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SLB Secures Multi-Year Deal to Boost Unconventional Gas Output

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Key Takeaways

  • SLB secured a five-year Aramco contract from Saudi Arabia to enhance unconventional gas reserve production.
  • SLB will deliver stimulation, well intervention, frac automation, and digital solutions to boost efficiency.
  • Long-term awards strengthen SLB's backlog and improve visibility into future cash flows.

SLB N.V. (SLB - Free Report) secured a multi-year contract from Aramco to improve the production of Saudi Arabia’s unconventional gas reserves. The five-year agreement is tied to a larger multi-billion-dollar initiative aimed at expanding Saudi Arabia’s unconventional gas sector.

The extraction of cleaner energy will enable Aramco to diversify its portfolio while reducing its dependence on conventional fuels and supporting the global shift toward lower-carbon fuels. SLB stated that this diversification effort is consistent with the Vision 2030 targets and the company’s energy transition strategy.

Long-term awards like this not only strengthen SLB’s order backlog but also help predict the company’s cash flow over the coming several years, thereby bringing stability to its business model and attracting investor appeal.

According to the contract SLB will provide advanced services and technologies to assist Aramco in bolstering production efficiency of unconventional gas from its reserves. These technologies and services include stimulation services, well intervention, frac automation and digital solutions. These capabilities will help Aramco tap natural gas from resources where extraction is difficult, thereby highlighting SLB’s technical edge in this field.

The rising global demand for cleaner energy in the coming days is apparent from the increased LNG export volume predictions made by the U.S. Energy Information Administration (“EIA”) in its Short-Term Energy Outlook.

According to EIA, daily U.S. LNG exports in 2025 are predicted to be 14.9 billion cubic feet, suggesting a rise from the 11.9 billion cubic feet registered in 2024. The EIA also predicts daily U.S. LNG exports to rise year over year to 16.3 billion cubic feet, in 2026.

The rise in the price of natural gas is evident from increasing global demand. The EIA expects the spot price of natural gas to be $3.56 per million BTU in 2025, indicating a rally from the $2.19 recorded in 2024. For 2026, the EIA projects an even higher spot price of $4.01.

Rising demand and increasing prices indicate a promising future for natural gas producers, explorers and firms engaged in assisting these companies. As a result, SLB, a leading supplier of oil and gas equipment and services, is likely to operate in a favorable business environment, going forward.

However, SLB’s business model remains highly exposed to crude oil price volatility. With West Texas Intermediate crude oil prices trading below $59 per barrel, its business is currently under pressure. The company carries a Zacks Rank #4 (Sell) at present.

Other oil and gas equipment and service players also vulnerable to crude price volatility are Baker Hughes Company (BKR - Free Report) , Halliburton Company (HAL - Free Report) and Core Laboratories Inc. (CLB - Free Report) . BKR, HAL and CLB currently carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baker Hughes, based in Houston, TX, offers a variety of technologies and services to the global energy markets. BKR has recently been selected to deliver liquefaction systems for the Commonwealth LNG export project.

Halliburton, also based in Houston, TX, is a leading oil and gas equipment and service provider operating above 12 research centers and offering services in more than 70 countries, as highlighted in its third-quarter earnings.

Core Laboratories, based in Houston, TX, is another leading oil and gas equipment and services company. The company is focused on increasing its free cash flow in the coming days.

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