SLB LIMITED/NV (SLB) FY 2023 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions, and resources. Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A. Risk Factors” of this Form 10-K.

This section of the Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparison between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of SLB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

2023 Executive Overview

2023 was a remarkable year marked by widespread revenue growth, margin expansion, and exceptional cash flow. Year on year, revenue grew 18%, pretax segment operating margin increased 185 basis points (“bps”) to 20% and we delivered $6.6 billion of cash flow from operations and $4.0 billion of free cash flow—allowing us to reduce net debt by $1.4 billion and return $2.0 billion to shareholders this year through dividends and stock repurchases.

Our strong full-year performance was fueled by substantial international growth, with approximately 90% of our international GeoUnits posting year-on-year increases, complemented by sustained performance in North America.

International revenue grew 20% year on year by more than $4 billion. Notably, we achieved our highest-ever revenue in the Middle East, led by impressive growth in Saudi Arabia, the United Arab Emirates, and Egypt & East Mediterranean GeoUnits.

In the offshore basins, we benefited from long-cycle developments, capacity expansions, and exploration and appraisal activities with remarkable growth in Brazil and Angola, and solid increases in the US Gulf of Mexico, Guyana, and Norway.

In North America, while activity moderated as expected in the second half of the year, revenue increased 12% year on year, outpacing the rig count. This outperformance was driven by our technology-leveraged portfolio in both US land and the US Gulf of Mexico.

On a divisional basis, our Core business—comprising Reservoir Performance, Well Construction, and Production Systems—accelerated, growing revenue 20% year on year and expanding pretax segment operating margin 277 bps.

Digital & Integration revenue increased 4% year on year. This was led by digital, which continued strong growth momentum, delivering more than $2 billion in revenue. Our success in digital was driven by further adoption of Delfi technology and customers embracing our connected and autonomous drilling, data, and AI solutions.

We also saw continued adoption of our Transition Technologies portfolio as customers look to enhance efficiency and reduce emissions. The imperative to operate more sustainably is translating into tangible investments by our customers, resulting in the portfolio generating more than $1 billion of revenue.

As global energy demand continues to increase, international production is expected to play a key role in meeting supply through the end of the decade. Notably, we anticipate record investment levels in the Middle East extending beyond 2025, with significant expansion in Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait. Offshore remains another distinct attribute of this durable growth cycle, serving as an important source for production growth and capacity additions, and we expect strong activity to continue in Brazil, West Africa, the Eastern Mediterranean, the Middle East, and Southeast Asia.

In the international environment, despite elevated geopolitical tensions in various regions, we do not anticipate a significant impact on the sector's overall activity, absent any escalation. Furthermore, we expect the long-cycle investments across the Middle East, global offshore, and gas resource plays to be largely decoupled from short-term commodity price fluctuations.

In 2024, SLB expects to experience another year of strong growth driven by the international markets. Benefiting from these market dynamics, we foresee further growth led by Production Systems, strengthened by the additional subsea opportunities from our OneSubsea joint venture. Sustained momentum is expected in Reservoir Performance, accompanied by increased activity in Well Construction. Additionally, we expect continued customer adoption of our Digital business, particularly in our new technology platforms.

Our performance and returns-focused strategy, combined with our differentiated market positioning and digital capabilities, will drive profitable growth and further margin expansion, setting a strong foundation for long-term outperformance.

With confidence in the strength and longevity of the cycle and visibility into sustained strong cash flows, in January 2024, our Board of Directors approved a 10% increase to our quarterly dividend. Additionally, we plan to increase share repurchases in 2024, visibly enhancing returns to shareholders for the full year.

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Fourth Quarter 2023 Results

(1)
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives, and other nonoperating items.

(2)
Excludes interest income included in the segments’ income (fourth quarter 2023: $11 million; third quarter 2023: $2 million).

(3)
Excludes interest expense included in the segments’ income (fourth quarter 2023: $4 million; third quarter 2023: $3 million).

(4)
Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements.

Fourth-quarter revenue of $9.0 billion increased 8% sequentially with the acquired Aker subsea business accounting for approximately 70% of the growth, while the legacy portfolio continued its growth trajectory in the international markets.

International revenue of $7.3 billion grew 10% sequentially, driven by Europe & Africa and the Middle East & Asia. Europe & Africa increased 16% sequentially driven by the acquired Aker subsea business, which accounted for most of the sequential revenue growth, primarily in Scandinavia. Revenue in the Middle East & Asia increased 11% sequentially driven by higher drilling, intervention, stimulation, and evaluation activity, both on land and offshore. North America revenue of $1.6 billion was flat sequentially as reduced drilling activity in US land and Canada was offset by higher offshore revenue in the US Gulf of Mexico.

