Schlumberger Limited
Q4 2019 Earnings Call Transcript

Published: 17 Jan 2020

[Operator:]

Thank you for standing by, and welcome to the Schlumberger earnings call. (Operator Instructions) As a reminder, this call is being recorded.I would now like to turn the conference over to Simon Farrant, Vice President, Investor Relations. Please go ahead.

[Simon Farrant:]

Good morning, good afternoon, good evening, and welcome to the Schlumberger Limited Fourth Quarter and Full Year 2019 Earnings Call.Today's call is being hosted from Houston following the Schlumberger Limited Board meeting held here this week. Joining us on the call are Olivier LePeuch, Chief Executive Officer; Simon Ayat, Chief Financial Officer; and Stephane Biguet, VP Finance.For today's agenda, Olivier will start the call with his perspectives on the quarter and our updated review of the industry macro, after which, Simon Ayat will give more detail on our financial results. Then we will open up to your questions.As always, before we begin, I would like to remind the participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. 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 fourth quarter press release, which is on our website.Now I’ll hand the call over to Olivier.

[Olivier Le Peuch:]

Thank you, Simon, and good morning, ladies and gentlemen. I'm going to comment on 4 topics this morning

[Simon Ayat:]

Thank you, Olivier. Ladies and gentlemen, thank you for participating in this conference call.Fourth quarter earnings per share, excluding charges and credits, was $0.39. This represents a decrease of $0.04 sequentially but an increase of $0.03 when compared to the same quarter of last year.During the quarter, we recorded $209 million of net pretax charges. This reflected $456 million of restructuring charges, offset by a $247 million gain on the formation of the Sensia joint venture. The restructuring charges largely relate to our North America operation. They consist primarily of write-offs relating to facility closures and exiting certain activities as well as severance.These restructuring charges and related write-offs were all recorded at the end of the quarter. Therefore, the fourth quarter results do not include any significant benefit as a result of this charge.Our fourth quarter revenue of $8.2 billion decreased 4% sequentially, as the 2% growth in our international operations was more than offset by a 14% decline in North America. Pretax segment operating margins decreased by 60 basis points to 12.2%.Highlights by product group were as follows

[Operator:]

Thank you. Our first question comes from the line of James West with Evercore ISI. Please go ahead.

[James West:]

Hey, good morning Olivier.

[Olivier Le Peuch:]

Good morning James.

[James West:]

Maybe first for Simon Ayat. Thanks for your many years of help, guidance, and certainly, wisdom. And you will be missed.

[Simon Ayat:]

Thank you James. Thank you very much.

[James West:]

So Olivier, as we think about the second half of 2020, you talked about revenue quality improving clearly with international and offshore. That's a much better mix of business for Schlumberger for the industry and in general. Could you maybe expand a bit on that and what it could mean for both your revenue growth, but also continued margin improvement in your business?

[Olivier Le Peuch:]

No, thank you, James. So I think back to what I shared during my prepared remark. We foresee that the year-on-year growth internationally will be in line and slightly better than the current mid-single digits when we exclude the effect and impact of the divestiture we had. That has an impact of about 2% internationally. I also reiterate the fact that I foresee that the second half will be more robust than the first half on the back of offshore, both the offshore deepwater particularly, where we see in the projection engagement we have with our customer, significant upside in the later part of the year due to exploration as well as development. So the impact of this, we expect will result into not only 5% or better growth for the year, but also margin expansion in excess of 100 bps for the full year internationally.

[James West:]

Okay. That's very helpful. And then, I guess, if we think about the full year, and I know you guys don't give full year guidance, but it seems to me that we've got a bit of a hockey stick going into the back half. And so as we think about where the -- I guess where expectations are, both your internal expectations, our expectations, et cetera, do we think that you could -- that the second half shrink makes up for what will be a little bit of a weaker than potentially expected first quarter?

