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8-K - FORM 8-K - Baker Hughes Holdings LLC | h81663e8vk.htm |
Exhibit 99.1 | ||
News Release | ||
Contact: Gary R. Flaharty, +1.713.439.8039, gflaharty@bakerhughes.com Alexey A. Reznichenko, +1.713.439.8822, alexey.reznichenko@bakerhughes.com |
Baker Hughes Incorporated 2929 Allen Parkway Houston, Texas 77019 Phone: 713.439.8600 Fax: 713.439.8280 www.bakerhughes.com |
Baker Hughes Announces First Quarter Results
HOUSTON, Texas April 27, 2011. Baker Hughes Incorporated (BHI NYSE) today 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.
Exhibit 99.1 | ||
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 2 |
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.
Earnings before interest, taxes, depreciation and amortization or EBITDA per diluted share for
the first quarter 2011 was $2.19, up $0.86 or 65% compared to $1.33 for the first quarter 2010 and
up $0.01 compared to $2.18 for the fourth quarter 2010. EBITDA is a non-GAAP measure and is
calculated in Table 1 (Calculation of EBIT and EBITDA (non-GAAP measures)).
In addition to reported results, we are also providing Supplemental Financial Information in
Table 3 for revenue and operating profit before tax (a non-GAAP measure) for the first quarter
2010. This information presents pro forma combined revenue and operating profit before tax,
including estimates for depreciation and amortization expense associated with the acquisition of BJ
Services in April 2010.
Exhibit 99.1 | ||
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 3 |
Financial Information
Consolidated Statements of Operations
Consolidated Statements of Operations
UNAUDITED | Three Months Ended | |||||||||||
(In millions, except per share amounts) | March 31, | December 31, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
Revenues |
$ | 4,525 | $ | 2,539 | $ | 4,423 | ||||||
Costs and Expenses: |
||||||||||||
Cost of revenues |
3,497 | 1,912 | 3,421 | |||||||||
Research and engineering |
106 | 94 | 105 | |||||||||
Marketing, general and administrative |
282 | 305 | 279 | |||||||||
Acquisition-related costs |
| 10 | 56 | |||||||||
Total costs and expenses |
3,885 | 2,321 | 3,861 | |||||||||
Operating income |
640 | 218 | 562 | |||||||||
Gain on investments |
| | 6 | |||||||||
Interest expense, net |
(52 | ) | (24 | ) | (48 | ) | ||||||
Income before income taxes |
588 | 194 | 520 | |||||||||
Income taxes |
204 | 65 | 178 | |||||||||
Net income |
384 | 129 | 342 | |||||||||
Net income attributable to noncontrolling interests |
3 | | 7 | |||||||||
Net income attributable to Baker Hughes |
$ | 381 | $ | 129 | $ | 335 | ||||||
Basic earnings per share of Baker Hughes |
$ | 0.88 | $ | 0.41 | $ | 0.78 | ||||||
Diluted earnings per share of Baker Hughes |
$ | 0.87 | $ | 0.41 | $ | 0.77 | ||||||
Weighted average shares outstanding, basic |
435 | 313 | 432 | |||||||||
Weighted average shares outstanding, diluted |
437 | 313 | 434 | |||||||||
Depreciation and amortization expense |
$ | 315 | $ | 189 | $ | 326 | ||||||
Capital expenditures |
$ | 429 | $ | 190 | $ | 486 |
Exhibit 99.1 | ||
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 4 |
Table 1: Calculation of EBIT and EBITDA (non-GAAP measures)1
Three Months Ended | ||||||||||||||||||||||||
March 31, 2011 | March 31, 2010 | December 31, 2010 | ||||||||||||||||||||||
per diluted | per diluted | per diluted | ||||||||||||||||||||||
UNAUDITED | millions | share | millions | share | millions | share | ||||||||||||||||||
Net income attributable to Baker Hughes |
$ | 381 | $ | 0.87 | $ | 129 | $ | 0.41 | $ | 335 | $ | 0.77 | ||||||||||||
Net income attributable to NCI2 |
3 | | 7 | |||||||||||||||||||||
Income taxes |
204 | 65 | 178 | |||||||||||||||||||||
Income before income taxes |
588 | 194 | 520 | |||||||||||||||||||||
Interest expense, net |
52 | 24 | 48 | |||||||||||||||||||||
Acquisition-related costs3 |
| 10 | 56 | |||||||||||||||||||||
(Gain) on investments |
| | (6 | ) | ||||||||||||||||||||
Earnings before interest
and taxes (EBIT) |
640 | $ | 1.46 | 228 | $ | 0.73 | 618 | $ | 1.42 | |||||||||||||||
Depreciation and amortization
expense |
315 | 189 | 326 | |||||||||||||||||||||
Earnings before interest,
taxes, depreciation and
amortization (EBITDA) |
$ | 955 | $ | 2.19 | $ | 417 | $ | 1.33 | $ | 944 | $ | 2.18 | ||||||||||||
