GE's oil and gas business merges with Baker Huges Inc
04 July 2017
The merger of GE's oil and gas business with Baker Hughes Inc officially closed yesterday, creating the second-largest supplier of oil industry equipment and services after Schlumberger Ltd.
Baker Hughes, now fully a GE company, is the first and only company to bring together industry-leading equipment, services and digital solutions across the entire spectrum of oil and gas development, according to a GE statement.
''BHGE provides differentiated services for customers by combining digital solutions and technology from the GE Store with the domain expertise of Baker Hughes and its culture of innovation in the oilfield services sector. No other company brings together capabilities across the full value chain of oil and gas activities - from upstream to midstream to downstream. This full-stream portfolio positions BHGE to create new sources of value, improving productivity and project economics through integrated equipment and service offerings,'' the release stated.
According to Lorenzo Simonelli, the GE oil executive who will lead the new Baker Hughes, his company carried built-in advantages over its rivals. Commentators say the development comes at a time of increasing risks and uncertainty in the oil market at large.
Shale explorers had been riding a fresh drilling boom, with budgets increasing 10 times faster in the US than the rest of the world. Whether that growth would sustain, however, was far from certain. Following around six months of growth, the number of rigs targeting oil were down last week and production declined indicating growing caution among producers for next year.
"I think they need a little more time over the course of this year to make those decisions," Simonelli said in an interview on Friday ahead of finalising the merger yesterday. He was also not ready to make any new predictions on the profit outlook for his company in 2018. "It's a little early to say."
According to commentators, the merged company which retains the name Baker Hughes, would need to cut jobs including some at its Houston head office. The company would also need to compete in a changed oil and gas industry, one that was leaner and demanding ever greater efficiency from its contractors following the three-year-old crash in oil prices.