Baker Hughes posts bigger-than-expected loss on weak drilling

Oilfield services provider Baker Hughes Inc. reported a bigger-than-expected quarterly loss, hurt by weak drilling activity and pricing, and said it did not expect a substantial recovery in North America this year.
Baker Hughes, however, said it expected margins to improve across segments due to recent restructuring actions, including job cuts.
The company’s shares rose 3.3 percent to $46 in premarket trading on Thursday.
Baker Hughes’ bearish outlook contrasts those of bigger rivals Schlumberger Ltd. and Halliburton Co.
Schlumberger said the oil downturn appeared to have bottomed out, while Halliburton said it expected a “modest uptick” in North American rig count in the second half of 2016.
“I believe oil prices in the upper $50s (per barrel) at a minimum are required for a sustainable recovery in North America,” Baker Hughes Chief Executive Martin Craighead said in a post-earnings conference call.
“In the second half of 2016, excluding the seasonality in Canada, we do not expect activity in North America to meaningfully increase,” he said.
The company expects pricing to remain challenging as activity is seen weakening in most regions outside North America too.
In May, Baker Hughes and Halliburton scrapped their long-stalled deal — valued at about $35 billion when it was announced in 2014 — due to opposition from US and European antitrust regulators. The companies had hoped the merger would help them weather the worst oil price crash in a generation.
Baker Hughes, which is on track to meet $500 million in annualized cost savings by the end of 2016, said it cut 3,000 jobs in the second quarter.
The company had slashed 2,000 jobs in the first quarter and 18,000 last year. Baker Hughes had about 43,000 employees at the end of December.
The company also said it was planning to launch new products this year, most of them for lowering costs and optimizing production for oil producers.
Baker Hughes said in May proceeds from a $3.5 billion breakup fee from Halliburton would fund a $1.5 billion share buyback and a $1 billion debt repayment.
Net loss attributable to the company widened to $911 million, or $2.08 per share, in the quarter ended June 30.

Excluding charges related to restructuring and asset writedown, the company reported a net loss of 90 cents per share, bigger than the 62 cents analysts had expected, according to Thomson Reuters I/B/E/S.
Revenue fell 39.3 percent to $2.41 billion.

Source: Arab News