SLB surges on OneSubsea deepwater contract wins in Asia
Oil services giant secures major offshore projects in South China Sea and Malaysia, analyst sees 20% upside
SLB shares climbed 2.6% on Tuesday as the oilfield services giant announced two major deepwater contract wins for its OneSubsea joint venture, reinforcing the company's position in the lucrative offshore drilling market.
The stock, which rose to $46.13, came within striking distance of the consensus analyst price target of $55.40, representing potential upside of 20%. The move comes as investors welcomed the OneSubsea awards from China National Offshore Oil Corporation (CNOOC) and Thailand's PTT Exploration and Production Public Company Limited (PTTEP), which underscore strong demand for deepwater development in Asia.
The first contract, awarded by CNOOC for the Kaiping 18-1 field development, spans 20 wells in the South China Sea at an average water depth of approximately 500 meters. OneSubsea will provide integrated subsea production systems including dual electric submersible pumps, gas lift and gas injection horizontal trees, manifolds, connectors, and control systems. The standardized architecture is designed to reduce system complexity and accelerate installation schedules.
Separately, OneSubsea secured an engineering, procurement, and construction contract from PTTEP Sabah Oil Limited for the second development phase of the Kikeh 3B project offshore Malaysia. The scope includes delivery of three subsea trees, a manifold, a subsea distribution unit, and integrated control systems for water depths ranging from 1,300 to 1,400 meters, with project execution running through 2026 and 2027.
This marks the third major subsea production systems award OneSubsea has received from PTTEP in the past 12 months, highlighting the joint venture's strengthening partnership with the Thai energy company. The projects will be supported by OneSubsea's manufacturing and services facilities in Malaysia, reinforcing regional supply chain capabilities.
OneSubsea, a joint venture in which SLB holds a 70% stake, combines SLB's subsea technology with Aker Solutions and Subsea7. The venture, established in October 2023, has rapidly positioned itself as a leader in deepwater production systems, leveraging standardized technologies to reduce costs and cycle times for complex offshore developments.
The contract wins arrive at a pivotal moment for SLB, which reported full-year 2025 revenue of $35.7 billion and earnings per share of $2.93. The company's fourth-quarter results beat expectations, with EPS reaching $0.78 on revenue of $9.75 billion, driven by strength in digital solutions and robust free cash flow of $2.29 billion.
Analysts remain broadly bullish on SLB's prospects, with 25 of 29 analysts rating the stock a Buy or Strong Buy. The consensus price target of $55.40 suggests significant room for upside from current levels, particularly as deepwater investments accelerate globally despite broader uncertainty about upstream spending in 2025.
Management had previously projected a decline in global upstream spending for this year, partly due to tariff impacts, but the latest contract wins demonstrate continued appetite for complex offshore projects that require specialized technology. Deepwater developments typically offer long production profiles and superior economics compared to shallower or onshore fields, making them increasingly attractive to operators seeking to maximize returns.
From a technical perspective, SLB has recovered substantially from its 52-week low of $30.19 reached earlier this year, though it remains below its 52-week high of $52.45. The stock currently trades at a forward price-to-earnings ratio of 14.88, below its trailing multiple of 19.13, suggesting investors are discounting near-term headwinds while pricing in growth potential.
The Asia-Pacific region represents a critical growth market for deepwater development, with China's offshore reserves and Malaysia's established deepwater infrastructure driving sustained investment. OneSubsea's ability to secure repeat business from operators like PTTEP demonstrates the competitive advantage of its standardized technology and integrated delivery model.
Looking ahead, investors will focus on SLB's ability to convert contract awards into revenue growth while maintaining margin expansion. The company's digital transformation and emphasis on sustainable technologies position it to benefit from longer-term industry trends, even as near-term spending patterns fluctuate.