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Schlumberger Refrains From Inking Fresh Field Management Pacts

Zacks Equity Research
TechnipFMC's (FTI) total backlog at the end of the first quarter is $17,777.6 million, reflecting year-over-year growth of 27%.

Per Paal Kibsgaard, CEO of Schlumberger Limited SLB, the company has decided not to enter into fresh field management agreements. 

Rather than inking such new deals, this largest oilfield service provider is likely to prioritize monetizing its prevailing contracts associated with Schlumberger Production Management (SPM). Under the SPM business,created in 2011, Schlumberger is engaged in developing the customers’ oilfields so that they can extend the life of the same and continue to increase production as well as cashflows.  

In its SPM business, Schlumberger has invested considerably over the past few years. This massive investment has led the company to generate neutral cashflow from the same operations in 2018. As a result, without spending further on new such projects, the company is willing to execute and monetize the current developments so that its SPM business could generate free cashflow since the beginning of 2019 as management stated.  

At the Scotia Howard Weil 2019 Energy Conference, Kibsgaard also informed that the company’s oilfield services business in the international market will improve in 2019. This was owing to fresh investment initiatives taken by the nations like China, Angola, Indonesia and Mexico where oil and natural gas production volumes have been declining over the past few years.  

However, in the land market of North America, this year’s investments in exploration and production activities will decrease more than 10% year over year, notified Kibsgaard. This, in turn, could hurt Schlumberger’s business in the continent.

Based in Houston, TX, Schlumberger currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Antero Resources Corporation AR, NGL Energy Partners LP NGL and Ultrapar Participacoes SA UGP. While Antero Resources and NGL Energy sport a Zacks Rank #1 (Strong Buy), Ultrapar carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is likely to see earnings growth of 20% in the next five years. 

NGL Energy is likely to witness earnings growth of 227% for the fiscal year ending March 2019.

Ultrapar is likely to see 25% earnings growth through 2019.

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