Baker Hughes Co. has revised its forecast for U.S. shale activity, indicating that a previously anticipated recovery in oil drilling is unlikely to occur this year.
The world’s second-largest oil-services provider by market value now predicts a mid-single-digit decline in 2024 exploration spending in North America compared to last year, according to Chief Executive Officer Lorenzo Simonelli, who spoke during an earnings call on Friday. The Houston-based firm had earlier projected a fall within the low- to mid-single-digit range.
Revised Expectations for U.S. Shale
Baker Hughes, the last of the top three oilfield service companies to announce second-quarter results, echoed its competitors SLB and Halliburton Co. by predicting growth in international and offshore oil activity.
Meanwhile, U.S. shale operations are expected to slow due to industry consolidation, cautious spending, and lower natural gas prices.
International and Offshore Growth
The company highlighted a positive outlook for international and offshore oil activities, contrasting with the slowing U.S. shale sector.
This shift in focus comes as Baker Hughes adapts to changing market conditions and seeks opportunities outside the U.S.
Stock Market Response
Shares of Baker Hughes climbed as much as 4.8% to $37.29 on Friday after the company reported profits that exceeded expectations.
Additionally, Baker Hughes increased the midpoint of its full-year guidance by 5%, reflecting confidence in its adjusted strategy and future performance.
CEO’s Insights
Chief Executive Officer Lorenzo Simonelli emphasized the importance of adapting to market realities during the earnings call. By adjusting its forecast, Baker Hughes aims to navigate the evolving landscape of the oilfield services sector.
Sector Trends
Baker Hughes’ revised outlook aligns with broader industry trends. As U.S. shale work decelerates, the company and its rivals are placing greater emphasis on international and offshore projects. This strategic shift is driven by factors such as consolidation, prudent spending practices, and the impact of fluctuating natural gas prices.
Financial Performance
The better-than-expected profits and the increase in full-year guidance midpoint underscore Baker Hughes’ resilience and strategic agility. Despite the challenges facing the U.S. shale sector, the company’s diversified portfolio and international focus contribute to its overall stability and growth prospects.