Key Takeaways
- First-quarter earnings declined 6% year-over-year to $752 million (50 cents per share) versus $797 million previously
- Geopolitical tensions in the Middle East compelled operational shutdowns in several nations
- Top-line performance increased 2.7% reaching $8.72 billion, surpassing Wall Street projections of $8.63 billion
- Adjusted earnings per share hit 52 cents, narrowly exceeding the consensus forecast of 51 cents
- Adjusted EBITDA plummeted 12% to $1.77 billion; company withheld annual financial outlook
Shares of SLB tumbled 3.7% during premarket hours Friday following the oilfield services giant’s announcement of weakened first-quarter earnings, as persistent Middle East instability severely impacted business activities.
Chief Executive Olivier Le Peuch characterized the period as “a challenging start to the year.” Operational shutdowns became necessary across multiple nations as clients prioritized safeguarding employees and infrastructure.
Quarterly earnings declined 6% from the prior-year period to $752 million, translating to 50 cents per share. This marks a decrease from $797 million, or 58 cents per share, recorded in the first quarter of 2025.
Adjusted earnings per share reached 52 cents—marginally surpassing analyst projections of 51 cents, based on FactSet data.
Top-line figures climbed 2.7% to $8.72 billion, exceeding the Street’s $8.63 billion estimate. Despite the revenue outperformance, investor anxiety centered on deteriorating margins.
Adjusted EBITDA contracted 12% to $1.77 billion, emerging as the primary catalyst behind the premarket selloff.
North American Strength Offset by International Weakness
North American operations delivered robust growth with revenue surging 26% to $2.17 billion, providing partial cushioning against broader headwinds.
Conversely, international revenue contracted 3.8% to $6.47 billion—a direct consequence of Middle Eastern disruptions affecting SLB’s worldwide operations.
The well construction and reservoir performance segments absorbed the heaviest blows from the regional conflict, according to company statements.
SLB opted against providing full-year financial projections. Management reaffirmed its $2.5 billion capital expenditure plan for 2026, representing a modest increase from the $2.4 billion deployed in 2025.
Leadership Anticipates 2027 Turnaround
Le Peuch noted that the conflict has “accelerated” the rebalancing of worldwide liquid supply-demand dynamics while revealing fragilities in energy infrastructure.
He anticipates nations will emphasize supply chain diversification and boost domestic resource development initiatives following conflict resolution.
Le Peuch projected increased capital allocation toward short-cycle North American and Latin American projects, alongside deepwater offshore expansion.
“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 said.
Earlier in January, SLB had indicated its regional challenges were subsiding. Friday’s financial disclosure painted a contrasting picture.
Premarket trading showed shares at $52.70, representing a decline from Thursday’s closing price.
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