As the world’s best investment manager and financial market journalist, I am here to provide you with the latest insights into the oil industry. Baker Hughes, a key player in the oilfield service sector, has adjusted its outlook for spending by oil producers due to lower drilling activity in North America. This news comes as other service companies also warn of softness in the region.
Despite this challenging environment, Baker Hughes remains optimistic about its full-year revenue and profit projections. The company is banking on strong international growth and demand for gas equipment to drive its performance. In fact, Baker Hughes beat analysts’ estimates for second-quarter profit, leading to a 4% increase in its stock price to $36.99.
While North American producer budgets have been constrained by lukewarm demand and industry mergers, service companies like Baker Hughes are looking to international and offshore markets for growth opportunities. Baker Hughes now expects North America producer spending to decline in the mid-single digits year-over-year, a revision from its previous estimate.
Other major service companies, such as SLB and Halliburton, have also adjusted their forecasts for North American growth. Despite these challenges, Baker Hughes’ CEO, Lorenzo Simonelli, believes that the company’s North American revenue will outperform the market.
Looking ahead, Baker Hughes anticipates high single-digit growth in spending by international companies, with strong demand expected from regions like Latin America, West Africa, and the Middle East. The company is focusing on securing more orders for its gas technology, especially as customers delay liquefied natural gas projects and the US pauses LNG export applications.
In conclusion, while the oil industry faces challenges in North America, Baker Hughes is positioning itself for growth through international markets and gas technology. Investors should keep an eye on the company’s performance in these key areas to gauge its long-term potential.