Baker Hughes Reports Drop in 2Q Earnings
Houston-based oilfield service company Baker Hughes Inc. reported lower than expected earnings for the second quarter on a drop in activity and demobilization costs in Latin America and reduced activity in Canada. However, the company expects an uptick in profits during the second-half of the year.
Almost half of Baker Hughes revenue comes from North America, which has seen a reduction in the demand for drilling equipment due to low natural gas prices.
The company reported net income for the second quarter was $240 million, or a profit of 54 cents per share, on revenues of $5.5 billion, compared to a net income of 60 cents per diluted share for the first quarter of 2013. Their second-quarter 2012 profit was $1.00 per share.
Some analysts had predicted Baker Hughes would have second-quarter profits of 65 cents per share. However, the lower-than-expected profits were a result of what are thought to be transitory issues in Latin America, an analyst at Barclays said in a July 19 report, adding that the company’s second-half outlook is likely to show improvement because of the company’s positive outlook for North America.
“Our second quarter results reflect mixed performance across our international operating segments,” Martin Craighead, Baker Hughes’ chairman and chief executive officer, said in a statement. “Activity levels continued to rise across the Eastern Hemisphere based on strong demand in deepwater markets, particularly in Europe and Africa, as well as seasonal improvements in Russia. However, our gains in the East were more than offset by a sharp decline in Latin America resulting from reduced activity and demobilization costs in Brazil and Mexico.”
The company began taking steps in the second quarter to reduce their costs in Latin America, and expects higher profitability through the reminder of the year on an increase in activity in North America, Craighead said.
Baker Hughes also said it had extended its Baker Hughes Rig Count Service, which provide counts of drilling activity on a weekly and monthly basis, and was introducing the Baker Hughes Well Count to provide information on U.S. onshore wells on a quarterly basis.
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