Iraq “The Next Big Market” For Baker Hughes?

By John Lee.

An article from Seeking Alpha speculates that Iraq could provide solid opportunities to oil field services firms like Baker Hughes, but points out that there are significant risks and issues that need to be addressed before international firms can participate wholeheartedly in this promising market.

Baker Hughes has been making steady progress by bagging contracts in the Iraqi market. The company inked a deal with Russia’s Lukoil last year to drill in the West Qurna-2 oil fields; the firm also secured a $640 million contract for drilling 60 wells at Zubair.

However, the firms operations in the region have been slow to pick up. It has been experiencing high start-up costs relating to equipment movement and logistical issues, and the firm mentioned that at present Iraqi operations were a compression of the firms margins. A lack of clarity in rules and institutional inefficiencies have also slowed down the firms operations in the country.

The author gives a price estimate of $54 for Baker Hughes, representing a 28% premium to the current market price.

(Source: Seeking Alpha)

Comments are closed.