(Reuters) - Baker Hughes Inc BHI.N, the world’s third-largest oilfield services provider, reported a 36 percent fall in quarterly profit as drilling decreased in North America, its biggest market.
The company’s big exposure to the pressure pumping market pulled down its margins during the quarter as the industry has been inundated by an influx of new equipment.
Pressure pumping equipment is used in fracking to extract oil and gas from shale rock formations.
“Results reflect the challenges faced by the industry as North American activity declined sharply towards the end of the year, and we continue to deal with unfavorable pricing conditions in the pressure pumping market,” Chief Executive Martin Craighead said in a statement.
The company plans to cut capital expenditure by 30 percent for 2013. Capital spending for 2012 was $2.87 billion.
The number of rigs drilling for oil in the United States fell to its lowest in 10 months in the week ended January 18, while the gas-directed rig count is hovering just above the 13-1/2-year low of 413 posted 10 weeks ago, Baker Hughes data show.
Net income from continuing operations attributable to Baker Hughes fell to $211 million, or 48 cents per share, for the quarter ended December 31, from $331 million, or 76 cents per share, a year earlier.
Revenue marginally fell to $5.22 billion, with nearly 50 percent coming from North America.
The company warned last month that fourth-quarter margins and revenue would be below its expectations.
Larger rival Schlumberger Ltd (SLB.N) reported results on Friday that beat market expectations. The results were lifted by its strength outside the volatile North American market.
Houston-based Baker Hughes’s shares closed at $44.85 on the New York Stock Exchange on Tuesday.
They have risen nearly 8 percent so far this year, while the Thomson Reuters United States Oil Related Services and Equipment Index .TRXFLDUSPOILS has been largely flat.
Reporting By Thyagaraju Adinarayan; Editing by Sriraj Kalluvila