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1. Company Snapshot

1.a. Company Description

Schlumberger Limited provides technology for the energy industry worldwide.The company operates through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.It offers software, information management, and IT infrastructure services; consulting services for reservoir characterization, field development planning, and production enhancement; petro technical data services and training solutions; reservoir interpretation and data processing services; asset performance solutions; open and cased-hole services; exploration and production pressure and flow-rate measurement services; pressure pumping, well stimulation, and coiled tubing equipment for downhole mechanical well intervention, reservoir monitoring, and downhole data acquisition; and integrated production systems.


The company also provides mud logging and engineering support services; drilling equipment and services for shipyards, drilling contractors, energy companies, and rental tool companies; land drilling rigs and related services; drilling tools; well cementing products and services; and well planning and drilling, engineering, supervision, logistics, procurement, contracting, and drilling rig management services, as well as supplies engineered drilling fluid systems; and designs, manufactures, and markets roller cone and fixed cutter drill bits.In addition, it offers well completion services and equipment; artificial lift production equipment and optimization services; valves; process systems; and integrated subsea production systems comprising wellheads, subsea trees, manifolds and flowline connectors, control systems, connectors, and services, as well as designs and manufactures onshore and offshore platform wellhead systems and processing solutions.The company was formerly known as Socie´te´ de Prospection E´lectrique.


Schlumberger Limited was founded in 1926 and is based in Houston, Texas.

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1.b. Last Insights on SLB

Schlumberger's recent performance is driven by several positive factors. The company's Q2 earnings beat expectations, with revenue of $8.55 billion and EPS of $0.74, surpassing Wall Street estimates. The acquisition of ChampionX expands SLB's US presence in chemicals and digital capabilities, offering synergy potential and positioning for enhanced oil recovery trends. Additionally, SLB OneSubsea was awarded an EPC contract for Equinor's Fram Sør project, deploying the first large-scale all-electric subsea system. The company's digital and new energy businesses are positioning it for long-term growth. A $40.80 price target was reiterated, citing relative undervaluation versus peers.

1.c. Company Highlights

2. SLB N.V. Posts Strong Q3 with Digital Business Shining

SLB N.V. reported third-quarter revenue of $8.9 billion, a 4% sequential increase, with earnings per share excluding charges and credits of $0.69, beating analyst estimates of $0.657. The revenue growth was primarily driven by the addition of two months of activity from Champagnex, a digital business acquired during the quarter, which contributed $579 million of revenue and $108 million of pretax income. Excluding Champagnex, revenue was essentially flat sequentially. The company's digital business, now a standalone division, reported 11% sequential revenue growth, driven by a 39% increase in digital operations.

Publication Date: Oct -20

📋 Highlights
  • Revenue Growth from Champagnex Acquisition:: Third-quarter revenue rose 4% to $8.9 billion, with $579 million ($108 million pre-tax) from the Champagnex acquisition, offsetting flat core business performance.
  • Digital Division Outperforms Core Business:: Digital revenue grew 11% sequentially to $658 million, driven by 39% digital operations growth, with EBITDA margin at 32.7% and full-year guidance of 35%.
  • Core Divisions Maintain Stability:: Reservoir Performance, Well Construction, and Production Systems showed sequential stability, with Production Systems up 18% due to Champagnex integration.
  • Q4 Guidance for Margin Expansion:: Expected high single-digit revenue growth and 50–150 bps EBITDA margin expansion, driven by full-quarter Champagnex results and digital/product sales seasonality.
  • Full-Year Digital Growth & Synergy Targets:: Digital revenue on track for double-digit YoY growth, with $926 million annual recurring revenue (7% YoY) and $400 million annual pretax synergies from Champagnex over three years.

Segment Performance

The core divisions had mixed results: Reservoir Performance revenue declined 1% sequentially to $1.7 billion, while Well Construction revenue was flat at $3 billion. Production Systems reported revenue of $3.5 billion, up 18% sequentially, driven by the acquisition of Champagnex. The digital division's revenue is expected to continue growing at a rate that visibly outperforms global upstream spending and exceeds the growth rate of SLB N.V.'s core business by double digits.

Outlook and Guidance

SLB N.V. expects a sequential step-up in results in the fourth quarter with high single-digit top-line growth, driven by a full quarter of Champagnex results and seasonally higher digital and product sales. The company forecasts adjusted EBITDA margin to expand 50 bps to 150 bps sequentially, driven by increased earnings contribution from digital and Production Systems. For the full year, SLB N.V. expects revenue to be within the midpoint of its previous guidance range of $18.2 billion to $18.8 billion.

Valuation and Metrics

With a P/E Ratio of 13.77 and an EV/EBITDA of 4.58, the market seems to have priced in a moderate growth outlook. The company's digital business, with its high-margin profile, is expected to outstrip the core business by double digits, driven by market leadership, customer adoption, and the addition of digital operation capabilities. Analysts estimate next year's revenue growth at 4.6%, which is slightly higher than the current valuation multiples.

