SLB NV (NYSE:SLB) reported lower first-quarter earnings as geopolitical disruptions in the Middle East weighed on operations despite modest revenue growth driven by acquisitions.

Earnings and Financial Performance

SLB reported first-quarter 2026 revenue of $8.72 billion, beating the $8.647 billion estimate. Adjusted EPS came in at $0.52, in line with expectations, while GAAP EPS fell 14% year over year to $0.50.

Net income attributable to the oilfield services company decreased 6% to $752 million, and adjusted EBITDA fell 12% to $1.77 billion, with margin contracting to 20.3% from 23.8%.

Cash flow from operations was $487 million, and free cash flow was negative $23 million. The company ended the quarter with $3.39 billion in cash and short-term investments and $11.61 billion in total debt.

Operational Headwinds and Market Impact

"It was a challenging start to the year as widespread disruptions in the Middle East impacted our business," CEO Olivier Le Peuch said.

"The impact was most pronounced in Well Construction and Reservoir Performance, as SLB demobilized operations in a number of countries in response to customer actions to safeguard personnel and facilities."

Geopolitical disruptions pressured performance, including force majeure in Qatar and operational constraints across Iraq and offshore markets. Excluding ChampionX, global revenue declined 7% year over year, indicating underlying weakness.

Segment and Regional Performance

Digital revenue rose 9% to $640 million, with ARR increasing 15% to $1.02 billion.

Reservoir Performance and Well Construction revenue each declined 6% to $1.59 billion and $2.80 billion, respectively, with margins of 16.1% and 15.2%.

Production Systems revenue increased 23% to $3.51 billion, driven by ChampionX, though it declined 6% excluding the acquisition.

North America revenue rose 26% as reported to $2.17 billion, while international revenue declined 4% to $6.47 billion. Data Center Solutions revenue increased 45% to $141 million.

ChampionX contributed $838 million in revenue, $199 million in adjusted EBITDA, and $149 million in pretax operating income.

Capital Allocation and Strategic Moves

SLB repurchased $451 million of shares and approved a quarterly dividend of $0.295 per share.

The company reiterated plans to return more than $4 billion to shareholders in 2026 and expects approximately $2.5 billion in full-year capital investment.

SLB Expands Capabilities

S&P Global announced strategic innovations and changes to its upstream energy business, beginning with a definitive agreement to sell its geoscience and petroleum engineering software portfolio to SLB.

The assets, widely used by U.S. land operators, will be integrated into SLB's platforms to enhance subsurface and planning solutions. The deal also includes collaboration on data distribution and development of new AI models for upstream use cases.

SLB CEO Olivier Le Peuch said, "By integrating these capabilities with our industrial-scale digital platforms and AI technologies, we can serve customers across the full spectrum of subsurface and planning needs."

The transaction is expected to close in the second half of 2026 or early 2027.

Price Action: SLM shares are trading 1.22% higher at $55.41 at the time of publication on Friday.

Photo by T. Schneider via Shutterstock