1 | EBIT, EBITDA, EBIT per diluted share and EBITDA per diluted share (as defined in the calculations above) are non-GAAP measurements. Management uses EBIT and EBITDA because it believes that such measurements are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance. | |
2 | Noncontrolling interests. | |
3 | Costs related to the acquisition of BJ Services. |
Exhibit 99.1 | ||
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 5 |
Consolidated Balance Sheets
(UNAUDITED) | (AUDITED) | |||||||
March 31, | December 31, | |||||||
(In millions) | 2011 | 2010 | ||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and short-term investments |
$ | 1,395 | $ | 1,706 | ||||
Accounts receivable, net |
4,371 | 3,942 | ||||||
Inventories, net |
2,805 | 2,594 | ||||||
Other current assets |
474 | 465 | ||||||
Total current assets |
9,045 | 8,707 | ||||||
Property, plant and equipment, net |
6,432 | 6,310 | ||||||
Goodwill |
5,957 | 5,869 | ||||||
Intangible assets, net |
1,541 | 1,569 | ||||||
Other assets |
536 | 531 | ||||||
Total assets |
$ | 23,511 | $ | 22,986 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 1,549 | $ | 1,496 | ||||
Short-term borrowings and current portion of
long-term debt |
296 | 331 | ||||||
Accrued employee compensation |
566 | 589 | ||||||
Income taxes payable |
197 | 219 | ||||||
Other accrued liabilities |
531 | 504 | ||||||
Total current liabilities |
3,139 | 3,139 | ||||||
Long-term debt |
3,545 | 3,554 | ||||||
Deferred income taxes and other tax liabilities |
1,346 | 1,360 | ||||||
Long-term liabilities |
658 | 647 | ||||||
Stockholders Equity |
14,823 | 14,286 | ||||||
Total liabilities and stockholders equity |
$ | 23,511 | $ | 22,986 | ||||
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 6 |
Table 2: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin1
Three Months Ended | ||||||||||||
March 31, | March 31, | December 31, | ||||||||||
(In millions) | 2011 | 2010 | 2010 | |||||||||
Segment Revenue |
||||||||||||
North America |
$ | 2,352 | $ | 919 | $ | 2,210 | ||||||
Latin America |
473 | 272 | 482 | |||||||||
Europe/Africa/Russia Caspian |
771 | 720 | 793 | |||||||||
Middle East/Asia Pacific |
659 | 439 | 657 | |||||||||
Industrial Services and Other |
270 | 189 | 281 | |||||||||
Oilfield Operations |
$ | 4,525 | $ | 2,539 | $ | 4,423 | ||||||
Profit Before Tax |
||||||||||||
North America |
$ | 460 | $ | 141 | $ | 478 | ||||||
Latin America |
63 | 9 | 43 | |||||||||
Europe/Africa/Russia Caspian |
91 | 80 | 64 | |||||||||
Middle East/Asia Pacific |
79 | 30 | 68 | |||||||||
Industrial Services and Other |
14 | 17 | 28 | |||||||||
Oilfield Operations |
707 | 277 | 681 | |||||||||
Corporate and Other Profit Before Tax |
||||||||||||
Acquisition-related costs |
| (10 | ) | (56 | ) | |||||||
Gain on investments |
| | 6 | |||||||||
Interest expense, net |
(52 | ) | (24 | ) | (48 | ) | ||||||
Corporate and other |
(67 | ) | (49 | ) | (63 | ) | ||||||
Corporate, net interest and other |
(119 | ) | (83 | ) | (161 | ) | ||||||
Total Profit Before Tax |
$ | 588 | $ | 194 | $ | 520 | ||||||
Profit Before Tax Margin1 |
||||||||||||
North America |
20 | % | 15 | % | 22 | % | ||||||
Latin America |
13 | % | 3 | % | 9 | % | ||||||
Europe/Africa/Russia Caspian |
12 | % | 11 | % | 8 | % | ||||||
Middle East/Asia Pacific |
12 | % | 7 | % | 10 | % | ||||||
Industrial Services and Other |
5 | % | 9 | % | 10 | % | ||||||
Oilfield Operations |
16 | % | 11 | % | 15 | % | ||||||
1 | Profit before tax margin is a non-GAAP measure defined as profit before tax (income before income taxes) divided by revenue. Management uses the profit before tax margin because it believes it is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance. |
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 7 |
Table 3: Supplemental Financial Information (Pro Forma Combined Basis)1
The following table contains non-GAAP measures of segment revenue, operating profit before
tax2, and operating profit before tax margin2. Management uses this
information to perform meaningful comparisons between quarters and believes that this information
may be useful to investors. Supplemental financial information for the first quarter 2008 through
the first quarter 2011 can be found on our website at www.bakerhughes.com/investor in the Financial
Information section.
