BKR - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Baker Hughes A GE company Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. of President Vice Mueller, Investor Relations. Phil may you begin. Sir,

Phil Mueller

and Thank third Baker the Good quarter everyone you, morning welcome Hughes, earnings call. to conference Nicole. XXXX A GE Company

Simonelli; our Here today earnings bhge.com. found release earlier Today's Chairman on and issued the our was can and presentation with and CFO, are CEO, today me that our Worrell. Brian at Lorenzo be website

statements. provide the As this will and of during we course predictions, a other forward-looking reminder, call, conference forecasts,

statements are and Although guarantees our our they that expectations, these actual to a of risks reflect performance could future of SEC discussion results involve factors differ assumptions. not and of a current of review the materially. some cause filings number for Please

to and can earnings call Relations turn As in our over our found on section. GAAP will Lorenzo. measures under you of With other know, reconciliations the release be the to at operating website bhge.com income I Investor that, non-GAAP and

Lorenzo Simonelli

for Good Phil. you, Thank us. morning and thanks joining everyone

I today, highlights some brief then in on product out and dynamics call our results. are overview market we share our some market the key will as quarter third will companies. the of achievements I On building our perspectives of a quarter leading give

BHG, the of second are and We in now operating our we journey the are change year our in portfolio. with differentiated as driving are we better company the industry

productivity exciting value our outcome construction will commercial of new innovation, across significant I and few well to a leading provide models product chain. integrated services on in based focused are We the that based examples approach solutions. is provide Today, will oilfield outcome The technology.

call quarter will operating productivity and in questions. subsea projects. In in billion was Adjusted third deepwater approach which we is detail revenue. financial open a second quarter, the new The in our review billion to development, million. the income in $X.X for we offshore before based and the then delivered more orders results for introduces $X.X technology new a $XXX philosophy Brian

seeing businesses continued per in the $X.XX shorter and improvements were $XXX in cycle longer the share our improving. cycle businesses cash is was are flow EPS and $X.XX. our was Earnings quarter quarter We Free million. for outlook for adjusted the

like view markets. moments a few would on I to the our share to Now take

are improved We some into to pressure environment. the are despite market expect offshore encouraged we We are North by activity American stable, American pumping grow resilient. The strongest East, expect strong levels. The improving activity Iraq. risk, Emirates, on which them the XXXX and to North our see continue the bodes In as Drilling pumping for fourth frac-related activity and in our the macro spin the by be to XXXX, markets. Middle pressure minority well market market the customers international many is as driven the Outside materially outlook challenges in increase markets remains United in current Overall, continues remain not softness Arabia the we by and quarter. years. Arab North completions activity to spending into investment Saudi the related portfolio. of we in geopolitical the is American impacted services, BJ weakens and

sign cycle the XXXX improving as and remain activity prior peaks, will an is look well beyond. tender it and order Although below to encouraging out we

proving number are world. be a for our primary transition continues customers. remains We market competitive, the While technology large both XX% X% flexible and annum sanctioned economies million tons LNG XX grown XXXX. to India and with be Korea offshore imports year-over-year. of to energy over successful Chinese by conservatively XXXX. through and in per the partnership total have approach our to has remained estimated up demand Global be of the robust were fuel South

spot for prices agents Given million current the BTU. strong global over demand $XX landed and growth

decision more this with Earlier first our month, final are we annum. showed We investment trains LNG move seeing a Canada projects. major customers to their with XXXX XX tons per since from ahead totaling two million confidence sanctioning

previously our of we just of the significant With build have is share a stated, some let well are believe the of we is cycle construction changing. for dynamics Services, portfolio start In quarter. new me that and this As third the positioned. highlights which challenges Oilfield well

Earlier automation next and Our of leadership driven technology. unlocked by that by construction sophisticated model be ADNOC competencies remote drilling is partnerships innovative ADNOC. enabled innovative The we is we equity well well It where for on will analytics and data will acquire announced partnership will with X% by in operations. level with models our be million. October, $XXX ADNOC advances partnership focus The position in stake in collaboration. in as negative a strategic as productivity higher the

construction increase in will drilling We a resources. capabilities unconventional hydrocarbon conventional we ADNOC’s and exclusive Emirates strategic accomplishes be for will partnership United Arab This significantly well several number of our presence across unprecedented the supplier things. and and the

the First, will the strengthening efficiencies, relationship outcomes and for our levels while drilling improve partnership long-term. service

customers fully higher focused and are and incentives aligned our returns. Our and on better

aligned this share priority revenue to gain Second, fully incremental drive with in the years. over and will coming our is the agreement Middle-East

a through our Third, on generate $X.XX original BHGE will attractive returns investment.

