• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 16 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 10 hours Will Uncle Sam Step Up and Cut Production
  • 3 mins Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 1 day Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 11 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 14 hours Continental Resource's Hamm (Trump Buddy) wants shale to cut production.Can't compete with peers. Stock will drop in half again.
  • 1 day Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 3 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 7 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 2 days I think I might be wrong about a 2020 shakeout
  • 2 days Kremlin Says WTO's Existence Would Be In Doubt If the U.S., Others Left
  • 1 day Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 51 days To be(lieve) or Not To be(lieve): U.S. Treasury Secretary Says U.S.-China Trade Deal Is 90% Done
Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Baker Hughes Upbeat About 2019

Baker Hughes, a GE company sees a bright year ahead for its businesses, underpinned by solid growth in key oil and gas regions like the Middle East and the North Sea and an acceleration of liquefied natural gas (LNG) project approvals.

Unlike its closest competitors Schlumberger and Halliburton, Baker Hughes has less exposure to the softening in the North American pressure pump drilling market. So the GE company provided an upbeat outlook for 2019—brighter than the forecasts of its rivals—when it announced 2018 figures this week.

Baker Hughes reported growing revenues in Q4 and in 2018, and adjusted earnings per share of US$0.26 in Q4, matching the analyst consensus estimate provided by The Wall Street Journal.

“In the fourth quarter, we achieved $6.9 billion in orders, our largest orders quarter in almost 3 years, with sequential growth in all four of our business segments,” BHGE Chairman, President, and CEO Lorenzo Simonelli said.

These segments are Oilfield Services, Oilfield Equipment, Turbomachinery & Process Solutions (TPS), and Digital Solutions.

Like Schlumberger and Halliburton, Baker Hughes admitted that the oil price slump in the fourth quarter last year resulted in a considerable decline in completions activity across North America.

“U.S. production surprised the upside and we saw completions activity in North America, specifically in the Permian dropped significantly,” Simonelli said on the earnings call.

Related: The Only Way For The Aramco IPO Is Downstream

“The areas most impacted by the recent steep decline in crude prices are the more traditional transactional markets in the U.S. and Canada. We expect the activity slowdown and pricing deteriorations in these markets in the first half of 2019 to negatively impact our well construction product lines. We expect the market for artificial lift and production chemicals to remain stable,” the manager noted.

While Baker Hughes’ outlook on the immediate future of the North American market is surely not bright, analysts at Evercore ISI remind that the GE company has limited exposure to the pressure pumping market in North America.

This year, Baker Hughes sees the biggest opportunities for its businesses in expected solid growth in the Middle East and the North Sea and more LNG projects, for which the company aims to provide its turbomachinery solutions.

“Given the continued strong demand dynamics, likely project sanctioning is accelerating faster than we previously anticipated. We now see an opportunity for considerably more LNG projects reaching FID in 2019, including the recently announced LNG Canada project we see the potential for up to 100 million tons per annum of new capacity to be sanctioned by the end of 2019,” Simonelli said on the conference call, noting that more LNG projects being approved is “good news for BHGE.”

BHGE secured an award to provide modular turbocompressor technology for LNG Canada’s liquefaction plant in Kitimat, British Columbia, the largest LNG project to reach a positive FID globally since 2014 and the first large-scale LNG project to use modular liquefaction trains, Baker Hughes said.

Related: Oil Rallies As Saudis Cut Exports To The U.S.

For this year, energy consultancy Wood Mackenzie shares Baker Hughes’ bullish view on LNG projects. This year could be a record year for LNG project approvals, with more than 60 mmtpa of capacity likely taking FID, beating the previous 45 mmtpa record from 2005 and tripling the 21 mmtpa sanctioned in 2018, WoodMac says.

Before Baker Hughes’ earnings release, its two bigger competitors—more exposed to the North American shale drilling market—had announced financials beating estimates, but both Schlumberger and Halliburton had to rely on the solid recovery of their international business to offset the softer North American market in Q4.

Halliburton reported a Q4 net income beating analyst estimates, as continued recovery in its international business more than offset lower North American demand. In Q4, demand for completion services in North America— Halliburton’s biggest market by revenue—dropped as operators focus on returns, the company said.

Schlumberger, for its part, said that it expects North America’s E&P operators to likely keep future investments much closer to a level that can be covered by free cash flow, while companies in international markets except for the Middle East and Russia “are starting to see the need to invest in their resource base simply to maintain production at current levels.”  

Baker Hughes, with less exposure to North America, sees a brighter year ahead, thanks to growth in the key international oil and gas markets and an expected bumper year for LNG project approvals.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play