SLB (NYSE:SLB) shares climbed 2% on Tuesday following an announcement that the oilfield services and technology firm had been awarded a $1.5 billion, five-year integrated contract by Kuwait Oil Company. The agreement covers the next stage of Mutriba field development in Kuwait and expands SLB’s remit beyond its prior subsurface work.
The new contract assigns SLB responsibility for design, development and production management of the field, building on the company’s existing familiarity with Mutriba’s subsurface characteristics. The work will target reservoirs that are high-pressure and high-temperature and include sour conditions, introducing additional technical complexity as development progresses.
"This award reflects the strength of our long-standing partnership with Kuwait Oil Company and the trust built over decades of working together," said Steve Gassen, executive vice president, Geographies, SLB. "As development of the Mutriba field moves into its next stage, we are taking on end-to-end responsibility to support safe, reliable execution in complex reservoir conditions."
According to the company, the project is designed to accelerate development of resources that are both technically challenging and remote while placing emphasis on capital efficiency and environmental considerations. The arrangement marks a move toward end-to-end delivery models intended to lower execution risk as fields transition into more complex phases of development.
SLB, which formerly operated under the Schlumberger name, will leverage its existing relationship with Kuwait Oil Company as the Mutriba program advances into deeper and more technically demanding reservoir conditions. The contract’s integrated nature means SLB will assume broader operational duties across multiple stages of the field lifecycle.
Market reaction was immediate, with the stock registering the 2% gain after the contract announcement. The award highlights SLB’s continuing role in large-scale field developments and underscores the company’s positioning to take on comprehensive delivery responsibilities in demanding reservoir environments.
Key points
- SLB secured a $1.5 billion, five-year integrated contract from Kuwait Oil Company for the next phase of Mutriba field development.
- The scope expands SLB’s role to include design, development and production management, focusing on high-pressure, high-temperature and sour reservoirs.
- Sectors impacted include energy and oilfield services, with implications for capital markets given the stock's 2% rise.
Risks and uncertainties
- Technical complexity - The project involves HPHT and sour reservoir conditions, which present greater operational and engineering challenges for the oilfield services sector.
- Execution risk - Developing technically challenging and remote resources can increase execution risk as fields enter more complex development phases, affecting project timelines and costs.
- Capital efficiency considerations - Prioritizing capital efficiency is explicit, but achieving that goal amid complex reservoir work remains uncertain and could affect broader investment outcomes in the energy sector.