SLB Q3 2026 earnings call transcript, October 23, 2026

Good morning. My name is Sarah, and I will be your conference operator today. I would like to welcome everyone to the third quarter SLB earnings call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. You may remove yourself from the queue by pressing star 1 again. As a reminder, this call is being recorded. I will now. I 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 Third Quarter 2026 earnings conference call. Today's call is being hosted from New York City following our board meeting held earlier this week. Joining us on the call are Olivier LaPouche, Chief Executive Officer, and Stéphane Begay, 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 detail 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. And good morning, ladies and gentlemen. Thank you for joining us. Today, I will begin with our third quarter performance. I will then discuss the evolving microenvironment and the fundamentals supporting outlook as we approach 2027. And finally, I will

share our expectations for the fourth quarter. Stéphane will then provide additional details on our financial results. And after that, we'll open the line for your questions. Let's begin. The third quarter was marked by broad-based sequential revenue growth across each of our geographical areas and core divisions, with pre-tax segment operating margins expanding across all four divisions. This was driven by the gradual recovery in the Middle East, solid growth in North America, and continued momentum across the international offshore basins, including Latin America, Europe and Africa, and Asia. Within the core divisions, production systems led the way, supported by higher 1-30 revenue and strong sales of production chemicals and are still lived in North America and the Middle East. Notably, Champanex delivers highest quarterly revenue since the acquisition, with margins expanding sequentially for the fourth consecutive quarter. While construction, growth was driven by double-digit increases across Argentina, Guyana, Brazil, and U.S. land, along with a seasonal recovery in Canada, complemented by strong offshore drilling in Asia. Sequential growth was also driven by higher drilling activity and fluids demand in the Middle East. While the near-term pace of recovery in the Middle East remains uncertain, the longer-term outlook continues to strengthen. This is reflected by Sari Zarankov.

We sent a world of four integrated well-construction contracts to SLB covering more than 450 wells over an initial three-year term. These multi-year awards significantly improve our revenue visibility and expand our participation in development activity across the kingdom by bringing together our digital drilling workflows, automated technologies, and integrated well-construction portfolio. As our performance also delivered strong seconds and growth. Led by increased stimulation and intervention activity alongside an uptick in evaluation. This demonstrates that customers are investing in both restoration and production optimization of existing assets and evaluation of reservoirs to support new developments. Our results this quarter continue to demonstrate the benefits of our strategic focus on production and recovery. Our production business encompassing all production systems and some of the offerings in other of our performance now represents more than 50% of our portfolio, leading position across every major basin and a balanced mix of short and long cycle activity, including exposure to resilient OPEX spend. This provides a durable foundation with greater revenue visibility and a resilient performance across market cycles. Second together, growth across all core divisions reflect the characteristics of an inflecting upcycle. with broad expansion of activity across exploration, development and intervention, as operators ramp up efforts to restore production and bring new capacity online.

In digital, third quarter revenue was steady sequentially and margins remained strong, despite digital exploration sales declining, following exceptional sales in the second quarter. Customers continue to recognize the benefit of AI and digital operations, and we deliver more than 750,000 speed of automated drilling this quarter and increase of nearly 50% year-on-year. Additionally, the Helops Predictive Analytics, our intelligent real-time monitoring and advisory system, is now monitoring more than 20% of active international rigs, representing year-on-year growth of more than 60%. As you can see, adoption continues to accelerate, and we are very pleased with the progress of our digital business. Provenu has grown 11% year-to-date. And we have clear visibility into higher sales in the fourth quarter. As a result, we anticipate finishing the year with double digits year-on-year growth and adjusted EBITDA margins exceeding 35%. Finally, data center solutions continue this strong growth trajectory, supported by the progression of existing projects and geographic expansion into Asia. During the quarter, we continue to invest in facilities and talent to expand our execution capacity. including a new manufacturing center in Canada to support the Meta data center project that are essential to meet surging customer demand. Upon closing of our S&T announced acquisition of Kelvion, the Kelvion portfolio will also benefit greatly from this momentum and will accelerate our ambition to become a leading industrial partner into the AI infrastructure build out. In summary, I'm extremely proud of our third quarter performance and I want to thank the entire SLB team for delivering this

