Ladies and gentlemen, thank you for standing by. Welcome to the Schlumberger Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. Should you require assistance, please press star, then zero, and we will assist you offline. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations, Ndubuisi Maduemezia. Please go ahead. Thank you, Leah. Good morning, and welcome to the Schlumberger Limited First Quarter 2021 Earnings Conference Call. Today's call is being hosted from Houston, following the Schlumberger Limited board meeting held earlier this week. Joining us on the call are Olivier Le Peuch, Chief Executive Officer, and Stéphane 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. I therefore refer you to our latest 10-K filing and our other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures can be found in our first quarter press release, which is on our website. With that, I will turn the call over to Olivier. Thank you, Nd. Good morning, ladies and gentlemen. Thank you for joining us on the call. In my prepared remarks today, I will cover three topics. Our first quarter results, our progress on our performance strategy, and finally, our outlook for the second quarter and second half of the year. Stéphane will then give more detail on our financial results, and we will open the floor for questions. The first quarter of 2021 was a strong step forward. The quarter unfolded as we anticipated, with acceleration in North America activity and momentum continuing to build in the international markets, aside from the usual seasonal effects. We executed very well within that context. We expanded our global operating margins for the third consecutive quarter, and free cash flow was once again solidly positive. Here are some highlights in support of this performance. Well Construction sustained growth sequentially. In North America, outpaced U.S. land rig counts, demonstrating enhanced market participation in the recovery. Reservoir Performance grew when adjusted for the OneStim divestiture. Digital and Integration delivered another strong quarter, with resilient margins on track for our full-year target. In North America, execution of our returns-focused strategy drove strong margin expansion, fully aligned with our double-digit margin target. In international markets, despite severe seasonality and relative exposure in Russia and China, we continued to grow across geographies. In this environment, as the industry prepares for an upcycle, performance matters, and decisions on contract awards and capacity allocation are increasingly driven by technology and execution. We are very pleased with the outcome of several international multiyear contract awards, specifically in Middle East and in offshore, building a pipeline that will support growth in 2022 and beyond. We are determined to drive performance differentiation, leveraging our fit-for-basin technology and digital capabilities. This combination benefited our integration performance, with our largest LSTK operations achieving a 6% improvement in drilling efficiency during the quarter. This strong start of the year, characterized by resilient revenue, sequential margin expansion, and positive free cash flow, position us very well to meet our full-year financial ambitions and to deleverage our balance sheet. I want to congratulate the entire Schlumberger team, who delivered strong execution for our customers, having positioned us for the growth that is now underway. Next, I would like to comment on three elements of our performance strategy that present further opportunity for growth in this upcoming cycle and beyond. Digital, sustainability, and Schlumberger New Energy. Starting with Digital. 18 months ago, we stated our ambition to lead the digital transformation in our industry and to significantly grow new digital revenue streams. I want today to update you with our progress. Our digital strategy is a platform strategy, leveraging unique and open platforms, DELFI, OSDU, and Agora. Since launching our core DELFI platform, we have significantly expanded its market reach, from Google Cloud to Microsoft Azure, and more recently, using IBM Red Hat technology to enable hybrid cloud and offer fit-for-basin cloud solution, as highlighted this morning in our collaboration with Yandex. We'll continue to execute on this platform journey to expand the choice for our customers and to support our three digital business streams, workflow, data, and operations. First, we offer our customers the opportunity to transition their technical workflows from the desktop to the cloud to realize productivity gains from DELFI workflow integration, collaboration, and access to scalable cloud computing. Our market leadership on the desktop position us very well to capture this market. In the last 18 months, our customers have increasingly transitioned to the cloud, resulting in 50% growth of our contract backlog and a tenfold increase in full-time DELFI users. As we expand our cloud-native application and enable additional workflow within DELFI, we expect increased adoption across our customer base, resulting in steady growth of our digital workflow revenue. Second, recognizing that data is the key to unlock the industry digital transformation, we work with the industry OSDU forum to open source and contribute the underlying DELFI data ecosystem, helping to establish OSDU as the industry standard. An essential step to deliver a data scale for AI applications and to enable multi-vendor interoperable workflows. In this context, we recently partnered with Microsoft to offer Azure customer access to our OSDU enterprise data management solution. We augment this offering with additional AI capabilities and will also expand our geographical reach. The market potential for this data business stream is very significant, as it underpins every customer digital transformation, as exemplified by our recent announcement with Equinor. Third, our customer operations represent a unique opportunity to realize the promise of asset and field digital solution. We designed an open IoT platform, Agora, to enable edge