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Martin Tillier

Martin Tillier

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This Oilfield Services Company Is A Buy

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This morning, oilfield services giant Schlumberger (SLB) announced results for Q2 2017. SLB has dropped around twenty-five percent since the beginning of the year as the effects of the capex cuts by oil companies following crude’s collapse started to bite, and this morning’s numbers looked on the surface like more of the same. Read a little deeper, however, and there is good reason for optimism. That, combined with the type of technical setup that regular readers will know I favor, convinces me that SLB is a great buy at these levels for short and long-term investors alike.

First, the bad news. Schlumberger once again posted a net loss for the quarter, this time of $74 million, or 5 cents per share. That sounds bad, but compared to the $2.16 billion loss in the same quarter of 2016 it is a spectacular result. Adjusted earnings were positive, showing a profit of $0.35 per share on revenue of $7.46 billion, both of which beat expectations handily. That has caused the stock to trade a little higher early this morning, but when you look at the 1 year chart below it is obvious that move won’t put a dent in the recent declines.

However, what traders and investors should bear in mind here is that oil companies’ capex spending tends to change course a little like an aircraft carrier. Most firms learned a long time ago that reacting too quickly to fluctuations in the volatile oil markets is a bad idea: it creates confusion and ultimately ends…

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