Baker Hughes seeks own identity
Baker Hughes is developing its own identity and positioning itself for growth now that it’s more than six months past its merger with General Electric’s oil and gas business, the chief executive of the Houston energy services company said Wednesday.
That independent outlook of emerging independence for Baker Hughes could be important, considering its majority owner, Boston-based GE, is struggling financially and considering selling its stake in Baker Hughes in 2019, if not sooner.
“We are well-positioned for any changes ahead as we already operate independently,” said Baker Hughes’ chairman and CEO, Lorenzo Simonelli, who previously headed GE Oil & Gas.
GE’s stock has plummeted nearly 50 percent in a little more than a year. GE owns 62.5 percent of Baker Hughes, but it’s still unclear how it might divest its holdings. GE is restricted from pulling out of the company until mid-2019 unless given special permission from an independent committee designated by the Baker Hughes and GE boards.
GE chief executive John Flannery has praised Baker Hughes and its potential, but he is seeking to turn around GE’s fortunes by shrinking the industrial con-
glomerate by putting up its transportation and lighting businesses up for sale and focusing on health care, aviation and power.
Baker Hughes said Wednesday that it narrowed its fourthquarter loss to $29 million from $104 million in the third quarter — its first three months as a merged company.
As Baker Hughes continues to integrate operations after the merger, Simonelli said, the company is focused on long-term success, remaining patient with divisions that do business with still-languishing sectors of the energy industry, such as deepwater exploration and production, and liquefied natural gas.
The goals are to keep expanding its market share, especially in North America and the Middle East, while keeping costs low through efficiencies and integrated services made possible through the GE merger.
Market share, profit margins and cash flow are all on the rise, Simonelli said.
Byron Pope, an energy analyst with the Houston investment bank Tudor, Pickering, Holt & Co., said Baker Hughes avoided any big surprises in its earnings as it remained on track to make the merger work. The company reported $5.8 billion in revenue in the fourth quarter, up 7 percent from the third quarter.
Baker Hughes’ revenue, however, fell shy of the $5.9 billion generated by Halliburton as the Houston rivals compete to be world’s secondlargest energy services company after Schlumberger.
Baker Hughes’ stock fell nearly 6 percent Wednesday to $33.78 a share, but some of that slide may stem from the market’s concerns with GE, analysts said.