fund from ADNOC its very to and outstanding capital are execute Separate ability activity. with payment we receive share. to to a this framework. deal from unique differentiate and as pleased quarter this our leveraging I'm strategic significant need transaction, team’s our capabilities we technology continue financial ramp-up We also with to this will our drilling down and gain

Petroleum Marjan quarter in remains a The like us. Arabia. Middle-East wins key in Saudi Field key for Award Integrated area focus Drilling We the and have third Qatar the some the

earlier, field As services I well is leadership oil our in by construction technology. driven mentioned

product Specifically in drilling services our line.

the space records We in are to the global set markets. leader in and critical unconventional continues

ensure target reduced XXX% the monitoring the drilling world-class third As an feet our are drove to the XX%. hour time. quarter, record and utilized the over cost We world capabilities X,XXX the XX customer’s in the we We at of example, by in data a period. remote term

the Marcellus world-class our has our and the drilled to seen we over XXX rotary steerable Over results Permian, to have of demonstrating well due and drilling challenging complexity a on a wells deliver years operations. three last in consistent sustainable a day mile use growing a Utica in the increasing than more BHGE a In basis. more and ability

built activity has strength accuracy. ConocoPhillips of their the the one RSS sponsored We Permian Our the in fast on year. our the over RSS with assets. we performance simply having partnered offering leading the is XX% the XXX% third market. improve of feel The very grown over quarter, drilling in high wells In to with planned from last not

is performance advantage life drilling our competitive and drill rotary system. includes system, our Our extended which integrated bits, steerable motors high advanced

and engineers at in Germany. together services We scientists have working Southern our more facility X,XXX drilling than

still have integrated hydraulic the is year the are business know continue to of In run. electronics Shell for is won in costs position rebuilding from heavily require We steadily and step offshore we The order unsanctioned in for energy model and our equipment in have new-build outlook for other average also of BOP We and improved projects a built leading higher a this encouraging. since invest This largest and Asia. project. breakeven and looking After month, yet overall outlook, XXXX Earlier ONGC. The $XX sign make a for and is by our a this clearly important in costs state other demand recovering. our competitive big economic depot This R&D first and this capital offshore. more number XXth mechanical, intensive the another to sources [indiscernible] our the as the subsea ONGC customers in technology. market a semi-sub our of an first success better announced our the offshore the award and competition improving. The is XXth that customer well is lower encouraging single to half backlog. we represents per to with win barrel. the but ever certainty a [indiscernible] for this award outlook OFC Despite contract $XX of of for between with is sustainable large awarded projects long small,

significantly do. has industry and years, development costs sponsor, economic over a continue in our operate to costs sustainable the the reduce come drive past to to better still have While need model down offshore. breakeven more We couple of

Our customers need it and expect it.

which based We subsea, have working for in we Connect. been Subsea It to solutions our new productivity is rooted call market. differentiated model a on of bringing the philosophy

support in are of can the our customers connect subsea We world, but CapEx the not entire life and spend, systems optimizing initial and wealth just company only cost. the entire the who

systems from EPCI well our the subsea and solutions insights, software are blocks [OFS] sensors Reservoir capabilities and (ph) across power from handling business We DHC portfolio. the our and field core digital with connecting our production partners. solutions and of construction from offering development from TPS building

builds areas, and management, subsea Our of surface The capabilities. independent and is connect which around which our portfolio planning on there EPCI partners. key and the leveraging focused integrates fact our surface, risk seabed the strategy our sub four breadth

in The deepwater on focus technology. second new modular

as designs new Subsea digital our tools an modular products The family strategy The to network brand preferred compression and writers, system. power to and subsea development, That top fourth flexible STX, partners well The third advanced of side is project FERC, purchases. together of a work optimize generation. is analytics working incorporates across of Connect cornerstone integrate construction. integrated and includes the surface better area sub that

We dramatically to ownership. the installation, have and make subsea of lowering systems total efficient redesigned and production simpler and reengineered cost more interventions

using We have developed this family of principles. three solutions

configured standard Firstly, depending products in into be that structured are individual subassemblies can a on requirements. components

building modular as are Secondly, blocks products system. and these for overall serve the

