If Schlumberger is serious about exiting the US land market that no longer hits its return on capital minimums, what product lines might that include?  And how much money are we talking about? We’ve been working up a deep dive on Schlumberger USA, and thought we’d share a quick overview.

First, what is the US land currently worth to SLB?  In 2019 total company sales globally were $33B.  ~$9B was generated on land in the US… including exploration, drilling, completion, production and capital equipment sales.  That is about $1B less than sales in 2018.  2020 might see that reduce by another $1B. 

Second, what will SLB keep?  Technology, differentiated products, businesses where US land is small and hard to separate from global operations.  We think that means SLB keeps things like directional drilling, drill bits, openhole logging, ESP pumps, completion equipment, process equipment, geophysical…

Third, what will SLB exit?  Here’s our guess (based on 2019 estimated US land revenues):

The company’s OneSTIM struggles to make the cut to stay inside SLB… that is 58% of the chart above.  Add to that other completion services – coiled tubing, frac trees and flowback/testing – and you’re up to about 70%.  All that is left is cementing (little sister of frac) and the totally unrelated artificial lift business (probably not ESP). 

What is this $6B business worth?  This looks sort of like ProPetro, so what is ProPetro worth?  $2.1B in sales last year and valued at $1.1B today. It is valued at half its revenues.  So perhaps SLB USA LLC is valued at $3B?

(We’ll have the full SLB USA report finished next week for subscribers.)