results. Their focus on execution, innovation, and our customer centricity continues to make the difference. Let me now turn to the Macron diamonds and the fundamental supporting outlook as we approach 2027. Ongoing disruptions continue to reinforce the importance of energy security and the need of reliable geographically diverse source of supply. At the same time, the industry continues to face the structural challenge of setting natural decline and replacing reserves following several years of limited exploration. Collectively, these conditions are supporting a broader and increasingly diversified international opportunity. In the near term, this will support production, intervention, and over short cycle activity. Longer term, this is providing a strong foundation for the progression of offshore developments, renewed exploration, and new areas of investment emerging across several markets. This is how this long cycle dynamics are evolving. Deepwater represents one of the industry's most advantaged source of new supply, combining attractive project economics, material resource development, and long duration production. We continue to see this opportunity broaden across Latin America, Africa, the Eastern Mediterranean, and Asia, with FIDs expected to increase more than 30% year-on-year in 2026, and many projects advancing from sanctions into execution. For SLB, this momentum is reflected into a continued flow of one subsea awards, further strengthening our backlog and increasing visibility into 2027 and beyond. One example is our recent award in Mozambique, where one subsea was selected to deliver subsea pollution systems for the first phase of ExxonMobil deepwater Rovima energy development. This project will contribute to an important new source of global gas

supply and further demonstrates the progression of large, long-cycle deepwater development into execution. In addition, fundamentals for exploration are improving as operators seek to replace reserves and diversify supply following several years of restrained investment. We see this materializing through new licensing activity in Brazil, the Eastern Mediterranean and West Africa. Growing interest in frontier basins such as Namibia and preparations for future campaigns across deepwater markets, including Vienna and Suriname. As exploration assumes a greater role in our customer portfolio, SLB's leading position across exploration data, subsurface modeling, and evaluation technologies positioned us to capture this growing opportunity. So far this year, SLB has participated in the evaluation of approximately 80% of completed high-impact exploration waste globally, many of which are concentrated in frontier and deepwater basins. Beyond deepwater and exploration, international markets are offering new pathways for growth, with opportunities broadening across conventional and unconventional resource in the Middle East, as well as key emerging markets. In this context, Venezuela represents a particularly significant growth driver for SLB. Following more than a decade of limited investment, activity in the country is accelerating, led by international oil companies. For SLB is already transitioning to revenue growth, a revenue in Venezuela is on track to more than double this year, with strong momentum among U.S. and European ENPs, supporting the potential for multi-fault growth in 2027. At the same time, major U.S. share operators are expanding internationally, entering new countries and partnering with NLCs. This trend further broadened the addressable market, particularly in exploration and deep water development across Africa, Latin America, and Asia.

As well as in conventional and unconventional resources in the Middle East. Looking across these dynamics, long cycle offshore development, renewed exploration, digital adoption, and U.S. operators expanding globally, all confirm a durable multi-year international investment cycle with clear visibility into 2027. With market leading position across our core divisions, we recently established leadership position in global production, differentiated digital Thank you very much. and an unmatched global footprint, SLB is uniquely positioned to capture this upside. Now, let me conclude with our expectations for the fourth quarter and our first view of the 2027 market outlook. Over the past several weeks, the Middle East has continued to experience heightened tensions. Given the ongoing uncertainty, our fourth quarter outlook assumes Middle East revenue remains flat sequentially at approximately $1.9 billion, representing about 83% of revenue generated in the fourth quarter of 2025. Based on this assumption, and supported by continued deployment momentum, as well as the typical year-end strength in digital and product sales, we expect overall fourth quarter revenue to reach approximately $10 billion, representing an increase of 5% to 7% sequentially. As a result, when excluding the Middle East, global fourth quarter revenue is expected to grow in the high single digits year on year. We also expect adjusted EBITDA margins to expand 100 to 150 BPS. At the division level, we anticipate combined revenue from the core division to sequentially increase by low single digits, led by high single digit growth in production systems and with well construction, however, performance essentially flat. In digital,

