Strong demand for LNG-related services drove Baker Hughes’ third-quarter financial performance above expectations, with the company reporting a 23% annual increase in orders despite a dip in net profits of 20% on the year.
Free cash flow rose as well, from $239 million at the end of June to $699 million at the end of September, and cash flow from operating activities rose from $510 million at the end of June to $929 million at the end of September, although both cash flow figures were down on an annual basis.
Natural gas was the driver of the oilfield service major, which has been consistently growing its exposure to that segment amid strong demand projections and a growth momentum driven by the new U.S. administration. In fact, Baker Hughes attributed most of its financial success last quarter to gas-related business activities.
It boasted an order backlog of $4 billion for its Industrial & Energy Technology division, which is mainly busy in gas and LNG infrastructure and equipment. This was only the third time in the history of the company that the IET backlog was worth $4 billion, Baker Hughes said. The total size of the company’s order backlog surged to an all-time high of $32.1 billion by the end of September. The company highlighted its work for the Rio Grande LNG facility and the Port Arthur Phase 2 development.
As in the second quarter, Baker Hughes noted a continued slowdown in oilfield activity, where orders increased but revenues and earnings before interest, tax, depreciation and amortization fell on an annual basis.
“While OFSE margins softened, reflecting the broader macro backdrop, IET delivered another quarter of strong performance, driving consolidated Adjusted EBITDA margins higher year-over-year. This positive margin progression highlights the resilience of our portfolio and the foundation we’ve built through disciplined execution,” chief executive Lorenzo Simonelli said.
By Irina Slav for Oilprice.com
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