Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

UPDATE 3-Baker Hughes says North America recovery unlikely this year

Published 2016-07-28, 11:18 a/m
UPDATE 3-Baker Hughes says North America recovery unlikely this year
HAL
-
LCO
-
CL
-

* 'I don't subscribe to the hopeful commentary,' says CEO

* Q2 loss/shr $0.90 vs est loss of $0.62

* Says margins expected to improve due to restructuring

* Cuts 3,000 jobs in Q2 (Adds details)

By Amrutha Gayathri

July 28 (Reuters) - Oilfield services provider Baker Hughes Inc BHI.N said it did not expect a substantial recovery in drilling and pricing in North America this year, in contrast with comments from bigger rivals Schlumberger Ltd SLB.N and Halliburton (NYSE:HAL) Co HAL.N .

Baker Hughes' shares, however, rose about 3 percent to $45.88 after the company said it expected margins to improve across its businesses due to recent job cuts and other restructuring actions.

"I don't subscribe to the hopeful commentary," Baker Hughes Chief Executive Martin Craighead said on a post-earnings conference call on Thursday.

Schlumberger said last week the oil downturn appeared to have bottomed out, while Halliburton said it expected a "modest uptick" in North American rig count in the second half of 2016.

"I believe oil prices in the upper $50s (per barrel) at a minimum are required for a sustainable recovery in North America," Craighead said.

Baker Hughes' outlook was more "sanguine" than its peers', said Evercore ISI analyst James West, noting that oil prices have slid from last week, when Schlumberger and Halliburton reported results.

Prices for both globally traded Brent futures LCOc1 and U.S. crude CLc1 are down about 5 percent this week.

In May, Baker Hughes and Halliburton scrapped their long-stalled deal - valued at about $35 billion when it was announced in 2014 - due to opposition from U.S. and European antitrust regulators. The companies had hoped the merger would help them weather the worst oil price crash in a generation.

Baker Hughes said in May proceeds from a $3.5 billion breakup fee from Halliburton would fund a $1.5 billion share buyback and a $1 billion debt repayment. Hughes, which expects to save an annualized $500 million in cost by the end of 2016, said it cut 3,000 jobs in the second quarter.

The company had laid off 2,000 employees in the first quarter and 18,000 last year. Baker Hughes had about 43,000 employees at the end of 2015.

The company also said it was planning to launch new products this year, most of them for lowering costs and optimizing oil production.

Net loss attributable to the company widened to $911 million, or $2.08 per share, in the quarter ended June 30.

Excluding charges related to restructuring and asset writedown, the company reported a loss of 90 cents per share, bigger than the 62 cents analysts had expected, according to Thomson Reuters I/B/E/S.

Revenue fell 39.3 percent to $2.41 billion.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.