revenue is expected to increase in line with the fourth quarter historical trends led by significant undertaking typical year end digital exploration sets. This outlook provides clear evidence that the next phase of that cycle is underway. While our near term outlook remains dependent on geopolitical development, an eventual resolution of regional disruption in Middle East would unlock deferred activity and serve as a powerful catalyst for our selected role in 2020. Looking ahead to 2027, assuming Middle East activity remains at second half 2026 levels and that the conflict doesn't naturally escalate, we expect global OFAC market activity to grow in the mid single digits, the normalization of activity in the Middle East providing further upside. Against this backdrop, we expect our core divisions to visibly outperform the market, reflecting our differential exposure to the strong biggest area of activities, including long cycle offshore developments, renewed exploration activity, production and recovery investments, and the activation of Venezuela. Beyond the core, we expect digital continues to establish growth trajectory, while our data center solutions business will continue to accelerate as a meaningful growth engine for the company. I will now turn the call over to Stefan to discuss our financial results in more detail. Thank you, Olivier.

Yeah, and...

Good morning, ladies and gentlemen. Third quarter earnings per share, excluding charges and credit, was $0.64. This represents an increase of $0.09 sequentially and a decrease of $0.05 when compared to the third quarter of last year. During the quarter, we recorded $0.03 of merger and integration charges related to the ChampionEx transaction, as well as a $0.12 or $100 and $87 million non-cash pension settlement charge. This was the result of offering a lump sum payment to certain former employees in one of our pension plans. This transaction, which was funded directly by assets of the plan, allowed us to de-risk our largest pension plan by reducing both our pension obligations and plan assets by almost $900 million. This will help us to a slower potential volatility, as well as manage future pension costs. Importantly, the plan remains very well funded. Overall, our third quarter revenue of $9.45 billion increased 5% sequentially. This performance was driven by the Middle East, growth in North America land, and strong international deepwater activity, including upside in one subsea. In the Middle East, we experienced a gradual recovery as third quarter revenue of $1.9 billion increased 13% from the previous quarter. Sequentially, our pre-tax segment operating margin increased 104 basis points, with margin expansion across all four divisions. Company-wide adjusted EBITDA margin for the third quarter was 21.9%.

Representing a sequential increase of 71 basis points. Let me now go through the fourth quarter results for each division. Fourth quarter digital revenue of $693 million was essentially flat sequentially, as strong platforms and application sales and higher revenue from digital operations and professional services was offset by lower digital exploration. Revenue following a very strong second quarter. Digital pre-tax operating margin of 28% increased 27 basis points as improved profitability in digital operations and platforms and applications more than offset the effects of lower sales of exploration data licenses and transfer fees. We expect digital exploration revenue to increase significantly in the fourth quarter. Which will result in strong year-on-year growth for the digital division and adjusted EBITDA margin exceeding 35% for the full year. Reservoir performance revenue of 1.6 billion increased 5% sequentially. While pre-tax operating margin of 16.3% increased 140 basis points. These increases were primarily driven by the gradual recovery in the Middle East. While construction revenue of 2.9 billion increased 5% sequentially. Primarily driven by higher drilling activity in the Middle East. Pre-tax operating margin of 16.4% improved 122 basis points. Mostly due to the Middle East activity rebound. Production systems revenue of 4 billion increased 6% sequentially. Driven by the recovery of Middle East activity. Increased sales in North America and strong one subsea activity. One subsea also recorded a steady flow of new contract awards. Increasing backlog and further enhancing subsea revenue visibility into 2027. Production systems pre-tax operating margin of 16.1% increased.

