Baker Hughes reports strong earnings
By Jack Burke19 April 2023
CEO Simonelli ‘optimistic’ about 2023 outlook
Baker Hughes CEO Lorenzo Simonelli said the company is “optimistic” about 2023 as the company reported adjusted earnings in the first quarter were up 25% over the same period a year ago.
The company reported orders of US$7.6 billion for the quarter, up 12% year-over-year. Revenue for the quarter hit US$5.7 billion for the quarter, up 18% year-over-year.
“We were pleased with our first quarter results and remain optimistic on the outlook for 2023,” Simonelli said. “We maintained our strong order momentum in IET and SSPS. We also delivered solid operating results at the high end of our guidance in both business segments, booked almost US$300 million of New Energy orders and generated approximately US$200 million of free cash flow.”
The company reported GAAP operating income of US$438 million for the quarter, up US$160 million year-over-year. Adjusted operating income (a non-GAAP measure) of US$512 million for the quarter, up 47% year-over-year. Adjusted EBITDA (a non-GAAP measure) of US$782 million for the quarter, up 25% year-over-year.
“While 2023 has already started off with some macro volatility, we remain optimistic on the outlook for energy services and Baker Hughes,” Simonelli said. “Our diverse portfolio features long cycle and short cycle businesses that position us well to navigate any periods of variability that may occur across the energy sector.”
Among highlights of the quarter:
- The Oilfield Services & Equipment (OFSE) business segment was awarded its largest subsea tree order in almost five years through a contract with Azule Energy in the Agogo oilfield offshore Angola. Baker Hughes will supply subsea equipment and services, including 23 subsea trees and 11 Aptara manifolds. A significant portion of the equipment manufacturing will be conducted in country, utilizing Baker Hughes’ local facilities and workforce, which is a key condition of many contracts in the region.
- OFSE was also awarded a multi-year contract from Wintershall Dea for integrated well construction and completion services. Baker Hughes will provide integrated solutions to drill and complete 29 wells for gas exploration and development and three wells for CO2 storage. The gas field will leverage Baker Hughes’ project management expertise and advanced high-pressure, high-temperature technology, delivering an efficient and lower cost solution supporting greater energy security in Europe and future use as a CO2 storage facility.
“We continue to believe that the current environment remains unique, with a spending cycle that is more durable and less sensitive to commodity price swings, relative to prior cycles,” Simonelli said. “Another notable characteristic of this cycle is the continued shift towards the development of natural gas and LNG. As the world increasingly recognizes the crucial role natural gas will play in the energy transition, serving as both a transition and destination fuel, the case for a multi-decade growth opportunity in gas is steadily improving as both a transition and destination fuel.”