HOUSTON (Reuters) – Baker Hughes lowered its outlook for oil producer spending on Friday, citing lower drilling activity by U.S. companies, joining other oilfield services companies in warning about weakness in the region.
However, the company raised its revenue and profit estimates for the full year, banking on strong international growth and demand for gas equipment.
Shares of the company, which beat analyst estimates for second-quarter profit on Thursday, rose 4% to $36.99.
Weak demand and a wave of mergers have constrained producers’ budgets in North America, with service companies turning to international and offshore markets to offset the weakness.
Baker Hughes now expects North American producer spending to decline in the mid-single digits from a year ago, rather than the low to mid-single digits in its previous estimate.
Services major SLB said last week that North American growth would be lower than expected, while Halliburton estimated that the region’s annual revenues will fall 6% to 8% due to lower activity.
Baker Hughes’ North American revenue will beat the market, CEO Lorenzo Simonelli said on an earnings call Friday.
The company raised the midrange of its full-year revenue expectations by nearly 2% to between $27.60 billion and $28.40 billion. It raised its estimate of adjusted earnings before interest tax depreciation and amortization by 5% to between $4.40 billion and $4.65 billion.
The company also said it expects spending from international companies to grow in high single digits compared to last year, adding that it expects strong demand in the oil fields of Latin America, West Africa and the 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 U.S. pause in approving LNG export orders.
“LNG has not disappeared and we predict it will come back again,” Simonelli said.
(Reporting by Arathy Somasekhar in Houston and Tanay Dhumal in Bangalore; Editing by Richard Chang)
