SLB echoes headwinds warning after falling short of first-quarter expectations

Oilfield services firm SLB said on April 25 that its net income for the first quarter of 2025 totalled $988mn, representing diluted earnings of $0.72 per share, a decline of 4% year on year. This fell short of average analyst expectations of $0.74 per share, Reuters noted, citing data compiled by LSEG.

SLB’s revenue for the first quarter came in at $8.49bn, down 3% y/y and 9% sequentially. SLB’s CEO, Olivier Le Peuch, said higher activity in parts of the Middle East, North Africa, Argentina and offshore US, along with strong growth in the company’s data centre infrastructure and digital businesses in North America, had been more than offset by a sharper-than-expected slowdown in Mexico, a slow start to the year in Saudi Arabia and offshore Africa, and steep decline in Russia.

SLB, the world’s largest oilfield services provider, warned that lower spending by oil producers and US tariffs would have an impact on demand for its products and services. The company joined rivals Halliburton and Baker Hughes, who had issued similar warnings in the days prior about the headwinds created by tariffs and by lower oil prices. Indeed, oil prices have fallen further still, with West Texas Intermediate (WTI) trading at around $63 per barrel when SLB released its results and having since dropped to around $58 per barrel as of May 1. According to recent reporting by Reuters, many producers have said they need oil prices to be above $65 per barrel in order to be profitable. Recent price movements therefore make the outlook for the industry even more bearish.

“The industry may experience a potential shift of priorities driven by changes in the global economy, fluctuating commodity prices and evolving tariffs – all of which could impact upstream oil and gas investment and, in turn, affect demand for our products and services,” stated Le Peuch. “In this uncertain environment, we remain committed to protecting our margins, generating strong cash flow and delivering consistent value to our customers and shareholders in 2025.”

On the company’s earnings call, Le Peuch also pointed to plans by OPEC+ to increase production, including these in contributors to an “uncertain” market backdrop.

“At this point, we expect global upstream investment to decline compared to 2024, with customer spending in the Middle East and Asia being more resilient than other regions across the rest of the world,” he said.

Against this backdrop, SLB said it remained committed to returning more than 50% of its free cash flow to our shareholders. Indeed, it expects to “materially” exceed this target in 2025 according to Le Peuch.

“We continue to have confidence in our ability to generate strong cash flow in the current environment and will return a minimum of $4bn to shareholders through dividends and share repurchases this year,” he said.