MW Don't count on 'drill, baby, drill,' Schlumberger says

By Tomi Kilgore

Schlumberger's stock falls after a rare earnings miss, and a warning that a slowing economy and tariff policies could hurt oil-drilling demand

Shares of Schlumberger Ltd. slumped in early Friday trading after the provider of oil- and gas-drilling services reported a rare earnings miss, and said a slowing economy and current policies on trade could hurt drilling demand.

The company also missed first-quarter revenue expectations, citing a "subdued start to the year" amid particular weakness in its well construction and international businesses.

"The industry may experience a potential shift of priorities driven by changes in the global economy, fluctuating commodity prices and evolving tariffs - all of which could impact upstream oil and gas investment and, in turn, affect demand for our products and services," said Chief Executive Olivier Le Peuch.

Upstream refers to exploration and production, or pulling oil and gas out of the ground.

Schlumberger's outlook appears to run counter to the Trump administration's "drill, baby, drill" call to boost production and lower oil prices. The problem is that the lower prices go - as uncertainties surrounding tariffs and the global economy reduce demand - drilling becomes less profitable.

The stock $(SLB)$, which dropped 2% in premarket trading, has tumbled 19.8% since President Donald Trump's inauguration through Thursday.

Schlumberger's stock has shed 8.9% in 2025 through Thursday, while the Energy Select Sector SPDR ETF XLE has slipped 3.6% and the S&P 500 index SPX has slid 6.8%.

Meanwhile, crude-oil futures (CL.1), which were down 1.2% at $62.05 in recent trading, have also dropped 19.8% since the inauguration.

For the quarter to March 31, Schlumberger reported net income that dropped 25.4% from the same period a year ago to $797 million. Adjusted earnings per share, which excludes nonrecurring items, fell to 72 cents from 92 cents per share, missing the average analyst estimate compiled by FactSet of 73 cents.

That marked the company's first quarterly bottom-line miss in at least five years, according to available FactSet data back to April 2020.

Revenue declined 2.5% to $8.49 billion, falling short of the FactSet consensus of $8.60 billion.

Among the company's business segments, well-construction revenue sank 11.6% to $2.98 billion, well below the FactSet consensus of $3.09 billion, as international revenue was down 12% and North America revenue declined 10.4%.

Production-systems revenue rose 4.3% to $2.94 billion, but came up just shy of expectations of $2.95 billion, as North America revenue jumped 18.7% to $768 million but international revenue inched up just 0.1% to $2.17 billion.

-Tomi Kilgore

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April 25, 2025 08:36 ET (12:36 GMT)

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