Analyzing Schlumberger’s Stock Price on May 12
Schlumberger’s stock price compared to the industry
In the past year, Schlumberger (SLB) stock fell 2% until May 12, 2017. Schlumberger has underperformed the VanEck Vectors Oil Services ETF (OIH), which has generated 2% returns. OIH is an ETF tracking an index of 25 OFS (oilfield equipment and services) companies. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, produced 4% returns in the past year. Schlumberger also underperformed the SPDR S&P 500 ETF (SPY), which produced 17% returns during the same period. The Dow Jones Industrial Average (DJIA-INDEX) rose 19% in the past year. The energy sector makes up 6.2% of the DJIA-INDEX.
Crude oil prices and rigs
In the past year, West Texas Intermediate crude oil prices recovered 4%. The hike in crude oil prices partially explains OIH’s returns. The rise in crude oil prices also prompted US rig count revival, which rose 118% in the past year. For the latest on crude oil prices, read US Crude Oil Futures: Why the Recovery Could Be Short-Lived.
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Schlumberger partnered with Pemex and YPF
On April 28, 2017, Schlumberger signed an agreement with Pemex related to a multiclient wide azimuth seismic survey in the southern Gulf of Mexico. Pemex is a Mexico-based and state-owned petroleum company. On April 14, Schlumberger made an agreement with YPF S.A. (YPF) related to a shale oil project to be developed in Bandurria Sur Block in Neuquén, Argentina. YPF is an Argentina-based integrated energy player. Schlumberger committed to investing $390 million in the project.
What could drive Schlumberger’s returns in 2017?
- On March 24, Schlumberger and Weatherford International (WFT) announced that they would form a joint venture called “OneStimSM.” The joint venture could drive Schlumberger’s returns in 2017. To learn more, read What to Expect from Schlumberger Stock after JV with Weatherford.
- Schlumberger’s management is skeptical about a sustained energy market recovery in 2017.
Latest on oilfield services industry
Read Which Oilfield Service Giant Stands Tallest after 1Q17? to learn how large cap OFS companies like Halliburton (HAL) and National Oilwell Varco (NOV) have been faring recently.
In this series, we’ll look at Schlumberger’s correlation with crude oil and investors’ short interest in the company. We’ll start with Schlumberger’s implied volatility.