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Schlumberger Ltd SLB

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Energy Stocks Surge on Positive Vaccine News, but Plenty of Upside Remains

Preston Caldwell Equity Analyst

Analyst Note

| Preston Caldwell |

Energy stocks surged on Nov. 9 following Pfizer's announcement of favorable phase 3 data on its COVID-19 vaccine. The broader U.S. Market Index was up 1% on the day, but the energy sector led the way up 14%. Oil prices (West Texas Intermediate) were also up about 8%. Despite the rally, the energy sector is still down around 45% year-to-date. We think the sell-off has been overdone, and as such energy stocks continue to look undervalued overall. Our median covered energy stock trades at a 37% discount to our fair value. Within energy, oilfield services look cheapest overall, trading at a median 52% discount to fair value. E&Ps are also at a 45% median discount to fair value.

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Company Profile

Business Description

Schlumberger is the world’s largest supplier of products and services to the oil and gas industry. The company operates its business via multiple groups: reservoir characterization, drilling, production, and Cameron. It is investing more than any other services firm to make its offerings more bundled, which it believes is likely to be one of the key industry trends during the next 10 years. Efforts on this front are most visible via the Schlumberger Production Management business, which now accounts for 10% of its revenue.

Contact
5599 San Felipe, 17th Floor
Houston, TX, 77056, Curaçao
T +1 713 513-2000
Sector Energy
Industry Oil & Gas Equipment & Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 105,000

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