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Baker Hughes Posts First Quarterly Profit Since Oil Collapsed In 2020

Oilfield services provider Baker Hughes (NYSE: BKR) booked its first quarterly net profit since oil prices crashed in March, reporting on Thursday a net income of $653 million for the fourth quarter of 2020, compared to a loss of $170 million for the third quarter.

Both orders and revenues rose in Q4 compared to the previous quarter, Baker Hughes said, although they were still lower than those booked for the fourth quarter of 2019.

The profit for Q4 2020 marks the first quarterly net income for Baker Hughes since oil demand collapsed, prices crashed, and drillers deferred orders and curtailed fracking activity.

In Q2 and Q3 2020, the major oilfield services providers reported losses amid significantly reduced demand for drilling services, both in North America and internationally.

The three largest oilfield services providers in the world—Schlumberger, Halliburton, and Baker Hughes—all reported losses for the third quarter. Yet, those losses were significantly lower than the ones seen in the second quarter, “the most challenging quarter in past decades,” as Schlumberger’s chief executive Olivier Le Peuch had said. The losses were lower between July and September also because of massive cuts in expenses after oilfield services companies laid off tens of thousands of workers.

In the Q4 results release, Baker Hughes chairman and CEO Lorenzo Simonelli said the company expects “a tepid investment environment for oil and gas during the first half of 2021.”

“However, we expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022,” Simonelli added.

Earlier this week, another major oilfield services provider, Halliburton (NYSE: HAL), reported adjusted net income for the fourth quarter of 2020, with North America revenue rising by 26 percent sequentially to $1.2 billion.

“I am optimistic about the activity momentum I see in North America, and expect international activity to bottom in the first quarter of this year,” Halliburton’s chairman, president and CEO, Jeff Miller, said.   

By OPC Markets

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