Bright Outlook at Baker Hughes

The company's shares are up more than 3%.
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Baker Hughes (BHI) said demand for its oilfield services was strong in the fourth quarter, and the company offered an optimistic assessment for the next two years.

Earnings from continuing operations for the fourth quarter rose to $257.4 million, or 75 cents a share, from $178.8 million, or 53 cents a share, in the year-ago quarter.

Baker Hughes said its net income was almost the same as its profit from continuing operations, totaling $257.9 million and 75 cents a share in the most recent quarter vs. $179.6 million and 53 cents a year ago.

Revenue for the fourth quarter was $1.99 billion, up 19% from $1.67 billion last year. Analysts were looking for revenue of $1.92 billion and earnings of 73 cents a share, according to Thomson First Call.

Shares of Baker Hughes were gaining $2.25, or 3.4%, to $68.42.

"Baker Hughes posted record results in the fourth quarter and for the year 2005 as a whole," the company said Thursday. "North American land drilling continued at high levels and offshore operations recovered from the Gulf of Mexico hurricanes. The international market remained strong, and the Middle East, Asia Pacific region, especially India, China and Saudi Arabia, delivered exceptional results."

The company also said its customers have "increased their

exploration and production budgets in 2006 and we expect continued strength through 2007."

Looking ahead, Baker Hughes believes revenue for this year will increase 19% to 21% from $7.19 billion in 2005. That forecast implies a top line of $8.56 billion to $8.70 billion this year.

The company is projecting income from continuing operations of $3.40 to $3.60 a share for 2006. The expected range includes costs for expensing options, which will probably reduce Baker Hughes' continuing operations profit by 5 cents to 6 cents.

Wall Street's consensus revenue forecast for 2006 is $8.38 billion and the earnings target is $3.44 a share.