Updated Version 2 - Baker Hughes Announces Oilfield Services Business Financial Report, Quarterly Profits Decline

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Reuters, October 27 - Baker Hughes (BKR.O) reported a drop in third-quarter profit on Tuesday, as ongoing conflict in the Middle East affected demand for services and equipment in this major oil-producing region.

The Middle East conflict has lasted for eight months, with repeated escalations leading to project decision delays, operational disruptions, and increasing concerns in the market about the pace of future client spending, thereby squeezing profit margins in the oilfield services industry.

Nearly 40% of Baker Hughes' revenue comes from the Middle East. Among oilfield services industry competitors, the company has the highest exposure to the region, followed by SLB and Halliburton.

Additionally, as producers adopt more efficient extraction technologies and ample crude oil and natural gas supply dampens demand for new drilling, the industry also faces weak demand conditions.

Baker Hughes stated that revenue in North America dropped to $955 million from $980 million a year earlier. In the Middle East and Asia, revenue was $1.26 billion, down from $1.45 billion a year ago.

After the earnings report, the company's stock price fell by over 1% in after-hours trading.

The company expects that rising logistics costs and supply chain challenges will impact operations, anticipating a quarter-on-quarter decrease in business volume in the Middle East in the fourth quarter.

However, the global rig count, seen as a leading indicator for future oil and gas production, has begun to recover steadily after disruptions caused by the Iran war.

CEO Lorenzo Simonelli stated that the company's business in the Middle East has seen significant improvement, and he expects more opportunities as clients increasingly focus on maximizing recovery rates and extending asset lifespans.

The conflict is expected to support future demand for oilfield services, with consultancy Rystad Energy forecasting that infrastructure repair costs related to energy could reach as much as $58 billion.

This U.S. oilfield services provider reported net income of $411 million, or 41 cents per share, for the three months ended September 30, down from $609 million, or 61 cents per share, a year earlier.

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