SLB – Market expectations are for recovering Uniform ROA, but management has concerns about market share, sales, and margins

• Schlumberger Limited (SLB:USA)currently trades at historical lows relative to UAFRS-based (Uniform) Assets, with a 2.3x Uniform P/B. However, even at these levels, the market has bullish expectations for the firm, while management has concerns about their global market share, their sales across multiple segments, and margin compression
• Specifically, management may lack confidence in their ability to compete for growth opportunities in all parts of the E&P value chain, and to increase market share across the globe. Furthermore, they may have concerns about their full fleet production management model, and about their reliance on pricing tailwinds in order to improve margins. They may also lack confidence in their ability to leverage their position in the market after they have absorbed cost headwinds due to their current frac structure, and in the sustainability of high demand for high-end technologies in Drilling and Measurements. Also, they may lack confidence in their ability to drive growth in Latin America, and to improve margins in their Integrated Drilling Services segment. Further, they may lack confidence in their ability to offset takeaway constraints in the Permian, and to increase production in Shushufindi. Finally, they may be concerned about their ability to sustain strong product and equipment sales in Nigeria, Angola and Namibia, revenue growth in Far East Asia and Australia GeoMarket, and Surface Systems sales in North America