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Baker Hughes, a GE company, is seeing its business stand out, supported by strong growth in key oil and gas regions such as the Middle East and North Sea, and accelerated gas project approvals liquefied natural gas (LNG).
Unlike its closest competitors, Schlumberger and Halliburton, Baker Hughes is less exposed to the slowdown in the pressure pump market in North America. The GE company has therefore presented optimistic prospects for 2019 – brighter than those of its rivals – by announcing its 2018 figures this week.
Baker Hughes announced revenue growth in Q4 and 2018, as well as adjusted earnings per share of $ 0.26 in Q4, which is in line with the badyst consensus estimate provided by The Wall Street Journal.
"In the fourth quarter, we recorded orders of $ 6.9 billion, our largest quarter in almost three years, with sequential growth in our four business segments," said Lorenzo Simonelli, president of the company. board of directors of BHGE.
These sectors include oilfield services, oilfield equipment, turbomachinery and process (TPS) solutions and digital solutions.
Baker Hughes acknowledged, along with Schlumberger and Halliburton, that the drop in oil prices in the fourth quarter of last year had resulted in a significant drop in completion activity in North America .
"US production surprised the rise and we saw the activity of finishes in North America, especially in the Permian, drop significantly," Simonelli said at the call of the results.
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"The areas most affected by the recent sharp drop in crude prices are the more traditional transactional markets of the United States and Canada. We expect that the slowdown in activity and the deterioration of prices in these markets in the first half of 2019 will have a negative impact on our well construction product lines. We expect the market for artificial lifting products and production chemicals will remain stable, "said the manager.
While Baker Hughes' prospects for the immediate future of the North American market are certainly not bright, Evercore ISI badysts point out that GE has limited exposure to the North American pressure pump market.
This year, Baker Hughes sees the greatest opportunities for his companies in terms of solid growth expected in the Middle East and North Sea and more LNG projects, for which the company aims to provide its turbomachinery solutions.
"Given sustained demand dynamics, project sanctions are likely to accelerate faster than expected. We now see an opportunity for many more LNG projects reaching the IDF in 2019, including the recently announced LNG Canada project, we believe that a potential new capacity of 100 million tonnes per year will be allowed for the future. 39, here the end of 2019, "Simonelli said on teleconference, noting that more LNG projects under approval is" good news for BHGE ".
BHGE won an award for the supply of modular turbocharger technology to LNG Canada's liquefaction plant in Kitimat, BC, the largest LNG project to achieve a positive FID since 2014 and the first project to large scale LNG to use modular liquefaction trains, said Baker Hughes.
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For this year, Wood Mackenzie Energy Council shares Baker Hughes' bullish views on LNG projects. This year could be a record year for LNG project approvals, with more than 60 million tonnes per year of capacity taking IDF, breaking the previous record of 45 million tonnes in 2005 and tripling the 21 million tonnes sanctioned in 2018, according to WoodMac.
Prior to the release of Baker Hughes' results, its two largest competitors – more exposed to the North American shale drilling market – had announced better-than-expected financial results, but Schlumberger and Halliburton had to rely on the solid recovery of international activities to offset the slowdown in the North American market. market in the fourth quarter.
Halliburton posted net income higher than badysts' estimates in the fourth quarter, as the continued recovery in international operations more than offset the decline in North American demand. In the fourth quarter, demand for completion services in North America – Halliburton's largest market in terms of revenue – dropped as operators focused on returns, the company said.
For its part, Schlumberger expects E & P operators in North America to maintain their future investments at a level that can be hedged by free cash flow, while international market companies, with the exception of the Middle East and Russia, the need to invest in their resource base is just beginning to emerge just to keep production at current levels. "
Baker Hughes, less exposed in North America, sees a better year to announce thanks to the growth of the main international oil and gas markets and to a record year for the approval of LNG projects.
By Tsvetana Paraskova for Oilprice.com
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