Could SLB's (SLB) Geothermal Partnership Reveal a New Path for Diversification Success?

• Ormat Technologies and SLB recently announced an agreement to fast-track the development and commercialization of integrated geothermal assets, including enhanced geothermal systems (EGS), with a pilot project planned at an Ormat facility.
• This collaboration is designed to unlock new geothermal energy opportunities beyond traditional resources by streamlining project deployment and targeting widespread adoption among independent power producers, utilities, and large-scale energy users.
• We'll explore how this move into next-generation geothermal technology could strengthen SLB's diversification story and growth outlook.

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SLB Investment Narrative Recap

To be a shareholder in SLB, you need to believe in the company’s ability to diversify beyond traditional oilfield services, unlocking new growth through digital transformation and expansion into low-carbon solutions. The recent announcement with Ormat Technologies to fast-track geothermal projects could modestly boost SLB’s energy transition narrative but is unlikely to materially change the near-term catalyst, which remains global upstream spending trends, nor does it immediately offset the cyclicality risk associated with oilfield service revenues.

Of the recent announcements, the October 10 partnership with Google Cloud and Project Innerspace directly supports SLB’s geothermal ambitions, complementing the new Ormat agreement by improving identification and development of geothermal resources. This initiative aligns with the growing operator demand for production optimization and digital efficiency, supporting SLB’s push toward a higher-margin recurring revenue mix.

Yet, in contrast to the promise of diversification, investors should be aware of heightened cyclicality risk if upstream spending declines in core markets...

Read the full narrative on SLB (it's free!)

SLB's outlook anticipates $38.7 billion in revenue and $4.9 billion in earnings by 2028. This is based on a 2.9% annual revenue growth rate and an $0.8 billion increase in earnings from the current $4.1 billion.

Uncover how SLB's forecasts yield a $45.16 fair value, a 23% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members forecast SLB’s fair value between US$36 and US$81, based on 13 different perspectives. Given the wide range of opinions, remember that shifting global energy spending and adoption of low-carbon solutions remain key factors shaping SLB’s outlook.

Explore 13 other fair value estimates on SLB - why the stock might be worth just $36.00!

Build Your Own SLB Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your SLB research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free SLB research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SLB's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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