Compared to the same quarter last year, fourth-quarter 2023 international revenue outpaced North America, growing 18%, while North America was relatively flat. Excluding the acquired Aker subsea business, international revenue grew 10% year on year, marking the 10th consecutive quarter of double-digit growth.

Fourth-quarter 2023 pretax segment operating income margin of 21% increased year on year, representing the 12th consecutive quarter of growth.

Digital & Integration

Digital & Integration revenue of $1.0 billion increased 7% sequentially due to increased digital revenue across all areas led by the Middle East & Asia and Europe & Africa.

Digital & Integration pretax operating margin of 34% expanded 197 bps sequentially due to improved profitability in digital.

Reservoir Performance

Reservoir Performance revenue of $1.7 billion grew 3% sequentially primarily due to increased activity internationally, mainly in the Middle East and Africa.

Reservoir Performance pretax operating margin of 21% expanded 88 bps sequentially and represents the Division’s highest level of pretax operating margin in this cycle. This increase was primarily driven by higher activity, pricing, and improved operating leverage.

Well Construction

Well Construction revenue of $3.4 billion was flat sequentially with international growth being offset by a decline in North America revenue. International revenue increased 2% driven primarily by strong growth in the Middle East & Asia and Africa. North America revenue decreased 7% on a lower US land rig count.

Well Construction pretax operating margin of 22% increased 35 bps sequentially primarily driven by improved profitability from the increased activity in the Middle East & Asia and Africa.

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Production Systems

Production Systems revenue of $2.94 billion increased 24% sequentially. The acquired Aker subsea business accounted for most of the growth. Excluding the effects of this acquisition, revenue grew 4% sequentially due to strong international sales.

Production Systems pretax operating margin expanded 153 bps sequentially to 15%, its highest level in this cycle. The improvement was driven primarily by higher sales of midstream, artificial lift, and subsea production systems.

Full-Year 2023 Results

(1)
Comprised principally of certain corporate expenses not allocated to the segments, stock-based compensation costs, amortization expense associated with certain intangible assets, certain centrally managed initiatives, and other nonoperating items.

(2)
Excludes interest income included in the segments’ income (2023: $13 million; 2022: $72 million).

(3)
Excludes interest expense included in the segments’ income (2023: $14 million; 2022: $13 million) .

(4)
Charges and credits are described in detail in Note 3 to the Consolidated Financial Statements.

Full-year 2023 revenue of $33.1 billion increased 18% year on year led by Well Construction and Production Systems. On a geographic basis, year-on-year revenue growth was broad-based with North America revenue increasing 12% due to strong land and offshore drilling and higher sales of production systems, while international revenue grew 20%. International growth was widespread across all areas, led by the Middle East & Asia, which grew 21% due to higher drilling and intervention activity. Europe & Africa grew 18% primarily from higher sales of production systems in Europe and increased activity in offshore Africa, while Latin America revenue increased 17% due to robust drilling activity and higher sales of production systems.

Full-year 2023 pretax segment operating margin of 20% expanded by 185 bps as compared to 2022 driven by higher activity, improved pricing, and a more favorable activity mix.

Digital & Integration

Digital & Integration revenue of $3.9 billion increased 4% year on year, as strong growth in digital sales was largely offset by lower APS revenue and decreased exploration data licensing sales. The APS revenue decline resulted primarily from a temporary production interruption in the projects in Ecuador during the first quarter of 2023 due to a pipeline disruption and lower commodity prices that impacted the project in Canada. The lower exploration data licensing sales were driven by the absence of the $95 million of transfer fees recorded in the second quarter of 2022.

Digital & Integration pretax operating margin contracted 397 bps to 32% primarily due to the absence of the $95 million of exploration data transfer fees and reduced profitability from APS projects.

Reservoir Performance

Reservoir Performance revenue of $6.6 billion increased 18% year on year due primarily to increased activity internationally.

Reservoir Performance pretax operating margin expanded 338 bps to 19% primarily due to higher activity levels and improved pricing.

Well Construction

Well Construction revenue of $13.5 billion increased 18% year on year with double-digit growth across all areas. North America grew 17% while international revenue increased 19%. This growth was driven by drilling fluids and measurements—both on higher land and offshore activity—along with improved pricing.

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Well Construction pretax operating margin expanded 243 bps to 22% with profitability improving across all geographic areas driven by the higher activity and improved pricing.

