Baker Hughes posts steep drop in revenue. Expects further decline in rig count

Baker Hughes, world’s third largest oilfield services provider, saw its revenue cut in half in the fourth quarter of 2015, versus the same quarter of the previous year.

Namely, the company on Thursday said revenue for the quarter was $3.4 billion, down $3.2 billion or 49% compared to the fourth quarter of 2014, blaming the result on the ongoing pricing pressure as E&P companies further adjust their spending to the continued drop in commodity prices.

Baker Hughes also posted a net loss for the quarter of around $1.03 billion, compared to a gain of $667 million a year ago.

Revenue for the full year year was $15.7 billion, down $8.8 billion compared to $24.6 billion for 2014.

This reduction resulted from the steep decline in activity, as evident by the 34% drop in the average rig count, global pricing pressures, and share losses in onshore pressure pumping, Baker Hughes said.

“Our 2015 results are reflective of an extremely difficult and increasingly challenging year for the industry,” said Martin Craighead, Baker Hughes Chairman and Chief Executive Officer. “Since the fourth quarter of 2014, the global rig count has declined 46% as our customers adjusted their spending to align with declining commodity prices.”

Craighead also expects that rig activity worldwide will continue to decline throughout 2016.

“At current commodity prices, the global rig count could decline as much as 30% in 2016, as our customers’ challenges of maximizing production, lowering their overall costs, and protecting cash flows are now more acute,” he said.

Halliburton merger

Baker Hughes is currently working to complete the proposed merger deal with its larger peer Halliburton.

Craighead said: “With regard to the merger, I continue to be extremely pleased with the efforts of our team supporting the regulatory review process and developing plans for a successful integration. We are fully dedicated to closing the merger as early as possible.”

 

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