applications, complementing our DELFI platform operational workflows and integrating with our partner, Sensia. Using Agora and DELFI, we are deploying digital operation solutions for drilling and production, both with our customers and as part of our integrated projects. This digital offering can significantly impact our own operations, as was demonstrated this quarter in the Equinor project and in our main LSTK operations, and also greatly benefit our customers. Our ambition is to establish critical market share in this wide space and accelerate collaboration with industry partners to further its adoption. These three digital business stream, workflow, data, and operation, built on open platform, are supporting our digital growth ambition. We are very pleased with the progress on our platform foundation, with the adoption by a broad set of customers, and are confident in the success of each business stream as we execute our roadmaps. Moving now to sustainability. We are strengthening our commitment to action, particularly as the industry face a decarbonization mandate and world leaders have reaffirmed commitments or advanced stronger goals in recent days. As it relates to climate action, this goes beyond reducing our own greenhouse gas emissions. We believe there is a significant opportunity for our technology and operating practice to decisively impact and accelerate the industry's decarbonization effort, as well as contribute towards emission reduction goals around the world. Our technology portfolio includes solutions that help our customer eliminate flaring, reduce fugitive methane emissions, and leverage automation and digital surveillance to reduce environmental impact. This technology focus on low carbon impact will be an increasing element of differentiation for Schlumberger in the future. An example that resonates with our customer is the complete electrification of offshore production systems. Outlined in our earnings release with the BP project for subsea electrification. This is the next offshore frontier, and it will also pave the way to full digital enablement. Beyond our industry, our CCS partnership with LafargeHolcim and the bioenergy CCS project in Mendota, California, are examples of cross-sectors initiative aligned with climate actions. Specifically, in Schlumberger New Energy, we reached milestones in the sector where we are participating across the energy transition. Hydrogen, lithium, CCS, geothermal, and geoenergy. During the quarter, we established and accelerated new ventures, formed strategic partnerships, and gained market exposure, and are progressing in de-risking technology for upscale. We'll continue to build out the new energy portfolio throughout the year, and we will keep you updated on our progress. We are extremely proud of the tangible results we have realized in only a short time, as it clearly outlines the power of the Schlumberger brand and the potential of this new chapter for the future of the company. Turning to the outlook. Upward revision in global economic forecast, growth forecast by the IMF, and positive demand forecast adjustment by both IEA and OPEC reinforce the transition into a demand-led recovery, which will strengthen through the second half of 2021, absent new setbacks in vaccination rollouts or easing of lockdown. Against this backdrop, we are increasingly confident in our full-year activity outlook. In North America, in the second quarter, we see sustained activity growth in U.S. lands and a seasonal rebound of North America offshore being partially offset by the Canada breakup. As our first quarter results have shown, particularly in Well Construction, our new mix and sizable exposure in the North America market will increasingly contribute to our results. Moving to international markets, activity growth will broaden in the second quarter with the seasonal recovery in Russia and China, augmenting continuing growth in Africa and the Middle East, while Latin America should remain resilient. In addition, the offshore recovery will continue in the second quarter, including the gradual return of exploration and appraisal in key international markets. The depth and diversity of our international franchise give us great exposure to this market expansion, especially in Well Construction and Reservoir Performance, which will lead in the second quarter. More broadly, we anticipate all divisions to grow sequentially at different pace, and margin expansion to be led again by Reservoir Performance and Well Construction. In light of this, directionally, we expect total second quarter revenue to grow in mid-single digits Looking further into the second half of 2021, in North America, the pace of growth is expected to moderate on budget exhaustion and seasonal effect, but could surprise to the upside, resulting in full-year growth when excluding the impact of divestiture. In the international markets, our confidence in the second half outlook has been strengthening based on the latest international rig count trends, CapEx signal, and customer engagements. International activity will broaden and accelerate in the second half, impacting short to long cycle, both on land and offshore, including deployed activity in the most advantage offshore basins. The magnitude of these leading indicators, combined with upward revisions to global economic growth and demand recovery, present the potential for an even stronger inflection than initially anticipated for the second half of the year. We have greater confidence in the previous guidance of a double-digit increase in international revenue in the second half when compared to the same period last year. Absent of a setback in the post-pandemic recovery, we foresee an upside for full-year growth internationally, resulting in a stronger footing as we enter 2022. In the context of this top-line growth and the steps we took to reset the earnings power, we are confident that we will fully realize our operating leverage to deliver our full-year ambition of 250 - 300 basis points margin expansion year-over-year. We expect to continue expanding margins during the recovery