By Chelsey Dulaney
Baker Hughes Inc. on Tuesday said headwinds from tumbling oil
prices will likely persist for the rest of the year, as the
oil-field services company swung to a loss and reported a 33% drop
in revenue for its second quarter.
"In North America, we don't anticipate activity to increase
while commodity prices remain depressed," said Chief Executive
Martin Craighead, who added that seasonal activity in Canada will
likely be offset by a decline in the U.S., while international rig
counts will continue to decline.
Still, revenue for the quarter came in above Wall Street
expectations, while adjusted profit was in line.
Baker Hughes has cut thousands of jobs and closed facilities as
plunging oil prices have prompted many of its clients to curtail or
cancel projects. Baker Hughes and its peers are particularly
struggling in the U.S., where shale producers have dialed back
their operations.
Baker Hughes on Tuesday said it is focusing on growing revenue
in areas more resilient to commodity price declines, such as
Norway, Saudi Arabia and West Africa.
For the quarter ended June 30, Baker Hughes reported a loss of
$188 million, or 43 cents a share, compared with a prior-year
profit of $353 million, or 80 cents a share.
Baker Hughes said its profit was also hurt by an unfavorable tax
rate due to a shift in the geographic mix of its earnings.
Excluding restructuring charges and merger costs, among other
items, the company's adjusted per-share loss was 14 cents. Revenue
tumbled to $3.97 billion from $5.94 billion a year earlier.
Analysts polled by Thomson Reuters were expecting an adjusted
loss of 14 cents a share on revenue of $3.78 billion.
Revenue fell across all of Baker Hughes's geographic segments in
the quarter, with the biggest drop in North America. The division
saw a 47% decline in revenue to $1.5 billion, as average rig counts
fell 51% and customers cut spending. Latin America posted a 19%
decline in revenue, while revenue fell 22% in the Middle East and
Asia Pacific division.
Meanwhile, Baker Hughes is moving forward with its agreement to
be acquired by larger rival Halliburton Co. The deal, struck in
November and valued at almost $35 billion at the time, underscored
the new realities for energy companies in a world suddenly awash
with oil. As a result, oil-field services companies, which are
hired to drill and pump wells, are facing less demand for their
services and pressure to cut prices.
Halliburton on Monday said its second-quarter earnings plunged
93% amid weak demand, particularly in North America.
Rival oil-field services firm Schlumberger Ltd. last week said
it expects the North American rig count to begin to rebound in the
second half of the year. That company also reported a steep
earnings drop for the second quarter. Schlumberger's profits fell
30% amid plunging revenue, with a significant decline seen in North
America.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for Baker Hughes, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0572241075
Access Investor Kit for Halliburton Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4062161017
Subscribe to WSJ: http://online.wsj.com?mod=djnwires