CGGVeritas Signs Baker Hughes Shale Deal as Profit Gains 20%
CGGVeritas (GA), the world’s largest seismic surveyor of oilfields, agreed to work with Baker Hughes Inc. (BHI) to provide shale drilling services after reporting a 20 percent increase in third-quarter profit.
Net income climbed to $48 million from $40 million a year- earlier, the Paris-based company said today in a statement. That missed the average estimate of $68 million among seven analysts Bloomberg surveyed. Sales increased 7 percent to $855 million. It fell 2.6 percent to 24.655 euros by 11:35 a.m. in Paris.
The results were “disappointing,” missing estimates partly because of a higher tax rate, Fiona Maclean, an analyst at Bank of America Corp., said in a note. Sales are expected to rise on contracts in Mexico, Brazil and the U.K., she said.
Baker Hughes helps companies drill and complete oil and gas wells and access fuel with hydraulic fracturing, which blasts water, sand and chemicals underground to free it from shale formations. Oilfield surveyors have forecast a pickup in demand as explorers spend more to counter depletion at mature fields.
“We expect the fourth quarter to be much stronger than the third quarter,” Chief Executive Officer Jean-Georges Malcor said on a call. CGGVeritas affirmed annual targets including a 10 percent to 15 percent jump in sales and said marine prices are expected to rise an average a further 7.5 percent in 2013.
“Exploration and production is strengthening with a level of urgency, which is good for the geosciences domain,” Malcor said. India is a promising market where energy companies are under “considerable pressure” to boost exploration programs.
CGGVeritas and Baker Hughes will develop services using reservoir models with seismic data to help explorers pinpoint “sweet spots,” according to the statement. The deal makes the French company a “preferred seismic” supplier for Baker Hughes while allowing it to work with other drillers, Malcor said.
CGGVeritas posted a 13 percent group operating margin, up from 12 percent. The margin for equipment-supply unit Sercel was 33 percent, up from 31 percent, and 10 percent for services. Its order backlog on Sept. 30 was $1.28 billion, the company said.
To contact the reporter on this story: Tara Patel in Paris at email@example.com