Baker Hughes Lays Out Cost Cuts, Buybacks After Halliburton Deal Dies -- Update

By Austen Hufford 

Baker Hughes Inc. laid out a plan to cut costs and buy back stock and debt, outlining its path forward a day after its planned merger with Halliburton Co. was scrapped.

Baker Hughes said it would cut $500 million of costs and weigh a restructuring of its business, while buying back $1.5 billion of shares and $1 billion of debt. The funds for the buybacks will come from the $3.5 billion breakup fee Baker Hughes got from Halliburton as the deal was called off.

On Sunday, Halliburton and Baker Hughes walked away from their merger, once valued at nearly $35 billion, after regulators on several continents claimed it would hurt competition in the oil-field services business.

The companies had been working for more than a year to get the complex deal completed and had been planning to potentially sell billions in assets to appease regulators.

Baker Hughes had amassed $306 million in merger-related costs, after taxes, in 2015 and the first quarter of this year, according to regulatory filings.

Oil-field services firms, which are hired to drill and frack wells, were among the first to feel the pain from lower oil prices, and have been forced to make some of the deepest cuts and to curtail operations.

But Baker Hughes has been constrained by its merger agreement from making sweeping changes without Halliburton's approval. The company said last week that it carried $110 million of costs during the first quarter that it wasn't able to cut because of the merger.

Monday, Baker Hughes said it was "taking immediate steps" to remove those previously uncuttable costs and was also "evaluating broader structural changes" to further reduce expenses and improve efficiency.

Baker Hughes also said it intends to refinance its $2.5 billion credit facility, which expires in September.

Shares of the company fell 0.6% to $48.05 in premarket trading.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

May 02, 2016 08:20 ET (12:20 GMT)

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