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SLB Limited (NYSE: SLB) stock rose Friday after the oilfield services company reported better-than-expected third-quarter 2026 earnings and revenue, driven by stronger North American activity and a gradual recovery in the Middle East.
The company also outlined fourth-quarter growth expectations and its 2027 outlook, while warning that uncertainty in the Middle East could affect the pace of recovery.
SLB reported adjusted earnings of 64 cents per share, down 7% year over year but above Wall Street's estimate of 61 cents.
Revenue increased 6% year over year to $9.449 billion, beating analysts' estimate of $9.280 billion. Revenue rose 5% sequentially.
Net income attributable to SLB fell 1% to $735 million.
Adjusted EBITDA remained nearly flat at $2.067 billion, while adjusted EBITDA margin narrowed 121 basis points to 21.9%.
North American revenue jumped 24% year over year to $2.401 billion, while international revenue increased 1% to $6.993 billion.
Excluding the ChampionX acquisition, total revenue rose 2%, with North America growing 13% and international revenue remaining flat.
ChampionX contributed $956 million in quarterly revenue.
CEO Olivier Le Peuch said all regions posted sequential growth, supported by a gradual Middle East recovery, stronger North American land activity and expanding deepwater operations.
During Friday's earnings call, Peuch said SLB expects its Data Center Solutions business to surpass $2 billion in revenue in 2027, positioning AI infrastructure as a major growth engine beyond its traditional oilfield operations.
The company is expanding its manufacturing capacity and pursuing the acquisition of Kelvion to strengthen its position in data center cooling and thermal management, as demand from major technology companies grows.
Production Systems revenue climbed 15% year over year to $4 billion, while Digital revenue increased 5% to $693 million.
However, Reservoir Performance revenue declined 3% to $1.634 billion, and Well Construction revenue fell 3% to $2.888 billion.
SLB's Data Center Solutions business emerged as a key growth driver, with revenue surging 76% year over year to $230 million.
The business also grew 23% sequentially, supported by rising demand, an expanded range of services and growth in Asian markets.
SLB ended the quarter with $3.551 billion in cash and short-term investments, $1.653 billion in short-term borrowings and current long-term debt maturities, and $11.147 billion in long-term debt.
Quarterly results included a $187 million pension settlement charge and $55 million in merger and integration costs.
The company repurchased 12.9 million shares for $656 million and approved a quarterly dividend of 29.5 cents per share.
SLB maintained its 2026 capital investment outlook at approximately $2.5 billion.
Management cautioned that the pace of recovery in the Middle East remains uncertain.
SLB expects fourth-quarter Middle East revenue to remain roughly flat sequentially at $1.9 billion, representing about 83% of the year-earlier level.
Despite those challenges, the company forecasts fourth-quarter revenue of approximately $10 billion, reflecting sequential growth of 5% to 7%.
SLB also expects adjusted EBITDA margin to expand by 100 to 150 basis points.
Excluding the Middle East, global revenue is projected to grow at a high-single-digit rate year over year.
For 2027, SLB expects the global oilfield services and equipment market to expand at a mid-single-digit rate, assuming Middle East activity remains near second-half 2026 levels and the conflict does not escalate significantly.
Management expects its core divisions to outperform the broader market.
Venezuela could provide another growth opportunity. SLB expects revenue in the country to more than double in 2026, with the potential for severalfold growth in 2027.
CFO Stephane Biguet said fourth-quarter free cash flow should increase significantly as inventories decline and customer collections improve. However, the timing of payments in certain countries remains a factor.
SLB Stock Price Activity: SLB shares are trading higher by 6.59% at $52.81 at the time of publication on Friday, according to market data.
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