2027 and beyond.

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

I think it's -- I don't want -- I don't think we'll have time to go into the detail and to explain this in an intelligent way that can address your question. I think the simplest way to answer this is that we have the confidence that they would exit rate and continue to grow organically to the diversity of the hyperscaler, the solution and the scope expansion including international, including Asia and Canada and the U.S. to support an exit rate that will exceed $2 billion by the end of this year -- around next year.

So that is, in essence, giving us a significant growth. And I think the time is -- I don't want to -- the time -- we'll continue to grow, obviously, as we expand the scope, but the sky is the limit at the moment on our growth rate.

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

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

First, to keep it simple. I think the backlog is already in place to support this $2 billion or more. So that gives us opportunity to chase for more and to prepare for more future and to high-grade and to continue to develop our scope from design to expanding our capability set and to try to participate to design and start to expand as well.

So no, it's already in the pipeline, that is the reason why we feel confident to announce it. Now we will continue to build, we'll continue to explore, we'll continue to work with the different customers we have secured in the last 6 to 9 months to explore how we can develop this further, how we can add value and not only scale in manufacturing, but also scale into the product and the technology offering that can help optimize the performance of those data centers and expand beyond the inner side of the data center to then start to touch the cooling loop full optimization as well as touch into the power -- decarbonized power provision for some of the centers. So that's the combination of expansion that we are looking in that will go beyond the $2 billion I just mentioned.

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

Thank you. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflections. First, the market is beginning to exhibit the characteristics of an upcycle. The need to replenish inventories, diversify supply, develop domestic resource and rebuild spare capacity is supporting increased customer investment across both short- and long-cycle markets. This will drive higher activity with deepwater in particular, expected to accelerate into 2027. Combined with the increased activity that will require to restore production capacity in the Middle East as conditions allow, these dynamics create a compelling outlook for our core business.

Second, we continue to capture exciting growth beyond our core. Our digital and AI solutions are becoming increasingly critical to our customers' operations, while Data Center Solution is expanding our reach into critical infrastructure for the AI economy. Both businesses are gaining momentum, extending our capabilities into new markets and creating additional revenues for long-term growth.

And third, we're well positioned to capture the opportunities ahead. Our leadership in international and deepwater, [ combined ] with our expanded capabilities in production recovery aligns SLB with where our customers have direct investments. And as the cycle strengthens, we expect this position to translate into differentiated growth and performance.

With this, I will conclude today's call. Thank you all for joining.

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

Good morning, everyone, and thank you for joining us today. Before we start, let me briefly step back and review the story you heard so far. We have discussed the pivotal role of digital in our industry and the differentiated position SLB has built over time. You have seen how we are leveraging our platforms and applications across planning and operations workflows. And you have heard about the opportunity to scale AI across our portfolio to unlock even greater value. What I would like to do now is bring that story together through a financial lens. Over the next few minutes, and we'll focus on 3 areas. First, the digital profile of our digital business, the financial profile of our digital business. Second, the significant market opportunity ahead of us and how we plan to monetize it. And finally, our 2030 financial ambitions. The key takeaway is this. Digital has become a meaningful contributor to SLBs financial performance in the past few years. And we continue to see significant runway ahead with accretive growth and continued margin expansion.

Let me begin with where the business stands today. In 2025, Digital generated approximately $2.7 billion of revenue. More than $900 million of adjusted EBITDA and an adjusted EBITDA margin of 35%. It also reached approximately $1 billion in annual recurring revenue on a trailing 12-month basis. But what is most important is the quality of this growth. Since 2029 -- 2021, Digital revenue has grown at a 16% compound annual growth rate, well above the oilfield services market and SLBs overall growth during the same period. And adjusted EBITDA grew even faster at a 23% CAGR compared with approximately 14% for SLB overall, demonstrating Digital strong operating leverage and differentiated earnings power.

Also, the margin profile you see here already reflects a meaningful share of the costs required to support growth as the research and engineering spend is directly expensed. That translates into very strong cash generation and effectively makes Digital the division with the highest return on capital employed in the company. So what Digital brings to SLB is very clear. It has growth, it lifts margins and it delivers very attractive returns.

Let me now describe our Digital revenue footprint. One of the defining strengths of this business is that it is diversified across geographies, customer types and revenue categories. That matters, because it gives us a broader opportunity set, greater resilience and multiple paths to growth. Today, our Digital business serves more than 1,500 customers, including more than 90 of the world's top 100 oil and gas producers. That is a strong installed base, and a solid foundation for growth. Geographically, the business has broad exposure across the Middle East and Asia, Europe and Africa, Latin America and North America. And our customer mix is also well balanced across national oil companies, independents and majors. That mix is important. With national oil company and independents, we already see strong Digital adoption, particularly in planning workflow. With the majors, we see a meaningful runway. As some customers move away from internally developed systems towards scalable, enterprise-grade platforms that can support broader Digital transformation.

And finally, from a revenue category perspective, Platform as an application represent approximately 40% of Digital revenue, followed by professional services, digital operations and digital exploration. That mix will evolve as digital operations continue to scale. We expect it to become the largest part of the business over time, as I will describe momentarily. Overall, this is a well-balanced business. We have the broadest Digital offering in the industry, and it is not dependent on one geography, one customer or one product line. It is also supported by the depth of the broader SLB portfolio and our global reach. Taken together, that gives us confidence in both the durability of the business and the opportunity ahead. So next, building on what Rakesh outlined earlier, let me turn to the market opportunity and where we see the strongest growth Recent third-party analysis shows the total addressable market for our Digital business growing to approximately $35 billion by 2030. That view aligns closely with SLBs internal analysis. And when we map the market by category, we expect the strongest growth to come from digital operations, where the market is expected to grow at an 11% CAGR through 2030. This is compared with about 8% of the overall digital market. And as highlighted earlier this morning, there is meaningful upside to this outlook. If adoption of AI solution moves faster than currently forecasted, the digital market could expand to as much as $50 billion by 2030, representing a 15% CAGR. Taken together these trends along with our differentiated market position, gives us confidence that we can grow Digital revenue at a 10% to 15% CAGR through the end of the decade, with the higher end of this range based on accelerated AI adoption. This revenue trajectory would outpace both oil and gas upstream investment, as well as the industry's Digital spend as we believe we can leverage our digital platforms, customer footprints and AI capabilities to continue growing ahead of the market. Notably, we expect to deliver this level of revenue growth without significant M&A activity, although we will continue to consider bolt-on technology acquisition that can further strengthen our offering.

With that as the backdrop, let me now turn to how we will monetize that opportunity. Our Digital offerings are monetized through several commercial models, each contributing differently to growth margins and recurring revenue. Platforms and applications are largely recurring. They are sold through software subscriptions or perpetual licenses with annual maintenance. Digital operations has a different model. It is generally sold as an incremental digital line item connected to our core services or equipment. Revenue in this category is repeatable or sometimes recurring and typically delivers high incremental margins. Digital exploration represents our exploration data business, which consists of a differentiated library of seismic service and other subsurface data covering key basins worldwide. This is usually highly profitable, but nonrecurring in nature, with revenue generated primarily through onetime license sales. Our success in producing and selling high-quality data is highly dependent on the use of our platforms and applications, enhanced by our domain foundation models.

And finally, professional services is more project-based. It includes consulting and technology services required to support our clients' digital transformations. Although this category has lower relative profitability than the other digital categories. It remains strategically important because it helps drive adoption and creates pull-through across the broader portfolio. In short, we have multiple ways to monetize the Digital opportunity. More importantly, these various models reinforce one another. And combined, they create a business with growth, resilience and flexibility. Let me now go one level deeper into the two areas with the strongest growth potential, namely platforms and applications and digital operations and explain how we will unlock further growth and value.

In platforms and applications, we see 3 key levers for increasing monetization. First, gradually transitioning on-premises customers from perpetual licenses with maintenance to subscription models. This allows for better tiering of our commercial offering based on the features our customers choose to consume. Second, migrating more customers from on-premises offerings to the client. And first, monetizing consumption across the portfolio as customers expand the usage of our platforms and applications, data environment and AI solutions. As you can see, growth in platforms and applications is not only about adding customers. It is also about shifting the mix towards more recurring subscription and consumption or outcome-based models. This will improve revenue productibility, reduce sales volatility, increased contract lifetime value and improve customer retention.

The opportunity in digital operations is of a different nature and scale. Here, we believe we can increase the size of the market, if not create the market. By scaling connected equipment and autonomous workflows across customer operations, with new AI capabilities further accelerating that trend. Today, those Digital services only represent about 15% of our core equipment and services revenue, despite delivering significant results in the field. As customers increasingly recognize the benefits of these solutions, we see the potential for spending in this category to grow at an elevated rate, potentially tripling by 2030, supported by digital add-ons and increased outcome-based pricing. Second together, the evolution of platforms and applications and digital operations are expected to drive the majority of the growth in our Digital business. And the value generated from these offerings will continue to compound. As platform usage increases, more data is organized [ in activity ]. As more assets and operations become connected, the opportunity to automate workflows expense. And as AI becomes embedded in those workflows, the value we create for customer increases. All in all, this will support our ability to continue delivering attractive digital growth with margins that are highly accretive to SLB.

To make this more explicit, let me now close by sharing our 2030 financial ambitions. Based on market growth and the trends we are seeing in terms of adoption and monetization, we expect to double Digital annual revenue -- annual recurring revenue to approximately $2 billion by 2030. This is supported by the assumption I shared earlier that Digital revenue will grow at a 10% to 15% CAGR from 2025 through 2030. We also see a path to approximately double our current adjusted EBITDA for Digital to between $1.8 billion and $2 billion by 2030, with margins expanding to a range of 38% to 42% towards the end of the decade.

Our ability to achieve margins towards the higher end of this range will depend on our success in increasing the share of subscription-based revenue in our mix. The continued expansion of digital operations and the addition of AI-driven capabilities that create incremental value for customers and support better monetization of the outcomes we have help enable. In summary, Digital is already helping to accelerate SLBs growth with accretive margins and compelling returns. And as adoption continues to expand across platforms, operations, data and AI, we see a clear path to sustain double-digit growth, continued margin expansion and increasing contribution to SLBs return -- overall returns over time. Thank you for your attention. I will now turn it back to Olivier.

Thank you, Stephane. Ladies and gentlemen, as we conclude, let me leave view of this. Digital is becoming central to how this industry plans, operates and creates value. And what you have heard today, reflects a leading position SLB has built over many years. It is one that is powered by science, accelerated by AI and built for the complexity of energy operations. We are the only company that brings together the government expertise, the technology, the partnerships and global execution to redefine what is possible, where it matters most. But this is just the beginning. In the age of artificial intelligence, new opportunities are being unlocked across all industries and we are pursuing them not only through the Digital offering we discussed today, but also through our Data Center Solutions business. There, we're expanding our work with hyperscalers. The same partners we work with and we collaborate in our digital upstream business to deliver the physical infrastructure required to scale AI. In that sense, SLB is uniquely positioned to benefit from the secular growth of AI in 2 ways: full platform and digital solution that transfor energy operations and to the infrastructure that enables AI to scale. So it is one takeaway. It is this. Our Digital leadership is here, it is differentiated, and it is creating long-term value for SLB and its shareholders. Thank you for joining us today and for your engagement throughout the session. With that, I would like to invite to their speakers to come with me on stage for the Q&A session.

[Operator Instructions]. As you're thinking about your question, allow me to kick it off by asking Olivier about something we've been hearing a lot lately.

Olivier, as we think about SLB Digital next phase, what gives you the confidence that this business can evolve into a scaled, higher multiple engines, distinct from traditional oilfield services and what proof points should investors focus on today?

Thank you, James. So indeed, I think I will state first saying is that we are not building our digital capability anymore. We have built it. We're here to scale it. We're here to scale it. And if you look at the proof points of where we stand today, we're already growing at double digit. We're expanding margins, and we are seeing a mix further evolving towards increased recurring and consumption-based revenue. What makes me confident is that we have a clear path forward. And the clear path forward is around digital operation and AI solution. And the Sandbox is a total SLB OFS footprint. That is unique. The capability we have together, the domain, the platform, including an AI-ready stack, the partnership ecosystem we have developed and the global reach, as we've said, is unique. When you combine all of this, as we continue to scale, the ARR will shift upwards, the consumption based on our platform will start to be clear and our margin will resemble software-like margins. When you put all this together, I believe this would deserve a higher multiple. And I think it's no more cyclical growth. It is durable growth that will compound and create value for the company.

Thank you, Olivier. Let's take questions now from the audience. We have one right up here up front.

Marc Bianchi with TD Cowen. I'm curious to achieve these targets. I think you talked about $3 billion of R&D spend since 2016. Can you talk about what additional R&D spend is contemplated to get to these targets? And then related to that, how do you see this initiative sort of helping the capital intensity of all business? Do we see a reduction in capital per dollar of revenue, for instance, as time goes on and you are able to implement more of these capabilities?

Thank you, Marc, for the question. Stephane, can I pass that one to you?

Yes, of course. Thank you, Marc. Look, as Olivier mentioned, the foundations are built. I mean we've spent actually decades then an increased R&D in the last in the last few years to get there. So we are not going to stop there. We will always need to enrich the platform. But in terms of R&D, you've seen the numbers over the last 10 years. I would expect this, of course, not to increase as fast as the revenue if it ever increases. So you will gain operating leverage from this, but we will continue to enhance the platform and invest into it.

I have a question right here in the middle. Scott?

Yes, Scott Gruber from Citigroup. Thanks for the presentation this morning. Super impressive. I'm curious about the pricing strategy for some of these services, thinking back to the digital operations examples, where autonomous drilling can save 25% to 40% on the drilling time of a well. So if you think about that in the context of a deepwater well, it could be like $25 million, right, which is a huge amount of savings. How do you guys think about what is the fair share of that savings for Schlumberger's SLB -- sorry, a multiple for SLB to capture versus how much you share with the client. Obviously, you want to push the adoption of these services and scale it up, but there's a huge amount of value creation there. How do you think about the pricing strategy with that value creation potential. Rakesh, would you like to kick off the question and perhaps

Cecilia on digital operations, you can have a follow-up.

Sure. Thank you. So I think on different categories of revenues we've reported, the pricing strategies, of course, vary. So for the operations, as you rightly point out, significant value for our customers. And we will, therefore, be in a very strong position to be able to scale. In the operations, as I think Stephane briefly mentioned, we are talking about almost very little new investment for us to be able to provide this value addition because of the fact that we are utilizing the existing hardware already, and we are just bringing new algorithms to be able to bring the value for our customers. Of course, we expect, therefore, the margins to be very, very significantly accretive, as I think mentioned by Stephane. For the other categories, for example, in the platforms and applications, again, I think the fact that we have a very distinctive and a very strong offering, we expect to scale that. And therefore, the additional scaling would not cost us very much and which is why the confidence that we have in terms of even stronger margins in the years ahead. And then, of course, the agentic AI, that will bring significant value on top of what we are already charging and that should bring significant margins for us going forward as well. So if I look at those, each one of those categories has distinct advantages, which will continue to bring more margins for us going forward.

Cecilia, perhaps you want to elaborate on operations?

A couple of points other than what Rakesh said. First of all, many and most of our contracts are performance-based contracts. So when we get this additional digital add-on service, we actually increased revenue, not just from digital, but also from our general operations. Second is many of our digital operations that we sell actually are agnostic. But as in the completions example, when we merged our -- the digital piece with our innovative hardware, that's when we see a step change in performance. So then it is also an enabler to bring additional pull-through revenue for the locations where we're not having operations there.

James see you right here.

James West, Melius. Question about the changing dynamics that we've seen and how it impacts the digital and digital adoption in this space. Energy and power changed a lot in the last 110 days. And of course, that change with energy security started in '22 as well, but it's become more pronounced. And Olivier, you're having the CEO to CEO conversation. And I'm curious what the feedback is from the customer base about the security of their operations as they move more and more information to the cloud and build more digital, do they worry about cybersecurity? Do they worry about hacks, things like that? And does that limit? Or have you created a platform where they're very comfortable that you can protect their data?

Olivier would you like to take the first part of the question and then perhaps we can pass it to Shashi for the second part?

Yes. The first thing I would say is common that what is happening today with energy security, the need for supply diversification, the need to secure and accelerate the supply management is all playing to the strength of the impact of digital in our industry. [indiscernible] thing I'm hearing from customers the same way we heard back in 2020 is that Digital is becoming more critical, more essential to unlock the performance efficiency to fast track the cycle of first oil, first gas and to improve recovery for the market for the assets that can be deployed securely in a world. So this is the trend that we see is only accelerating. It's a secular trend that we believe that this crisis is only reinforcing the role of Digital going forward, will be a shift and critical transition for the industry. So that is happening. And I think this is only accelerating. That's the feedback we're getting . And we are seeing it in adoption. We're seeing a pilot. And if any mention of the impact, actually, our business -- Digital business in Middle East has been extremely resilient against this backdrop of crisis.

Let me add two points here. I think when we talk about customers and their concerns around their assets, I would put them into one aspect, which is around data. So we implemented our digital platforms in a way that we can meet their customers where they are. For those customers that are comfortable with a traditional SaaS offering, great. We have -- we support all the 3 hyperscalers. But then there are customers for whom we have implemented what we call private SaaS, which means deployed solutions onto their talent, which means it is managed by their own IT and security organizations. So that's one fact. And of course, then there is a set of customers that want everything on-prem. So we cover that entire spectrum to say, wherever the customer is and their data are, we can deliver a solution there. The second angle I would say is from a cybersecurity point of view. So we run one of the largest cyber SecOPs operations across the industry. And we work very closely with leading hyperscalers, but also security companies like Palo Alto Networks, et cetera, on those, right? We are adopting and using the latest frontier models to test to validate our implementations or any kind of loopholes that might be existing. And then, of course, we work very hand-in-hand with our customers' own IT and security organizations as well. So at the end of the day, for our customers to use our stack, they need to be comfortable that the implementations that we have meet their standards, and that's what we go with.

Thank you, Shashi. Right here in second row in the middle. Dave, please?

David Anderson, Barclays. Stephane, just a real quick point of clarification. On your 2030 targets, was that based on the $50 billion TAM or the $35 billion TAM?

David, it's a range. So it -- this is why we have a range of EBITDA as well. The revenue itself is between 10% and 15% CAGR through that period, right? So the market overall, if you take the low end of the TAM, we've given you the $45 billion, that would be 8% CAGR. The $50 billion would be 15% CAGR. So it's based on the entire range, if you will.

