Schlumberger Vs. Halliburton: Which Oil & Gas Stock Is A Better Buy?

NYSE: SLB | Schlumberger N.V.  News, Ratings, and Charts

The oil and gas industry has been one of the hardest-hit sectors in 2020, as a near-complete COVID-19-driven halt in global industrial activity earlier this year brought oil prices to record lows. However, with China resuming its economic operations since the second quarter, and the rest of the world following by degrees, West Texas Intermediate (WTI) crude oil has gained 228.3% to date since hitting its all-time low of negative $37.63 per barrel on April 20.

The ongoing coronavirus vaccine deployment, combined with OPEC’s global supply agreement to reduce total oil output and a $900 billion U.S. fiscal stimulus package have driven an oil price rally this month. WTI has gained 6.5% in December.

However, the industry still faces headwinds as 2021 approaches. A second strain of coronavirus is making renewed lockdowns necessary in most European countries. And international travel restrictions are expected to again hamper global trade.

Also, most countries are focusing on revamping their industrial sectors to make them more energy-efficient, which poses a long-term challenge for the oil and gas sector. Companies such as Schlumberger Limited (SLB - Get Rating) and Halliburton Company (HAL - Get Rating) are focusing on reviving their business to the pre-pandemic levels while dealing with long-term challenges in the guise of emission standards.

Both companies have generated significant returns over the past nine months. HAL has gained 195.6% over this period, while SLB returned 56.8%. In terms of performance over the past three-months, HAL is the clear winner with 48% gains versus SLB’s 31.1%. HAL has gained 7.6% over the past month, while SLB declined marginally over this period.

But which stock is a better buy now? Let us find out.

Latest Developments

On December 2, HAL partnered with Accenture to digitize its manufacturing function and supply chain. HAL plans to launch a new global hub and spoke supply chain and manufacturing services model, which should increase the company’s operational efficiency as well as increase its productivity. This will allow the company to achieve economies of scale, thereby increasing its profitability.

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