WRAPUP 1-Slow oilfield recovery hits Transocean, Baker Hughes
* Transocean, Baker Hughes both short of Wall St estimates
* Recovery seen slow, even if worst now behind industry
* Baker Hughes shares drop 4.4 pct, Transocean off 1 pct
* Rig maker Sembcorp beats estimates
By Braden Reddall
SAN FRANCISCO, Nov 4 (Reuters) - Rig contractor TransoceanLtd (RIG.N) and oilfield services firm Baker Hughes Inc (BHI.N)posted sharp drops in quarterly profit on Wednesday as theirindustry recovers slowly from the past year's slump.
Oil and gas companies, faced with commodity prices sharplydown from last year, have put pressure on the companies thatserve them to get costs down.
A bounce in crude prices in recent months has weakenedproducers' bargaining power, leading oil service companies toto predict a mild recovery next year. Those with deepwaterexposure have also fared better.
Transocean, the world's largest offshore drillingcontractor, said rig rates broadly would inch up early nextyear. While Chief Executive Bob Long saw no dramatic recoveryfor shallow-water rig rates, he was surprised they had notfallen more sharply given how oversupplied that market is.
"For whatever reason, they have been moving very slowly,and now seem to have stabilized," Long, who is set to retireearly next year, told analysts on a conference call.
For Baker Hughes, a weak performance outside North America,and in Latin America in particular, took a toll in the thirdquarter as the Houston-based company reshuffles its business tofocus on geography rather than product lines.
Chief Executive Chad Deaton said profit margins in theEastern Hemisphere and Latin America had bottomed out,predicting that the latter could double this quarter from just4.9 percent in the third quarter.
Overall, net profit slid 87 percent to $55 million, or 18cents per share, from $429 million, or $1.39 per share, a yearago. Revenue fell 26 percent to $2.23 billion. [ID:nBNG75879]
Excluding charges for reorganization and allowances fordoubtful accounts worth 13 cents per share, Baker Hughes earned31 cents a share. Analysts had expected 35 cents, on revenue of$2.26 billion, according to Thomson Reuters I/B/E/S.
Tudor Pickering Holt said in a note to clients that whileWall Street expected "soft" Baker Hughes earnings due to thereorganization, the results would "test the fortitude of recentvalue buyers."
Larger rivals Schlumberger Ltd (SLB.N) and Halliburton Co(HAL.N) both suffered less dramatic drops in quarterly profits,but expect a lukewarm 2010 recovery and further struggles forthose chasing North American natural gas. [ID:nN2248654]
Baker Hughes is buying BJ Services Co (BJS.N) to bettercompete with the big two in pressure pumping, and said it nowexpected that deal to close in the first quarter of 2010.
While North American pricing was stable after significantpressure last quarter, Baker Hughes Chief Operating OfficerMartin Craighead saw no major recovery without a significant rebound in drilling or further rationalization of capacity insome product lines.
Baker Hughes shares fell 4.4 percent to $41.52 in earlyafternoon trading on the New York Stock Exchange.
TRANSOCEAN SHY OF ESTIMATES
Switzerland-based Transocean posted a 33 percent drop inprofit as it pulled more rigs off the shallow-water jackupmarket. [ID:nN04515197]
Excluding charges for legal issues, asset impairments, debtretirements and a tax gain, its earnings per share of $2.65fell short of the $2.67 analysts had expected. Revenue fell 12percent to $2.82 billion, below the $2.85 billion forecast.
Transocean shares fell 1 percent to $85.05.
While the Philadelphia Stock Exchange oil service index.OSX is up 60 percent in 2009, Transocean has jumped 82percent thanks to its market leadership and exposure to thehealthy ultra-deepwater segment.
Rivals Diamond Offshore Drilling Inc (DO.N) and Noble Corp(NE.N) both reported better-than-expected third-quarter profitgrowth, boosted by their deepwater rig earnings.
Sembcorp Marine (SCMN.SI), the world's second-biggestoffshore rig maker, beat quarterly profit estimates onWednesday and said it would build a new yard in Singapore totap energy sector demand. [ID:nSIN12050] (Reporting by Braden Reddall, with additional reporting byMatt Daily in New York and Ajay Kamalakaran in Bangalore;Editing by Tim Dobbyn)
Source: Reuters
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