Ricardo Pillai
2 min read
In This Article:
We came across a bullish thesis on Schlumberger Limited (SLB) on Business Model Mastery’s Substack. In this article, we will summarize the bulls’ thesis on SLB. Schlumberger Limited (SLB)'s share was trading at $33.34 as of 2nd June. SLB’s trailing and forward P/E were 11.30 and 10.29 respectively according to Yahoo Finance.
This company stands out as a digital and integrated powerhouse in the oilfield services sector, with its Digital & Integration segment delivering the highest operating margin at 33.2%, fueled by proprietary platforms like DELFI and a vast exploration data library.
The segment’s 10% year-over-year growth is driven by a successful SaaS transition and growing demand for AI-powered services. Over 81% of its operations are international, with the Middle East and Asia contributing 36% and expanding at an impressive 18.2% annual rate. This global orientation mitigates North American volatility and fosters deep, long-term client relationships, particularly with national oil companies.
Unlike competitors, the firm offers a unique full-stack solution from reservoir modeling to production optimization, vertically integrated across four segments that operate cohesively. This system-level approach results in high customer dependency and service bundling, reinforcing retention.
Its competitive moat is strengthened by decades of proprietary subsurface data, global regulatory expertise, AI-driven decision tools, and entrenched relationships with government-linked clients. Asset Performance Solutions (APS) contracts in regions like Ecuador and Canada bolster recurring, asset-linked revenue.
Operational excellence extends across divisions, with robust margins in Well Construction (21.2%), Reservoir Performance (20.2%), and Production Systems (15.6%), the latter seeing a 297 basis point margin expansion due to improved pricing and successful joint ventures.
Together, these elements reflect a company with strong financial discipline, resilient growth drivers, and a defensible market position, making it an attractive investment opportunity in the evolving energy landscape where digital capabilities and international integration are becoming increasingly vital.
For a comprehensive analysis of another standout stock covered by the same author, we recommend reading our summary of this bullish thesis on West Pharmaceutical Services, Inc. (WST).
Schlumberger Limited (SLB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held SLB at the end of the first quarter which was 80 in the previous quarter. While we acknowledge the potential of SLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