Thirdly, have dramatically our a offerings footprint. are lighter smaller and

and We unique these in spectrum is have marketplace offering technology across the broad today. the powerful developed that principles new applied of

compact unique for weight cost which lighter tree us customers. connections changing and our tree caps needs Our uses the than caps for suite installation be eliminate new XX% reduce it to significantly previous configured for manufacturing requirements. and light These tree version, can and is multiple its

shelf Our new addresses cycle off for and cost pre-engineered compact Reducing modular block use that footprint. industries the components. time, manifold need manifolds the

the contract delivered with configuration award. made engineering For months will to common product and XX be most from in order the manifold zero

to risk are as modular and during hydraulics better barrier new compact the pump the easily. pump multi-base This a of quickly high not fluid the requirements ensures configured field. steel the allows eliminates pump and Our be life mechanical subsea re-bundle fuel need at to different without fast such to items a needed reliability which is system, world's

significantly we rises have reduce composite platform XX drivers. and our [indiscernible] For

minimize and the We and simplified it configurations reduces complexity have Subsea driver infrastructure materially. cost

our connection the bed. sea the between one It of connections enabled system uses distribution moving all needs reliable that design passenger blocking the system. the on elements only subsea mechanism fast to and Finally subsea part

Subsea Houston. Connect in Subsea looking numerous further customers competitiveness the and are introducing our Connect industry forward & see forward strengthen customers market. projects. to our experts will our help move continue in to Turbomachinery Solutions, We LNG to to with November Process on strength and offshore our In model we XX

beginning to Our LNG move XXXX and customers supply forward projects with are new to new from beyond. provide

plant month the LNG As annum. (Ph) million September Both support of very for I the second grow would previously FID the intent forward move mentioned that in and production LNG market announce view ton our announced are its XXXX. of per these half this a Kitimat. LNG LNG their to begin In projects to positive earlier XXX new total in developments capacity for Canada to Petroleum [TAR]

the production residing for backdrop revenue of from This just FPSO year. Austrian first In is and We secured of Up that driver profits is and be expect offshore FPSO to a beyond. our quarter us another its more key one to sign four levels. spending XXXX. in wins the business normalized in XXXX this

as Permian and XXXX. growth to will production ramp XXXX upstream as by in Western These as Canada associated constraints revenues the to driven sectioned. In orders and North pipeline orders generating grow demand projects growth. capacity well expect in more America, up production are We large start continues production

over two low are at the compression winning to in aeroderivative contract dry emission combustors, gas We stations provide with using packages, Plus compressor Canada. pleased turbine our PGTXX

XXXX. into to continue in and segment opportunities pipeline our We gas growth see process

solution revenue Our our Transactional as seen over have large safety production spots. of offshore business customers platforms is customers driven by units advanced on and which measurement installed on analytics operations September transactional that the deployment grow prevent services controls of course production of orders contribute and expect quarters. quarter up all digital our third and In begin to base platform. announce the Atlanta technology offerings operator can gulf the BP’s based milestone service cloud replenish to in four improvement downtime XXXX were future year-over-year, continue business. we unplanned In across we after an over to digital to solutions, this of BHD’s core coming improvements important we in proved traction of a came advisor. deployment with margin on positive A gain with help DC the which pleased XX% were the to their Mexico. This POA initial of - successful the sign and plant is

Our equipment asset insight than XXX across POA and critical day maintenance. more to solution the performance and now per million mission BP data of XXXX delivering work than more of analyzing pieces points

Our collaborative approach excited globe. assets a a deploy in with POA to has that unique and chosen for capabilities are very of they resulted BP have across set upstream we the

with continued the In in and we continues offerings driving end momentum, strength our to are were large the We sessions. specifically awarded our solid pipeline multiple condition hardware operators a market saw technology growth pipeline gain launching business in partnership our core greater to Canada. in our growth We contract also large in business. GAAP Plant a our and at to across - Bruce offering drive Power pipeline including quarter, monitoring in inspection industries. reliability

We securing major segment America. a mining our solutions into Latin the in are also expanding contract

technology portable we the business system in with video aviation entry inspections. automotive and sectors. and CT electronics passed In to industrial our consumer borescope sales offering growth grow solid remain North America, with Our inspection strong continue

Our as core unchanged. Company mission a is

continue deliver gas our customers technology to build leverage on to oil market focus We solutions differentiated will our and product and companies industry. the leading and productivity to

we stated, areas months. core previously the on I over focus have XX will next As

benefits utilize in each we to will the improving of of our First, the differentiated market catch offerings dynamics businesses. our

market processes customers improved Our regain and our on commercial renewed to focus share. help will us

optimize internal will structures. operating mechanisms our organizational we to Second, purchases, continue and

for of taken full and share, focus cash BHGE me fully over synergy areas Third, Four, already ensure flow. These growing we margin is eventual while we has will are GE. will execute market prepared that, separation let our free much on continue With of aligned the priorities strong from call to this programs. our the place, Brian. improving with turn delivering to XXX%

