finance

Oil field service giant ends “incredibly challenging” year with $15bn losses



Oil field service company Baker Hughes concluded an “incredibly challenging” 2020 financial year with pre-tax losses of $15.2 billion.

While fourth quarter results had improved, a $11bn impairment charge in the first half of last year weighed heavy on results, which were otherwise “pleasing” in the face of “navigating the impacts of the global pandemic and industry downturn”.

The GE group company has several sites across Scotland, and opened a Centre of Excellence facility in Montrose back in June 2019. The site focuses on engineering, manufacturing, test and assembly services for deepwater technology.

Revenue for the quarter was $5.4bn, a sequential increase of 9%, driven by turbo-machinery, process solutions and digital solutions.

However, compared to the same quarter last year, revenue was down 13%, driven by lower volume across the oilfield services, oilfield equipment and digital solutions segments.

Operating income for the fourth quarter was $182m – down $149m year-on-year.

Income tax expenses during the fourth quarter totalled $568m, while capital expenditures and net of proceeds from disposal of assets were $127m.

Oilfield equipment orders were down $544m, or 49% year-on-year, driven primarily by lower equipment order intake across all business segments. Equipment orders were down 54% year-on-year and services orders were down by a third.

Oilfield equipment revenue of $712m for the quarter decreased $53m, or 7% year-on-year, driven by lower volume in the services business, and from the sale of the surface pressure control flow business.

Orders for the quarter were $5.1bn, down by a quarter year-on-year. The decline in orders was a result of lower order intake across all segments.

“Despite an incredibly challenging year for the industry in 2020, we generated over $500m in free cash flow, booked $6.4bn in orders, and executed on our substantial cost-out and restructuring program,” stated chief executive Lorenzo Simonelli.

“As we look ahead to 2021, we are cautiously optimistic that the global economy and oil demand will begin to recover from the impact of the global pandemic.

“We believe this macro environment likely translates into a tepid investment environment for oil and gas during the first half of 2021,” he continued. “However, we expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022.”



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