Oilfield services provider,
Baker Hughes Inc.
) has provided a preliminary operational update on the fourth
quarter of 2013.
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The company's Iraqi business suffered operational hindrances and
increased expenses in the fourth quarter due to personnel
movements, security measures and other nonrecurring items. These
contributed to a loss in revenues.
Baker Hughes' pre-tax and after-tax profit is also likely to have
been affected by around $80 million, or 18 cents per share due to
disturbances in Iraq.
Moreover, weather delays late in the quarter affected activity in
the U.S. and the North Sea. As a result, operating profit margins
witnessed a sequential decline in North America and
As a result of the operational items mentioned above, adjusted
earnings per share (a non-GAAP financial measure) are expected
between 60 cents and 62 cents per share for the quarter. The
estimated adjusted earnings per share exclude $29 million in
after-tax severance costs, or 6 cents per share, incurred during
If the disruption in Iraq is excluded, the estimated adjusted
earnings would be 78-80 cents per share. Baker Hughes also
repurchased about 6.3 million shares of common stock, totaling
$350 billion during the fourth quarter.
Baker Hughes' strong portfolio of products and services should
help it post better-than-average results in North America and
enable it to expand in the international markets. Baker Hughes,
the world's third-largest oilfield services provider, also has a
competitive set of technologies, which allows it to bolster its
activity in the deepwater Gulf of Mexico. The company appears to
be focusing on the international and offshore markets for
Baker Hughes carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the oil and gas sector include
Harvest Natural Resources Inc.
Cheniere Energy Partners L.P
Helmerich & Payne, Inc.
). All these stocks hold a Zacks Rank #1 (Strong Buy).