Schlumberger’s 1-week returns vis-à-vis the industry
Schlumberger’s (SLB) one-week returns were 2.0% until September 22, 2017. Since September 15, 2017, the Energy Select Sector SPDR ETF (XLE) has risen 2.0%. XLE represents the broader energy industry. The VanEck Vectors Oil Services ETF (OIH), which represents 25 oilfield services stocks, also saw 2.0% one-week returns. So SLB has performed in line with XLE and OIH in the past week. The Dow Jones Industrial Average (DJIA-INDEX) remained unchanged in the past week through September 22, 2017. The SPDR S&P 500 ETF (SPY), since September 15, 2017, has underperformed SLB. SPY has produced zero returns during that period.
Crude oil price and rigs
On September 22, 2017, the WTI (West Texas Intermediate) crude oil price was 2.0% higher than a week ago. Despite crude oil prices gaining strength, the US rig count fell by one in the past week through September 22, 2017. You can find out more about the energy sector’s recent drivers in Market Realist’s What if US Crude Actually Does Stay above $50? You can also read Wall Street’s expectations on OFS (oilfield services and equipment) companies, including National Oilwell Varco (NOV) and Weatherford International (WFT), in Market Realist’s The Top and Bottom of Oilfield Service Stocks in 3Q17.
Recent events that could affect Schlumberger’s returns
- On September 13, 2017, SLB announced that it introduced the DELFI cognitive E&P (exploration and production) environment. On that day, it introduced the DrillPlan digital well construction planning solution as the initial step toward the DELFI environment. DELFI is designed to leverage digital technologies such as security, analytics and machine learning, high-performance computing, and the Internet of Things to improve efficiency and production.
- SLB expects US onshore energy activity to remain strong in the second half of 2017. So SLB’s hydraulic fracturing calendar is booked well into 4Q17 on improved demand for drilling services.
- SLB is scheduled to complete the OneStim joint venture (or JV) with Nabors Industries (NBR) in the second half of 2017. The JV will provide additional hydraulic horsepower capacity and a full suite of multi-stage completion technology.
- Russia’s and OPEC[1. Organization of the Petroleum Exporting Countries] Gulf countries’ strong activities in the remainder of 2017 could benefit Schlumberger.
- On July 20, 2017, SLB signed an agreement with EDC (Eurasia Drilling Company) to acquire a 51.0% controlling stake in EDC. According to the media, the Federal Antimonopoly Service (or FAS) of Russia, the country’s competition regulator, may object to Schlumberger’s proposed acquisition of EDC.
You can read more on Schlumberger in Schlumberger Sees Twists and Turns before Its Recovery.
In this series, we’ll look at Schlumberger and its correlation with crude oil. Let’s start by looking at Schlumberger’s stock price forecast.