In my best Jim Nantz voice, “Hello friends!”
Hope everyone had a great July 4th. Nothing better than celebrating the nation’s birthday than buy blowing things up.
And in a tribute to ‘Merica’s birthday let’s check out the history of a French company….huh?!?!
The history of SLB 0.00%↑ dates back to 1926 when Marcus and Conrad Schlumberger founded the company at the urging of their father.
The timing makes sense too. Following the first World War the industry saw the first major introduction of technology into the oil patch.
The high prices of the post WW1 era brought about new technology aiding in the exploration of new fields that previously were un-economical to develop.
Up until then, the industry had mostly relied upon surface geology to find new reserves. Much of this entailed looking for place where oil had seeped up to the surface (PA, TX, Russia, Oklahoma, CA).
But then technology was developed to help see underground and much of it came from the war.
For example
Oil companies began to use planes for aerial surveillance.
Other technologies were developed such as torsion balance and magnetometer to help explorers understand the subsurface structure and find out where oil may be trapped.
A major break through was seismographs. Originally these were used to analyze earthquakes. The Germans used the technology to search and destroy artillery during the war.
Finally micropaleontology was used to analyze fossils and other matter that was brought to the surface from drilling operations.
By one account, the brother’s first job was in Romania (HERE) by another account I read their first wireline job was in post Bolshevik Russia.
That’s one of the ironies in oil history.
SLB was the first service company in Russia in the 1920s.
70 years later, after the fall of the Soviet Union and the rise of the Oligarchs, Gustafson in his wonderful book, Wheel of Fortune on the history of the Russia Oil Industry, details how Joe Mach of SLB basically helped save Russian oil production from decline in the late 1990s.
My guess is they will be called in yet again to repair the Russian oil fields when embargoes are lifted and Russia rejoins the world markets.
But it wasn’t until the 1950’s that SLB became a publicly traded company as shown below. (I can only get monthly price data beginning in 1962)
And what a great time to go public. SLB was THE STOCK to own during the 1970’s super-cycle. The only other chart that I have seen that looks like this is the 1990’s Nasdaq.
But SLB has severely lagged the S&P since July-2008.
And when looking at the chart below, it has lagged energy equities and oil since late 2015/early 2016.
Deep value guys & gals get excited about the above chart. Momentum guys and gals want to see it turn up. Which one are you? Comment below.
On a macro level, the big debate in OFS is when are their customers going to spend.
I show the correlation between Upstream Capex and Schlumberger’s Reconstructed OFS revenues.
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