Net income for the first quarter 2006 was $339.2 million or $0.99 per diluted share, compared to $179.8 million or $0.53 per diluted share for the first quarter 2005 and $257.9 million or $0.75 per diluted share for the fourth quarter 2005.
Revenue for the first quarter 2006 was $2,062.0 million, up 26% compared to $1,642.9 million for the first quarter 2005 and up 4% compared to $1,989.4 million for the fourth quarter 2005.
Chad C. Deaton, Baker Hughes chairman and chief executive officer, said, "Pricing realization exceeded our expectations in this record quarter. Our strong first quarter results, particularly in North America, the North Sea and the Middle East, reflect customer recognition of the value our technology delivers and our continuing focus on execution and reliability.
"Last Friday we announced that we had reached agreement with Schlumberger to sell them our minority interest in WesternGeco for $2.4 billion. While we were pleased with WesternGeco's results and the accomplishments of the management team, we believe this was an excellent opportunity to exit our minority ownership position. Given our positive, multi-year outlook for the market, we expect to continue to generate cash in excess of our needs to grow our business. Accordingly, the Board increased our stock repurchase authorization by $1.8 billion which will be funded by the $1.8 billion cash proceeds, net of tax, generated by the sale of our interest in WesternGeco."
Mr. Deaton concluded, "The environment remains positive for continued market growth over the next several years. Global demand for oil and gas has remained strong, challenging our customers to find and develop new reservoirs to offset depletion and meet growing demands. Our customers are taking a long-term approach to the market with a focus on technology, reliability and execution. We are continuing to invest in people and technology today to satisfy the future demands of this growing market and to address geographic opportunities, particularly in the Eastern Hemisphere where we believe we have the greatest opportunities for growth."
During the first quarter 2006, debt decreased $4.5 million to $1,083.4 million, and cash and short-term investments decreased $131.9 million to $642.1 million. In the first quarter 2006, the company's capital expenditures were $159.1 million, depreciation and amortization was $100.0 million and dividend payments were $44.4 million.
During the first quarter of 2006, the company repurchased 1.3 million shares at an average price of $67.41 for a total of $90.7 million. During the first three weeks of April 2006, the company repurchased 0.6 million shares at an average price of $71.72 for a total of $45.4 million. On April 21, 2006 the company announced that it increased its share repurchase authorization by $1.8 billion. As of April 21, 2006, the company has authorization remaining to repurchase approximately $2.1 billion in stock.
Income from discontinued operations, net of tax, was $20.4 million and included a $19.2 million gain on the sale of Baker SPD. During the first quarter of 2006, the company sold Baker SPD, a product line group within the Baker Oil Tools division of the Completion and Production segment, for $42.5 million and has recorded a gain on the sale of assets of $19.2 million, net of tax of $11.0 million. For the twelve months ended December 31, 2005, Baker SPD had revenues of $32.5 million and net income of $4.9 million. In December 2005, the company reclassified all prior periods to reflect Baker SPD as a discontinued operation.
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