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Schlumberger a Buy on Valuation

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Schlumberger Limited (SLB - Free Report) is a leading oilfield services company, providing technology, project management, and information services to the global oil and gas industry. The Oilfield Services segment provides a broad range of services and solutions to the oil and gas industry, including drilling fluids, direction drilling and real-time drilling analysis, and project management.

Last week, we upgraded Schlumberger shares to Buy from Hold following the stock's massive pullback, which has made valuation very compelling for this quality oilfield service name. Schlumberger has limited direct credit-market exposure, given its strong balance sheet strong operating cash flows.

While near-term commodity-price weakness may weigh on the stock price, the company's long-term prospects remain positive, given its global footprint and industry leading position. Also, a number of significant acquisitions in the recent past have accelerated the company's growth momentum.

Schlumberger remains committed to returning excess cash to shareholders. In the beginning of this year, it increased quarterly dividend by 20%, after raising the same by 40% last year and 19% in 2006. The company has also been fairly active on the buyback front, repurchasing $8 billion worth of shares since April 2008.

Neil Malkin contributed to this report.

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