Baker Hughes Takes $15 Billion Writedown Amid Oil’s Collapse

Baker Hughes Co. wrote down $15 billion in value from two of its biggest business units as the global pandemic guts demand for crude oil.

The hired hands of the oil patch have been hammered as oil explorers retrench amid the worst price rout in decades. Schlumberger Ltd. is cutting salaries and firing workers and Halliburton Co. is furloughing thousands of employees. Meanwhile, Hornbeck Offshore Services Inc. intends to file for bankruptcy.

An historic weekend agreement by OPEC and most of the world’s major oil producers to curtail output hasn’t salvaged the oil market as intended because of concerns the reductions are too little too late. The scope of the damage to shale drillers and ancillary industries will become clearer as earnings season begins to unfold in coming weeks.

”We expect impairments and writedowns will be prevalent” for the sector over the course of this year, Bill Herbert, an analyst at Simmons PJC, wrote in a note to investors

The world’s second-biggest oilfield services provider plans to record a $1.5 billion first-quarter charge for restructuring, impairment and other costs, Baker Hughes said in a statement on Monday. The company also plans to cut net capital spending by more than 20% this year. The Houston-based company has lost about half its market value this year.

Baker Hughes said its cash and cash equivalents totaled $3 billion through the end of 2019 and that it has access to a $3 billion revolving credit facility, as well as commercial paper and other uncommitted lines of credit.

The company is scheduled disclose full first-quarter results on April 22. Baker Hughes shares rose 2.3% to $13.16 at 10:11 a.m. in New York.

To contact the reporters on this story:
David Wethe in Houston at dwethe@bloomberg.net;
Christine Buurma in New York at cbuurma1@bloomberg.net

To contact the editors responsible for this story:
Simon Casey at scasey4@bloomberg.net

Joe Carroll, Christine Buurma

© 2020 Bloomberg L.P. All rights reserved. Used with permission.