Baker Hughes Q1 Profit Beats Estimates on Strong International Drilling Demand

Baker Hughes, a leading oilfield services company, reported better-than-expected profits for the first quarter of 2023. The company's revenue from the international segment rose to $2.79 billion from $2.59 billion a year earlier, as Brent crude prices increased nearly 10% in the quarter. This increase in international drilling demand helped drive the company's profitability, with its Q1 profit beating analysts' estimates.

Baker Hughes' total revenue from its international segment was up at $2.79 billion in the quarter, compared with $2.59 billion a year earlier. The company's international rig count, an indicator of future production, was up 5.4% at 965 on average at the end of the first quarter compared to a year earlier. Rivals SLB and Halliburton also benefited from higher oil and gas drilling demand in their international operations, which helped offset weakness in North America.

The company reported an adjusted profit of 43 cents per share for the quarter ended March 31, compared with analysts' average estimate of 40 cents. Baker Hughes' revenue for the quarter was $6.42 billion, topping the $6.34 billion expected by seven analysts surveyed by Zacks.

Why this matters: Baker Hughes' strong first quarter results reflect the increased activity and demand in the global energy industry as oil prices recover. The company's performance highlights the importance of international markets for oilfield services firms, as they look to offset challenges in North America.

Baker Hughes CEO Lorenzo Simonelli stated that the solid first-quarter results put the company on a path to achieving its full-year guidance and build on the momentum from last year. The company continues to expect high single-digit growth in 2024 and has increased its quarterly dividend by 11% year-over-year, while also repurchasing $158 million of shares. Baker Hughes generated $784 million in cash flows from operating activities and $502 million in free cash flow in the quarter.

Key Takeaways

• Baker Hughes reported better-than-expected Q1 2023 profits, with revenue up 8% YoY.
• International segment revenue rose to $2.79B, driven by 10% increase in Brent crude prices.
• Baker Hughes' international rig count increased 5.4% YoY, offsetting weakness in North America.
• Adjusted EPS of $0.43 beat analysts' estimates of $0.40, and revenue topped expectations.
• Baker Hughes increased quarterly dividend by 11% YoY and repurchased $158M in shares.