to support increasing cash flow throughout the year, which will provide subsequent leveraging opportunity. I would like to pass the call to Stéphane. Thank you, Olivier, and good morning, ladies and gentlemen. First quarter earnings per share was $0.21. There were no charges or credits recorded during the first quarter of 2021. Excluding the charges and credits recorded in the previous periods, this represents a decrease of $0.01 sequentially and $0.04 when compared to the first quarter of last year. Overall, our first quarter revenue of $5.2 billion decreased approximately 6% sequentially. If we adjust for the OneStim and Artificial Lift low flow divestitures, which were completed during the fourth quarter of last year, revenue was essentially flat sequentially, despite the first quarter seasonality. Excluding the impact of divestitures, North America revenue increased 10% sequentially, reflecting a significant activity on land, partially offset by lower product sales offshore. International revenue declined only 3% sequentially, despite the effects of the extended winter period we experienced in Russia and the usual seasonality in the Far East. Pre-tax operating margins were 12.7% and have now increased for three quarters in a row. In addition, pre-tax operating margins were 230 basis points higher compared to the same quarter of last year. This represents the highest margin since the third quarter of 2019. This strong margin performance reflects the significant operating leverage we have created through the combination of the high grading of our portfolio and our cost out program, which is now essentially complete. Company-wide adjusted EBITDA margins of 20.1% for the first quarter were flat sequentially as the positive impact of the OneStim divestiture was offset by the seasonal effects we typically experience in the first quarter. EBITDA margins were 203 basis points higher compared to the same quarter of last year. Let me now go through the first quarter results for each division. First quarter Digital & Integration revenue of $773 million decreased 7% sequentially, driven by seasonally lower sales of digital solutions and multi-client licenses. Margins only decreased by 37 basis points to 32% as the effects of the digital solutions and multi-client revenue declines were largely offset by improved profitability from APS projects. Reservoir Performance revenue of $1 billion decreased 20% sequentially. Excluding the impact of the divested OneStim business, revenue increased 3%, despite seasonally lower revenue in Russia and China. The revenue growth was driven primarily by higher activity in Latin America and the Middle East. Margins increased 260 basis points to 10.2%, largely due to the divestiture of the OneStim business that was dilutive to the division's fourth quarter margins. Well Construction revenue of $1.9 billion increased 4% sequentially. Margins increased 103 basis points to 10.8% due to increased activity in North America land and Latin America. This growth was partially offset by the seasonal slowdown in drilling activity in Russia and China. Production Systems revenue of $1.6 billion decreased 4% sequentially. International revenue declined 4%, while North America was down 3%. Despite the revenue decline, margins only decreased 71 basis points to 8.7% as a result of cost measures, as well as improved profitability in midstream production systems due to higher activity. Turning to our liquidity. During the quarter, we generated $429 million of cash flow from operations and positive free cash flow of $159 million, despite severance payments of $112 million, and the increase in working capital requirements we always experience in the first quarter due to the annual payout of employee incentives. Our cash flow will improve throughout the rest of the year, consistent with our historical quarterly trends. Our net debt at the end of the first quarter was $13.7 billion, a decrease of $207 million when compared to the end of the previous quarter. During the quarter, we made capital investments of $270 million. This amount includes CapEx, investment in APS projects, and multi-client. For the full-year of 2021, we are still expecting to spend between $1.5 billion-$1.7 billion on capital investments. On that note, let me take the opportunity to provide you with a quick update on our capital stewardship program. Optimizing the allocation of our capital investments will be critical to maximize the benefits of the ongoing activity recovery, which is poised to accelerate in the next few quarters. As part of the company's reorganization, we implemented a new capital allocation framework that governs all types of investments. The underlying principle behind the framework is that investment opportunities are prioritized based on returns and cash flow before any other metric. At the corporate level, this framework allows us to critically assess our technology portfolio and rationalize our offering to reduce capital intensity and maximize returns. At the division level, we have strengthened our processes to ensure that new assets, as well as existing assets, are deployed where they will generate the highest returns. We are also leveraging this capital discipline to drive commercial behaviors and improve the quality of our revenue. With this in place, we remain confident in our ability to achieve double-digit cash flow margin, free cash flow margin for the full-year of 2021 and beyond. This will allow us to de-leverage the balance sheet, which remains a top priority for us. It is worth noting that during the quarter, the two major credit rating agencies confirmed our long-term credit ratings of A2 and A respectively, and both cited our expected strong cash flow profile and our commitment to de-leveraging. I will now turn the conference call back to Olivier. Thank you, Stéphane. I believe that we are ready to open the floor for the Q&A session. Thank you. Ladies and gentlemen, if you would like to ask a question, please press one then zero on your telephone keypad. You will hear acknowledgement that your line has been placed in queue. You