HOUSTON (Reuters) – Baker Hughes cut its outlook for spending by oil producers on Friday, citing lower drilling activity by North American companies, joining other oilfield service companies in warning about softness in the region.
However, the company raised its full-year revenue and profit estimates, banking on strong international growth and demand for gas equipment.
Shares of the company, which beat analysts’ estimates for second-quarter profit on Thursday, rose 4% to $36.99.
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Lukewarm demand and a wave of mergers have constrained producer budgets in North America, with service companies betting on international and offshore markets to offset the weakness.
Baker Hughes now expects spending by North America producers to decline in the mid-single digits year-over year, instead of in the low- to mid-single digits in its previous estimate.
Top service company SLB said last week that North American growth would be lower than expected, while Halliburton estimated full-year revenues from the region will decline by 6% to 8% on lower activity.
Baker Hughes’ North American revenue will outperform the market, Chief Executive Officer Lorenzo Simonelli said in an earnings conference call on Friday.
The company raised the midpoint range of its full-year revenue expectations by nearly 2% to between $27.60 billion and $28.40 billion. It raised the estimate for its adjusted earnings before interest tax depreciation and amortization by 5% to between $4.40 billion and $4.65 billion.
The company also affirmed expectations for spending by international companies to grow by high single digits over last year, adding that it expects strong oilfield demand from Latin America, West Africa and Middle East beyond 2024.
Baker Hughes has focused on booking more orders for its gas technology as customers delay some liquefied natural gas projects and a US pause in the approval of applications to export LNG.
“LNG has not gone away and we anticipate it’s going to be coming back again,” Simonelli said.
(Reporting by Arathy Somasekhar in Houston and Tanay Dhumal in Bangalore; Editing by Richard Chang)