[Olivier Le Peuch:]

Yes, the first quarter, indeed. And you have heard my prepared remark highlighting the high single-digit sequential decline for International and Cameron, the low single-digit decline in North America. All of these will combine due to the seasonal effect, the transition from a good revenue mix in Q4 into Q1 into high decrementals into Q1. So that is our expectation.However, I think from the -- we'll not wait the second half. I think from the second quarter, we expect the mix to improve, the execution of our NAL strategy to start to bear fruit and the international outlook to go back to normal seasonality, so the combination of which should provide the support for growth of earnings from -- sequentially from Q2 onwards.

[James West:]

Okay, very helpful. Thanks Olivier.

[Operator:]

And next, we go to Sean Meakim with JP Morgan. Please go ahead.

[Sean Meakim:]

Thank you, good morning.

[Olivier Le Peuch:]

Good morning Sean.

[Sean Meakim:]

I'd like to maybe just continue a bit more on the framework for 2020, maybe just expand on some of those thoughts. So, we're looking for margin expansion across both North America and international. Can we unpack a little bit of what's building your confidence that we're making the turn here on margins? Given the emphasis on the back half of 2020, how much would you say is confidence in what's happening in the market from more a macro perspective versus the impact of your self-help initiatives?

[Olivier Le Peuch:]

I think, to give you more light on this, Sean, I think I would like to contrast North America and international. I believe the international market is poised for further growth. And I think we've come out on a mid-single digit, is poised for further offshore and mix, including later part the deepwater, both of which combine to present the good, favorable mix that will help us execute. So internationally, I believe that the combination of our self-help, through capital stewardship program on underperforming business units, continuation of our transformation program that has had positive impact onto the service business line incrementals, and the effect of our technology adoption on those favorable offshore market as well as international digital transformation, will all combine to this 100 bps-plus expansion in international. So we have some confidence there. Obviously, all depends on the top line and activity growth, but we have confidence in this shape and into the favorable revenue mix. By contrast, North America will depend on our execution of our NAL strategy. There is a downside risk as similar to last year. There is some uncertainty on to the market spend and on to the pricing headwinds that could affect and delay some of the benefits that we'll collect from the NAL strategy.But all in all, both for different reasons, more self-help and NAL execution strategy in North America and market conditions as well as continuation of our progress internationally will combine to shape up our margins next year.

[Sean Meakim:]

Understood. That's very helpful. Maybe just to continue on North America. A couple of clarifications and just maybe to go a little bit deeper. It sounds like you said half of your horsepower is going away. Is that being stacked with the potential to come back? Or are we scrapping that horsepower? And maybe just if we could clarify the difference there. And maybe just -- I hoping to talk about the rest of the product and service lines. Are there potential for other divestitures or other transformative type of transactions that you're considering? Maybe just hear about the rest of the portfolio in North America as well.

[Olivier Le Peuch:]

Yes. I think you have heard the comment we made and I made in my prepared remarks. We have decided to cut our deployed capacity by 30%when contrasted with the fourth quarter of 2019. And we will self impose this as a cap going forward. That results into about 50% of our capacity that we don't intend to deploy. And I think whether it's cold-stacked or unemployed, it will not be deployed going forward as we are repurposing our -- and restructuring our business around 3 basins or on 3 large hubs to serve the most active basins. And as such, we will not expect to increase our capacity.Beyond this, you have heard the choice we made to exit coiled tubing onshore, to evaluate divestiture of rod lift, and to further accelerate our technology access fit-for-basin strategy to replicate the success of D&M. All of this combined will result into a top line decrease faster than the market due to the self-imposed cap on capacity and as well as the exit of some business units, but also will result into high grading our portfoliomargins as well as benefiting from the success on technology access business model, asset-light model to replicate D&M and expand. And that is what we expect to see.

[Sean Meakim:]

Thank you for clarifying, I appreciate that.

[Operator:]

Next we go to Scott Gruber. Please go ahead.