Three Months Ended | ||||||||||||||||
March 31, | March 31, | December 31, | ||||||||||||||
(In millions) | 2011 | 20103 | 2010 | |||||||||||||
Segment Revenue |
||||||||||||||||
North America |
$ | 2,352 | $ | 1,641 | $ | 2,210 | ||||||||||
Latin America |
473 | 399 | 482 | |||||||||||||
Europe/Africa/Russia Caspian |
771 | 815 | 793 | |||||||||||||
Middle East/Asia Pacific |
659 | 554 | 657 | |||||||||||||
Industrial Services and Other |
270 | 248 | 281 | |||||||||||||
Oilfield Operations |
$ | 4,525 | $ | 3,657 | $ | 4,423 | ||||||||||
Operating Profit Before Tax2 |
||||||||||||||||
North America |
$ | 460 | $ | 176 | $ | 478 | ||||||||||
Latin America |
63 | 5 | 43 | |||||||||||||
Europe/Africa/Russia Caspian |
91 | 84 | 64 | |||||||||||||
Middle East/Asia Pacific |
79 | 43 | 68 | |||||||||||||
Industrial Services and Other |
14 | 18 | 28 | |||||||||||||
Oilfield Operations |
$ | 707 | $ | 326 | $ | 681 | ||||||||||
Operating Profit Before Tax Margin2 |
||||||||||||||||
North America |
20 | % | 11 | % | 22 | % | ||||||||||
Latin America |
13 | % | 1 | % | 9 | % | ||||||||||
Europe/Africa/Russia Caspian |
12 | % | 10 | % | 8 | % | ||||||||||
Middle East/Asia Pacific |
12 | % | 8 | % | 10 | % | ||||||||||
Industrial Services and Other |
5 | % | 7 | % | 10 | % | ||||||||||
Oilfield Operations |
16 | % | 9 | % | 15 | % | ||||||||||
1 | This supplemental financial information is provided for illustrative purposes and is not intended to represent or be indicative of the consolidated results of operations or financial position of Baker Hughes had the BJ Services acquisition been completed as of the dates presented and should not be taken as representative of future results of operations or financial position of the combined company. | |
2 | Operating profit before tax is a non-GAAP measure defined as profit before tax (income before income taxes) less certain identified costs. Operating profit before tax margin is a non-GAAP measure defined as operating profit before tax divided by revenue. Management uses operating profit before tax because it believes it is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance and that this measurement may be used by investors to make informed investment decisions. | |
3 | Results for the quarter ended March 31, 2010 are based on revenue and operating profit before tax previously reported by Baker Hughes and estimated by BJ Services for the quarter ended March 31, 2010. Operating profit before tax includes pro forma charges of $33 million per quarter for depreciation and amortization of tangible and intangible assets associated with the acquisition of BJ Services and a credit to corporate interest expense of $3 million, for a net of $30 million. No adjustments have been made for cost or revenue synergies or any other integration related items that may have affected this quarter. |
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 8 |
Operational Highlights
North America
We continue to realize market opportunities from our expanded product portfolio. For example, in
US Land geomarket, through an existing contract with Cabot Oil & Gas for pressure pumping services,
we were awarded incremental contracts for drilling services, drilling fluids, completions, wireline
and chemicals, with estimated annual revenue of more than $150 million. In March, we achieved a
50% increase in efficiency in stage completions for Cabot, a new record for the client.
