Houston oilfield service company Baker Hughes plans to write down the value of its assets by $15 billion and cut capital spending by more than 20% from 2019 levels as market conditions worsen for the oil and gas industry.
Baker Hughes expects to take the $15 billion write down in the first quarter. It won’t affect the company’s cash flow but could result in a net loss when the company reports its first quarter figures on April 22.
A 20 percent cut would mean leave the company with a net capital expenditure budget of $780 million, down from the $976 million spent last year.
Baker Hughes joins Schlumberger, the world’s largest oil-field service company, in slashing capital spending. Schlumberger on March 24 said it would cut its budget by up to 30 percent as oil companies cut spending in the face of crude prices near $20 a barrel.
The economic fallout from the coronavirus pandemic continues to crush global demand even as a monthslong price war came to an end over the weekend as countries agreed to cut production.
“The uncertainty related to oil demand continues to have a significant impact on the investment and operating plans of our primary customers,” Baker Hughes said in a statement.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.