Baker Hughes (BHI) Q3 2016 Results
Martin S. Craighead – Baker Hughes, Inc.
Need oil prices in the mid 50s for a sustainable recovery
” As we said in July, and reiterated again in September, we continue to believe that oil prices in the mid to upper 50s are required for a sustainable recovery in North America. Our customers also need to be more confident on the durability of those oil prices before making any significant change to their spending patterns. As we previously projected, the North American market has been continuing to grind slowly upward and we expect that to continue. In order for a broader recovery to take place, a series of milestones need to be reached before the market can respond in a more predictable way.”
$65 needed in west Africa, $55 in North Sea
“We still have a very positive view on a dollar per barrel recovery cost. It makes all the sense in the world, but at these commodity prices, I think my customers in West Africa need about $65. I think it’s probably about $55 in the North Sea, and I think it’s about the same in the Gulf. And until we see that, as we’ve said before, you just have to have some period of stability for them to come back. The nice thing about that market, as you know, is the focus on technology, reliability, quality. That’s right up our alley, so we’re participating in managing our costs until that starts to recover.”
Gulf of Mexico probably wont recover until mid 2017
” I think that our customers, particularly our IOCs, are still struggling with cash flow issues. We have a significant operator there that told us recently the word from headquarters is you’re going to deploy your capital to some better opportunities, one international and one on land. And if you look at the 17 rigs or whatever drilling rigs that are out there today, I think 10 at most have a contract to go beyond Q2, the MODUs. Beyond Q2, I’ve got six or seven rigs that I don’t have visibility to. So I don’t see the Gulf of Mexico getting better until probably mid-2017.”