Global Energy Conference - NASDAQfiles.shareholder.com/downloads/BHI/0x0x417979/7246372e-3b1b-44a2... · Forward-Looking Statements Today‟s discussion may include “forward-looking

Bank of America / Merrill Lynch

Global Energy Conference

Miami, Florida

11 November 2010

© 2010 Baker Hughes Incorporated. All Rights Reserved.

Forward-Looking Statements

Today‟s discussion may include “forward-looking statements” within the meaning of Section 27A of

the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and “safe harbor”

provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, the

expectations, beliefs, plans and objectives of Baker Hughes. Such statements relate to future events

and expectations and involve known and unknown risks and uncertainties. Our actual results or

actions may differ materially from those projected in these forward-looking statements. For a

summary of the specific risk factors that could cause results to differ materially from those expressed

in the forward-looking statements, please refer to Baker Hughes‟ Annual Report on Form 10-K for the

year ended December 31, 2009; Baker Hughes‟ subsequent quarterly reports on Form 10-Q for the

quarterly periods ended March 31, 2010 and June 30, 2010; and those set forth from time to time in

our other filings with the Securities and Exchange Commission (the “SEC”), which are available at the

SEC‟s website at www.sec.gov and our website at www.bakerhughes.com/investor. Readers are

cautioned not to place undue reliance on forward-looking statements, which speak only as of the date

hereof. We undertake no obligation to publicly update or revise any forward-looking statements.

Reconciliation of Operating and GAAP ResultsReconciliation of non-GAAP results to GAAP results for historic periods can be found on our website

at www.bakerhuhges.com/investor in the Financial Information

section under Financial Reports.

© 2010 Baker Hughes Incorporated. All Rights Reserved.

http://www.sec.gov/

Discussion Topics

• Third quarter results

• International margins

• Market segments

• Importance of U.S. shale plays

• BJ Services integration

• Technology

© 2010 Baker Hughes Incorporated. All Rights Reserved. 3

GAAP Financial Highlights

• Net income of $255 million

• Net income per share of $0.59

– up $0.41 from $0.18 per share in Q3 09


• Revenue of $4.08 billion

– up 83% year-on-year

– up 21% sequentially

• EBITDA per share of $1.64




Operational Highlights

• North America

– Revenue $2 billion, up 71% YoY and 16%

sequentially

– PBT $340 million, up $356 million YoY and

52% sequentially

– PBT margin @ 17%

• International

– Revenue $1.8 billion, up 6% YoY and up 1%

sequentially

– PBT margin @ 5%

• Industrial and Other

– Revenue $278 million, up 10% YoY and up

13% sequentially

– PBT $36 million, up 29% YoY and up 80%

sequentially

– PBT margin @ 13%

$4.078 billion revenue

in Q3 2010

Source: November 1, 2010 News Release Table 3


Customer Focused Organization

Gulf of Mexico

US Land

Canada

Latin America

Europe

Africa

Russia Caspian

Middle East Asia Pacific

Regions and Geomarkets Products and Technology Global Support

US Land, GoM, Canada, Latin

America, Europe, Africa, Russia

Caspian, Middle East, Asia

Pacific

Drilling and Evaluation,

Completions and Production,

Pressure Pumping, Fluids and

Chemicals, Reservoir

Development Services

Industrial and Other

Reliability and Quality, Marketing,

Portfolio Management, Global

Account Management, Supply

Chain and Manufacturing

Integrated Operation

• Are demonstrating a

more holistic view of the

market

• Are developing closer

relationships with our

customers

• Are communicating

clear market-driven

priorities to our

products and

technology organization

• Are executing and

delivering high quality

products and services

to our customers

• Have maintained high

levels HS&E

performance

Our geomarket

management teams…

Improving International Profitability

• Overhead short-term

– Eliminate inefficiencies

– Incurred severance costs in Q3 10

• Overhead long-term

– Revision of geomarket structure

• Supply chain

– On target

• BJ Services synergies

– $75 million year one

– Incremental $75 million in year two

– Revenue synergies

• Volume growth

Market Segments


Deepwater Unconventional

HydrocarbonsAlternative Energy

Conventional

Oil and Gas

Shale Oil

Shale Gas

Heavy Oil

Tar Sands

CBM

Geothermal

Carbon Capture and

Sequestration

Rebound Driven by Unconventional

Hydrocarbons

© 2009 Baker Hughes Incorporated. All Rights Reserved.9

gas-directed oil-directed

A Closer Look


gas-directed oil-directed

Unconventional Plays Drive N. America, + 505


W.Gulf Cst +92

Haynesville+43

Marcellus+88

Andarko+87

Williston +79

Permian +135

BJ Services Integration Update

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Frac crew on site in the Horn River gas play

