Transcription
Baker Hughes, a GE CompanyInvestor UpdateDecember 8, 2016
Agenda and SpeakersNew Baker HughesLorenzo SimonelliBHI Deal RationaleMartin CraigheadCreating Customer Value Productivity Leadership- Commercial InnovationMaria Borras/Derek Mathieson/Rod Christie- Digital TransformationMatthias Heilmann- Technology LeadershipArt Soucy/Kishore Sundararajan- Optimizing OperationsJody MarkopoulosIntegration UpdateUwem UkpongSummaryLorenzo SimonelliQ&ADecember 8, 20162
Baker Hughes, a GE CompanyLorenzo SimonelliDecember 8, 20163
What We Like About the Deal1Fullstream technology provider industry-unique portfolio2Combining strengths technology, services, global capability32x scale better ability to influence customer outcomes4Blended leadership team deep industry expertise5GE Digital capability significant impact on oilfield services productivity6Significant synergies NewCo better positioned to navigate cyclesDecember 8, 20164
Transaction Overview the “new” Baker HughesShareholders 17.50/shdividend100%Newco, Inc.(NYSE listed)62.5%37.5% 7.4BcashBaker Hughes, a GE company(operating partnership)GE Oil & Gas 7.4B cash Merge GE Oil & Gas with Baker Hughes GE owns 62.5%,new Baker Hughes owns 37.5% through partnership structure Publicly traded company with separate investor base; robustminority protections Ownership interest & voting aligned GE to contribute 7.4B to fund cash dividend, Baker Hughesdistributes 17.50 per share dividend to shareholders Baker Hughes shareholders receive dividend & 37.5% equityof stronger business Blended leadership team 9 member Board 5 appointed by GE, 4 by Baker Hughes,including M. CraigheadDecember 8, 20165
Update Since 10/31 Transaction Announcement Broad support for transaction strong industrial logic Customers see significant value Process, Technology, Digital Provided supplemental financial information on GE O&G Hosted GE O&G specific investor event at Minds Machines conference Integration teams kicked off and executing cost revenue synergies Regulatory process underwayDecember 8, 20166
Baker Hughes, a GE Company 34B* revenue 70,000 employees 120 countriesDrilling & EvaluationCompletion &ProductionFind and produce hydrocarbonsLNG &Pipeline SolutionsRefinery &Petrochemical SolutionsTransport hydrocarbonsProcess & marketproductsDigital Solutions* 2020FBroad solutions portfolio fullstream capabilityDecember 8, 20167
Creating the Productivity Leader in the O&G IndustryFullstream portfolioProductivity driversDrilling & EvaluationBetter outcomes Commercial Innovation Cost per BarrelCompletion & ProductionLNG & Pipeline SolutionsRefinery & PetrochemicalSolutions Digital Transformation Faster cycle times Technology Leadership Operations Optimization ROIDigital Solutions#1 or #2 in keysegmentsUnique differentiatorsExecution ResultsDecember 8, 20168
Deal RationaleMartin CraigheadDecember 8, 20169
Volatility is the New Normal 1507,000 Volatility remains despite improvedGlobal Rig CountWTI Spot Price (left)prospects for a recovery6,0005,000 Operators need stability, resilience, and4,000 /barrelpredictability 100 Industry unsuccessful in achieving return-on-invested-capital3,000 502,0001,000 Recovery rates and well efficiencies aresub-optimal 0198001985199019952000200520102015An equipment, services and digital partner is essential to driving productivityDecember 8, 201610
Customers Require More ProductivityCustomer requirementsDiminishing returns through cycleROCE – Selected Majors & Independents14%16%‘08AverageBrent /bbl 995%(1)%(1)%‘13‘14‘15’16 YTD 108 100 54 45Step change in productivity unit cost of oil and gas productionmust be improvedBreakevens
Publicly traded company with separate investor base; robust minority protections Ownership interest & voting aligned GE to contribute 7.4B to fund cash dividend, Baker Hughes distributes 17.50 per share dividend to shareholders Baker Hughes shareholders receive dividend & 37.5% equity of stronger business Blended leadership team