Understood. So Olivier, [indiscernible] SLB has made a big point today about your mode in Digital. You're really the only OFS company doing this. You've been doing this longer than anybody, the foundational models, the rest of the domain expertise gives you all a head start or a lead in AI. But your customers are also adopting AI. They're adopting AI agentics, all sorts of platforms as well. So where is that line today? And are you concerned about that line moving? In other words, your customers are going to be adopting some of this in-house, you're going to be providing other things. But is there a concern that, that line could shift and what is the concern that some of them are going to be started adopting what you're doing?

As you heard before, we meet our customer and they are where they are in their digital journey. And I think if you look back at the history of digital, 30 years ago, most of the reservoir simulators were owned and developed by our customers. and some of the basic interpretation was done the same way. Over time, the emergence of platform, industrial grade platform has replaced those developments. Nowadays, some customers are willing to enter the development of AI model, if not development of agentic AI using models. And what we offer is an open platform. We offer DELFI, Lumi, the data and AI open platform and Tela as agent -- agentic agent framework that our customer can use to extend their agentic and connect to their agentic workflow, connect to their third-party application and also embed our domain foundation model or retrain our domain foundation model to their own data sets, that's what is happening in a pilot we have with several customers, and they see a huge benefit of doing so because they have a starting base that is a step change from what they can do by themselves. As we said, the relationship with NVIDIA give us the guarantee that just peaked performance for this domain formation model. We have designed them from the ground up, not using the existing frontier model. We have designed it using our science, our technology from the ground up with the guardrails that we integated from NVIDIA, from other provider into it. So the starting point is very strong. The framework we have give them the freedom to extend, and that's what is attractive into our offering to the customer today.

Yes, right back here. Right here in the middle. Someone pass the microphone.

Yes. Sebastian Erskine from Rothschild & Co. Just a question on the -- in one of the presentations you mentioned about the performance-based contract in Libya and actually trying to buy in a bit to the efficiencies that kind of customers can gain. Obviously, that's interesting to me when we look at U.S. land, one of the big stories was the deflation services, the fact that E&Ps could do more with less. So how much as a percentage of these performance-based contracts or pricing based outcome-based models do you see and a scope for that in digital operations going forward?

Cecilia, I think you answered part of that question earlier, maybe you can take it.

Yes. We have -- it's a large percentage of our contracts are performance-based contracts. I believe you were asking specifically on the U.S. market. In U.S. market, we have a very flexible go-to-market approach. We rent and sell our equipment as well as do the services. Many of our services are performance-based and then the rental and the sale of our equipment is through a third-party competitor.

Yes, right back here. Thanks.

Heath Terry, Citi. I really appreciate you taking the time on all of this, particularly the level of detail around some of your technology partnerships. The reliance that you have on the cloud providers, they've obviously been very vocal about the issues that they're dealing with from a supply perspective and the constraints with demand increasing the way that it is. That's showing up in pricing, it's showing up in this whole issue around token costs going up as we started referring to as token maxing. I'm curious if you're seeing sort of any of those kind of issues showing up in your relationships, either with the hyperscalers or with your customers as those costs -- those underlying costs start to go up and how you're planning longer term against the constraints that seem like they're going to be around for a while in this space?

Trygve, you explain to the audience, the digital advantage and the partnership model. Why don't we pass this question to you.

Yes. We -- as you said, we have a close relationship with all the hyperscalers, all the major cloud providers. And we, of course, secure ourselves with -- for direct expenses, we secure ourselves with long-term contracts with these providers to ensure that we have cost competitive access to the technologies. And we also work very actively with them, particularly on securing capacity where we have a well-established playbook for securing that we have the right capacity as our workloads will be sometimes having -- demanding the same type of capacity they use for other workloads to make sure that we can continue providing continuity to our customers in operating.

Rakesh, would you like to elaborate further?

Yes. Heath, actually, you do make a good point. There is clearly a transition happening. And the industry is getting used to the changes that are happening. So I'll say there is a very interesting trend that is happening right now. So instead of going from cloud first, many of our customers are going to what they call hybrid cloud for elasticity. They want to keep on-prem for consistency and then they go on the edge for immediacy. So they are moving in a direction where they will actually have infrastructure, which encompasses all of them so that they are able to benefit, take the benefit of what the cloud compute brings as well, but they are also prepared so that they are able to get the maximum benefit from what they have in-house already and also from the edge operations where it is required.

Olivier?

Yes. And what is important to this is that to offer our customers the ability to navigate through this tenant hybrid cloud for elasticity of cloud compute and edge at the same time, doesn't come in a quarter. It has taken us years of development, of tuning, of testing and validation and certification of our customer. So we're proud of ourselves to be the only one that can do this complex environment at scale industry grade complex architectures that combine the benefits that you heard about that allow our customers to use the cloud when and as necessary and remain independent where they believe it's more secure and they have the capacity they can to develop their workflows.

In the very back. I see your hands up.

Stephen Gengaro, Stifel. When we think about Digital and we think about maybe the last few years and then now through 2030, how do you think that impacts your growth versus history in the core business?

Stephane, let me go ahead and pass this one to you. Did you hear the question?

Yes. Actually, if you don't mind rephrasing?

Yes, very good Stephane.

So maybe relative -- unless you want to tell us what you think the market does for the next 5 years. But relative to the market, through 2030, how do you think Digital impacts the growth in your core operations versus the peer group?

Okay. Got it. Sorry for that. So look, first, the growth we are portraying here for Digital, and we've said this before, we believe is at least partially the correlated from the growth of our core services and equipment, which, as you know, are more cyclical. So if we are confident to give that 10% to 15% CAGR there for Digital only is that we think this is really secular, structural and trigger more recently by the acceleration of AI. So that gives us confidence that there is this spot of Digital, if you want, that can grow a bit regardless of what can happen in the rest of the E&P upstream sector, particularly because it remains a very small percentage of the total spend as you've seen. So now can that can that influence the size of the overall E&P spend. Yes, it can. That's what it can do, at least for us, is that it can bring more first, more digital. But then because as Cecilia highlighted, it's not just about the software and the platforms, but it's the connection with the hardware is that, that more Digital is going to pull through more core services as well. So our clients may -- we want them to gain in efficiencies and generate cost savings but this is not going to happen in the core services and equipment we provide. To the contrary, we are going to have a boost from the advent of more digital operations.

Thank you, Stephane. Yes, Doug we'll get you a microphone right now.

Doug Becker with Capital One. Just curious about as autonomous operations really start to scale, how are you thinking about risk management, just what safeguards are in place from a suboptimal decision made by an autonomous operation or maybe in an extreme example, a well control incident that was really triggered by an autonomous decision.

Thanks, Doug. We're going to pass that one to Cecilia.

So just like self-driving car like Tesla, if the system can go into manual mode at any time, and the user can decide whether to go autonomous or if the recommendation needs to be approved by the user. So it's a very easy on/off. And ultimately, there's always going to be a user that makes the final call, which is going to be our customer.

Thank you, Cecilia. Saurabh, did you have your hand up? Right up here in the front, please.

Saurabh Pant, Bank of America. One thing, Olivier, when you took over as the CEO back in 2019, you were talking about the fit-for-basin at that point of time. I think I heard the word fit-for-basin once in Shashi's remarks. How do you think about it fit-for-basin from a digital perspective? I know you talked about 7, I think innovation factories across the globe. Maybe talk to how are you thinking about that? What are you doing differently in different parts of the world?

Olivier why don't you go ahead and [indiscernible] around the question?

I think this -- Digital brings us one thing, it's ability to customize, to tailor and to fit our Digital offering to the basin challenge that we are facing. And I think the concept we have put together with the innovation factory, and we have 7 of them in the world where to provide the digital backbone, the digital domain expert, the digital platform, close to our customer to collaborate on what could be done locally, do you make fit technology, digital technology solution. Now with the advance of digital operation, the advance of agentic AI, we are going to the next level. The next level of putting together, stitching together, OFSE operation with digital capability and creating unique set of fit operation with a fit domain formation, a fit set of workflows that are stitched together to an agentic AI and fit set of equipment or services provider back to back. Best example actually happening today that we can refer to. It's what you heard about ADNOC, referring to that AI PSO and the AI PSO's production optimization using AI. We are CO-DEVELOPING THE AGENT. We are fitting this agentic work on the specific assets of ADNOC and we are lifting and kind of enhancing the production performance through this. So it's a fit application of AI capability tailored to the OEM equipment that they use, tailored to the reservoir characteristics that they have using a DELFI and a Lumi platform to make it work together. That's the principle, and that's what we want to extend that we want to repeat from basin to basin.

And Trygve, did you wish to add any additional color?

Just there's one more color to fit-for-basin as well that is increasingly being important now and which is underpinned by our platform investment over the last few years, and that is the technology sovereignty. A lot of operators around the world are increasingly concerned about their sovereignty, their ability to operate their digital environment. And we have -- this is exactly what our platform has been built for and enabled for the last few years. And I would say we are uniquely positioned to be able to guarantee our customers this type of sovereignty as well. So that's the additional thing in addition to the particular operation and geological challenges they have as well.

And Cecilia.

I want to add a different angle to the whole -- to the question. Every geography is going to be different. And the system needs to learn what are the parameters for those -- for that geography. So for example, our deepwater operation is directional drilling is going to look completely different than U.S. land. And what the customer wants is going to be completely different. So in deepwater, it's about landing the operation per the plan at -- in the sweet spot with a minimal amount of risk. In the U.S., it's about drilling as fast as possible as long as you're in the tunnel, you're fine. So each -- the system learns and gets smarter depending on which geography and what type of operations you're running. Hence, why it's very important to have this wide footprint that we have at SLB.

In the very back. Yes, please keep your hand raised. Thank you.

[ Aarti Malhotra's ] from Goldman Sachs. I wanted to connect a few dots. So I think, Shashi, you mentioned generic ALMs are challenging to do. Olivier you mentioned at the beginning that it's important to know what to build. We've been hearing customers trying to build their own applications. Where are we in that evolution of that dynamic? And I'm curious how that evolution is factored into or affects the sensitivity on your 2030 guidance?

Shashi, would you like to take the first part of the question?

Yes. So I think we talked about LLMs because they are very, very powerful tools, but they're very statistical in nature. And they build and they predict the next -- they generate the next response based on the context you provide. We cannot take that risk when we are talking about technical workflows where customers are making high-value decisions or high-risk decisions, right? So what we want to do is to say we will leverage the large language models where they bring value, which is converting the context into an outcome. But then the context is set by us by providing the domain. So that means when we are working with a well-off foundation model or a seismic foundation model, that absorbs the knowledge that comes from that domain, and then there's a handoff between the foundation model and the large language model to then aggregate the information and serve it out, right? So that way, we don't ask the large language model to figure out how to work with seismic data. It has no clue, but we do. So we work with that balance of us providing the domain context and informing everything based on the domain and then use the large language model for where it is best suited, which is to aggregate and summarize and provide the outcome to the user.

Maybe I'll pass it to Rakesh.

Yes. So I think I want to also bring in Dave's point that you -- I think you were alluding to. Many of our customers have actually tried and absolutely, they will continue to try to go down that value as well. But they are realizing more and more that the changes are happening at such a rapid pace that unless you really have the expertise and you're engaged in it on a regular basis, this is not a pace that you will be able to keep up with. So more and more, we are seeing that the customers are actually aligning with partners that they realize are going to be in this for the long game. The other comment I want to make, we're talking about LLMs a little bit. LLMs are based only on text. The data that we have in our industry is in very other different formats. Seismic formats have nothing to do with text. Logs are completely different. And therefore, the models, the domain foundation models, naturally, the LMMs cannot do anything with the data that we have in our industry. So the domain foundation model have a very distinct application that will continue to bring value to our industry specifically and only companies who can handle that kind of data will be able to benefit from it as well. So I just wanted to give you those 2 colors.

Thank you for that, Rakesh. Right here. Dan?

So I just wanted to ask a question on labor and kind of talent retention on the catalyst. So the question was, I noticed one of your -- in one of the earlier partner testimonials, it was someone who had actually been at SLB for a couple of decades and then most recently was at one of your biggest competitors. But yes, can you just talk about -- to what extent attracting talent, retaining talent is a bottleneck or any type of impediment to growth for SLB. And also if it's something when you speak with your customers, if training and attracting the right talent is a bottleneck for their digital adoption as well.

Olivier, why don't you?

Yes. I think we all compete for the same talent pool, but I think we have demonstrated for the last decades that I think we have still the foundation, the culture, the training framework to attract talent, digital talent, geoscience talent, petro technical experts, engineered talent that we train. We co-train in AI and in data science as well as in geoscience or in domain. And we have been able to attract from every region, top talent across the best university. Occasionally, we compete with those hyperscalers. We compete with some other horizontal player. But I think the talent we have in our team has allowed us to build what you have seen today, to build the Tela infrastructure, to build the DELFI, to build the Lumi. And I think it speaks volume to the talent we have that Shashi is leading and our team is leading. So I'm very proud of what we have as a talent pool in our team. I'm convinced we'll continue to attract, I think this event and what we are publishing every day and the path to autonomy is what is exciting the most new and future employees and prospects that are joining us, and they love what they can see when they enter the company. They see that we are becoming a digital-first company. And I think that's very attractive. And I think that is the magnet we are putting for digital talent throughout the next few years. So I'm not concerned. I'm excited about the future can give us with this talent pool we are attracting.

Thank you, Olivier.

Keith Beckmann from Pickering Energy Partners. It sounds like M&A is probably not a key way to grow. You guys got a lot of internal things going on. But on that front, is there anything within the Digital portfolio that you think you're missing? And maybe what are some of the key characteristics you're looking for when evaluating potential opportunities?

Thank you, Keith, for your question. I'm going pass that to Rakesh.

So Keith, clearly, we are always on the lookout for bolt-on technology that will bring value. We've announced a couple, I think, over the last few months that I'm sure you are aware of. I'm not going to sit here and tell you this is the weakness we have in our system. But we are always on the lookout for technologies which will complement what we have for bolt-ons that we decide, we will not develop in that particular domain or that particular part of the technology. So I think both, extending our partnerships with companies that have complementary skills that we will either integrate or we have decided not to compete. But then occasionally, where we see that it is a good fit into our own organization as we have done, we will continue to look out for opportunities.

Thank you, Rakesh. I think S&P Global and TaskUs are good examples of that. Derek, right here, please.

Dark Podhaizer, Piper Sandler. I thought it's interesting when you split about -- split apart the customer type for Digital, I think you have 37% NOC, 37% independents, 21% for the majors. Maybe can you talk about the opportunities to capture more share with the majors or on the flip side, some of the limitations and headwinds to continue to drive adoption in with the majors?

Go ahead, Olivier.

think you have seen 3 statements from Eni, from Chevron from TotalEnergies and from Shell, I forgot about Shell in the statement. They are very, very clear of the benefit they see in partnering with us. They all collaborate with us on a different scope. Eni is in digital operation, trying to get the most of autonomy for drilling operation. Chevron is the historical partner that has helped us develop and accelerate our platform at scale with Microsoft. And both Shell and TotalEnergies have entered a collaboration agreement with us to develop fit subsurface and adapt their workflows to the benefits of the organization. So I don't see any limitation on this. I see organizations on the customer side that are keen and eager to leverage and to work side by side with us so that they can leverage our agentic AI environment. They can leverage the power of our platform so that they can deploy to the complex environment they always want to deploy to match security requirements they have, sovereignty when they operate in certain countries and leverage of their own IP, which our platform allows us to plug in. So I don't see an obstacle. I see a big runway with all the major and the one that we mentioned into this. We continue to work with them for adoption at scale.

Very good. Right here.

Phil Jungwirth with BMO. Can you talk about the drivers behind the margin improvement by 2030, 38% of 42% is quite a bit higher than 35% and 25%, and I think you guided to a similar level here in '26, despite the 9% growth. Is it mainly just mix shift with platforms and applications, digital operations growing more? Or is there more behind it? If so, could you please expand upon that?

Stephane, I'm going to pass this one right to you.

Look I'm -- first, I'm quite confident we can reach that range towards the end of the decade, if not earlier, I think actually margins will increase year after year into 2030 to reach these levels. The key driver of this -- it's a few things. So first, you have simple operating leverage. We've mentioned R&E before. R&E, if you want, is the biggest cost to grow. But again, the heavy lifting is done and if we increase R&E little bit, it's not going to increase for sure as much as the revenue growth. So you get margin expansion from there. And then you have that shift in pricing model. Some of it is enabled by AI. We believe we will be able to increase the subscription-based revenue, which is -- which allows us to tier better, if you want, the levels of pricing depending on the features each customers use. And then more consumption based, the more outcome-based pricing should help us lift the margins as well. So it's the combination of all this that really gives us the confidence that 38% to 42%, the midpoint of 40%, if you want is -- it's quite a good ambition, I think we can reach there.

Allow me to come back to this side of the audience. Yes, right here.

Noah Naparst from Goldman Sachs. I have another question on the mix. If we look at the 60% or so of revenues that's recurring and repeating, just wondering how weighted it is to pure SaaS. And do you plan to increase SaaS mix over time? And how do you plan to do that?

Yes. So I'll pass it back to Stephane.

Yes. So we -- definitely, we do, yes. Part of the -- it's part of the driver is indeed the SaaS mix. Again, we are not betting everything on the cloud, right, because as we mentioned before, we need the customers where they are. But still, we are seeing that shift. Is it going as fast as we want it to be, maybe not, but it is going. And so today, we have, if you want a bit less than 50% on the cloud, and we could very much go to 2/3, around 75% at one stage of SaaS and cloud. So it's part of it.

Olivier.

And the other element is the consumption model as part of the [ science ]. And I think the use of AI and use of agent, as you have seen a demo as well as shown by Shashi earlier today, you can imagine the compounding effect of deploying agents that can then run autonomously, part of our engines, either in the cloud or on the talent and consumption is based on the frequency and intensity of use of this application. So that's this compounding effect that we believe will drive the way forward.

Do we have any further questions from the audience?

Keith MacKey with RBC. The digital operations TAM expansion is certainly key to the growth metrics here. Can you just talk about what some of the key customer impediments to adopting digital operations has been? And how do you mitigate that to drive the further adoption going forward?

Thank you, Keith, for the question. Cecilia?

Sure. Thanks for the question. Excellent question, in fact. What we see is that customers like to pilot and test the system first to really understand the value it brings and to ensure that it's a safe operations and it fits everything that they would like to see out of the tool. And just to give you an idea, the last 6 months, we've done as much autonomous feets drilled than the last -- first 2.5 years. So it's taken us quite some time to get those pilots to get our customers to feel comfortable with it. But now we're starting to see quite a lot of uptake and an acceleration of uptake. The second thing is that a lot of customers are waiting to see who is going to go first. But now we have enough pilots that we're actually seeing customers almost not wanting to be left behind, and they're starting to be very, very interested in what we have to offer.

