Baker Hughes posts smaller-than-expected loss as costs fall
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Idle oil equipment is seen in a Baker Hughes yard in Williston, North Dakota April 30, 2016. REUTERS/Andrew Cullen
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By Vishaka George and Anet Josline Pinto
(Reuters) - Oilfield services provider Baker Hughes Inc (NYSE: BHI) reported a smaller-than-expected quarterly loss on strict cost control and said it expected to cut more costs this year than previously anticipated.
Shares of the company rose as much as 10 percent to a year-high of $57.36 on Tuesday. It later pared gains to trade up 4.6 percent.
Baker Hughes, smallest among the top three oilfield services companies, said oil would have to trade above mid-$50s per barrel for the industry to see a "sustainable recovery" in North America.
This is a few dollars higher than larger rival Halliburton Co's (NYSE: HAL) outlook, but both companies said they are already seeing higher oilfield activity in the region as drillers put more rigs back to work.
Halliburton said last week that oil prices would have to stabilize at above $50 per barrel for producers to meaningfully increase oilfield activity.
U.S. crude prices
Baker Hughes - whose planned merger with Halliburton fell through in May due to opposition from regulators - warned of continued weakness in international markets.
Oil would have to trade at about $55 for drilling activity to pick up in the North Sea, while drilling in West Africa would need a higher price of $65, Chief Executive Martin Craighead said on a post-earnings call.
Schlumberger Ltd (NYSE: SLB), the world's No.1 oilfield services provider, said on Friday there were early signs of recovery in industry activity in most parts of the world.
Baker Hughes' total costs and expenses fell 31.2 percent in the third quarter, helping the company report an adjusted loss of 15 cents per share. That was much smaller than the 44 cents analysts were expecting, according to Thomson Reuters I/B/E/S.
The company on Tuesday raised its target to cut costs for the year to $650 million from $500 million.
Baker Hughes said in a filing it had laid off 1,400 employees in the third quarter, taking the total job cuts this year to 6,400. The company had slashed 18,000 jobs last year. (http://bit.ly/2e7HG44)
The company had about 34,000 employees as of Sept. 30.
Revenue fell 37.8 percent to $2.35 billion in the three months ended Sept. 30, missing the analysts' average estimate of $2.41 billion.
Net loss attributable to Baker Hughes widened to $429 million, or $1 per share, due to one-time items including after-tax charges of $365 million related to asset and goodwill impairments, restructuring and litigation settlements.
(Reporting by Vishaka George and Anet Josline Pinto in Bengaluru; Editing by Sriraj Kalluvila and Swetha Gopinath)
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