Key Takeaways
- First-quarter net income declined 6% year-over-year to $752 million (50 cents per share) from $797 million previously
- Geopolitical tensions in the Middle East led to widespread operational demobilizations in multiple regions
- Total revenue increased 2.7% to $8.72 billion, surpassing Wall Street’s $8.63 billion forecast
- Adjusted earnings per share reached 52 cents, narrowly exceeding the analyst consensus of 51 cents
- Adjusted EBITDA tumbled 12% to $1.77 billion; company withheld full-year financial projections
Shares of SLB plunged 3.7% during Friday’s premarket session following the energy services provider’s disappointing first-quarter earnings report, which highlighted the significant operational toll of Middle East instability.
Chief Executive Olivier Le Peuch characterized the period as “a challenging start to the year,” noting that the company had been compelled to withdraw operations across multiple countries as clients prioritized the safety of workers and infrastructure.
The company’s net income retreated 6% from the prior-year period to $752 million, translating to 50 cents per share. This marks a decline from the $797 million, or 58 cents per share, recorded in the first quarter of 2025.
Adjusted earnings came in at 52 cents per share — marginally beating the FactSet consensus estimate of 51 cents.
While revenue climbed 2.7% to reach $8.72 billion, exceeding analyst projections of $8.63 billion, the top-line strength failed to alleviate investor concerns about deteriorating margins.
Adjusted EBITDA dropped 12% to $1.77 billion, a figure that likely triggered much of the premarket selling pressure.
North American Strength Contrasts With International Weakness
Revenue from North American operations surged 26% to $2.17 billion, delivering a rare bright spot amid broader challenges.
Conversely, international revenue contracted 3.8% to $6.47 billion — a clear indication of how Middle Eastern disruptions have affected the company’s worldwide operations.
According to company statements, the well construction and reservoir performance segments bore the brunt of the regional conflict’s impact.
SLB opted not to provide full-year earnings guidance. However, management confirmed its capital expenditure plan of $2.5 billion for 2026, representing a modest increase from the $2.4 billion deployed in 2025.
Leadership Anticipates 2027 Market Rebound
Le Peuch noted that the ongoing conflict has “accelerated” the rebalancing between global oil supply and demand while revealing critical weaknesses in energy infrastructure.
He anticipates that nations will place greater emphasis on supply chain diversification and domestic energy development once regional tensions subside.
The CEO also projected increased capital allocation toward short-cycle drilling projects throughout North America and Latin America, alongside expanded deepwater offshore initiatives.
“Absent a prolonged conflict leading to an economic slowdown and demand destruction, these supply responses reinforce our conviction of a broad-based recovery in upstream markets in 2027 and 2028,” he stated.
Earlier in January, SLB had indicated that its regional challenges were largely resolved. Friday’s quarterly results painted a markedly different picture.
Premarket trading showed shares at $52.70, representing a decline from Thursday’s closing price.
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