Growth Drivers

The growth in annual recurring revenue is driven by a combination of new customers and expansion of existing customer relationships, with a net retention rate of 103% indicating sticky revenue. The new Lumi and Lumi Data and AI platform has seen remarkable adoption with over 50 customers in less than a year. The company's data center solutions business is growing rapidly, driven by demand from hyperscalers, and is expected to expand beyond its current US footprint.

3. NewsRoom

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SLB (SLB) Beats Stock Market Upswing: What Investors Need to Know

Dec -04

Source:

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SLB (NYSE:SLB) & Archrock (NYSE:AROC) Critical Analysis

Dec -04

Source: defenseworld.net

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Trade Tracker: Stephanie Link buys SLB

Dec -03

Source: youtube.com

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SLB Limited (SLB) is Attracting Investor Attention: Here is What You Should Know

Dec -03

Source: zacks.com

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SLB Announces Dates for Fourth-Quarter and Full-Year 2025 Results Conference Call

Dec -02

Source: businesswire.com

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Benzinga's 'Stock Whisper' Index: 5 Stocks Investors Secretly Monitor But Don't Talk About Yet

Nov -29

Source: feeds.benzinga.com

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SLB: Meeting The Red Queen Moment

Nov -28

Source: seekingalpha.com

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Schlumberger: Oil Is Cheap Vs. Gold, Top Services Firm Ready To Rumble

Nov -27

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.45%)

6. Segments

Well Construction

Expected Growth: 6.4%

- The drilling and completion systems segment is driven by increasing demand for integrated well construction services, growing need for project management to optimize well placement, and reduce operational risks, along with the rising adoption of digital solutions to enhance hydrocarbon recovery.

Production Systems

Expected Growth: 7.4%

- This segment is poised for growth driven by increasing demand for integrated production and production optimization services, particularly in the well surveillance and artificial lift segments, as operators seek to maximize hydrocarbon recovery while reducing operating costs.

Reservoir Performance

Expected Growth: 6.6%

- This segment is poised for growth, fueled by increasing demand for enhanced oil recovery (EOR) and improved hydrocarbon recovery, as well as the need for operators to optimize reservoir performance and increase production from existing fields.

Digital & Integration

Expected Growth: 12.3%

- The Digital & Integration segment is expected to grow, driven by increasing customer demand for digital solutions to optimize workflows, improve operational efficiency, and reduce costs, amidst the ongoing digital transformation in the oil and gas industry.

Eliminations & Other

Expected Growth: 7.4%

- This segment, encompassing divestitures, minority investments, and non-core businesses, is poised for moderate expansion, driven primarily by the company’s strategic focus on streamlining its portfolio and allocating resources to core oilfield services operations.

7. Detailed Products

Drilling

Schlumberger's drilling segment provides drilling systems and equipment, including drill bits, drilling fluids, and drilling services to help customers optimize their drilling operations.

Reservoir Characterization

Schlumberger's reservoir characterization segment provides services and software to help customers understand and model their reservoirs, including seismic processing and interpretation, and reservoir simulation.

Production

Schlumberger's production segment provides services and equipment to help customers optimize their production operations, including artificial lift, well intervention, and production optimization.

Cameron

Schlumberger's Cameron segment provides surface and subsea equipment and services, including valves, pumps, and compressors, to help customers optimize their production operations.

OneSubsea

Schlumberger's OneSubsea segment provides integrated production systems and services for subsea oil and gas production, including subsea trees, manifolds, and control systems.

SIS

Schlumberger's SIS (Software Integrated Solutions) segment provides software and services to help customers optimize their operations, including exploration, production, and reservoir management.

8. Schlumberger Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Schlumberger Limited faces moderate threat from substitutes, as there are limited alternatives to its specialized oilfield services. However, the company's strong brand reputation and technological advancements help mitigate this threat.

Bargaining Power Of Customers

Schlumberger Limited's customers, primarily oil and gas companies, have significant bargaining power due to their large scale of operations and ability to negotiate prices. This forces the company to maintain competitive pricing and high-quality services.

Bargaining Power Of Suppliers

Schlumberger Limited has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's strong relationships with suppliers and its ability to negotiate prices also mitigate this threat.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the oilfield services industry, including significant capital requirements, technological expertise, and regulatory hurdles.

Intensity Of Rivalry

The oilfield services industry is highly competitive, with several established players competing for market share. Schlumberger Limited must continuously innovate and improve its services to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 37.21%
Debt Cost 5.19%
Equity Weight 62.79%
Equity Cost 12.14%
WACC 9.55%
Leverage 59.26%

11. Quality Control: Schlumberger Limited passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.0/10

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Quality: 6.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.46$

Current Price

38.46$

Potential

-0.00%

Expected Cash-Flows