Production Systems

Production Systems revenue of $9.8 billion increased 25% driven by strong growth across all areas led by Latin America and the Middle East & Asia, as well as the impact of the Aker subsea business, which was acquired on October 2, 2023.

Production Systems pretax operating margin expanded 315 bps to 13% mainly driven by higher subsea production system, artificial lift, and surface production system sales, as well as improved pricing, and the easing of supply chain constraints.

Interest & Other Income, Net

Interest & other income, net consisted of the following:

On December 31, 2020, SLB contributed its onshore hydraulic fracturing business in the United States and Canada, including its pressure pumping, pumpdown perforating and Permian frac sand business, to Liberty Energy Inc. (“Liberty”) in exchange for an equity interest in Liberty. During 2023, SLB sold all of its remaining approximately 9 million shares of Liberty and recognized a gain of $36 million. During 2022, SLB sold 47.8 million of its shares of Liberty and recognized a gain of $325 million.

Although SLB's functional currency in Argentina is the US dollar, a portion of its transactions are denominated in pesos. SLB uses Argentina’s official exchange rate to remeasure its Argentine peso-denominated net assets into US dollars. The Central Bank of Argentina maintains certain currency controls that limit SLB’s ability to access US dollars in Argentina and remit cash from its Argentine operations. A legal indirect foreign exchange mechanism exists in the form of capital market transactions known as Blue Chip Swaps, which effectively results in a parallel US dollar exchange rate. This parallel rate, which cannot be used as the basis to remeasure SLB’s net monetary assets in US dollars under US GAAP, was approximately 20% higher than Argentina’s official exchange rate at December 31, 2023 and 93% higher at December 31, 2022.

During the fourth quarter of 2023, Argentina devalued its peso relative to the US dollar by approximately 55%. As a result, SLB recorded a $90 million devaluation charge, of which $61 million is classified in Cost of services in the Consolidated Statement of Income, with the remaining $29 million classified in Cost of sales. SLB’s peso-denominated net assets in Argentina were approximately $75 million at December 31, 2023 ($40 million at December 31, 2022 and $270 million at September 30, 2022), primarily consisting of cash. Argentina represented less than 5% of SLB’s consolidated revenue in each of 2023 and 2022.

SLB accounts for its investment in the Arabian Drilling Company (“ADC”), an onshore and offshore gas and oil rig drilling company in Saudi Arabia, under the equity method. During the fourth quarter of 2022, ADC completed an initial public offering (“IPO”). In connection with the IPO, SLB sold a portion of its interest in a secondary offering that resulted in SLB receiving net proceeds of $223 million. As a result of these transactions, SLB’s ownership interest in ADC decreased from 49% to approximately 34%. SLB recognized a gain of $107 million, representing the gain on the sale of a portion of its interest as well as the effect of the ownership dilution of its equity investment due to the IPO.

During 2022, SLB sold certain real estate and recognized a gain of $43 million.

During 2022, SLB repurchased $395 million of its 3.75% Senior Notes due 2024 and $409 million of its 4.00% Senior Notes due 2025 for $790 million, resulting in a gain of $11 million after considering the write-off of the related deferred financing fees and other costs.

Interest Expense

Interest expense of $503 million in 2023 increased $13 million compared to 2022.

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Other

Research & engineering and General & administrative expenses, as a percentage of Revenue, were as follows:

Income Taxes

The SLB effective tax rate is sensitive to the geographic mix of earnings. When the percentage of pretax earnings generated outside of North America increases, the SLB effective tax rate generally decreases. Conversely, when the percentage of pretax earnings generated outside of North America decreases, the SLB effective tax rate generally increases.

The effective tax rate was 19% in 2023 as compared to 18% in 2022. The increase in the effective tax rate was primarily due to the charges and credits described in Note 3 to the Consolidated Financial Statements. These charges and credits reduced the effective tax rate in 2022 by approximately one percentage point.

Charges and Credits

SLB recorded charges and credits during 2023 and 2022. These charges and credits, which are summarized below, are more fully described in Note 3 to the Consolidated Financial Statements.

The following is a summary of the 2023 charges and credits:

The following is a summary of the 2022 charges and credits:

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Liquidity and Capital Resources

Details of the components of liquidity as well as changes in liquidity follow:

(1)
“Net debt” represents gross debt less cash and short-term investments. Management believes that Net debt provides useful information to investors and management regarding the level of SLB’s indebtedness by reflecting cash and investments that could be used to repay debt. Net debt is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, total debt.