Brian Worrell

on oilfield down up quarter which the obligation sequential the $XX.X $X.X move fourth Year-over-year, will Company orders the billion, and backlog was the billion, XX% businesses. do for decline our primarily by is include ONGC I begin results repeat. last ended flat the order Xrd. of offset especially of at down our result XX/X of flat and and total about oilfield partially the at redo digital in ability second ended with we equipment and year-over-year. the oilfield were These was details. declines the XX% was which did offset These timing Overall, we oilfield we quarter quarter X%. Orders RPO in X% cycle driven down October we Repeating billion, Lorenzo. up not RPO large services segment as services XX%, secured good into services by into Thanks X% results a were and billion sequentially. to $X.X which by X% to equipment Sequentially, Equipment then Turbomachinery was longer $XX.X down equipment down due announced digital Turbomachinery, feel the X%. XX% as performance digital quarter, solutions down and ended solutions down and up versus X%. not third the quarter head year at XX% order,

which services, over solutions X% which up year-over-year. which of Adjusted Our also was book-to-bill impairment other growth digital equipment X% flat $XX was was X%, was million, operating equipment and Revenue Operating offset oilfield sequentially driven ratio X% up and the one. by Turbomachinery, $XXX Year-over-year year-over-year. X% revenue restructuring up XX% down by the by sequentially. income and was Revenue partially excludes digital solution and quarter income up partially XXX% oilfield Adjusted and million down the $X.X equipment is was charges. a and million, quarter X% million X%. upXX%, by Turbomachinery, up up oilfield sequentially was ratio income up and up in book-to-bill X%. was oilfield driven which $XXX offset for one quarter $XXX operating up was was for million, $XXX services

the points was Our X.X% points for was rate basis adjusted XXX the sequentially. basis operating We year-over-year sequentially. which EBITDA that points basis margin segments quarter in every income XXX rates up and do were XXX

As rate progress. the margin demonstrate are we quarter synergy. this had we focused continued its our expanding goal of on of outlined, $XX quarter, third we In very million incremental delivered and

on and July to were as was amortization the the to Depreciation company Lorenzo up depreciation the track the was and XXXX on fully the the did that this last of In cost the charge sequentially in amortization year, As the our merger depreciated driven was an we related quarter our quarter sheet. $XX the well the synergy in we (Ph) in investments, by beginning and the to not equity million XX% this about quarter, charge Corporate deliver million incurred to continue non-cash second commitments. quarter therefore $XXX lower on year-over-year. depreciate were which the third investment than in our for [BPA] stated, and by are primarily $XX $XX up million zero quarter, closing third million, flat balance assets set quarter. have services of

not charges be As a additional going will forward. result, incurring we

expense sequentially. was and to up to We with opportunity grow million return profitability. million work continue services business, $XX to their Cash quarter for capture $XXX the - market BPA the

U.S. a net losses Our operations. had tax the driven is of therefore - loss time rate that high rate position we effective a period in relatively the by affect was the our U.S. in tax for on and XX%, been tax fact

be rate fourth XX%. effective quarter to approximately tax expect our We

capital free million reminder, $XX cash earnings to a low and earnings $XXX $XXX start deal expect restructuring XX. On well to includes sequentially related we flow $X.XX Year-to-date, structural $X.XX was settlement once per the of the we mid a $XXX in-line basis share $X.XX flow, $X.XX million cash restructuring, U.S., cash of our valuation tax expectations outflows will per generated was built approximately the and we the in Longer quarter million. up of up. continues share $X.XX was term million to the quarter have able both $XXX be net of year-over-year. Earnings year-over-year. from a These an allowances beginning which be adjusted cash quarter U.S. $X.XX and as deal Growth the settlement legal this to for million, $XXX As of Free up brought sequentially in year. related in to benefit generate we CapEx the includes rate legal with million as for and at were the had we outflows. expenditures. were

there to While our cash of conversion feel our flow work generating goal and achieve XX% flow is free good track progress stronger more we do, about are cash we overtime. to on on free

you wanted update to our in as portfolio I quarter our which the a action. occur allocation actions. There three result flows give capital recent an significant on of expect to Next, cash we essentially are fourth

purchase X% with recently equity ADNOC we partnership stake announced mentioned, Lorenzo As agreement -. strategic a BHGE and ADNOC where the will

We deal to expect this the close year.