We have time for one final question.

Thank you. Heath Terry again from Citi. You obviously have operated for a very long time in some of the most geopolitically sensitive parts of the world. This past weekend, we've got a bit of a wake-up call with the U.S. government's decision to effectively ban access to one of the large language models. How is that potentially -- how does that potentially impact the way that you and your customers are operating around this, does it lead you to want to use more open source? Does it lead you to want to have sort of more distributed systems in terms of where your own technology or where your customer technology is sitting?

Thank you for that final question, Shashi. Why don't you go ahead and take the question, and then we'll leave it to Olivier for closing remarks.

Yes. It's a very good question. I think when we started this journey, the LLM providers was few and select. But now the level of capabilities that we will need from an LLM to integrate into our technical solutions is getting to a point that you can get it from number of providers. And what we have done is that we -- while we leave this choice of a specific LLM to a customer because they may have an internal enterprise level choice, we also make sure that we implement our technology stack from the point of view of supporting open models. So we partner with NVIDIA. So we have NVIDIA's Nemotron models as the models that we can deploy ourselves. So we can -- we don't have to wait for a CSP to provide it in a particular area. It can be deployed on-prem or within a customer's environment. Similarly, we have models from Mistral. So we have several options. We keep that option open. Even our own domain foundation models are -- start from a base model that is open source so that we have not tied down to a particular provider and get our hands in a bind at some point in time.

And it matters to our customer. They realize when they are working with us through and discover the way we have built this model, the way we have factored open source or open protocol into our Tela framework, into our Lumi, into our DELFI reinforce the attractiveness and the confidence they can bet on this technology platform for the future.

So just to conclude, I think we had run through for the last more than 2 hours. I hope we convinced you that I think we have a unique moat as a digital leader in our industry. We are building it on 4 clearly distinct combined capabilities, deep domain expertise that is [indiscernible] 100 years ago, a platform approach that includes an AI-ready stack, an ecosystem with partners that you have heard about that is unique and are willing to and making every effort to work with us. And finally, ability to scale, not only to scale AI, but to scale in digital operation and to scale and use the footprint and sandbox of our oilfield services and equipment potential to reach all of our customers and to then help transform this industry to be digital first. And that's the way we are willing to lead the future, to be recognized as digital-first company that help transform and unlock new level of efficiency, performance and value for this industry. We believe we are there to lead this, to create this shift that the industry needs for energy, security, for energy, affordability and for the future of growth in our societies. So that's where we believe we have a role to play, and that's why we wanted to share with you today. So again, thank you for joining us. I hope that you got enough information to help you model the future and recognize what we believe will be an elevated multiple for the company going forward. Thank you very much.

Thank you, everyone. That completes the formal portion of our program today. On behalf of the entire team, we thank you for your time, your thoughtful questions and your continued engagement. We hope today's session clearly demonstrated not just the current strength of our digital business, but the distinct competitive advantages that will drive our next phase of growth. We are incredibly excited about the opportunities ahead and our ability to deliver long-term value for our shareholders.

With that, we will conclude today's live stream.

Now please join our leadership team and today's presenters for a standing lunch in the Vault ballroom. Feel free to engage and continue the conversation. Thank you again for your time today. Safe travels and have a great afternoon.

Good morning. My name is Megan, and I will be your conference operator today, and I would like to welcome everyone to the First Quarter SLB Earnings Call. [Operator Instructions]. As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB First Quarter 2026 Earnings Conference Call. Today's call is being hosted from Houston, following our Board meeting held earlier this week in Midland, Texas. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our first quarter earnings press release, which is on our website.

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

Thank you, James. Ladies and gentlemen, thank you for joining us. Before we begin, I would like to acknowledge our people, customers and partners in the Middle East as they navigate this challenging and uncertain time. Our strong presence in the region dates back more than 85 years, and I'm proud of the resilience and unity demonstrated by our people as they work in lockstep for customers to safeguard our teams and assets while preparing for an eventual resumption of operations. I want to commend the entire SLB team for their continued care, commitment and support for one another and for our customers.

Turning to today's call. I will start with our first quarter performance, followed by an update on the evolving situation in the Middle East and our outlook in the mid- to long term. I will then cover our strategic initiatives, including ChampionX, Digital and Data Centers and provide our thoughts for the second quarter. Stephane will then take you through the financials, and we'll open the line for your questions.

Let's begin. It was a challenging start of the year, marked by severe disruption in the Middle East that impacted our first quarter revenue and earnings. At the onset of the conflict, customer decision to safeguard personnel and assets led to an initial wave of operational shutdowns. As the conflict persisted, further activity curtailments followed as a result of production shut-ins. The impact of these actions was most pronounced in Qatar due to force majeure and the suspension of offshore operations and in Iraq due to the security conditions. We also experienced a more gradual impact from offshore rig shutdowns in other countries in the region, driven by a combination of security concerns and export capacity disruptions.

In addition to the situation in Middle East, unfavorable activity mix and higher costs further weighed on the quarter, most notably in OneSubsea. Looking across the divisions, Production Systems and Digital grew year-on-year, while Reservoir Performance and Well Construction declined mostly due to the impact of the conflict. Production Systems' year-on-year revenue increased 23% due to the acquisition of ChampionX, which continued to deliver accretive growth. Additionally, we're on track to achieve our synergies target. On a pro forma basis, ChampionX also grew year-on-year, demonstrating the increasing demand in the production market.

Turning to Digital. Revenue increased 9% year-on-year, driven by strong uptake in Digital Operations. Of note, automated footage drilled increased by 145% year-on-year as customers continue to adopt Digital and AI-powered Solutions to boost operational performance and efficiency. Also, Data Center Solutions remains a bright spot with 45% growth year-on-year. The momentum in this area continues, as you saw with our recent announcement to serve as a modular design partner for NVIDIA DSX AI factories. With our growing backlog, we remain on track to exit the year at $1 billion run rate and expect the growth rate to accelerate in 2027.

Overall, despite the challenges of the quarter, I'm pleased that the strategic decisions and portfolio actions that we are taking in Digital, Data Center Solutions and Production Recovery are delivering results. I would like to express a big thank you to our teams in the Middle East and across the world who continue to deliver each day for our customers in this very dynamic environment.

Now let me turn to how we expect the market to evolve as the conflict in the Middle East is resolved. Firstly, we anticipate that oil prices will settle at levels above the pre-conflict baseline. This reflects the new balance of liquid supply and demand, which has been significantly altered by more than 500 million barrels of lost production impact thus far. In this environment, energy security will remain at the forefront. We expect many countries to accelerate efforts to diversify supply, strengthen domestic resource development and rebuild strategic and commercial inventories that have been drawn down during the conflict. In short, the fragility of the global energy complex we are witnessing today demonstrates the strategic importance and long-term value of oil and gas.

Together, these dynamics are expected to support a constructive macro environment for upstream investment over the coming years. In the near term, activity would be led by efforts to restore production capacity across the Middle East for both oil and gas. While some countries executed orderly shut-ins and should be able to resume production within days or weeks, other areas, particularly where disruption were more abrupt may require more gradual ramp-up, including additional well intervention. As a result, while the near-term recovery will be gradual and differ across countries, we see an upside in the outlook, barring demand restriction from the prolonged conflict. We are committed and ready to support our customers across the region.

Beyond the region, we expect a broad-based response across both short- and long-cycle investments. Short-cycle activity is likely to strengthen first, particularly in North America and parts of Latin America, where operators can respond quickly to higher prices. In addition, well intervention activities that can lead to additional production will get a natural boost across all basins. At the same time, we expect renewed momentum in long-cycle development, especially in offshore and deepwater markets as customers look to secure a durable, large-scale source of supply. This is also likely to improve certainty of offshore FID approvals while also supporting increased exploration activity.

As you can read in third-party reports, the FID pipeline in 2026 is strengthening and directionally adding over $100 billion total investment approval visibly ahead of the last 2 years and with another step-up expected in 2027 with deepwater resource getting a large portion of this investment. Regionally, this presents opportunity in Africa, Asia and Latin America. Africa represent one of the most compelling long-term opportunities with a significant base of underdeveloped oil and gas resources. We expect portfolio allocation to shift more favorably towards this region over time.

Asia will continue to prioritize access to gas, both onshore and offshore as it works to diversify supply through development of national resources. And across Latin America, from Guyana to Brazil to Suriname, we see continued strength in deepwater development, complemented by short-cycle growth in unconventional in Argentina. Separately, Venezuela continues to represent an exciting growth opportunity where we can expand on our existing operation in country.

To conclude, in the context of energy security and the rebalancing of supply and demand, we see 3 primary drivers of increased investment over the coming years. First, the replenishment of depleted commercial inventories and strategic reserves; second, the diversification of supply, including greater redundancy in sourcing; and third, increased emphasis on developing local resource to enhance long-term resilience. Our core business will benefit from these dynamics, supporting a positive outlook for SLB into 2027 and 2028.

Let me now describe the additional strategic growth levers for SLB: Production Recovery, Digital and Data Centers. Starting with Production Recovery. This is becoming increasingly critical as the industry faces structural challenges in replacing reserves and sustaining production from existing assets.

In this context, technology that enhance recovery and extend the life of mature fields are no longer optional. They are essential. Against the macro we just discussed, this is a defining moment for Production Recovery. This technology has the potential to shape the next stage of recovery in unconventional assets and to create a step change in production enhancement in every basin and resource play from deepwater to conventional and from gas to oil.

With ChampionX, we are uniquely positioned to lead in this space by combining production chemistry, artificial lift, digital capability and subsurface domain expertise, we're helping customers unlock additional barrels from existing reservoirs in a capital-efficient manner. This is particularly relevant as operators look to maximize recovery, improve returns and bring incremental supply to market in support of energy security.

We hosted our first Production Recovery Summit in Houston a couple of weeks ago, and we are very pleased with the engagement from our customers from every region across the world. They increasingly recognize the potential of this domain and the opportunities present to unlock growth for the industry.

Turning to Digital. This business continued to build strong momentum and is a key driver of both differentiation and long-term value creation for SLB. While still a relatively small portion of our revenue today, its impact extends well beyond its size. Our approach is grounded in domain expertise where AI, data and software are integrated into our platform and workflow to deliver measurable performance outcomes. This is not about stand-alone tools. It is about embedding intelligence across the full life cycle of reservoir development and production.

Our teams continue to make exciting developments, particularly in agentic AI. And as the number of use cases increase, the value of this technology are proven in the field, we anticipate increased adoption. Over time, we expect digital to become an increasingly important lever for growth, both as stand-alone business and as an enabler across our broader portfolio. And we're excited to share more about this business during our Digital Investor Day later in June.

Finally, Data Centers represent a new and rapidly expanding opportunity for SLB. Building on our core strengths in engineering, manufacturing and project execution, we're extending our scope of modular infrastructure solutions to support the accelerating demand for AI and digital capacity. In less than 2 years, we have established our right to play in this industry, proven by our manufacturing know-how and supply chain capabilities. We are building on this expertise to support design engineering and performance optimization of the Data Center build-out, and we are currently scaling the business through expanded capacity, deepening partnerships and selective international growth.

While still at an early stage, this business is already demonstrating the characteristics we are looking for: capital-light growth, strong demand visibility and a clear path to becoming a meaningful contributor to earnings over time. Looking ahead, we see additional upside through opportunities such as thermal management, decarbonized power and serving as a system integrator. These are areas where our capability can further differentiate our offering and expand our addressable market. We also continue to assess potential opportunities to accelerate this trajectory through targeted M&A.

Taken together, these 3 areas: Production Recovery, Digital and Data Center Solutions reflect how we are evolving our portfolio towards higher return, technology-driven and less cyclical growth. They are complementary, scalable and aligned with the long-term trends shaping both energy system and digital infrastructure.

Let me now share our view on how the second quarter may unfold. First, it is uncertain how long geopolitical disruption will last and how the recovery in the Middle East will unfold. At the same time, we are facing higher procurement and logistics costs driven by the conflict. As a result, it is challenging to provide precise guidance for this quarter. However, there is a scenario where operational disruption in the region persists through the middle of the second quarter and then begin to gradually ease. Under this assumption, we estimate that the sequential revenue and earnings decline in the Middle East will be fully offset by all other international markets combined, where we anticipate mid- to high single-digit revenue growth with improved margins.

Meanwhile, North America revenue is expected to be flat sequentially. By division, under the middle scenario I just highlighted, Digital and Production Systems will grow globally, while Reservoir Performance and Well Construction will decline globally. I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. First quarter earnings per share, excluding charges and credits, was $0.52. This represents a decrease of $0.20 when compared to the first quarter of last year. During the quarter, we recorded $0.02 of merger and integration charges, primarily related to the ChampionX transaction. Overall, our first quarter global revenue of $8.7 billion increased 3% year-on-year. Excluding the impact of the ChampionX acquisition in the third quarter last year, revenue declined by $607 million or 7% year-on-year.

When compared to the fourth quarter of last year, revenue fell by just over $1 billion or 10.5%. This decline was approximately 200 basis points or about $200 million higher than we expected at the time of our last earnings call in January. This was primarily due to the impact of the conflict in the Middle East as we experienced operational disruptions throughout the month of March.

Company-wide adjusted EBITDA margin for the first quarter was 20.3%, down 346 basis points year-on-year. Margins were negatively affected by high decrementals on the Middle East revenue impact. We did not make any material adjustment to our cost base during the quarter as our immediate focus was the protection of our people and preserving operational capacity for the expected future rebound in activity. We also incurred additional logistics and materials costs as a result of supply chain disruptions due to the conflict. Beyond the effect of the Middle East conflict, first quarter margins were impacted year-on-year by increased tariffs, project mix and higher costs in OneSubsea as well as pricing headwinds in select markets, particularly in Well Construction.

Let me now go through the first quarter results for each division. First quarter Digital revenue of $640 million increased 9% year-on-year, primarily driven by 87% growth in Digital Operations. This was supported by increased digital services adoption and new technology introduction as well as the acquisition of ChampionX. Notably, annual recurring revenue for the division stood at $1.02 billion at the end of the first quarter, representing year-on-year growth of 15%.

Digital pretax operating margins of 20.9% was essentially flat year-on-year. However, adjusted EBITDA margin of 26.1% declined 473 basis points due to lower amortization relating to exploration data as a result of the mix of surveys sold during the quarter. As you know, Digital margins are historically lowest in the first quarter due to seasonality and steadily increased throughout the year, reaching the highest level in the fourth quarter as evidenced by last quarter's results. This trend will continue. And consequently, we expect to achieve full year digital adjusted EBITDA margin that is at least equivalent to last year's level of 35%.

Reservoir Performance revenue of $1.6 billion decreased 6% year-on-year, while pretax operating margin of 16.1% decreased 47 basis points. These decreases were due to lower stimulation and intervention activity, primarily as a result of the disruptions in the Middle East. Well Construction revenue of $2.8 billion decreased 6% year-on-year, primarily from lower activity due to the disruptions in the Middle East, partially offset by higher offshore drilling activity in Europe and Africa, Latin America and North America. Pretax operating margins of 15.2% contracted 463 basis points year-on-year due to lower profitability on account of the Middle East conflict as well as pricing headwinds in select markets.

Finally, Production Systems revenue of $3.5 billion increased 23% year-on-year. Excluding the impact of the ChampionX acquisition, first quarter revenue decreased 6% year-on-year. On a pro forma basis, revenue from the ChampionX Production Chemicals and Artificial Lift businesses grew 2% compared to the first quarter of 2025. This strong ChampionX performance was offset by the impact of the Middle East conflict, lower OneSubsea revenue and independent of the conflict, lower product deliveries in Saudi Arabia.

Production Systems' pretax operating margins of 14.2% declined 240 basis points year-on-year due to lower profitability in Surface Production Systems, Completions and OneSubsea. As it specifically relates to OneSubsea, pretax margin in the first quarter was 14.4% compared to 18.1% in the first quarter of 2025. Margins were affected by the concurrent wind down of several large programs and the initiation of new projects with high start-up costs. OneSubsea margins are expected to increase over the remainder of the year.

ChampionX partially offset those effects as we continue to make progress with our synergy realization. As a result, ChampionX margins this quarter were higher than in both Q4 and Q1 of last year and were accretive to both Production Systems and total SLB's margins.

Now turning to our liquidity. Our net debt increased $797 million sequentially to $8.2 billion. During the quarter, we generated $487 million of cash flow from operations. Free cash flow was slightly negative at $23 million on account of the payment of annual employee incentives and the seasonal increase in working capital that we typically experience in the first quarter. This was compounded this year by delayed collections in the Middle East stemming from the conflict.

We expect our cash flow generation to follow our historical pattern with free cash flow gradually increasing throughout the year with the majority coming in the second half. Capital investments inclusive of CapEx and investments in APS projects and exploration data were $510 million in the first quarter. For the full year, we are still expecting capital investments to be approximately $2.5 billion. During the quarter, we repurchased $451 million of our stock, and we still expect to repurchase a minimum of $2.4 billion for the full year, in line with 2025. As a reminder, we are targeting to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks.

Before I wrap up, let me come back to our second quarter outlook and more specifically to the Middle East. I would first like to clarify that the Middle East represented approximately 70% of our Middle East and Asia business in the first quarter. Under the specific scenario that Olivier highlighted earlier, where operational disruption in the region continues until the middle of the quarter and then starts to alleviate, we estimate that it would negatively impact our second quarter earnings per share by an incremental $0.06 to $0.08 when compared to the first quarter. This is the result of lost revenue as well as higher procurement and logistics costs associated with the conflict.

I will now turn the conference call back to Olivier.

Thank you, Stephane. I believe we are now ready for taking your questions.

[Operator Instructions]

Your first question comes from the line of Dave Anderson with Barclays.

So looking past some of the near-term disruptions, I was wondering if you could expand a bit more on your views on how the investment cycle has changed. You mentioned a broad-based recovery in '27 and '28. Is that predicated on oil prices being structurally higher now? And can you also comment on kind of which end markets that you see the most upside as you sit here today?

I think there are multiple reasons why I think we believe that the industry will benefit from an uptick in investment. First, indeed, I think we are projecting that the commodity price will be higher after this than they were before. But more importantly, I think the significant impairment of the supply-demand balance, I think, has created the need for replenishing these inventories, replenishing the strategic reserve and also have heightened the risk of energy security.

