Oilfield operator Baker Hughes Inc. (BHI) said Tuesday North American business climbed 9% sequentially in 4Q2009 after producers went back to work to drill more horizontal natural gas wells in U.S. and Canadian unconventional shale plays, as well as increased offshore drilling in the Gulf of Mexico (GOM) and the Permian and Williston basins.

Net income for 4Q2009 was $84 million (27 cents/share), well below the $432 million ($1.41) reported in 4Q2008, but above $55 million (18 cents) in 3Q2009. Profits in the last three months of 2009 included expenses of $74 million before tax (16 cents/share) associated with reorganization, severance and acquisition-related costs from its merger with BJ Services Co. (see Daily GPI, Sept. 1, 2009).

The decline in profits from the same period of 2008 “reflects the significant decrease in drilling in all North America geomarkets in 2009,” said CEO Chad C. Deaton, who led a conference call with financial analysts. “The sequential improvement in our fourth quarter earnings was the result of increased revenue in every region, as well as the aggressive cost-cutting measures we took throughout the year.”

North America, said Deaton, “is our bread and butter,” and the company is seeing more opportunities both onshore and offshore. The company participated with McMoRan Exploration Co. and its partners’ recent Davy Jones discovery well on the Outer Continental Shelf (see Daily GPI, Jan. 12), and more activity in the shallow waters could be increasing as the economy improves, he told analysts.

“Incremental margins were particularly strong in North America, driven by increased horizontal drilling in the U.S. land geomarket and improved rig mix in the Gulf of Mexico geomarket,” the CEO said.

The “price deterioration” that hit the oilfield services sector in North America last year has ended, giving BHI and other operators a “better chance for pricing as time goes on,” said Deaton. “If the rig count continues to climb to 20, 30 rigs a week, possibly in the second quarter we could raise some prices.”

BHI’s international activity also is expected to gain strength this year because of the global economy’s increasing demand for gas and oil, Deaton said. “In North America the oil-directed rig count has improved substantially, and the gas-directed rig count has begun a steady increase. We expect both trends to continue.”

Integrating BJ Services into BHI is on schedule, and management is continuing to “fine tune” the restructuring, said Deaton. The transaction, which is expected to help BHI increase its shale activity, should be completed by the end of March.

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