BAKER HUGHES 
By HOUSTON, Jan. 24, 2012 /PRNewswire/ -- Baker Hughes Incorporated (NYSE: BHI) today announced adjusted net income (a non-GAAP measure) for the fourth quarter 2011 of $534 million, or $1.22 per diluted share. This excludes an after-tax charge of $220 million ($0.50 per diluted share) related to the impairment of certain trade names. This compares to $0.77 per diluted share for the fourth quarter 2010, and to adjusted net income of $1.18 per diluted share for the third quarter 2011.
Adjusted net income for the year 2011 was $1.84 billion or $4.20 per diluted share, compared to $2.06 per diluted share for the year 2010.
Net income attributable to Baker Hughes (a GAAP measure) for the fourth quarter 2011 was $314 million or $0.72 per diluted share, compared to $0.77 per diluted share for the fourth quarter 2010, and $1.61 per diluted share for the third quarter 2011. Net income attributable to Baker Hughes for the year 2011 was $1.74 billion or $3.97 per diluted share, compared to $2.06 per diluted share for the year 2010. Please see Table 1 for a reconciliation of GAAP to non-GAAP Financial Measures.
Revenue for the fourth quarter 2011 was $5.39 billion, up 22% compared to $4.42 billion for the fourth quarter 2010 and up 4% compared to $5.18 billion for the third quarter 2011. Revenue for the year 2011 was $19.83 billion, up 38% compared to $14.41 billion for the year 2010.
Martin Craighead, Baker Hughes President and Chief Executive Officer, said: "We are pleased with our international margins of 16% in the fourth quarter (excluding the impairment of certain trade names), with contributions across all regions. Our business continues to improve and we benefited from increased activity, a favorable product mix as well as typical seasonal product sales. For 2012, we expect international growth to continue, particularly in the Latin America, Middle East, and deepwater markets.
"In North America, the fundamentals of the business continue to be robust driven by activity growth in the unconventional basins. The geology and economics in the liquids-rich shale plays will support substantial additional drilling, and we have every reason to be confident about the long-term prospects of this market. Our Drilling and Evaluation and Completion and Production groups showed steady improvement, except for Pressure Pumping.
"The issues in Pressure Pumping were related to the availability, cost and transportation of materials, such as sand and gel. Further, as we increased headcount and added capacity to address the growing market needs, we were not able to sufficiently utilize these resources. We are resolving these issues and expect to see improvement in the second half of the year.
"Finally, I would like to thank Chad Deaton for his contribution to Baker Hughes during the past seven years. Many of the initiatives we've put in place during this time frame have been critical to ensuring our success in the market going forward. Baker Hughes has a talented workforce that is constantly focused on innovating and finding solutions. As CEO I will ensure that our 57,000 employees are relentlessly focused on delivering reliable products and services so Baker Hughes is the service company that best anticipates our customers' needs and exceeds their expectations."
Debt increased by $169 million to $4.07 billion compared to the third quarter 2011. Cash and short-term investments increased by $247 million to $1.05 billion compared to the third quarter 2011. Capital expenditures were $810 million, depreciation and amortization expense was $343 million, and dividend payments were $66 million in the fourth quarter 2011.
For the year, capital expenditures were $2.46 billion, depreciation and amortization expense was $1.32 billion and dividend payments were $261 million.
Adjusted EBITDA (a non-GAAP measure) in the fourth quarter 2011 was $1.18 billion, up $35 million sequentially. For the full year, Adjusted EBITDA was $4.3 billion. A reconciliation of net income attributable to Baker Hughes to Adjusted EBITDA is provided in Table 2. Supplemental financial information for revenue and adjusted operating profit before tax (a non-GAAP measure) is provided in Tables 5a and 5b.
