Key facts
- Baker Hughes forecasts a modest decline in global oil and gas producer spending for the current year.
- Spending is expected to decrease in Europe and the Middle East, while growing in Latin America, offshore Africa, and North America land.
- The company reported record industrial and energy technology orders of $7.1 billion, a doubling year-over-year.
- Baker Hughes beat quarterly profit estimates, leading to a more than 6% rise in its shares.
- The company anticipates a 1%-2% revenue hit to its Industrial and Energy Technology (IET) segment due to Middle East disruptions.
- Third-quarter revenue for the IET segment is projected to be between $3.17 billion and $3.47 billion.
Baker Hughes indicated on Monday that global spending by oil and gas producers is expected to see a modest decline this year. This forecast is influenced by cautious producer behavior stemming from Middle East tensions, which are forcing a more conservative approach to increasing drilling activity. While growth is anticipated in Latin America, offshore Africa, and North America land, this is expected to be counterbalanced by reduced spending in Europe and the Middle East.
Despite the cautious outlook on producer spending, Baker Hughes reported strong financial results, beating quarterly profit estimates and achieving record industrial and energy technology orders of $7.1 billion, a year-over-year doubling. The company's shares saw an increase of over 6% following the announcement. However, the company warned that its Industrial and Energy Technology (IET) segment could experience a 1% to 2% revenue reduction due to disruptions caused by the ongoing Middle East conflict. For the third quarter, IET segment revenue is projected to be between $3.17 billion and $3.47 billion, falling short of analyst expectations.
Company executives noted that while the overall impact of Middle East disruptions is expected to be modest, some increase in logistics and inflationary pressures are anticipated in the third quarter. These challenges are expected to be mitigated by strength in regions outside the Middle East, with seasonal recovery anticipated in North America and growth driven by Brazil and Mexico in Latin America. Baker Hughes is also focusing on resilient growth areas such as LNG infrastructure and power grid upgrades to buffer against oil price volatility.