(2)
Includes depreciation of fixed assets and amortization of intangible assets, exploration data costs and APS investments.

(3)
“Free cash flow” represents cash flow from operations less capital expenditures, APS investments and exploration data costs capitalized. Management believes that free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of our ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to shareholders through dividend payments or share repurchases. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations.

Key liquidity events during 2023 and 2022 included:

•
Cash flow from operations of $6.6 billion in 2023 increased approximately $2.9 billion as compared to 2022. This increase was primarily due to a $1.4 billion increase in net income adjusted for the previously mentioned charges and credits and depreciation and amortization expense combined with the effect of working capital only consuming $0.2 billion of liquidity in 2023 as compared to $1.7 billion in 2022. This $1.5 billion improvement in working capital was largely attributable to strong collections of accounts receivable and a smaller increase in inventory in 2023 as compared to 2022. Inventory increased in 2022 as a result of the

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significant activity growth that SLB was expecting in 2023. Additionally, SLB received a US federal tax refund of $85 million during the fourth quarter of 2023 relating to prior years.

•
In January 2023, SLB announced a 43% increase to its quarterly cash dividend from $0.175 per share of outstanding common stock to $0.25 per share, beginning with the dividend payable in April 2023. In April 2022, SLB announced a 40% increase to its quarterly cash dividend from $0.125 per share of outstanding common stock to $0.175 per share, beginning with the dividend payable in July 2022. Dividends paid during 2023 and 2022 were $1.3 billion and $0.8 billion, respectively.

In January 2024, SLB announced a 10% increase to its quarterly cash dividend from $0.25 per share of outstanding common stock to $0.275 per share, beginning with the dividend payable in April 2024.

•
As of December 31, 2023, SLB had cumulatively repurchased $1.7 billion of its common stock under its $10 billion share repurchase program. SLB repurchased approximately 13.3 million shares of its common stock under this program during 2023, for a total purchase price of $694 million. SLB did not repurchase any of its common stock during 2022.

•
Capital investments (consisting of capital expenditures, APS investments, and exploration data capitalized) were $2.6 billion in 2023 and $2.3 billion in 2022. Capital investments during 2024 are expected to be approximately $2.6 billion.

•
During the first quarter of 2023, SLB sold all of its remaining approximately 9 million shares of Liberty and received net proceeds of $137 million. As a result, SLB recognized a gain of $36 million. During 2022, SLB sold 47.8 million of its shares of Liberty and received proceeds of $732 million.

•
During the second quarter of 2023, SLB issued $500 million of 4.50% Senior Notes due 2028 and $500 million of 4.85% Senior Notes due 2033.

•
During the fourth quarter of 2023, SLB repaid its $1.5 billion of 3.65% Senior Notes that were outstanding.

•
During the second quarter of 2022, SLB sold certain real estate and received proceeds of $120 million.

•
During the fourth quarter of 2022, SLB repurchased $395 million of its 3.75% Senior Notes due 2024 and $409 million of its 4.00% Senior Notes due 2025 for $790 million.

•
During the fourth quarter of 2022, SLB repaid $795 million of Senior Notes that matured.

•
During the fourth quarter of 2022, SLB sold a portion of its equity interest in ADC in a secondary offering that resulted in SLB receiving net proceeds of $223 million.

As of December 31, 2023, SLB had $3.99 billion of cash and short-term investments and committed credit facility agreements with commercial banks aggregating $5.0 billion, all of which was available and unused. SLB believes these amounts, along with cash generated by ongoing operations, will be sufficient to meet future business requirements for the next 12 months and beyond.

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The following table reflects the carrying amounts of SLB’s debt at December 31, 2023 by year of maturity:

Interest payments on fixed rate debt obligations by year are as follows:

See Note 14, Leases of the Consolidated Financial Statements for details regarding SLB’s lease obligations.

SLB has outstanding letters of credit/guarantees that relate to business performance bonds, customs/excise tax commitments, facility lease/rental obligations, etc. These were entered into in the ordinary course of business and are customary practices in the various countries where SLB operates.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires SLB to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. The following accounting policies involve “critical accounting estimates” because they are particularly dependent on estimates and assumptions made by SLB about matters that are inherently uncertain.

SLB bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Allowance for Doubtful Accounts

SLB maintains an allowance for doubtful accounts in order to record accounts receivable at their net realizable value. Judgment is involved in recording and making adjustments to this reserve. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. Adjustments to the allowance

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may be required in future periods depending on how such potential issues are resolved, or if the financial condition of SLB’s customers were to deteriorate resulting in an impairment of their ability to make payments.

