Baker Hughes Inc., the oilfield contractor that acquired BJ Services Co. last year, said profit quadrupled as higher crude prices lifted demand for drilling work in North America.
Net income rose to $335 million, or 77 cents a share, from $84 million, or 27 cents, a year earlier, the Houston-based company said in a statement today. Excluding acquisition-related costs and an investment gain, earnings were 19 cents more than the average of 31 analysts’ estimates compiled by Bloomberg. Revenue surged 82 percent to $4.42 billion.
Oil prices rose 12 percent to average $85.24 a barrel in the quarter, from $76.13 a year earlier. There were 3,227 active drilling rigs at the end of last year, up 29 percent from 2009.
The third-largest oilfield services provider “delivered an old-school blow-out,” Bill Herbert, an analyst at Simmons & Co., wrote today in a note to investors. “We would expect this quarter to result in continued conversion of skeptics into believers.”
Baker Hughes rose $3.82, or 6.5 percent, to $62.32 at 4:00 p.m. in New York Stock Exchange composite trading. The shares, which have 21 buy and 13 hold recommendations from analysts, went as high as $62.04
The quarterly results, which Herbert described as “best-in-class,” were helped by its North American business, including work in the Gulf of Mexico, he said.
Sales in North America rose 69 percent to $2.2 billion, the company said.
Exploratory drilling in waters deeper than 500 feet (152 meters) was halted after BP Plc’s Macondo well erupted off the Louisiana coast in April, causing the worst U.S. offshore oil spill. The moratorium was lifted in October.
Given the ongoing delays in permitting new work offshore in the Gulf of Mexico, particularly in deep water, many operators are trying to breathe new life into existing fields, Chief Executive Officer Chad Deaton said in the statement.
The company benefited from an increased share of the growth in workover and well-completion jobs, he said. It also received more work from producers drilling deep, high-pressure, high-temperature wells in shallow waters of the Gulf.
Capital Spending Rises
Baker Hughes, which is adding equipment to meet increased demand for hydraulic fracturing and other pressure-pumping services needed to pull oil and gas from shale rock, expects to boost capital spending this year to a range of $2.3 billion to $2.7 billion. Its total spending in 2010 was $1.5 billion.
Deaton told analysts today on a conference call he’s “bullish” on the second half of 2011.
“I think the second half, especially the fourth quarter, could surprise us and start showing some strong growth in momentum,” Deaton said, citing client optimism, the oil prices and the fact that a number of drilling projects have been delayed.
The number of rigs active in the U.S. is expected to grow 12 percent this year to 1,740, Deaton said. The number of rigs outside the U.S. and Canada will grow 8 percent to 1,180.
Schlumberger Ltd., the world’s largest oilfield-services contractor, said Jan. 21 fourth-quarter adjusted earnings were 85 cents a share, 7 cents more than analysts’ estimates. Halliburton Co., the world’s second-largest oilfield services provider, said adjusted earnings were 5 cents more than analysts’ estimates.