Baker Hughes Inc, which is being bought by Halliburton Co for $35 billion, said it expects “unfavorable market conditions” to persist in the second quarter as drillers turn off more rigs, intensifying a glut in oilfield services. The comments echoed larger rival Halliburton’s warning on Monday of pricing pressure hurting oilfield services in North America and challenges in international operations.
The rig count in North America, a region that accounts for 44 percent of Baker Hughes’ revenue, has halved to 1,000 so far this year. The dramatic fall follows a 45 percent drop in global oil prices since June. Oil producers have responded by quickly scaling back spending, which in turn has weighed on demand for Baker Hughes’ services. In response, the company is cutting 10,500 jobs or 17 percent of its global workforce.
Baker Hughes also said it had closed and consolidated about 140 facilities worldwide, besides idling and writing off excess assets and inventory. Halliburton said on Monday that it had laid off about 9,000 workers, or more than 10 percent of its global headcount, in the past two quarters, while industry leader Schlumberger Ltd said last week that it was shedding about 15 percent of its workforce, or 20,000 jobs.
Baker Hughes, which publishes a closely watched rig count, said it expected the rig count in North America to drop 30 percent in the second quarter on a sequential basis, and by as much as 15 percent across Europe and Africa. The company swung to a quarterly loss in the first quarter ended March 31 as it recorded a $772 million charge related to restructuring and other items.
Net loss attributable to Baker Hughes was $589 million, or $1.35 per share, compared with a profit of $328 million, or 74 cents per share, a year earlier. Revenue fell nearly 20 percent to $4.59 billion. Up to Monday’s close, Houston-based Baker Hughes’ shares had fallen 6.4 percent since June last year. The stock fell marginally in light premarket trading.