Schlumberger is one of the largest oil service companies in the world and a member of the “big four” global oil service companies. Its shares are trading 50% off their peaks and are revering slower than shares of oil majors that are posting new price records.

The reason is some uncertainty in the sector as oil service companies’ revenues mostly depend on capital expenditures of oil production companies. Whether the latter are ready to invest more at the current circumstances remain a big question. The U.S. Administration is draining its strategic oil reserves, lockdowns in China have been eased but are not completely over yet, and a global recession that could dump the demand for fuel is just around the corner. So, one may think oil prices may fall below the levels of the beginning of 2022.

However, investors are guided mostly by long term expectations. The situation may change dramatically in 2023 as China is on the recovery path, while U.S. crude is being exported outside its territory. Fears about a devastating recession might be exaggerated, besides the demand for oil is not directly linked to economic activity. Rising demand from countries in Latin America, Africa and India would stimulate the output.

We may find ourselves in the beginning of the upside cycle in the energy market. So, investing in SLB stocks is seen to be quite attractive considering plans of its management to raise dividend and restart buyback programs.