And hence, as a reason -- as a consequence of this, there will be multiple factors that will play into an increased investment outlook. Firstly, to replenish inventory and strategic reserve will supplement the natural demand in oil and gas. Secondly, the energy security will draw decision -- national decision to reinvest into local resource and to diversify the source of supply, including creating some redundancy if and as necessary and clearly maintaining in the future higher inventory stock spare to prevent future shock of supply.

So we believe that these are aligning with trends that are already in play that we're indicating that offshore was set for a rebound as we exit 2026 and 2027. So we believe that this combination will both affect the short cycle impact in a shorter time and the long cycle at scale into '27 and '28. So we are set in our opinion, for an uptick into the cycle strength going forward.

So Olivier, you had talked about deepwater looking particularly attractive in that outlook. Obviously, that's part of the long cycle story there. Can you talk about where you see the most upside in terms of SLB business? Is it more on the Well Construction and Reservoir analysis side? Could OneSubsea be a big driver? Just trying to think about through the business that would be most impacted?

So first, I think we are confident that offshore, I think, as being very attractive economically now, and I think where the large resource are set for operator to unlock and develop going forward, I think, is the reason why we are seeing this uptick into the FID pipeline and the prediction by many reports saying that this will at scale exceed what we have seen in the last couple of years.

So the macro assets are very positive for deepwater. And this is true across -- I would be very clear, across Africa, Asia -- East Asia and Americas for different reasons. Africa, as I stated in my remarks, I think it would certainly be one of the most beneficiary for this as it has vast undeveloped still resource, both oil and gas on the West and on the East and clearly set to be developed, and this is where we see potential acceleration of FID in the coming quarters.

Americas is very strong from Brazil to Gulf of America. And I believe this will continue to be a play part in Central America, that we see support in Asia because of gas. We see a double down on the development of gas, deepwater resource, and we have seen a lot of development happening these days in Indonesia. And you have seen some of the announcements we have made earlier today in the earnings press release and with Subsea being awarded in Malaysia and in South China Sea, a critical award.

So I believe that core at large will benefit from this rebound. We have strong market position across the different divisions. But yes, indeed, Subsea, we expect OneSubsea to benefit at scale. And as guided historically previously, I think we expect OneSubsea to benefit to have higher booking this year than last year visibly and to then have a growth trajectory in '26 and into '27 and '28 as we see the scale of this offshore cycle developing.

Your next question comes from the line of James West with Melius Research.

Olivier, the Middle East is your backyard. You guys have owned that market for a century or more. You don't leave conflict zones when conflicts happen and you're always there for the recovery. As you think about the recovery and how it could unfold, and I know you made some comments in your prepared remarks about this. But as you talk to the customers, what do they want to do? What do they need you for initially? And how do you think the kind of momentum builds, assuming that we -- the conflict resolves in the time line that you've kind of laid out and others have laid out?

First, I think to be clear, I think we are working in lockstep with our customers every day, every week. We continue to work closely with them to understand as they are contemplating all options for recovery, and I continue to observe the outcome of the discussion and the geopolitical events happening on the back, and we stand ready. So I think we are more in standby as we speak.

But yes, multiple scenarios are being considered. And there are some country where the resumption of operation will be relatively fast and could turn into days and weeks. And there are a country as facility and/or field have been stopped and shutting abruptly, where we will be needing to intervene on those fields. Hence, it will be an initial phase of assessment, initial phase of intervention before the production can come back to full capacity. And there are country or region or -- not region, but zone in the region where security will remain a concern and will delay further the recovery.

So it's a gradual recovery. But yes, we are working very closely with customers, both to mobilize equipment or resource and also to anticipate the reservoir consequence and the type of services you need to provide as the conflict start to be stabilizing and as the customer have the confidence to remobilize. So we see long-term clear upside in the region. And we see that some country will actually use it to catch up and maybe expand the capacity to recover from the market share and the production loss during this period.

Got it. Okay. Very, very helpful. And then maybe a quick follow-up. Understanding that most energy countries and, of course, companies and countries want to diversify supplies now. Do you see more of your customers that are Middle East-based maybe stepping outside of the region. They've already started to do that a little bit, but stepping outside more post conflict?

No, I think that generally, I think operators will continue to diversify their options across the entire world. And I think there are plenty of basins that still stand undeveloped. And I think I highlighted Africa. I think there's a lot of oil and gas resource that are set to be developed. And I think the fiscal terms and the security conditions have improved actually in the region and will make it very critical.

But the Middle East remains a low-cost barrel and low-cost gas country at scale. And hence, it will continue to attract investment as well. And I think the national resource holder in the region will continue to develop at scale the resource. So we see a mix, but I think beneficiary of this, and I think maybe additional investment will go into Africa, into Americas offshore, into Asia deepwater and into production recovery across all regions, we believe, because this is where the fastest incremental barrel can come from.

Your next question comes from the line of Steve Richardson with Evercore ISI.

I was wondering if we could talk a little bit about Digital made this acquisition with S&P. And from what we understand, this is a largely U.S.-centric data business and data sets. So can you talk about what the longer-term vision is there and be sure to hit on how and if that's an enabler of some of the other things you're doing in the broader business outside of Digital?

Yes, absolutely. As described in our press release this morning, I think we have come to an agreement with S&P Global Energy to acquire actually their upstream petrotechnical software suite, not their data. And this is mostly deployed in North America with independent and with workflows that are quite specific to commercial market. So this is highly complementary to the offering we have. And as we go forward, this will complement our offering in North America, give us opportunity to expand the reach of this petrotechnical workflow solution internationally for the [ iberian ] market. And also it will help us to maybe expand and address the next challenge into the unconventional development and recovery and use this new software suite to complement what we have and [ add sounds, add domain ] and create and unlock new commercial workflow into North America.

So it gives us a broader market access. It gives us a tool that is fit for the commercial market where we're not having the same offering today. And this just expands our product suite into the domain.

Now separately, as you may have seen also into the earnings press release announcement, we have entered an agreement to pursue a strategic partnership with S&P Global Energy with AI, giving an opportunity to use the power of Lumi and Tela, including specific domain foundation models that we build using the data sets, the global data sets of S&P Global Energy so that we together provide our customers with unique insights to AI, applying AI capability, applying our domain and our domain foundation model, our capability on the full data sets of S&P Global Energy. So that's unique, and I think that will be very, very appreciated by customers and benefit the customer greatly going forward.

That's great. And I suspect we'll hear much more about that at the Analyst Day in June. I'm wondering if you could give us a brief update on the Data Center business and your outlook there in terms of securing additional customers, commercial approaches there and expectations for the balance of the year relative to what you talked about a quarter ago?

Yes. I think you have seen we continue to progress. I think we continue to reiterate our ambition and our goal that we will reach or exceed the $1 billion run rate as we close this year. And actually, we have made great progress this quarter to secure additional customers that give us further visibility into the demand for our capacity in 2027 and '28. And as indicated, developing more growth and scaling more than what I've mentioned as an exit rate going forward.

So you have seen one announcement on NVIDIA that has chosen us, has selected us as their design partner for the DSX AI factory. It means a lot. It means that we have been selected amongst others as a partner they believe they can trust to develop this modular infrastructure solution for DSX center, large-scale future Rubin Vera solution center that will need to be scaled fast, and we will add our capability to build this site, manufacture this equipment off-site and bring this modular infrastructure to this NVIDIA customer in the future. So that's great. And I think you will see additional announcement coming that will show the breadth of our customer reach and the scale of our operation going forward. So we are very pleased with the progress, and this will continue to grow in '26 and clearly at scale in '27.

Your next question comes from the line of Arun Jayaram with JPMorgan.

Olivier, Production Recovery seems to be an important theme this morning. I was wondering if you could highlight some of the industrial and technical challenges in restoring production, which is off-line in the Middle East. And do you think that -- assuming that we get to an improvement in the situation in the Middle East in 2Q, could this be a driver of SLB's second half '26 results?

So firstly, I will not be commenting on behalf of our customers in the Middle East as they go through the assessment of their facilities. Some of them, as you know, have been damaged by this crisis. I will more comment on the engagement, collaboration and close partnership we have with our customers to prepare for and as they are ready to mobilize as they believe the security concerns are no more present.

And I think -- first and foremost, I think some, as I said, the shuttings were done orderly. And I think this would just be a resumption of operation that would just be redeployment of resource, remobilization of resource, and I think with no necessarily significant impact in short term. Others will need well intervention activity, and that's where we have an upside, and we will want to work with our customers to see how we can help restore the production and add -- and use the production recovery technology set to help us regain the capacity production that was pre conflict.

So long term, as we said earlier, we see more upside. I think once this resumption of operation gradually resumes throughout the following months and possibly quarter for some country, we see that there is an upside into the desire for some country there to uplift their capacity and to participate to the replenishment of the depleted inventory and strategic reserve. So we are seeing gradual intervention first recovery, production recovery focus and then a large-scale development and expansion of capacity for some country.

Great. I have a follow-up to Stephen's question on Digital. If I look at year-over-year trends, Olivier, your revenue was up 9%, but your margins fell by 473 basis points. I was wondering if you could talk about what you saw on the margin front and perhaps the recovery potential for Digital margins over the balance of the year?

I'll take this question, Arun, it's Stephane. So as you know, we closed last year in Digital with full year EBITDA margin of 35% and the pretax operating margins of 28%. There's a bit of a distinction between the pretax margin and the EBITDA here. We started 2026 with pretax margin of just about 21%, which is essentially in line with where we started in the first quarter of 2025. EBITDA margins, however, were indeed lower, and this is exclusively due to lower amortization from the mix of exploration data that we sold during the quarter.

So if you step back anyway, as I said earlier, the first quarter of the year is typically the lowest for Digital margin. So if you look at where we started, same as last year, and we fully expect to see the same pattern we have seen over the years. we will reach the highest margins in the fourth quarter. And it is clearly our ambition to deliver the total EBITDA margins from Digital of at least 35% this year as well. So this is the choppiness of quarterly movements, but it's not a concern to us.

Your next question comes from the line of Scott Gruber with Citi Research.

I got a couple of questions on Digital. So in a world where code writing becomes easier and more commoditized, can you speak to the resilience of the value add of your Digital portfolio? And as you kind of take moves to shape the portfolio like you've done with the S&P acquisition, how do you think about kind of expanding that value add and enhancing that resilience?

No, I think the customers are accelerating the adoption of Digital because they believe that no matter what the cycle is turning into, a highly favorable cycle or challenging cycle, they believe they need to differentiate. They need to add and extract efficiency, productivity in the [ general ] terms and planning workflow, operational performance and efficiency into the drilling and into the production and recovery space.

And they have seen that the digital capability, and you can see it by the adoption of Digital Operations growing at very nicely year-on-year and is driven by drilling, is driven by production, operation workflow where customers are adopting AI solution, adopting software solution that can transform the performance of drilling operation like drilling automation, can transform production workflow to render ESPs autonomous. And I think this capability will be looked for, for every customer.

So every use case we see is resonating across customers in every basin. And I think we see this not only resilient, we see this as a long-term tail of any cycle and something that Digital will continue to have a tailwind in our industry because we have data like no other industry has. We have scientists and engineers that love to play with data, and we have AI that is starting to come at play as a catalyst to become an X factor, if you like, to unlock productivity.

So we are, I think, unique in our capability. We have the domain knowledge that is deep, and we have the platform that can help scale this AI capability going forward. So we feel that I think it is the right time for the industry to adopt AI at scale. We think that we have the platform, we have the deep domain and the first use case that are starting to be realized recently and the power of agentic in our industry will only reinforce this growth opportunity, and it's not only resilience, it's growth going forward. And we show more of this in the Digital investor forum.

Definitely, look forward to it. And a follow-up here, just with an outlook for higher oil prices, at least over the medium term, how does that impact the Digital business? I assume your seismic sales could improve. How meaningful could that be? And then kind of more importantly, would you anticipate customers taking some of this excess cash that they're generating and spend it on more software, more applications to get a bigger boost for their own internal efficiency?

Yes. Obviously, when the commodity prices are high, and I think the customer have more optionality with their discretionary spend, they use it in 2 domains, use it in Digital and they accelerate exploration. And I think we foresee that -- and we have seen it, and we have seen signal that exploration is coming back. You have seen some announcements of some company reinvesting in exploration at scale because they believe they want to secure reserves to participate to long-term energy security.

And at the same time, yes, they use this discretionary spend smartly and using this on occasion to buy data sets to accelerate the exploration and will benefit from that, but also participate to more pilots and then make decision faster to accelerate their platform software deployment in their organization.

Your next question will go to the line of Sebastian Erskine with Rothschild & Company Redburn.

I just want to start on SLB OneSubsea. It's really one of the jewels in the SLB Crown. You guided at full year '25 results of $9 billion in sort of order intake over the next 2 years. But I wonder if you could give perhaps some outlook on the margin expansion potential within the OneSubsea business, particularly with comparison to the sort of broader offshore E&C universe. Is there more room for integration with the rest of your portfolio or further efficiencies related to your -- the existing kind of Aker Subsea business? Any color on the margin outlook for OneSubsea?

Yes, sure, Sebastian. So you have noticed that actually for the first time, we gave you our margins for -- in OneSubsea for the first quarter. Unfortunately, they were not as brilliant this quarter, but these are temporary effects for -- due to the timing of project completions and start-ups. So you've seen where the margins were in the same quarter of last year, pretax margins of 18%, which means EBITDA margins very close to 20%.

So this is what we expect from this business over the cycle at the minimum. And even though we started on a rough note in the first quarter, we expect the margins to normalize in the coming quarters. And hopefully, on the back of a backlog, that is increasing year-on-year. We are actually up 5% year-on-year on the backlog. We have better visibility on the growth going forward and potential margins at least.

Yes. I just want to add a couple of things. Yes, Production Recovery, I think I just want to add that, obviously, Subsea as a domain of deepwater, I think, is essential for our customers and Production Recovery plays a great role. And I think we have a unique processing -- Subsea flow processing portfolio. You have seen one more announcement that we are continuing to renovate and to enhance the project we have at Gullfaks with Equinor in Norway and we have done one acquisition that complements offering to help us better participate into the intervention world of deepwater subsea.

So we believe indeed that our Production Recovery strategy and the connection with our other core capability is essential going forward as it will help customers leverage OneSubsea to enhance the production of existing fields and provide more life-of-field services as we call it, including Digital capability to this subsea installation. So it's both on the E&C cycle and then on the life-of-field services long term that will benefit.

Really appreciate the color there. And then just a follow-up. I think, Olivier, in the prepared remarks, you mentioned towards the end of the Data Center Solutions section, you were kind of considering potential further M&A following the closure -- or the announcement of the S&P Global deal. What areas are you seeking to add in terms of your portfolio? Any color on that would be helpful.

Yes. We are looking at everything where we believe that we could build a portfolio that give us a more technology anchor into our portfolio so that as we build more modular infrastructure solution across the full space, thermal management is one that obviously come to mind. And we're looking at the opportunity we believe could complement the offering we have and the go-to-market that we have created and right of play we have created into the space.

Your next question will go to the line of Marc Bianchi with TD Cowen.

I just first wanted to quickly clarify on the outlook here for second quarter. So you're essentially saying that results will be the same as first quarter and there's sort of a $0.06 to $0.08 incremental hit from Middle East that's being offset elsewhere. Is that the message you're trying to deliver here?

Yes. No, that's a good summary, Marc. Just to be clear, this is under the specific scenario that we highlighted where the operational disruptions start to ease more or less at the middle of the quarter and then gradually recover. So in this scenario, we can offset the negative impact of $0.06 to $0.08 incremental effect of Middle East with the rest of the international operations.

Great. The other question I had going back to OneSubsea and sort of the $9 billion of awards over '26 and '27. Just given sort of the outlook here, do you see upside to that now? And how are you sort of thinking about your competitive positioning? We hear a lot from your other competitor about their integrated capabilities. Can you kind of talk about how you see OneSubsea positioned from a competitive perspective?

So first, I think commenting on the cycle. I think the more the dynamic plays probably as the conflict ends, the more we believe that the investment will be attractive into the deepwater market as it is a majority actually of what we foresee as FID in '27 and '28. And hence, the more it will play into the size of the addressable market. Hence, if FID have firmed up, if not accelerated in '27 or even in '26, this will give us a potential to outperform the guidance we have given.

So yes, now on the position, we feel very good with the position we have, extremely good. We have a partner with Subsea7 who gave us when and as customers ask for integrated offering, the indicated capability to deliver, and we have done it at scale with many customers. We feel that we have developed partnership and collaborative engagement with several customers that have led us to be getting -- working jointly with our customers to help and provide support to increase and improve the design of the subsea architecture and unlock FID, and this is true with the partner we have with Equinor with bp. And we believe that we have a unique portfolio with subsea processing that is having no match on the market.

And you have seen an announcement today, and you will continue to see a pipeline of projects that will make it pretty unique in the marketplace. You have seen the Ormen Lange subsea gas compression that unlock a new level of recovery for the field of Ormen Lange in Norway. You have seen the additional announcement we did today on the Gullfaks project, where we'll rework with our customer to make sure that we extend the life and improve the performance of this capacity of subsea processing so that it unlocks next level of recovery.

So yes, we feel good about our integration capability. We feel good on the pipeline that you have seen. We were awarded in Malaysia, in South China Sea, in Suriname and in Norway announced today. And we continue to have a pipeline of exciting projects going forward across the basin. I mentioned earlier, Americas, Asia and Africa. So we are pleased with the OneSubsea progress and continue to support them fully.

Your last question comes from the line of Neil Mehta with Goldman Sachs.

You guys talked a lot about some of the cost impacts that you're seeing in the Middle East and how that's impacting margins. And I think we all understand that a conceptual level, things like freight. But can you just kind of give us some of the line items that might be causing the pressure point and help us understand what are some of the specific items that are pressure points?

Sure, sure. We can do that. So clearly, from the situation in the Middle East, it introduced quite some strain on supply chain networks locally, but with ripple effects in other places in the world. So probably the line item that's the most impacted is logistics and transportation costs clearly. Coming next is raw materials, those which are derived from petroleum products, of course, and that would also include chemicals.

So it's raw materials and logistics mostly. So this has impacted our margins in the first quarter, and it will linger for a while. Now we are not going to let just that hit our cost. We have mobilized our commercial organization to recover some of these increased costs, and we are activating inflation pass-through clauses that we have in our contracts. And if we don't, we are in direct negotiations with both our suppliers and our customers to offset these effects. So we are kind of used to these spikes in costs coming from inflation, and we will try to recover as much as we can.

