General MCE discussion

Not sure where to put this so I thought I'd start a new thread. A few in the offshore space have reported quarterly results this week. The big picture, for me, remains unchanged and seems to confirm we are in a new multi-year capex upcycle. These comments from this morning's Schlumberger call are interesting, at least for me. One thing I'd note, at least for the time being, is the discipline many of the guys in the offshore space have. This is unlike the last boom where it was just build, baby, build.

Moving to the macro. We maintain a constructive multiyear growth outlook. Through the first quarter, the resilience, breadth and durability of the upcycle has only become more evident. I would like to take a few minutes to describe these factors.

To begin, the underlying demand, investments and activity during this cycle are resilient despite short-term economic and demand uncertainties. The combination of energy security, the initiation of long-cycle projects and OPEC's policy sets the condition for a decoupling of the activity outlook for short-term demand uncertainties.

Indeed, energy security remains a top priority for most countries and is driving structural investments that are governed primarily by national interest. The extent of these investments is resulting into a broad-ranging growth outlook, comprised predominantly of resilient long-cycle projects in the Middle East, the international offshore basins and in gas projects. Collectively, we expect these market segments to reach or exceed more than 2/3 of the total global upstream spend and support a long tail of resilient activity over the next few years.

In parallel, the North America market, characterized by higher short-cycle exposure, is also set to benefit from positive demand outlook and supportive commodity pricing. However, this will be impacted by an anticipated activity plateau in the short term, which will subsequently be reflected in production volumes.

Moving to the dimensions of breadth and duration. These are also best emphasized by the latest activity outlook for the Middle East and offshore market segments. Fundamentally, the pivot to both segments as anchors of supply growth is a defining attribute of this cycle. This is providing an unprecedented level of investment visibility and a scale that is setting many records.

In the Middle East, the largest-ever investment cycle has now commenced. This will support ongoing capacity expansion projects over the next 4 years in both oil and gas. Consequently, this year, we expect to post our highest revenue ever in the Middle East, putting us on track to achieve our multiyear growth aspiration.

Simultaneously, we are witnessing further activity expansion in the offshore market. Offshore activity continues to surprise to the upside with breadth and a diversity of opportunities across all major basins. In addition, the latest FID projections and industry reports indicate that the offshore sector is set for its highest growth in a decade with more than $200 billion in new projects through the next 2 years.

This growth will be supported by three layers of activity. First, the resumption of infill and tieback activity in mature basins, which was very visible across Africa in 2022. This will continue to strengthen in multiple geographies from this year onward. Second, ongoing large development projects in both oil and gas that are ramping up and starting to scale. This is evident in Latin America, such as Guyana and Brazil, and in the Middle East, such as in Saudi Arabia, UAE and Qatar.

And third, the resurgence of exploration and appraisal activity, which is starting to gather strong momentum in the existing basins and new frontiers. From West and South Africa to the East Mediterranean, we are starting to see exploration and appraisal at a pace that was unforeseen just a few months ago. Additionally, the activity pipeline continues to elongate with new licensing rounds and new blocks awarded. As a result, we believe that we'll continue to witness durable offshore investment for many years to come.