Baker Hughes shares slip as Gulf of Mexico business wanes

Oil services group Baker Hughes Inc (NYSE: BHI) saw revenues fall in  its latest quarter but losses narrow as the sector still faces challenging headwinds.

The group said it had been boosted by its construction business in onshore US but customer spending in the Gulf of Mexico had dwindled.

In pre-market deals, shares slipped 2.8% to $57.01.

Revenues down on same period last year…

Revenue for the first quarter came in at $2.3 billion, which was 15% less than the same period last year.

The net loss attributable to the firm was $129 million, or $0.30 per diluted share, compared to a loss of $981 million, or $2.22 per diluted share, in the first quarter of 2016.

“In North America we grew our well construction onshore business, particularly drill bits and rotary steerable systems. However, this growth was more than offset by the deconsolidation of the North America onshore pressure pumping business and reduced customer spending in the Gulf of Mexico,” said Martin Craighead, chairman and chief executive.

Revenue in the upstream chemicals business, which represents around one-quarter of our North America revenue, grew in line with production volumes, and is poised for additional growth as production increases, he added.

“As expected, our international revenues declined as a result of year-end sales not repeating, seasonal activity reductions, and price deterioration. The decline was more pronounced in the offshore markets as a result of ongoing customer spending reductions,” said Craighead.

Onshore market seen growing…

Looking ahead, he reckons the US onshore market will grow but expect there to be headwinds offshore throughout the rest of 2017, despite the group winning recent tender awards.

It is in contrast to peer Halliburton Co (NYSE: HAL), which yesterday reported a 6% improvement in quarterly revenue thanks also to a rapid increase in activity in North America.

• READ – Halliburton boosted by rapid rise in first quarter activity

Halliburton said yesterday : “We are in the midst of a unique and challenging cycle with very different dynamics between the North American and international markets.”

Meanwhile, market leader Schlumberger (NSYE: SLB) said last week that it was redeploying service capacity and technical support resources from the Gulf of Mexico to other markets.

Story by ProactiveInvestors