60 basis points. With broad base growth in one subsea, artificial lift, completions, and production chemicals. Notably, the acquired ChampionX businesses delivered their highest quarterly revenue and margin since joining SLB. Finally, in the all-other category, revenue increased 8% sequentially. Driven by strong growth in data center solutions, while pre-tax operating income decreased slightly as a result of ramp-up costs associated with new data center projects. With regard to our previously announced agreement to acquire Kelvion, things are progressing quite well. A dedicated integration team has been put in place, but has kicked off its various work streams, and we are in the process of making all necessary filings in the relevant jurisdictions. We are very excited about the opportunities that this transaction will bring, and we remain on track for closing in the first half of 2027. Now turning to our liquidity. We ended the quarter with net debt of 9.2 billion, the same level as the first quarter of last year. We generated one. 1.5 billion of cash flow from operations and 828 million of free cash flow. Looking ahead, consistent with our historical pattern, we expect a meaningful step up in free cash flow in the fourth quarter, supported by lower inventory following year-end product sales and higher customer collections. The magnitude of the sequential increase in free cash flow

will largely depend on the timing of collections in certain countries. Capital investments, inclusive of capex and investments in APS projects and exploration data, were 682 million in the third quarter. For the full year, we still expect capital investments to be approximately 2.5 billion. During the quarter, we repurchased 656 million of our stock. And are on track to repurchase approximately 2.4 billion for the full year. In line with 2025 levels. This will bring our total returns to shareholders for 2026, slightly above 4 billion. In line with the commitment we made earlier this year. I will now turn the call back to Olivier. Thank you, Stéphane. I believe, Sarah, that you are ready for taking questions.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by the number one on your telephone keypad.

Your first question comes from the line of James West with Melius Research. Your line is open.

and then, of course, one of your senior people as well. Capital is definitely flowing there. For the first time in maybe a decade, they were happy about capital. Where are you seeing the most exciting exploration at this point? I think we see several. What is very good in this exploration circle, I think, is a mix of infrastructure-led exploration in very well-known natural basins that still have pockets of oil or gas. and to be connected to, and with opportunity for sizeable development in those, and I think that relates to the West Africa metro basin, as well as the North Sea on both sides of the sector, and then, obviously, Gulf of America. Now, there is a lot of frontier basins and a lot of area that are expanding, and I think this is partly true in Americas. Brazil, I think the Pelotas Basin is attracting a lot of attention, as well as the... The Atlantic Margin or the Margin on the North, I think, which is along with continued investment into Suriname and Guyana, I think clearly a spotlight for this. The same as in Namidia, in further, the Namib Basin in Angola, as a part of Africa and East Med, and then I could keep going east to East India, Indonesia, that has attracted a lot of investment due to gas reserves and potential there. And through large discovery has been made and after entering a subsidy development going forward. So it all combined, it's an exciting cycle for exploration. I think the combination of energy security heightened priority, as well as depleting reserves and the pressure of declining production, adding and fueling this investment in exploration.

Great. Thanks, Olivier. Thank you, James. Your next question comes from Scott Gruber with Citigroup. Your line is open.

is materializing costs and that is very well illustrated into the growth that we are enjoying and that will be the base for the 2027 outlook. So we believe that we are set, the market is set for mid single digits global activity growth, assuming Middle East being flat on the 2026. But this means that we will visibly upperform this and the Middle East category will become a catalyst on the peace deal going forward. I appreciate that. And I wanted to turn to Venezuela. The opportunity here certainly appears to be materializing more quickly than many anticipated initially. Can you provide some more color on what you're seeing in the market? And you mentioned that Venezuela could double this year with multiple growth in 27. How large could Venezuela become for us? Will it still be in two to three years time? I know you guys said, you know, billion dollars back at peak. I'm curious, kind of in a ballpark where you think the market could grow to here in the next two to three years. No, we remain very excited about Venezuela. Every time we look into it, I think we are realizing that the activity is set to increase further. And I think we are getting several catalysts for this. We are getting first and foremost in lockstep with our customer that we have been working on with for the last two years. We are seeing activity increase currently and in the near future. And they have made an announcement for further increment of capex into the region. So we will be fully participating to this upside. But additionally, several of our international operators have committed, have come to agreement in the country. And we have benefited from this and by signing contracts. And we have already started with another large contract execution this quarter. So we expect this to only continue going forward.

