• Orders of $4.9 billion for the quarter, down 12% sequentially and down 25% year-over-year
• Revenue of $4.7 billion for the quarter, down 13% sequentially and down 21% year-over-year
• GAAP operating loss of $52 million for the quarter was favorable sequentially and unfavorable year-over-year.
• Adjusted operating income (a non-GAAP measure) of $104 million for the quarter, down 56% sequentially and down 71% year-over-year
• GAAP loss per share of $(0.31) for the quarter which included $0.26 per share of adjusting items. Adjusted loss per share (a non-GAAP measure) was $(0.05).
• Cash flows generated from operating activities were $230 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was $63 million. 

Baker Hughes Company announced results today for the second quarter of 2020.

“The second quarter of 2020 was challenging in several areas as our company navigated through the ongoing impacts of the COVID-19 pandemic and the sharp decline in activity levels due to lower oil and gas prices. Despite these headwinds, I was pleased with how our team executed with strong margin performance in TPS and DS, cost execution in OFS, solid order bookings in OFE and TPS, and another quarter of free cash flow generation,” said Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive Officer.

“Although the majority of lockdowns have been easing globally and economic activity likely troughed during the second quarter, visibility on the economic outlook remains extremely limited. More specifically, the risk of a second wave of virus cases, the reinstitution of select lockdowns, and the risk of lingering high unemployment creates an uncertain economic environment that likely persists through the rest of 2020. Given these factors, we are preparing for potential future volatility, while also focusing on structurally reducing our cost base and implementing a number of strategic initiatives across all of our product companies.

“Overall, we are executing on the framework we laid out on our first quarter earnings call. We are on track to hit our goals of structurally right-sizing our business and achieving the $700 million in annualized cost savings by year end. I am confident in the ability of our team to execute while keeping safety as our highest priority.

“We remain committed to our strategy, maintaining our focus on higher-margin and differentiated portfolio offerings, and providing our customers with leading technologies to support the energy transition,” concluded Simonelli.

Supporting Customers

In the second quarter, the OFS segment delivered 72% of its global drilling services jobs remotely, compared to 60% in the first quarter. Remote wireline jobs increased by 13% compared to the first quarter despite lower activity levels. The OFS team achieved new execution milestones, remotely drilling two miles in a 24-hour period – an industry first – and separately drilling 11,253 feet in a 24-hour period with North American customers. OFS’ remote capabilities continue to improve efficiencies and lower costs for customers, with significant projects in the Gulf of Mexico, Middle East, APAC, and Brazil.

The OFE segment expanded its remote inspection capabilities in the second quarter, supporting customers facing business continuity issues due to COVID-19 restrictions. OFE’s engageSubsea remote operations offering, a pillar of Subsea Connect, was optimized successfully and deployed across multiple contracts, including equipment installation, factory acceptance testing, and project approvals. In one example, the team installed multiple wellheads on two different rigs, supporting the customer remotely without incurring any downtime.

The TPS segment continued to achieve important execution milestones for LNG projects, performing more than 50 remote witness tests and inspections for customers in the second quarter. In June, TPS announced the completion of the First Engine to Test (FETT) for the LM9000 aeroderivative gas turbine for NOVATEK’s Arctic LNG 2 project. The FETT completion paves the way for the supply of the LM9000 for NOVATEK’s new LNG projects and confirms the LM9000 as the world’s most efficient and powerful aeroderivative gas turbine in its class, with simple-cycle efficiency in excess of 44% and power output 15% higher compared to industry peers. This efficiency is key to driving lower carbon intensity and, combined with lower NOx emissions (15 ppm in dry condition, 40% lower than competing technology), is a more environmentally sensitive solution.

TPS also won a contract to supply nine NovaLT16 gas turbines for a utility power generation project in the Middle East. The NovaLT family provides a more-efficient, cleaner power generation solution for a broad range of industrial and emerging energy applications, with the customer awarding the contract based on the NovaLT’s superior performance in electrical efficiency (36% at ISO conditions) and plant availability (35,000 hours mean time between maintenance).

The DS segment maintained critical customer support in key international markets such as China, where customers began to resume normal operations after COVID-19 restrictions were lifted. DS also continued to drive growth across industrial end markets, winning key contracts with multiple automotive OEMs for industrial X-Ray and CT systems in Asia and Europe.

Executing on Priorities

OFS continued to focus on its differentiated portfolio to help customers lower costs and increase efficiencies, securing multi-year contracts for drilling services, completions, and artificial lift. The OFS Chemicals product line won multiple large orders in North America, APAC, and Sub-Saharan Africa, including securing a five-year preferred partnership agreement with Marathon Petroleum Corporation to provide downstream hydrocarbon treatment products and services at its 16 refining locations.

TPS continued to execute against its strategic priorities, including growth in services and upgrades. In the second quarter, TPS secured a key upgrades contract for an onshore project in Algeria. The upgrades will enhance the plant’s gas treatment and compressor trains, increasing production and efficiency of the plant while eliminating gas flaring. The project scope includes engineering, supply of equipment, site modifications, and commissioning.

In DS, the Bently Nevada product line continued to drive growth across industrial segments. In the second quarter, Bently Nevada executed a major project in South America to provide a plant-wide condition monitoring solution for the Arauco pulp & paper plant in Chile, one of the largest plants of its kind in the world.

Innovation

Baker Hughes continued to drive advancements in leading technologies and being at the forefront of the energy transition. As customers look for more productive and efficient operations, the BakerHughesC3.ai joint venture alliance secured a contract with a Canadian oil company to deploy BHC3™ Production Optimization, an AI-based application that helps operators better visualize and optimize oil and gas production. The contract marks the first customer commitment for Production Optimization since the technology was announced at Baker Hughes’ Annual Meeting in the first quarter.

The Company remains committed to reducing its carbon footprint as well as those of its customers. In the second quarter, TPS successfully completed a testing campaign to replace conventional refrigerant gases for compressor testing at its largest global rotating machinery testing facility in Massa, Italy. The new hydrofluoro-olefin gas will enable the Company to save an average of 20,000 tons of CO2 equivalent emissions per year for the Massa and Florence TPS sites combined.

OFS significantly expanded the capabilities of its i-Trak automation service. Eight out of nine Equinor rigs in Norway are now using this service to identify well incidents early, resulting in reduced risk of stuck pipe, lost circulation, and other well events. As a first-of-its kind automated directional drilling service, i-Trak provides more efficient drilling at a lower cost for the operator.

KeyFacts Energy Industry Directory: Baker Hughes