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Baker Hughes’s Management Discussed Its 4Q16 Outlook

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Baker Hughes’s outlook on different geographies

  • lower activity and pricing pressure to continue in Baker Hughes’s (BHI) international operations
  • growth opportunities in Kuwait, the United Arab Emirates, India, and Oman
  • lower revenue in Africa due to ongoing reductions in deepwater activity
  • expects Latin American market to remain flat
  • expects modest North American energy production growth and challenging prices for OFS products and services
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What are global opportunities for the proposed “new BHI”?

On October 31, Baker Hughes’s management disclosed that it will combine with General Electric’s (GE) oil and gas business to form a partnership. The combined entity will benefit from the resurgence in North American shale plays. The combined entity is expected to see opportunities in less developed but adequately resourced regions like the African subcontinent including West Africa. Baker Hughes can also find business opportunities in offshore projects in Brazil. Baker Hughes accounts for 0.14% of the SPDR S&P 1500 Value Tilt ETF (VLU).

On December 30, 2016, Baker Hughes, CSL Capital Management, and West Street Energy Partners formed a land-based pressure pumping company under the brand BJ Services. Read Baker Hughes Makes Another Deal: An OFS Newco Explained to learn more.

Outlook for Baker Hughes’s peers

  • Schlumberger’s (SLB) management expects that energy production in North America onshore, the Middle East, and Russia will increase in 2017.
  • Oil States International’s (OIS) management expects lower operating earnings in 4Q16 due to offshore project delays and uncertainty over drilling and well completion activity.

Next, we’ll discuss how the rig count can impact Baker Hughes’s revenues.

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