Baker Hughes' Profit Misses on Weak Drilling Activity Outside N. America
Oct 16 (Reuters) – Baker Hughes Inc, the world's No.3 oilfield services provider, reported a lower-than-expected profit for the first time in five quarters as political tensions in Libya and Iraq, and a sharp fall in drilling activity in the Gulf of Mexico weighed on margins.
The company's shares fell nearly 6.7 percent to $50.06 in premarket trading on Thursday.
Baker Hughes said pretax profit margins in its operations in Europe, Africa and the Russia Caspian region slumped to 8 percent in the quarter ended Sept. 30 from 17 percent a year earlier.
North America, which accounted for more than half of total revenue, was a brightest spot in the company's operations.
Increased demand for pressure pumping, used in hydraulic fracturing to extract oil and gas from shale rock, and a seasonal rebound in activity in Canada helped the company report a 10 percent rise in third-quarter profit.
Revenue from North America rose to $3.15 billion, a 10 percent – the highest among its five reporting divisions.
Baker Hughes expects higher revenue and margins in North America in the fourth quarter due to a rebound in drilling activity in the Gulf of Mexico and improved profitability in its key pressure pumping business, Chief Executive Martin Craighead said in a statement.
Demand for pressure pumping, which analysts estimate account for a fifth of Baker Hughes's revenue, is recovering from a supply glut as drilling activity ramps up in Texas's Permian Basin and North Dakota's Bakken shale field.
Baker Hughes's net income rose to $375 million, or 86 cents per share, in the third quarter, from $341 million, or 77 cents per share, a year earlier.
Excluding items, Baker Hughes earned $1.02 per share. The average analyst estimate was for a profit of $1.13, according to Thomson Reuters I/B/E/S.
Revenue rose 8 percent to $6.25 billion, narrowly missing the average analyst estimate of $6.29 billion.
Up to Wednesday's close Baker Hughes shares had fallen nearly 26 percent due to a big slide in oil prices. The stock closed at $53.63 on the New York Stock Exchange.
(Reporting By Swetha Gopinath and Kanika Sikka in Bangalore; Editing by Savio D'Souza)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.