And my last question, it's been a couple of months now that ChampionX has officially been in the SLB portfolio. Just any observations about what it's bringing to the table here and how you've been able to integrate the system into the broader company?

First, I think I will reiterate the results part of the ChampionX addition to our portfolio. As Stephane highlighted, I think ChampionX has been as a portfolio accretive to the company in the first quarter, and I think it has been growing year-on-year and expanding margin year-on-year.

Second, I will come back to the 3 days we spent with our Board in Midland. I think it was a pleasure to see in action our ex ChampionX employee integrating fully in [ Port to Pipeline ] if you like, a tool that we made for our customer with our Board of Directors to showcase our fit-for-basin technology in the Permian. Highly integrated, already getting pull-through or getting synergy -- revenue synergy and technology synergy that customers are appreciative.

The second highlight of this trip was meeting of our customers. We hosted many customers with our Board of Director in Midland, and I think it was a pleasure to give -- to get feedback, very direct and transparent feedback from our customer. They were very pleased with the integration progress, and they have seen the light of the potential that ChampionX with the greater SLB can bring to their operation in the Permian.

So we are seeing the benefits on the financial results. We are seeing an exciting opportunity for Production Recovery as we commented on the summit that we hosted lately. And we see the enthusiasm of our team spending with the ChampionX employees and the customers that are appreciative and recognize this is something unique that we have and something that can unlock the potential of Production Recovery, partly in unconventional, but in all of our basins in the world as well.

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

So thank you very much. So ladies and gentlemen, as we conclude today's call, I would like to leave you with the following reflection. First, while recent events have created near-term disruption, they have also reinforced the need for secure and reliable energy, which will support oil price above pre-conflict levels and create an enduring backdrop for oil and gas investment.

Second, Production Recovery, Digital and Data Center Solutions are creating the foundation for accelerated growth.

And finally, I want to take the moment to recognize that this year marks 100 years of SLB. As we celebrate this milestone, I'm proud that we are not only honoring an extraordinary legacy, but also building the foundation for the next century of innovation, performance and leadership. With this, I will conclude today's call. Thank you all for joining.

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

Good morning. My name is Megan and I'll be your conference operator today, and I would like to welcome everyone to the Fourth Quarter and Full Year 2025 SLB earnings call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being hosted from Houston, following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause the results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our fourth quarter and full year earnings press release, which is on our website.

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

Thank you, James. Ladies and gentlemen, thank you for joining us today. I will begin by reviewing our fourth quarter performance followed by an update on market conditions and the unique opportunities we see developing for our business. I will then share our outlook for the first quarter and expectations for the full year 2026. Stephane will then provide additional details on our financial results. And finally, we will open the line for your questions. Let's begin.

We ended the year with strong operational and financial performance in the fourth quarter, achieving sequential revenue growth, margin expansion and substantial cash flow generation. This performance reflects the breadth of our portfolio and the impact of our strategy in a challenging macro environment. Sequentially, revenue increased by 9%, driven by high single-digit growth internationally and mid-teens growth in North America. Excluding ChampionX, organic revenue increased by 7% internationally and 6% in North America. We saw sequential growth across all our geographies for the first time since the second quarter of 2024. This demonstrates that global upstream activity has stabilized with key markets showing early signs of a rebound. This helped us to deliver approximately $500 million of organic revenue this quarter in addition to roughly $300 million contribution from ChampionX, resulting from an extra month of consolidation.

Let me briefly discuss a few highlights from the quarter. First, we benefited from strong year-end product sales in production systems globally, higher exploration data sales and strong demand for digital operation across all areas. Second, activity increase across the Middle East, led by Saudi Arabia and with Momentum UAE due to a combination of sustained gas development and increased oilfield intervention activity. Third, we delivered strong results across Asia with increased activity in Australasia, East Asia and Indonesia as this market continues to benefit from offshore gas development. Notably, this quarter also marked the return of growth in Saudi Arabia and across Sub-Sahara Africa with flat revenue in Mexico. These 3 basins actually accounted for the entire organic revenue decline in the full year of 2025. And directionally, we expect activity in this market to improve as we move throughout 2026.

Turning to the divisions. In the fourth quarter, Production System and Digital led the way, where reservoir performance was up slightly and Well Construction revenue was steady. The strength in Production System was driven by increased demand for production chemicals, artificial lift and process technology and solutions as well as backlog execution completions and OneSubsea. When excluding the ChampionX contribution, this division still grew by double digits sequentially and maintained its momentum with several contract awards during the quarter, as you can see from today's highlights. Digital also continued to grow at a healthy rate. driven by strong growth in digital exploration with year-end sales in the Gulf of America, Brazil and Angola as well as robust increase in digital operations and platform application. Digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%.

We also announced several exciting digital milestones in the fourth quarter, including launching Tela, an agentic AI assistant, purpose-built to transform the upstream energy sector and forming a partnership with ADNOC to launch an AI powered production system optimization platform. These underscore the opportunity for AI to continue to reshape industry populations. Meanwhile, in reservoir performance, sequential growth was a result of increased stimulation activity in Middle East and Asia and higher intervention activity in Europe and Africa. In Water construction, higher offshore drilling activity in North America and Europe and Africa was offset by declines in some land markets. Additionally, our fourth quarter revenue benefited from the resumption of production in APS projects of Ecuador. Overall, our fourth quarter results are a positive indication of the opportunity that lies ahead. I want to thank the entire SLB team for delivering excellent performance for our customers throughout 2025 and finishing the year on such a strong note.

Turning to the market environment. Near-term oversupply may continue to exert downward pressure on commodity price throughout the first half of 2026, while elevated geopolitical uncertainties should provide a price floor. E&P operators are therefore expected to remain cautious and to backload their 2026 jet. As supply and demand continues to rebalance into 2027, conditions will likely support a gradual recovery in upstream investments acting key international markets and offshore deepwater exiting 2026 at higher less level than 2025. Indeed, economic growth, including population and large-scale manufacturing and infrastructure investments, partly in the U.S. and China related to AI will inherently drive more demand in both oil and gas, coupled with the natural decline of existing oil and gas assets, we believe this will be the key drivers for the rebalancing of supply and demand. In the meantime, our customers are focused on delivering the lowest cost incremental buyers. This means capturing efficiencies at scale. And in our view, that requires more technology, more integration and more digital solutions. Today, operators are increasingly prioritizing performance assurance across the asset life cycle, reducing development time lines and accelerating optimization through digital solutions.

SLB is uniquely positioned today by value in [indiscernible] by integrating equipment with intelligent and autonomous digital capabilities to reduce downtime, improve efficiency and increase productivity as witnessed a rapid uptake in our digital operations. Additionally, production recovery has made as a critical domain for value creation, not only in brownfield and mature assets, but also across greenfield developments and tiebacks. This is not an either/or proposition between CapEx and OpEx, but an opportunity to increase our share of CapEx spend and capture OpEx white space with new solutions. With SLBs expanded production portfolio, including the addition of ChampionX, we are uniquely positioned to meet the developing demand in the production space.

Globally, the international markets are stabilizing and trending upwards directionally, with Latin America and Middle East and Asia leading the rebound in 2026. Regionally, Middle East continues to robust on the largest international market with positive investment outlook. Indeed, there is a resurgence of our production across vision, driven by OPEC+ policy while gas remains a strategic priority to meet regional demand and long-term capacity expansion. In 2025, we witnessed double-digit growth in the United Arab Emirates, which was more than offset by the decline in Saudi Arabia. In 2026, the device market will be characterized by a rebound in drilling and more cover activity in Saudi Arabia, with rig counts potentially returning to early 2025 levels by the end of 2026. And this has already bagger.

Offshore also continues to plan on compelling long-term growth opportunities for SLB partly in deepwater, where we expect activity to inflect towards the end of 2026 as what space subside. With OneSubsea, we have the unique ability to combine subsea processing capabilities digital solutions and SLB is integrated both to process expertise across subsea intervention and to well construction to create differentiated value for customers. Specific to the subsea market, more than 500 subsidiaries are expected to be awarded across 2026 and 2027, about 20% higher than 2025 run rate, and this is an opportunity we aim to capitalize on. In 2025, OneSubsea was about approximately $4 billion in subsea bookings, and we see a path for cumulative bookings exceeding $9 billion over the next 2 years, supported by this tendering activity.

Finally, we're excited about the strong progress in our data center solution business since it launched less than 2 years ago. This year, we plan to expand our range of offering our customer base and the geography we serve, paving the way for [indiscernible]. The opportunity is growing faster than anticipated, and we expect to exit the year at a quarterly revenue run rate of $1 billion per year. Overall, SLB is clearly positioned to fully benefit from a rebound in international activity as supply-demand rebalance supported by ongoing investments for all capacity, gas expansion project and a constructive long-term outlook for deepwater. Asian activity dynamics further reinforce this fiber directional trajectory beginning in 2026.

Let me now share our outlook for the year. The headwinds we face in 2025 in certain markets may become tailwinds for our business this year. We anticipate this will translate into higher fourth quarter revenue exit rate in 2026 compared to the fourth quarter of 2025. For the full year, assuming oil price remains range bound in high 50s to low 60 range. We expect 2026 revenue to be between $36.9 billion to $37.7 billion. In North America, we will benefit from the addition of 7 months of activity from ChampionX, stronger offshore activity tied to customer plans and accelerated growth in data centers, while upstream land activity will continue to decline younger. In international markets, revenue is expected to trend upwards over the year, resulting in a slight year-over-year increase. growth will come from Latin America and the Middle East and Asia, while Europe and Africa is anticipated to decline slightly.

Let me now describe how these dynamics will unfold across the divisions. In Digital, revenue is expected to go at the same pace as 2025, payment by digital operations. Production System will increase, mostly benefiting from the full year of ChampionX revenue, as our performance will be flattish, while well construction will decline slightly. Revenue in the all of our category will be flat year-on-year, considering the loss of revenue from the divested Palliser asset will be offset by growth in the data center solutions. This revenue outlook translates into adjusted EBITDA between $8.6 billion to $9.1 billion for with margins remaining in line with full year 2025 levels. Finally, with visibility into [indiscernible] strong cash flow, we will return more than $4 billion to shareholders in 2026 to the combination of the increased dividend that we announced this morning and share repurchase.

Turning to the first quarter. We anticipate revenue to decline by high single digits sequentially, similar to the prior year due to outsized year-end product sales and project milestones in Production System in the prior quarter. We also expect adjusted EBITDA margin to decrease by 150 to 200 basis points versus the prior quarter. This seasonal dip will be followed by a rebound activity during the second quarter with further expansion into the second half driven primarily by international markets.

Finally, before I hand over to Stephane, let me briefly touch on Venezuela. SLB is the only international service company actively operating in Venezuela today as we are delivering a diverse set of services for NIC under their license, with near a center of experience in Venezuela. We did maintain active facilities, equipment and local personnels on the ground. Historically, we have been leader in a country. And we remain confident that with appropriate licensing, safety parameters and compliance measure in place, we can rapidly ramp up activities in support of the oil and gas industry in Venezuela. We are excited and we are already receiving a lot of [indiscernible] from our customers.

I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Fourth quarter earnings per share, excluding charges and credits, was $0.78. This represents an increase of $0.09 sequentially and a decrease of $0.14 compared to the fourth quarter of last year. We recorded $0.23 of net charges during the fourth quarter. This includes $0.11 goodwill impairment charge relating to our carbon capture business, $0.08 of merger and integration charges, $0.07 related to workforce reductions and $0.03 of other charges. Offsetting these charges is a $0.06 credit relating to the reversal of a valuation allowance that was recorded against certain deferred tax assets. .

Overall, our fourth quarter revenue of $9.7 million increased $817 million or 9% sequentially. Approximately $300 million of this increase is due to an additional month of activity from the acquired ChampionX businesses. Excluding the impact of this transaction, SLB's fourth quarter global revenue increased 6% sequentially. The sequential revenue step-up was higher than expected and was driven by strong year-end digital sales, significant backlog deliveries and project milestones in production systems, as well as higher reservoir performance activity in international markets. Fourth quarter adjusted EBITDA margin of 23.9%, increased 83 basis points sequentially, primarily driven by very strong digital performance. Margin growth during the quarter was, however, constrained by a loss in a carbon capture project that negatively impacted margins by approximately 50 basis points.

Let me now go through the fourth quarter results for each division. Fourth quarter digital revenue of $825 million increased 25% sequentially, while pretax operating margin expanded 557 basis points to 34%. These results were driven by strong year-end sales in digital exploration and increased revenue in both digital operations and platforms and applications. Notably, for the full year, digital revenue of [ $2.7 million ] grew 9%. The combination of the growth rate and the full year EBITDA margin well exceeded the widely recognized Rule of 40. In addition, digital annual recurring revenue surpassed $1 billion, reflecting year-on-year growth of 15%. Finally, trailing 12 months net recurring revenue was 103% at the end of the fourth quarter. Reservoir performance revenue of $1.7 billion increased 4% sequentially, driven by strong international activity particularly in Saudi Arabia, East Asia, Qatar, Indonesia and Gula. Pretax operating margin of 19.6% increased 105 basis points largely due to a favorable activity mix in the Middle East. Well construction revenue of $2.9 billion decreased 1% sequentially, primarily driven by declines in Middle East and Asia, while pretax operating margin of 18.7% was slightly down. Production Systems revenue of $4.1 billion increased 17% sequentially, reflecting a full quarter of activity from ChampionX. Excluding the impact of this acquisition, Production Systems revenue increased 11%, driven by strong sales of completions and artificial lift as well as project milestones in process technologies, Subsea and valves. Pretax operating margin of 16% increased 20 basis points due to improved profitability in completions and production chemicals.

Now turning to liquidity. During the fourth quarter, we generated $3 billion of cash flow from operations and $2.3 billion of free cash flow. This strong performance was due to the unwinding of working capital and significant customer collections and reduced inventory driven by year-end product deliveries. For the full year, we generated free cash flow of $4.1 billion, marking the third year in a row with free cash flow at or above $4 billion. As a result, net debt reduced by $1.8 billion during the quarter to end the year at $7.4 billion. Capital investments, including CapEx and investments in APS projects and exploration data were $716 million in the fourth quarter and $2.4 billion for the full year. For the full year, we returned a total of $4 billion to our shareholders with approximately $2.4 billion in stock repurchases and $1.6 billion in dividends.

Looking ahead, let me now provide some additional color on our outlook for 2026, building on the details Olivier shared earlier. We expect revenue to benefit from a full year of ChampionX, which will result in incremental revenue of approximately $1.8 billion in 2026. This increase will be partially offset by the effects of the 2025 divestitures of our interest in the Palliser APS project in Canada and of our REIT business in the Middle East. These 2 businesses accounted for approximately $350 million in combined revenue in 2025. As Olivier mentioned, adjusted EBITDA margin for 2026 will be relatively consistent with 2025 levels with different dynamics by division. Digital margin will increase slightly year-on-year on continued top line growth. Production Systems margin will increase, primarily driven by synergies from the ChampionX acquisition, where we still expect to achieve approximately half of the $400 million of total synergies by the end of 2026, [ $30 million ] of which were achieved in 2025. About 75% of the synergies will benefit production systems, with the remaining portion benefiting well construction and reservoir performance. The positive effect of ChampionX synergies and production system margins will be partially offset by unfavorable technology mix within the division.

In Reservoir Performance and well construction, despite activity levels stabilizing, margins will be down year-on-year due to activity mix and pricing headwinds in select markets. From a below-the-line perspective, corporate costs will increase year-on-year, driven by an incremental $70 million of intangible asset amortization expense as a result of a full year of ChampionX. Additionally, we expect our effective tax rate to be approximately 20%, representing a slight increase from 2025. While we expect overall activity to stabilize and increase from today's level in certain key international markets, we will remain disciplined in our capital allocation. In this regard, we expect our total capital investments to be approximately $2.5 billion in 2026. This should lead to another year of strong free cash flow generation. As a result, today, we announced a 3.5% dividend increase, and we expect to return more than $4 billion to our shareholders in 2026 through a combination of dividends and stock buybacks. We are currently targeting to buy back the same $2.4 billion that we repurchased in 2025. However, this amount could increase as the year unfolds, depending on our free cash flow generation progress and our visibility on the business outlook.

I will now turn the conference call back to Olivier.

Thank you, Stephane. I believe Megan, that we are ready for the Q&A session. .

[Operator Instructions] Your first question comes from the line of Steve Richardson from Evercore ISI.

I was wondering if we can talk a little bit about CapEx. I understand -- I appreciate you've given some outlook here on 2026. There seems to be something with investors of an old rule of thumb about your CapEx leading revenue expectations, I thought it would be helpful if you could maybe give us some context around the trend line of CapEx, but also -- how is the capital intensity of your forward business different than perhaps it was in the past?

Thanks for the question. Yes. So we increased CapEx slightly compared to last year to -- in total, with APS and exploration to $2.5 billion, as I just said. We think this is what we need to operate this year and to capture new opportunities as activity recovers gradually throughout the year, particularly in the international markets. So yes, compared to the past, our capital efficiency has improved quite a bit in the last few years. We can do more with less, basically. But clearly, we will not miss any opportunity if activity recovers faster. We want to be ready for a ramp-up and we'll bring more equipment and tools as needed. By division, clearly, reservoir performance is probably the highest capital intensity followed by well construction and production systems, especially with the addition of ChampionX as quite lower capital intensity.

And on the Middle East, your comments are appreciated about the other regions picking up the slack in Saudi in your view on the full year improving. I was wondering if you could talk what we're seeing is the IOCs are seeing a lot more opportunity across North Africa and the Middle East. And I was wondering if you could talk a little bit about your mix or your expectation of your kind of customer mix as you go into '26? And how much of that is driving some of this optimism on improvement versus some of your traditional customers on the national oil companies?

No. First, I will comment -- reinforce the trust and the confidence we have a national company to continue to their execute the capital program. And I think indeed, we are foreseeing and already witnessing the rebound of the Saudi rig and doing and workover activity, which is very favorable. And I think, as I said, coming from a deep in 2025, rebounding at the end of 2026 to as we expect to the level of entry of 2025, which is a V-shape recovery. I think that will set the year very well and also the 2027 is a much stronger year going forward. So beyond that, obviously, the region is still continuous momentum, high momentum in Kuwait, in UAE and has been witnessing significant growth. But coming to international, indeed, Libya, I think is attracting and there's conference this week, next week, and Libya is attracting a lot of investment, and we have been the early benefit of this, and we see Libya high trajectory of growth. We have seen it in the last couple of years, and we foresee this will continue in -- well into '26 and '27, driven by investment coming back in country from an international company. .

