SLB boosts dividend and buybacks, but warns of oil oversupply

By Arathy Somasekhar and Seher Dareen

(Reuters) - Oilfield company SLB raised its quarterly dividend and accelerated share repurchases on Friday as its fourth-quarter profit beat expectations, while also warning of flat 2025 revenue due to an oil oversupply.

The world's largest oilfield services company increased its quarterly dividend by 3.6%, and said it would buy back $2.3 billion of shares at an "accelerated" pace.

Shares of SLB, previously called Schlumberger, rose 7.4% to $44.13 at midday.

First-quarter and full-year revenue would largely be unchanged from the same periods last year, as excess oil supply limits oilfield activity, the company said.

Adjusted earnings before interest, taxes, depreciation and amortization for 2025 are expected to be at or above 2024 levels, while those for the current quarter will be similar to the year-ago level.

"Customers adopted a more cautious approach to near-term activity and discretionary spending, primarily driven by concerns of an oversupplied market," said SLB Chief Executive Officer Olivier Le Peuch.

Global upstream investment this year will largely be steady compared to 2024, Le Peuch added, as growth in United Arab Emirates, Kuwait, Iraq, China and India is offset by declines in Saudi Arabia, Egypt and Mexico.

Activity will rebound in the second quarter, particularly in the international markets, Le Peuch said, as he expects "oil supply imbalance to gradually abate."

SLB, which has been focusing on its international business to offset slowing North American revenue growth, posted a 3% rise in its quarterly revenue from foreign markets, the smallest growth since the first quarter of 2021 when the COVID-19 pandemic slashed demand.

Revenue in Latin America declined 5% year-over-year, driven primarily by reduced drilling activity in Mexico, the company said. The declines were offset by 7% growth in the Middle East and Asia.

International business accounts for about 80% of SLB's total revenue.

North American revenue grew 7%, the most since the second quarter of 2023, driven by higher digital sales and offshore activity in the U.S. Gulf of Mexico. U.S. land drilling activity declined.

The company said revenue from SLB's operations in Russia has also been declining, accounting for 4% of its total revenue, down from 5% the year before.

It said it believes that voluntary measures it took in 2023, such as halting shipments of product and technology into Russia from all SLB facilities worldwide, are aligned with this month's U.S. sanctions on Russia.

The U.S. Treasury tweaked an executive order to cut off Russia's access to U.S. services related to the extraction and production of crude oil and other petroleum products, effective Feb. 27.

While the company is striking a confident tone in the balance sheet and outlook with its share buyback and dividend program, investor concerns will likely focus on the sharp deceleration in international revenues, said analyst Peter McNally at research firm Third Bridge.

Total revenue of $9.28 billion beat analysts' average estimate of $9.18 billion, data compiled by LSEG showed.

SLB posted a profit, excluding charges and credits, of 92 cents per share for the quarter, compared with analysts' average estimate of 90 cents. The charges included a restructuring-related cost of $223 million.

(Reporting by Arathy Somasekhar in Houston and Seher Dareen in Bengaluru; Editing by Chizu Nomiyama, Mark Potter and Richard Chang)