(Reuters) - General Electric's oilfield services company Baker Hughes (>> Baker Hughes A GE Co) reported fourth-quarter revenue on Wednesday that beat analyst estimates and profit that modestly exceeded forecasts as growing U.S. oil production spurred demand for its products.

General Electric (>> General Electric Company) and Baker Hughes closed a merger of their oilfield services businesses in July, and Wednesday's report was the second combined earnings release for the newly formed company.

Like rivals Schlumberger (>> Schlumberger NV) and Halliburton (>> Halliburton Company), the company is benefiting from a rise in global oil prices and greater activity as an industry recovery spreads from North America to international markets.

GE's Baker Hughes reported revenue of $5.76 billion in the fourth quarter, up 7 percent sequentially but down 3 percent from a year ago on a combined basis. Analysts had expected revenue of $5.61 billion, according to Thomson Reuters I/B/E/S.

Excluding items, Baker Hughes earned 15 cents per share, beating analysts' average estimate by 1 cent.

Shares sank nearly 5 percent to $34.05 in morning trading.

"Early indications of customer capital spending in 2018 are encouraging," Chief Executive Lorenzo Simonelli said in prepared remarks, adding that international activity was "stabilizing."

Wall Street analysts broadly viewed the fourth-quarter results as a metric for the new company's future performance.

This is "currently more about baselining the company's operations than quarterly earnings prints vs. market expectations," analysts from investment firm Tudor Pickering Holt wrote in a note on Wednesday, but added it was "good to see no huge surprises."

The fate of the new company was thrown into question in November after General Electric said it was considering exiting the oilfield services business in an effort to refocus the conglomerate.

Under the merger agreement, such an exit could not occur until mid-2019 without special approval.

On Wednesday, Simonelli reiterated that Baker Hughes was on track to achieve the $700 million in synergies expected from the merger this year.

He said that under current commercial agreements, the company would still have access to certain General Electric technology and products despite a potential breakup.

Parent company General Electric on Wednesday posted a $10 billion fourth-quarter loss and 5-percent drop in revenue.

Revenue from its Baker Hughes' oilfield services business were $2.77 billion on a combined basis, up 10 percent. Gains in the segment come as the U.S. rig count is up about 35 percent in 2018. [RIG/U]

Meanwhile, revenue in oilfield equipment fell 21 percent year-over-year, while those in its turbomachinery and process solutions business fell 14 percent amid a dearth of new LNG activity.

The company said it included a benefit of $132 million in its tax expenses as a result of U.S. tax reforms.

On a per-share basis, Baker Hughes posted a loss of 7 cents.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva and Bernadette Baum)

By Liz Hampton and Yashaswini Swamynathan