It was a tough day for Baker Hughes (NASDAQ:BKR) as the company closed trade on Wednesday with a steep -4.7% decline. The plunge came after CEO Lorenzo Simonelli delivered a sobering forecast, announcing that spending on drilling and well completion in North America is expected to dwindle in 2024. The anticipated decline in North America is anticipated to outweigh international growth, casting a shadow on the company’s prospects.
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Simonelli struck a cautionary note about the forthcoming period, expressing, “In North America, activity continues to lag, and we are now anticipating no meaningful recovery in activity during the first half of the year,” during the post-earnings conference call. This projection sets Baker Hughes apart from its peers in the oilfield services sector. While other firms, such as Halliburton (HAL) and SLB (SLB) are foreseeing stable activity, Simonelli’s outlook diverges significantly.
The CEO indicated that Baker Hughes (BKR) is bracing for a low to mid-single digits fall in North America’s spending in 2024. In contrast, the company had previously projected a low double-digit surge in international oilfield spending, but it now expects growth in the high single-digits. The revised outlook reflects a challenging landscape, with the company recalibrating its expectations downwards. The impact was immediately visible in trading, with Baker Hughes shares taking a hit.
The new projections instigated a wave of unease among investors, with the company forecasting Q1 revenues in the $6.1B-$6.6B range. The mid-point of this projection falls below the analyst consensus estimate of $6.51B, adding to the somber mood surrounding Baker Hughes’ outlook.
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