SLB Stock Climbs on 5-Year Saudi Aramco Gas Contract
Deal for unconventional gas services aligns SLB with Saudi Arabia's Vision 2030 and its multi-billion dollar energy diversification strategy.
SLB (NYSE: SLB) shares gained on Tuesday after the energy services giant secured a significant five-year contract from Saudi Aramco to support the kingdom's ambitious unconventional gas production growth.
The deal, announced early Tuesday, positions SLB as a key partner in one of the world's largest unconventional gas development programs. Financial terms were not disclosed, but the contract is part of a broader multi-billion dollar initiative by Aramco. In response to the news, SLB's stock climbed in morning trading, reflecting investor optimism about the long-term revenue implications for the Houston-based company.
The contract calls for SLB to provide stimulation services, well intervention, and advanced digital solutions across Saudi Arabia's unconventional gas fields. This includes the company's latest frac automation technology, designed to enhance efficiency and performance in one of the region's most challenging geological environments. With a market capitalization of nearly $57 billion and annual revenues of over $35 billion, this contract further solidifies SLB's project pipeline.
The award is a crucial component of Saudi Arabia's Vision 2030, a sweeping economic plan to diversify its economy and energy portfolio. According to Saudi Aramco's strategy, the kingdom aims to increase its gas production by more than 60% by 2030 compared to 2021 levels. This push is centered on developing vast domestic reserves, such as the Jafurah gas field, to reduce reliance on burning oil for power generation and to free up more crude for export.
"This long-term contract is a testament to our enduring partnership with Aramco and our commitment to supporting the Kingdom’s energy ambitions," said Steve Gassen, an executive vice president at SLB, in a statement released on Business Wire. He noted that SLB's technology and expertise are well-suited to help redefine operational performance in the development of Saudi Arabia's unconventional resources.
Wall Street has maintained a largely positive outlook on SLB even before the latest announcement. According to market data, 28 of 31 analysts covering the stock hold a "Buy" or "Strong Buy" rating, with a consensus price target of approximately $46 per share, suggesting significant upside from its current level of around $38. The Aramco deal is likely to reinforce this bullish sentiment, providing enhanced revenue visibility and strengthening SLB’s premier position in the critical Middle East market.
This contract win arrives as the global energy services sector navigates a complex landscape of fluctuating commodity prices and an accelerating energy transition. By securing a long-term role in a major gas development project, SLB demonstrates the persistent demand for its core services, particularly in national projects with strong state backing. The focus on technology and digital solutions also highlights the industry's shift towards more efficient and data-driven extraction methods, an area where SLB has invested heavily. The agreement reinforces SLB's strategic advantage and its role as a critical supplier for the world's largest oil and gas producers.