The oilfield-services company beat estimates and guided to about $10 billion of revenue next quarter while holding its Middle East assumption flat. Excluding its ChampionX acquisition, international revenue was unchanged from a year ago.
SLB's third quarter was better than expected. Its outlook was built on a cautious assumption about the region that matters most to it.
Revenue rose 6% from a year earlier and 5% from the second quarter to $9.45 billion, above the $9.27 billion analysts expected. Earnings excluding charges and credits were 64 cents a share, up from 55 cents in the second quarter but down from 69 cents a year earlier, and ahead of the 62-cent consensus. On a reported basis, SLB earned 49 cents a share after a $187 million non-cash pension settlement charge and $55 million of merger and integration costs.
Adjusted EBITDA rose 9% from the second quarter to $2.07 billion, a margin of 21.9%, compared with 23.1% a year earlier. Pretax segment operating margin improved by about 1 percentage point from the second quarter to 16.7%, but remained 1.5 points below a year ago.
What the acquisition is doing
ChampionX contributed $956 million of revenue. Excluding ChampionX from both periods, SLB's revenue rose about 2% from a year earlier. International revenue excluding the acquisition was flat, while North America grew 13%.
The Middle East held up despite what SLB called "late-quarter disruptions." Revenue from the region was about $1.9 billion, up 13% from the second quarter.
The outlook
For the fourth quarter, SLB expects revenue of about $10 billion, up 5% to 7% sequentially, with adjusted EBITDA margins 100 to 150 basis points higher. That forecast assumes Middle East revenue stays flat at about $1.9 billion, roughly 83% of its level in the fourth quarter of 2025.
For 2027, assuming Middle East activity holds at second-half 2026 levels and the conflict does not escalate materially, SLB pointed to growth in global oilfield-services activity. "We see a very compelling outlook for 2027, with further upside as Middle East activity recovers," Chief Executive Olivier Le Peuch said.
Cash and returns
Cash flow from operations was $1.51 billion and free cash flow $828 million. SLB repurchased $656 million of shares in the quarter, plans about $2.4 billion of buybacks for 2026, and expects total shareholder returns slightly above $4 billion this year. Net debt was $9.2 billion. The quarterly dividend is 29.5 cents.
The reaction
Shares rose 6.7% to about $52.86 by early afternoon, from Thursday's close of $49.55. The stock did not move alone. Halliburton rose 5.1%, Baker Hughes 3.5% and the energy sector 2.6%, as Brent crude climbed above $116 a barrel. How much of SLB's move was the report and how much was oil cannot be separated.
Upside or margin squeeze
The bullish view is that SLB has set a low bar. A flat Middle East assumption in a quarter when the region grew 13% leaves room for upside if conditions stabilize, and the company is already calling 2027 compelling.
The cautious view is that margins are still below last year's, growth outside North America depends on the acquisition, and the Middle East is a swing factor tied to a war.
What to watch
Middle East activity through the fourth quarter, deepwater contract awards, and SLB's formal 2027 outlook in January.