Baker Hughes looks for North American revenue to rise in Q2

Baker Hughes busy in shale fields

On Tuesday, Baker Hughes said it expects its North American revenue to rise in the current quarter over Q1 as producers drill more onshore wells, making up for a drop in demand from customers in the Gulf of Mexico.

The oilfield services company says producers are spending more on shale fields and a cutting back on more expensive, long-term offshore projects.

“Activity growth in the U.S. onshore well construction product lines is forecast to more than offset the seasonal decline in Canada and ongoing activity reductions in the Gulf of Mexico,” Chief Financial Officer Kimberly Ross told Reuters in a post-earnings call.

With US shale producers clamouring to take advantage of oil prices stabilizing at over $50/barrel, oilfield services companies are seeing an uptick in business.

Halliburton reported on Monday that a number of producers are completing nearly as many wells as they drilled, resulting in revenue and margin growth in the company’s completion and production unit.

Last week, Schlumberger said it was moving service capacity and technical support resources from the Gulf of Mexico to other markets.

About 31 percent of the Baker Hughes’ total revenue comes from North America. Operations in the Gulf of Mexico account for 15 per cent of its revenue from the region.

With the company more involved in international markets, persistently low activity and pricing for oilfield services has impacted the company’s balance sheet.

In its Q1 report, Baker Hughes reported a bigger-than-expected loss, with revenue falling 15.3 per cent to $2.26 billion.  Shares in the company, which is being acquired by General Electric, fell by as much as 4.3 per cent to $56.15 before paring losses to trade down marginally.

Analysts had expected Baker Hughes Q1 revenue to reach $2.27 billion, according to Thomson Reuters.

Net loss attributable to Baker Hughes narrowed to $129 million, or 30 cents per share in the first quarter, ending March 31 from $981 million, or $2.22 per share this time last year.

Thomson Reuters reports the company lost 24 cents per share, on an adjusted basis.  Analysts had been anticipating a loss of 21 cents per share.

So far this year, Baker Hughes shares have fallen 9.7 per cent.

The sale of the company to GE should close by mid-2017.