Baker Hughes Acquires Stake in Verdande Energy

- Baker Hughes Acquires Stake in Verdande Energy

Friday, September 02, 2011
Baker Hughes Inc.

Baker Hughes and Verdande Technology announced that a subsidiary of Baker Hughes has acquired a minority equity stake in Verdande Energy AS, a subsidiary of Verdande Technology AS, and will become a user of Verdande Technology's case-based reasoning (CBR) software platform for oil and gas applications.

This CBR technology, called DrillEdge™, is a real-time intervention tool constructed on the principle of case-based reasoning, a problem-solving process that identifies similar issues from relevant wells drilled in the past and offers similar solutions. This immediate intervention-while-drilling response provides a thorough, fast and practical real-time bridge between past experience and current operations. Under the terms of the agreement, Baker Hughes will be involved in further developing the capabilities.

"The DrillEdge platform is expected to help operators lower risk, increase their rate of penetration and reduce non-productive time while drilling," said Scott Schmidt, president of Drilling and Evaluation for Baker Hughes. "Integrating this capability into our portfolio of real-time optimization and remote drilling services complements our BEACON remote operations platform. The technology is expected to help our customers expand their understanding of their wells without increasing their workload as they continue to drill more demanding and technically challenging wells."

"This strategic arrangement delivers immense benefits to our customers seeking to improve drilling performance and drive operational efficiencies by joining our technology with Baker Hughes' extensive network," said Lars Olrik, chief executive officer of Verdande Technology. "It helps a small company like ours strengthen its place in the market, access a global support and operational network and further develop the technology at a more rapid pace."

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Baker Hughes Names Integrated Operations President

- Baker Hughes Names Integrated Operations President

Thursday, August 18, 2011
Baker Hughes Inc.

Baker Hughes announced that Darrell C. Howard has joined the company as President of the Integrated Operations organization. Howard joins Baker Hughes from VICO Indonesia, where he served as Vice President, Technical Support for the BP-Eni joint venture.

"Darrell's combination of technical expertise, project management capabilities, international business experience, and leadership qualities make him the ideal candidate to lead our integrated operations business," said Derek Mathieson, president of product lines and technology for Baker Hughes. "In this role, Darrell will apply his in-depth knowledge of the entire oil and gas asset lifecycle to expand Baker Hughes' position in the fast-growing integrated project management market. This is a critical business for our company and I look forward to working closely with Darrell to enhance Baker Hughes' top-tier integrated project management capabilities."

Howard joined Amoco Corp. following his graduation from the University of Colorado in 1978. During his career with Amoco he held a variety of drilling, completion, and production engineering and management roles. Howard has extensive international experience, including assignments where he worked closely with governments, national oil companies and third-party organizations in the United Kingdom, Norway, the Republic of Congo and Egypt. Immediately prior to his appointment with VICO Indonesia, he spent seven years in various roles with BP in Baku, Azerbaijan and with TNK-BP in Moscow, including Exploration Drilling Manager for the Shah Deniz Caspian gas project.

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Baker Hughes Prices Senior Notes

- Baker Hughes Prices Senior Notes

Thursday, August 11, 2011
Baker Hughes Inc.

Baker Hughes announced the pricing of $750 million aggregate principal amount of its 3.20% senior notes due August 15, 2021. Interest is payable on February 15 and August 15 of each year. The first interest payment will be made on February 15, 2012, and will consist of interest from closing to that date. The offering is expected to close on August 17, 2011, subject to customary closing conditions.

The company intends to use the net proceeds of the offering to redeem all of its outstanding 6.50% senior notes due 2013, of which an aggregate principal amount of $500 million is currently outstanding. The company will use any remaining net proceeds for general corporate purposes, which could include funding ongoing operations, business acquisitions and repurchases of the company's common stock. The net proceeds of the offering may be invested temporarily in short-term marketable securities pending such usages.

The notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes will be offered and issued only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S.

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Baker Hughes Lands Gig at Lukoil's West Qurna Field

- Baker Hughes Lands Gig at Lukoil's West Qurna Field

Monday, August 08, 2011
Baker Hughes Inc.

