When Baker Hughes Inc. (NYSE: BHI) reported first-quarter earnings last week, CEO Martin Craighead complained that the now-terminated merger agreement with Halliburton Co. (NYSE: HAL) was hampering the company’s ability to cut costs and, as a result, boost operating margins. Now that this is no longer a consideration and Baker Hughes has $3.5 billion in cash from the breakup fee, what does the oilfield services company plan to do?

First off, Baker Hughes said Monday that it intends to buy back $1.5 billion in its shares, along with $1 billion in debt. The company also intends to refinance its $2.5 billion credit facility set to expire in September.

Thinking first of shareholders first is a good idea. When the merger was announced in November 2014, Baker Hughes stock traded around $65 a share. The shares closed at $48.36 on Friday, a decline of around 25%. A stock buyback softens that blow a little.

Repurchasing debt and refinancing its revolving credit facility help shore up the balance sheet, and that too is a good thing.

Baker Hughes also said that now that it is freed from the restrictions of the merger agreement, it will take “immediate steps to remove significant costs that were retained” as a requirement of the proposed merger. The company has never detailed these costs, but the agreement with Halliburton tied Baker Hughes’ hands to some degree. When Baker Hughes reported results last week it said that it had been forced to carry $110 million in costs that it could not cut because of the merger agreement. The company said expects to achieve $500 million in annualized savings by the end of this year.

Now that it is free to eliminate those costs, does that mean that the company will sail out of the doldrums it’s been in for the past year or so? The answer is very likely, “not immediately.” Production cutbacks in the U.S. onshore business are not going to stop until the second half of this year, according to most estimates, and that means more cost cutting, not more revenue.

Baker Hughes may also be in for a struggle with activist investor ValueAct Capital Management, which owns about 9% of the company’s shares. The hedge fund probably thinks it has waited long enough for a return on its investment and is unlikely to wait for Baker Hughes to rejuvenate itself.

At the end of the first quarter, Baker Hughes reported cash on hand of $2.2 billion. Added to the breakup fee payment the company has about $5.7 billion, which it could theoretically use for growth. There are several services firms with market caps of around $3 billion or less, but both the poor shareholder returns of the past year and the presence of an activist shareholder pretty much closes off that option.

The possibility of a major shake-up in the oilfield services space remains remote in general. Schlumberger Ltd. (NYSE: SLB), the sector’s largest company, has shown no interest in buying weaker firms. Halliburton and Baker Hughes are the second- and third-largest, while Noble Energy Inc. (NYSE: NBL) and National Oilwell Varco Inc. (NYSE: NOV) round out the top five. Noble acquired Eagle Ford producer Rosetta last year for around $3.9 billion, and National Oilwell Varco last week announced that it is slashing its dividend. Hoarding cash is the order of the day in oilfield services.

Halliburton, which has built up a cash pile of some $10 billion that it expected to use to acquire Baker Hughes, may make some noise in the acquisition market again after it takes some time to lick its wounds. The company delayed its first-quarter earnings report until Tuesday, and we may hear more about its plans at that time.

Mid-morning on Monday, Baker Hughes stock traded down 0.6%, at $48.07 in a 52-week range of $37.58 to $70.45.

Halliburton stock traded up less than 2%, at $42.07 in a 52-week range of $27.64 to $50.20.

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