uploads///NA Rig Count and Revenue

Could the US Rig Count Affect Baker Hughes in 1Q17?

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Nov. 20 2020, Updated 1:03 p.m. ET

BHI’s revenue by geography

In 4Q16, Baker Hughes’s (BHI) revenue share from North America increased to 32%, compared to 29% in 3Q16. During the same period, BHI’s aggregate revenues increased 2%.

BHI comprises only 0.11% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 6.1% of IWV, which tracks the Russell 3000 Index (RUA-INDEX). The RUA-INDEX increased 16% in the past year versus the 48% rise in BHI’s stock price.

In comparison, Weatherford International’s (WFT) 4Q16 revenues increased 4% over 3Q16, while Tidewater’s (TDW) revenues decreased 10%. You can read more about WFT in Market Realist’s What Does Weatherford’s Relative Valuation Suggest?

Nabors Industries’s (NBR) revenues increased 4% from 3Q16 to 4Q16.

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US rig count

From December 30, 2016, until the week ended April 7, 2017, the US rig count rose ~28% to close at 839. A higher US rig count can increase Baker Hughes’s revenues and earnings in 1Q17. Crude oil prices have dropped 1% since December 30, 2016.

Despite the steady decline in crude oil prices, the US rig count has continued to surge. You can about the movement of crude oil prices in Market Realist’s Energy Investors: Reviewing Important Weekly Updates.

The US rig count has risen ~83% in the past year through April 7, 2017. The US rig count reached its multiyear high in September 2014. Since then, it has dropped 57% through April 7, 2017.

From December 2016 to March 2017, the international rig count rose ~2%. A higher international rig count could also increase Baker Hughes’s revenues and earnings in 1Q17.

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