Transitory Shock, Durable Growth Cycle

Research evidence excerpt

Transitory Shock, Durable Growth Cycle

accounting

EPS Q1 $0.52A $0.68 $0.81 for a dominant position in the ~$100 Bn of expected FIDs. While the

Q2 $0.55A $0.79 $0.91

Q3 $0.62 $0.86 $0.99 market got a fulsome update on the digital offering at last month’s

Q4 $0.80 $1.00 $1.14 analyst event, it was good to see top line and margin pull through here

FY $2.49 $3.33 $3.85 although early days. Absent from this event was a more fulsome update

on the datacenter solutions business where SLB looks to be delivering

on all strategies (expand customers, expand geographies, expand

1 Year Price History scope) with visibility offered to the 2027 exit rate ARR (based on

existing project backlog). Important context, SLB has thoughtfully

repositioned the portfolio and invested in growth opportunities that look

more secular vs. cyclical in terms of the leverage to broader E&P

spending trends. The 2Q update should clear some of the uncertainties

on the direction of estimates with momentum building into 2027 which

should likewise lift the multiple. Maintain Outperform.

The Middle East conflict is proving transitory rather than

structural, with broad-based international growth, a firming

commodity backdrop, and an emerging offshore cycle offsetting

the near-term disruption. The 2Q print was solid, with revenue of $9.0

billion, up 3% sequentially, despite the Middle East continuing to remain

Source: FactSet an overhang, with regional revenue declining by 13% sequentially to

$1.66 billion. The disruption has heightened the need to replenish

commercial inventories (+SPR), diversify supply, and secure long-term

domestic energy, giving us confidence in our read that the macro

backdrop is firming rather than fading. A range-bound and constructive