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Schlumberger: Rock Solid


Cutting capex by 40% and laying of 10,000 workers has given the company much needed liquidity and flexibility.

The company has $13 billion in cash and short term investments on its books.

Schlumberger's balance sheet could help it pick up assets from smaller producers at below market prices.

The company has generated over $6 billion in free cash flow over each of the past three years.

The dividend is now at almost 3%.

With energy prices beginning to level out, the imminent demise of the entire energy sector might be a bit overblown. While there will certainly be smaller producers that will have a tough time surviving in the low crude oil price environment, many of the big names with rock solid financials will be able to not only do well but also take advantage of the misery of others.

Schlumberger (NYSE:SLB) is one of those companies. Amid the wreckage of the stock price over the past couple of years from its peak of nearly $120 all the way down to $73 currently is the fact that the company has taken steps to strengthen its balance sheet in a challenging economic environment.

2016 revenue for Schlumberger is expected to be down over 20% compared to the prior year. Therefore, the company has taken steps to improve its liquidity and cash cushion while it waits out the low oil environment. The company slashed its capex by roughly 40% in 2015 (from $4 billion the prior two years...