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Baker Hughes, Sonatrach to Construct Oil Equipment Plant

Zacks

Baker Hughes, part of GE BHGE, and Algerian State energy company, Sonatrach, have proposed to set up a joint venture (JV).

Per the deal, the companies will construct an oil equipment plant in Algeria at an estimated cost of $45 million. Manufacturing, assembly and maintenance for various types of oilfield equipment will be provided by the JV. This will result in the formation of an important base, which will meet Algeria’s rising domestic needs and fulfill requirements for exports.

The project, to be based in Azrew in western Algeria, is expected to come online in December 2019. Sonatrach will hold a 51% stake in the project, while the remaining 49% will be owned by BHGE.

About the Companies

Being the world’s first and only company to provide integrated oilfield products, services and digital solutions, Baker Hughes strives to boost efficiency across the oil and gas value chain. The company operates in over 120 countries.

An Algerian government-owned company, Sonatrach was created with the intent to discover hydrocarbon resources. It enjoys some concessions in Libya, Mauritania, Peru, Yemen and Venezuela. The company is mainly engaged in all aspects of production, including exploration, extraction, transportation and refining. Recently, Sonatrach diversified its operations into petrochemistry and the desalination of seawater.

Price Movement

The company’s shares have lost 3.8% as against the industry’s rally of 5% over the last three months.



Zacks Rank & Key Picks

Baker Hughes currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Braskem SA BAK, ConocoPhillips COP and Northern Oil and Gas Inc NOG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The largest petrochemical operator in Latin America, Braskem, delivered a positive earnings surprise of 68.54% in the preceding quarter.

ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. It delivered an average positive earnings surprise of 152.34% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an earnings surprise of 100.00% in the preceding quarter.

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