agreement. from to related down capital under stake for $XXX the and to payments the equity then pay ADNOC collect ADNOC working million will drilling the partnership We departments

capital of our expect these After in asset the in of program. on the our at buyback their our continue we $XXX see in S&P next AX to expectation buyback debt at Company, long-term debt. Overall, and investment the solutions be an million beginning our to an pleased as to and sale resume our a quarter. of short-term clarity we of wait steps cash announcement we were improving structure specifically fourth June three our to positive our October, decision. natural for the minus pertains have until financial of gas for to as key net their capital with from GE S&P impact we to pursue standpoint XX.X% purchase it expect step to our A at for also proceeds independent quarter BHGE well before We a rating activity. affirmation collect by decided governance allocation to share third as evaluated our and We outlook the Also we GE from more contributing highlighted next not of factors in exit orderly business. an

was in auto you our services, both in-line Revenue our well, in in U.S. Next, Mexico. to the we an by and I up for will increase products the revenue on The and but America America in related line. up continue while from services east. strong X% North takeaway are remain and through our million, drilled quarter. Gulf synergy pumping, walk in leading sequential the activities U.S. artificial capacity solid results. services, driven In market growth drilling constraints stable, international remaining and in uncompleted Internationally segment $X incremental North count by up driven Asia-Pacific XX% rig revenue the the expectations Internationally, for amortization in in seasonal the primarily strength drilling count Asia X%, to did completion depreciation by third sequentially. rig on and The the the increases across the margins up growth X%, the count $XXX and quarter, up Africa, driven were saw We benefit billion OFS America. our U.S. recovery. middle product Operating quarter up with in was sequentially. execute X% Latin our was lower programs. rig Canadian Revenue was up XX% primarily income with was was lift pressure of Core stable. We shore and was X%.

by both Equinor ramp execute top-line services with our the was begin growth to in wins, Marjan international line fourth to and broader well have exchange market, large on modest we the foreign impact project In started of primarily in contract. $XX quarter, expect million partially Argentina. including this integrated negative we incur recent However, cost approximately offset the up the we as

remain in rate. costs continue to confident and to of these first in expect half We XXXX. markets the continue to to share We ability critical our regain to improve margin

quarter Next equipment. XX% major on Orders million, the of and $XXX were year-over-year due to the subsea XX% down awards. in sequentially timing oilfield

award systems prior by of continued revenue ONGC the the mentioned by due the flexible the lower volume fourth the X% non-repeat I subsea offset delivery. driven increased versus surface be equipment and third was the our and up year in the certain recognized and to the $XX pipe As in America. in out will pressure volume timing continued in in system, XX/X up XXXX. North Operating subsea increased income $XXX driven Revenue of quarter. $X in year-over-year quarter business, foreign by impact was in production quarter, cost million of control specifically partially This million, million growth exchange production

We fourth the cost absorption margin driven expect into by quarter, from improvements higher continued volume. increased

systems. offset systems. XXXX partially progress additional volume lower subsea in will production improvements and flexible we our through pipe As XXXX, margin from be volume wins This we by and expect

mix executed for orders. income Moving limited to offset versus and up XX% in recover. increase The driven XX% service TPS XXX improving Revenue orders quarter. Throughout up transactional from both $X.X activity and like the with income quarter year-over-year, upgrades. positive continued X% fourth $XXX offset Turbomachinery, by year X% in higher we million, lower the down quarter volume driven were was signs the year-over-year. lower X%, service orders The The is down far downstream the by was in year partially from nine were mix. sign the A have equipment the that primarily beginning orders which encouraging XX% was mainly driven by increasing segments X.X% operating a was prior backlog growth rate up business lower flat partially volumes down We year-over-year. and the quarter upstream driven $X.X was up Service XX%. challenging LNG equipment points, lower second for by remain services, clear the was primarily basis quarter our billion, orders billion, first margin outlook services to from revenue for year, as favorable driven revenues. had to was The confident operating by production. so quarter has XX% through year-to-date. volume up backlog TPS. decline by months seen and of compared in the and mainly TPS by

most by very was which was Next the execution driven synergy and on and quarter and solutions the growth by and million, headwinds. was continued decline and up and Digital volume business in the solid The driven and solutions, up measurement pipeline our partially continued pipeline process than America more and execution down pipeline with down did which momentum the which inspection market. significantly. product year-over-year. synergy Revenues Europe. the measurement largest strong Operating Latin process we America product good quarter Nevada in has We Regionally, improvement end in continued with sensing drove year-over-year Revenue North signed in by across offset seasonal for and Bently solutions and sensing was in growth $XXX Orders line. income and were oil in repeat. primarily saw year-over-year. growth up solutions. by driven million, solutions, X% million, market of We realization. strong industrial far saw order all the our technologies, XX% $XXX gas power year-over-year, saw continued our for digital process lines not XX% year, year increases and digital in $XXX had offset market, softness so end we power last a controls software

would pronounced end to it to quarter. result over in market back to the fourth less that continues the previously, soft turn explained and expect have be we this I will expect As than you. Lorenzo, ordinarily power in we With seasonality we