Lukoil has awarded Baker Hughes a two-year contract to provide full drilling and completion services for 23 wells in the West Qurna field in southeast Iraq, 50 kilometers (31 miles) west of Basra.

Under the terms of the contract, Baker Hughes will provide engineering and project management for the turnkey drilling and completions scope of the project. Baker Hughes will supply drilling services, formation evaluation, casing and tubing running services, completion tools and services, wellbore intervention services, and wireline logging as well as perforation operations. Baker Hughes also will contract all third-party services, equipment, personnel, tools and materials required for the project, including the provision of up to five drilling rigs and three workover rigs.

Some of the wells will be drilled directionally, targeting the Mishrif formation, with step outs of up to 3,000 meters (9,842 feet). The wells are closely spaced, so the operation will employ a cluster (pad) drilling technique. The five drilling rigs and three workover rigs will be mounted on skids for fast, efficient rig moves.

Baker Hughes is well positioned in Iraq to execute the West Qurna project. In 2010 Baker Hughes opened a 120,000 square-meter (1.3 million square-feet) operations base in Basra to serve the Iraq oil and gas industry. The base includes a workshop to support a wide range of Baker Hughes products and services. The facility also houses chemical blending capabilities and inventory, as well as bulk drilling fluids storage for quick response to customers' requirements.

In addition to the LUKOIL drilling and completions award, Baker Hughes manages and operates drilling and workover rigs in the Zubair field for an international oil company. Baker Hughes also has a strategic alliance with the South Oil Company to support the development of Iraqi wireline capabilities; and supplies electrical submersible pumping (ESP) systems and services—including real-time remote monitoring and automation capabilities to optimize production—to three major international operators.

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Baker Hughes Tops Q2 Earnings and Revenue Estimates

- Baker Hughes Tops Q2 Earnings and Revenue Estimates



Jul 25, 2011

Baker Hughes (NYSE:BHI) reported Q2 EPS of 93 cents, topping consensus estimates of 91 cents. Revenue rose 41% year-over-year to $4.74 billion, better than the $4.55 billion analysts were expecting.

Adjusted EBITDA in the second quarter 2011 was $1.02 billion, up $63 million sequentially.

Chad Deaton, chairman and CEO, said, "Our performance was solid this quarter with steady improvement of our international profit margin. As expected, the sequential profit improvement in US Land and the Gulf of Mexico nearly offset the seasonal decline in Canada."

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Baker Hughes' 2Q Earnings Shine on N. American Drilling

- Baker Hughes' 2Q Earnings Shine on N. American Drilling

Monday, July 25, 2011
Baker Hughes Inc.

Baker Hughes announced net income for the second quarter 2011 of $408 million, or $0.93 per diluted share, which excludes expenses of $70 million, before and after-tax ($0.16 per diluted share) associated with increasing the allowance for doubtful accounts and reserves for inventory and certain other assets in Libya. Including these expenses, net income attributable to Baker Hughes, a GAAP measure, for the second quarter 2011 was $338 million, or $0.77 per diluted share, compared to $93 million, or $0.23 per diluted share, for the second quarter 2010 and $381 million, or $0.87 per diluted share, for the first quarter 2011.

Revenue for the second quarter 2011 was $4.74 billion, up 41% compared to $3.37 billion for the second quarter 2010 and up 5% compared to $4.53 billion for the first quarter 2011.

Results presented for the second quarter of 2010 included the results of BJ Services from the date of acquisition on April 28, 2010.

Chad C. Deaton, Baker Hughes chairman and chief executive officer, said, "Our performance was solid this quarter with steady improvement of our international profit margin. As expected, the sequential profit improvement in US Land and the Gulf of Mexico nearly offset the seasonal decline in Canada.

"International profit before tax margin now exceeds 13 percent, excluding the Libya charge, up more than 120 basis points sequentially and up 675 basis points year over year. The largest sequential improvement was in the Europe, Africa, Russia/Caspian segment.

"In North America, US Land revenue increased sequentially at a rate more than double that of the rig count, with strong incremental margins as the service intensity of the unconventional oil and gas plays continued to increase. Furthermore, demand for pressure pumping exceeds industry supply in North America. Gulf of Mexico revenue and profit increased modestly as new permits allowed only a limited resumption of deepwater activity.

