Baker Hughes Tops Expectations With Strong Q2 Results

Baker Hughes reported a 13% annual increase in second-quarter revenues and a 41% annual increase in net profits, beating analyst expectations on its strong international business.

Like fellow oilfield service majors, Baker Hughes posted a strong quarter overseas and not so much at home. The company cited deals with Algeria’s Sonatrach and Brazil’s Petrobras among the largest contributors to its financial performance during the quarter, as well as Azerbaijan’s state-owned energy entity, SOCAR.

Baker Hughes reported a 12% quarterly increase in orders for its oilfield services and equipment unit although on an annual basis the order volume for the second quarter represented a 3% decline.

Thanks to the second-quarter performance, the company revised its full-year financial performance outlook higher.

“Following our first-half outperformance, we are raising the midpoint of our full-year guidance by 5% and are confident in our ability to drive margins structurally higher over the coming years,” chief executive Lorenzo Simonelli said.

The last six months have not been particularly easy for the U.S. oilfield service industry as consolidation among exploration and production companies increased competition among service providers.

It is this state of affairs that has seen both of Baker Hughes' main competitors, SLB and Halliburton, report stronger performance overseas and a weakening of the domestic business. Among them, SLB is especially well positioned, as some 82% of its revenues from overseas operations, Reuters recalled in a recent report.

“Investments will increasingly be targeted to in the most resilient out of the market, including key international markets such as the Middle East and Asia and in offshore globally,” SLB’s chief executive Olivier Le Peuch said this week.

Growth is stronger outside North America because oil demand is growing outside North America and not so much in it. Even so, in a consolidating industry at home, the biggest OSPs are best placed to maintain and even expand their business.

By Irina Slav for Oilprice.com

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