Baker Hughes, a top three global oilfield services firm, blamed supply chain constraints and inflation for disappointing third-quarter profits, but said the global oil and gas recovery was on track to continue into 2022.
Third-quarter net income for the company was $8m a wide miss compared to Wall Street expectations of $180m, according to analyst estimates compiled by S&P Global Market Intelligence.
“We did experience some mixed results across our segments during the quarter,” chief executive Lorenzo Simonelli said. Oilfield services was “negatively impacted by Hurricane Ida, cost inflation in our chemicals business, and delivery issues stemming from supply chain constraints,” he added.
The inflation and supply chain problems saw Baker Hughes’ revenue dip in to $5.09bn from $5.14bn in the second quarter, even amid surging oil and gas prices. Despite the slim profits, free cash flow of $305m in the quarter beat expectations of $204m.
Oilfield services rival Halliburton reported a stronger quarter on Tuesday, saying that higher prices were underpinning a pick-up in global oil and gas drilling activity, which had buoyed its profits.
Oil prices have topped $80 a barrel in recent weeks and US natural gas prices are trading at around $5 per million British thermal units, both multiyear highs. Producers have not brought supply back fast enough to meet surging demand as major economies around the world have recovered faster than expected.
Simonelli said he saw “continued signs of global economic recovery that should drive further demand growth for oil and natural gas” going into 2022, but that “global chip shortages, supply chain issues, and energy supply constraints,” threatened to slow that recovery.
The company’s shares, which have surged nearly 30 per cent this year on the industry’s recovery, were down around 2 per cent in pre-market trading.