Baker Hughes, the LNG equipment-maker and energy services company, reported an increase in first-quarter revenues to $4.83 billion and a 70 percent jump in operating income to $279 million while forecasting LNG final investment decisions on up to 150 million tonnes per annum of projects in the next two years.
The company, which has main offices in Houston and London, reported net income of $72M in the quarter to the end of March 2022 versus a loss of $452M in the same three months of 2021.
“Our first quarter results reflect operating in a very volatile market environment during the first few months of 2022,” said Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive.
“On the positive side, we recorded strong orders from Turbomachinery and Process Solutions (TPS) as the LNG order cycle continues to unfold,” stated the CEO.
The company said TPS orders totalled $3Bln for the second consecutive quarter, driven again by strong orders in LNG.
“We believe that we are at the beginning of another constructive LNG cycle, which is being expedited by the current geopolitical situation, particularly for US LNG projects,” stated Simonelli.
“As these market dynamics play out, a number of projects should accelerate, and we now believe that 100 to 150 MTPA of LNG FIDs will be authorized over the next two years with additional FIDs becoming more likely in 2024 and 2025,” declared the CEO.
Record orders
Orders in the quarter were $3.0Bln, up $1.6Bln year-over-year and a new quarterly record for TPS.
Simonelli said that equipment orders were up $1.5Bln year-over-year, driven by a significant award to provide an LNG system for the first phase of US company Venture Global’s Plaquemines LNG project, located south of New Orleans on the Mississippi River in Louisiana.
Service orders in the quarter were up 8 percent year-over-year, primarily driven by growth in contractual and transactional services, partially offset by lower order volumes in upgrades.
Overall orders in the quarter were $6.8Bln, up 3 percent versus the three months to the end of 2021, driven by Oil Field Equipment and TPS, partially offset by a decrease in Digital Solutions and OFS.
Year-over-year, revenue was up 1 percent compared with $4.78Bln in the prior-year quarter, driven by increases in OFS and Digital Solutions, partially offset by decreases in OFE and TPS.
Adjusted operating income was $348M, which excluded $70M of restructuring, separation and other charges.
Russia issue
As regards the conflict in Ukraine, Baker Hughes said Russia represented roughly 4 percent of total company revenue in the first quarter.
“We recently announced that we have halted all new investment in the country,” said the company.
Oilfield Services revenues in the quarter amounted to $2.5Bln, down 3 percent from the previous three months.
“International revenue was down 7 percent sequentially led by declines in the North Sea, Russia Caspian, the Middle East, and Latin America,” said Baker Hughes.
Moving to the Oilfield Equipment division, the company said that orders for the quarter were $739M, double the $394M achieved in the same three months of 2021.
It added that the strong orders performance was driven by subsea production systems (SPS), supported by a large subsea tree contract in Asia, along with growth in flexibles, surface pressure control and services.
“As a reminder, we removed Subsea Drilling Systems from consolidated OFE operations when we completed the merger with MHWirth in the fourth quarter of 2021,” Baker Hughes explained.
The company concluded that revenue in the division was $528M, down 16 percent year-over-year, primarily driven by SPS, SPC and the removal of SDS, partially offset by growth in services and flexibles.
