News wire — Oilfield services provider Baker Hughes Co reported a third straight quarterly loss on Wednesday and warned that activity may be lower next year, as a coronavirus-induced slump in commodity prices continued to hurt demand for equipment and services.
Producers have been drilling fewer wells following a collapse in crude oil prices this year as demand for oil products has sunk. The downturn has hit rivals Schlumberger NV and Halliburton Co as well, with both reporting quarterly losses.
Global oil prices were trading around $42.59 a barrel on Wednesday, down about 1.32%, as rising coronavirus cases in places like Europe and the United States threaten to stall any recovery in demand.
“After significant turmoil during the first half of the year, oil markets have somewhat stabilized. However, demand recovery is beginning to level off and significant excess capacity remains, which could create volatility in the future,” said Lorenzo Simonelli, Baker Hughes chairman and chief executive officer.
Next year, the company anticipates international activity to remain down and U.S. oil production to be lower.
Baker Hughes in July vowed to further cut costs to prepare for a longer period of oil price volatility.
The company was on track to “right-sizing its business” and to achieve $700 million in cost savings by the year-end, Simonelli said on Wednesday. It has also been selling non-core businesses and on Wednesday said it will divest its Surface Pressure Control Flow unit in the fourth quarter.
Wall Street analysts were upbeat on the results and shares were up about 2.7% to $14.00 in morning trading.
Restructuring and cost-out efforts are “clearly bearing fruit,” analysts for investment firm Tudor Pickering Holt & Co wrote in a note.
Revenue from Baker Hughes’ oilfield services unit, which accounts for nearly 46% of its total sales, fell 31% to $2.31 billion in the third quarter.
Orders in Baker Hughes’ oilfield equipment business were down 58% year-over-year for the third quarter.
Net loss attributable to the company was $170 million, or 25 cents per share, in the quarter, compared with a profit of $57 million, or 11 cents per share, a year earlier.
On an adjusted basis, the company earned 4 cents per share, in line with Wall Street expectations, according to data from Refinitiv.
Revenue fell 14% to $5.05 billion but beat analysts’ estimate of $4.78 billion.
(Reporting by Arathy S Nair in Bengaluru and Liz Hampton in Denver; Editing by Bernadette Baum and Steve Orlofsky)