SLB (NYSE: SLB) became the latest oilfield services giant to sound the alarm on shrinking producer budgets and tariff headwinds, after posting a first-quarter earnings miss amid steep drilling declines in Mexico, Russia, and Saudi Arabia. The company’s warning mirrors bleak outlooks from rivals Halliburton and Baker Hughes, underscoring a sector-wide contraction as oil companies prioritize shareholder returns over expansion.
Key Takeaways
- Earnings Miss: Adjusted EPS of 0.72∗∗fellshortofthe∗∗0.72∗∗fellshortofthe∗∗0.74 consensus, with revenue down 3% YoY to $8.7B.
- International Slump:
- Latin America: Revenue plunged 10% ($1.5B) on Mexico’s drilling collapse.
- Russia/Saudi Arabia: Sanctions and delayed projects dented results.
- North America Bright Spot: 8% revenue growth, fueled by data center demand—but U.S. shale drilling weakened.
Tariffs & Cost Cuts
- 50% of SLB’s operations face tariff risks, particularly U.S.-China trade flows.
- Plans to pass costs to customers and cut jobs (per earlier Reuters reports).
- Targets 50–100 bps margin improvement in Q2 despite trade pressures.
Industry-Wide Retreat
- Halliburton: Warned of Q2 profit hits from tariffs and North America slowdown.
- Baker Hughes: Flagged deeper global spending cuts by producers.
- Macro Drag: Brent crude near $83/bbl isn’t spurring new investments.
What’s Next?
- OPEC+ May Meeting: Potential output hikes could further pressure service demand.
- H2 2025: SLB sees flat to mid-single-digit revenue growth, hinging on Middle East/Asia resilience.
Why This Matters:
- Investor Reality Check: The oilfield services slump has legs, with tariffs compounding pain.
- Geopolitical Risk: SLB’s Russia/Saudi exposure highlights sanctions’ ripple effects.
- Sector Shift: Data centers and offshore projects may offset onshore declines.
Data Point: SLB’s international revenue (6.73B)nowdwarfsNorthAmerica’s(6.73B)nowdwarfsNorthAmerica’s(2.0B), reflecting shale’s waning dominance.
SLB Joins Oilfield Services Slump, Warns of Spending Cuts and Tariff Pain After Q1 Miss