[Scott Gruber:]

Yes, good morning.

[Olivier Le Peuch:]

Good morning Scott.

[Scott Gruber:]

Just staying on the NAL outlook for North America. You provided the market outlook and commented that there will also be an impact from scaling down and exiting some businesses. Any potential additional color that you can provide on a range of additional impact from the strategic shift on the top line in North America in 2020 relative to the market?

[Olivier Le Peuch:]

Globally speaking, I think we gave the guidance that North America land will see -- will see a market contraction of high single digit to low double digits. On the back of what we are executing, we believe, if everything is executed, that will be in the mid-teens to high teens -- in the mid-teens decline from the same scope in North America land, in the same scope, okay? So that's the guidance I can share with you, okay? This extra contraction that we anticipate will be a few percentage points of further decline compared to what we see in the market.

[Scott Gruber:]

Got it. And obviously, you're exiting the more capital-intensive business lines that oftentimes tend to be more CapEx-intensive. Can you just talk about the cash dynamics in the business as you go forward in 2020? Are you near neutral on the net cash you think you're going to be able to generate in the business in light of the restructuring, just given the cash consumption from some of these product lines? Is there a hit? And if you could just provide some color on that front as well?

[Simon Ayat:]

Sorry, Scott, is your question about North America or in total?

[Scott Gruber:]

Yes. Well, in North America, how -- is OneStim, for instance, cash generative today such that you lose cash with the scale down? Or is it consuming cash today such that you'd actually save on cash given the scale down?

[Simon Ayat:]

No, we -- okay, Simon here again. We are expecting to be better than neutral on OneStim. And actually, it's not true that OneStim consumed cash. OneStim is -- we've been managing it to be neutral, but will be better than neutral going forward.

[Scott Gruber:]

So the restructuring helps the cash profile of OneStim?

[Simon Ayat:]

Absolutely, yes.

[Scott Gruber:]

Important clarification. Thank you.

[Operator:]

Next we go to Angie Sedita with Goldman Sachs. Please go ahead.

[Angie Sedita:]

Simon, I echo James' comments, and I wish you the very best in the next chapter of your career. And Olivier, we appreciate the details very much on your call. This is great to have the granularity that you provided today, so this is very helpful. So I would add on the -- or the North America commentary, if you think through 2020, comment a little bit on international margins, thought around North America margins under the scale-to-fitstrategy and how we should think about margins over the course of 2020 as you see lower revenue growth, but obviously, a margin impact. And how we can think about EBITDA in that context?

[Olivier Le Peuch:]

Yes. I think, Angie. So yes, to reiterate what I shared before, I think the margin progression in North America will result from 2 critical action

[Angie Sedita:]

Okay. So -- and then further around North America and OneStim, do you view OneStim as core to your operations? Do you think that you need to be in OneStim longer term? And what other options for either rightsizing the business or strategic partners do you see for that business overall in North America for 2020 and beyond?

[Olivier Le Peuch:]

As we have said before, we believe it's critical that we fully participate into the North America market first. It's a market that is here to stay. It's a market that will, over time, come back to use and align with our reservoir technology and capability. However, we believe that we will continue to evaluate alternate ways to participate into this market. For now, we have decided that we rightsize, we scale to fit and we refocus our OneStimoperation to be fit, lean, and more profitable. But we'll continue to observe the market opportunity. As we have said, all options are on the table. And when and if an opportunity arise with the right partner and the right economics, we will take the step and look at alternate way to keep participating into the market and yet exit this.

[Angie Sedita:]

Great, thanks. I’ll turn it over.

[Simon Ayat:]

Thank you, Angie for your comments - Simon here.

[Operator:]

Next we’ll go to David Anderson with Barclays. Please go ahead.

