OREANDA-NEWS. Baker Hughes expects unfavorable market conditions to persist for the rest of the year as oil companies continue to pull back on drilling activities on the back of weak commodity prices.

The world's third-largest oilfield services provider's outlook is more circumspect than its top two bigger rivals. Both Schlumberger and Halliburton have said that they saw tentative signs of an improvement that may lead to a modest uptick in drilling activities in the second half. Baker Hughes expects activity to remain muted both in the US and elsewhere.

"In North America, we don't anticipate activity to increase while commodity prices remain depressed as the seasonal activity rebound in Canada will likely be offset by a decline in the US," said chief executive Martin Craighead. "Internationally, rig counts are projected to continue to decline led by many offshore and shallow water markets."

A focus on revenue growth in markets that are more resilient in the lower commodity price environment has "led to significant drilling and production chemicals wins in Norway, Saudi Arabia, West Africa and the Gulf of Mexico," Craighead said.

The company expects its $34.6bn acquisition by Halliburton to go ahead as planned despite a 90-day extension of a federal antitrust review, Craighead said, echoing views given earlier by Halliburton's chief executive Dave Lesar.

The company's North American business fell by 47pc in the second quarter, largely as a result of a drop in onshore and shallow water activity. Baker Hughes had to offer deep discounts to retain share in a shrinking market, which led to "an unfavorable pricing environment."

In comparison, the fall in Latin America was more tempered, declining by 19pc, which was led by a drop in activity in Venezuela, Brazil and Mexico. Both the Europe, Africa, Russia and the Middle East/Asia Pacific regions by 22pc each.

In Latin America, Baker Hughes expects the rig count to continue to decline, but at a slower pace. In Europe, Africa, and Russia, the rig count is also expected to decline across most of the region, primarily in onshore and shallow water markets. For Middle East/Asia Pacific, it expects the count to remain relatively stable as any rig count growth in the Middle East will likely be offset by declines in Asia Pacific.

The company's total capital expenditure during the quarter was $258mn compared with $424mn a year earlier.