may remove yourself from the queue by pressing one, zero again on your telephone keypad. One moment, please. Our first question is from James West with Evercore ISI. Please go ahead. Hey, good morning, Olivier and Stéphane. Morning, James. Olivier, great to hear your increased conviction about international top-line growth in the second half of this year. I'd love to hear or understand how you're thinking about the slope or shape of that recovery, and then really as it relates more so to 2022 and 2023, which I think will be very important years. No, thank you, James. I think first, I believe it's clear that we are about to enter a demand-led recovery. I think the macro factor, both economic growth and what we are seeing, indicates that the oil demand recovery will reach 2019 level by or before the end of 2022. In this context, I believe that we are really during the second half of this year, facing the beginning of demand-led recovery that will trigger a multi-year recovery cycle and industry upcycle. In this context, if you look at the recent period of underinvestment, look at the structural constraints in North America due to capital discipline, I believe that this will create the condition to create a significant pull on international supply. This will support international supply activity buildup, not only at the end of this year, but well into 2022 and 2023. In addition to this, I believe that the offshore, being a unique market, a privileged market for IOCs, some NOCs, and focused independents, will also see a gradual but very strong recovery over the long-term. It is the offshore advantage basins represent extremely good oil production plateau for some basins at low carbon footprint. Right. This will support also the long-term international recovery. We believe, really, that we are very well positioned to outperform this macro, because we believe that this macro outlook that would include a growing international mix, including offshore, will play very well to our strengths. In addition, we have accelerated our strategy transformation, both the organizational transformation and key strategic elements that will place very well from efficiency performance focus from our capital stewardship, our fit-for-basin, that is resonating very well for customer, and finally, for our Digital and Decarbonization strategic focus we are putting. I believe that we are seeing the beginning of this multi-year growth. We are also seeing that our performance strategy is resonating very well for customer, and we have been awarded several multi-year contract that are creating the backlog we need to support this growth going forward. Yes, I'm optimistic not only on the second half of this year, but on an accelerated path in 2022 and the long cycle strength, including offshore in 2022, 2023, and beyond. No doubt. That's very clear, Olivier. Thanks for that. The second follow-up for me is on the margins. You've had good margin progression the last three quarters. How do you think about sustainable margin progression, and expansion as the recovery takes hold? I think going forward, as we enter this industry up cycle, I believe there are three elements that will favorably impact our margin expansion. First, as I described, is the very favorable macro outlook that combine the pace of international growth, the offshore element, and also as we are starting to see this quarter, the return of exploration and appraisal activity that is still needed to replenish the reserve, and also that is becoming more near field exploration close to the offshore hubs in particular. These factors are very favorable. Secondly, I believe that we have created quality revenue initiative as part of our initiative. First, fit-for-basin. fit-for-basin technology is creating the premium that differentiate us in some critical basin, in some critical asset, and give us the premium for revenue quality improvement. Similarly, I think our technology access, as we have seen in North America, has played a great role in helping us to expand market, but also to command premium with our technology partner. Finally, the success of digital will be accretive over the period to this. The third element, I think, beyond this strategy, I think is the step change we expect to materialize into our integration contracts. From a performance efficiency using digital, as we have demonstrated already, using fit technology and using practice that are becoming best in class. Believe that these three elements, the backdrop, the key element of our strategy for revenue quality and the enhanced margin on our integrated contract will all combine to create a condition for further margin expansion and acceleration of our margin expansion going forward. Excellent. Thanks, Olivier. Our next question is from David Anderson with Barclays Capital. Please go ahead. Hi, good morning, Olivier. Morning, David. on the discussion around the Middle East. You talked about robust growth in Saudi and Qatar this quarter. Really seems to be kind of the first tangible signs of international inflection. I was just wondering if you could talk a little bit about that performance during the quarter and whether or not those were new contracts starting up or existing contracts coming back on. More importantly, I was wondering if you could just talk about the types of tenders that are being discussed in the Middle East, and do you see projects that would be expanding capacity in the region? Also, do you think this will be more project management work? I think you had talked about LSTK kind of doing a little bit better this quarter. Do you think that's going to be a bigger part of the mix going forward? To comment on our growth in Middle East, we have sequential growth in Middle East during the quarter, this was led by Saudi and Qatar to a large extent. This was due to two factor. Qatar, is our market position combined with the activity growth have resulted into activity. In Saudi, it's more related to performance and activity share award that resulted from our performance in execution in the quarter. We see this factor of strong market