Schlumberger to feel Q1 effects of Russian ruble depreciation, CEO says

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Schlumberger's (SLB +5.7%) Q1 results likely will be hurt by the Russia-Ukraine conflict, CEO Olivier Le Peuch told the CERAWeek by S&P Global conference in Houston, largely from the effects of the depreciation of the ruble, which lost around a third of its value last week.

Le Peuch expects persistent global supply and logistics constraints will cause lower than expected product deliveries, which will have an impact on the quarter; Russia accounts for ~5% of Schlumberger's global revenue, which the CEO said should grow in the low-to-mid-teens during Q1.

The company sees Q1 pre-tax segment operating margin expanding by 150-200 bps Y/Y, while adjusted EBITDA margin is expected to increase 50-100 bps Y/Y.

Oil and gas producers are ready to raise spending to capture the benefit of higher energy prices, although surging inflation and supply chain delays remain obstacles, Le Peuch said.

"Recent events will exacerbate an already tightly supplied oil and gas market, [which] will likely require increased global investment across geographies to ensure the security of the world's energy supply," the CEO said.

Schlumberger shares nevertheless extend their nearly three-year highs, as the company is seen as a "key beneficiary of short-term drilling and completion boost from $100-plus oil."