Previously expecting year-over-year growth of 1-3%, the company now expects first quarter 2002 oilfield revenues to be flat, plus or minus 1%, compared to the first quarter of 2001, primarily due to the more rapid than expected deterioration of the North American market. Quarter to date, the U.S. land, U.S. offshore and Canadian rig counts have declined 28%, 27% and 22% respectively, compared to the average for the first quarter of 2001. This decline in activity has resulted in downward pricing pressure in the company's North American operations as well as reduced utilization of well site service staff, rental tools and manufacturing capacity. International revenues are also expected to be below previous expectations primarily as a result of reduced Latin American drilling activity, particularly in Venezuela and Argentina.
Due to a change in expectations regarding the geographic source of earnings, the company now expects its tax rate for the first quarter of 2002 to be 34.5% versus the 33.5% previously anticipated.
As a result of the above factors, operating profit after tax per share (diluted), excluding non-operational items, is now expected to be between $0.20 and $0.22 per share (diluted) in the first quarter of 2002.
The company will review its guidance for the remainder of 2002, in connection with its first quarter 2002 earnings release, which is scheduled for April 23, 2002.
Forward-Looking StatementsThis news release (and oral statements made regarding the subjects of this release) contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "expected," "intends," "will," and similar expressions are intended to identify forward-looking statements.
General Outlook - Oilfield Segment: Baker Hughes' expectations in this news release, regarding its outlook for its oilfield businesses (including, without limitation, the company's oilfield operations and the production and refining component of the company's process segment) and the oil and gas industry are only its forecasts regarding these matters. These forecasts may be substantially different from actual results, which are affected by the following factors: the effect of competition; the level of petroleum industry exploration and production expenditures; drilling rig and oil and gas industry manpower and equipment availability; the company's ability to implement and effect price increases for its products and services; the company's ability to control its costs; the availability of sufficient manufacturing capacity and subcontracting capacity at forecasted costs to meet the company's revenue goals; the ability of the company to introduce new technology on its forecasted schedule and at its forecasted cost; the ability of the company's competitors to capture market share; world economic conditions; the price of, and the demand for, crude oil and natural gas; drilling activity; weather; the legislative environment in the United States and other countries; Organization of Petroleum Exporting Countries policy; war or extended period of conflict involving the United States, the Middle East and other major petroleum-producing or consuming regions; acts of war or terrorism, the development of technology that lowers overall finding and development costs; the condition of the capital and equity markets and the timing of any of the foregoing.
Oilfield Pricing: Baker Hughes' expectations regarding pricing for its products and services are only its expectations regarding pricing. Actual pricing could be substantially different from the company's expectations, which are affected by many of the factors listed above in "General Outlook - Oilfield Businesses," as well as existing legal and contractual commitments to which the company is subject.
General Outlook - Process Segment: Baker Hughes' expectations in this news release regarding its outlook for its process segment business and its markets are only its forecasts regarding these matters. These forecasts may be substantially different from actual results, which are affected by the following factors: the effect of competition; the health of the markets of the company's customers, including, without limitation, the production and refining, industrial, chemical, municipal wastewater and mining markets; the level of customer expenditures and investment, especially in the oil and gas, industrial, chemical, municipal wastewater and mining markets; the company's ability to control its costs; the ability of the company's competitors to capture market share; world economic conditions; the legislative and regulatory environment in the United States and other countries in which the company operates; the condition of the capital and equity markets and the timing of any of the foregoing.
Information regarding Western GECO is based upon information that Western GECO has provided to Baker Hughes. Information derived from this information is subject to the accuracy of the information that Western GECO provided. Additionally, any forward-looking statements relating to Western GECO are also subject to the factors listed in Forward-Looking Statements in this news release.
Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry.
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