position we have of performance differentiation to help us go forward. That's to maybe support and substantiate what we see going forward. In addition to this, as you have seen from last quarter to this quarter, we did announce some critical awards that are securing or expanding this market position in Middle East. There is a lot of LSTK and some of our peers have talked about large and very large contract tenders on the way, so I cannot and will not comment on this as this tender on the way. What can I say is that the activity is rebounding. The activity outlook, both land and offshore in Middle East is and will be strengthening. Our customer are indeed securing capacity and looking for best performer and looking for, in a sense, the condition that will make them successful in their ambition to augment their capacity and augment their production going forward. It will be performance that will matter most in the future for Middle East, in my opinion. Makes sense. My other question is on the digital side. You made a lot of progress over the last year establishing your footprint with the platform, with DELFI, across a lot of IOCs and NOCs. I believe Chevron's actually even implementing across the Permian. It feels like you're kind of where you want to be in terms of your footprint. It was interesting to hear you talk about the three elements of the workflow data and operations. I'm just wondering if you could just maybe expand a bit on how you see the pace of growth in each of those, and what is that dependent upon? Partly, I'm wondering, is it customers just getting more comfortable in using digital in day-to-day operations, but do you also need to build out new software applications or maybe it's just something else? First, I think it's clear that we need to recognize an industry as it has gone out of this crisis and turn into a new landscape, has realized that digital is a tenet of the future, and digital is here to impact efficiency, performance, and to make this industry more resilient for the long-term. First, there has been a catalyst in the last 18 months that accelerated adoption of digital. That's the first. We believe that our platform strategy is being recognized, accepted, and across different customer type, from national company to independent to the IOCs, as you have seen, there is a large adoption of this because we have kept this platform open. Now, when it comes to the pace and growth factor that differentiates workflow, data, and operation, I believe that workflow is the one that is the most mature because it builds on our existing desktop market leadership we have. Here we are transitioning the existing customer base we have towards the cloud. Each of them is realizing the power of the cloud, from productivity, from collaboration, from access to scalable cloud computing. We simply need to reassure them that our platform is open and that they can make their choice on the cloud infrastructure, which we are doing. The second data I think is a renaissance of the data market that used to be a major market in digital 20 years ago. Everybody realized that without the data, we cannot unlock the power of digital transformation. Thankfully, the industry has come together and has created this OSDU platform, Open Subsurface Data Universe, driven by the Open Forum, and we have been fortunate to technically contribute our DELFI ecosystem to this. On that foundation, every company will have to roll out and will certainly use the opportunity to roll out OSDU as a platform so that it unlock the data access, liberate the data, and then data provider, and then service provider, consulting company, and the customer themself will tap into this data using AI application, and this is where we want to participate, both the data transition to this new platform and the AI opportunity upon this. Finally, operation. Operation is certainly the biggest prize long-term, but also the most difficult to realize because every asset, every infrastructure on the field, every infrastructure at the edge is different. While we believe that there is immense opportunity to use digital in operation, and we are doing it very successfully internally, the complexity, the system integration needs, and the fit for purpose digital deployment will slow down on the adoption of this. We'll make progress, and we'll continue to partner with other company to make sure that we offer integrated offering to the industry. When you combine these three at a different pace of growth, you create the condition for multiplicity of revenue stream that will support our double-digit ambition that we will realize within the decade. Thanks for the information. Thank you. Thank you. Our next question is from Chase Mulvehill with Bank of America Merrill Lynch. Please go ahead. Hey, good morning, everybody. One sec. I wanted to hit on was kind of New Energy. I don't know if maybe at a high level, could you take a minute and talk to how SLB is viewing the New Energy environment, and what are the key highlights of your New Energy transition strategy? It actually would be great if you could lay out a prospective roadmap as SLB embarks on this New Energy transition journey. Yeah, great question, Chase. I think as you have seen, we've decided to enter a new chapter for the company. The way we decided to go after this is to first identify and selectively the domain in which we believe we can leverage our strengths, the subsurface, can leverage our strengths, our technology, and global footprint to create and forge partnership, technology, acquisition, or organically grow the domain. First, we have decided to explore and establish market position and diversify our market entrance into this domain. You have seen that we have, in parallel, from lithium to CCS, from hydrogen to geoenergy and geothermal, credit venture, each of them with potentially a different partner for addressing a different industry sector so that we diversify not only our approach, but diversify and expand our market reach. That has been the first, is to make sure that we diversify our investment, diversify our market