How Baker Hughes and Halliburton Would Stack Up Against Schlumberger

Energy

Published: November 13, 2014 4:31 pm

Last Updated: April 27, 2020 11:10 pm

The reported merger talks between Halliburton Co. (NYSE: HAL) and Baker Hughes Inc. (NYSE: BHI) would create a single oil field services company with a market cap of more than $71 billion. That would still leave the combined company well behind Schlumberger Ltd. (NYSE: SLB), the market cap leader with a value of just over $122 billion.

The Wall Street Journal cites unnamed sources who say that talks between Halliburton and Baker Hughes are “moving quickly, and they could reach an agreement soon.” The report sparked a late afternoon burst in Baker Hughes stock, sending shares up 15.24% for the day after trading in the red for most of the day. According to the WSJ, Halliburton would be the acquirer.

How would a combined Halliburton-Baker Hughes stack up with Schlumberger? In 2012, the two companies posted combined net income of $3.97 billion and revenues of $49.86 billion, compared with Schlumberger’s net income total of $5.52 billion on revenues of $41.73 billion. For 2013, the combined companies reported net income of $3.24 billion on revenues of $51.76. Schlumberger posted net income of $6.77 billion on revenues of $45.27 billion for 2013.

A combined Halliburton-Baker Hughes would likely top Schlumberger’s revenues, but the combined company would have to make some big changes to match Schlumberger’s profitability. For example, cutting costs to wring more profit out of the revenue dollars. That’s where the magic word — synergies — comes in, and we could expect to see some sizeable cuts to headcounts. Halliburton reports 80,000 employees and Baker Hughes reports 61,100 for a total of 141,100. Schlumberger reports 123,000 employees. That offers some idea of where more profits will have to come from.

Schlumberger’s shares traded down 2.65% on Thursday to close at $94.85, in a 52-week range of $84.91 to $118.76.

Halliburton’s shares rose 1.05% to close at $53.79, in a 52-week range of $47.60 to $74.33.

And, as we noted, Baker Hughes closed at $58.75, up 15.24%, in a 52-week range of $47.51 to $75.64.

ALSO READ: Early Signs of a Pullback in Drilling Activity

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.