So how big it can become, I think we have mentioned that the potential is for multiple fold next year. And I think we see this trajectory to certainly continue going forward. And I think we have mentioned before the historical level of $1 billion or both in the long term. So we don't see why not this as a ceiling or there is no ceiling. Why not as a target, as an ambition going forward. So we are well prepared. We are adding resources. We are getting the trust because we have a unique capacity on the ground and ability to deliver. Well, great. I appreciate the color. Thank you. Thank you.

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

Good morning, Saab. Olivier, maybe I want to dig in on the Middle East topic a little bit. more because we saw you delivered a strong 13% increase in the Middle East revenue, and that was despite some late quarter disruptions, right? So that kind of tells me you were running ahead of expectations perhaps before the disruptions hit. Can you maybe share some more color on the disruptions and if these disruptions are continuing right now? And then what was driving this, I guess, stronger than maybe anticipated recovery before these disruptions hit? I know you talked about winning some contracts. including those integrated dwelling contracts. Maybe some color on all of that. Yeah. First, I think indeed several countries did participate to the brief of activity in the third quarter as the security situation started to ease off in several countries. And I think this included the UAE, Kuwait, to a lesser extent Qatar, and to a lesser extent Saudi, that at the beginning of the quarter clearly had an increase of activity. And this was concluded on the, on some. Intervention activity, stimulation, and drilling activity across the region. Iraq, by contrast, was not necessarily getting the same uplift of activity, but Oman was steady. And that's the situation that turned out to be slightly ahead of expectation indeed at the run rate, as we were at mid-quarter. Now at the end of the quarter, some adjustment of activity were done. And I think this has been fairly publicized, and I want to come back on this.

We see things stabilizing, though. And our expectation is that the fourth quarter will be at current level of disruption, I would say. And without further escalation of conflict going into a worst-case scenario, we are seeing that the fourth quarter will be in line with the third quarter, and that's our assumption. And this is the hypothesis we have made on our guidance for 2027 market outlook as well. So that's, in a sense, where we start. Now we're relating to, in relation with the integrated contract, we're very pleased with this award that touched both gas and oil assets. And this is an activity that is definitively going forward and for which we are mobilizing in the fourth quarter and will come to full capacity in 2027 going forward. And I think that's untouched and certainly a committed contract for which we are dedicating resource and getting in the fourth quarter and will come to full capacity in the fourth quarter and will come to full capacity and increase activity going forward. Got it. No, thank you. That's a very useful color, Olivia. And then for my follow-up, maybe I'll stick to the Middle East and focus on the margin side of things a little bit. I know there are lots of cross currents, lots of uncertainty, but just given everything that we have heard about disruptions and cost inflation and then some pricing pressure on larger tenders, how should we think about where margins can go in maybe 27, but I'm just thinking more broadly.

If revenue is normalized in the Middle East to, let's say, the pre-conflict level, can margins normalize to that level immediately or would it take more time because of everything that's going on on the pricing and cost of things?

Saurabh, Stéphane here. Yes, I mean, you are using the Middle East as a swing factor to margins and it's clearly a significant negative effect this year if you look at the year on year performance. As we have indicated earlier, we have actually decided intentionally to address only partially the resources in the Middle East, not to hamper our capacity to address the activity rebound. So we are keeping some resources in place. When the conflict is resolved and activity rebounds, as a result, we'll have very strong operating leverage, very few additional costs to that. So that will increase margin. Now, the overall level of margins of the company, it's not just the Middle East. That will be a booster. We will have likely less inflation effects going into 27 because this is already kind of baked in, if you want. We also hope that pricing pressure we have experienced in some of our core divisions will also abate and are also baked into the current margins. But then you have all the... of the divisions. You know, digital is a booster, obviously, on margins. Data center on its own, as it grows very fast, is, as you know, not accretive to the overall SLB margin. So it's a big equation, which we are not going to give you the answer today. We will provide more color on our 27 margins in January. But overall, yes, the Middle East will be a catalyst for margin expansion for sure. Right. No, thanks just to find out.