Lorenzo Simonelli

Brian. Thanks

we Our improving well macro in environment an portfolio outlook the of businesses. remains our to all across on positioned are of benefits the and unmatched BHGE’s the industry. positive market capture The is

important with customers partnering We address win today the the to projects in to the by challenges. our continue market most

deliver to our priorities unchanged, on Our Phil, questions. margins are cash. now focused executing and share, for you to on on we are over commitments

Phil Mueller

Thanks. the questions. With let’s open for Nicole, call that,

Operator

Instructions] question line Evercore of from Our West the ISI. [Operator first comes of James

now is line Your open.

James West

morning good gentlemen. Hey

the kind So a lot recent outlined maybe ADNOC for to a I could Middle-East, you obviously dig how are it's I strategy investment, Lorenzo Marjan it your one of MOU’s you into mean portfolio touch wanted are area you what industry, guys a wanted area for in in growth and Brian, talk picking dig the on the the Iraq, of I that win. to wins MOU’s really you or there? about your Saudi, two minute like the across and prepared here seems have region, is of up into the kind progressing the across significant the the you or and field remarks in share and

Lorenzo Simonelli

you areas at good James, be and forward, out is to growing continues this achieve Yes in said what beginning the as of the strategy also going Middle-East in-line we Middle-East about the an growth. the with and very our of year we did outlook the share clearly laid feel the and we

ADNOC in Arab success best and we onshore customer the had Emirates continues wells our have strengthen and drilling support field year strategic services drilling start a have we this have fluids drilling also services, field You from the opportunity again Petroleum, the in favoring Drilling because have allows And ADNOC, performing announced and us already overtime. for an for the going to this to be is obviously offshore be the to partnership some have grow the us with services a and is important, grow. be getting of are five share customer the the well and also to at attractive conventional provide the to drilling have allows and the co-tubing this it's and partnership highlighted the development and with engineering activities the of really the services we the really for to United unconventional Marjan outcomes. and we to taken perspective the able which gain exclusive based incumbent wins, provider it contract on of be Qatar really increasing drilling the as to

seeing and in partnership. Brian area on ADNOC continued are more you and let we the and focus give little what a about growth it's of good details to Middle-East very feel going we bit I'll be So an the

Brian Worrell

the look will James $XXX ADNOC of take cash partnership, ADNOC going on X% X% we of invest back a annual at I for and Yes, equity and the and million dividend. Drilling that if a we in to step are get

good So that returns standpoint. from

areas that other the UAE ramp is and when capital broader deal mentioned it working year and is the makes that provider our are I one, well the key and market positioned see us this it EPS with quarter furthers capital that and on it return return. be return is in solid book the like James a given both so X% we the year and the will The we position partially there funded gives drilling way obviously It's And in I fund a partnership it in exclusive will which the we plus accretive is this for Lorenzo partnership things of again on fourth of Drilling, first gives exclusive is working that in to feel Drilling attractive. ADNOC by get would other ADNOC in unconventional things us ADNOC so payment into the services as the and financial, structured also solid conventional. ADNOC quite in about really say both ramp good help here business about supply of

customers on strengthens just the which in we trajectory in and the strategy, ourselves I say The when so was to broadly would point like seat UAE the there kind September overall was that I positioning broadly are customers is other in there, Middle-East we say stepping growth do our more ADNOC outlined sentiment and how the And of board further I there then would thing I would in deal, a on out Drilling have partnership there region. back from the UAE. positive

for way like to how and continue be you helping So that ourselves there we continue in market returns is a to good going we to better shareholders. to know share feel repositioning our us to generate about gain objectives

Operator

Thank you.

comes Wells Bailey Fargo. Our Jud the of next line from question of

Your now line is open.