[David Anderson:]

So Olivier, you talked about your strategy of an asset-light, more technology-driven businesses in North America. It seemed to fit pretty well with digital being a primary growth driver, as you talked about. You made a number of agreements around DELFI late last year. I was just wondering if you could just talk about how you see the progression of revenue over the next several years. I guess, that will mostly be in the Reservoir Characterization business. Is it fair to assume that maybe the top line comes down a little bit initially as you move more towards the subscription-based models? And you talked about maybe this business doubling, but I'm just kind of wondering if you could just kind of give us maybe a little bit of a road map of kind of what this looks like over the next few years?

[Olivier Le Peuch:]

Thank you, Dave. I'm not sure I will give you a detailed road map today, no. But I will comment on some of the remarks. So indeed, we have stated, and I believe we are still setting and having a clear ambition to double the digital revenue in the next few years. We do not anticipate that the transition to software as a service will materially or will actually negatively impact our revenue trajectory. We have had a pause somehow in our digital in the last couple of years, revenue growth, more due to the market condition as well as the fact that our DELFI offering was not having the readiness and the breadth to expand into the marketplace.So this has been addressed. I think the SIS Forum that did happen in September gave us the opportunity to not only commercialize 4 new DELFI products, but also create a step change and a new momentum in the industry with our open strategy. So a combination of this DELFI new product and the open strategy has carried the momentum that has attracted the engagement with customer, and we have seen one of the engagement that has materialized with Exxon for drilling digital products in North America. So you will see our digital opportunity to be communicated in the coming weeks and months, both internationally and in North America, and both in workflow or product deployment or in edge operation. So we are working hard on several fronts with several customers, and we're making progress. And I think the leadership we have established is recognized across the industry, is valued and will only accelerate going forward.

[David Anderson:]

If you don't mind, I'd like to switch gears. If I could just kind of talk about the Middle East for a moment here. You had a very good quarter by all accounts in your commentary on the progress in the Middle East. But it kind of comes with a bit of caution on your first half, the remarks about the OPEC agreement. I was just kind of curious on 2 fronts here

[Olivier Le Peuch:]

First, to answer your question on the Middle East market and gas, the Middle East market, I think, is still very steady, and I think it's poised for further growth. However, based on the -- on some of the cap of OPEC+ requirements, on occasions, we see some of the developments that have been started to be either paused or delayed in the context of caps.Now the gas is indeed very active. Gas development project are very active, particularly offshore in the Middle East, and this is not slowing down.This is actually accelerating, and we fully participate into this. Coming into the LSTK. Indeed, the LSTK has been under scrutiny, be it in Middle East or across the world. And I'm happy to report that we have made a steady progress to stabilize and improve the operational performance and also to address on occasion, specifically with some customers, be it Middle East or elsewhere, the specific contractual terms and liability that we believe were not appropriate for -- when contrasted with risk or the engagement we had. So we have made progress on those. I'm pleased to report that every time I go to Saudi, in particular, I'm getting increasingly positive feedback from the customer. And I'm pleased with the steady progress with my team.

[David Anderson:]

Good to hear, thank you.

[Operator:]

Next we go to the line of Kurt Hallead with RBC. Please go ahead.

[Kurt Hallead:]

Hey, good morning.

[Olivier Le Peuch:]

Morning Kurt.

[Kurt Hallead:]

I echo everyone’s comments on Simon. And Simon, I look forward to frequenting your restaurants.

[Simon Ayat:]

Thank you very much, Kurt. You are welcome.

[Kurt Hallead:]

Olivier, thank you so much for all the great color this morning with respect to the outlook on the macro and the specifics. And I think the one area that I was looking for a little bit more color on myself related to the margin dynamics in North America and the magnitude of the potential margin improvement on a year-on-year basis. And I kind of ask this in the context of, as you know, you don't report margins on a geographic basis. You report them on a segment basis. So really just trying to get some sense on how to think about the North American margin improvement on a year-on-year basis.

