Major oilfield services company, Baker Hughes, is leading a stock price recovery among its sector, after the demand destruction that took place in April of this year, which prompted a crash in oil prices and subsequently in the demand of oilfield services and equipment.
Other behemoth companies like Schlumberger, Halliburton and National Oilwell Varco also suffered from the crash in prices, and they are too recovering as the sector shifts to clean energy investments and into an ESG agenda.
Nevertheless, is Baker Hughes that has had the most significant share price recovery, according to S&P Global data. According to James West, Evercore ISI analyst, quoted by S&P, Baker Hughes’ share price recovery “likely reflects several factors including their emphasis on driving the Energy Transition.”
2020 has been a transitioning year for Baker Hughes, as they adopt new strategies and invest in energy transition solutions. Its shifting began back in October 2019, when it changed its name to Baker Hughes Co., and rebranded as an energy technology firm.
Then, in August, 2020, the company announced a Report on Corporate Responsibility, that introduced low-carbon solutions and other cleaner alternatives to the company’s portfolio. “Baker Hughes’ purpose is to take energy forward, making it safer, cleaner, and more efficient for people and the planet,” said Lorenzo Simonelli, company’s CEO.
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“We see ESG factors as key levers to transform the performance of our company and our industry,” added Allyson Book, Baker Hughes vice president of energy transition.
Then, in November, the company diversified its portfolio to carbon capture technologies with a $70 million investment; to meet its “strategic commitment to lead in the energy transition by providing decarbonization solutions for carbon-intensive industries; including oil and gas and broader industrial operations,” company said in a statement.
That investment boosted its share prices to about $1 billion, based on the stock’s opening price of $100, according to S&P. Since then, it has led the recovery of the sector.
Meanwhile, Schlumberger, and other oilfield services companies are too looking to diversify its solutions. In June, Schlumberger presented its New Energy business, in partnership with Celsius Energy and Genvia, to advance the use and production of hydrogen.
While Halliburton presented its Halliburton Labs, dedicated to provide facilities, technical expertise and business network to early-stage clean energy developments; in exchange for a minor participation in them.
For investors and market watchers, this trend will continue pushing in years to come, as capital managers are more aware of companies proactive in energy transition efforts.
