Baker Hughes, oilfield services company, announced this Wednesday its quarterly financial results. The company reported its first quarterly profit since the fourth quarter of 2020, pushed by the rally of oil prices and a boost in oilfield services.
Firstly, the company reported a net income of $8 million, hitting its first profit since 2020, as outlined above. However, the overall financial performance of the company fell slightly short from expectations. The Hurricane Ida disruptions and an increase in materials are the main reasons for it.
As we reported previously, rival Halliburton also saw its financial performance hit by Ida, which disrupted operations on the U.S. Gulf Coast and the Gulf of Mexico in August and September. Indeed, it was one of the most disrupting weather events of the year, knocking off more oil before landing that Hurricane Katrina.
As a result, Baker Hughes reported an adjusted net income of $141 million, or 16 cents per share, in 3Q 2021. Such a performance missed forecasts of 21 cents per share, according to Refinitiv IBES data, reviewed by Reuters. The company also reported revenues of $5.093 billion, falling short in front of expectations of $5.321 billion.
Consequently, upon the news breaking into the media, the company’s shares slipped 4% to $25.79 in early trading. Nevertheless, they are up about 29% year-to-date, lagging gains in global oil prices, which have risen about 62%.
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Baker Hughes faced big costs after Ida’s disruptions
Moreover, on a call with investors, Baker Hughes Chief Executive Officer Lorenzo Simonelli said. “As we look ahead to the rest of 2021 and into 2022, we see continued signs of global economic recovery that should drive further demand growth for oil and natural gas.”
However, he acknowledged Baker Hughes experienced “some mixed results across our product companies” during this year’s third quarter. In fact, the company’s oilfield services unit faced costs of $30 million to $40 million during the quarter, directly attributable to Ida and supply chain related problems.
Furthermore, its digital solutions unit was also negatively impacted by supply chain problems related to semiconductors, boards, and displays, executives said on the call; while higher costs for chemicals, still not passed to consumers, also weighed on earnings.
Finally, Tudor, Pickering, Holt & Co said in a note that there are disappointing results in oilfield services and digital solutions. “At the segment level, there were a number of different moving pieces which may drive some uneasiness today.”