Algeria has been successful in licensing round, and I think is exploring on commercial in the South and also gaining additional independence coming back into countries. So we see a rebound in Algeria that will strengthen in 2027. Egypt in the region, I think, is back in offshore. Additional rigs will mobilize in deepwater offshore Egypt as well as in Egypt due to the support that Gabon has provided and again, the return of investment into Egypt. And for Iraq, I think, has been a lot of growth last year. We continue to be significant going forward, like is where some international companies are investing. I think we are associated with this directly. So we have a strong exposure in all of these markets where international company are joining. And finally, I would say that the unconventional UAE is a place where newcomers are appraising the resource and ready to scale their investments from appraisal in '26 to '27 development going forward. So a combination of oil attractiveness in the region, Libya, Iraq, partially for international company. And gas in the region, Qatar, obviously steady but also the upcoming UAE and commercial and deepwater offshore is met. So that's the template, and I said the favorable outlook from NOC and international company in the Middle East.

Your next question comes from the line of James West with Melius Research.

So Olivier, curious, so with the headwinds bottoming here, Saudi, Mexico, some of the white space in deepwater, sub-Saharan Africa, and everything looking kind of up and to the right, how are you thinking about the exit rate for '26 versus the exit rate we saw in '25. Certainly, it's going to be higher, but what kind of if you give us some observations or thoughts on kind of magnitude of how this up cycle will begin.

I think first, I think we have guided into our prepared remarks that we expect the fourth quarter of 2026 to be higher than the fourth quarter of 2025. And this will be led by the international rebound. Secondly, as we guided the first quarter has a marked decline compared to last year Q4, we will see a gradual recovery, again, driven mostly by international market throughout the year that is setting the scene, as we said, for 2027 to be favorable driven by first and foremost continues to regain momentum in Middle East with the addition of the rebound activity in Saudi and the combination of what the factor I mentioned before.

Asia, I think, has been on the momentum and Latin America as well. I think a bit offshore base in Latin America albeit in Argentina. We are experiencing a slight rebound of Mexico driven by deepwater activity in Mexico coming back. And we will see -- we expect that gradually and into 2027, the activity in sub-Sahara deepwater will resume to a higher level -- visibly higher level, the combination of FID in Namibia, in Mozambique, in Angola and the early pickup of activity in Nigeria are already showing sign of a very promising '27, '28 cycle. So international gradually recovering and the exit rate in the end of this year to be driven by international addition so that it will result into Q4 of this year being higher than last year.

Okay. That's helpful. And then maybe a follow-up on the digital side of the business. Obviously, strong results in the fourth quarter. But my sense is we're still fairly underpenetrated on Lumi and Delphi and the cloud platforms and the AI platform that you have? My numbers may be a little bit dated, but I think a couple of 300 or so customers out of our 1,500 or so customers were on the cloud as of maybe a year ago. Could you give us a sense of kind of where that stands now? Or where you see that heading? I'm assuming everybody eventually goes there, most everybody goes there. but just the magnitude of what that could mean for your digital business. I'm assuming that it's pretty -- pretty accretive.

No, long term. I think we believe that the potential digital to transform industry from the asset team productivity to the efficiency of digital operation between drilling or producing assets, I think, is very significant. I think we are just touching the early innings of that transformation, and we're using a multipronged approach towards this first and foremost strategy built on a platform approach to it. And I think you mentioned the combination of Delphi, Lumi and Tela, and we have been indeed gradually gaining a lot of traction for our customer to recognize that platform is the approach to have the most benefit to combine the geo sounds, the production, the drilling, the operation workflow improvement that everybody is looking for. But if we look at the momentum that we are benefiting from today, the amount comes from digital operation, that I think you have seen is getting significant benefits because it's where I think the river hit the ground and where the customers are seeing and materializing the savings in drilling performance in production and PT reduction in production optimization, and we are benefiting on that. But obviously, we are pursuing adoption of data and AI Lumi, which we launched 4 or 5 quarters ago. It's already having more than 50 customers of an adoption. Tela, that we launched less than 3 months ago, has already on and a dozen customers that are engaging and working with us to create this foundation model that can transform their geoscience that can automate detect and optimize autonomously some producing assets, as you have seen with ADNOC announcement that we have done. So we are pleased with the progress surprised with the tact on digital operation, believe this moment continues and very confident that the secular trend that the industry is continuing to witness will benefit our platform approach and that Lumi, Delphi and Tela will be at the core of this industry transformation going forward.

Your next question will go to the line of Arun Jayaram with JPMorgan.

I was wondering if you could frame -- I was wondering if you could frame your thoughts on the near-term and longer-term opportunity for SLB in Venezuela, you mentioned you're the only international service company now actively operating, but talk to us about what type of product lines could benefit if we do get a revitalization of the oil industry in Venezuela?

Obviously, we have to preface this with the condition, the right conditions, including licensing, including payments and operating license will have to be put in place. But assuming that the condition asset for investment to resume and to accelerate, not only from the customers that we are serving to them and for new customer reentering or entering the country. We have kept -- we have historically been the largest supplier, the largest partner of the national company and the largest supplier in service technology in-country, historically, we have had about 10 years ago, more than 3,000 people, and we were recording visibly more than $1 billion revenue at that time. So we have the track record in integration. We have a unique subsurface digital leading role that we had at that time that we can resume. And we have today a significant set of assets that are ready to be deployed across the drilling services, across production with no less than 10 portion set across rig operation with rigs that we are ready to mobilize. And I think across intervention, across drilling, for infill drilling or production optimization, we believe to have the capacity in country, and we believe that we have the access to the Venezuela nationals about 80 of them are already in country. We have more than 1,000 Venezuelan [indiscernible] employee in the company and some of them will be welcoming to bought back in Venezuela, and we have almost 2,000 alumni that I think we have kept in touch with that will be also ready to be joining us as we move forward. So as I said, long term under the right conditions, we can be the partner for our customers there. And I think I've quoted the number where we were before. And I think the future will tell us when and as this can accelerate to already, and we're already seeing a lot of incoming calls, as I would say, to explore options going forward.

Great. That's helpful. Olivier, my follow-up. I was wondering if you could talk a little bit about your data center infrastructure business. You mentioned that you expect to reach a $1 billion run rate in revenue, if I heard you correct, by year-end. Can you talk a little bit about the solutions you're providing today and maybe how you're thinking about organic and even inorganic opportunities to grow that business over time?

Yes. I think -- and you hear me correctly. I think this is amazing what we have put together in less than 18 months. I think the rate of growth the customer engagement that we are getting, the traction we're getting with hyperscalers and I think is amazing. And yes, we put together a setup that is focused on the modular manufacturing capability co-engineering of data center solutions from several and cooling solutions. And we are aiming at increasing not only our scope, but also our footprint, as we announced last quarter, doubling our capacity to respond to the pipeline and to respond to the backlog we have, and we continue to be expanding both in terms of scope in terms of around this manufacturing design capability for modular data center solution will be this year going and growing internationally. We'll be this year, adding new customers to our portfolio and preparing ourselves to go in throughout the year in 2027, $1 billion is the run rate, but it will be significantly both this in 2027. And we believe that we see -- we see growth the rest of the decade internationally. And indeed, as we explore and respond to the request from our customers who are looking for integrator in this space. We will look for complementing our current capability that we have bid organically and to look at what could help complement this and accelerate our market penetration and make us as a fulfilled partner of our customers going forward. technology for the life cycle of the data center for construction and operation.

Your next question comes from the line of David Anderson with Barclays.

If we compare -- if we compare SLB today versus 10 years ago, in addition to digital, I think the biggest shift is now the emphasis on production recovery. I was wondering if you could talk a little bit more specifically about the growth opportunity in the next few years as we think about OneSubsea, ChampionX, artificial lift. If I think about OneSubsea, I'm thinking about backlog conversion accelerating. Guyana, Venezuela, potentially Venezuela could be growth engines in chemicals and then artificial lift in the Middle East. Could you sort of frame this growth opportunity for us over the next few years on this side of your business?

No. Absolutely, Dave. I think portion recovery, as we call it, is a new chapter for the company, something that we have decided strategically to invest because we believe that first is a market that has significant opportunity for value creation through technology, through integration, through digital, and we believe that we need to own and have access to a broader portfolio, hence the access to the ChampionX chemical, OpEx and fulfilled lift technology and the digital platform addition that put us very well paced into that market. So now the customer response is very positive. Indeed, I think if you look at the priority of our customers today into a challenging committee on pricing online, it's all about getting more from the assets that have on the production. And hence, the return of the higher barrier for lower cost is a priority. So I'm getting a lot of intake into our lift solutions, into our digital production as you have heard, and indeed trying to realize and realizing today the benefit of chemistry. Chemistry for not only production assurance, chemistry for -- but also chemistry for as performance or recovery. So we believe that the integrated capability that we have built together will give us opportunity to create solutions for the market, end-to-end solution that will help to improve the performance of existing producing assets will help transform existing assets into -- with a solution for recovery, solution for optimization and will have a cost to bring digital solutions. So yes, led solution in the metro basin or into the most producing oil basin in the world, including Middle East. Yes, Subsea as a beneficiary for the long-term deepwater, but also the boosting processing capability we have in subsea that are quite unique and contribute to this recovery production gain and goal we have. So yes, it is a new story for us. It's a new chapter. We're excited. Customer feedback is very strong because they believe that they need somebody that have the subsurface have the technology and has a full integrated portfolio to respond to the transformation of portion recovery landscape as we have contributed and had the industry transformed the well construction or exploration historically.

That makes a lot of sense. Shifting gears a little bit to another area of potential growth in geothermal. You've been dabbling there for a number of years, but now as you noted in the release here, you're working with Ormat on a pilot project, I believe, later this year. in enhanced geothermal. It looks a lot of this, when we look at geothermal, a lot of this sounds a lot like shale in the early 2000s. We know the resource is there, but it's a matter of process and technique to suffer the economics. Do you agree with that conceptually? And -- and where is your confidence that this can be scaled up to create, say, 100-plus megawatt geothermal plants in the next few years?

Let me know absolutely. I think Dave, I think -- let me first step back and explain the reason why we have partnered with Ormat and the potential we see in this partnership first, is to put together the 2 leading companies in the field. We are subsurface leader in geothermal helping to characterize the geothermal source and then develop the wealth and they have the section to produce the heat and the hot water from those and Ormat is leaders into building a geothermal power plant and understanding the full life cycle. So putting this together and providing industry for one integrated offering, I think, is -- was very well received by the industry and will have accelerated providing conventional geothermal bridge power or base power for some of the data center in the future. So that's -- that's clearly one -- the first aspect.

The second, obviously, we have put this together because we believe that we want to together optimize, explore and optimize through a development of an asset or 2 assets in the future in -- in the near future into the commercial geothermal. And yes, we believe this is a field that has significant potential. But we want to lead right, we want to do sense, we want to do this technology, we want to do with digital modeling of the process so that we get it right, and we understand how to scale it economically, how to make it viable, how to make it safe and then how to offer it together to the market in the near future. So that's the ambition. So we have done this for a reason. And I think we will be developing these assets. It will be experimenting this asset appraising and then getting ready for risk technology, digital and with joint offering to offer this at scale to the market in the U.S. and beyond.

Your next question comes from the line of Neil Mehta with Goldman Sachs.

I guess the first question is more of a macro question a unique perspective on this big debate that's in the market right now about how much OPEC spare capacity really lives there in markets like the Middle East and of course, recognizing that there's probably limitations about what you could say. Your perspective on that question, I think, would be helpful for us as we think about the back end of the oil curve.

No, I think you have been reading what I'm reading, and I think I want to read it more, but I think OPEC has been unwinding $2.2 million. I think when you fast forward a year from now when the imbalance that still exist in today will start to subside and then the market will balance itself. I don't think there will be much spare capacity available, sign of which you see by the reinvestment into all capacity system investments that are happening today across -- across the Middle East and all intervention and international activity in which we have a strong exposure is benefiting from this. So yes, I don't think -- and you have some of the OPEC members beyond the Middle East that are not necessarily having an easy path towards sustaining their existing production. So all in, I think it bodes very well to focus on production recovery, which is focusing on providing the technology, the integrated capability to sustain production, enhanced recovery. And I think that's where we will see adoption of this. But I don't think there is significant spare beyond what has been released back to the market. Hence, the market will tighten in balance into '27 and beyond. Hence, we set the condition for a better outlook as an investment backdrop for the industry from '27 and beyond.

Yes, that makes sense. And then another market, I would love to get your perspective on is Mexico. Olivier, this is probably the most constructive. I've heard you on Mexico in a little bit, but we're in a bottoming phase and maybe even a cash recovery phase, your perspective on that market and how it should evolve from here as we think about SLB.

Yes. The market that we say has normalized from a market that has dropped significantly and has had a need for getting the confidence of the whole industry to reinvest. I think has normalized in a few months. I think it's -- we bet to be steady from the land activity for the free short to midterm, and we expect the condition are trade in place, getting in place for reinvestment going forward in 2026, however, where we see the upside is in offshore activity in Mexico, where the deepwater asset that we are developing with, that is being developed by the with side will give us an upside whereas the activity in land now will make the assumption, it is steady, but we got the [indiscernible] to start to strengthen as we move into 2027.

Your next question comes from the line of Marc Bianchi with TD Cowen.

I wanted to ask on -- got this activity you've got these activity increases in your outlook for certain international markets. Earlier, I think a few months ago, there was some discussion of some pricing potential weakness. Can you talk about what that looks like today and what your expectation is embedded in the outlook here?

Yes. I think first to comment that I think the industry has been under pricing pressure in the last couple of years, starting with North America, and I don't see one change there. I think although we believe North America, we are shifted to the mix of the portfolio we have and exposure were data center and digital and our exposure in deepwater and Gulf of America is proportionally bigger and also the OpEx exposure where ChampionX is a little bit of shed towards some of the pricing pressure in North America internationally. The matter has been -- and I keep repeating every time I get to comment on this, has remained highly competitive for a large tender in international markets, and the market has been keeping pressure considering that the market has been declining the last 18 months or 12 months in the international market, and the pricing pressure has sustained and in some clinical markets. And we have been responding with this -- to this is pressure when we felt it was the appropriate -- appropriate things to do to keep upswing to the market at the same time. I think we are able to maintain our margin steady in 2026 compared to 2025, building on the ChampionX synergy, building on the digital growth margin accretive business. and therefore we are doing to continue to use technology performance as differential to protect where we can margin against the pricing pressure.

Okay. And the other question I had was related to the offshore outlook. You've talked about an expectation for improvement in offshore. And I think if we go back a year or 2, there was an expectation for offshore improvement that didn't really materialize. So what are you seeing now that you think is different from that prior period and gives you the confidence to make those comments?

No, the comment I'm making is that I believe that the FID and the booking will improve in 2026, setting the right setup and context for 2027, 2028 offshore cycle rebound. Whether this is material in 2026, yes, in certain markets in East Asia, the activity of Indonesia the market will strengthen in deepwater. And I think this reflects into this year. In Sub-Sahara Africa, this is more a trend of FID of project from Namibia to Angola and Mozambique that will set the context for a market rebound going forward. And this FID happening as we speak, being negotiated and being spending. And in Americas, I think the continuous momentum in Brazil, in Guyana, Surinam, and I think are here to stay with the metro basin Gulf of America, metro basin of the North Sea, remaining steady somehow, although a slight decline in the North Sea. So we believe that the FID, the economics are favorable and the pipeline of FID across Africa and Asia are set to create a rebound of activity going forward from -- as we turn into 2027.

Your last question comes from the line of Scott Gruber with Citigroup.

So I want to come back to the Data Center Solutions business. Olivier, you mentioned expanding the business abroad is the $1 billion target capture any of the international growth opportunity, would that be future upside? And how equally could this materialize? And ultimately, as you leverage your global relationships, could the international opportunity become even larger than your U.S. business?

Difficult to say what it could become larger, but easy to tell you that it will grow. And this year will be the first step into establishing ourselves in Asia and to provide this modular manufacturing solution to our customer there. Also, we initiated partnership to design a next-generation data center in one country in the Asia region. And then we expect to also look at our relationship to embed and go further, including Middle East in the near future. So these are the -- these are the places where we have ambition to leverage our hyperscale relationship and our modular manufacturing capability ability to source locally, it manufacture where, I think it's something unique that not so many companies can do and scale and replicate what we have done in the last 18 months. So that's what we look forward, and that's where we are excited about the international market. But U.S. is still the hot market. And U.S. is where we believe we have the seating pipeline in '26 and in '27 coming our way and not [indiscernible] market.

Got it. Appreciate that color. And I want to come back to the question Stephen asked at the beginning on CapEx. So your $2.5 billion of CapEx this year will support the second half growth rate that you'll achieve, which we led by digital and data center solutions, some contribution from the core. But overall, the capital intensity of the portfolio is improving. So my question is, can you sustain similar growth rate for a couple of years into the future at a CapEx level that's still broadly around $2.5 billion given those kind of less capital-intensive drivers of growth? Or do you think CapEx would need to creep a bit higher?

Look, as I said before, we do what it takes to not miss any opportunity, but again, we have really improved our capital efficiency over the last 5 to 6 years, so we can really operate with less. But if growth really comes at high growth rates, we will have to increase beyond the $2.5 billion for [indiscernible]. But as a percentage of revenue, that will still remain pretty low compared to what we were doing before and still quite in the low range -- in the low end of the range we had guided before, 5% to 7% of revenue. that's excluding APS and exploration data. So yes, we'll increase as necessary, but it will go with increased cash flow as well. And some of the growth that we will be seeing is production and recovery as we elaborated on before as well as digital. And that doesn't require as much CapEx as the web-centric businesses. So this is how we can maneuver within [indiscernible], basically.

So without some acceleration in the kind of core business, you would expect the CapEx to sales ratio to continue to improve over the next couple of years? Is that fair?

It will be more or less as a percentage of revenue, it will stay within that 5% to 7%, we've guided before, but it's more below. As you have seen, we've been closer to 5% and 7%. So we will be -- we will remain at the low end of that range in the future.

Ladies and gentlemen, as -- yes. Thank you. Thank you, Megan. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, our strategic focus on production recovery in ChampionX, digital and data center solutions present new pathways for growth supporting our full year revenue and margin guidance. Second, I'm confident that we'll continue to generate strong cash flows enabling us to return more than $4 billion of shareholder return in 2026. Third, in the longer term, the outlook is becoming more positive for SLB. The recovery of Saudi Arabia, the positive pipeline in Subsea, the growth dynamic in both digital and data centers are all catalysts. And Venezuela represents an upside. In summary, the current cycle is recovering towards the strength of SLB. With this, I will conclude today's call. Thank you all for joining.

