Schlumberger Limited (SLB) is expected to gain international pricing power for its international oil services as the gap between the large services contracts and the large equipment awards comes to a close, performing better than large peers with more of a North American exposure, says Edward C. Muztafago, Vice President of Investment Research at Societe Generale Group.
“You have the potential to see an international recovery kick in as you get into the back half of the year, and I think that gives Schlumberger a lot of tailwind on a relative basis. They generate about 70% of their revenue from international, where Baker (BHI) and Halliburton (HAL) are a little closer to 45% or 50%,” Muztafago said.
Muztafago rates Schlumberger a “buy,” and he says the company’s technology leads the group with a heavy focus reservoir optimization with data and technology suites oriented towards fracture mapping, and also through Framo Engineering, its subsea boosting pump division. The company’s technology is expected to prove helpful as international offshore demand grows.
“There is somewhat of that shift offshore internationally as well, because as you start to go into some of these ultradeepwater projects, there’s really only handful of service companies that can ultimately provide the services to drill these high-end exploration wells. So we’ve been somewhat positive on the multiservice names overall for quite some time, regardless of our opinions on what may happen relative in North America right now,” Muztafago said.
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