Baker Hughes narrowed losses for the first quarter as one of the world’s largest oilfield services groups forecast continued growth in North American onshore market for the remainder of the year while cautioning that the offshore market will likely face headwinds.
The Houston-based company said its net loss narrowed to $129m or 30 cents a share, compared with $981m or $2.22 per diluted share in the first quarter of 2016. Adjusted for one-time items the company reported a loss of 4 cents, better than the 21 cent loss that Wall Street had forecast.
Revenue fell 15 per cent from a year ago to $2.3bn and was down 6 per cent sequentially, just ahead of analysts’ estimates of $2.27bn. The sequential decrease in revenue was driven primarily by the deconsolidation of the North America onshore pressure pumping business, lower revenue internationally and reduced activity in the Gulf of Mexico. Stripping out the $83m of onshore pressure pumping revenue from the fourth quarter, revenues were down 3 per cent sequentially.
The results come as oil prices stabilised over the first quarter after Opec and non-member like Russia agreed to curb output by 1.8m barrels per day in the first half of the year in an effort to bolster crude prices. More recently however, a rise in US crude stocks and concerns over the effectiveness of Opec’s cuts have pushed US crude prices back below the $50 a barrel level.
Baker Hughes noted that the “onshore rig count increase in North America has been more robust than many had expected” and that the industry was working to absorb excess service capacity. Indeed, Baker Hughes’ weekly rig count show that the number of US rigs drilling for crude is currently at its highest level since April 2015.
Martin Craighead, chief executive, said:
Looking forward to the rest of the year, we believe that the North America onshore market will continue to grow and service capacity will continue to be absorbed. For international onshore markets, activity has bottomed and we expect it will remain stable, with a few pockets of modest growth. And, while we expect there to be headwinds offshore throughout the rest of 2017, we are winning in the right places, as evidenced by our recent tender awards.
Baker Hughes, which last year abandoned its $38bn tie-up with Halliburton following objections by regulators, agreed in October to merge its business with GE’s oil and gas division. And on Tuesday the company said it was pleased with the progress on the deal which is expected to close sometimes in mid-2017.
Shares in the company are down nearly 10 per cent so far this year.