Production Systems revenue of $1.6 billion decreased 4% sequentially. The revenue decrease was across North America offshore, Europe/CIS/Africa, and Asia, partially offset by strong activity in Latin America—mainly in Brazil and Argentina—and the Middle East, mostly in Saudi Arabia and Qatar. Lower production system sales were posted in subsea, well production, and surface while midstream production systems grew sequentially in Latin America, North America land, and the Middle East.

Despite the revenue decline, pretax operating margin only decreased 71 basis points to 9%, as a result of cost measures as well as improved profitability in midstream production systems due to higher activity.

Quarterly Highlights

Schlumberger continues to harness the power of the cloud to enable a step change in customer productivity and performance—through our digital platforms and the application of artificial intelligence (AI) and internet of things (IoT) solutions to create new insights from data and optimize operations. During the quarter:

• Schlumberger and Equinor announced a strategic project, in collaboration with Microsoft®, to deploy the DELFI* cognitive E&P environment with seamless integration to the OSDU™ Data Platform—the industry’s new data standard. This is the first major deployment of the OSDU Data Platform, which will streamline strategy planning for Equinor. This project aims to accelerate Equinor’s ability to integrate data at scale and improve decision-making, and it will be embedded as a key part of Equinor’s Microsoft Azure enterprise-wide data platform.
  
  
• In Mexico, Schlumberger is collaborating with Pemex, using a new digital workflow that can accelerate the time from prospect lead to drilling by at least 30%, transforming the prospect maturation process currently used in the industry. Enabled by the DELFI environment, the workflow—called prospect-focused imaging—is helping Pemex more quickly generate value from its assets in the challenging Gulf of Mexico Campeche Basin by identifying and de-risking exploration opportunities in weeks rather than months. This acceleration is achieved through the DELFI environment, which enables a remote, multidisciplinary team to work in parallel rather than sequence, iterating seismic imaging and exploration knowledge to adjust an earth model in real time.
  
  
• In Russia, Schlumberger and Yandex.Cloud announced an industry-first collaboration to deploy the DELFI environment hosted on Yandex.Cloud, the first use of the cloud for the conventional upstream domain in Russia. The deployment includes AI and data solutions to accelerate the digital transformation of energy companies and elevate performance across the industry.
• In one of the largest assets in Ecuador, Agora* edge AI and IoT solutions were leveraged to deliver an 18% increase in production uptime while reducing the carbon footprint of artificial lift surveillance operations. The application of digitally enabled well surveillance and artificial lift optimization workflows in more than 100 wells resulted in a 36% reduction of CO2 equivalent emissions due to reduced trips to the field. Agora solutions enabled digital surveillance of electric submersible pumps and suction rod pumps within a remote well-operation platform that covers the entire asset. Agora solutions are providing an opportunity for operators to achieve a step change in production uptime while reducing the cost and carbon footprint of operations.

Around the world, our differentiated operational execution continues to resonate with customers and is being acknowledged through new contract awards. Awards in the quarter include:

• In Africa, Tullow Oil plc awarded Schlumberger a four-year contract, valued at more than USD 100 million, for combined drilling services offshore Ghana. The comprehensive services contract targets an accelerated drilling restart early in the second quarter of 2021, and includes the full Well Construction Division portfolio, as well as adjacent services from the Reservoir Performance and Digital & Integration Divisions. The contract incorporates a new, performance-based element—the first such contract model deployed in Ghana—aligning Schlumberger and Tullow to collaborate toward additional performance improvements as Tullow unlocks more value from its world-class deepwater assets.
  
  
• In South America, Total awarded Schlumberger a contract for services across multiple Divisions for a 4- to 10-well deepwater appraisal and exploration campaign in Block 58 offshore Suriname. The campaign commenced in February 2021 following discoveries in the block during 2020, for which Schlumberger delivered the majority of the Well Construction services.
  
  
• In the Middle East, Qatargas awarded Schlumberger a five-year contract for three stimulation vessels in the giant Qatar North Field, with an optional five-year extension. OpenPath Reach* extended-contact stimulation service and MaxCO3 Acid* degradable diversion acid system are key differentiating technologies included in the award that were selected to improve stimulation efficiency.
• In addition, Qatargas awarded Schlumberger a five-year contract for intervention services in the North Field Expansion project. This Reservoir Performance award features a unique fit-for-basin technology with an advanced perforation deployment system that conveys multiple services with ACTive* real-time downhole coiled tubing services. The new design eliminates multiple rig ups and rig downs, reducing health, safety, and environmental exposure and saving up to three days of rig operations per well.

For more than a century, Schlumberger has developed and deployed innovative technology. Our technology solutions continue to enhance customer performance, support basin competitiveness, maximize asset value, and reduce carbon footprint.

