Schlumberger (SLB) The Stress Test Is Middle East Recovery Timing Not The 87% Digital Surge!

Schlumberger Limited’s first quarter 2026 results were notably influenced by geopolitical disruption in the Middle East, which led to operational shutdowns and production curtailments. The conflict’s impact was most severe in Qatar and Iraq, affecting offshore operations and contributing to a sequential revenue decline of over 10%, exceeding prior expectations. This region accounted for a significant portion of the company’s Middle East and Asia business, and the ongoing disruption is expected to continue to pressure earnings into the second quarter, with an estimated sequential earnings per share impact of $0.06 to $0.08. The company reported total revenue of $8.7 billion for the quarter, a 3% increase year-over-year; however, excluding the ChampionX acquisition, revenue declined by 7%. Adjusted earnings per share were $0.52, down $0.20 from the prior year, and adjusted EBITDA margin contracted by 346 basis points to 20.3%, driven by unfavorable activity mix, increased costs, and decremental effects from lost Middle East revenue. Higher procurement and logistics costs due to supply chain disruptions also weighed on margins. Divisional performance showed mixed results: Digital and Production Systems delivered year-over-year growth (9% and 23%, respectively), supported partly by the ChampionX acquisition, whereas Reservoir Performance and Well Construction experienced declines primarily due to Middle East operational curtailments.