Baker Hughes Loss Widens as Pricing Pressures Continue
July 28 2016 - 8:30AM
Dow Jones News
Baker Hughes Inc. said its second-quarter loss widened as the
oil-services company's revenue slumped amid continued weak demand
and pricing pressures as the result of the prolonged commodities
downturn.
The per-share loss, excluding certain items, was wider than
analysts' feared—though revenue beat expectations.
In early May, Baker Hughes and Halliburton Co. called off their
planned merger deal, once valued at nearly $35 billion, as
regulators claimed it would hurt competition in the sector.
A day later, Baker Hughes said it planned to use the $3.5
billion breakup fee from Halliburton to help improve its balance
sheet and unveiled plans to restructure its business. The deal to
combine the second- and third-largest oil-field services businesses
after Schlumberger Ltd.—announced in November of 2014—had prevented
Baker Hughes from cutting costs and making other changes in
response to a commodities rout that reduced demand for drilling
wells and pumping oil and natural gas.
Both Halliburton and Baker Hughes have cut thousands of jobs
amid the commodities downturn.
In prepared remarks Thursday, Baker Hughes Chief Executive
Martin Craighead said that despite an extremely tough market
environment, he was encouraged to see that Baker Hughes's
second-quarter revenue declined only 10% from the first quarter
despite a 19% drop in the global rig count. Mr. Craighead said he
attributed the revenue decline mostly to the continued steep drop
in activity and to pricing pressure.
For the second half of 2016, excluding the seasonality in
Canada, Baker Hughes doesn't expect activity in North America to
meaningfully increase because customers require a more sustained
improvement in oil prices before committing to any material
increase in spending, he said.
However, activity outside North America is expected to continue
to decline in most countries, with a steeper decline in markets
with higher lifting costs, Mr. Craighead said.
Over all, Baker Hughes reported a loss of $911 million, or $2.08
a share, compared with a year-earlier loss of $188 million, or 43
cents a share. Excluding write-downs, restructuring charges, the
breakup fee and other items, the adjusted per-share loss was 90
cents, compared with a year-earlier adjusted loss of 14 cents.
Revenue slumped 39% to $2.41 billion.
Analysts polled by Thomson Reuters expected a per-share loss of
62 cents and revenue of $2.32 billion.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
July 28, 2016 08:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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