"Looking forward, we continue to see improvement in North America driven by increased activity in unconventional oil and gas plays and increased service intensity driving opportunities for advanced directional drilling, complex multi-stage completions and pressure pumping. The Canada rig count has already rebounded from second quarter lows and we are mobilizing for the normal seasonal increase in activities going forward. Our continued investment in products and services for the unconventional resource plays supports the long-term strength of the North American market. While the increase in deepwater activity makes us optimistic, the pace of permits being issued has slowed significantly. In addition, we expect to incur incremental expenses associated with the increase in deepwater Gulf of Mexico regulation in the second half of 2011.

"Globally, spare oil production capacity is tight and we expect growing demand in China, India, developing Asia and the Middle East to support high oil prices and sustain increases in international spending. Activity is expected to increase in the second half of 2011 and into 2012 led by steady improvement in Brazil and the Middle East. If activity increases as we anticipate for 2012, conditions should support pricing improvements."

Debt decreased by $233 million to $3.61 billion and cash and short-term investments decreased by $458 million to $937 million compared to the first quarter 2011. Capital expenditures were $594 million, depreciation and amortization expense was $331 million, and dividend payments were $65 million in the second quarter 2011.

Adjusted EBITDA in the second quarter 2011 was $1.02 billion, up $63 million sequentially. Adjusted EBITDA is a non-GAAP measure that excludes certain identified items, such as the Libya charge in the second quarter 2011.

Operational Highlights

North America

Baker Hughes advanced technologies including AutoTrak™Curve, FracPoint™ multi-stage fracturing system with In-Tallic™ disintegrating frac balls and extended stage FracPoint systems continue to gain traction in customer applications. These technologies will contribute to our ability to substantially differentiate from our competition.

In the emerging Niobrara play, we were awarded a one-year contract to supply directional drilling, drilling fluids, cementing, open hole and cased hole wireline, micro-seismic and pressure pumping services for a major International Oil Company ("IOC").

We were awarded two substantial integrated service contracts for large independent operators in the Permian Basin, where we have a particularly large pressure pumping presence. The product lines awarded include Pressure Pumping, Completion Systems, Bits, Production Chemicals and Wireline Services.

In the Bakken, a new customer chose FracPoint to perform a 40-stage fracturing program, and has awarded all services, including pressure pumping, directional drilling and completion tools on the rig to Baker Hughes. To date, six of these systems have been deployed for this customer.

In the Gulf of Mexico, we expanded our presence in the ultra-deep gas Shelf market with a multi-million dollar award from an IOC to provide drilling fluids and evaluation on a High Temperature High Pressure exploratory program.

Latin America

Baker Hughes was recently awarded a three-year contract to provide drilling systems, bits and completions for three deep wells in the Huron block in Colombia. Also in Colombia, a customer awarded us a one-year integrated project in the Llanos Basin on seven wells to perform drilling, completions and pumping operations.

In Brazil, activity was strong as we completed the first six wells of a 37-well campaign in a heavy oil field in the Campos Basin. In what is currently the biggest development program by an international operator in Brazil, Baker Hughes was contracted for a number of services, including drilling and evaluation, drill bit systems, completion systems, ESP systems and gravel pumping services. The first four wells are already on production.

In Argentina, Baker Hughes performed its first hydraulic fracturing stimulation job in an unconventional hydrocarbon shale reservoir. The multistage fracturing operation for YPF in the Neuquen Basin was successful.

Baker Hughes was the preferred provider of electric submersible pump equipment and services for a 200 well field in the South and Tarapoa Blocks in Ecuador. This award solidifies our place as the preferred provider for artificial lift in these fields that we have enjoyed for the last ten years.

Europe/Africa/Russia/Caspian

In Nigeria, we installed our first permanent downhole fiber optic gauge in Africa allowing real time production monitoring to facilitate production from a gas reservoir.

In Gabon, Baker Hughes was awarded an offshore completions contract by a major oil company. The package consisted of injector well completions with our innovative Dual Flow Head system which allows simultaneous injection into an upper and lower zone, and full downhole gauge systems, chemical injection mandrels, gas lift, production packers and flow control devices.

