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$101.88 -1.48 (-1.43%)
7/3/2008 1:02 PM

Schlumberger Limited (ADR) (SLB)

CAPS Rating:
*****

An oilfield services company, supplying technology, project management and information solutions that optimize performance in the oil and gas industry. It consists of two business segments: Schlumberger Oilfield Services and WesternGeco.

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Avatar NetscribeEnergy (99.42) Submitted: 11/13/06 7:34 AM : Outperform Start Price: $62.46 SLB Score: 71.69

“Better buy, than worry” goes with Schlumberger, the world’s leading oilfield services company; supplying technology, project management and information solutions that optimize performance in the oil and gas industry. It is a market leader to provide 3D and 4D seismic data through its proprietary products and technology and operates across the globe. Schlumberger relies on the oil and gas exploration and production sector and the level of exploration and production spending undertaken. This trend has seen an upward movement with a growth of 20% in 2005 and expected growth of over 20% in 2006 and 2007. The exploration and production companies are chasing oil in more complex locations which leaves huge potential for Schlumberger.

The Q technology – a proprietary technology for enhanced reservoir description, characterization, and monitoring throughout the life of the field – has witnessed impressive growth and is expected to perform even better in the future. With constant focus on research and development and new technology innovation the company has been able to be at the top in every product market.

However, a recent executive order prohibiting US citizens from engaging in oil production in Sudan can affect the top-line. Further, operations in Iraq and Nigeria can be hampered due to political unrest in the area. Additionally, the recent news about a French seismic company Compagnie Generale de Geophysique's proposed acquisition of Veritas in the late 2006 will affect the company. The combined entity will be the number one with the largest 3D seismic fleet. Considering the positives and the negative we believe that the stock will win all hearts in the near future.

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Avatar bobbydove (< 20) Submitted: 12/14/06 4:13 PM

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a risk/reward i can easily sleep with...

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Avatar prose976 (80.31) Submitted: 6/02/07 3:22 AM

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NetscribeEnergy, thanks for the pitch. I want to invite you to read my latest blog entry and give me some feedback. Thanks. Fool on! Philip

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Avatar NetscribeEnergy (99.42) Submitted: 6/06/07 2:27 AM

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Schlumberger growth looks intact. SLB reported 28.9% increase in operating revenues for the first quarter of 2007 driven by strong growth from both of company’s oilfield services and WesternGeco segments. Oilfield Services, the company’s largest segment comprises of 87.1% in revenues witnessed stronger international activity coupled with efficiency gains in North America market.

Globally strong crude oil and natural gas prices have prompted energy producers to spend heavily to increase output over the past three years. Higher costs for oilfield services, equipment and labor have also pushed up spending. Globally spending on exploration and production is expected to increase 3.6% Y/Y to $308 billion for 2007. The increase is largely expected to come outside the United States and Canada, with spending in the international markets likely to rise. As a result, SLB is well positioned to benefit from growing demand for oilfield services technology, particularly in frontier regions such as the Middle East, Africa, and Eastern Europe.

For the first quarter 2007, Schlumberger margins from oilfield services segment increased 390 bps Y/Y to 29.5% benefited from increased exploration spending by state-run oil companies and margins from WesternGeco segment improved 142 bps Y-o-Y to 37.7% driven by large- scale projects in the Gulf of Mexico. The company expects strong growth from its WesternGeco segment’s seismic business to continue on account of strong land and marine activity. With increase in global spending for exploration and production activities, right product-mix and presence in international markets, SLB is all set to steal the show.


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