Baker Hughes Boasts Record Third-Quarter Earnings as Global Segments Hit Revenue Highs

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oilfield service company Baker Hughes Incorporated (NYSE:BHI) (Houston, Texas) reported a record revenue of $5.8 billion during its third-quarter 2013 earnings webcast on October 18, 2013. Chairman and Chief Executive Officer Martin Craighead attributed this growth to record revenues from many of the company's geographic segments.

Industrial Info is tracking a $10 million fatty acids tank replacement project that Baker Hughes is evaluating for a plant in Hobbs, New Mexico. The project involves dismantling and replacing 10 to 20 stainless steel tanks of 10,000 gallons each and supporting equipment.

North America contributed to the growth with revenue of $2.85 billion, up 4.8% from the same period last year. The growth can be attributed to seasonal recovery in Canada, as well as strong growth in drilling services, completion systems, artificial lift, and upstream chemicals. U.S. pressure pumping also increased for the third quarter in a row. BHI announced that it drilled the deepest well in the history of the Gulf of Mexico.

"During the quarter, we achieved record revenue and strong earnings growth," Craighead said. "In addition, we increased margins sequentially in each of our four geographic segments. Specifically, in our Eastern Hemisphere operations, we increased revenue 20% compared to the same quarter last year at higher margins, as a result of increased activity and improved mix. This growth was led by strong performance in the Middle East, Asia Pacific, Africa, and Russia Caspian."

According to Senior Vice President and Chief Financial Officer Peter Ragauss, international revenue was $2.6 billion in the quarter, up 4.5% from second-quarter 2013, and 13.6% from third-quarter 2012. A record performance from the Middle East/Asia Pacific segment of $1.06 billion can be attributed to share gains and increased drilling services in China, Southeast Asia and the Arabian Gulf.

The Russia Caspian/Europe/Africa segment had record growth as well, from strong completions, product sales, and increased drilling services in the Russia Caspian business. BHI has increased its product line in this area to provide the widest variety of services. The Africa business also showed an increase from strong drill bit sales in North Africa and increased completion systems and pressure-pumping activity in Nigeria.

BHI is restructuring its business plan in Latin America to match current conditions; excluding severance costs and bad debt reserves, the segment was up 6.9% in revenue for the third quarter.

Industrial services increased 2.5% from third-quarter 2012 to $328 million, primarily due to increased revenue from downstream chemicals. BHI reported a 6% growth in the number of wells per rig from 2012.

Total debt was $46 billion, down $334 million from the second quarter, while capital expenses were $511 million, down $40 million.

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