SLB (SLB) reported better-than-expected third-quarter results on Friday as a surge in North America revenue and momentum in its data center business offset weakness in its Middle East operations.
The oilfield services company’s adjusted per-share earnings fell to $0.64 for the September quarter from $0.69 a year earlier, but exceeded the FactSet-polled consensus of $0.62. Revenue grew 6% to $9.45 billion, while analysts expected $9.27 billion. The stock was up 6.5% in Friday trade, taking its year-to-date gains to more than 35%.
“SLB delivered solid third-quarter results with all regions growing sequentially — led by a gradual recovery in the Middle East, growth in North America land and broadening international activity in deepwater offshore basins,” Chief Executive Olivier Le Peuch said in a statement.
Revenue in the production systems division surged 15% to $4 billion, while digital revenue rose 5% to $693 million. Well construction revenue contracted 3% to $2.89 billion, though it exceeded the consensus of $2.82 billion. The reservoir performance also saw a 3% decline in revenue, to $1.63 billion, which also surpassed Wall Street’s projections.
By geographical area, North America revenue jumped 24% to $2.4 billion and was up 7% sequentially, with the ChampionX business generating $956 million. The company said its data center business also contributed to the sequential improvement.
The Latin America business logged an 18% increase to $1.75 billion, mainly due to stronger offshore activity in Brazil, Guyana and Mexico. Revenue in the Middle East and Asia fell 6% year over year to $2.81 billion, but was up 9% sequentially, with the Middle East operations accounting for about two-thirds of revenue in that area.
“In the Middle East, our business grew 13% sequentially despite late-quarter disruptions,” Le Peuch said. “Outside the region, growth was supported by higher activity in US land, highlighted by ChampionX achieving its highest quarterly revenue since the acquisition.” SLB, formerly known as Schlumberger, acquired rival ChampionX in 2025.
The company’s data center business, which designs and manufactures critical infrastructure components for hyperscalers, including cooling systems and other hardware, generated $230 million in revenue in the third quarter, up 23% from the prior quarter and 76% year over year.
SLB continues to expect its full-year 2026 capital investment to be about $2.5 billion, compared with the FactSet-polled consensus of $2.17 billion, while Le Peuch said the company sees “a very compelling outlook” for 2027 taking into account significant activity increases in Venezuela, expanding momentum across its businesses, “with further upside as Middle East activity recovers.”
“Our view of supportive market fundamentals remains firmly intact,” Le Peuch said. “Energy security and supply shocks continue to drive a quest for international supply diversification, reserve replacement and sustained production — driving a distinct upcycle, despite near-term uncertainty in the Middle East.”
On the earnings call, Le Peuch said global fourth-quarter revenue is expect to grow in the high single digits year on year, excluding the Middle East. Analysts are looking for fourth-quarter sales of $9.91 billion, which would indicate a 1.7% increase year over year.
“Over the past several weeks, the Middle East has continued to experience heightened tensions,” Le Peuch said, according to a FactSet transcript. “Given the ongoing uncertainty, our fourth quarter outlook assumes Middle East revenue remains flat sequentially at approximately $1.9 billion.”
Ahead of the third-quarter earnings release by SLB, Tudor Pickering Holt Analyst Matt Portillo said that “the situation remains dynamic, and even once a (Middle East conflict) resolution is reached, operational bottlenecks could be a drag on margins over 2027.”
“Despite these challenges, SLB has reported major contracts during the quarter inside and outside the Middle East (Oman, Saudi Arabia, Ivory Coast, Mozambique, Indonesia, Brunei), underscoring their optimism in the forward outlook, with the company also playing an active role in Venezuela given their incumbency,” Portillo said.
Earlier this week, SLB rival Halliburton (HAL) also reported stronger-than-expected third-quarter results.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
