There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

November 14, 2011 - Schlumberger Limited, (SLB-NYSE) together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide.

Its WesternGeco group offers reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also has 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management.

The M-I SWACO division supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations.

Its Smith Oilfield group designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions.

SLB cratered this year, going from $95 to $55 before starting to climb again. The reason: recession fears in Europe and the U.S. and maybe a slowdown in the robust growth in China. Combined, investors felt they might put a damper on oil consumption. So they sold this oilfield services stock. Makes sense if those fears were well founded. But they don't seem to be as China continues to grow. While the U.S. is slowly showing signs of some recovery, Europe is still in the midst of its own mess. So where does that leave SLB?

The first place to look is earnings. They're not slowing down. This year, 36 analysts have a consensus estimate of $3.67 a share, up 28% from last year's $2.86. Next year, they forecast $4.94 with a range of $4.34 at the low end to $5.36 at the high. They see $1.11 for the fourth quarter, up from 85 cents last year in the final period.

One thing working in SLB's favor is the need for most producers to raise their reserves which have been drawn down over the last few years. There isn't a lot of excess oil production capacity currently. Of course, end demand drives explorations and until Europe shows more strength, that region's need for more oil will stay weak. Once the new leaders in Greece and Italy put their countries in better financial shape (if they can), all of Europe will breathe a sigh of relief, and consumers as well as governments will start spending more on products and services that require more oil.

SLB has a new way of fracking. It's a method of well fracturing that takes less water and support materials to open a reserve. Fracking is used to extract oil and gas from shale. Fracking has come under heavy fire of late for the alleged contamination of water that takes place when the process is used. The new SLB approach will be of strong interest to the natural gas producers since it's more efficient and less expensive than current methods. Since the price of natural gas is much lower now than a year ago, SLB's new approach will afford producers lower costs. After all, it's a service business, and better, more efficient products and services is what a service company provides. Expect more innovative techniques and products to be introduced over the next several years as SLB's R&D department continues to thrive.

Essential Numbers:
- Trailing P/E: 22.31
- Forward P/E: 15.27
- Price to sales ratio: 2.73
- Price to book: 3.26
- Operating margin: 16.47%
- Profit margin: 12.3%
- Return on equity: 14.08%
- Return on assets: 7.35%
- Revenue for last 12 months: $37.67 billion
- Total cash: $6.06 billion
- Cash per share: $4.52
- Total debt: $11.49 billion
- Debt to equity: 36.33%
- Current ratio: 1.88
- Book value per share: $23.47
- 52 week change: 3.28%
- Total Shares Outstanding: 1.34 billion
- Float: 1.34 billion
- Insiders own: .23%
- Institutions: 78.5%
- Annual Dividend: $1.00

Conservative investors should like these numbers, especially the cash position. While the dividend isn't too exciting, it all helps. Debt is only 22% of the balance sheet. Operating and profit margins are very healthy.

Schlumberger is dependent on oil and gas producers drilling. If, as was recently the case, investors fear economic slowdowns and the possibility of lower oil and gas demand, SLB is going to get hit again. But if global economies finally get back on track, look for oil and gas exploration to expand to meet the new demand. When that happens, SLB will rebound and may get back to its old high of $115 set back in 2007.

- Company Web site: www.slb.com 

Ted Allrich