And that equation in on us to solve in the meantime. But thank you. Thanks for all the moving pieces. Olivia, thank you. I'll turn it back. Thank you. Your next question comes from Arun Jayaram with JP Morgan. Your line is open. Yeah, good morning. Olivia, I was wondering if you could comment on some of the trends you're seeing at Champion X on a year over year basis. You know, obviously.

Our customers and all the feedback we're receiving from customers, both in North America and abroad, is that they like the combination, they like the power of production recovery, they like the potential of unlocking further recovery and production performance through both production chemicals and lift technology, including digital. So, very, very, very pleased with the performance so far. And as to the margins level, Arun, yes, you are right. We are. Champion X touched now the mid-20s. Which is clearly accretive to the whole company. And this is despite inflation pressures, particularly on chemicals. So, the synergies, including in G&A, have been higher than we expected and have mostly offset those inflationary pressure to the point where margin continues to expand quarter after quarter. So, clearly, we are going to achieve our interim synergy target of about 200 million after 80. month post-acquisition, which is basically the end of this year, and we are not going to stop there, and we are quite happy with the margins the businesses are generating. Okay. And then my follow-up, I was wondering if you could just elaborate on 1Sub C visibility as we think about 2027. Obviously, you announced the Exxon Robuma LNG award in Mozambique. But are you seeing 2027 as a year where there's going to be a lot of greenfield activity in terms of larger awards? And maybe just speak to the visibility you're seeing as we extend into this deepwater cycle.

No, thank you, Arun. I think I will not restrict this to 2027. 1Sub C awards typically are multiple, multi-year revenue generation. So, I mean, whatever is... in bookings in 2025 and 2026 reach out to 2027 to 2029 typically. So I think directionally, I think the success we have had in recent months and the booking projection that we are anticipating, I think we believe that we will surpass the 9 billion target booking that we have set across the two years. I believe this will translate into visible growth on revenue in 2027. and 2028 and beyond, and as we believe that the technology portfolio we have, the deliverability of our capacity to the market, the multiple allowance we have created with joint feed study with customers to secure FID and to participate the best economics and best recovery solution for the customer, all combining to make it very attractive, including the processing, subsea processing technology. We are uniquely positioned to unlock recovery solution for major basins. So all in, we are quite confident into the outlook for subsea that is aligned with the deep water cycle that has started. And we believe that we will benefit from it. And one subsea will be a growth driver for the company going forward. Great. Thank you. Thank you, Aaron.

Your next question comes from Sebastian Erskine with Rothschild & Co. Redburn. Your line is open.

Good morning. Congratulations on a strong North America quarter, obviously 7% sequential growth. Maybe you can talk about some of the building blocks of that performance, how much of it came from that production-linked revenues, obviously the Champion X side and artificial lift, rather than sort of activity-linked work. And what are your expectations for North America? Next year, outside of data center solutions, so in the core business. No, we are indeed very pleased with the North America sequential growth. I think beat sequentially on year on year. I think we believe we have been ahead of the market, and we believe that the factor that supports this is a combination of our market position in North American lands, not only Champion X and a production recovery portfolio we have there, a combination of production chemicals. and Absolift solution, but also our building technology and our digital portfolio that includes now the S&P Energy, I think all factors that will continue to support our performance in North American lands, including Canada and U.S., and conversely, North America offshore and some of the activity we have in Alaska or in North America offshore in the Gulf of America will continue to also support North America growth, and with performance, with digital exploration, and compacts across trading and reserve performance that will continue to give us growth. And finally, as you know, a data center solution will serve as a new leg of growth in North America, growing at a rate that you have seen, very impressive.

