Halliburton, Baker Hughes see tough 2015 as drilling slows
Oilfield service providers Baker Hughes and Halliburton posted better-than-expected quarterly profits on resilient demand, but warned that a fall in drilling activity due to weak oil prices would hurt results in 2015.



Global oil prices have tumbled almost 60 percent since June, hitting five-year lows as growing production and tepid global demand caused a supply glut, prompting oil producers to scale back spending.

Halliburton, which is buying Baker Hughes in a $35 billion deal, said it took a $129 million restructuring charge in the fourth quarter ended Dec. 31 to "temper the impact of anticipated activity declines."

The number of rigs drilling for oil in the United States fell by 55 to 1,366 last week, the second-sharpest weekly drop in 24 years, according to data released by Baker Hughes on Friday.

Still, strong year-end sales and previously signed contracts at both the companies shielded fourth-quarter results from impact of the slowdown in drilling activity.

Halliburton's shares were up 2 percent in premarket trading, while Baker Hughes was up 1 percent.

"While market demand ended up being more resilient in the fourth quarter than many had predicted, the recent declines seen in rig counts will clearly affect results in 2015," Baker Hughes Chief Executive Martin Craighead said in a statement.

Oilfield services leader Schlumberger said last week it would lay off 9,000 workers worldwide and warned that the oil price drop was likely to have a "significantly more dramatic" impact on North America than on the rest of the world.

The company, like Halliburton and Baker Hughes, reported a better-than-expected profit on Thursday, largely helped by an 18.5 percent jump in revenue from North America.

Baker Hughes said on Tuesday that revenue from North America rose 20 percent to account for half of overall sales.

Halliburton said revenue from North America rose 24 percent, making up for more than half of fourth-quarter revenue.

Baker Hughes's total revenue rose 13 percent to $6.64 billion, while Halliburton's revenue rose about 15 percent to $8.77 billion.

Baker Hughes's fourth-quarter adjusted profit was $1.44 per share, much higher than the average analyst estimate of $1.07, according to Thomson Reuters I/B/E/S.

Halliburton's adjusted profit from continuing operations was $1.19 per share, above the average analyst estimate of $1.10.