In US Land, an independent operator awarded us a 39-well, $140 million contract to perform all
their Marcellus Shale work (excluding microseismic) in 2011-2012.
In the Eagle Ford shale, we secured a contract from an independent operator that includes 12 wells
with all product lines, representing over $100 million in revenue for 2011.
In the first quarter 2011, we announced the next generation of our FracPoint multi-stage
fracturing system with innovative In-Tallic disintegrating frac balls. Our nanotechnology
research efforts enabled us to develop metal balls that would electrochemically decompose saving
the operator time, ensuring a clean wellbore and immediate production.
Finally, we continue to gain market share in the Woodford Basin through a contract award by an
independent operator for wireline, completions, pressure pumping, cementing and coil tubing,
creating a Blue Wellbore for the customer.
In the deepwater Gulf of Mexico, Baker Hughes has been awarded a multi-million dollar contract for
Electrical Submersible Pump (ESP) systems and upper completions by a super major. This is the
first Miocene development in the Gulf of Mexico to deploy ESPs inside the wellbore to extend life.
In Canada, we delivered a 15-stage fracture treatment in record time using our
OptiPortTM coiled tubing deployed frac sleeve technology for a client in the Viking
Resource Play in Saskatchewan. We reduced average fracturing time by 45% and reduced fluid usage
by 30%.
Latin America
In Brazil, we achieved two key milestones for Petrobras in the Lula field. First, we kicked off
the first-ever directional section in a pre-salt area in Brazil using our AutoTrak G3
rotary-steerable system, OnTrak measurement and logging-while-drilling system, and CoPilot
real-time drilling optimization system. Second, we installed the first intelligent completion in
the pre-salt deepwater frontier challenging well with high CO2 and H2S
levels.
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 9 |
Also in Brazil, we completed the drilling phase of our integrated operations project for
Brazils largest independent in the Campos Basin. The project continues, and we expect revenue of
approximately $60 million in 2011.
In Ecuador, Andes Petroleum awarded us a multi-million dollar three-year ESP contract, building on
our successful track record of ten years of artificial lift operations in the Andes Fields. The
award includes advanced pumps technology with extreme duty Centurion systems.
Europe/Africa/Russia Caspian
In the Continental Europe geomarket, offshore Italy, Baker Hughes installed the worlds first
openhole GeoFORMTM conformable sand management system. The GeoFORM system is a shape
memory polymer that provides a simple, cost-effective total conformance sand control solution,
while significantly reducing installation time.
Maintaining our strong market position in the Norway geomarket, Baker Hughes was awarded a two-year
completions contract by a super major for over $200 million as a result of our strong record of
execution and solid relationship.
In Russia, we have been awarded a multi-million dollar integrated operations project by a national
oil company for a remote, deep, high pressure gas test well on the Yamal Peninsula.
Also in Russia, in Western Siberia, we were awarded a multi-well project planned for 2011,
introducing our 4 3/4-inch LithoTrak and OnTrak technologies through a drilling contractor for a
leading Russian major.
Baker Hughes has strengthened its position in offshore Sakhalin where we secured a ten-well,
three-year contract for high pressure fracing and gravel placement services.
In the Sub-Sahara Africa geomarket, in Angola, we won a three-year deepwater drilling and
evaluation services contract for Block 18 by an international oil company. Also in Angola another
IOC has awarded us a two-well drilling and evaluation program for Blocks 16 and 23.
Middle East/Asia Pacific
In Saudi Arabia, we significantly enhanced production from existing gas wells using under-balanced
coil tubing drilling on two hybrid rigs for a national oil company. Laterals of several thousand
feet were drilled using our CoilTrak bottom-hole-assembly and custom PDC bits. Year-over-year,
the monthly footage drilled has more than doubled, and we have reduced non-
productive time (NPT) to 5% compared to the 17.5% average of the 5 wells drilled prior to the
beginning of our contract.
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 10 |
We strengthened our supply chain in the Middle East by opening our newest drill bit
manufacturing plant in Dhahran, Saudi Arabia, in the first quarter 2011. The facility is fully
operational and delivering industry-leading polycrystalline diamond compact (PDC) bits to the Saudi
Arabian and Middle East markets.
