Baker Hughes, one of the world’s largest oil field services companies, soon to be acquired by Halliburton, has seen a net loss for the third quarter of 2015 of $159 million, compared to a profit of $375 million a year earlier.
The revenue for the third quarter of 2015 was $3.8 billion, a drop of 39% when compared to the third quarter of 2014. Compared to the prior quarter, revenue declined $182 million or 5%.
Adjusted EBITDA (a non-GAAP measure) for the third quarter of 2015 was $522 million, an increase of $63 million or 14% sequentially, and a decrease of $666 million or 56% compared to the third quarter of 2014.
Adjusted net loss (a non-GAAP measure) for the third quarter of 2015 was $22 million. Adjusted net loss for the third quarter excludes $191 million before-tax or $137 million after-tax in adjustments. The adjustments include restructuring charges of $98 million before-tax or $70 million after-tax and $93 million before-tax or $67 million after-tax for merger and other related costs.
“In the third quarter, we delivered increased operating profit sequentially, despite deteriorating market conditions and lower revenue,” said Martin Craighead, Baker Hughes Chairman and Chief Executive Officer.
“Internationally, despite a 4% decrease in revenue we expanded margins across all of our segments as a result of continued cost reductions. In North America, margins declined further driven by ongoing weakness in the U.S. onshore market, and unfavorable mix in the Gulf of Mexico. Although our Canada business grew sequentially due to seasonal activity, the recovery was less pronounced than prior years.
Further activity reductions due to low oil price
Craighead said: “As our customers focus increasingly on managing cash, we are experiencing a current shift in spend favoring production optimization projects over exploration and development. As such, we are seeing stronger interest in our production offerings, particularly upstream and refinery chemicals, that provide our customers with optimized production from existing wells and increased ultimate recovery.
“Consistent with our earlier forecast, we expect further activity reductions and pricing pressures to continue across the globe for well construction for the remainder of the year, as our customers adapt their spending to the lower oil price environment.
“In the fourth quarter, we expect activity in North America to decline as our customers adjust activity for lower commodity prices, exacerbated by an extended holiday impact. Internationally, seasonal year-end product sales are not expected to offset the anticipated decline in activity. We remain focused on proactively managing our cost structure, efficiently reducing our working capital, and strategically targeting revenue opportunities to continue to increase profitability, generate positive cash flow, and maintain a strong balance sheet.
Craighead added: “Regarding the pending merger, I continue to be pleased with the efforts of the teams working on regulatory matters and developing plans for a successful integration. The recently announced plan to divest certain businesses is another important step in the process to complete the transaction.”
Drop in capex
For the quarter, capital expenditures were $178 million, a decrease of $80 million or 31% sequentially, and down $247 million or 58% compared to the third quarter of 2014.
Excluding merger-related costs, corporate costs were $26 million, compared to $42 million in the prior quarter and $57 million in the third quarter of 2014. The reduction in corporate costs is mainly a result of workforce reductions and lower discretionary spend.