Schlumberger: Is the Worst Over?

Oilfield services stocks surely have the distinction of the most hated of the hated energy stocks in recent years. Strict capital discipline by exploration and production (E&P) companies in oversupplied markets has impacted oilfield service providers. In the last five years, top oilfield stocks have fallen roughly 60% while the broader markets rallied by the same percentage points. However, certain key factors make Schlumberger (NYSE: SLB) look better placed than its peers in the face of weak North America activity.

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Schlumberger's international revenue grew 7% in 2019. Increased activity by the E&P companies contributed to the growth in Schlumberger's revenue. After a long period of underinvestment, international operators have started investing in resource development for the long-term. Slower North American production growth may further stimulate investments by international operators as they act to fill potential supply gaps. This trend should continue to benefit Schlumberger, which earns more than 60% of its revenues from international markets.

Source Fool.com