And we are well on track for surpassing $1 billion by the end of this year's run rate. And we are still on track and very well on track to surpass $2 billion in exit rate for 2027. So you combine all of this, differentiated the portfolio and technology in North America lands, continued differentiation in North America offshore, including Alaska and digital, and then an optic and a new growth vector of growth with data sensor solution, and you get enough. North America market that is poised to future growth, despite the market condition that will qualify it as a low growth environment going forward. I appreciate the color, Olivier. And just turning to data center solutions, I noticed in the release you've expanded into Asia this quarter. I'm curious, how large could the opportunity outside the U.S. become for your business? And also, how is the customer base kind of broadening beyond your initial hyperscalar contacts? I think we have potential to grow and replicate the setup we have put in America internationally. Now it's early days. And I think we are leveraging the hyperscalar contract we have and delivering for end use, we say, for data center construction or data center development into Asia at this point. And then replicating, to some extent, some of the capability we have developed. Manufacturing hub in Louisiana and expanding it with some satellite capability of manufacturing integration that we have deported into Asia and then delivering our end customer into Asia market. So this, we believe, will continue to happen. But I think the potential we see, as you have heard from the meta contract in Canada, and as we develop further hyperscalar contract in North America, will still be centered in the short term with North America growth.

And we can. to diversify our customer base. And I think we'll be in a position next year to more develop and deploy and inform you about this. But this is certainly a multiple customer contract that are being deployed and being logged in our backlog. And that will give us the support to growth. And additionally, obviously, the acquisition announcement we've made on Kelvion will only add the app. And the feedback we are getting from our existing and prospective customers in this domain is that a lot of the combination of our manufacturing engineering technology capability and the Kelvion technology portfolio that supports thermal management and heat management in the data center space. That is an equation that is difficult to resolve, where a lot of efficiency, a lot of upside exists, hence a pool of technology, the pool of integration. in which we will play as a partner for this infrastructure build-out. Thank you very much Olivier. I'll turn the call back over now. Thank you.

Your next question comes from Alexa Brino with Goldman Sachs. Your line is open.

Thank you. I really appreciate that, Kalar. And then maybe just a follow-up. Can you talk a little about the digital offering? and some of the opportunities set there from a customer perspective? Yeah, I think we are very pleased with the progress we are making in digital. I think as we commented earlier, I think digital operation, particularly, and data and AI are the two vectors of growth that I think we are the most excited about. Additionally, I think digital exploration is about to benefit from a secular trend. So I think these are the three vectors of growth that we see that will certainly support our growth ambition for the next few years. Digital operation, as we commented before, relates to both drilling and production operation. It's a combination of platform application and edge application that allow us to provide automated solutions for our customers. We have been commenting on the success we are getting into drilling automation and drilling optimization. The same thing applies to production optimization. So digital operation clearly will continue to be a factor of growth going forward. Now, adding to it, digital exploration, as we have seen, is benefiting from a circular trend or new upcycle in exploration. And every new frontier basin is getting the benefit of digital exploration to de-risk the development, to de-risk the exploration campaign. And I think we are seeing increasing interest.

For my customers to invest into data, to invest into reprocessing, and to invest into digital AI capability to improve the imaging and improve the capability that we can provide to de-risk this exploration and accelerate the success. And finally, data and AI as a new vector of growth, as a new disruptor for the industry, we believe with our offering, with our Lumi offering, with our AI Tela offering, we are seeing early adoption. I think it indicates that this has a potential to disrupt and become a new vector of growth for digital in our company. Thank you very much for the call. We'll turn it back. Thank you very much, Alexa.

