Baker Hughes beat Q2 with record orders of $10.5B. Management sees 2026 oil and gas spending down and trimmed IET revenue outlook on Middle East conflict.
Baker Hughes shares jumped more than 6% after the company beat second-quarter profit estimates and posted a record order book, even as management warned that oil and gas producers will spend modestly less in 2026. Earnings per share came in at 64 cents against the 50 cents analysts expected, according to LSEG data.
The quarter split into two stories. Orders rose 49% from a year earlier to $10.5 billion, a record. The industrial and energy technology segment, the arm serving LNG and power infrastructure, booked a record $7.1 billion. Backlog climbed 19% to an all-time high, and remaining contracted work reached $40.1 billion.
Management said annual global spending by oil and gas producers will decline modestly this year. Europe and the Middle East are spending less, while Latin America and offshore Africa are growing. Management cited the conflict between the U.S. and Iran as a reason producers are more cautious.
Chief Executive Lorenzo Simonelli has been framing the strategy around what he calls a "demand decade for energy," pushing Baker Hughes beyond traditional oilfield services into LNG and data center power demand. Baker Hughes won an order from LNG producer Venture Global to manufacture 12 LNG trains for its proposed CP2 expansion. It is expanding gas turbine and generator capacity, expected online by 2029, which management says could support nearly $5 billion a year in power systems revenue. The company also raised its full-year order guidance under its Horizon 2 growth plan to more than $45 billion.
The Middle East conflict is now a quantified drag. Baker Hughes expects it to cut IET segment revenue by 1% to 2%. The company's third-quarter revenue forecast for that segment, $3.17 billion to $3.47 billion, falls short of the $3.79 billion analysts expected. Management also flagged rising logistics and inflation costs at regional facilities because of the disruptions. AlphaScala assigns BKR a Moderate risk score of 56 out of 100. The drag is tied to the U.S.-Iran conflict, and management did not say when it expects the situation to ease.
Baker Hughes had 72 hedge fund holders at the end of the first quarter, up from 59 three months earlier. The value of those stakes jumped from about $797 million to $1.62 billion, according to Insider Monkey's database. Among oilfield services peers, Halliburton also had 72 holders, up from 53, and SLB had 74, up from 73.
Operating cash flow more than doubled from a year earlier to $1.35 billion, and free cash flow rose to $1.11 billion from $239 million.
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