In Iraq, our focus on completions and production enhancement is paying dividends. All product
lines are engaged with workover rigs and rigless operations on multiple projects that include
cementing, coiled tubing clean-out, and open-hole and closed-hole wireline services. Recently
awarded projects include work with Lukoil, BP and ENI further strengthening our position in Iraq.
In the Southeast Asia geomarket, a NOC has awarded us a contract to revitalize and increase
production and recovery of oil and gas in a mature field offshore Malaysia. The contract is
comprised of a 15-month field development study with accompanying production enhancement work with
considerable upside potential as work progresses.
Also in Malaysia, a super major has awarded Baker Hughes the 2010 Team of the Year global prize
for the successful installation of six Intelligent Well completions on the St. Josephs development
in 2010. Through this award, we displaced a competitor that previously had the work for nine
years. The six wells were completed in eight weeks, greatly enhancing oil field recovery and
incremental revenue to the customer.
In India, we are penetrating the deepwater market through a five-year integrated operations
contract from a NOC, which includes a fully integrated Baker Hughes solution estimated at almost
$300 million. We will provide drilling systems, fluids, liner hangers, cementing and mudlogging on
this semi-submersible rig capable of drilling high pressure / high temperature wells at 10,000 ft.
Industrial and Other
Our Industrial Services Portfolio (ISP) group, comprised of downstream services, specialty
chemicals and pipeline commissioning and inspection, secured a significant contract from Agip KCO
for providing leak testing and related services on the Kasahagan field offshore Kazakhstan.
Conference Call
The company has scheduled a conference call to discuss the results reported in todays earnings
announcement. The call will begin at 8:30 a.m. Eastern time, 7:30 a.m. Central time, on Wednesday
April 27, 2011, the content of which is not part of this earnings release. A slide presentation
providing summary financial and statistical information that will be discussed on the conference
call will also be posted to the companys website and available for real-time viewing. To access
the call, which is open to the public, please contact the conference call operator at
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 11 |
(800) 374-2469, or (706) 634-7270 for international callers, 20 minutes prior to the scheduled
start time, and ask for the Baker Hughes Conference Call. A replay will be available through
Wednesday, May 11, 2011. The number for the replay is (800) 642-1687, or (706) 645-9291 for
international callers, and the access code is 45880129. The conference call will be webcast
simultaneously at http://investor.shareholder.com/bhi/events.cfm on a listen-only basis. The call
and replay will also be available on our website at www.bakerhughes.com/investor.
Forward-Looking Statements
This news release (and oral statements made regarding the subjects of this release, including on
the conference call announced herein) contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, (each a forwardlooking statement). The words anticipate, believe,
ensure, expect, if, intend, estimate, project, forecasts, predict, outlook,
aim, will, could, should, potential, would, may, probable, likely, and similar
expressions, and the negative thereof, are intended to identify forwardlooking statements. There
are many risks and uncertainties that could cause actual results to differ materially from our
forward-looking statements. These forward-looking statements are also affected by the risk factors
described in the companys Annual Report on Form 10-K for the year ended December 31, 2010 and
those set forth from time to time in other filings with the Securities and Exchange Commission
(SEC). The documents are available through the companys website at
http://www.bakerhughes.com/investor or through the SECs Electronic Data Gathering and Analysis
Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or
revise any forwardlooking statement.
Our expectations regarding our business outlook and business plans; the business plans of our
customers; the integration of BJ Services; oil and natural gas market conditions; cost and
availability of resources; economic, legal and regulatory conditions and other matters are only our
forecasts regarding these matters.
These forward looking statements, including forecasts, may be substantially different from actual
results, which are affected by many risks including the following risk factors and the timing of
any of these risk factors:
Baker Hughes-BJ Services acquisition preliminary estimates of acquisition accounting may change;
the inability to achieve the expected benefits of the acquisition, including financial and
operating results; the risk that the cost savings and any other synergies from the transaction may
not be realized or take longer to realize than expected; the ability to successfully integrate the
businesses; and with respect to the historical financial information for BJ Services disclosed or
utilized in this news release: the estimates, pro forma calculations and quarterly results have not
been audited and actual results may differ materially, no assurance can be given that these results
were realized or can be considered predictive of actual or future results, and that we do not
intend to update or otherwise revise these estimates.
