By Claudia Assis

SLB has looked beyond the Middle East, capitalizing on revenue opportunities in other regions and in the AI market

Either way crude futures go, there would be benefits for SLB.

A century-old oilfield services company is adapting to Middle East headwinds by making money elsewhere.

Offshore activity in Latin America, Europe and Africa as well as Asia "more than offset" the impact of disruptions in the Middle East, SLB Chief Executive Olivier Le Peuch said Friday.

SLB also turned to data centers, an emerging source of revenue for the company, which was founded in 1926.

Management broadly painted an optimistic view of next year, when it expects that companies and governments will look to replenish their inventories and solidify new supply connections as the war reshapes energy markets.

"The market is starting to exhibit the characteristics of an upcycle," Le Peuch said on a call with analysts following results.

Either way crude futures prices go, there should be a benefit for the $78 billion company.

Lower oil futures would support that inventory-replenishment cycle and the need to rebuild spare capacity. Higher prices "will encourage the development of new supply, while unlocking new opportunities for our business," the CEO said in the call.

SLB, formerly known as Schlumberger, earlier Friday reported second-quarter earnings that were above Wall Street expectations. The results sent the company's stock (SLB) soaring 10% to rank as the second best performer in the S&P 500 index SPX. The shares were headed their best one-day gain in six months.

The conflict in the Middle East has been a serious headwind for SLB and other oilfield services companies, which are the contractors of the energy world, providing exploration and production companies the labor and technology to drill and maintain wells, among other things.

The second quarter marked a return to year-on-year revenue growth outside the Middle East, SLB said.

Crude futures (BRN00) (CL00) on Friday eased off recent highs. They are looking to end the week with gains of more than 8% as Iran-backed Houthis entered the fray earlier in the week, threatening to choke more oil out of the Middle East and compounding worries about global crude supplies.

Don't miss: An oil lifeline is under threat, and markets have yet to price in the growing crisis

The Wall Street Journal reported Friday that President Donald Trump has grown "skeptical" that negotiations with Iran can end in lasting peace, getting "increasingly frustrated" that the conflict has dragged on.

Markets have adjusted to the conflict by drawing on commercial and strategic reserves, keeping a lid on demand and seeking out other countries for crude and crude products.

Energy experts have warned, however, that some of those solutions cannot go on indefinitely. U.S. retail prices for gasoline and diesel and their impact on inflation are also an area of concern, with both rising in recent days - gasoline averaged $4.11 a gallon and diesel $5.24 a gallon on Friday, according to AAA.

Earlier Friday, SLB reported adjusted earnings of 55 cents a share on sales of $8.97 billion, up 5% from the year-ago period. That compares with estimates for adjusted earnings of 51 cents a share on sales of $8.67 billion, according to FactSet.

Revenue from its data center business rose 33% quarter-on-quarter and 80% year-on-year, SLB said.

The company said that the business is on track to top $1 billion annualized revenue run rate by the end of the year, and as it grows customer base and footprint it would surpass $2 billion annualized revenue run rate by the end of next year.

Related: Why energy stocks still look so cheap, even after their big rally this month

SLB is aiming at becoming an industrial technology partner to the data-center industry, it said. Earlier this year, it announced an expanded deal with Nvidia (NVDA) to build AI infrastructure.

The company's report kicked off earnings season for U.S. energy companies. Integrated giants ExxonMobil and Chevron are slated to report their earnings next Friday, and major refiners also reporting next week or in early August.

U.S. refiners are running their refineries harder than ever, seeking to capitalize on exports, and quarterly profits are expected to triple, and in some cases quadruple, and the industry takes advantage of the supply disruptions caused by the war.

-Claudia Assis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-24-26 1439ET