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended
------------------
December 31, September 30,
------------ -------------
(In millions,
except per
share amounts) 2011 2010 2011
Revenue $5,387 $4,423 $5,178
Costs and
Expenses:
Cost of revenue 4,118 3,421 3,931
Research and
engineering 125 105 117
Marketing,
general and
administrative 303 279 313
Impairment of
trade names 315 - -
Acquisition-
related costs - 56 -
-------------- --- --- ---
Total costs and
expenses 4,861 3,861 4,361
--------------- ----- ----- -----
Operating income 526 562 817
Gain on
investments - 6 -
Interest
expense, net (57) (48) (58)
Loss on early
extinguishment
of debt - - (40)
--------------- --- --- ---
Income before
income taxes 469 520 719
Income taxes (151) (178) (13)
------------ ---- ---- ---
Net income 318 342 706
Net income
attributable to
noncontrolling
interests (4) (7) -
---------------- --- --- ---
Net income
attributable to
Baker Hughes $314 $335 $706
Basic earnings
per share
attributable to
Baker Hughes $0.72 $0.78 $1.62
Diluted earnings
per share
attributable to
Baker Hughes $0.72 $0.77 $1.61
Weighted average
shares
outstanding,
basic 438 432 437
Weighted average
shares
outstanding,
diluted 439 434 439
Depreciation and
amortization
expense $343 $326 $332
Capital
expenditures $810 $486 $628
Financial Information
Consolidated Condensed Statements of Operations
(Unaudited)
Twelve Months Ended
December 31,
------------
(In millions, except per share
amounts) 2011 2010
============================== ==== ====
Revenue $19,831 $14,414
Costs and Expenses:
Cost of revenue 15,264 11,184
Research and engineering 462 429
Marketing, general and
administrative 1,190 1,250
Impairment of trade names 315 -
Acquisition-related costs - 134
------------------------- --- ---
Total costs and expenses 17,231 12,997
------------------------ ------ ------
Operating income 2,600 1,417
Gain on investments - 6
Interest expense, net (221) (141)
Loss on early extinguishment
of debt (40) -
Income before income taxes 2,339 1,282
Income taxes (596) (463)
------------ ---- ----
Net Income 1,743 819
Net income attributable to
noncontrolling interests (4) (7)
-------------------------- --- ---
Net income attributable to
Baker Hughes $1,739 $812
========================== ====== ====
Basic earnings per share
attributable to Baker Hughes $3.99 $2.06
Diluted earnings per share
attributable to Baker Hughes $3.97 $2.06
Weighted average shares
outstanding, basic 436 394
Weighted average shares
outstanding, diluted 438 395
Depreciation and amortization
expense $1,321 $1,069
Capital expenditures $2,461 $1,491
Consolidated Condensed Balance Sheets
(Unaudited)
December 31,
------------
(In millions) 2011 2010
============ ==== ====
ASSETS
Current Assets:
Cash and cash equivalents $1,050 $1,456
Short-term investments - 250
Accounts receivable, net 4,878 3,942
Inventories, net 3,222 2,594
Other current assets 522 465
Total current assets 9,672 8,707
-------------------- ----- -----
Property, plant and equipment, net 7,415 6,310
Goodwill 5,956 5,869
Intangible assets, net 1,143 1,569
Other assets 644 531
Total assets $24,830 $22,986
============ ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,810 $1,496
Short-term borrowings and current portion
of 224 331
long-term debt
Accrued employee compensation 704 589
Other accrued liabilities 697 723
Total current liabilities 3,435 3,139
------------------------- ----- -----
Long-term debt 3,845 3,554
Deferred income taxes and other tax
liabilities 860 1,360
Long-term liabilities 726 647
Equity 15,964 14,286
Total liabilities and equity $24,830 $22,986
============================ ======= =======
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Twelve Months Ended
December 31,
------------
(In millions) 2011 2010
============ ==== ====
Cash flows from operating
activities:
Net income $1,743 $819
Adjustments to reconcile net
income to net cash flows from
operating activities:
Depreciation and amortization 1,321 1,069
Other, primarily working
capital (1,546) (1,032)
Net cash flows from operating
activities 1,518 856
----------------------------- ----- ---
Cash flows from investing
activities:
Expenditures for capital assets (2,461) (1,491)
Proceeds (purchase) from
maturities of short-term 250 (250)
investments
Acquisition of businesses, net
of cash acquired (5) (888)
Other 325 253
Net cash flows from investing
activities (1,891) (2,376)
----------------------------- ------ ------
Cash flows from financing
activities:
Net proceeds of debt 57 1,531
Dividends (261) (241)
Other 163 76
Net cash flows from financing
activities (41) 1,366
----------------------------- --- -----
Effect of foreign exchange rate
changes on cash 8 15
------------------------------- --- ---
Decrease in cash and cash
equivalents (406) (139)
Cash and cash equivalents,
beginning of period 1,456 1,595
-------------------------- ----- -----
Cash and cash equivalents, end
of period $1,050 $1,456
============================== ====== ======
Table 1: Reconciliation of GAAP and Non-GAAP Financial Measures(1)
The following tables reconcile net income attributable to Baker Hughes, which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted net income, which excludes certain identified items (a non-GAAP financial measure) referenced in this news release. There were no identified items requiring adjustment for any quarter in 2010.
