Stock Analysis & Valuation Schlumberger Limited (SLB.PA)

• Previous Close: €40.60
• Sector Valuation Confidence Level: Low

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	3.50	-91
Graham Formula	46.60	15

Strategic Investment Analysis

Company Overview

Schlumberger Limited (SLB.PA) is a global leader in providing cutting-edge technology and services for the energy industry. Headquartered in Houston, Texas, and listed on Euronext Paris, Schlumberger operates through four key divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. The company offers a comprehensive suite of solutions, including reservoir characterization, drilling optimization, production enhancement, and digital transformation services for oil and gas exploration and production. With a history dating back to 1926, Schlumberger has established itself as a trusted partner for energy companies worldwide, leveraging advanced data analytics, AI-driven solutions, and integrated project management to improve operational efficiency and sustainability. As the energy sector transitions toward cleaner technologies, Schlumberger is positioning itself as a critical enabler of both traditional hydrocarbon extraction and emerging low-carbon energy solutions. The company's global footprint, technological expertise, and diversified service portfolio make it a key player in the Oil & Gas Equipment & Services industry.

Investment Summary

Schlumberger presents a compelling investment case due to its dominant market position, technological leadership, and diversified revenue streams in the energy services sector. The company's strong financial performance, with FY 2024 revenue of €36.29 billion and net income of €4.46 billion, demonstrates resilience in a cyclical industry. However, investors should consider the inherent volatility of the oilfield services sector, reflected in Schlumberger's beta of 1.566. The company's €12.99 billion in total debt warrants monitoring, though its robust operating cash flow of €6.6 billion provides financial flexibility. Schlumberger's dividend yield of approximately 1.8% (based on a €1.01 per share dividend) offers income potential, while its investments in digital transformation and sustainable energy solutions position it for long-term growth. The stock may appeal to investors seeking exposure to energy sector recovery with a technologically advanced industry leader.

Competitive Analysis

Schlumberger maintains a competitive advantage through its unparalleled global scale, technological innovation, and integrated service offerings. The company's Digital & Integration division provides a unique edge with its industry-leading software platforms like DELFI, which enables AI-driven exploration and production optimization. Schlumberger's vertical integration across the oilfield services value chain allows it to deliver comprehensive solutions that few competitors can match. The company invests heavily in R&D (€1.2 billion annually), focusing on digital technologies and sustainable solutions that differentiate it from traditional service providers. Schlumberger's strategic partnerships with national oil companies and major independents create long-term revenue visibility. However, the company faces pricing pressure from smaller, more nimble regional competitors and must continually innovate to justify its premium service pricing. Its recent focus on carbon capture and new energy technologies positions it well for the energy transition but requires significant ongoing investment. Schlumberger's main competitive weaknesses include high fixed costs from its global infrastructure and exposure to cyclical oil price downturns that can rapidly reduce drilling activity.

Major Competitors

• Halliburton Company (HAL): Halliburton is Schlumberger's closest competitor in integrated oilfield services, with particular strength in North American pressure pumping and completion services. While smaller than Schlumberger globally, Halliburton often competes aggressively on price in key markets. The company has a more concentrated geographic exposure to North America (about 45% of revenue) compared to Schlumberger's more balanced international presence. Halliburton's digital initiatives like the DecisionSpace 365 platform compete directly with Schlumberger's DELFI ecosystem but with less global adoption.
• Baker Hughes Company (BKR): Baker Hughes has transformed into an energy technology company with growing focus on industrial and new energy solutions. Its strength in gas turbine technology and LNG equipment provides differentiation from Schlumberger's more oil-focused portfolio. Baker Hughes' partnership with GE gives it unique capabilities in turbomachinery but makes it less pure-play in oilfield services than Schlumberger. The company's newer energy transition businesses (carbon capture, hydrogen) compete with Schlumberger's similar initiatives but with different technology approaches.
• Weatherford International (WFTLF): Weatherford is a smaller but aggressive competitor that emerged from bankruptcy in 2019 with a restructured balance sheet. The company specializes in well construction and completion services where it often undercuts larger rivals on price. Weatherford lacks Schlumberger's scale and technology depth but can be more flexible in local markets. Its financial recovery remains work in progress compared to Schlumberger's established profitability.
• National Oilwell Varco (NOV): NOV competes primarily in Schlumberger's Well Construction segment with its drilling equipment and technologies. The company is stronger in offshore drilling equipment but lacks Schlumberger's service breadth and digital capabilities. NOV's cyclical exposure is more pronounced due to its capital equipment focus versus Schlumberger's more balanced service revenue streams. The company has been slower than Schlumberger in developing digital oilfield solutions.
• Tenaris S.A. (TS): Tenaris is a global leader in tubular products that competes with Schlumberger's Production Systems segment. The company has superior manufacturing capabilities in steel pipes but lacks Schlumberger's comprehensive service offerings. Tenaris benefits from long-term relationships with national oil companies but is more vulnerable to trade policies and raw material costs than service-focused Schlumberger.