Schlumberger’s one-week returns
The VanEck Vectors Oil Services ETF (OIH), which tracks an index of 25 oilfield equipment and service companies, underperformed SLB and rose 0.3%. The SPDR S&P 500 ETF (SPY) fell 1.3%, and the SPDR S&P Oil & Gas Equipment & Services ETF (XES) increased 1.1%. Schlumberger accounts for 0.40% of SPY.
Schlumberger’s YTD and three-month returns
Year-to-date, Schlumberger has produced -0.5% returns, marginally underperforming OIH’s 0.8% YTD return. In the past three months, SLB has returned 3.5% versus 10.0% returns from OIH. Helix Energy Solutions Group (HLX) has been the top performer in the OFS industry in the past three months, with 44.0% returns.
Crude oil’s price and rigs
On June 29, the WTI crude oil price (USO) was 8.1% higher compared to the previous week. Despite the strength in crude oil’s price, five rigs went offline in the United States in the week ended June 29. To learn more about oil prices, please read Is Oil Price Risk Rising?
Factors that have impacted Schlumberger’s returns
- There were increased sales of drilling and measurement products and services in North America due to high demand for rotary steerable systems. These systems are required to drill longer laterals in shale oil production.
- Seasonality impacted rig-related activities in the Northern Hemisphere and the North Sea. These activities dented Schlumberger’s integrated drilling services projects in the United Kingdom, Europe, the Far East, Australia, and Venezuela.
- On June 12, Patrick Schorn, SLB’s executive vice president, commented at the Wells Fargo West Coast Energy Conference that exploration and production spending is forecast to grow 15.0%–20.0% in North America in 2018. Tendering activity, which refers to invitation bids for projects, is expected to grow strongly in the international upstream energy market.
Next, we’ll discuss Schlumberger’s stock price forecast.