How Does Schlumberger Plan To Return Value To Its Shareholders?

Over the last three years, Schlumberger (NYSE:SLB), the world’s largest oilfield services company, has witnessed a huge drop in its profitability as well as cash flows due to the plunge in commodity prices. As a result, it became difficult for the company to sustain its capital expenditures while returning value to its shareholders. However, as the outlook for commodity markets improves, the company now plans to return higher value to its shareholders in the coming years in order to compensate for the past years. Below we show how Schlumberger’s Free Cash Flows are expected to rise in 2018 and beyond, backed by its improving profitability and restricted capital investment using our interactive platform.

With the extension of production cuts by OPEC and Non-OPEC members until the end of 2018, Schlumberger expects the commodity prices to improve significantly in the coming quarters. Consequently, the demand for oil and gas drilling services and equipment is expected to pick up sharply in 2018 and beyond. This will allow the company to negotiate better pricing for its services, which will, in turn, boost its profitability.

On the other hand, Schlumberger plans to restrict its capital investments over the next couple of years in order to better manage its cash flows and return higher value to its shareholders. In the graph below, we show our forecast for the share repurchase program and dividend payments expected to be made by Schlumberger over the next three years.

Do not agree with our forecasts? Create your own forecasts for Schlumberger’s EBITDA, capex, share repurchase and dividends using our interactive platform.

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