Baker Hughes, soon to merge with GE, has reduced its fourth quarter loss, compared to both a year before and to a previous quarter.
The company, one of the world’s largest oilfield services providers, said its net loss for the quarter was $413 million, an improvement from the previous quarter of $429 million loss, and from the 4Q 2015 loss of over $1 billion.
Fourth quarter 2016 revenue, fell compared to a year before, however, taken sequentially, revenue grew two percent.
Revenue for the quarter was $2.4 billion, down from $3.4 billion a year ago, but up from the $2.35 billion in the quarter which ended on September 30, 2016.
Presenting the results, Martin Craighead, Baker Hughes Chairman and Chief Executive Officer focused on the sequential comparison: “For the fourth quarter, revenue increased 2% sequentially as a result of increased activity in North America, uplift from better-than-expected seasonal year-end product sales, and pockets of growth internationally, primarily in the Middle East.
He said the growth was partially offset by reduced activity across the North Sea resulting from labor union strikes, weather delays, and project postponements.
Craighead said the company in the quarter also achieved a sequential reduction in operating losses, generated $632 million of cash flow from operations, and ended the year with $4.6 billion in cash.
On a yearly level, Baker Hughes posted a net loss of $2.7 billion, down from $1.97 billion in 2015.
Revenue for the year was $9.8 billion, down $5.9 billion, or 37%, compared to $15.7 billion for 2015. Baker Hughes said the reduction resulted from the steep decline in activity, as evident by the 32% drop in the average rig count, global pricing pressures, and sharply reduced revenue in onshore pressure pumping as we strived to maintain cash flow positive operations.
Tough times for deepwater
Providing the outlook for the first half half of 2017 of the year, CEO Craighead said: “We expect onshore revenue in North America to increase as our customers ramp up activity, with service pricing improving but limited by overcapacity. Internationally, we are forecasting activity declines and continued pricing pressure, with pockets of growth onshore.
In offshore markets, particularly deepwater, activity declines are expected to be more severe. As such, we remain focused on managing our costs and aggressively identifying revenue opportunities for our products and technology that can help our customers achieve their business objectives,” Caighead said.
GE Merger targeted for mid-2017
Craighead also shared his views on the pending merger with GE that will create world’s second largest oilfield services company after Schlumberger, surpassing Halliburton.
With regard to the pending GE Oil & Gas merger, my excitement about the opportunities this transformative combination will deliver for our customers, shareholders, and employees, and the industry as a whole, has only grown since we announced the transaction in late October. GE Oil & Gas and Baker Hughes are an exceptional fit, with highly talented teams, similar cultures of innovation, and industry-leading capabilities. The integration planning teams are making good progress, the regulatory review process is proceeding as planned, and we continue to expect a mid-2017 close.”
Baker Hughes was previously in discussions to merge with another oilfield services provider, Halliburton, but the merger fell through in 2016 after a number of regulatory hurdles.