approach, and our type of partnership. That has been our first, I would say, framework that we have used to develop this. Now, what is our ambition there? Our ambition is to create the future of the company in the long run. Within the decade and within the next two or three years specifically, we will de-risk at scale this technology investment, this venture investment, working with our partners, working internally to develop those technology as we are for green hydrogen, as we will with our CCS Mendota bioenergy plant or with LafargeHolcim for CCS on cement plant. We will work, Embark into venture where we will, the risk enhance. When it is the risk at scale, we will then make bigger investments, larger investments that will then support the long-term growth. Perfect. As a quick follow-up to James' first question around international, you mentioned that 2019, next year we could kind of get back to 2019 levels. I guess my question would be, 2019 was pretty tight, and you were starting to see some pricing. If we get back to 2019 levels next year, what could this mean for pricing? When we think about the full international cycle, could we actually see a real pricing cycle unfold internationally as the recovery gains momentum? First, I think our approach to this is first and foremost performance. We believe that performance creates the revenue opportunity, the revenue quality, and the margin expansions. We believe that are the foundation of our strategy. Whether the market capacity in some basin for some specific business line will create the condition for pricing, I believe it will. Again, it will depend on how do we differentiate for performance, how do we make sure that our technology is unique and is in high demand and create a condition for the customer to accept to a premium on this technology. That's our approach. Now, whether the global capacity will create in a short-term global pricing, I don't think it will, but I think it will certainly in the coming quarters create a pricing inflection on some business line in some basin. We are already seeing it today in North America for very specific Well Construction technology that is in high demand and demand a premium. Okay, perfect. Appreciate the color, Olivier. We'll turn it over. Thank you. Next we go to the line of Scott Gruber with Citigroup. Please go ahead. Yes, hello. Morning, Scott. Morning. The D&I margin at 32%, super impressive. As we think about incrementals for that segment over the course of the year, by definition, they obviously need to be healthy given the starting point, but what's a reasonable range? Relatedly, as you get deeper into these digital management contracts with customers, obviously profitability improves over time. Will that be a material driver during the rest of the year, or is that incremental margin benefit more in 2022 and beyond? First, I think we provided a guidance for full-year margin at 30%, and I think you have seen that the way we started the year is putting us on an excellent footing to realize that margin outlook. This margin comes from two major factor. One is the performance of our Integration contract, and secondly, the strength and margin of our Digital business. Going forward and rolling into the later part of the year, obviously, the Digital will gradually start to improve its size and will create and generate the pull-through that we believe will support this 30% ambition, and could, as we exit 2021, clearly outperform and put us on a better opportunity for margin expansion into 2022. Over time, long-term, the Digital will indeed grow, and we share that ambition there, and will clearly help continue to support these impressive margins and possibly expand it further in the long-term. Got you. Just shifting gears a little bit and maybe somewhat premature to ask, but if it's given that the international recovery outlook is strengthening and obviously the capital intensity of your portfolio is now in the decline, how do you think about the use of free cash flows, the focus purely on building cash and deleveraging? What conditions would you look for to start enhancing the cash return? As we move deeper into the recovery, is there a preference for dividend enhancement versus buybacks when the time is right to return cash? I'll answer that question, Scott. You said that our immediate priority is indeed to deleverage the balance sheet. At the same time, we want to make sure that we can sustain growth in our core business, of course, even though our CapEx intensity has reduced quite a bit compared to the past. We also need to leave enough capacity to execute our strategy, particularly as it relates to new horizons of growth. In any case, whether it relates to our core business or white spaces, as I mentioned during the prepared remarks, any new investment will be looked at under the strict lens of our return-based capital allocation framework. Beyond that, yes, once we have filtered all this project, we will return any excess cash to our shareholders through either dividends or stock repurchases. We do not have a prescribed split between the two. It will depend on the conditions at that time, the time we have to make that decision, and in particular, the sustainability of cash flows. Got it. Appreciate it. Our next question is from Sean Meakim with JP Morgan. Please go ahead. Thanks. Good morning. Good morning, Sean. I appreciate the commentary on the outlook for the Middle East. Maybe just to follow up, can we talk about the legacy margin dilutive LSTK contracts? Just to what extent have you been able to mitigate some of the challenges there? They're now a few years old. I was just curious to what extent does a contract role create an opportunity for resetting the margin impact for those contracts maybe in the medium term? Yeah. I think, as you know, for the last two years, I think we have been increasing our focus, management and operation focus on resolving or improving this highly dilutive contract that they were two or three years ago. We have made great progress. I think whether they are exactly where I would like them to be and accretive