SLB still confident in Middle East despite Aramco hit

Reuters/Liz Hampton

• Record earnings in 2023
• Rig count to rise this year
• Share price fell with Saudi cut

US oilfield services company SLB is expecting significant growth in the Middle East this year, despite its share price taking a hit following this week’s output announcement by Saudi Aramco. 

SLB shares fell by more than 6 percent after Aramco’s decision to ditch the plan to boost its oil output capacity. The company’s income is strongly linked to the region.

During its latest earning call, SLB revealed that it had achieved its highest revenue in the Middle East, led by Saudi Arabia, the UAE, Egypt and the East Mediterranean.

• Oil service company shares dive on Aramco decision
• SLB predicts record Middle East oilfield services revenue
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Total 2023 revenue increased 18 percent to $33 billion year on year, while Middle East and Asia revenue rose by 22 percent.

SLB’s fourth-quarter revenue of nearly $9 billion increased by 8 percent.

The company said that in addition to its core business, it forged new partnerships and investments in technology for carbon capture and storage (CCS).

“We are actively participating in more than $400 million CCS tenders globally,” said SLB CEO Olivier Le Peuch.

SLB is also forming partnerships in the geothermal energy field with government agencies in the Middle East.

“We are seeing very positive momentum in this space,” added Le Peuch.

He said that he expected SLB business to rise in the Middle East as countries invest in expanding their production capacity in oil and unconventional gas.

“Growth momentum is set to continue with more than two-thirds of total investment taking place in the Middle East, offshore, and gas resource plays,” said Le Peuch.

The company also expects the rig count to continue to rise in the Middle East in 2024.

Following Aramco’s announcement to maintain its output capacity at 12 million barrels per day, Le Peuch pointed out on Wednesday that SLB’s revenue is weighted toward onshore and the expanding gas market in Saudi Arabia.

The US company landed a service agreement for the unconventional gas scheme Jafurah last year, the Middle East’s largest liquid-rich shale gas play. 

“Our unique market position in other countries in the Middle East will continue to support the multi-year growth cycle in the region,” Le Peuch added.

SLB also signed an exclusive digital drilling deal last year with Qatargas. 

Le Peuch said he expects global energy demand to increase, and international production would play a key role in meeting supply through the end of this decade.

“We are confident in the strength and longevity of this cycle through 2024 and beyond.”