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Schlumberger Receives Master Contract From Chevron in GoM

Zacks Equity Research

Schlumberger Limited SLB recently received a 20-year equipment and services contract from Chevron Corporation CVX for development projects in the Gulf of Mexico (GoM).

Per the deal, Schlumberger will provide innovative technologies, as required by Chevron’s GoM projects. The OneSubsea equipment of Schlumberger is expected to perform under high temperatures and pressures, which in some cases can reach up to 20,000 psi, at several thousand feet below the seabed.

The financial details of the deal are yet to be disclosed. The master contract, in combination with a preapproved catalog of standard subsea equipment, is expected to reduce Chevron’s operating costs in GoM subsea projects and optimize project efficiency. Through the deal, Schlumberger is expected to help Chevron reduce cycle times for its future GoM subsea projects.

The master contract comes at an opportune time when the offshore exploration and production industry is on recovery mode. Conservative spending by explorers and producers haunted oilfield service providers with curbed demand. Notably, being the leading provider of technology for complex oilfield projects, Schlumberger is better positioned than most of its peers to take up new offshore projects in the basins outside North America.

Houston, TX-based Schlumberger is a leading oilfield services company, providing services to upstream energy companies across the world. It recently reported second-quarter 2019 earnings of 35 cents per share (excluding charges and credits), which was in line with the Zacks Consensus Estimate, owing to contributions from drilling operations in international markets.

Price Performance

Schlumberger has gained 10.1% year to date compared with 15% rally of its industry.

Zacks Rank and Stocks to Consider

Currently, Schlumberger carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Oceaneering International, Inc. OII and Subsea 7 SA SUBCY. While Oceaneering has a Zacks Rank #1 (Strong Buy), Subsea 7 holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Oceaneering’s sales growth is projected at 12.6% through 2019.

Subsea 7 surpassed earnings estimates in three of the trailing four quarters, with the average positive surprise being 108.8%.

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Schlumberger Limited (SLB) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report
Subsea 7 SA (SUBCY) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
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