In Russia, a major National Oil Company ("NOC") awarded us with a 310 electrical submersible pump systems lease contract, replacing a competitor. We achieved this based on our strong technology offering in artificial lift and the service capability of recently acquired Oil Pump Services company.

In Continental Europe, we secured a sand control contract to provide completions fluids, pressure pumping and tools to an IOC in the Eastern Mediterranean.

Middle East/Asia Pacific

In China's Shengli oilfield we performed a multi-stage FracPoint completion on a horizontal well.

In India, we launched a BEACON Real-Time Operations Center that will provide geomechanical and drilling optimization support for three deep water rigs operated by a NOC where Baker Hughes provides integrated services.

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Baker Supports Marcellus Initiative with New Office

- Baker Supports Marcellus Initiative with New Office

Tuesday, July 19, 2011
Michael Baker Corp.

Michael Baker has established a new office in Towanda, Bradford County, Pa., in support of its Marcellus Shale initiative and growing client base across the Marcellus Shale region from Pittsburgh to north central Pennsylvania to south central New York.

Baker's Matthew Natale, P.E., assistant vice president, said, "Opening the Towanda office allows Baker to provide both staff and services more efficiently to current Marcellus Shale clients in northern Pennsylvania. It will also accommodate growth of shale service areas currently provided out of other Baker offices in Pennsylvania and West Virginia."

"With nearly 1,000 professionals based in offices across the entire Marcellus Shale region, Baker is well-positioned to provide a considerable range of services including surveying and geospatial, well pad design and permitting, pipeline and facilities design, roadway rehabilitation support, and construction management/construction inspection services," added Christine S. Mayernik, P.E., PMP, vice president and coordinator of Baker's Marcellus Shale services. "The new Towanda office further demonstrates our commitment to the region and support of our membership in the Marcellus Shale Coalition."

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Baker Hughes Welcomes New VP, Investor Relations

- Baker Hughes Welcomes New VP, Investor Relations

Monday, June 27, 2011
Baker Hughes Inc.

Baker Hughes announced that Adam B. Anderson will be appointed Baker Hughes' vice president, investor relations effective July 1, 2011. In this position, he will be located in Houston and will report to Peter A. Ragauss, senior vice president and chief financial officer.

Adam will succeed Gary R. Flaharty, who will assume a senior role in Baker Hughes' supply chain organization effective August 1, 2011.

Chad Deaton, chairman and chief executive officer of Baker Hughes said, "Gary has been instrumental in helping Baker Hughes communicate our message and strategy to the Street during his tenure in investor relations and we look forward to his continued success at Baker Hughes.

Adam brings a broad understanding of International and North America operations, sales and marketing to his new position. His knowledge and experience will be helpful in enabling us to communicate Baker Hughes' strategic plans and operational results to our investment community."

Biographical Information

Adam B. Anderson, 35, has most recently been the vice president of completion systems for Baker Hughes in the US Land geomarket. Prior to this role, he held a variety of marketing and operations management positions for Baker Hughes in the Gulf of Mexico, the Middle East and the Product Development Center. Mr. Anderson began his career with PES/WellDynamics and served in a variety of engineering and sales positions. He earned a BS in Petroleum Engineering from Colorado School of Mines and a MBA from the Fuqua School of Business at Duke University.

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Terra Resources Contracts Baker Hughes for Development of Russian Fields

- Terra Resources Contracts Baker Hughes for Development of Russian Fields

Wednesday, May 25, 2011
Terra Resources plc

Terra Resources has engaged Baker Hughes to manage the development of its oil and gas assets in Russia.

Terra Resources and Baker Hughes have entered into a Master Services and Sales Agreement on April 21, 2011 and subsequently approved a work program for the next 4 to 6 months. The objective of the initial work program is to analyze all available data, produce reservoir studies, production forecasts and field development optimization models, develop performance and dynamic modeling, re-entry design, (casing inspection, and additional data acquisition program including but not limited to logging, sampling, and PVT analysis). Additionally, Baker Hughes plans to perform geomechanical modeling for surface completion design and production optimization, workover design (analysis of potential stimulation, re-perforation and side tracking), final subsurface completion design, and surface gathering system design and optimization.