to the overall margin, maybe not. We have made progress in three directions. First, in engaging for customer and making them realize the complexity and providing the support to execute this contract with better support and eliminating or mitigating some risk. Secondly, by adopting and accelerating adoption within this contract of fit-for-basin technology that are unique and that will create for the long run an opportunity to set benchmark on those contracts and to keep our market position and enhance our future execution. Finally, we have, in the last few quarter, last few months actually, starting to roll out our digital operation capability to extract further automation, further efficiency on this. We have improved and enhanced customer collaboration on those contracts. We have created the technology portfolio that is starting to mitigate and enhance the operational execution, and we have rolled out unique digital features that are creating. Those conditions are unique. Customer recognize it, and I think as we get the opportunity to renew this contract and expand, we would obviously look for making sure the commercial terms and the revenue quality we develop in the future will be more accretive than they are today. Thanks, Olivier. That's very helpful. It's encouraging as well. Just to come back maybe to cash flow. North of $2 billion for free cash looks to be the bar here for full-year, just given the 10% margin target. Could you just maybe highlight any major levers that would materially deviate from that goal? I'm also just thinking beyond cash flow, are there plans for potential further pruning of the portfolio to optimize fit-for-basin, maybe help accelerate de-levering of the balance sheet? Look, Sean, I don't think there's anything that's going to deviate from us achieving double-digit, i.e., possibly more than 10% free cash flow this year. There is a typical seasonality in the working cap and free cash flow throughout the year. Free cash flow will improve quarter after quarter like it has in the past, and we will deliver on that ambition. It can be enhanced by exceptional proceeds. We are continuously looking at our portfolio, as I mentioned earlier. We are particularly working on two key divestitures. One is, I mentioned in the previous quarter, regards to our APS portfolio. We are looking at launching very soon, in the next few days actually, a formal process for the APS asset in Canada. There's a lot of interest still, and the economics have improved quite a bit. We are quite hopeful there to close a good transaction. The second one is the rigs we have in the Middle East. We are actually even more advanced there. We are in a formal process. We have shortlisted a few interested buyers, and we are just concluding the due diligence. We should be closing or at least signing this transaction in the next few months. This will enhance the cash flow profile and the potential reduction of our net debt and the flexibility it will give on liquidity basically. Very helpful. Thanks to you both. Thank you. Next we go to Connor Lynagh with Morgan Stanley. Please go ahead. Thanks. Good morning. Morning, Connor. I think we had noticed that you guys were a bit more upbeat on the offshore side of things. Basically, I'm wondering if you could frame how you think that market's gonna trend relative to last cycle. In particular, how do you think customers are thinking about exploration activity? That's a great question. I think first, it's worth saying that offshore basins and the most advantage offshore basins are still very much very critical resource and core resource for some of our customers. IOCs, some unique NOCs, and a few independent that are pure play offshore independents from relative medium to large size. First, these resource are precious. These resource typically have a good geology. As I said, both from the production plateau, they provide and/or the low carbon opportunity they have in term of mix or API grade, I think is excellent resource. The second thing I believe is that the economics for offshore due to integration success, fit technology and digital practice have improved from the last cycle. I think opportunity exists for industry to leverage this and accelerate some FID going forward. Another factor that is very critical as you touch the exploration appraisal is that most of the Major and large NOC in this context are organizing the impact of exploiting hubs, offshore hubs. The offshore hubs, the opportunity is to exploit those hubs to improve the return on asset, improve return on infrastructure, and focus on near field or backyard exploration so that they maximize the return on existing infrastructure, existing FPSO, existing platform, so that it is also something that plays very well in our portfolio for infill drilling or for subsea tieback as we are expanding in this domain. I believe that the exploration appraisal will not necessarily accelerate in frontier exploration, but will accelerate in near field exploration offshore. We are starting to see this this quarter and would accelerate during second half of the year. I'm optimistic indeed on offshore. If you read some of the Rystad or IHS reports or some of the reports are highlighting the FID pipeline. You see that the FID pipeline that are already pre-committed towards 2022, 2023, have the potential over 2022, 2023, and beyond to eclipse the last 2017, 2019 in term of number of project, but also in term of total CapEx invested in the quarter. Got it. That's helpful. Maybe just sticking with the offshore theme, could you help us think through on the Production Systems, I think you called out you expected all divisions to grow sequentially, but how should we think through the long cycle portion of that business, particularly the subsea business? Yeah, I think first, the Production Systems is not only subsea Production Systems. Have both short and long cycle as exposure in short cycle in North America to the ESP, which is coming back strongly, and the come on surface equipment also servicing the frack and our partner, Liberty. Internationally, it's indeed a mix of short for ESP and some compression equipment and long cycle for midstream as well as for subsea and surface equipment. It's a mix of long and short with very tangible exposure in North America, benefiting short-term and long-term international long cycle, both recovery and production new project. In that context, back to the point on offshore, I believe that the subsea market is very alive. I think last year, the number of subsea trees were just short of 200, compared to higher than 250 in 2019. The prediction this year is to be above 200. 