North America Takes Second in Revenue for Baker Hughes

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Upstream services firm Baker Hughes Company (NASDAQ:BKR) (Houston, Texas) recorded $6.4 billion in revenue during the first quarter, though North American operations took second fiddle to work in the Middle East and Asia.

Earnings season for major energy companies is in full swing, with rival SLB (NYSE:SLB) (Houston), formerly Schlumberger, among those kicking things off with first quarter revenue of $8.7 billion, a 13% increase from year-ago levels.

Baker Hughes turned in a good performance as well, with its $6.5 billion in first quarter revenues beating year-ago levels by 14% and by 5% when compared with the fourth quarter.

"2024 has gotten off to a good start for Baker Hughes," said Lorenzo Simonelli, the company's chairman and chief executive officer. He said upstream activity was supported by a surge in demand for its rotary services in North America, with contracts in the gas-rich Appalachia basin, as well as the Delaware and Denver-Julesburg reserves.

Of those, Appalachia is by far the most lucrative. The federal government expects the basin will yield around 36 billion cubic feet per day (Bcf/d) in natural gas this month, some 10 Bcf/d higher than the second-largest inland gas producer, though that level could decline a bit by next month.

Drillers, meanwhile, are becoming more efficient and U.S. rig counts, a loose gauge of future production trends, are down about 18% from year-ago levels. Lower natural gas prices seem to be curbing spending on upstream activity.

That may help explain Baker Hughes' performance over the first few months. By region, the Middle Eastern and Asian markets generated the most revenue for the company, with the $1.4 billion marking a 5% improvement over year-ago levels.

In its earnings report, Baker Hughes pointed to Saudi Arabia as something of a standout, with compressors and gas going to support a new 2,500-mile pipeline.

"This new gas distribution project is expected to accelerate the switch from oil to gas for domestic power generation and contribute to the reduction of carbon emissions in the kingdom," the company said.

European performance, meanwhile, showed a 29% increase year-on-year, though revenue was sluggish at $750 million. North American revenue came in second to the Middle East and Asia at $990 million, unchanged from last year despite the noted activity in the shale patch.

Baker Hughes is not alone in returns from North America. U.S. supermajor Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) on Friday reported $1.5 billion in earnings in the North American market, compared with $5.6 billion overseas.

Despite the downturn, the U.S. remains a major global producer in both oil and natural gas production and is among the world leaders in exports of liquefied natural gas, lending support to the upstream sector.

"Our solid first-quarter results put us on a path toward achieving our full-year guidance and continue to build on the momentum from last year as we execute our strategy," Baker Hughes' Simonelli said.

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