(Reuters) – General Electric Co’s Baker Hughes posted quarterly profit that beat Wall Street estimates on Friday as improving oil prices prompted companies to ramp up oil and gas production.
U.S. crude futures climbed 7.5 percent in the first quarter of 2018, re-energizing oil and gas producers that held back investments in recent years amid a steep drop in prices. That boost has benefited service companies, which were among the hardest hit by the oil price downturn that started in mid-2014.
“Market fundamentals remain supportive, as crude oil prices are relatively rangebound, providing stability to customers as they evaluate projects,” said Baker Hughes Chief Executive Officer Lorenzo Simonelli in a statement.
Excluding items, GE Baker Hughes earned 9 cents per share, beating analysts’ estimates by 3 cents, according to Thomson Reuters I/B/E/S. Revenue rose to $5.40 billion from $5.32 billion on a combined basis a year earlier.
Results were boosted by a $124 million benefit from U.S. tax reform.
Less than a year ago conglomerate General Electric Co combined its oilfield business with services firm Baker Hughes, creating the second largest oilfield services company by revenue.
The combined company achieved $144 million of synergies in the first quarter of 2018, putting it on track to hit an expected $700 million in synergies by year-end, Simonelli said.
Oilfield services revenue, which accounted for half of overall sales, rose 10.1 percent to $2.64 billion in the quarter. The company was awarded a five-year contract by Kinder Morgan to provide artificial lift services in the Permian Basin and a wireline contract with an integrated major in the Gulf of Mexico, it said.
Net income attributable to the company was $70 million, or 17 cents per share, in the quarter. Orders rose 8.7 percent.
The company, which was formed in July 2017, did not provide earnings for the combined entity in the same quarter a year ago.
Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila and Jeffrey Benkoe
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