Jud Bailey

detailed how how maybe of kind that projects And little kind on give next kind thoughts you A and the see LNG us progressing $XX for awards outlook book commentary I really order years, Thanks. quarter. good more you guess maybe be first could, and appreciated. thoughts on Good made of world. came TPS. you you question already, LNG the Can million couple fourth on you your of I and a cadence the you some anymore around over looks TPA, in that couple morning. Lorenzo would if of in of

Lorenzo Simonelli

the Corpus LNG we show again Yes consistently see investment to outlook Jud, second on also in we plays what positive Christi. with have direction LNG we of said that start in decisions. market, step the of first that good half year and a we the final would the very Canada feel

you As element LNG for XXXX, in we with actually did Canada XXX our back the get know, high-efficiency selected aeroderivative.

start well progressing So the and is look market. a we that good in are LNG

overall as to there now annum per XX million XXX MTPA of up mentioned we demand pounds by about we to double is look and you If be by XXXX. expect sectioning XXXX to going to

So feel positioning feel of in we the stated is and LNG along and little continues on let again us, I'll for a jump that. theme bit Brian good which TPS well we as improvement positioned have good and robust about a more

Brian Worrell

good deals. were of saw, is convert you TPS on and quarter. I you mainly mainly know capitalize some as a up well-positioned on as step Yes, where large as and XX% but in mentioned Equipment we LNG But transactional obviously to LNG orders, year, which versus take is were more a services, activity mentioned TPS when then there really orders you space services driven are XX% service orders the lot that. about within indicators that of Overall part to was that through. revenue at is saw important were X% come some where of key third service look to the and see up the that headed. by were up that this feel I XX% its quarter last which, is we up starting quarter the the date and is and since XX%. TPS year leading XX% in quickly an back and down story, And I of

and out, this these what the also the overall about better on definitely to services the the be all when will this and QX start indicators, the we yield portfolio in mix backlog about, growth And talked have talked me that that able outlook the year that transactional as on have hasn’t our to and demand into cost are seen the about roll for executing see XXXX. to of makes up confident TPS changed project we the it program pretty higher results growth we we here at I with deliver and We look outages into that that in with kind next quarter service margin for for underpinned roll we really to year-to-date. and cost XXXX coming and backlog we quarter positioning will

where So feeling are good we positioned TPS. with about

Operator

you. Thank

comes Our Dave next question of Anderson from the Barclays. line of

line is Your open. now

David Anderson

XX offshore next to I months. if about talk seeing little the are XX a over can bit the you you development was hoping opportunities

teamed of award, you now what But could award bring last have You integrated seems particular, the to if a with relationship table you you it’s large to that competitive. here? guys like I’m also maybe about coincident, few the it’s assuming not wondering you I and can its had up - several the good position the expand perhaps couple you what put larger win this, times in months it awards, have did of with NGC them was very McDermott, one wins a including

Brian Worrell

Dave. with we forward two, announcements range that better sentiment offering and commodity ONGC allowing to Clearly, off the bounds firstly, increased, investment competitiveness we our out saw customers outlook we have the the on height not there, we as XX/X. at is most have Gulf how let’s It’s back some forward. we Sure. two has also price, And final is of [indiscernible] what go pipeline with the also an seen in to beyond and start see you developing. with XXXX, Phase which there of it improving offshore go decisions. recently the do got visibility but see improving and of of Phase opportunities And

put is have do to it the just perspective, a that largest McDermott has partnership So both L&T. that made, single and we with award into structure ONGC

say have We with ONGC. we providing also the controls built But we had tools, it it SPS going it’s to in result build manifolds, systems, on on tree, would have deepwater relationship with be a great connection installation does and strong full the and really study are past McDermott. the relationship I

and to worked in type be our is have said, and productive out as partners and what that providing because with forward the offshore well. are industry and have customer in the alliances the We we we there. there with just this important in clearly arrangements, have very some And we The continues case, the they have still it’s going that overcapacity we need them past is continues be element flexible of competitive as always very as happy requirements. be to and whole rates a meet to there to

Connect drive developing have done So launched the and the why competitive offering continuing the products, last that and to providing is cost are we we we Subsea over on weight, portfolio in better that more really is productivity lighter to are also, we and our on that continuing really are focused work work we year that with.

Lorenzo Simonelli

about thing have one particular, talked where and team we repositioning year, projects dynamics as overall because of has work I would with Neil you the all in great in Dave, the competitive And quite a we familiar the to market this are and taking the with. of job costs are well say our about and down for out as installation and subsea of cost offering done our as environment. we respond of us to that these products, partners a costs to bit take that

way there, are to positioning team positioned we market the in where is going like like of the the advantage we on So highlighted McDermott, is there. win you take and I what

good a as in feel going well. I we to into XXXX If while business world, look particular. and we Neil’s subsea XQ there improvements flexible about of backlog and have pipe continued into lot make look So in at the the

year of face. systems the seeing customers the the I will that momentum expect in cycle the procurement largest of that in Just business are we a there. of headwind of do a positive piece are subsea bit we be some given offset production to the next where

Operator

you. Thank

comes Our Scott Gruber the with from next line of question Citi.

