Oilfield services giant Baker Hughes saw revenues drop to $3.8 billion for 3Q 2015, down 39 percent compared to 3Q 2014, and a 5 percent decrease from last quarter.
“Compared to the third quarter of 2014, revenue in North America declined 57 percent on sharply lower activity and unfavorable pricing, while actions we have taken to right-size our operational structure resulted in decremental adjusted operation profit margins of 30 percent,” Baker Hughes CEO Martin Craighead said in a company release.
A reduction in customer spending is the cause for less drilling in the fourth quarter, Reuters reported.
An Evercore analyst report stated that Baker Hughes continues to see a shift in spending, which favors production optimization projects over exploration and development (E&P) work. This will result in further activity and pricing weakness in its well construction product lines.
Baker Hughes, which is set to be acquired by Halliburton Company, has already laid off thousands of workers this year due to the challenging commodity price environment. In late September, Reuters reported that both companies planned to sell additional businesses in connection with the pending acquisition.
Looking ahead to 4Q, Craighead said the company expects activity in North America to decline as customers “adjust activity for lower commodity prices, exacerbated by an extended holiday impact.”