Baker Hughes Takes Covid-19 Financial Hits

Drilling and completion services provider Baker Hughes is the latest to announce financial and operational hits in the wake of the global Covid-19 pandemic, announcing a plan April 13 that will result in restructuring, impairment and other charges of some $1.8bn, with $1.5bn of that to be taken in Q1 2020.

Future cash expenditures associated with the impairment charges, the company said, are estimated at about $500mn, with an expected payback within a year, and “are designed to right-size our operations for anticipated activity levels and market conditions.”

Finally, net capital expenditures in 2020 will be reduced by about 20% from 2019 levels.

The company also expects a non-cash goodwill impairment charge in the first quarter of $15bn, as the combination of the Covid-19 pandemic and the collapse in crude oil prices resulted in the carrying value of the oilfield services and oilfield equipment reporting units exceeding their estimated fair value.

The goodwill impairment charge will not impact cash flow, and remains subject to finalisation, Baker Hughes said.