Baker Hughes edges higher as outlook makes up for slight earnings miss

By Geoffrey Smith

Investing.com -- Baker Hughes (NASDAQ:BKR) stock edged higher in premarket trading on Monday as the oilfield services company's bullish outlook compensated for a slight miss on revenue and profit in the final quarter of 2022.

By 07:55 ET (12:55 GMT), Baker Hughes was up 1.1%, outperforming index futures that were largely flat.

Order inflows rose 32% from the previous quarter and 20% from a year earlier to hit a new record of $8.0 billion, fresh evidence of international energy companies making up for years of under-investment to ease a looming squeeze on global oil supply. Order momentum was particularly strong at its Industrial and Energy Technology division, which outstripped those in oilfield services, traditionally the company's biggest revenue generator.

"Global spare capacity for oil and gas has deteriorated and will likely require years of investment growth to meet forecasted future demand," Baker Hughes chairman and CEO Lorenzo Simonelli said in a statement.

Crude prices have started the year strongly amid evidence of a sharp increase in Chinese mobility since Beijing loosened its COVID-19 public health restrictions at the end of last year. The shift from Beijing will swing the global oil market from a surplus of 1M barrels a day in the current quarter to a deficit of 2.4M b/d by the end of the year, according to the International Energy Agency, raising the pressure on OPEC and others to increase their output. That in turn is set to feed through into a demand boom for services from the likes of Baker Hughes and Schlumberger (NYSE:SLB), which also put out a bullish outlook for 2023 at the end of last week.

Baker Hughes said its adjusted earnings per share totaled 38c for the quarter, a little below the 40c expected but up from 25c a year earlier, while revenue was up 8% from a year ago at $5.9B.

Simonelli said the company will continue to target paying out between 60% and 80% of its free cash flow in buybacks and dividends. In 2022, free cash flow rose 2% to $657M.