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 12 |
Economic conditions the impact of worldwide economic conditions; the effect that declines
in credit availability may have on worldwide economic growth and demand for hydrocarbons; the
ability of our customers to finance their exploration and development plans; and foreign currency
exchange fluctuations and changes in the capital markets in locations where we operate.
Oil and gas market conditions the level of petroleum industry exploration, development and
production expenditures; the price of, volatility in pricing of, and the demand for crude oil and
natural gas; drilling activity; the impact of recovery from the now lifted US Gulf of Mexico
drilling moratorium; the timing for new drilling permits both on the shelf and in the deepwater;
and changes in the regulation of drilling in the US Gulf of Mexico or other areas as well as higher
operating costs; excess productive capacity; crude and product inventories; LNG supply and demand;
seasonal and other adverse weather conditions that affect the demand for energy; severe weather
conditions, such as hurricanes, that affect exploration and production activities; Organization of
Petroleum Exporting Countries (OPEC) policy and the adherence by OPEC nations to their OPEC
production quotas.
Terrorism and geopolitical risks war, military action, terrorist activities or extended periods
of international conflict, particularly involving any petroleumproducing or consuming regions;
labor disruptions, civil unrest or security conditions where we operate; expropriation of assets by
governmental action.
Price, market share, contract terms, and customer payments our ability to obtain market prices
for our products and services; the effect of the level and sources of our profitability on our tax
rate; the ability of our competitors to capture market share; our ability to retain or increase our
market share; changes in our strategic direction; the effect of industry capacity relative to
demand for the markets in which we participate; our ability to negotiate acceptable terms and
conditions with our customers, especially national oil companies, to successfully execute these
contracts, and receive payment in accordance with the terms of our contracts with our customers;
our ability to manage warranty claims and improve performance and quality; our ability to
effectively manage our commercial agents.
Costs and availability of resources our ability to manage the costs and availability of
sufficient raw materials and components (especially steel alloys, chromium, copper, carbide, lead,
nickel, titanium, beryllium, barite, synthetic and natural diamonds, sand, chemicals, and
electronic components); our ability to manage energy-related costs; our ability to manage
compliance-related costs; our ability to recruit, train and retain the skilled and diverse
workforce necessary to meet our business needs and manage the associated costs; the effect of
manufacturing and subcontracting performance and capacity, including forecasted costs to meet our
revenue goals; the availability of essential electronic components used in our products; the effect
of competition, particularly our ability to introduce new technology on a forecasted schedule and
at forecasted costs; potential impairment of long-lived assets; the accuracy of our estimates
regarding our capital spending requirements; unanticipated changes in the levels of our capital
expenditures; the need to replace any unanticipated losses in capital assets; labor-related
Exhibit 99.1
Baker Hughes Incorporated News Release Baker Hughes Announces First Quarter Results |
Page 13 |
actions, including strikes, slowdowns and facility occupations; our ability to maintain
information security.
Litigation and changes in laws or regulatory conditions the potential for unexpected litigation
or proceedings and our ability to obtain adequate insurance on commercially reasonable terms; the
legislative, regulatory and business environment in the US and other countries in which we operate;
outcome of government and legal proceedings as well as costs arising from compliance and ongoing or
additional investigations in any of the countries where the company does business; new laws,
regulations and policies that could have a significant impact on the future operations and conduct
of all businesses; restrictions on hydraulic fracturing; any restrictions on new or ongoing
offshore drilling; permit and operational delays or program reductions as a result of the new
regulations and recovery from the drilling moratorium in the Gulf of Mexico; changes in export
control laws or exchange control laws; restrictions on doing business in countries subject to
sanctions; customs clearance procedures; changes in accounting standards; changes in tax laws or
tax rates in the jurisdictions in which we operate; resolution of tax assessments or audits by
various tax authorities; and the ability to fully utilize our tax loss carry forwards and tax
credits.
Environmental matters unexpected, adverse outcomes or material increases in liability with
respect to environmental remediation sites where we have been named as a potentially responsible
party; the discovery of new environmental remediation sites; changes in environmental regulations;
the discharge of hazardous materials or hydrocarbons into the environment.
Baker Hughes provides reservoir consulting, drilling, pressure pumping, formation evaluation,
completion and production products and services to the worldwide oil and gas industry.
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