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

Good morning. My name is Megan and I'll be your conference operator today. I would like to welcome everyone to the third quarter SLB earnings call. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn the call over to James R. McDonald, Senior Vice President of Investor Relations and Industry Affairs. Please go ahead.

Thank you, Megan. Good morning, and welcome to the SLB Third Quarter 2025 Earnings Conference Call. Today's call is being hosted from Houston following our Board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer; and Stephane Biguet, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter earnings press release, which is on our website.

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

Thank you, James. Ladies and gentlemen, thank you for joining us on the call. I'll begin today by discussing our third quarter performance, then I will describe the near-term outlook for oil and gas markets. And finally, I will share our guidance for the fourth quarter. Stephane will then provide more details on our financial results and the structure of our new digital division. After that, we'll open the line for your questions.

Let's begin. Our fourth quarter and followed in line with expectations. As we achieved sequential revenue growth driven by the addition of 2 months of activity from ChampionX, our digital business and the resilient performance of our core. In the International markets, revenue rose 1% sequentially, with notable increases in several countries across the Middle East and Asia. Across this region, sequential growth was seen in Iraq, the United Arab Emirates, Oman, Egypt, China, East Asia, Indonesia, Australia and India, alongside broader improvement in offshore activity across Guyana, Sub-Sahara Africa and Scandinavia.

Meanwhile, revenue in North America grew 17% sequentially. This was driven mainly by the contribution of ChampionX, followed by higher offshore activity, which more than offset a decline in U.S. land activity as U.S. share operators focus on further efficiency gains and cash conservation during the quarter. We also experienced strong growth in our data center solution business, extending our reach with APS getting us to a new market for SLB. This quarter marks the first time we have disclosed our data center revenue, which has more than doubled year-on-year. Looking ahead, we foresee expansion beyond the U.S., along with the onboarding of new customers.

Next, let me discuss the performance of our divisions. I'll begin with digital. This is the first quarter we are reporting digital as a stand-alone division. As you have seen in our release this morning, our digital business is comprised of 4 categories where SLB offers a solution that help unlock productivity for geoscientists and engineers, driving step change in efficiency and safety in operations and help our customers in delivering better wells and higher producing assets. The solutions embedded in platform and applications digital operations, digital exploration and professional services, each of which Stephane will describe in more detail a little later in this morning's call.

Specific to the third quarter, digital revenue increased 11% sequentially. This was driven by a 39% increase in digital operations, which enables digital services and automation capabilities augmenting our offering from our core divisions. Of note, automated drilling footage increased by more than 50% year-on-year. This was also supported by the addition of new connected assets from ChampionX. Following the integration, we now have a combined total of more than 20,000 connected assets deployed in the field, providing additional digital insights and optimization for our customers. One of the reasons digital operation is such an exciting growth because it presents the opportunity to enhance every service and piece of equipment that we deliver by embedding digital capabilities, that enhance performance and unlock the power of autonomous operations, creating an adjacent and fast-growing digital market that strengthens our core offering.

The earnings release previous this morning, you would have seen a broad range of examples of platform and application being adopted by customers across all basins, customer types and life cycles. These examples demonstrate global reach of our digital brand, the impact of our platform strategy and the emergence of AI as a transformative force in our industry. This quarter, for example, we secured key contracts awards for our OptiSite production suite, which enables customers to process comprehensive data streams through cloud-based applications to drive productivity and efficiency across assets and facilities in the field. We've also announced a collaboration with AIQ to deploy its energy agent AI solution for ADNOC, powered by SLB Lumi data and AI platform. These are meaningful milestones that speak to the momentum behind our digital business, and you can expect to hear more announcements in the weeks ahead that further demonstrate the impact and scale of these solutions.

Turning to the financial performance of this business. We expect our digital revenue to continue growing at a rate that visibly outperforms global upstream spending and that exceeds the growth rate of our core business by double digits. At the same time, we expect digital to continue delivering highly accretive margins to the company. In the core, I was very pleased with the resilient performance of this quarter, given the challenging macro environment. Excluding the impact of the ChampionX contribution, the core divisions of reservoir performance, well construction and production systems were essentially flat sequentially. This demonstrates how our global footprint and both portfolio helps us to navigate regional uncertainties and offset localized headwinds.

Specific to our Production Systems division, we are already benefiting from the addition of ChampionX, which delivered revenue growth and margin contribution ahead of expectations. We are very pleased with the integration so far. And in addition to the strong delivery of the team, we continue to receive positive feedback from our customers. For example, we recently delivered a combined ESP string using a ChampionX pump with an SLB induction model for a main operator in the [indiscernible]. By bringing together these 2 best-in-class technologies, we improved performance for uncommercial waste and enabled faster installation, reducing downtown and strengthening project economics per customer. And in the Middle East, we have received several contract awards for artificial lift well testing and production chemical technologies that leverage the combination of SLB and ChampionX solution and engineering capabilities.

Moving forward, in the context of tighter industry economics and mounting pressure from production declines, our customers are placing greater emphasis on production recovery solutions to unlock additional barrels at the lowest possible cost and with maximum capital efficiency. This presents an exciting growth opportunity for companies who can offer solutions and technology to optimize production and maximize recovery from maturing assets and technology will be the key. This is where SLB has a distinct advantage and why we have made production recovery, a strategic focus for our business. By combining our deep subsurface expertise, the industry brought us lift [indiscernible] and chemical technology portfolio with unique integration and digital capabilities, we offer a differentiated value proposition to our customers. This offering now includes ChampionX which brings unique technical capabilities and strong track record of customer success from production chemicals to artificial lift enhanced with digital capabilities. I will continue to develop portfolio with strategic investments, including our recent acquisitions of RESMAN Energy Technology and Stimline Digital. Altogether, our production recovery offerings, adds another level of growth to our business. With combined exposure to CapEx and OpEx spend, complementing our leadership in upstream exploration and development.

Now turning back to our quarterly results. and considering the market conditions we faced during the past few months, I'm pleased with our performance. We achieved resilient results across the core divisions, delivering early success with ChampionX and continuing the momentum in digital, and there are several bright spots on the horizon. Thank you to the entire SLB team, including our new colleagues from ChampionX for your excellent contribution this quarter.

Next, I will discuss the ongoing macro environment and the near-term outlook for oil and gas markets. In an environment with increasingly challenging commodity prices and insolvency on the demand supply bands, the industry has so far proven discipline and most long cycle and international activity demonstrating resilience. While it is difficult to predict the exact outcome of further production increases and ongoing geopolitical developments the fundamentals for oil and gas remain constructive. Global inventories still resides at multiyear lows and the need to offset natural production decline accounts for nearly 90% of annual upstream investment. These dynamics create a supportive environment for stable investment in near to midterm buying dermatic shift in commodity prices. Against this backdrop, with the exception of 3 to 4 well-known markets where activity has recessed. Global activity has stabilized in many locations still on the rise. To touch on international markets, many countries remain poised for investment growth tied to long-term capacity expansion plans and assurance of energy supply, particularly for gas. Notably, while OPEC+ production release are currently being filled using capacity behind the pipes, additional release will eventually require new infill drilling or new development to meet the higher supply output from these countries. This caused a positive catalyst for activity in member countries and reinforces the potential for higher activity in 2026.

Specific to deep other markets, the pipeline remains very healthy with favorable economics. We expect further investments in countries across the Atlantic supported by oil and in Asia driven by gas. And while short-term scheduling uncertainties have resulted in white space, partly in Sub-Sahara Africa. We expect this to progressively disappear as there are a number of FID planned for 2026 and early 2027. Meanwhile, in North America, operators continue to prioritize production magnets as a result of commodity prices. underpinned by efficiency improvements, leading to muted activity in the near to midterm. In this context, considering current industry dynamics and commodity price environment, we believe the conditions are set when the supply/demand rebalances for the international markets to lead the future activity rebound and SLB is well positioned to benefit from search and events.

Now as we have discussed the market conditions. Let me describe how we see the fourth quarter unfolding for our business. We expect that we'll achieve a sequential step-up in results in the fourth quarter of high single-digit top line growth. as we report a full quarter of ChampionX and generate seasonally higher year-end digital and product sales. With the third quarter results behind us, we're now in a position to consider that second half revenue will be within the midpoint of our previous guidance range of $18.2 billion to $18.8 billion. We also expect the fourth quarter adjusted EBITDA margin to expand 50 to 150 bps sequentially. This was driven primarily by increased earnings contribution from both digital and production system and PSL, including a full call or ChampionX results and fully restored operations on our APS equal assets. Specific to the digital business, we expect a significant increase in the fourth quarter on seasonally higher sales across the portfolio. As a result, we believe our digital division will be able to achieve double-digit growth for year with EBITDA margin reaching 35% on a full year basis. Overall, SLB continues to demonstrate resilience in navigating the challenging market environment. and flanks digital, coupled with our growing presence in the production recovery space, will expand our leadership in the sector and help us drive positive outcomes for customers.

I will now turn the call over to Stephane to discuss our financial results in more detail.

Thank you, Olivier, and good morning, ladies and gentlemen. Third quarter earnings per share, excluding charges and credits, was $0.69, which represents a decrease of $0.05 sequentially and $0.20 when compared to the first quarter -- the third quarter of last year. We recorded $0.19 of charges during the third quarter. This includes $0.12 of merger and integration charges, largely related to the ChampionX acquisition that we closed during the quarter, as well as approximately $0.04 related to workforce reductions and $0.03 related to the impairment of an equity method investment. Overall, our third quarter revenue of $8.9 billion increased $382 million or 4% sequentially. I recognize that there are a lot of moving pieces this quarter.

So let me bridge our Q3 revenue to Q2 at a high level. $579 million of the sequential revenue increase comes from the 2 months of activity we recorded this quarter. from the acquired ChampionX businesses. This increase was partially offset by the loss of approximately $100 million of APS revenue due to production interruptions arising from a pipeline disruption in Ecuador and the absence of approximately another $100 million of revenue following the divestiture of our interest in the Palliser APS project in Canada at the end of the second quarter. In other words, after considering the revenue contribution from ChampionX and the impact of the lower APS revenue due to the 2 factors I just mentioned, revenue was essentially flat on a sequential basis.

Our pretax segment operating margin declined 42 basis points sequentially to 18.2%. The impact of the 2 months of ChampionX was accretive to these margins, as ChampionX contributed $579 million of revenue and $108 million of pretax income in the quarter. Company-wide adjusted EBITDA margin for the third quarter was 23.1%, representing a sequential decrease of 92 basis points. The effect of the pipeline disruption in Ecuador negatively impacted our EBITDA margin by approximately 60 basis points. In addition, the divestiture of our interest in the Palliser project resulted in a further 30 basis points reduction. I will now go through the quarterly results for each divisions.

And let me begin by sharing more detail about our new digital reporting structure. As Olivier described earlier, digital is a fast-growing business, and SLB is at the forefront of this industry transformation. We expect our digital business to grow faster than our core business for the foreseeable future with margins visibly accretive to the rest of the company. As such, our intent is to increase transparency around our digital business and better highlight its strategic value. To device, we are now reporting digital as a stand-alone division. At the same time, our APS business is now being reported in the all other category, together with our data center solutions and SLB capturing businesses. To provide you with better insight into these reporting changes as well as the impact of ChampionX, we have included supplemental pro forma financial information going back to the first quarter of 2024 as an exhibit to the Form 8-K we filed this morning for our earnings press release.

Getting back to digital. Revenue is captured and will be reported across 4 categories where SLB offers solutions for our customers, platforms and applications, digital operations, digital exploration and professional services. Let me briefly describe each of these categories. Additional details can be found in question 11 to be FAQs at the back of our earnings release. The first category is platforms and applications. Platforms and Applications include SLBs cloud technologies, such as the Delfi and Lumi platforms, along with a suite of specialized domain-focused applications such as petrol and tech offered as SaaS subscription or perpetual licenses. These platforms and applications automate complex models unlock data and utilize AI and machine learning to reduce cycle time and improve efficiency of workflows. This allows our clients to make better, faster decisions to improve their project economics and reservoir performance. With the exception of one-off license sales, revenue in this category is recurring in nature, underpinned by a globally installed software base built over 4 decades and complemented by growing adoption of cloud-based capabilities and IoT-enabled solutions. As a result, platforms and application has high retention rates and very limited churn. As illustrated by the fact that the net revenue retention rate was 103% at the end of the third quarter. This represents the percentage of recurring revenue retained from our existing customer base over the last trailing 12 months, relative to the prior trailing 12 months.

The second category is digital operations, which combines the unique strength of SLB's core oilfield services and products with advanced digital technologies to deliver more reliable and more efficient field operations. By integrating connected solutions with performance live, digital service delivery centers, Customers gain real-time monitoring, remote decision-making and automated execution across their workflows from autonomous drilling to automated well intervention. Revenue in this category is generated from the same client base as our core divisions and is, therefore, repeatable. Additionally, a portion of the revenue is recurring in nature. To incentivize the 3 core divisions, well construction, reservoir performance and production systems and digital to develop and promote this offering, the resulting revenue is recognized in both the respective core division as well as in the digital division. This revenue is then eliminated in consolidation. The third category is digital exploration. Digital exploration represents our exploration data business, our differentiated library of seismic surveys and other subsurface data covers key exploration and producing basins worldwide. These licensed data sets are refreshed and reprocessed to benefit from the latest imaging algorithms and AI technologies enabled by high-performance cloud computing. Revenues are generated from onetime nontransferable license sales and are therefore nonrecurring in nature.

Professional services makes up the fourth revenue category. This includes consulting and overall services required to support our clients' digital transformations. These services include transition support from on-prem to cloud-based digital solutions data cleanup and migration and workflow automation, including deployment of solutions built using our global network of innovation factories. Professional services revenue is largely project-based, and repetitive engagements with the same customers are common. These services generate pull-through opportunities across the overall digital revenue streams. In addition to reporting revenue across each of these 4 categories, we will also share annual recurring revenue or ARR on a quarterly basis. ARR represents the annual value of recurring subscription and maintenance revenue from platforms and applications, along with the recurring portion of digital operations, providing a measure of predictable revenue over the next 12 months.

Now that I have described our digital reporting structure in more detail, I will walk through our third quarter digital results. Third quarter digital revenue of $658 million increased 11% sequentially, and adjusted EBITDA was $215 million, reflecting a margin of 32.7%, up 123 basis points sequentially. Third quarter sequential revenue growth was driven by robust sales of digital exploration coupled with increased digital operations. It also reflects 2 months of activity from ChampionX, which contributed digital revenue of $20 million. Annual recurring revenue stood at $926 million at the end of Q3, representing year-on-year growth of 7%, highlighting our ability to continuously expand our offerings in platforms and applications and digital operations as well as secure new customers.

Turning to the core divisions. Reservoir performance revenue of $1.7 million declined 1% sequentially as higher activity in Europe and Africa was more than offset by lower revenue in the Middle East and Asia, primarily in Saudi Arabia. Pretax operating margin of 18.5% was essentially flat sequentially. Well Construction revenue of $3 billion was flat sequentially as higher revenue in Offshore, Guyana and North America were offset by lower drilling activity in Saudi Arabia and Argentina. Margins of 18.8% were essentially flat sequentially. Production Systems as reported revenue of $3.5 billion increased $542 million or 18% sequentially. This reflects 2 months of activity from the acquired ChampionX production chemicals and artificial like businesses, which contributed $575 million of revenue. Pretax operating margin of 16.1% declined 66 basis points sequentially, driven by an unfavorable geographic mix in completions and lower subsea margins. This decline was partially offset by the accretive margin contribution from ChampionX.

On a pro forma basis, Production Systems revenue of $3.8 billion was flat sequentially with lower completion sales, offset by increased sales of valves and production chemicals. While it is still early days, we are quite pleased with the performance of ChampionX, which recorded another quarter of year-on-year revenue and margin growth, demonstrating the resilient nature of this production and OpEx-based business. Going forward, these results will be further enhanced by $400 million of annual pretax synergies that we expect to generate within the first 3 years after us. We will remain confident that we will be able to realize 70% to 80% of the synergies within the first 24 months of the transaction. As a result, we expect the transaction will be accretive to both margins and earnings per share on a full year basis in 2026.

Now turning to our liquidity. During the quarter, we generated $1.7 billion of cash flow from operations and $1.1 billion of free cash flow. These amounts include the payments of $153 million of acquisition-related items during the quarter. Capital investments inclusive of CapEx and investments in APS projects and exploration data were $581 million in the quarter. For the full year, we still expect capital investments, including the impact of ChampionX to be approximately $2.4 million. We expect that following our historical patterns, free cash flow will increase in the fourth quarter on the back of lower inventory as a result of year-end product sales as well as higher customer collections. The extent of the sequential step-up in free cash flow will largely depend on cash collections in certain countries. And finally, we repurchased $114 million of our stock during the quarter, which brings our total stock repurchases to $2.4 million on a year-to-date basis. When combined with our $1.6 billion dividend commitment for the year, this will result in us returning a total of $4 billion to our shareholders for the full year.

I will now turn the call back to Olivier.

Thank you, Stephane. Megan, I think we are ready to open the floor for the questions. .

[Operator Instructions] Your first question comes from the line of Dave Anderson with Barclays.

On the IEA put out a report highlighting the increased global decline rates and the need to spend capital just to offset these barrels each year. You know ChampionX in the fold and you've created really what is to be the largest production-focused business in services. When you think about chemicals, lift, subsea, something like 40%, 45% of your revenue. Can you talk about how you see this part of your business growing? I'm a little confusing when I think about your core business because this seems a little bit different, but how are you thinking about this part of your business growing particularly with deepwater development running up? And I'm just wondering, are you thinking the production should outpace upstream-driven part of your portfolio through the end of the decade? Is that the right way to think about it in terms of the opportunity set?

I think the right way to think about it, first is what a customer is looking for. And I think as you pointed out, I think it's clear that the natural decline that are waiting on the on the industry that have to be offset not only by infill drilling and new development but increased recognition by the -- in the customer that production and recovery is a new theme that needs reinvestment, that needs technology that is innovation that is integration, analysis capability to lift and increase production, enhanced recovery through technology, through disruptive solution, I think the industry needs. So we are positioning ourselves with this acquisition of ChampionX to not only address both the OpEx and the CapEx market as a larger market and hence, as a larger share of the wallet of our customers. but also as a more resilient space as the OpEx is indeed growing as -- has been growing at a higher pace than CapEx lately, and we continue to do so.

