The first quarter of 2025 brought a challenging landscape for the North American oilfield services market, as reflected in SLB’s recently released financial results. Although the company remains resilient, it is facing notable hurdles tied to lower drilling revenue, a cautious drilling outlook, and rising concerns about tariffs that threaten to impact future activity.
Lower Drilling Revenue Hits U.S. Land
In North America, SLB reported $1.72 billion in revenue for the first quarter of 2025, an 8% year-over-year increase driven by strong digital sales, subsea production system sales, and booming data center infrastructure demand. However, this growth masked weakness in traditional drilling markets. As SLB explained:
“These increases were partially offset by lower drilling revenue in U.S. land,” the company stated in its earnings release.
The softness in U.S. land drilling weighed heavily on SLB’s Well Construction division, which saw a 12% year-over-year revenue decline globally, attributed primarily to “lower drilling activity in Mexico, Saudi Arabia, U.S. land, India and offshore West Africa.”
Drilling Revenue Outlook: North America Faces Pressure
Looking ahead, SLB maintained a cautious tone regarding drilling revenue, particularly in North America. CEO Olivier Le Peuch acknowledged a “subdued start to the year” and highlighted that challenges such as declining drilling activity and operational efficiencies were making the environment more difficult:
“The industry may experience a potential shift of priorities driven by changes in the global economy, fluctuating commodity prices and evolving tariffs — all of which could impact upstream oil and gas investment,” said Le Peuch.
SLB pointed specifically to U.S. land as an area of downside risk. Rig counts have flattened, and efficiency gains are leading to fewer wells drilled per rig, creating additional revenue headwinds.
Meanwhile, international markets, particularly offshore, are seen as somewhat more resilient. However, North America remains at the center of concern as both private and public operators trim drilling budgets in response to softening commodity prices and higher costs.
Tariffs Add to Uncertainty
Compounding the challenges in North America are worries about tariffs. Although SLB did not cite a direct impact in Q1 results, the company noted that “evolving tariffs” could weigh on upstream investment decisions in the coming quarters. Rising materials costs, disruptions to global supply chains, and political instability have all made operators and service companies more cautious.
“In this uncertain environment, we remain committed to protecting our margins, generating strong cash flow and delivering consistent value to our customers and shareholders in 2025,” Le Peuch emphasized.
Analysts have warned that tariffs—especially between the U.S. and China—could hit about half of SLB’s operations through higher input costs for critical materials, potentially squeezing margins further if service pricing does not adjust upward.
Resilience Through Digital and Diversification
Despite these headwinds, SLB continues to invest heavily in digital transformation and diversification into lower-carbon energy solutions. Digital revenue grew 17% year-over-year in the first quarter, signaling that customers are increasingly turning to data-driven solutions to optimize operations amid cost pressures.
By expanding its digital business and leveraging its scale, SLB hopes to offset some of the drilling-related revenue volatility in North America.
Conclusion
The road ahead for SLB—and indeed for much of the North American oilfield services sector—is one of cautious navigation. Lower drilling revenues, a subdued outlook for U.S. land activity, and tariff uncertainties all pose significant hurdles. Yet SLB’s strong focus on margin protection, digital growth, and operational discipline positions it to weather the storm better than most.
If North American drilling activity remains constrained, success for companies like SLB will hinge on adaptability, innovation, and maintaining strategic flexibility in an increasingly complex environment.
