Updated Version 3 - Baker Hughes quarterly profits decline, marking the end of oilfield services earnings season

Prospects and analyst comments have been added in paragraphs 8–12; stock price information updated.

Vallari Srivastava

Reuters, October 27 - Baker Hughes BKR.O reported a decline in third-quarter profit on Tuesday, as ongoing conflicts in the Middle East affected demand for services and equipment from this major oil-producing region.

The conflict in the Middle East has persisted for eight months, with repeated escalation causing project decision delays, operating disruptions, and market concerns over the pace of future client spending, thereby squeezing profit margins for the oilfield services sector.

Nearly 40% of Baker Hughes’ revenue comes from the Middle East. Among its oilfield services competitors, the company has the highest dependency on the region, ahead of rivals such as SLB SLB.N and Halliburton HAL.N.

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Additionally, as producers adopt more efficient extraction techniques and amid ample oil and gas supply, demand for new drilling has been subdued, creating further demand weakness in the sector.

Baker Hughes said revenue in North America fell from $980 million in the previous year to $955 million. In the Middle East and Asia, revenue was $1.26 billion, down from $1.45 billion a year ago.

The company expects rising logistics costs and supply chain challenges to impact operations, and forecasts a quarter-on-quarter decrease in business volume in the Middle East in the fourth quarter.

The oilfield services provider now expects annual revenue from industrial equipment maker Chart, acquired in July for $13.6 billion, to be $1.99 billion, down from a previous forecast of $2.05 billion, mainly due to scheduling of liquefied natural gas equipment shipments and weak hydrogen demand.

Baker Hughes shares fell more than 1% in after-hours trading.

The company maintained its overall revenue outlook. CEO Lorenzo Simonelli said business in the Middle East has shown significant improvement, and with clients increasingly focused on maximizing recovery and extending asset lifespans, more opportunities are expected.

Melius Research analyst James West noted that Baker Hughes’ outlook “is aligned with our expectations for continued improvement in the global oilfield and power markets through 2027.”

The US oilfield services provider reported that net profit for the three months ended September 30 was $411 million, or 41 cents per share, down from $609 million, or 61 cents per share, a year earlier.

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