"We are excited about working with Baker Hughes, as we begin to develop our oil and gas assets," stated Dmitriy Salop, Terra Resources' President. "Baker Hughes has performed a comprehensive data review, which enables it to construct a geological model, and move forward rapidly," explains, Mr. Salop. Baker Hughes and Terra Resources expect to start the field execution phase by or before November 2011.

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Baker Hughes Awarded Deepwater ESP Gig at Chevron's Big Foot Proj.

- Baker Hughes Awarded Deepwater ESP Gig at Chevron's Big Foot Proj.

Tuesday, May 24, 2011
Baker Hughes Inc.

Chevron has awarded Baker Hughes a contract to supply electrical submersible pumping (ESP) systems and production packers for seven producing wells, plus mud line packers for three injection wells for their Gulf of Mexico deepwater Big Foot Project. This award marks the first deployment of ESP systems inside the wellbore in the deepwater Gulf of Mexico. The ESP systems will be placed at a true vertical depth of approximately 16,000 feet.

Discovered in 2006, Big Foot is in 5,200 feet of water in the Walker Ridge area of the Gulf of Mexico. The Big Foot production facility will be an extended tension leg platform with an onboard drilling rig and production capacity of 75,000 barrels of oil and 25 million cubic feet of gas. Deployment of the ESP systems is scheduled to begin in 2014.

ESP systems were selected to boost the production stream and maximize asset recovery while extending production life and accelerating recovery. Improved ESP technology and manufacturing controls has extended ESP run times for critical well applications. The 1200 horsepower dual ESP systems will be the highest horsepower in-well systems ever deployed in an offshore environment. The ESP systems are deployed on dual by-pass systems, allowing for reservoir access and the ability to switch between ESPs without intervention.

"Longer-term, the experience and knowledge gained from Big Foot can potentially be applied to other developments in the deepwater market to extend field productivity," said Richard Williams, president of the Gulf of Mexico for Baker Hughes. "We are happy to be working with Chevron on this groundbreaking project to extend the application of ESP technology in the deepwater environment."

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Baker Hughes Names New Executive Chairman

Baker Hughes Names New Executive Chairman

Friday, April 29, 2011
Baker Hughes Inc.

Baker Hughes has approved the transition of Chad C. Deaton, Chairman of the Board and Chief Executive Officer, to the new role of Executive Chairman beginning January 1, 2012. At that time Martin S. Craighead will assume the position of Chief Executive Officer in addition to his role as President of Baker Hughes.

Mr. Deaton said, "In October 2011, I will have served seven years as the leader of Baker Hughes. We have accomplished the major objectives I had when I joined the company in the fall of 2004 and I am very proud to have shared this success with our outstanding employees, management team and Board of Directors. We have expanded and refocused the company, building its competitive strengths while maintaining financial discipline and improving our returns. We have established a strong culture based on our Core Values of Integrity, Performance, Learning and Teamwork.

"I have tremendous respect for Martin's abilities and confidence in his leadership. As an experienced operations executive, Martin has an exceptional background for the CEO role. He has been with the company for over 25 years, including management roles in both the United States and other countries. He is one of the veterans of the company's management team who has effectively mobilized our people and technology into a new geographic alignment as a leading global supplier of oilfield services."

H. John Riley, Lead Director of the company's Board of Directors, said that "The entire board is extremely appreciative of Chad Deaton's outstanding leadership and significant contributions to the success of Baker Hughes over the past several years. He has implemented a strategy for growth and improved performance that has re-energized and broadened the horizons for the company. We look forward to Chad's active involvement in his new role as Executive Chairman.

"The Board joins me in congratulating Martin for earning the opportunity to lead Baker Hughes in the future as the company continues its growth as a leader in our industry. Baker Hughes is extremely well positioned for the future."

Baker Hughes Reports Solid Results, Beats EPS By $0.09

Baker Hughes Reports Solid Results, Beats EPS By $0.09



Apr 27, 2011

Baker Hughes (NYSE:BHI) reported EPS of $0.87 today, beating the consensus estimate for $0.78 per share. Revenue for the quarter was up 78% year-over-year to $4.53 billion, beating the consensus estimate for $4.28 billion. The year ago quarter does not included the results of BJ Services, which Baker Hughes acquired at the end of April 2010.

