Oct 27 (Reuters) – Baker Hughes reported a fall in third-quarter profit on Tuesday, as prolonged conflict in the Middle East hit demand for services and equipment in the key oil-producing region.
Repeated flare-ups in the Middle East conflict, now in its eighth month, have squeezed margins for the oilfield services sector amid delays in project decisions, disrupted activity and concerns over the pace of future spending by customers
Baker Hughes derives nearly 40% of its revenue from the Middle East. It has the biggest exposure to the region among oilfield services rivals SLB and Halliburton.
The sector is also grappling with muted demand as producers adopt more efficient extraction technologies and ample crude and natural gas supplies curb the need for new drilling.
Baker Hughes said revenue from North America fell to $955 million from $980 million a year earlier. In the Middle East and Asia, revenue came in at $1.26 billion, compared with $1.45 billion a year ago.
The company expects higher logistics costs and supply chain challenges impacting operations, with Middle East activity expected to be sequentially lower in the fourth quarter.
The oilfield services provider now expects annual revenue of $1.99 billion from Chart, an industrial equipment maker it acquired in a $13.6 billion deal in July, compared with its prior forecast of $2.05 billion amid timing of LNG equipment volumes and soft hydrogen demand.
Baker Hughes’ shares fell more than 1% after the bell.
The company left its overall revenue forecast unchanged. CEO Lorenzo Simonelli said it saw meaningful improvement in the Middle East and expects additional opportunity as customers increasingly prioritize maximizing recovery and extending asset life.
Melius Research analyst James West said Baker Hughes’ outlook “is consistent with our expectations of continued improvement in global oilfield and power markets in 2027.”
The US oilfield services provider reported net income of $411 million, or 41 cents per share, for the three months ended September 30, compared with $609 million, or 61 cents, a year earlier.
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