As a large multinational company with a long history of operating in a cyclical industry, SLB has extensive experience in working with its customers during difficult times to manage its accounts receivable. During weak economic environments or when there is an extended period of weakness in oil and gas prices, SLB typically experiences delays in the payment of its receivables. However, except for a $469 million accounts receivable write-off during 2017 as a result of the political and economic conditions in Venezuela, SLB has not historically had material write-offs due to uncollectible accounts receivable. SLB has a global footprint in more than 100 countries. As of December 31, 2023, three of those countries individually accounted for greater than 5% of SLB’s net accounts receivable balance, of which only two (the United States and Mexico) accounted for greater than 10% of such receivables.

As of December 31, 2023, Mexico and the United States represented 13% and 11% respectively, of SLB’s net accounts receivable balance. SLB’s receivables from its primary customer in Mexico are not in dispute and SLB has not historically had any material write-offs due to uncollectible accounts receivable relating to this customer.

Goodwill, Intangible Assets and Long-Lived Assets

SLB records the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill. The goodwill relating to each of SLB’s reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred.

Under generally accepted accounting principles, SLB has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount. If, after assessing the totality of events or circumstances, SLB determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing. However, if SLB concludes otherwise, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.

SLB has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.

SLB elected to perform the qualitative assessment described above for purposes of its annual goodwill impairment test in 2023. Based on this assessment, SLB concluded it was more likely than not that the fair value of each of its reporting units was significantly greater than its carrying amount. Accordingly, no further testing was required.

Long-lived assets, including fixed assets, intangible assets, and investments in APS projects, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value, SLB could be required to recognize impairment charges in the future.

Income Taxes

SLB conducts business in more than 100 tax jurisdictions, a number of which have tax laws that are not fully defined and are evolving. SLB’s tax filings are subject to regular audits by the tax authorities. These audits may result in assessments for additional taxes that are resolved with the authorities or, potentially, through the courts. SLB recognizes the impact of a tax position in its financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits. Estimates of these tax liabilities are judgmental and are made based upon prior experience, and are updated in light of changes in facts and circumstances. However, due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities that could be materially different from these estimates. In such an event, SLB will record additional tax expense or tax benefit in the period in which such resolution occurs.

Revenue Recognition for Certain Long-term Construction-type Contracts

SLB recognizes revenue for certain long-term construction-type contracts over time. These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications. Under this method, revenue is recognized as work progresses on each contract. Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs. Approximately 6% of SLB’s revenue in 2023, 5% in 2022 and 6% in 2021, was recognized under this method.

The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Profits are recognized based on the estimated project profit multiplied by the percentage complete. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs are often required as work progresses. Any expected losses on a project are recorded in full in the period in which they become probable.

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Pension and Postretirement Benefits

SLB’s pension and postretirement benefit obligations are described in detail in Note 17 to the Consolidated Financial Statements. The obligations and related costs are calculated using actuarial concepts, which include critical assumptions related to the discount rate and the expected rate of return on plan assets. These assumptions are important elements of expense and/or liability measurement and are updated on an annual basis, or upon the occurrence of significant events.

The discount rate that SLB uses reflects the prevailing market rate of a portfolio of high-quality debt instruments with maturities matching the expected timing of payment of the related benefit obligations. The following summarizes the discount rates utilized by SLB for its various pension and postretirement benefit plans:

•
The discount rate utilized to determine the liability for SLB’s United States pension plans and postretirement medical plan was 5.25% at December 31, 2023 and 5.50% at December 31, 2022.

•
The weighted-average discount rate utilized to determine the liability for SLB’s international pension plans was 5.14% at December 31, 2023 and 5.41% at December 31, 2022.

•
The discount rate utilized to determine expense for SLB’s United States pension plans and postretirement medical plan was 5.50% in 2023 and 3.00% in 2022.

•
The weighted-average discount rate utilized to determine expense for SLB’s international pension plans was 5.41% in 2023 and 2.83% in 2022.

The expected rate of return for SLB’s retirement benefit plans represents the long-term average rate of return expected to be earned on plan assets based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rate of return. The average expected rate of return on plan assets for the United States pension plans was 6.00% in 2023 and 4.40% in 2022. The weighted average expected rate of return on plan assets for the international pension plans was 6.00% in 2023 and 5.05% in 2022. A higher expected rate of return decreases pension expense.

The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for SLB’s United States and international pension plans:

The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant, for SLB’s United States postretirement medical plans:

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