GE GE Aerospace

By Austen Hufford 

Baker Hughes Inc. said revenue rose sequentially in its latest quarter for the first time in two years, as energy prices stabilized.

General Electric Co. is currently working to combine its oil-and-gas business with Baker Hughes to create a publicly traded energy powerhouse. Thursday, Baker Hughes said the regulatory review process is proceeding as planned and that it continues to expect a mid-2017 close.

For Baker Hughes, the 2.4% third-quarter to fourth-quarter revenue gain was due to increased activity in North America, better-than-expected seasonal year-end product sales and pockets of growth internationally, mostly in the Middle East.

Still, for the first half of 2017, Baker Hughes said it expects "more severe" activity declines in its offshore markets internationally, particularly deep water. It expects onshore revenue in North America to increase as customers increase activity.

Energy companies have been hit in recent years by the decline in prices. Only in recent quarters have prices begun to stabilize.

On a year-over-year basis, revenue declined across all of the company's units.

The Organization of the Petroleum Exporting Countries and Russian officials said Sunday they were making good progress on their pledges to cut back crude-oil production and raise global prices.

On Thursday, Baker Hughes Chief Executive Martin Craighead said on a call with analysts that he sees a "disconnect" between OPEC's production cut announcements and what his company is seeing on the ground in the Middle East. "We've seen no pullback that would, kind of correlate if you will, to the announcement on a production cut," he said, noting rising Middle East revenue and unchanged production goals from many customers.

Still, on a year-over-year basis, revenue declined across all of the company's units.

In all, Baker Hughes reported a loss of $417 million, or 98 cents a share, compared with a year-earlier loss of $1.03 billion, or $2.35 a share. The year-earlier quarter includes a large impairment and restructuring charge. Excluding that and other items, the adjusted per-share loss was 30 cents, compared with a year-earlier adjusted per-share loss of 21 cents. Revenue slumped 29% to $2.4 billion.

Analysts expected an adjusted per-share loss of 11 cents and revenue of $2.37 billion, according to Thomson Reuters.

Angie Sedita, an analyst at the investment bank UBS, said the profit miss was largely driven by tax rate fluctuations.

Shares fell 0.9% in afternoon trading.

--Dan Molinski contributed to this article.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

January 26, 2017 14:18 ET (19:18 GMT)

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