220 is our prediction, that's aligned with the market prediction. This will be more or less increasing going forward gradually, to be within between 250 to 300 over the midterm period to support this offshore project. Appreciate the color. Thank you. Thank you, Connor. Our next question is from Marc Bianchi with Cowen and Company. Please go ahead. Thank you. The guidance for second quarter, for the mid-single digit revenue and 50 - 100 of margin improvement, seems to suggest a little bit maybe weaker margin progression than I would have otherwise expected, and certainly if I look at the operating leverage that the business has had over the past few quarters, it would seem that there's a little bit less operating leverage implied in second quarter. I'm curious, are there some unusual costs that you're realizing? Perhaps there's startup costs for some of these contracts you mentioned. Any color around that and how maybe that could progress beyond second quarter would be helpful. Yeah, Marc, thank you for the question. Indeed, our guidance though, for operating margin expansion between 50 and 100 basis points into the mid-single digit will still imply on the high end of that range, 30+ incremental. I believe that this is the first remark. The second is that we are still on track, okay? Very confident on our 250 to 200 full-year, 200 basis points full-year margin expansion. In the second quarter, indeed, there are two factor. One is the fact that you are mobilizing for what the offshore return and some of the activity that are prepping and mobilizing for the second half already in the later part of the quarter. Also there are some persistent but temporary COVID-related constraints and costs that as the lockdown are still in place in many countries, that are adding cost up front into those mobilization and are making this mobilization cost maybe a little bit more than they would have been in over cycle in the past. These are the factors that are shaping up, but we are very confident that margin expansion is in place and will continue going forward. Wonderful. Thank you for that. You mentioned in your prepared remarks and then also in the press release about the kind of double digit growth for the second half in international, setting up for kind of upside to already robust growth anticipated for 2022. I'm curious what the baseline is for that comment. Are you referring to a market forecast that's out there, or are you referring to sell side consensus? Just curious what the benchmark we should be thinking about is? No, it's a combination of facts. As I said, I think there are some market indicators from the CapEx of some of the NOC, National Oil Company. There is the rig count projection that we are making based on our engagement with customer and with rig contractor. There are some market position or market enhancements and contract award that we have been benefiting in the last few quarters. The mix of our market position, favorable mix, the market expansion on international that has an element of seasonal effect as well as reinvestment, and the National Oil Company increasing their investment in second half, all combine to make us more confident than we were three months ago on the shape and inflection of this recovery in the second half. Got it. Thanks, Olivier. Thank you very much. Ladies and gentlemen, we will now turn you back to Schlumberger for closing remarks. Okay, thank you very much. Thank you, and to conclude, I would like to offer three takeaway. First, the macroeconomic and activity outlook are increasingly supporting an attractive industry upcycle, characterized with an inflection in international activity, a consolidation of short cycle activity, and a return of advantaged offshore plays, all playing to our core strength. In particular, we are increasingly optimistic about the international growth trajectory during the second half of the year, which, absent of a setback in pandemic recovery, will result in full-year international growth. As a consequence, we have reinforced our confidence in our 2021 financial targets on margin expansion and free cash flow generation. Second, we are convinced that our performance strategy is aligned with the new industry landscape and is increasingly resonating for our customer as performance matters critically in this environment. This is translating to market wins, partly in Middle East and offshore basins, and will support our ambition to outperform through the cycle. In addition, the steady progress in our Digital strategy will translate over time in expanding new revenue streams and accretive margins. Third, the margin expansion realized this quarter, both sequentially and year-on-year, is reflecting the impact of both our capital stewardship and the restructuring programs, and will translate into substantial operating leverage as the year progress and activity strengthen in all basins. We anticipate the upcoming quarters to favor this margin expansion with broad contribution from our basin and divisions. Finally, our commitment towards both sustainability and New Energy is materializing in a growing portfolio of technology and ventures that will contribute to the global climate actions and to the future of the company. Ladies and gentlemen, this year represents a unique opportunity for the new SLB to execute on its new performance journey and outperform the market within an increasingly attractive outlook. Thank you very much. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference service. 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