Oil services major Baker Hughes falls short on drilling slowdown

Baker Hughes reported a bigger than expected quarterly loss on Thursday, hurt by lower drilling activity and pricing, and the oilfield services provider said it did not expect North America activity to increase substantially this year.

The company’s comments contrasts those from bigger rivals Schlumberger and Halliburton last week.

Schlumberger said the oil downturn appeared to have bottomed out, while Halliburton said it expects a “modest uptick” in North American rig count in the second half of the year.

Oil producers require a more sustained oil price improvement before committing to any material increase in spending, said the chief executive Martin Craighead on Thursday.

“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 said it expected pricing to remain challenging, as activity is expected to continue to decline internationally in most countries.

However, Baker Hughes said it expected to see margin improvement across its segments due to restructuring actions in the latest quarter.

Baker Hughes and Halliburton scrapped their long-stalled deal – valued at about US$35 billion when it was announced in November 2014 – in May after opposition from US and European antitrust regulators.

Both the companies had hoped the merger would help them weather the worst oil price crash in a generation.

Baker Hughes said in May proceeds from a $3.5bn breakup fee from Halliburton would fund a $1.5bn share buyback and the repayment of $1bn of debt.

Net loss attributable to Baker Hughes widened to $911 million, or $2.08 per share, in the second quarter ended June 30 from $188m, or 43 cents per share, a year earlier.

On an adjusted basis, the company reported a net loss of 90 cents per share. Analysts on average had expected a loss of 62 cents per share, according to Reuters.

The second quarter included charges related to goodwill impairment, asset impairments, restructuring, and inventory, but were offset by the merger termination fee.

Revenue fell 39.3 per cent to $2.41bn.

business@thenational.ae

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