Iraq Biz to Hurt BHI 4Q Earnings - Analyst Blog


Oilfield services provider, Baker Hughes Inc. ( BHI ) has provided a preliminary operational update on the fourth quarter of 2013.

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 Europe/Africa/Russia Caspian.

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 the quarter.

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 near-term growth.

Baker Hughes carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Harvest Natural Resources Inc. ( HNR ), Cheniere Energy Partners L.P . ( CQP ) and Helmerich & Payne, Inc. ( HP ). All these stocks hold a Zacks Rank #1 (Strong Buy).

BAKER-HUGHES (BHI): Free Stock Analysis Report


HARVEST NATURAL (HNR): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BHI , CQP , HNR , HP

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