Baker Hughes Q1 revenue declines 20%, activity reduction projected in Nigeria

Oilfield services major Baker Hughes on Tuesday reported its first-quarter (Q1) 2015 results that saw a significant drop in oilfield activity amid upstream capex cuts and weak crude oil prices.

Unfavourable market conditions saw its 2015 Q1 revenue declined 20 percent year-on-year (y/y) to $4.6 billion from $5.7 billion. On a GAAP basis, net loss attributable to Baker Hughes for the first quarter was $589 million or $1.35 per diluted share.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) for Q1 2015 was $458 million, a 56 percent decline ($589m) from the corresponding quarter of the previous year.

Commenting on the results, Martin Craighead, Baker Hughes chairman/CEO, said: “Our first quarter results are a reflection of the extreme market forces faced by our industry since late December. Consistent with past downturns, many of our customers have curtailed or cancelled projects.”

Baker Hughes European, African and Russian Caspian segment posted Q1 revenue of $895 million – a 14 percent decline compared with the corresponding quarter of 2014.

The decline in revenue was mostly attributed to an estimated $102 million relating to the unfavourable change in foreign exchange rates of several currencies across the region relative to the US dollar.

“Looking out to the second quarter, we expect unfavourable market conditions to persist,” Craighead said.

For Q2, activity is expected to decline significantly across the Europe/Africa/Russia Caspian segment. Activity reductions are projected to be pronounced in Europe and Africa, with the highest percentage drop in Nigeria, where lower commodity prices have depleted local capital channels.

The naira has lost 18 percent of its value over the past nine months as a result of a plunge in crude oil prices that hammered Africa’s biggest oil producer, Nigeria. In aggregate, average rig counts across Europe and Africa are forecasted to decline by as much as 15 percent in the second quarter.

Baker Hughes is in the process of being acquired by larger rival Halliburton. Shareholders of both companies have approved the deal, which is expected to close towards the end of this year, subject to regulatory approvals.