Baker Hughes Inc. (NYSE: BHI) said it planned to buy back $1.5 billion of shares and $1 billion of debt, using the breakup fee it will receive following the collapse of its proposed buyout by fellow oilfield services provider Halliburton Inc. (NYSE: HAL).
The merger, valued at $35 billion when it was first announced in November 2014, would have created North America's largest oilfield services company to take on global market leader Schlumberger Ltd. (NYSE: SLB).
Baker Hughes will get $3.5 billion as part of the merger agreement, which the companies terminated on May 1 after opposition from U.S. and European antitrust regulators.
The U.S. Justice Department filed a lawsuit last month to stop the deal, arguing that it would leave only two dominant oilfield services companies.
Baker Hughes, which is focusing on the development of products that lower costs and maximize production for oil and gas producers, also said on May 2 it planned to refinance a $2.5 billion credit facility, which expires in September 2016.
The company said an initial phase of cost-cutting was expected to result in $500 million of annualized savings by the end of 2016.
In a separate regulatory filing on May 2, Baker Hughes said it cut 2,000 more jobs in the first quarter, adding to the 18,000 cut worldwide last year. The company had about 43,000 employees as of Dec. 31.
Baker Hughes said last April 27 it recorded "merger-retained" costs of $110 million, after tax, in the first quarter, leading to a bigger net loss for the period.
The Houston-based company also said then that it was limiting its exposure to the unprofitable onshore pressure pumping business in North America.
Halliburton, which will release its results on May 3, said on April 22 that revenue in the quarter slumped 40.4%.
Baker Hughes's shares were down about 1.6% at $47.60 in premarket trading.
The company's shares have fallen 25% since Halliburton first agreed to buy Baker Hughes in November 2014. Halliburton's shares have fallen more than 19% in the same period.
RELATED:
Halliburton, Baker Hughes Scrap $28 Billion Merger
DOJ Antitrust Suit Hands Halliburton, Baker Hughes Deal Grim Prognosis
Recommended Reading
Eni, Vår Energi Wrap Up Acquisition of Neptune Energy Assets
2024-01-31 - Neptune retains its German operations, Vår takes over the Norwegian portfolio and Eni scoops up the rest of the assets under the $4.9 billion deal.
NOG Closes Utica Shale, Delaware Basin Acquisitions
2024-02-05 - Northern Oil and Gas’ Utica deal marks the entry of the non-op E&P in the shale play while it’s Delaware Basin acquisition extends its footprint in the Permian.
Vital Energy Again Ups Interest in Acquired Permian Assets
2024-02-06 - Vital Energy added even more working interests in Permian Basin assets acquired from Henry Energy LP last year at a purchase price discounted versus recent deals, an analyst said.
California Resources Corp., Aera Energy to Combine in $2.1B Merger
2024-02-07 - The announced combination between California Resources and Aera Energy comes one year after Exxon and Shell closed the sale of Aera to a German asset manager for $4 billion.
DXP Enterprises Buys Water Service Company Kappe Associates
2024-02-06 - DXP Enterprise’s purchase of Kappe, a water and wastewater company, adds scale to DXP’s national water management profile.