Baker Hughes Co. (BKR) has made investment in “new energy frontiers” a key part of its strategy moving forward, but management for the oilfield services provider still sees a bright outlook for the global natural gas market.
Remarking on the company’s recently released 2Q2021 financial results, CEO Lorenzo Simonelli struck an optimistic tone when discussing the current state of demand for natural gas and liquefied natural gas (LNG) worldwide.
“Fundamentals are equally strong if not better than oil, as a combination of outages and strong demand in Asia, Latin America and Europe have driven third quarter LNG prices to levels not seen since 2015,” Simonelli said.
This comes as management sees “continued signs of global economic recovery that should drive further demand growth for oil and natural gas” in the second half of this year and into 2022, the executive said. While Covid-19 variants present potential downside risks, “we believe that the oil price environment looks constructive, with demand recovering and operators largely maintaining spending discipline.”
As for natural gas, hot weather in Europe and in the United States has helped drive “solid demand improvement” and keep storage levels low. This comes as “structural growth continues unabated in Asia,” including a 30% year/year increase in Chinese LNG imports through the first half of this year, according to Simonelli.
“Given the strong pace of current growth and the increasing demand for cleaner sources of energy, we maintain our positive long-term outlook for natural gas and LNG,” Simonelli said.
Meanwhile, BKR continues to have its sights set on the energy transition.
“The momentum for cleaner energy projects continues to increase around the world,” Simonelli said. “In the U.S., Europe and Asia, various projects around wind, solar and green and blue hydrogen are moving forward, as well as a number of carbon capture projects.”
BKR spent the second quarter building on “a key pillar of our strategy to position for some of these new energy frontiers. Our team has moved quickly and decisively in selected areas to establish relationships and build a strong foundation for future commercial success.”
The Oilfield Services segment posted quarterly revenue of $2.358 billion, a 7% sequential increase. That included a $693 million, or 11%, sequential increase in revenue for North America, with International revenue coming in at $1.665 billion, a 6% increase quarter/quarter.
Oilfield Equipment revenue totaled $637 million for the quarter, up from $628 million in the first quarter but down 8% year/year. Management pointed to lower volume in the company’s Subsea Drilling Systems business and the disposition of its Surface Pressure Control flow business in 4Q2020 to account for the lower revenues, with higher volume in the Flexible Pipe Systems business partially offsetting.
Turbomachinery & Process Solutions revenue totaled $1.628 billion for 2Q2021, up 10% sequentially and 40% higher year/year, a result of higher equipment volume, management said. Equipment revenue accounted for 48% of revenues for the segment, with service revenue accounting for the remaining 52%.
Revenue for the Digital Solutions segment rose 11% sequentially and year/year to $520 million. Gains were primarily a result of higher volume in the Process & Pipeline Services, Waygate Technologies and Bently Nevada business, with the Nexus Controls business partially offsetting, according to management.
Total company revenue for the quarter was $5.142 billion, up from $4.782 billion in the prior quarter and $4.736 billion in 2Q2020.
BKR reported a net loss for the quarter of $68 million (8 cents/share), versus a loss of $195 million (30 cents/share) in the year-ago quarter. Operating income was $194 million, versus a year-ago operating loss of $52 million.
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