With the Acquisition of ChampionX, SLB's Opex Exposure Looks More Attractive

SLB focuses its strategy through three growth engines: core, digital, and new energy. Our thesis mostly relies on SLB's first two growth engines, specifically its offshore business outside of North America and its digital offerings. Market bears seem concerned over a possible recession, a slowdown in the exploration and production capital expenditure cycle, and that the acquisition of ChampionX dilutes shareholder value. We disagree that ChampionX diluted value and think parts of the cycle could be more resilient than the market appreciates.