GE To Spin Off Baker Hughes
GE announced today that it is spinning off Baker Hughes (BHGE) in its strategic plan for growth and shareholder value creation. It plans to focus on aviation, power, and renewable energy.
GE CEO John Flannery said these areas share technologies, digital and additive strategies, and business models.
The separation from Baker Hughes will take place over the next 2 to 3 years as part of GE’s effort to “make its corporate structure leaner and substantially reduce debt,” the company said in a statement. GE Oil and Gas merged with Baker Hughes in July 2017, with GE holding a 62.5% stake. BHGE’s revenue on an annualized basis is $22 billion.
GE Healthcare will also be separated into a standalone company, which will begin immediately and progress over the next 12 to 18 months. The spin-offs of BHGE and GE Healthcare are part of GE’s efforts announced last fall to sell $20 billion worth of assets.
Hints of possible restructuring arose when Flannery assigned a task force then to “evaluate exit options on Baker Hughes.” During a conference call at the time, he said, “When the whole transaction was put together, it really was a great combination of businesses. We had an upstream equipment business. They had a service business. But it was specifically designed to create the optionality that we’re talking about right now.”
GE’s “lock-up period” expires in July 2019, during which it cannot sell its interest in Baker Hughes without the approval from a committee of independent directors on Baker Hughes’ board of directors. GE’s board of directors unanimously approved today’s spin-off plans.
In January, Lorenzo Simonelli, BHGE chairman and CEO, said, “GE is evaluating exit options for its stake in our company. … We are well positioned for any change ahead as we already operate independently with a strong governance structure in place.”
Recent BHGE Contracts Awarded
In the past week, BHGE announced several contracts. The most recently announced is one from Chevron Australia Pty Ltd. for the supply of subsea production equipment, under a 15-year master service order with a second contract for well completion equipment in the Greater Gorgon area. The equipment will be used in the second development phase helping to maintain gas supply to the downstream LNG plant.
The scope of supply includes 13 subsea production trees, two eight-slot manifolds, 13 MS-700 SFX fatigue-resistant wellheads and specialty connectors and pipes systems, and 16 Sem2K subsea control systems and associated equipment. BHGE is also supplying well completion equipment and services under a separate 5-year contract, including coring work, liner hangers, completions, and wellbore cleanup technology.
BHGE is expanding the focus of its Oil & Gas Technology Center in Oklahoma City, Oklahoma, launched in 2014, from traditional R&D to launching new products and services into the marketplace as startups. The Center will be renamed the BHGE Energy Innovation Center of North America to reflect its new role as an innovation accelerator for the energy industry.
“BHGE enjoys a long history of innovation and technology leadership,” said Derek Mathieson, BHGE chief marketing and technology officer. “A new product can typically take 2–3 years before it can be available and put to use at a customer site. The unique challenges and evolving needs of our customers in North America require a new approach, so we have repositioned the Center to dramatically accelerate technology development for better customer outcomes.”
Examples of incubator projects targeted to North American customers include the application of augmented and mixed reality technology for asset management; using intelligent automation in the field to increase production through machine learning; and providing fullstream enhanced oil recovery services for unconventional reservoirs.
In the Norwegian continental shelf, BHGE was awarded the drilling and well services for the eight rigs developing the Troll, Oseberg, and Grane fields. Products and services will include integrated drilling services, drill bits, cementing and pumping, drilling and completion fluids, electrical wireline logging and completions. BHGE will also provide upper completions and mechanical well washing services for three other fields.
GE To Spin Off Baker Hughes
Pam Boschee, Senior Editor
26 June 2018
Norway Awards Most Licenses Ever in New Round
In need of an exploration boost, Norway doled out a record 83 production licenses in mature areas of the Norwegian Continental Shelf to 33 firms.
Eni To Team With BP, Others in Growing Middle East Exploration Campaign
By racking up exploration agreements in the United Arab Emirates, Oman, and Bahrain, Eni took a big step forward in its pledge to tap into the Middle East’s vast swaths of highly prospective oil and gas acreage.
ProPetro Completes Acquisition of Pioneer’s Pressure Pumping Assets
ProPetro closed its deal to purchase Pioneer’s pressure pumping fleet, boosting its services in the Permian Basin.
Don't miss out on the latest technology delivered to your email weekly. Sign up for the JPT newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.
16 January 2019
10 January 2019
14 January 2019
15 January 2019
16 January 2019