[Olivier Le Peuch:]

Yes, I think I can reiterate some of the comment I made. I think the level of margin improvement will be 2 level. I'm not talking about pricing. That is a headwind that I think we have estimated to be 2% or 3%, particularly focused on the pressure pumping, excluding negative expansion there.We believe that the 2 levels will be the high grading of our portfolio to capacity cap and/or to exit and the change of business model to technology access. So the impact of those 2 set of actions will, we believe, shall accelerate and expand our margin by more than 100 bps in North America on the way to our double-digit returns that we have set in our strategy, the pace of which, I think, could be accelerated if the market conditions are favorable. Could be a little bit seeing headwinds if the pricing get too deteriorated. But we are confident that we will have triple-digit basis points improvement in North America at large.

[Kurt Hallead:]

That's really helpful. And then just to follow up on the on the SPM monetizations. Can you give us some color on how things might be progressing? And how you might see the opportunity to monetize some of those assets in 2020?

[Olivier Le Peuch:]

Yes. As we mentioned in the last earnings call, I think the process of asset divestiture for the Bandurria Sur in Argentina actually is progressing very well. So we are in the advanced stage of the divestiture there and with closing anticipated during the first quarter of 2020, after all standard closing conditions are met. That's the situation and the progress we have.

[Kurt Hallead:]

Great, thank you.

[Operator:]

Next we go to Byron Pope with Tudor Pickering Holt. Please go ahead.

[Byron Pope:]

Just have one question on capital allocation. Now that you're evaluating all of your investments through a return on capital versus growth lens, I would -- and thinking about the 2020 guidance as CapEx is flattish year-over-year, I would think that North America would be down directionally.So it sort of implies that you've got some attractive opportunities to allocate capital internationally and offshore in 2020. So I was not asking for specific color, but just wondering if you could maybe give a little bit more of a sense for the investment opportunities that you guys have, both internationally, onshore as well as globally offshore in 2020.

[Olivier Le Peuch:]

Yes, indeed, I think we’ll comment on that. Why don’t you comment on this, Stephane?

[Stephane Biguet:]

Sure, sure. So as you said, our 2020 CapEx, when you exclude multiclient and our APS investment will be more or less in line with what we spent in '19. So it's $1.7 billion. What will be different, however, is how we will allocate this across our different businesses as we apply our new capital stewardship process. So to illustrate this, the CapEx that will go to our international businesses will increase in 2020 to 85% of the total spend. As a reference, this percentage was just above 55% 2 years ago, so it's a significant switch. And also, we will redirect a large portion of that international CapEx to business units that are accretive to our overall margins, and we'll have a specific focus on new technology that generate premium pricing.

[Byron Pope:]

Very helpful, thank you. I’ll turn it back.

[Operator:]

Next we go to Marc Bianchi with Cowen. Please go ahead.

[Marc Bianchi:]

Hey, thank you. Following up on the CapEx question and as it relates to APS, what should we be anticipating for CapEx in 2020 for APS? And could you talk about how that would be with or without the Argentina divestiture?

[Stephane Biguet:]

So I think I'll take that question as well. Stephane here. But just before we discuss 2020, I just want to quickly take us back to '19. Our total investment for APS was $780 million, and this was already down $200 million compared to 2018. We said in the past that we'll be managing our APS portfolio on a cash flow positive basis, and cash flow is really the focus. We modulate the level of investment accordingly. And I can confirm that with this$780 million CapEx in '19, we did generate quite a bit of positive free cash flow, clearly, even a bit above our initial expectations.So now when you get into 2020, we have finalized our plans for each of our APS projects, and I can say that the free cash flow from APS will increase beyond 2019 significantly, actually. So the corresponding level of investment will clearly be lower than in '19, particularly on the back of the Argentina divestiture. But we will maintain the level of investment that's necessary to generate that positive cash flow.

