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United States Natural Gas Fund, LP Message Board

  • kenoshanord kenoshanord Jan 23, 2013 11:07 PM Flag

    natgas glut weighs down Baker Hughes profits

    Wed Jan 23, 2013 11:24am EST

    * Fourth-quarter profit falls 36 percent

    * Plans to cut capex by 30 percent for 2013

    * Adjusted Q4 EPS 62 cents vs 61 cents expected

    * Shares up 0.5 pct

    By Braden Reddall

    Jan 23 (Reuters) - A glut of North American natural gas is weighing heavily on both drilling activity and pricing power for Baker Hughes Inc, the world's third-largest oilfield services company, which posted a 36 percent drop in quarterly profit on Wednesday.

    After service companies spent heavily to gear up for a boom, a surge in natural gas output led to a drop in drilling activity that left North America with 25 percent too much pressure pumping equipment - used in hydraulic fracturing to extract oil and gas from shale rock.

    Baker Hughes Chief Executive Martin Craighead said the downward drag of pressure pumping masked strong performances in other parts of the business.

    "But these headwinds on pricing, it's not over yet and it's going to be a drag on the overall North America margin for all of '13, easily," he told analysts on a conference call.

    Larger rival Halliburton Co will reveal how it fared when it posts fourth-quarter results on Friday. Sector leader Schlumberger managed to offset the U.S. onshore decline with a strong performance in the Gulf of Mexico.

    Craighead said the surplus capacity translated into 125 pressure pumping fleets across the North American sector that are now idle or underutilized, and that another 300 drilling rigs would need to go back to work eliminate that overhang.

    Yet Baker Hughes, which compiles a benchmark rig count for the industry, predicted a rise in the U.S. drilling rig count to 1,880 by the end of 2013 - up only 125 from current levels.an 23 (Reuters) - A glut of North American natural gas is weighing heavily on both drilling activity and pricing power for Baker Hughes Inc, the world's third-largest oilfield services company, which posted a 36 percent drop in quarterly profit on Wednesday.

    After service companies spent heavily to gear up for a boom, a surge in natural gas output led to a drop in drilling activity that left North America with 25 percent too much pressure pumping equipment - used in hydraulic fracturing to extract oil and gas from shale rock.

    Baker Hughes Chief Executive Martin Craighead said the downward drag of pressure pumping masked strong performances in other parts of the business.

    "But these headwinds on pricing, it's not over yet and it's going to be a drag on the overall North America margin for all of '13, easily," he told analysts on a conference call.

    Larger rival Halliburton Co will reveal how it fared when it posts fourth-quarter results on Friday. Sector leader Schlumberger managed to offset the U.S. onshore decline with a strong performance in the Gulf of Mexico.

    Craighead said the surplus capacity translated into 125 pressure pumping fleets across the North American sector that are now idle or underutilized, and that another 300 drilling rigs would need to go back to work eliminate that overhang.

    Yet Baker Hughes, which compiles a benchmark rig count for the industry, predicted a rise in the U.S. drilling rig count to 1,880 by the end of 2013 - up only 125 from current levels.Jan 23 (Reuters) - A glut of North American natural gas is weighing heavily on both drilling activity and pricing power for Baker Hughes Inc, the world's third-largest oilfield services company, which posted a 36 percent drop in quarterly profit on Wednesday.

    After service companies spent heavily to gear up for a boom, a surge in natural gas output led to a drop in drilling activity that left North America with 25 percent too much pressure pumping equipment - used in hydraulic fracturing to extract oil and gas from shale rock.

    Baker Hughes Chief Executive Martin Craighead said the downward drag of pressure pumping masked strong performances in other parts of the business.

    "But these headwinds on pricing, it's not over yet and it's going to be a drag on the overall North America margin for all of '13, easily," he told analysts on a conference call.

    Larger rival Halliburton Co will reveal how it fared when it posts fourth-quarter results on Friday. Sector leader Schlumberger managed to offset the U.S. onshore decline with a strong performance in the Gulf of Mexico.

    Craighead said the surplus capacity translated into 125 pressure pumping fleets across the North American sector that are now idle or underutilized, and that another 300 drilling rigs would need to go back to work eliminate that overhang.

    Yet Baker Hughes, which compiles a benchmark rig count for the industry, predicted a rise in the U.S. drilling rig count to 1,880 by the end of 2013 - up only 125 from current levels.

    Craighead said rig efficiency would improve, with the number of wells sunk per rig growing again this year after a rise in 2012.

    Sentiment: Hold

 
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