SLB’s long-term future looks brighter than the short term, CEO Olivier Le Peuch said on April 25 on the company’s first-quarter earnings call, echoing the comments of other oilfield services operators this week.
Supply-demand imbalance and recent tariff announcements made by the Trump administration have the energy sector navigating economic uncertainty on a global level, Le Peuch said in the call.
“Commodity prices are challenged. Until they stabilize, customers are likely to take a more cautious approach to near-term activity and discretionary spending.”
SLB reported net income of $797 million on revenue of $8.49 billion in the quarter, down from $1.068 billion and $8.71 billion a year earlier. Well construction revenue fell 12% from first-quarter 2024 to $2.98 billion.
Le Peuch said “trade concerns” may reduce demand for oil & gas this year. Crude futures began sinking from over $70/bbl after President Donald Trump announced sweeping tariffs on April 2 affecting almost every country in the world. The tariff situation has fluctuated through the month. Crude is now trading near $63.
SLB CFO Stephane Biguet said the company is already engaging with customers to recover tariff-induced cost increases through contractual adjustments.
“As the second quarter progresses and ongoing trade negotiations continue, we will hopefully gain better visibility of where tariffs may settle and the extent to which we will be able to mitigate the effects on our business,” he said.
Like the CEOs of Halliburton, Baker Hughes and Weatherford International earlier in the week, Le Peuch said the year ahead looks uncertain and the longer term looks solid.
“We expect global upstream investment to decline compared to 2024, with customer spending in the Middle East and Asia being more resilient than other regions,” he said. “We remain positive on the long-term outlook for oil & gas, and we’ll continue to deepen our partnerships with our customers throughout the life cycle of their assets.”
Le Peuch expects a “rebound in commitment to exploration” to continue, brightening SLB’s outlook in the longer term.
“I think you are seeing it to FIDs that we expect to be piling up in 2026, 2027 that will impact subsea business going forward,” he said.
Le Peuch said SLB will aim to keep its EBITDA margin, which was 23.8% in the first quarter, at 25% for the year. The tariffs are “a big question mark” that could change that math.
“We have been here before,” he said. “We’re operating from a strong position and have a clear priority of preserving margins while generating robust cash flows.”
SLB also said it expects to complete its acquisition of services provider ChampionX in the second or early third quarter. Talks with the competition authorities in the U.K. and Norway are going well, Le Peuch said.