Your next question comes from Mark Bianchi with TD Cowan. Your line is open.

portfolio, I think, should combine to the exploration data, the digital operation, and the data and AI, should combine to provide us with the leg of growth that we look for, the budget again in 2027 and beyond. Very good. Thank you, Olivier. The other question was on the data center business. And, you know, with Kelvion, you increase your content opportunity. I'm curious what your appetite is for further M&A to continue to increase the content opportunity, or is it more likely what we'll see here is you increase that on an organic basis? We are very pleased what we have managed to get as an acquisition. And I think we'll be concentrated on closing this. We'll concentrate on fulfilling, I think, the ambition and the strategic opportunity that we have unlocked with this. I think this indeed will give us an opportunity to increase our share of the wallet per gigawatt. And I think we have significant backlog with a large number of, an increasing number of customers, including hyperscalers, that will give us a point to put it to work and to participate into optimizing the thermal efficiency and hence to increase the share of the wallet, to increase our participation to this market, and to provide not only fit modular manufactured solutions, but also integrate more and more into the engineered thermal and manufactured solution for the market. So I think this is where we will focus in the foreseeable future, and then depending on how the market develops, we will see what could come next, but this is where we are putting our focus going forward.

Yep. Very good. Thank you. I'll turn it back.

Thank you. Your last question will come from Derek Podheiser with Piper Sandler. Your line is open.

And this one will be laid by the combination of the portfolio that you mentioned, Champanex, obviously, the completion, the one subsidy, I think clearly a portfolio that will benefit. going forward from the deep water, from the short and long cycle activity outlook that we believe we will participate fully and outperform going forward. So I think production system is resilient, short cycle and long cycle, and has a durable backlog, characterized particularly around subsea, that will give us legs of growth going forward in 2027 and beyond. Great, that's helpful. And then just to wrap up, again, addressing the 2027 outlook, I know it assumes the Middle East stays flat from the second half of 26, you're calling for market growth in the up mid single digit range, I guess help us walk through or frame the magnitude of the upside in this market here, if we do see a Middle East recovery, I don't know if you want to talk through on a country by country level, but just help us understand where that mid single digit can, can really ultimately go to, if we do see some form of resolution and recovery. I think first, I think to, to clarify, I think we have been commenting on the, on the market outlook that we see at this point, and based on our early engagement of customers, also based on and reflecting on some third party analysis on the 2027 outlook, that the combination of North America and international, including and assuming a flat Middle East activity is set to be in the mid single digit growth year on year. We believe that we are set to visibly outperform this.

Obviously, the Middle East resolution will only give a catalyst for additional growth into this. Now, I will come sure of giving you exact guidance on this. Okay. I think it will be internationally led up cycle going forward. But you have seen the commentary that I provided earlier that we are very pleased about market position and performance in North America. So again, we have multiple legs of growth ahead of us in this cycle. You should only consider the Middle East depending on the resolution of the conflict has the potential to come back, if not to exceed previous activity pre-conflict, as some of the countries in the region will not only have to mobilize activity to restore the pollution capacity, but will also continue to accelerate on their capacity commitments, be it on commercial gas, gas, or oil in the region. So going forward, I think this is only serving as a catalyst going forward, but again, 2027 at this point will witness international growth despite Middle East, and this being only a catalyst going forward on top of it. Great. Very encouraging. Thank you, Olivier. I'll turn it back. Thank you. 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 reflection.

First, our third quarter performance demonstrates that momentum is broadening across SLB. Each geography and core division grew sequentially, with a gradual recovery in the Middle East, complemented by solid growth in North America and continued strength across the international offshore markets. Second, our core portfolio is benefiting from increasing activity across development and production. The strength and resilience of our expanded production portfolio, together with growth in well-construction and reserve performance, position us to participate as customer-optimized existing assets and develop future activity. And third, the international outlook continues to strengthen. Long-cycle offshore projects are progressing, the foundations for renewed exploration are taking shape, and new opportunities are emerging across several markets. Combined with the continued progress in digital and accelerating momentum in data center solutions, our reach will be further expanded through the acquisition of helium. We are well positioned to capture attractive growth opportunities across both energy and industrial markets. These dynamics reinforce our confidence in delivering differential growth and outperformance as we move into 2027. With this, I will conclude today's call. Thank you all for joining. This concludes today's conference call. Thank you for joining. You may now disconnect.