Oil companies sound alarm on 4Q outlook
Schlumberger (NYSE:SLB) and Baker Hughes, a General Electric company, (NYSE:BGHE) issued cautionary statements over the future of the oil business when discussing its latest quarterly results on Friday, with weak oil prices slowing sector investment.
“We expect the overall oil and gas environment to remain challenging for the rest of the year,” Baker Hughes’ CEO Lorenzo Simonelli said. Baker Hughes merged with GE’s (NYSE:GE) oil and gas business last summer, putting the company under the GE umbrella.
In a statement, Schlumberger noted that investment in North American oil and gas seems to be decreasing.
“In the U.S. Gulf of Mexico, activity continued to weaken in the third quarter, and the outlook remains bleak for this region based on current customer plans,” the company wrote.
The energy sector declined 9.4% year-to-date through this Wednesday’s close, making it the second worst performing sector in the S&P 500 index. But, according to the Center for Financial Research and Analysis (CFRA), things have started improve, with the sector advancing 9.9% after bottoming on Aug. 18. The two-month increase was largely a reaction to higher oil prices.
The CFRA said it is now “less cautious” on the energy sector, and said they expect third quarter earnings season to be “good” for the energy sector. Earnings reports from energy companies will continue next week, with Halliburton (NYSE:HAL) scheduled to release its latest results Monday.