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Oilfield service provider Baker Hughes reported higher-than-expected profit growth for the final quarter of last year attributing it to strong demand for its services from the LNG industry.
Baker Hughes reported net income attributable to the company of $439 million for the three-month period, which was $257 million higher than a year earlier.
The company also boasted free cash flow of over $2 billion at the end of 2023, noting it represented a 54% conversion rate from adjusted earnings before interest, tax, depreciation, and amortization.
International revenues were the biggest contributor to the strong performance of the company, rising by 15% on the year while North American revenues only inched up by 1%. Baker Hughes competitors have reported similar trends, by the way, with international demand for their services much stronger than demand at home.
One LNG project specifically made a massive contribution to Baker Hughes’ strong performance. This was the Ruwais LNG project in the UAE, where the oilfield service provider was awarded contractual service agreements worth $1 billion. The Ruwais project will be entirely powered by electricity and will have a capacity of 9.6 million tons of liquefied gas annually.
LNG expansion at home also contributed to the company’s financial performance last year as several projects are at different stages of development, set to boost the United States' LNG export capacity substantially over the next couple of years.
Baker Hughes’ competitors SLB, formerly Schlumberger, and Halliburton, also reported forecast-beating figures for 2023, attributing the strong performance to international rather than domestic demand for their services.
SLB said that its international revenue had gone up by 18% during the fourth quarter while domestic revenue remained flat. Halliburton, for its part, reported a 7% quarterly decline in North American revenues, which are the biggest contributor to its overall revenues.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com