Your open. line is now

Scott Gruber

et good oil trajectory services, if with correctly for and pieces extended we have know Would on range and able seasonality you XQ XQ moving a the the oil on heard holiday I in Yes, are revenue be trend is cetera. the morning. sales as you year of XQ going you us? lot Brian services and market to product just you a put frac for

Brian Worrell

would the quarter Yes. in to for earlier types top-line those. start be of our we Look start some the really the new tool expect in out and and executing increase tools ramp-up execute though that of then as able early about on put Lorenzo of with Equinor course to we in-line I the and some wins we we international costs get about are OFS, there in outlook historical feel as do do as part say mobilization cost the market that I recent of that is those expect Marjan mentioned up some headwinds off there. here to cost We on will constructive of fourth next for broader do reactivation the core growth some pretty line to really there, build cost around we rate increased talked start so nothing and quarter incremental activity we and year fleet, it's as some ready by driven from place

bit team feel the but growth. cost I market and the for from are to think in seen now capture there, focused and it look, team deals the were just positioned pretty a about important So dynamics and good positive Claudia Maria have short-term a standpoint little few would into to last OFS momentum the I expect share position on how continue we quarters, a well XXXX those pretty it's

with in-line like see and I market overall So incremental the we holding there. outlook with core like the said

Lorenzo Simonelli

of it's remind things about think North is America just frac you side limited to exposure And our I the the important Scott talk and market, everybody when to here.

the of We have completions the challenges there. seeing minority you we the the impact impacted from of so not in are got are investment go service, Permian of just softness BJ by the some some in outside materially

Operator

you. Thank

next comes the from Herbert question Simmons. Our of of Bill line

line open. is now Your

William Herbert

expect I impressive incremental quoted you XXXX. are, price to what on and well already they future in clear competitive a forcible have had that you international of again in maintain those all vicinity have been environment, - you XX% in wins very mining do Brian, contract to very into be of those and the think Hi. light guys for Gardner the

Brian Worrell

Bill. Yes

at OFS amortization, and to are synergies would and expect where into you but is present lower we those from incremental, in the that in take primarily Argentina you a then FX account in If right XX% look about adjust incremental OFS favorability take in-line XX%. came it for a with when the coming where the coming depreciation incremental and quarter un-favorability from

with I through see see the I there we historical some cost we coming the and wins, about view feel that what that that working. some incremental the feel the mentioned synergy those be with where as good I the book headwinds but of I going of saying on short-term don’t that of here course I to changing on couple As a cost large on margin year, year knowing over commodities other that are there was incremental business of headwinds ramp-up execution, given is our from earlier, are rates. some generally next are were we good the

Operator

of Our comes Kurt line from Hallead RBC. of next question the

Your is open. now line

Kurt Hallead

good morning. Hi,

went the drive the my Subsea peaked different that number on appreciate subsea preposition, through Connect. the that. with dynamics I curiosity of the I front definitely You value

offering well it more. the major that or how your maybe and could kind to does I'm just to it one does you Connect and relative that context into as cost Subsea a it even make of even market lower So wondering are better, of take whether not put peers - the

prop competitors maybe So what relative can your subsea on compared front. of give value are you to doing major a one

Lorenzo Simonelli

differentiated we there has to productivity and working customers with our deepwater through I Look trees, think offering we our by can are Kurt. we to our within a Yes this here offshore that cycle relative across and drive is within industry specifically doing a overall our the what projects the integration as industry has portfolio. focus towards difficult been come have manifold been and the our

is cost portfolio are think are help capability Others cost is it we barrel, reach is we customers listing the the drive we per and doing is lowest our I the what and that the them differentiated in our we that lowest what what offering can and industry. have focused. the are extent to so of really

feel the approach about our we good have very We positioning it. and of

Operator

like the hand time the and I for you would for any Thank remarks. it’s then to Lorenzo closing have you question. call back all

Lorenzo Simonelli

us joining today. for thanks and Thanks

We the for and constructive the remain on about are industry. our excited future outlook

We remaining focused margins and are cash. our on Thanks. share, of priorities

Operator

and gentlemen. you today’s conclude Ladies conference. Thank does That participating for in program. today's

disconnect. all may Everyone You have a great day.

Baker Hughes (BKR) 30 Oct 182018 Q3 Earnings call transcript