SLB (SLB) Stock Tumbles as Middle East Turmoil Hammers Q1 Earnings

Key Highlights

• First-quarter earnings decreased 6% year-over-year to $752 million (50 cents per share) versus $797 million in the prior year
• Geopolitical tensions in the Middle East compelled operational pullbacks in several nations
• Quarterly revenue climbed 2.7% to $8.72 billion, surpassing Wall Street projections of $8.63 billion
• Adjusted earnings per share reached 52 cents, marginally exceeding the 51-cent analyst consensus
• Adjusted EBITDA contracted 12% to $1.77 billion; company withheld annual guidance

Shares of SLB tumbled 3.7% during Friday’s premarket session following the oilfield services provider’s announcement of diminished first-quarter earnings, as escalating Middle East tensions significantly disrupted business activities.

SLB N.V., SLB

Chief Executive Olivier Le Peuch characterized the period as “a challenging start to the year,” noting that customer-directed demobilizations were implemented to safeguard workers and infrastructure across multiple territories.

Quarterly net earnings slipped 6% compared to the same period last year, settling at $752 million, equivalent to 50 cents per diluted share. This marked a decline from the $797 million, or 58 cents per share, recorded in the first quarter of 2025.

When adjusted for one-time items, earnings per share registered at 52 cents—narrowly surpassing the Street’s 51-cent projection, based on FactSet consensus data.

The company’s top line expanded 2.7% to $8.72 billion, outperforming analyst expectations of $8.63 billion. Despite the revenue upside, investor focus shifted to profitability concerns.

Adjusted EBITDA tumbled 12% to $1.77 billion, a metric widely viewed as the primary catalyst behind the premarket selloff.

Regional Performance: North America Strength Versus International Weakness

Revenue from North American operations surged 26% to $2.17 billion, delivering a notable bright spot amid broader headwinds.

Conversely, international revenue declined 3.8% to $6.47 billion—a direct consequence of Middle East-related operational disruptions affecting the company’s expansive global presence.

Management indicated that the well construction and reservoir performance segments bore the brunt of conflict-driven challenges.

SLB opted not to provide full-year financial projections. However, the firm reiterated its 2026 capital expenditure plan of $2.5 billion, representing a modest increase from the $2.4 billion deployed in 2025.

Leadership Anticipates Industry Rebound by 2027

Le Peuch noted that ongoing regional instability has “accelerated” the global rebalancing of liquid hydrocarbon supply and demand dynamics while highlighting critical weaknesses in energy infrastructure resilience.

He anticipates that nations will shift focus toward supply chain diversification and domestic resource cultivation once geopolitical stability returns.

The CEO also projected increased capital allocation toward short-cycle drilling programs across North America and Latin America, alongside expanded deepwater offshore initiatives.

“Absent a prolonged conflict leading to an economic slowdown and demand destruction, these supply responses reinforce our conviction of a broad-based recovery in upstream markets in 2027 and 2028,” he said.

Earlier this year in January, SLB had indicated that regional challenges were subsiding. Friday’s quarterly report painted a contrasting picture.

Premarket trading showed shares changing hands at $52.70, representing a decline from Thursday’s closing price.