[Simon Ayat:]

I want to add a little bit more on the cash. I know the question is around the APS investments, but I wanted to highlight the strengths that we have seen in '19, that it will continue in 2020 on cash generation. As I said in my prepared remark, the total free cash flow reached $2.7 billion. And when you look at our commitment on the return of capital, be it dividend or the buyback that will continue, it's more or less met by our generation of free cash flow.In addition to this, when you look at the investment -- the divestment that we made, the proceeds that came from the 2 transaction, we were able to reduce the debt, and we ended up with $13.1 billion. So going forward, this will continue to be a focus. And I took over to mention this fact because there was a lot of questions in the past on our meeting the dividend cash flow requirement. And as you see in '19, we were able to mitigate the situation and to get to a point where we are within just tens of millions of dollars.

[Marc Bianchi:]

Right. My follow-up is unrelated, on lift. Olivier, you mentioned potentially some changes with the rod lift strategy in North America. I'm curious if you could talk a little bit more about the outlook there. Is it something that's just specific to the rod lift business and the capital intensity? Or are you seeing some sort of a structural shift in demand?

[Olivier Le Peuch:]

No, I think this is very specific to the capital-intensive of the rod lift-specific business, where we believe our strength as an organization, our technology focus as an organization is not necessarily best aligned with the support of this business. And we believe that there are partners that could and will certainly, with a focused approach, being better placed to execute this rod lift business in North America. So that's very similar to what we considered in the past for Drilling Tools, where we reached a decision to divest. Here, we are evaluating that decision.

[Marc Bianchi:]

Thank you.

[Operator:]

Next we go to Bill Herbert with Simmons. Please go ahead.

[Bill Herbert:]

Simon, can you talk about your free cash flow margin? Do we attain the double-digit margin in 2020?And then secondly, can you also comment on expected working capital performance for the first half of this year? Last year, that was a challenge.You consume a lot of cash in Q1 and then Q2 as well. I'm just curious as to what your expectations are for working capital in the first half of this year.

[Simon Ayat:]

Sure, Bill. I'm going to cover a bit about '19 and give you an indication going forward. But Stephane will also free to comment on 2020 onward.As far as our profile is concerned, and you know this, the first half of the year, we consume a bit of liquidity in the working capital. First quarter normally, there is a consumption because of compensation-related payments on year-end bonuses that comes during the first quarter. And as you saw in '19, during the second half, we improved this working capital, and we produced the free cash flow required.2020 will be similar profile. In the first quarter, we're going to consume cash in the working capital. But as we have declared, we are improving our free cash flow generation. And the -- our expectation in 2020 will be 2019 or even better. So this is where we are. The road towards the double digit is well defined. And I think implementation of the strategy will get us over there.

[Bill Herbert:]

Okay. And then -- and with regard to the actual free cash flow margin expectation for 2020, it doesn't sound like you're going to hit double digits for the year, but you think that the margin will be improved. Because I think you were already at 8% for 2019, if the math is right?

[Simon Ayat:]

Your math is correct. I mean, the double digit is an objective. And probably in 2020, we will not be reaching there.

[Bill Herbert:]

Okay, thanks.

[Operator:]

Next we go to the line of Connor Lynagh with Morgan Stanley. Please go ahead.

[Connor Lynagh:]

Thanks. Let me comment on this. So I think we have -- the OneSubsea, indeed, I think, has been very successful in the fourth quarter to raise their booking with success, particularly on the back of this Ormen Lange large integrated project for subsea -- subsea processing. And I think they are still the leader there and will keep this leadership going forward. So I'm very, very confident and very happy and very pleased with the performance on OneSubsea.Now looking at the margin of Cameron, I think, this is due to 2 factors

[Connor Lynagh:]

That makes sense. Just in terms of the North America realignment, is there a significant impact we should think about on cost savings or scaling down in Cameron? Or is that largely related to traditional oilfield services?

