- SLB posted adjusted third-quarter earnings of 64 cents a share, beating the average analyst estimate of 62 cents, and its shares rose as much as 6% in New York on Friday. The company was the best performer in the S&P 500 Energy Index on the day.
- Revenue in the Middle East rose 13% from the prior quarter despite late-quarter disruptions from the Iran war, which SLB described as a gradual recovery in the region. The growth reflected a rebound in activity, with improvements in Iraq, Kuwait, Oman, Saudi Arabia, Qatar and the United Arab Emirates.
- CEO Olivier Le Peuch said Venezuela will be a “significant growth driver,” with revenue in the country set to more than double by year-end and grow even more in 2027. As major US oil and gas operators expand in countries including Venezuela and Argentina, SLB sees accelerated growth in 2027.
- Le Peuch said energy security and supply shocks are driving “a distinct upcycle, despite near-term uncertainty in the Middle East.” He added, “We see a very compelling outlook for 2027, with further upside as Middle East activity recovers.”
What Happened?
SLB, the world’s biggest oil field services provider and formerly known as Schlumberger, reported third-quarter results on Friday and discussed its outlook on a call with analysts and investors. Le Peuch said energy security and supply shocks continue to drive a quest for international supply diversification, reserve replacement and sustained production. The results followed rival Halliburton, which said on Tuesday that it has seen more business in Iraq, Saudi Arabia and Kuwait as the war in Iran drags on and predicted higher revenue from the region in the fourth quarter. The Houston-based company’s shares led the S&P 500 energy sector on the results.
Why It Matters?
SLB is seen as a bellwether for oil and gas companies, because its global footprint gives insight into the financial health of the energy sector. Two of the biggest service providers reporting Middle East recoveries suggests producers are spending to restore output and diversify supply despite the conflict. Venezuela’s emergence as a growth market shows how US operators’ expansion abroad is opening new revenue for service companies. The region’s oil and gas rig count has risen for the past five months, which suggests supply disruptions may be easing.
What’s Next?
Investors will watch whether Middle East activity keeps recovering in the fourth quarter, as Halliburton also expects. SLB’s target for Venezuela revenue to more than double by year-end gives a concrete milestone to track. Any escalation of the Iran war remains the main risk to the 2027 outlook Le Peuch called very compelling. Further gains in the regional rig count would support the case that the upcycle is broadening.
Affected Tickers and Coins: SLB, HAL, XLE, OIH
Source: Bloomberg
