Oilfield companies supplier Baker Hughes booked an enormous impairment cost within the first quarter of the yr leading to a $10 billion loss for the quarter amid a major decline in oil and gasoline costs and coronavirus pandemic.
In its 1Q 2020 report on Wednesday, Baker Hughes stated that its orders within the quarter have been $5.5 billion, down 20 per cent sequentially and down three per cent year-over-year.
Its revenues have been $5.four billion for the quarter, down 15 per cent sequentially and down three per cent year-over-year
Baker Hughes’ GAAP working loss for the primary quarter of 2020 was $16.06 billion, in comparison with a revenue of $176 million in the identical interval final yr.
The firm’s internet loss in 1Q 2020 amounted to $10.2 billion in comparison with a revenue of $32 million in 1Q 2019.
As beforehand reported, the corporate’s 1Q 2020 outcomes embrace goodwill, stock, restructuring, and different impairment costs of over $15 billion.
Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive Officer, stated: “During the primary quarter, the macro surroundings modified quickly. The sudden demand shock from COVID-19 mixed with rising international oil provide drove a 67% decline in oil costs in the course of the first quarter.
“Looking ahead, the outlook for oil and gasoline demand and provide seems equally unsure, and it’ll largely be pushed by the tempo of financial restoration from the COVID-19 pandemic and the provision response that in the end materializes.
Trouble in oilfield companies
Baker Hughes is just not the one one from its sector to endure the results as a result of present market state of affairs.
Other oilfield companies suppliers have additionally recorded large losses within the first quarter of the yr.
Schlumberger final week took an $eight.5 billion cost primarily referring to the impairment of goodwill, intangible property, and different long-lived property and reported a internet lack of $7.four billion in 1Q 2020.
Earlier this week, Halliburton acknowledged a $1.1 billion of pre-tax impairments and different costs to additional alter its value construction to present market circumstances and reported a internet lack of $1 billion for the primary quarter of 2020.
Navigating by challenges
Simonelli added: “To navigate this difficult surroundings, we now have taken decisive actions in an effort to chop prices, speed up structural adjustments, and deploy know-how and optimize processes that may decrease prices for our clients.
“This contains decreasing capital expenditures by greater than 20% versus 2019, executing a restructuring plan to right-size our operations for anticipated exercise ranges and market circumstances, in addition to persevering with to ship on our portfolio evolution technique”.
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