A Review of the Nigerian Energy Industry

Baker Hughes profit slashes

huge-profits19 July 2013, News Wires – Baker Hugher has seen its net profit chopped in the second quarter as gains in some international markets were more than wiped out by a poor performance in Latin America.

The services player is, however, looking forward to a stronger second half of the year after implementing some cost-saving measures while it sees an activity rebound in North America.

Net profit for the three months to the end of June sank from $438 million to $245 million.

This was despite revenues going in the opposite direction, rising from $5.33 billion to $5.49 billion.

The bottom line inclused a $20 million after-tax bad debt provision in Latin America as well as a $7 million inventory charge on certain proppants used in North American pressure pumping.

However, total cost and expenses soared from $4.69 billion to $5.05 billion and interest expenses grew by $10 million.

Baker Hughes admitted to having a mixed performance in its international portfolio in the period where the eastern hemisphere had improved activity levels in the likes of Russia and the deep-water European and African markets.

“However, our gains in the East were more than offset by a sharp decline in Latin America resulting from reduced activity and demobilisation costs in Brazil and Mexico,” said chairman and chief executive Martin Craighead.

“In response to these conditions, during the second quarter we began taking actions to reduce costs in our Latin America operations.

“This process should be substantially complete in the third quarter leading to increased profitability in the second half of the year.”

Baker Hughes also pointed to a rebound in Canada – where activity levels have slumped – and continued strong activity in the Gulf of Mexico as further reasons for cheer in the third quarter.

– Upstream

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