In North America land, Schlumberger fit-for-basin Well Construction technology and execution is enabling customer outperformance across multiple basins as the recovery unfolds:

• In the DJ Basin, Schlumberger Well Construction technology enabled Great Western Petroleum to drill the longest footage in the 8.5-in section covering 21,630 ft of vertical, curve, and lateral in a single run, using a bottomhole assembly (BHA) comprising all Schlumberger technology—including NeoSteer* at-bit-steerable system and a drill bit from Smith Bits, a Schlumberger company.
  
  
• In the Delaware Basin, Schlumberger Well Construction technology enabled an operator to drill a curve and lateral totaling nearly 24,500 ft in a single run. One BHA comprising all Schlumberger technology—including PowerDrive Orbit G2* rotary steerable system and the xBolt G2* accelerated drilling service as a fit-for-basin solution—remotely drilled the 6.75-in curve and lateral in 6.5 days with Performance Live* digitally connected service. Drilling efficiency saved the operator an average of 5 days of rig time per well and as much as 12 days of rig time on an individual well.
  
  
• In the Haynesville Basin, Rockcliff Energy tested the first drill bit from Smith Bits, designed using the combination of data analytics from the Synapse* performance insights optimization service and a new bit design workflow. At-bit performance insights gathered with the Synapse service and the use of StrataBlade* concave diamond element bit and StingBlade* conical diamond element bit technologies enabled the new bit design to achieve a 69% rate of penetration (ROP) improvement while maintaining the required drilled footage, saving the operator more than 40 hours of drilling time.
  
  

Internationally, Schlumberger production and recovery technologies are setting new benchmarks and helping customers bring new reserves online:

• In Algeria, Schlumberger Reservoir Performance executed the first horizontal multistage plug and perforate hydraulic fracture in the tight sands of the Hamra Field, significantly contributing to field production for Sonatrach. The application of an integrated suite of Schlumberger stimulation technologies resulted in gas production exceeding offset wells. Using technologies, including Kinetix* reservoir-centric stimulation-to-production software, WellWatcher Stim* stimulation monitoring service, HiWAY* flow-channel fracturing technique and the ACTive DTS* distributed temperature measurement and inversion analysis, the project delivered increased gas production while reducing required proppant and water volumes. This process accessed gas reserves that would not have been monetizable otherwise, setting a path for further development of tight gas resource in the Hamra and similar fields.
  
  
• Offshore North West Shelf Australia, the Julimar JV, operated by Woodside with partner KUFPEC, recently used Schlumberger technology to maximize production. In two wells, the Schlumberger OptiPAC XL* extended-length Alternate Path† gravel-pack screen and high-temperature fluid system were implemented to ensure complete packing of the horizontal intervals with downhole temperatures up to 140 degC—a world record for OptiPAC* openhole Alternate Path gravel-pack services. Zonal isolation was achieved with a mechanical packer and completed two producing zones and one non-pay zone in a single pumping operation—reducing the number of wells required and increasing ultimate recovery.

Our solutions encompass sustainability through evolving existing technologies, new technology development, and project design and execution to reduce carbon footprint across industry applications:

• In the first quarter, OneSubsea® built the first all-electric manifold for the BP Trinidad and Tobago LLC Matapal gas project being developed off the coast of Trinidad and Tobago. The combination of a block valve manifold design and standard interfacing drop-in-place electric actuators created a simple solution that also demonstrated optimizations during the manufacturing and testing process. This is a major milestone in the Schlumberger and bp electric technology roadmaps. We continue to develop more sustainable ways of producing hydrocarbons, and electric systems are key to supporting our customers on their net-zero goals. The first all-electric manifold is scheduled to arrive in Trinidad in the second quarter of 2021, with installation expected in the second half of the year.
  
  
• Schlumberger Reservoir Performance has deployed a new service to evaluate geologic CO2 storage suitability—an essential step in advancing carbon capture and storage (CCS) projects—during a project for a power facility operator in the United States. This service leverages Reservoir Performance domain expertise by integrating data analysis from a suite of Schlumberger subsurface evaluation technologies, including Quanta Geo* photorealistic reservoir geology service, the Sonic Scanner* acoustic scanning platform, and the Saturn* 3D radial probe. This process evaluates the CO2 injection suitability and storage potential of any geologic formation, while also characterizing CO2 movement in the subsurface. Data from this service supported the research and evaluation required to secure necessary permitting to store CO2 in a deep geologic formation.
  
  
• Offshore Norway, Schlumberger installed the industry’s first subsea retrofit multilateral wells to reach new production without adding new infrastructure in the mature Goliat Field for Vår Energi. Using the RapidX* TAML 5 high-strength, hydraulic-sealed multilateral junction, Schlumberger and Vår Energi collaborated on a well construction and completion design that accessed 7–8 million additional barrels of oil from different targets of the Snadd and Goliat West discoveries. Two producing wells were retrofitted as multilaterals, each maintaining production from their original bores while adding new production from a lateral. An intelligent completion provides independent control of each branch that can be tuned for ultimate recovery. This operation saved the customer millions of US dollars of capex and an estimated 5,000–10,000 metric tons of CO2 equivalent emissions by avoiding the drilling of two new subsea wells and procuring and installing the associated infrastructure.