SLB - Embedded Expectations Analysis - 2020 04 08
ï€ Schlumberger Limited (SLB:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.7x Uniform P/E. Even at these levels, the market has bullish expectations for the firm, but management appears concerned about their North America Land strategy, international revenue growth, and working capitalï€ Specifically, management may have concerns about North American market contraction, their North American Land strategy execution, and negative pricing pressure on large integrated contracts. In addition, they may lack confidence in their ability to expand their international margins, realize mid-single digit growth in their international segment, and sustain Reservoir Characterization segment performance. Moreover, they may be exaggerating the progress of their technology and integration initiatives and the ability of international activity growth to improve the firm's revenue quality. Furthermore, they may have concerns about declines in their total available capacity, ongoing restructuring charges, and reduced working capital liquidity in H1 2020 due to year-end bonuses. Finally, they may lack confidence in their ability to keep improving their net debt position and sustain organization momentum and customer satisfaction
Schlumberger provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The company has four segments: Reservoir Characterization, which consists of the principal technologies involved in finding and defining hydrocarbon resources; Drilling, which consists of the principal technologies involved in the drilling and positioning of oil and gas wells; Production, which consists of the principal technologies involved in the lifetime production of oil and gas reservoirs; and Cameron, which consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.
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