SLB Ltd. is mentioned as a detractor in the portfolio, indicating that it has not performed well recently. The letter notes that SLB and EOG Resources have traded down in sympathy with benchmark oil prices, suggesting that their performance is closely tied to oil price fluctuations. While they are described as remaining the best in their respective fields, there is no positive argument made for SLB Ltd. in terms of future performance or investment potential.

We initiated a position in SLB, the largest global oil services provider, a name with which we are familiar. The company is the most international of the major oil services companies. Prior to the Iran conflict, the international market was growing faster than North America due to new basin discoveries and improvements in technology. Through its OneSubsea JV (with Aker Solutions and Subsea 7), SLB effectively forms a duopoly in the offshore segment, where growth is secular in our view. We believe oil prices will remain structurally higher due to a higher geopolitical risk premium, which should help incentivize further activity. Other secular drivers for SLB include its Digital segment (~8% of sales and ~15% of operating profit), which includes data platforms and digital operations.

Schlumberger has demonstrated a notable recovery in service demand as global upstream activity stabilized towards the end of the quarter. This recovery aligns with our long-held conviction in the energy sector's underlying value, particularly as the sector benefited from a sharp surge in crude oil prices, which averaged over $72 per barrel. The escalating Middle East conflicts have heightened global supply concerns, further supporting the outlook for Schlumberger. Our positive stance is reinforced by the company's performance as a top contributor to our portfolio, reflecting its strong position in the energy market.

SLB (SLB) is one of the world’s leading diversified providers of oilfield services, with an established franchise and world-leading technology. The company has a growing software business and outsized exposure to higher-margin and wider moat international, offshore, and software markets. SLB’s valuation is attractive given its risk ratings, and it reported a sequentially improving Q4 with organic revenue growth in all geographies and optimistic commentary on 2026/2027.

The portfolio was impacted both by the February rotation, driven by the reassessment of AI-related risks, and by the broader risk-off move in March. In contrast, the rest of the portfolio proved resilient, once again highlighting the strength of our diversified approach. On the equity side, energy names such as Schlumberger, along with more defensive segments like consumer staples, provided support.

The Fund initiated a position in SLB Ltd, the world’s largest oilfield services provider, as it is trading at a significant discount to Kopernik’s estimates of its risk-adjusted intrinsic value. The team of sector-specialist analysts continues to find companies like SLB Ltd that present substantial upside potential. The investment process focuses on buying and holding such undervalued companies, viewing market volatility as an opportunity to enhance positions.

Schlumberger (SLB) was our worst performer, falling 18%. We increased our position in SLB during its weakness and continue to believe the company is worth $50-$96 per share. SLB is currently trading for $36 per share, which is a substantial discount to our estimated intrinsic value. This quarter saw elevated trading activity due to a spike in volatility in April. We welcome periods of heightened market anxiety, as market corrections present valuable opportunities for portfolio managers to enhance their portfolios with better investment prospects.

We increased our position in Schlumberger (SLB) during its weakness and continue to believe the company is worth $50-$96 per share. SLB is currently trading for $36 per share, which is a substantial discount to our estimated intrinsic value. This presents a compelling opportunity as we see significant upside potential in the stock, especially given its strong market position and the recovery potential in the energy sector.

We purchased Schlumberger NV (SLB), the largest oilfield services company in the world by revenue. Despite the challenging backdrop, we believe the company offers a solid financial profile, including recurring revenue streams and rising operating profit margins. We believe the company’s scale and technical expertise are key differentiators. Additionally, we expect SLB will continue to evolve their capabilities to help clients with rising energy needs going forward.

We purchased Schlumberger NV (SLB), the largest oilfield services company in the world by revenue. Despite the challenging backdrop, we believe the company offers a solid financial profile, including recurring revenue streams and rising operating profit margins. We believe the company’s scale and technical expertise are key differentiators. Additionally, we expect SLB will continue to evolve their capabilities to help clients with rising energy needs going forward.