Schlumberger (SLB), the world’s largest oil-services provider, has recorded its first sequential decline in North American sales since the onset of 2021. This shift comes as oil explorers divert their investments towards the Middle East and other global regions. In a statement released on Friday, the Houston-based contractor, renowned for its expertise in drilling oil wells and mapping subterranean reservoirs of crude, foresees an upswing in overall sales during the final quarter of the year. SLB’s quarterly earnings exceeded expectations, excluding specific items. However, shares experienced a 1.8% drop in pre-market trading in New York.
According to CEO Olivier Le Peuch, “The oil and gas industry continues to benefit from a multiyear growth cycle that has shifted to the international and offshore markets where we are the clear leader. Upstream spending is accelerating as operators continue to invest in long-cycle developments, production capacity expansions, exploration and appraisal, and enhanced gas production.”
Widely regarded as a barometer for the oil-and-gas sector, SLB’s global operations offer a crucial gauge of the broader energy industry’s well-being, heavily reliant on fossil fuels. Notably, SLB, formerly known as Schlumberger, is the first among major oilfield contractors to release third-quarter results, with rivals Baker Hughes Co. and Halliburton Co. slated to report next week.
With a slowdown in US shale activity, oilfield contractors are redirecting their focus towards international endeavors. SLB derives over three-quarters of its sales from markets outside North America. The 19% decline in US oil rigs thus far this year has prompted investors to speculate on when service companies can recoup this lost revenue.
Luke Lemoine, an analyst at Piper Sandler, conveyed in an investor note dated October 15, “There likely won’t be a parabolic inflection in the US land rig count, but confirmation of this just moving incrementally higher should be enough to give investors confidence that pricing and margins are stabilizing to possibly moving higher.”
In conclusion, the recent dip of SLB in North American sales underscores a shifting landscape in the global oil-and-gas market. With increasing investments in international and offshore ventures, SLB remains poised for growth in the coming months, reflecting a broader trend in the industry. As the third-quarter results emerge, industry observers await insights into the health of the energy sector and its reliance on fossil fuels.
Source: Bloomberg
