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Will the US Rig Count Affect Schlumberger in 4Q16?

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Dec. 2 2016, Updated 11:05 a.m. ET

Schlumberger’s North America revenue

In 3Q16, Schlumberger’s (SLB) revenue share from its North America operations came down. In 3Q16, its North America revenue share fell to 24%—compared to 29% in 3Q15. So, the company has steadily diversified away from North America in the past year. International operations contributed 76% of its 3Q16 revenues. In comparison, Halliburton’s (HAL) revenue share from North America fell marginally in 3Q16 compared to 3Q15.

Schlumberger accounts for 0.47% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 6.7% of IWV.

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US rig count

According to Baker Hughes (BHI), the US rig count fell 38% in 3Q16 compared to 3Q15. The US rig count reached its multiyear high in September 2014. Since then, it fell 69% until November 25, 2016.

However, from September 30 until the week ending November 25, the US rig count rose 14% and closed at 593. In comparison, the international rig count fell 1% in October compared to a month ago. A higher US rig count can increase Schlumberger’s revenues and earnings in 4Q16.

Next, we’ll discuss Schlumberger’s revenue and earnings.

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