A sudden rise in Venezuelan oil production has emerged as a critical wild card for Schlumberger (SLB) and Halliburton (HAL), potentially affecting their near-term earnings. The uptick could shift global supply dynamics and impact service demand.
- Venezuela’s oil output rose to 1.8 million bpd in early 2026, up from ~1 million bpd in late 2024.
- SLB and HAL face potential 5–7% regional revenue decline if demand for services falls.
- The output increase represents a 2% share of global supply, more than double 2023 levels.
- Both companies operate extensive infrastructure in Venezuela and adjacent markets.
- Market volatility in Brent crude reflects growing concern over supply shifts.
- Earnings outlooks for SLB and HAL remain sensitive to regional contract activity
Venezuela has seen its crude output climb to approximately 1.8 million barrels per day in early 2026, up from just over 1 million barrels in late 2024—a surge of nearly 80% in 15 months. This resurgence, driven by renewed investment and operational improvements at PDVSA’s key fields, has caught the industry off guard. For oilfield services giants Schlumberger (SLB) and Halliburton (HAL), this development introduces significant uncertainty ahead of their Q1 2026 earnings reports. The rapid production ramp increases competition for drilling and maintenance contracts across Latin America, particularly in offshore and heavy-oil regions where both SLB and HAL have substantial operations. With Venezuela now accounting for roughly 2% of global supply—more than double its share in 2023—oil companies may delay or reduce drilling activity in neighboring countries, leading to lower demand for specialized services. This shift could result in reduced utilization rates for SLB’s and HAL’s rigs and workover fleets in the region. Analysts project that each company could see a 5–7% decline in regional revenue if current trends continue through Q2 2026, directly impacting adjusted EBITDA margins. Both firms have historically relied on the stability of regional contracts to maintain full-service capacity. Energy traders and investors are now reassessing supply forecasts, with Brent crude futures showing volatility around $85–$89 per barrel as the market digests the new data. The potential for oversupply, even if temporary, adds pressure on pricing power for oilfield services providers already facing margin compression due to inflation and labor costs.