Oilfield services provider SLB flags risk of lower upstream spending
North America remains the most exposed to the short-cycle spending cuts while Asia and the Middle East are proving more resilient, supported by lower breakevens, national energy security priorities, and gas project investments, it said.
Crude prices fell more than 21% in the April–June quarter, from a year earlier, raising concerns about a broader pullback in exploration and production spending.
U.S. energy firms have cut the number of active oil and gas rigs for an 11th straight week in the week ended July 11, for the first time since July 2020, according to Baker Hughes data.
SLB, the first of the Big Three U.S. oilfield services providers to report quarterly results, said the broader market continues to remain uncertain with OPEC+ supply releases, ongoing trade negotiations and geopolitical conflicts.
The company also flagged a 20-40 basis points hit on its margins from U.S. President Donald Trump's tariffs in the second half of the year.
In the second quarter, SLB's total revenue fell 6% to $8.55 billion, but beat expectations of $8.48 billion.
The results came in above expectations, which had been recently lowered following the company's forecast flagging weak activity levels in Saudi Arabia and Latin America, said Tudor Pickering Holt & Co analyst Jeff LeBlanc.
SLB received a boost from higher offshore activity and increased drilling demand in the UAE, Kuwait and Iraq.
North America revenue rose 1% to $1.66 billion from last year, helped by gains in data-center infrastructure solutions.
Its earnings, excluding charges and credits, of 74 cents per share, for the three months ended June 30, narrowly beat the average expectation of 73 cents.
Rivals Halliburton (HAL.N), opens new tab and Baker Hughes (BKR.O), opens new tab are scheduled to report their earnings next week.
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