* Second-quarter adjusted profit $0.92 vs est $0.90
* Expects profit from operations to increase by 15 pct in
* Says pressure pumping market tightening
By Swetha Gopinath and Ashutosh Pandey
July 17 Baker Hughes Inc, the world's
third-largest oilfield services company, said it expects strong
growth in North America as oil and gas producers turn to its
new technologies to reduce drilling time and cut costs.
The company, whose services include seismic surveys that
determine where oil lies under the earth's surface and hydraulic
fracturing of wells, launched 47 new products and services in
the second quarter.
"In North America, the trend of customers spending
incremental op-ex towards production-related technologies is
unfolding as we expected," Chief Executive Martin Craighead said
on a post-earnings call. "We predict strong growth in this area
for the foreseeable future."
Technologies developed in the last year or two contribute
between 35-50 percent to the company's revenue, Craighead said.
Oil and gas companies, under increasing pressure from
shareholders, are looking to increase production at lower cost,
prompting oilfield service providers to develop more efficient
Baker Hughes said it expects profit from operations to rise
by 15 percent in the third quarter as increased drilling
activity and an improving pressure pumping market lift revenue
and margins in North America.
Pressure pumping business in North America had been
depressed for the past two years as new equipment entered the
market at a time when drillers pulled out of natural gas basins
due to weak prices.
Pressure pumping is used in hydraulic fracturing to extract
oil and gas from shale rock.
Baker Hughes said on Thursday that pressure pumping supply
was now tightening, but that the market still had about 20
percent of excess supply.
"It does look like the fracking business has definitely
bottomed out, it's just a question of how fast it's going to
improve," Hodges Capital analyst Mike Breard said before Baker
Hughes earnings were released.
"A year ago the question was how bad can it get? The
question now is how good can it get?"
Bigger rival Schlumberger Ltd is expected to report
quarterly results after market close on Thursday.
Baker Hughes shares were down 2 percent at $72.69 in late
morning trade on the New York Stock Exchange.
The company's international customers were spending more on
well-construction services in all regions, Craighead said.
Revenue from North America increased 6 percent to $2.84
billion while Middle East and Asia Pacific revenue jumped 18
percent to $1.15 billion in the second quarter ended June 30.
Net income attributable to Baker Hughes jumped 47 percent to
$353 million, or 80 cents per share.
On an adjusted basis, the company earned 92 cents per share.
Revenue rose 8 percent to $5.94 billion.
Analysts on average had expected earnings of 90 cents on
revenue of $5.87 billion, according to Thomson Reuters I/B/E/S.
Baker Hughes shares, which touched a near three-year high of
$75.64 earlier this month, have risen about 12 percent in the
past three months.
(Reporting by Ashutosh Pandey in Bangalore; Editing by Maju
Samuel and Sriraj Kalluvila)