SLB SLB, an American oilfield services company, is expanding its operations in Russia, capitalizing on the exit of key Western competitors following Russia's full-scale invasion of Ukraine, per a Financial Times report. The Houston-based company has secured new contracts and increased its workforce in Russia, which contrasts sharply with the actions of major competitors that withdrew from the market in 2022.
New Contracts and Recruitment Surge
Despite the geopolitical tension, SLB has continued to strengthen its presence in Russia. Documents obtained by Global Witness and reviewed by the Financial Times reveal that in December, SLB’s Russian division signed a contract with the Russian oil and gas institute Vnigni, committing to assist in the development of oil and gas projects.
Additionally, the company has posted more than 1,000 job advertisements since December, looking to fill various roles ranging from drivers to geologists. The job postings cover benefits including workplace meals, sports facilities access and discounted share schemes.
Trademark Registrations and Import Activities
SLB’s expansion is further highlighted by the registration of two new trademarks by its Russian subsidiaries in July. The company has also been involved in importing significant amounts of equipment to Russia. Despite halting shipments from its global facilities in response to international sanctions in July 2023, SLB imported $17.5 million worth of equipment between August and December 2023, with the bulk coming from China and India.
Human Rights Concerns and Sanction Compliance
According to the report, SLB’s continued operations in Russia have drawn criticism from human rights organizations and the Ukrainian government, who allege that the company’s activities contribute to Russia’s war efforts.
In 2023, Ukraine’s National Agency on Corruption Prevention added SLB to its “international sponsor of war” blacklist. However, Western governments have been hesitant to impose comprehensive sanctions on oilfield services in Russia due to fears of destabilizing global oil markets.
Western Governments' Stance on SLB’s Activities
While some Western policymakers have expressed concerns, SLB has not been found guilty of breaching any sanction. A U.S. Department of State official noted that SLB has so far complied with the sanctions and understands the boundaries set by international regulations. A U.S. Treasury spokesperson emphasized the challenges of completely halting Russian oil production, warning of the potential economic fallout from such a move.
Conclusion
SLB’s expansion in Russia underscores the complexities of international business amid geopolitical tensions. While the company has managed to navigate sanctions and grow its presence, it remains under scrutiny from human rights groups and governments. SLB’s persistence indicates that it sees strategic value in maintaining its presence in Russia, even as geopolitical tensions persist.
Zacks Rank & Key Picks
Currently, SLB carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company SM, MPLX LP MPLX and The Williams Companies, Inc. WMB. While SM Energy currently sports a Zacks Rank #1 (Strong Buy), MPLX and The Williams Companies carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.57. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.
MPLX derives stable fee-based revenues, driven by long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
The Williams Companies is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids. Boasting a widespread pipeline system of more than 33,000 miles, Williams is one of the largest domestic transporters of natural gas by volume.
The Zacks Consensus Estimate for WMB’s 2024 EPS is pegged at $1.80. The company has witnessed upward earnings estimate revisions for 2025 in the past seven days.
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