Baker Hughes first-quarter profit beats Street on oilfield services growth

(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.

A Baker Hughes sign is displayed outside the oil logistics company’s local office in Sherwood Park, near Edmonton, Alberta, Canada November 13, 2016. REUTERS/Chris Helgren

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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