Chad C. Deaton, Baker Hughes chairman and chief executive officer, said, "International margins continued to improve in the first quarter, despite weather and geopolitical disruptions, as we made steady progress towards our goal of exiting 2011 with international operating margins in the mid-teens. The foundation of our improvement plan has been managing costs and improving efficiency, which have driven the increase in profitability we have seen to date. As we move towards the second half of 2011, activity growth becomes a more important driver of future improvement.

Baker Hughes Boosts 1Q Revenue by 78% in 2011

Baker Hughes Boosts 1Q Revenue by 78% in 2011

Wednesday, April 27, 2011

Baker Hughes Inc.

Baker Hughes announced net income attributable to Baker Hughes for the first quarter 2011 of $381 million or $0.87 per diluted share compared to $129 million or $0.41 per diluted share for the first quarter 2010 and $335 million or $0.77 per diluted share for the fourth quarter 2010.

Revenue for the first quarter 2011 was $4.53 billion, up 78% compared to $2.54 billion for the first quarter 2010 and up 2% compared to $4.42 billion for the fourth quarter 2010.

Results for the first quarter 2010 do not include the results of BJ Services, acquired at the end of April 2010.

Chad C. Deaton, Baker Hughes chairman and chief executive officer, said, "International margins continued to improve in the first quarter, despite weather and geopolitical disruptions, as we made steady progress towards our goal of exiting 2011 with international operating margins in the mid-teens. The foundation of our improvement plan has been managing costs and improving efficiency, which have driven the increase in profitability we have seen to date. As we move towards the second half of 2011, activity growth becomes a more important driver of future improvement.

"Geopolitical supply disruptions have focused attention on the limits of spare oil production capacity and have driven oil prices higher. High oil prices have spurred both international oil companies and national oil companies to accelerate their spending plans. Assuming oil prices do not increase to levels high enough to destroy demand, we expect oil-driven spending growth to be sustained for multiple years. Recent announcements by the Kingdom of Saudi Arabia and Abu Dhabi regarding increased rig activity in the Middle East, and steady increases in spending by Petrobras and other companies to develop fields offshore Brazil give us confidence that the volume growth supporting our margin plans will occur.

"The impact of higher oil prices has not been isolated to the international markets. In North America, on land, overall spending levels have increased as incremental spending on oil and liquids-rich natural gas plays has more than offset weakness in dry gas plays. The rig count in Canada is already dominated by oil-directed drilling and as of last week, for the first time since 1995, the US has more rigs drilling for oil than natural gas. Service intensity in the unconventional shales continues to increase as we drill longer horizontal wells requiring more frac stages and complex completions.

"Our pressure pumping is sold out in North America. We expect to accelerate the deployment of new hydraulic fracturing fleets in the second half of 2011; however, we do not expect that supply will match higher demand for fracturing this year. Although weather improved in March, utilization of equipment was high and we were unable to catch up on work we missed due to colder weather earlier in the quarter.

"Offshore markets will benefit from the resumption of deepwater activity in the Gulf of Mexico. We are encouraged by the recent permitting activity. However, we also recognize that the ten deepwater wells recently permitted to be drilled will only be a fraction of the activity levels we saw before the drilling moratorium was announced. This level of activity is insufficient to offset the 380,000 barrel per day or 23% drop in Gulf of Mexico oil production forecast by the EIA for 2012 compared to 2010. We have continued to invest in our training, safety, and competency assurance programs during the last year, and we are well positioned in the Gulf of Mexico, with our suite of advanced technology and services and experienced personnel, for a resumption of deepwater drilling activity.

"We expect demand for hydrocarbons to continue to increase as the global economy grows. Following the tragic earthquake and tsunami in Japan, we expect oil and LNG to experience higher incremental demand, supporting high oil prices. With shrinking spare capacity, we believe that exploration, development and production spending will increase, raising our confidence that the second half of 2011 will set the stage for a strong 2012."

Debt decreased by $44 million to $3.84 billion and cash and short-term investments decreased by $311 million to $1.40 billion compared to the fourth quarter 2010. Capital expenditures were $429 million, depreciation and amortization expense was $315 million, and dividend payments were $65 million in the first quarter 2011.