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Market Update

Earnings on Tap: Baker Hughes

Reduced rig allocations are likely to have a negative impact on the company's second-quarter results within the Latin American segment.

 Baker Hughes is slated to report earnings before the bell Friday, and analysts are expecting earnings of $0.65 per share for the second quarter. The company reported earnings per share of $1.00 in the corresponding period a year ago.

Baker Hughes provides a wide variety of oilfield services, such as directional drilling, oilfield chemicals, drill bits, and electronic submersible pumping systems. It operates in more than 90 countries, serving oil majors, exploration and production companies, and national oil companies.

The company's first-quarter net income came in at $290 million (on an adjusted basis) which amounted to $0.65 per diluted share. Revenue for the first quarter was $5.23 billion, down 2% from $5.36 billion reported in the first quarter of 2012.

Martin Craighead, president and CEO of Baker Hughes, said the company's first-quarter results reflected improvement in its North American segment. Increased revenues and profit margins in North America along with improved utilization in its pressure-pumping business helped offset a 3% decline in the U.S. onshore rig count since last quarter.  

Morningstar analyst Stephen Ellis believes that PEMEX's recent decision to further reduce rig counts after the end of the first quarter will negatively affect the industry's second-quarter results within the Latin American segment; and Baker Hughes is no exception. 

The stock has climbed nearly 20% since the start of the year and presently trades close to Morningstar's fair value estimate.