HOUSTON - Baker Hughes (NASDAQ: BKR), a global energy technology firm, has secured significant contracts with Brazilian state-run oil company Petrobras to supply flexible pipe systems for Brazil's pre-salt oilfields. The contracts, signed on October 15, 2024, involve the delivery of 77 kilometers of flexible pipes designed to withstand the corrosive effects of high CO2 concentrations found in the pre-salt fields.
The flexible pipe systems, which include risers and flowlines for hydrocarbon production, as well as gas and water injection lines, are scheduled to begin delivery in mid-2026. These systems are integral to Petrobras' efforts to limit CO2 emissions and enhance oil recovery by reducing flaring and re-injecting gas into wells.
Baker Hughes' technology is aimed at addressing stress-induced corrosion cracking from CO2, a common problem in flexible pipes operating in environments with high gas concentrations. The company's expertise in subsea technology and offshore operations is expected to support Petrobras in safely and efficiently extracting resources from fields such as Búzios, Libra, Berbigão, Sururu, and Sépia.
The production of the flexible pipe systems will take place at Baker Hughes' plant in Niteroi, Brazil, contributing to local manufacturing and strengthening the Brazilian economy and energy supply chain. This facility is a significant supplier of flexible pipe systems for the offshore oil and gas industry and provides employment for hundreds in the Rio de Janeiro state.
Throughout 2024, Baker Hughes has announced a series of agreements with Petrobras, including contracts for an additional 69.1 kilometers of flexible pipe systems and associated services in the third quarter. The company has also been awarded contracts for integrated well construction services in the Buzios field and solutions for workover and plug and abandonment services across Petrobras' pre-salt and post-salt fields.
This announcement is based on a press release statement from Baker Hughes. The company has a longstanding presence in Brazil's offshore oil and gas development and continues to contribute to the nation's economic growth while supporting the energy sector's transition to lower-carbon operations.
In other recent news, Baker Hughes has reported a record quarterly EBITDA in its Third Quarter 2024 Earnings Call, indicating strong financial results and strategic growth in its Integrated Energy Technology and Oilfield Services & Equipment segments. The company reported a 20% year-on-year EBITDA growth for the third consecutive quarter, with EBITDA margins reaching 17.5%, the highest since 2017. The company also maintained $2.9 billion in orders for the IET segment for the eighth straight quarter and achieved a free cash flow of $754 million.
Baker Hughes has experienced robust demand for gas infrastructure and new energy, with significant project awards contributing to a positive outlook for the future. The company has forecasted a 20% growth in natural gas demand by 2040 and anticipates stable global upstream spending for 2025. It also targets $6 billion to $7 billion in new energy orders by 2030.
However, the company's Q3 revenue fell slightly below expectations due to project delays, with a revenue miss of just over $200 million related to GTE timing. Despite these challenges, Baker Hughes expects recovery in Q4 and Q1. These are recent developments in the company's performance and outlook.
InvestingPro Insights
Baker Hughes' recent contract wins with Petrobras align well with the company's strong financial position and growth prospects. According to InvestingPro data, Baker Hughes boasts a market capitalization of $37.13 billion and has demonstrated solid revenue growth of 11.08% over the last twelve months as of Q3 2024. This growth trajectory is likely to be further bolstered by the significant contracts secured in Brazil's pre-salt oilfields.
The company's ability to secure these contracts is underpinned by its financial stability and operational efficiency. An InvestingPro Tip highlights that Baker Hughes operates with a moderate level of debt, which provides the flexibility to invest in innovative technologies like the flexible pipe systems designed for high CO2 environments. Additionally, the company's perfect Piotroski Score of 9 indicates strong financial health and operational efficiency, factors that are crucial for executing large-scale projects such as those with Petrobras.
Another relevant InvestingPro Tip notes that Baker Hughes has maintained dividend payments for 38 consecutive years, reflecting the company's commitment to shareholder returns even as it invests in growth opportunities. This consistent dividend policy, coupled with the company's involvement in Brazil's offshore developments, may appeal to investors looking for both growth and income potential in the energy technology sector.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on Baker Hughes, with 7 more tips available on the platform.
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