Oil prices fell on Friday…
Oil prices continued to rise…
As Baker Hughes (NYSE:BHI) booked a fourth-quarter loss much wider than analysts had expected, the oilfield services group said on Thursday that it expects companies to increase spending outside North America only if oil prices rise above US$65 per barrel.
Baker Hughes reported today an adjusted net loss of US$126 million for the fourth quarter, or US$0.30 per diluted share, compared with a loss of US$0.21 per diluted share for the fourth quarter of 2015. The loss was much wider than the Zacks Consensus Estimate of a loss of US$0.12.
Fourth-quarter revenue inched up 2 percent sequentially to US$2.4 billion, but plunged by 29 percent on the year. Still, fourth-quarter revenue beat the Zacks Consensus Estimate of US$2.369 billion.
North America revenue dropped to US$775 million from US$1.137 billion in the fourth quarter of 2015. Although revenue increased by 15 percent compared to the third quarter of 2016, Baker Hughes said that “despite the increase in activity, the competitive landscape remained challenging across the entire segment, keeping a downward pressure on price”.
To further dampen the mood, Baker Hughes said that it expects North American revenue in the first quarter this year to suffer from lower activity in the Gulf of Mexico and the spin-off of the pressure pumping business.
Related: Keystone XL Still Faces Obstacles Even With Trump’s Approval
“Looking ahead for the first half of 2017, we expect onshore revenue in North America to increase as our customers ramp up activity, with service pricing improving but limited by overcapacity. Internationally, we are forecasting activity declines and continued pricing pressure, with pockets of growth onshore. In offshore markets, particularly deepwater, activity declines are expected to be more severe,” chairman and CEO Martin Craighead said in the company statement.
Commenting on the spending of companies as related to oil prices, Craighead said – as reported by Reuters – that North American producers would increase spending with oil prices in the mid-to-upper-fifty-dollars per barrel. Regarding international producers’ spending, prices need to be higher than US$65 per barrel to make companies outside North America start raising spending again.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…