[Olivier Le Peuch:]

It's largely related to traditional oilfield services. I think as I commented before, the Cameron performance have been strong until recent time. I think last quarter was a bit of a challenge due to the severe trough. Now for some of our short cycle, we will still continue to adjust and make sure that we are structured to be aligned with the market condition, both pricing and with the size of the market. And we will continue to expand our Cameron franchise internationally as we have been successful. So I would expect that the short-cycle will be adjusted structurally to reflect the market condition. And we will divert and increase our focus on international as we have done in the last couple of years.

[Connor Lynagh:]

Got it. Thanks for the color.

[Operator:]

Our last question will come from the line of Chase Mulvehill with Bank of America Merrill Lynch. Please go ahead.

[Chase Mulvehill:]

Sorry. So I want to come back to the pressure pumping and the amount of capacity that you've actually reduced. So if I do the math correctly, it sounds like that you stacked about 600,000 horsepower in 2019 and maybe you entered the year 2019 with about 700,000 horsepower cold stacked, if I've done my math right. So how should we think about how much of that could come back and the cost that it would take to bring that capacity back into the market?

[Olivier Le Peuch:]

Chase, our intention here is not to cold stack or warm stack and bring back. Our intention here is to rightsize the capacity, which we did; restructure the organization, which we are doing; and refocus on where we believe we have the best alignment with our customers, we have the best leverage for technology, reservoir technology, or surface efficiency technology differentiation, and we can bring the most benefit to our customers and to the market. We have done this, and we don't intend to bring back capacity going forward.

[Chase Mulvehill:]

Okay. All right. That makes sense. That clears some things up. I'll be getting a lot of questions about that. Coming over to the international side. You guys are focused on margins. It seems like a lot of your peers are focused on margin improvement on the international side. So maybe could you talk about pricing on international. Given that everybody's focused on margins, are you seeing more discipline on pricing? Are you able to push pricing, in particular, in the Middle East at this point yet?

[Olivier Le Peuch:]

Similar to comment we made last quarter, I think there is still a dynamic where on large integrated contracts and high-volume contracts, we still see, be it in Middle East or elsewhere internationally, we still see negative pricing pressure or downward pricing pressure. Where by contrast, in more remote location and more specific exploration offshore or difficult project execution, we see and we have seen and we have had the opportunity to negotiate better price. And we see better also discipline from -- in the market on both -- on all the service providers. So I will say the market is still contrasted with large integrated contracts and discrete offshore exploration or remote location, and we believe this trend will continue in 2020.So I believe that considering the time, I think we'll have to conclude this call. So ladies and gentlemen, I would like to highlight my key message to conclude this call.

[Chase Mulvehill:]

Okay, appreciate the color. I’ll turn it back over, thanks.

[Olivier Le Peuch:]

First, the solid results of the fourth quarter and full year have highlighted the significant progress we have made in our international franchise and the early steps we took in execution of our North America land strategy. The momentum across our organization and the feedback from our customers continue to be very positive and support well our ambition for 2020.Our view for 2020 remains positive on the international market, which will be loaded on the back end of the year, particularly in deepwater activity.Internationally, we will benefit from further improvement in activity mix and revenue quality, which, when combined with our capital stewardship and performance program, will drive further margin expansion as a continuity of progress made in second half of 2019.In contrast, we face another year of declining North American market condition, but will accelerate our NAL strategy to fast-track our commitment to restore double-digit margins. Our actions, including scale-to-fit capacity reduction, rationalization towards asset-light through technology access and anticipated business unit exits will combine to reverse margin decline and with the ambition to grow both earnings and cash flow in contrastto 2019.While 2019 opened a new chapter for the company, 2020 offers the opportunity to amplify the impact of our new performance vision for the benefit of our customers and to accelerate key strategy elements to improve returns for the benefit of our shareholders.Thank you very much for your participation today. Good day to everyone. I look forward to seeing many of you in the coming weeks. Thank you.

[Operator:]

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.