SLB Revenue Hurt by Falling Commodity Prices

SLB (SLB) shares slumped Friday as a lower trend in oil and gas prices hurt quarterly results for the big oilfield services provider.

SLB reported third-quarter revenue rose 10% year-over-year to $9.16 billion, about $100 million short of consensus estimates by analysts surveyed by Visible Alpha. Earnings per share (EPS) of 83 cents came in 4 cents below forecasts.

North American revenue rose 3% to $1.69 billion, held back by “lower drilling activity in U.S. land as the market remained constrained by gas prices and ongoing capital discipline by operators,” Chief Executive Officer (CEO) Olivier Le Peuch said in remarks after the earnings were posted.

International revenue soared 12% to $7.43 billion, boosted by slightly higher Middle East & Asia demand, but Latin American revenue declined by 3%.

CEO Notes ‘Cautionary Approach’ by Customers

Le Peuch said that “commodity prices have been under pressure” over the past few months. He blamed that on “uncertainty around OPEC+ supply releases, weaker demand from China, and softer economic growth rates in the U.S. and Europe.” Le Peuch said those factors “resulted in a cautionary approach to activity and discretionary spend by many customers” that were borne out in the earnings report.

Shares of SLB skidded about 4% to $42.25 Friday afternoon. They are down 19% year-to-date. 

SLB wasn’t alone in feeling the effects of falling commodity prices Friday. The S&P Energy Sector Index fell as crude and natural gas futures pulled back slightly.