Company Reports

SLB announced it is acquiring Kelvion, a global provider of data center thermal management and heat exchange technologies. It's paying roughly 11 times unadjusted 2026 EBITDA, or 8.5 times when baking in its anticipated synergy target by year three. The stock rose 5% during the trading day.

SLB's strategy focuses on three growth engines: core, digital, and new energy. Our thesis relies on all three factors. Specifically, we believe SLB stands to outperform peers based on its productivity solutions—through the acquisition of ChampionX—its industry-leading digital offerings, and its newer bet on data center solutions, where we think the market could quadruple by 2030 from 2024 levels. SLB added to this bet with its acquisition of Kelvion, which we expect to close in early 2027. It's acquiring Kelvion at an attractive price, and the business should offer substantial long-term growth while meaningful improving SLB's go-to-market solution as it has no thermal management offerings previously.

SLB reported second-quarter revenue of $8.97 billion, a 3% sequential growth, and 5% year on year. Unsurprisingly, both digital and production systems drove these results as customers seek to maximize production output from current assets during a volatile macroeconomic backdrop.

SLB's strategy focuses on three growth engines: core, digital, and new energy. Our thesis relies on all three factors. Specifically, we believe SLB stands to outperform peers based on its productivity solutions—through the acquisition of ChampionX—its industry-leading digital offerings, and its newer bet on data center solutions, where we think the market could quadruple by 2030 from 2024 levels.

SLB's first-quarter revenue of $8.7 billion was up 3% year on year, aided by the acquisition of ChampionX. Still, adjusted EBITDA margin declined 346 basis points year on year to 20.3%. The conflict in the Middle East posed a meaningful margin headwind due to volume deleverage from shut-ins.

SLB's strategy focuses on three growth engines: core, digital, and new energy. Our thesis relies on all three factors. Specifically, we believe SLB stands to outperform peers based on its productivity solutions—through the acquisition of ChampionX—its industry-leading digital offerings, and its newer bet on data center solutions, where we think the market could quadruple by 2030 from 2024 levels.

Over the March 14-15 weekend, the US conducted large-scale strikes on Kharg Island, according to NBC News. The island houses Iran's critical crude export terminal, which ships over 90% of Iran's crude exports. We understand that the strikes focused on military targets and avoided oil infrastructure.

SLB's strategy focuses on three growth engines: core, digital, and new energy. Our thesis relies on all three factors. Specifically, we believe SLB stands to outperform peers based on its productivity solutions—through the acquisition of ChampionX—its industry-leading digital offerings, and its newer bet on data center solutions, where we think the market could triple by 2030 from 2024 levels.

SLB's fourth-quarter top line of $9.75 billion surpassed our expectations, though earnings were in line. Results were buoyed by the digital and production systems businesses, whose pretax earnings respectively rose 50% and 19% sequentially.

On the morning of Jan. 3, 2026, US forces deposed Venezuelan leader Nicolas Maduro. US President Donald Trump indicated the US will run Venezuela until there can be a "proper transition" and has highlighted his desire to substantially increase US private investment in Venezuela's oil infrastructure.

Major crude oil benchmarks rose slightly on Dec. 17 on news of a US blockade in Venezuela. The US has ramped up pressure following the seizure of an oil tanker a week prior. Both West Texas Intermediate and Brent each fell 5% during the week to lows of $55 per barrel and $59/bbl, respectively.

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

Following the July 16, 2025, completed acquisition of ChampionX, SLB reported fully integrated revenue of $8.9 billion and adjusted EBITDA of $2.1 billion. Production systems revenue grew 14% year on year, helped by ChampionX, though digital grew a meager 3% year on year. The stock declined 2%.

Over the past year, OPEC+ has authorized several crude production increases that could oversupply the market next year. The US EIA expects global production will rise by roughly 3.0 million barrels per day by year-end from last year, while demand will grow by only 1.2 million barrels per day.

SLB focuses its strategy through three growth engines: core, digital, and new energy. Our thesis primarily 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 the acquisition of ChampionX, diluting shareholder value. We disagree that ChampionX diluted value and think parts of the cycle could be more resilient than the market appreciates.

We've updated our midcycle oil price assumption. Our 10-year forecast marries our bullish in-house oil demand view with Rystad's supply projections, which aligns with our revised, long-term take.

SLB focuses its strategy through three growth engines: core, digital, and new energy. Our thesis primarily 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 the acquisition of ChampionX, diluting shareholder value. We disagree that ChampionX diluted value and think parts of the cycle could be more resilient than the market appreciates.

SLB reported second-quarter revenue of $8.5 billion, a 1% sequential increase, but a 6% year-on-year decline. Adjusted EBITDA grew 21 basis points to 24% sequentially but decreased 103 basis points year-on-year. SLB also updated its second-half guidance and closed the acquisition of ChampionX.

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.

SLB shares have declined over 35% following its early April 2024 announcement that it's acquiring ChampionX. Nearly half of the stock price decline has come since the US announced sweeping new tariffs and OPEC+ meaningfully increased crude production in early April 2025.