SLB

What They Do

SLB (formerly Schlumberger) is the world's largest oilfield services company, providing technology and expertise to help energy companies find, extract, and produce oil and gas more efficiently. They serve major oil companies, national oil companies, and independents with everything from drilling technology and reservoir analysis to production optimization and digital solutions. The company generates revenue through equipment sales, technology licensing, and long-term service contracts across the entire oil and gas value chain.

Investment Thesis

Key Risks

Growth Story

SLB is benefiting from a multi-year upcycle in global drilling activity as energy security concerns drive increased investment. International markets, which represent ~80% of revenue, are showing particular strength with double-digit growth expected as offshore and deepwater projects accelerate. The company is also positioning for long-term growth through energy transition technologies, though this remains early stage.

Profitability Profile

Operating margins have recovered to mid-teens levels after bottoming around 5% during the 2020 downturn, driven by disciplined cost management and improved pricing power. The company generates strong free cash flow conversion in upcycles, though margins remain below the 20%+ peaks of previous cycles. Management is focused on maintaining pricing discipline while investing in higher-margin digital and technology solutions.

Competitive Position

SLB maintains the strongest competitive position in oilfield services through superior technology, global scale, and deep customer relationships built over decades. Key competitors include Halliburton and Baker Hughes, but SLB's international presence and technology portfolio are unmatched. The company's digital platform and data analytics capabilities provide increasing differentiation as the industry digitizes.

Recent Momentum

Without access to recent quarterly results, the broader oilfield services sector has shown resilience despite concerns about oil price volatility. SLB typically outperforms peers during market recoveries due to its international exposure and technology leadership. The market has been focused on capital allocation discipline and returns to shareholders after years of over-investment.

What Wall Street Thinks

Analysts generally view SLB as the highest-quality name in oilfield services, though sentiment varies with oil price expectations and capital spending forecasts. The stock typically trades at a premium to peers due to superior margins and international exposure. Debate centers on the sustainability of the current upcycle and the company's ability to generate consistent returns through commodity cycles.

The Bottom Line

SLB is the premier way to play global energy infrastructure investment, offering best-in-class technology and international reach, though investors must accept the inherent cyclicality of energy services.