• April ‟10 BJS acquired

– International integration began

– Cost savings implemented

– $60 million annual run rate

achieved in first 2 months

• September ‟10

“Hold Separate” lifted

– Full access to BJS

– Integration of technologies

• November „10

– Management in place

– Sales teams working together

– Pulling through work

• Within the existing backlog

• On future tenders

Baker Hughes Shale Gas Services


Exploration

• Geomechanical

models

• Reservoir and

economic analysis

• Reservoir

characterization

• Fracture modeling

Appraisal Development

• Wireline logging

• MWD, LWD,

directional drilling

and coring

• Drill bits

• Drilling fluids

• Completion

systems, fishing

and whipstocks

• BJ Services

pumping

Production

•Total chemical

solution

•Production logging

and monitoring

Rejuvenate

•BJ Services

refracturing

•Well remediation

•Wellbore

intervention

• Wireline logging

• MWD, LWD,

directional drilling

and coring

• Drill bits

• Drilling fluids

(Nemsco)

• Completion

systems, fishing

• BJ Services

pumping

Enabling Technology: VaporFrac™

• ~96% nitrogen

• No formation damage

• Ideal for water-sensitive and/or low-pressure gas reservoirs

• Reduced freshwater requirements

• Reduced chemical requirements

(no biocides, clay control, etc.)


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Deepwater: RTCM

Deformed 20 foot length of 7 inch 24lb K55 steel casing

• Next generation drilling and well placement

• Next generation formation evaluation

• Next generation production management

Conventional Hydrocarbons: Reservoir

Navigation Services

• RNS begins with pre-planning geologic reservoir modeling

• Uses real-time drilling and evaluation data

• Lands the wellbore in the target horizon

• Maintains the wellbore in the zone

• Predicts and avoids exiting the reservoir


Intelligent Multi-Node Production/Injection

System

Unconsolidated Sandstone Formations


Multi-Zone Single Trip (MST) System

ComPlete™ MST (Multi-zone Single Trip)

Completion System

– Reduces number of trips necessary to conventionally stimulate and complete multiple intervals

• Over 35 runs to date

– Reduces completion cycle time and associated cost

• Documented savings of 70% of rig time (from ~20 days to 5.3 days)

– Minimizes formation damage and optimize productivity


Unconventional Gas: Multi-Stage Fracs


Annular Frac

BHAEasyTag CCLPacker

Baker Hughes Ported Collar and Custom Pup Joints

• Unlimited number of stages

• Coil tubing activated

• Reduced fluid usage

• Used extensively in Canada

World Oil Awards

• Providing the North Sea

oil and gas industry with

the highest level of

environmentally

compliant waste

processing services

from the rigsite to final

disposal

• Includes remote

monitoring capabilities

• The industry‟s first

fullbore access downhole

electronic flowmeter,

incorporates proprietary,

high-resolution quartz

gauges.

• The unrestricted access

enables full production

and can achieve a high-

accuracy measurement of

98%.

• Applicable in both gas

and liquid environments

• Reduces rig time for

setting upper

completions by

eliminating need for

inner string

• Functions as a fluid

loss control device

• Provides assurance

that EQUALIZER

CF will reach setting

depth

• Combines a rotary

steerable system with

the liner to help

overcome the

challenges of drilling in

zones with lower

pressure and unstable

shale/coal layers, as

well as in formations of

varying flow and

pressure regimes

Peterhead Eco-

CenterTM SureFloTM 298ExMulti-Tasking Valve

Equalizer (MTV)

Steerable Drilling

Liner (SDL)


Peterhead Eco-CenterTM


Baker Hughes Peterhead Eco-Center

• Providing the North Sea with the highest level of

environmentally compliant waste processing services from the

rigsite to final disposal

• Includes remote monitoring capabilities

• Ensures environmental compliance

Digital Oilfield: SureFloTM 298Ex

Maximize recovery with continuous production

• The industry‟s first fullbore access downhole

electronic flowmeter, incorporates proprietary, high-

resolution quartz gauges.

• The unrestricted access enables full production and

can achieve a high-accuracy measurement of 98%.

• Applicable in both gas and liquid environments


Wireline tool passing through the SureFlo 298Ex Gauge

Conventional Oil: MTV


MTVTM—Multi-Tasking Valve

EQUALIZERTM Technology Accessory• Reduces rig time for setting upper completions by eliminating need for

inner string

• Functions as a fluid loss control device

• Provides assurance that EQUALIZER CF will reach setting depth

Deepwater: Steerable Drilling Liner (SDL)


Joint Statoil and Baker Hughes

developed system

Combines a rotary steerable system

with the liner to help overcome the

challenges of drilling in zones with

lower pressure and unstable shale/coal

layers, as well as in formations of

varying flow and pressure regimes

©

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Advanced Measurement &

Actuation

High Performance Information Designer

Materials

Technology Horizons

Sustainable Chemistry


Documents

Global Energy Conference - NASDAQfiles.shareholder.com/downloads/BHI/0x0x417979/7246372e-3b1b-44a2... · Forward-Looking Statements Today‟s discussion may include “forward-looking