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Unlike its bigger competitors Schlumberger and Halliburton, who warned of a slowdown in North American drilling over the next year, Baker Hughes said on Tuesday that it expects both the North American and international markets for oilfield services to grow in 2019.
In the Q3 earnings release today, Baker Hughes, a GE company (NYSE:BHGE) President and CEO Lorenzo Simonelli said that the company was “encouraged by the improved outlook for the macro environment.”
“We expect both the North American and International markets to grow in 2019 as customers increase spending and overall rig and well counts grow. The offshore market is the strongest it has been in many years and the improving tender and order activity is an encouraging sign as we look out to 2019 and beyond. The LNG outlook is also improving, and we conservatively estimate a total of 65 million tons per annum of new capacity to be sanctioned by 2020,” Simonelli said.
Baker Hughes turned in an adjusted net income of US$78 million in Q3, compared to a loss of US$7 million in the third quarter of 2017. Adjusted earnings per share (EPS) came in at US$0.19 against a loss of US$0.02 for Q3 2017, missing the US$0.21 EPS analyst consensus of The Wall Street Journal.
Revenues rose by 2 percent on the quarter and 7 percent on the year to US$5.665 billion, driven primarily by higher volume in the Oilfield Services and Oilfield Equipment segments, Baker Hughes said. The revenues also missed analyst expectations of US$5.89 billion.
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Baker Hughes’ Oilfield Services (OFS) revenue rose by 4 percent on the quarter and 12 percent on the year to US$2.993 billion, with North America revenue rising 3 percent sequentially to US$1.212 billion and international revenue up 4 percent to US$1.781 billion, driven by Asia Pacific, the Middle East, and Latin America.
While Baker Hughes issued an upbeat forecast for North America, last week Halliburton confirmed lower demand for completion services in North America in Q3, noting that the issues were “temporary”. Halliburton CEO Jeff Miller also confirmed that the international business is recovering and posting revenue growth. While Halliburton said that the North American issues were only temporary, Schlumberger had issued a few days earlier a grimmer warning that “while the current Permian takeaway constraints in North America should be addressed within the next 12 to 18 months, a series of reservoir- and production-related challenges is emerging in the US shale basins that could dampen the most optimistic production growth projections.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.