uploads///Revenue Change

What’s Affecting Schlumberger’s Growth?

By

Updated

Schlumberger’s revenue growth by geography

Schlumberger’s (SLB) revenues were on a downward trend in 2015. Revenues from Schlumberger’s North America region declined the most in 2015, falling by 55%. Its Middle East/Asia region’s revenue fell moderately by 27% during the same period.

Article continues below advertisement

Schlumberger’s revenue growth by segment

All of Schlumberger’s three product segments witnessed revenue declines in 4Q15 over 4Q14. The Production segment witnessed the highest revenue drop (45%), followed by Drilling (35.5%) and Reservoir Characterization (34%). In comparison, Oceaneering International (OII), SLB’s peer, saw revenues fall 21% in 4Q15 compared to 4Q14. Its revenues were $722 million in 4Q15. SLB makes up 8.5% of the Energy Select Sector SPDR Fund (XLE). To learn more about SLB, read our series titled Against the Odds: How Schlumberger Keeps Delivering.

Schlumberger’s growth drivers and inhibitors

The following is a list of factors that have been affecting Schlumberger’s earnings in recent times:

  • lower onshore activity in North America
  • persistent pricing pressure on SLB’s products and services in North America
  • muted multiclient seismic license sales
  • lower drilling activity in Australia and the Asia-Pacific region
  • lower revenue in the Europe/CIS/Africa region, primarily as a result of weakness in Russia
  • strong performance in Saudi Arabia, Kuwait, and Oman

Why Schlumberger remains a strong player

In order to cut production costs, upstream companies will look for innovative technological solutions for their entire exploration and production process. New technology sales made up 24% of SLB’s total sales in 2015 and remained unchanged from the previous year. Better technology improves upstream companies’ reservoir performance.

Although limited multiclient seismic license sales in North America, reduced exploration, and lower deepwater activity remain SLB’s concerns, infrastructure development and technology integration should help it get through this rough period.

Next, we’ll discuss how SLB’s management outlook has evolved over the last few quarters.

Advertisement

More From Market Realist