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Baker Hughes reported expectation-beating financial results for the third quarter in the latest sign that the oilfield service industry is healing nicely after the pandemic and the oil and gas price slump the lockdowns caused.
The company booked a net profit of $518 million, swinging from a loss a year ago, and boasted 24% higher revenues. It also said its order book had swelled by 40% during the third quarter.
International business contributed significantly to the overall revenues, marking a 19% annual increase in the third quarter.
"Oil prices have rebounded as the combination of resilient oil demand and production cuts have tightened the market,” CEO Lorenzo Simonelli said.
“As a result, the oil market is likely to see inventory draws through the rest of 2023. Continued discipline from the world’s largest producers, the pace of oil demand growth in the face of economic uncertainty, and geopolitical risk will be important factors to monitor as we look into 2024."
The chief executive also noted that the global LNG market also remains tight, with prices prone to spikes on events such as the strikes at Chevron’s Gorgon and Wheatstone facilities in Australia and the latest flare-up of violence in the Middle East.
Simonelli said Banker Hughes expected LNG demand to increase 2% this year from 2022, to reach close to 410 million tons annually.
LNG is a growth area for Baker Hughes, responsible for a significant chunk of its bumper orders, via a recently closed deal with Venture Global. The LNG producer picked Baker Hughes to take part in its long-term expansion plans that should bring its production capacity to a sizeable 100 million tons from 20 million tons in initial nameplate capacity.
Other LNG makers are also choosing Baker Hughes to help build their future liquefaction capacity, boosting its order book.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com