Baker Hughes reported lower than expected first-quarter earnings and said the rest of the year will be impacted by “broad-based inflation and supply pressures,” exacerbated by “unfortunate geopolitical events” including uncertainty in Russia.
The world’s second-biggest oil servicer reported earnings of 15 cents a share, excluding certain items, that missed analysts’ expectations, according to the statement. Shares fell 2.7% in pre-market trading.
“All things considered, not a horrible outcome in a challenging supply chain environment,” analysts at Tudor Pickering Holt & Co. wrote Wednesday in a note to investors. “But not one that’s likely to turn heads either.”
Smaller rival Halliburton Co. reported results a day earlier that met analysts’ expectations while boosting its estimate for client spending in North America this year.
Service companies, which do the fracking and drilling onshore and offshore, are staging a return to growth after a two year stretch that included cratering energy prices and the pandemic-driven slump in worldwide economic activity. While their clients have been raking in record free cash flow, the contractors who provide the manpower to find oil and drill the wells have lagged behind financially as they navigate supply chain snarls and attempt to pass on cost inflation in the form of higher service prices.
“Our first quarter results reflect operating in a very volatile market environment during the first few months of 2022,” Chief Executive Officer Lorenzo Simonelli said Wednesday in a statement. “As we look ahead to the rest of 2022, we see a favorable oil and gas price backdrop but also a dynamic operating environment.”
The Houston company posted a surprise loss of $8 million in its oilfield equipment business, while analysts were expecting $12.6 million in operating income, according to Bloomberg data. It did however report better-than-expected orders of $739 million for new gear in the division.