But what is more important, I believe, is that we are able to unlock a new solution because we have the broadest portfolio with this addition. We have the broadest lift portfolio where we have the largest intervention portfolio in the market. And we have now since in chemistry and capability industry that not only touch the production from the well up to the process, but also the reservoir. And I think when combining this establish integration capability of digital. I think we have something that I think the industry was looking for. And I think the customer feedback we are getting is actually extremely good because they're all focused increasing on production recovery as a way to add to their production target. And it's an and, it's not an or. The end of upstream exploration development will be complemented by production recurring. It's a market that will expand long term in this market, we believe we have a leadership position that we have established.

And so shifting over to digital. I'm thrilled to see a breakout here. I have a million questions here. I'm going to try to keep it to a handful of things to focus on. Stephane, you talked that we have the 4 different segments here. I was wondering if you could kind of just talk a little bit about how you should be thinking about those 4 segments, how they should be trending and kind of what the drivers are for those 4 sites, I guess, the exploration part, but kind of the rest of it. And then secondarily, you highlighted $900 million in recurring revenue year-to-date, up 7% from last year. I'm just curious, are you picking us to accelerate? Do you think it was going to grow more or less this year? And how should we think about that going forward?

So the -- thanks for all the questions. Indeed, it's a lot of additional info. So the ARR above $900 million already. Yes, it's growing, and we clearly anticipate this to continue growing as we not only offer more to our existing customers, but also secure new customers. So probably going into Q4, we can be looking probably at a high single-digit growth for ARR. And -- and with the kind of number you see now, we are not too far, I believe, from getting into next year, getting to $1 billion of ARR, which really provides a very good baseline of revenue. For the rest of your questions, I will pass it to Olivier.

Yes. No, thank you, Stephane. No, Dave, clearly, I think, yes, there's a different dynamic for the 4 buckets. But I think if you have to look at the platform application, these were the customer adoption and expansion of our offering will give us the opportunity to continue on our journey to accompany our customers from the -- across the subsurface, across pollution drilling and across their data and AI capability. So the expansion of AI into that space, and you have seen several announcements during the -- in the earnings press release this morning, showing that this is the early innings will be a driving force for further growth. The deployment of clouds, both hybrid and public cloud continuation of our platform transition that we have sent. And the continuing adoption of the capability we keep adding to our offering, the application you have seen. So this is all about customer adoption. They had a technology transition from desktop to cloud AI.

Secondly, the digital operation is all driven by adoption of -- for every well we touch for every equipment we deliver, we'll continue to add digital services automation, autonomous capability to complement this offering. So this will be added to the core. It's jointly to the core, but it's an exciting adjacent space to the core that we grow and fast-paced growth ahead of the core. You have seen this quarter, you have seen the year-on-year, we're talking about 50% year-on-year growth. This is remarkable. The digital exploration is linked to exploration market, but it's increasingly becoming digital because the customer recognized they need to use more digital insight before they drill the first well. Hence, it would believe and it will be up and down, highly variable from quarter-to-quarter, but yet trending in our opinion, positively.

And turning to service, professional services, I think, are here to support the 3 buckets and I hear the capability we put inside the customer office ahead of the large engagement or consulting engagements or doing transition of that data space into our offering. This is what drives this. So it's a different driver. But altogether, we believe over time, this will all be positive, leading to each other to create a sustainable growth going forward, as you say, outpacing the CapEx spend.

Your next question is the line of James West with Mellus Research.

So curious on 2 key markets here for you guys, where you have a nice dominant position. I'd love to get your thoughts on. First is deepwater. As we look out into '26. Obviously, it's been very resilient although some white space, but it looks like we're going to hit a lot of campaigns next year. I just love to hear your thoughts on how we should think about that unfolding in Schlumberger's position or SLB's units position.

No. First and foremost, I think deepwater remains easy to say and easier to grow as a market. It has several economics, and it is seen as a place to invest to unlock new resource. You see development, FID, but it's also exploration. Deepwater is going on and is steady and is growing. So now if we look at the activity and the schedule of the rigs that we foresee going forward, actually, we are foreseeing that the white space that developed in the last 18 months are starting to dissipate. And we are at -- we believe from a reactivity -- drilling activity we may say that we are at bottom this quarter in Q4 of 2025. we expect, although the gradual, we expect the strengthening of the rig activity to support this -- both exploration and development FID come in the pipeline with a gradual strengthening and uptick in the later part of the year that is currently scheduled and strengthening further in 2027. And we see it from the call from our customers to prepare the subsea pipeline that correspond. We are happy with our subsea position. We'll be closing the year with growing both our booking and backlog to be ahead of last year, both and to place us to a position where subsea should go not in '26, but materially in 2027 as a consequence of this pipeline. So we are confident that it's on the horizon. And I think we'll start to see the strengthening happening step by step.

Got it. Okay. And then the other market, the Kingdom of Saudi Arabia has gone through some gyrations here in recent quarters. But it seems to me like at least we may have found somewhat of a bottom and maybe looking to add activity next year. Is that consistent with what you're seeing in that market? I know it's a sizable market for yourself.

Now I will comment on the activity. I think it is our assessment indeed that we have reached a stabilized activity if not bottom in the current level of activity we see. And we are anticipating a likely rebound in near to midterm. And directionally, we are anticipating that we should expect increased activity in the first half of 2026. for both gas and oil for different drivers, we have to continue to support the expanded capacity commitment to 2030 and then commercial of [indiscernible] and other assets in the country. And for oil in relation with supporting the extra supply that is delivered to the market an assurance of supply to intervention and possibly to some additional oil drilling as well.

Your next question comes from the line of Scott Gruber with Citi Research.

I want to ask about the data solutions business. So the data center solutions business, it's growing pretty quickly here. It's actually becoming sizable. Can you talk about the strategy for the business? Is it in here to develop a skill set and take a global as data center construction goes global. And overall, how do we think about the growth of the data center solutions business in '26 and beyond?

Yes, I think it's early days, and we're very pleased with the market position we gain in very fast pace. I think based on our first, our relationship and partnership that [indiscernible] has gave us the opportunity to step in into that market, building on our manufacturing engineering process technology and global supply and logistics that I think we have pulled to make it a reality. Now going forward, yes, the ambition is to expand beyond the U.S. train, we have established, and we already have a pipeline of of expansion here in Asia has been agreed and to also expand to more customers and diversify our hyperscalers and colocators as we call them to complement our offering. But as we will add technology. We'll add the critical technology that make it unique to go beyond the first day we have. So yes, we have an ambition to grow it to expand customers to expand geography to broaden our [indiscernible]. And remember, this is clearly not driven by oil and gas customers. It's driven by hyperscalers partners that reach out to us to help them respond to this AI bot and data center growth that I think will last beyond these decades, clearly.

Got it. No, very interesting. It's a bit of a different business. Is it fair to assume that there's little CapEx and balance sheet commitment with the business? Or is there an investment needed to grow this business?

Absolutely. Investment is competencies that I think we have at scale in the organization. it's technology, creating a repeatable, scalable modular solutions that differentiate us for fast employment. And -- but it's not CapEx, no. I think we are not -- this is a very low CapEx intensity business that we have set up here.

Your next question comes from the line of Josh Silverstein with UBS.

Thanks for the new digital details here. You have the 7% growth in the annual recurring revenue. This growth predominantly coming from new customers or growing the new customer base -- sorry, the existing customer base. Obviously, the 100% net retention rate shows how sticky the revenue is, but I'm curious about if you need to keep adding customers to drive that growth going forward.

I think we already have 1,500 customers, and I think we have a lot to grow with each customer we have. But yes, we are adding -- we're adding new customers in every new space where we develop technology. I think the digital operation, I think, is a discovery for many customers, and we are doing it every day. the platform application. I think the new offering, Lumi and -- Lumi data and AI platform, I think, is being delivered fresh launch last Q4 to new customers and as adoption has been already more than 50 customers in last than a year, I think it's remarkable. So I think we are very proud of this. So it's a combination of enhancing the adoption within customers developing enterprise solution and enhancing the consumption and they bring more to an existing customer set and also expanding and broadening our customer access for part of our offering that we are more confined to a few customers in the past. So I think we are broadening our offering with more access across all our customers, and we are strengthening for raising large customer, and you have seen announcements in the last and you will see more announcement coming soon on customer adoption, large customer adoption that reflect our success with those customers.

Great. And then just as a follow-up, I wanted to go back on the EBITDA margin comments that you guys have made. You highlighted it was around 32% for the first 9 months, but the -- I think you said you expected to reach 35% for the full year, which implies a very large job towards 45% in the fourth quarter. So I wanted to just picture that was right. And then where you think margins can kind of go to if we look at 2026 versus '25?

Yes, yes. We -- I confirm we did say that we think we can reach 35% EBITDA margin for the full year. And yes, it's a step up for the fourth quarter. If you look at actually at the pro forma statements we provided for the -- which includes the digital division by quarter back to 2024, it's this variability and seasonality is quite common. Actually, we always start very low in the first quarter and margins as well as revenue by the way grow quarter after quarter. So Q4 is always the best revenue quarter and is always the best EBITDA quarter as well. So we are pretty confident we can get there. And if you look into the future, 45% EBITDA margin is a good baseline to start from basically. By the way, if I can add something we've not discussed before on the EBITDA margin except for the -- sorry, digital exploration part of it is a very good proxy for free cash flow. There's obviously no CapEx in the digital business, again, excluding exploration data.

Your next question comes from the line of Arun Jayaram with JPMorgan.

Yes. That was my question on kind of digital margins and kind of the capital intensity of that segment. So I was just wondering about as you think about longer-term growth from that segment. I mean you mentioned that you think that it could outstrip the core business by double digits. I was wondering if you could maybe elaborate on that commentary on growth from digital.

I think there are 2 comments on to it. One, as I said, is the adoption of our customers, existing and new customers, we developed in the last question. I think the market expansion itself, the digital is being seen as a critical -- mission critical for many customers to transform the way they operate to add productivity to add efficiency to their geoscientist engineer and asset team. And I think this trend is here to stay, and we are leveraging our market leadership to leverage and to continue to grow market position into that superior trend. But secondly, and I think more importantly or equally importantly, our ability to continue to add digital operation capability, digital growth and hence, this one will outperform the core because the principle we are sitting here is essentially for every service we provide for every well site to touch for every equipment we deliver will progressively add building on our platform and connecting to our live performance center will add a set of digital services that enhance this offering that enhance the operation, the performance and get differentiation, get the customer to create more value. So this will ultimately and mechanically be growing at a higher rate than the core because it will be a market penetration of digital into our core business. So you add this to the underlying trend of digital transformation with the earnings that we have witnessing in AI. I think you get the combination give us the confidence that we will clearly outperform the market growth of CapEx and outperform the core as a combination.

Great. One follow-up, Olivier, I wanted to see if you could elaborate on your commentary on what would happen in the recovery. Your commentary suggest you expect that international would lead in a recovery historically, it's been North America. So I was wondering if you could maybe just elaborate on that thought behind that commentary.

Yes. I think we believe that the tightened economics that we are under, and we believe we don't see them necessarily changing very much with them improving slightly as soon as the demand supply rebalance. And under those conditions, I think we believe that the situation in North America is such that we don't anticipate significant gain of activity based on the efficiency [indiscernible] based on the I would say, the challenged economics of some basin and also of the continued consolidation happening in this market by contrast and international, you have several trends that are here to stay. I think deepwater as a base solid pipeline that drives the international growth, you have gas and as a security of supply that has led to capacity deployment exploration capacity expansion and on commercial development internationally. And you still have the commitment to oil capacity expansion. If not, the necessity to offset the decline in many international locations and aging pacing that combined to make international, I would say, getting a better outlook and the first leg for the rebound as activity strengthened.

Your next question comes from the line of Neil Mehta with Goldman Sachs.

So Sir, I just wanted your perspective on the oil macro and is more of a near-term question. Certainly, the market has flipped into oversupply. And I think with a lot of market participants are trying to figure out, which you have a unique perspective on is what is the rebalancing mechanism to get the market back into balance? And there are a couple of different levers. Certainly, the U.S. could be part of it and part of it could just be time and demand can grow into it. But how do you guys see the market rebalancing from this current period of oversupply?

Yes. I think first, you have to assume that I think the release of supply that happen -- that have happened, I think will align and moderate and/or be managed to not create a further, I think, I would say, further stretch, okay, to the demand supply to the oversupply market. You have to assume this first. And I think that's an assumption we're making. Secondly, we are making the assumption that indeed, the demand will -- over time, and we are talking about -- we're not talking years, we're talking a months, okay, will catch up. And hence, we believe that with the buffer of supply being behind us or the decline of this excess of supply being beans. We believe that sometime next year, I think that's one update is that the bond supply will be sufficiently rebalanced to allow the market to have the investment incentive to indeed consolidate from this steady -- steady solution or steady situation in which we are today to start to rebound. So there are some plus and minus, obviously, increase. There is some China adding some silos of liquid inventory. There are some OPEC country that currently are not fulfilling their quota despite the rise, and I think there is some U.S. shale production anticipation that could also be starting to create a deficit of supply on the horizon. So you combine this and you get a situation where the demand supply will balance itself in the future. And under those conditions, we believe that the drivers of activity will prompt reinvestments and rebound of activity first in the international market.

Yes. You have a unique perspective to what's going on in the oil market. The follow-up is just on M&A, Champion X, I think in retrospect, really helped to balance out the portfolio on the production side. Just your extent we are in a period of softness, do you see an opportunity for SLB to continue to be a consolidator or given the softness in the equity, do you feel like a more organic approach is the right strategy?

I think the first, we are focusing on executing the strategy ChampionX the benefit of this addition to our portfolio to consolidate and execute approach on recovery strategy. And you have seen we have done 2 more add-on bolt-on strategic acquisition, RESMAN for the tracer technology and used chemistry actually, okay, to enhance and to help enhanced recovery development and Stimline Digital, which is technology, digital technology addition to our portfolio and application, cloud application that helps to plan and execute well intervention for our customers. So all this pertains to the production recovery portfolio and this is one focus that we have. And we believe that aside from bolt-on acquisition, we don't see any further need for consolidating this but executing through integration through our unique capability set and expanding internationally, getting the full benefit of this -- that's our current focus.

Your last question look to the line of Steve Richardson with Evercore ISI.

I was wondering if you could talk a little bit about the addressable market in digital. I think you just talked about the longer-term growth. But how should we think about the addressable market? I mean, I think we've seen consultants talk about a mid-$30 billion number for total revenues in 2030? Or should we think about it as a proportion of total upstream spend. How do we think about the total pie here? And I appreciate that it's various objectives in terms of how you define the -- what is digital and what is...

It's very subjective, but I would consider it unconstrained. I will consider that I think the digital solution will create the space for their own. And I believe that the scale of offering the capability and the opportunity we have, I don't see constraints into the market. So I believe that okay, the growth potential we have from both the digital operation today, if you compare the digital operation if you were to do the math, okay? We could say that this represents 1% of revenue of core, why not 50% of revenue for core in the future. So that's the way you could look into it, okay? We have 1,500 customers, only a few portion of them have adopted the platform. We had an early news of AI. I've seen a handful of announcements on Lumi and AI in this quarter. Why not 1,000 customer using Lumi and AI in the future and using Agentic AI to supplement and get companions to help them execute their workflows with digital capabilities. So this is okay? Digital is a new wireline, I could say, okay? So I think I believe that you should consider is unconstrained for now, and it's only limited viability to create the right solution that I think the customers are keen to adopt because it has a net impact on their productivity for the geoscientists has a net impact on the effectiveness and decision-making, and it creates value and they organize the value. So one-on-one, we'll continue to work and power for our customers, continue to develop and use our platform to both address the office workflow, the back-office workflow and the digital operation to expand the offering, and we will use the technology portfolio we have at our disposal, both on-premise public cloud, by cloud, edge and obviously, accelerate GenAI and Agentic AI for the future. So it's unconstrained, and I wouldn't want to put a constraint. I'm just willing to keep supporting our customers into their digital journey, and we believe we are the partner of choice in this card, and we continue to lead the industry for our technology, our solution and capability of it.

That's great, Oliver. I mean I think a quick follow-up, if I may. On the commercial push here, do you find that you are -- is it fair to assume that you're coming in to your customer and providing a new solution that's outsourcing or replacing something that they're doing internal. Are you finding that you're bidding against a competitor? And then as a follow-up there, how much of digital would you think right now is bundled with something that comes out of the core. So does that create the commercial entry to then make the digital sale? Or should we think about them completely separately?

No, I think it's all in. I think we have -- we are the leader in the space and it's recognized with our customers. And I think they work with us, they desire to work with us and panel to understand how they can get a better use of the product -- the new product they have, most of the product -- most of the customers have one of our products, one of our applications, and they are then sitting with us and we are partnering to see how we can expand and help them go along the journey to adopt more of our offering. So it's sometimes it complements because you have taken an approach of an open strategy for our platform. It complements what they have, and we are able to preserve and build on what they have developed internally. Sometimes it sits side by side with competitive offering that is an integral part of their workflows, and we are not here to push everything out to be perceived as a platform integrator in our industry. And yes, it builds on the core because whenever we are delivering new take drilling operation, we can offer autonomous zero steering as an option. I think it obviously have a mutual pull through on the digital to sell this value added [indiscernible] capability and put through of hardware services that get the benefit of a better performance of digital services. So it's all in. And I think that's the reason why we are optimistic that it will continue to grow at a faster pace than the industry global spend and hence, it's a bright future ahead of us. .

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

Thank you, Megan. Ladies and gentlemen, as we conclude today's call, I would like to leave you with the following takeaways. First, upstream oil and gas remains investment remains resilient with pockets of growth in many international markets. SLB's unique footprint and portfolio provides us with leading exposure to many of these regions enabled us to deliver steady financial results to all market conditions. Second, the addition of ChampionX is already making a meaningful impact as customers remain focused on increasing production from legacy assets. Our expanded portfolio position us to capture a larger share of their spending and under greater value across the production life cycle, both in OpEx and CapEx spend categories. And finally, our digital business is a true differentiator for SMB. This is the fastest-growing part of our business and I look forward to showing the continued growth of this business through our new digital division. With this strength, SLB is exceptionally well positioned to continue delivering for our customers and our shareholders I look forward to diving a strong fourth quarter to close the year. With this, I conclude today's call. Thank you all for joining.

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