Three months ended December 31, 2011
------------------------------------
(Unaudited) Net Diluted
(In
millions,
except
per
share
amounts) Income Earnings
Per Share
--- ---------
Net
income
attributable
to Baker
Hughes
(GAAP) $314 $0.72
Identified
Item:
Impairment
of trade
names(2) 220 0.50
Adjusted
net
income
(non-
GAAP) $534 $1.22
======== ==== =====
Three months ended September 30, 2011
-------------------------------------
(Unaudited) Net Diluted
(In
millions,
except
per
share
amounts) Income Earnings
Per Share
--- ---------
Net
income
attributable
to
Baker
Hughes
(GAAP) $706 $1.61
Identified
Item:
Tax
benefit
associated
with
reorganization(3) (214) (0.49)
Loss
on
early
extinguishment
of
debt(4) 26 0.06
--------------- --- ----
Adjusted
net
income
(non-
GAAP) $518 $1.18
======== ==== =====
Twelve months ended December 31, 2011
-------------------------------------
(Unaudited) Net Diluted
(In
millions,
except
per
share
amounts) Income Earnings
Per Share
--- ---------
Net
income
attributable
to
Baker
Hughes
(GAAP) $1,739 $3.97
Identified
Item:
Expenses
related
to
Libya(5) 70 0.16
Tax
benefit
associated
with
reorganization(3) (214) (0.49)
Loss
on
early
extinguishment
of
debt(4) 26 0.06
Impairment
of
trade
names(2) 220 0.50
Adjusted
net
income
(non-
GAAP) $1,841 $4.20
======== ====== =====
(1) Adjusted net income is a non-GAAP measure comprised of net income attributable to Baker Hughes excluding the impact of certain identified items. The company believes that adjusted net income is useful to investors because it is a consistent measure of the underlying results of the company's business. Furthermore, management uses adjusted net income as a measure of the performance of the company's operations. Reconciliation of net income attributable to Baker Hughes, a GAAP measure, to adjusted net income for historical periods can be found on the company's website at www.bakerhughes.com/investor.
(2) Charge of $315 million before-tax ($220 million after-tax), the majority of which relates to the noncash impairment associated with the decision to minimize the use of the BJ Services trade name as part of our overall branding strategy for Baker Hughes.
(3) Noncash tax benefit of $214 million associated with the reorganization of certain foreign subsidiaries.
(4) Loss of $40 million before-tax ($26 million after-tax) related to the early extinguishment of $500 million notes due 2013.
(5) Expenses of $70 million (before and after-tax) associated with increasing the allowance for doubtful accounts, and reserves for inventory and certain other assets in the second quarter 2011 as a result of civil unrest in Libya.
Table 2: Calculation of EBIT, EBITDA and Adjusted EBITDA (non-GAAP measures)(1)
(In millions) Three Months Ended
------------ ------------------
December 31, 2011 December 31, 2010 September 30, 2011
----------------- ----------------- ------------------
Net income
attributable
to Baker
Hughes $314 $335 $706
Net income
attributable
to NCI(2) 4 7 -
Income taxes 151 178 13
------------ --- --- ---
Income before
income taxes 469 520 719
Interest
expense, net 57 48 58
Earnings
before
interest and
taxes (EBIT) 526 568 777
Depreciation
and
amortization
expense 343 326 332
------------- --- --- ---
Earnings
before
interest,
taxes,
depreciation 869 894 1,109
and
amortization
(EBITDA)
Adjustments
to EBITDA:
Acquisition-
related
costs(3) - 56 -
Impairment of
trade
names(4) 315 - -
Gain on
investments - (6) -
Loss on early
extinguishment
of debt(5) - - 40
--------------- --- --- ---
Adjusted
EBITDA $1,184 $944 $1,149
======== ====== ==== ======
(In millions) Twelve Months Ended
------------ -------------------
December 31, 2011 December 31, 2010(6)
----------------- -------------------
Net income attributable to Baker
Hughes $1,739 $812
Net income attributable to NCI(2) 4 7
Income taxes 596 463
------------ --- ---
Income before income taxes 2,339 1,282
Interest expense, net 221 141
Earnings before interest and taxes
(EBIT) 2,560 1,423
Depreciation and amortization
expense 1,321 1,069
----------------------------- ----- -----
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 3,881 2,492
Adjustments to EBITDA:
Acquisition-related costs(3) - 134
Impairment of trade names(4) 315 -
Expenses related to Libya(7) 70 -
Gain on investments - (6)
Loss on early extinguishment of
debt(5) 40 -
------------------------------- --- ---
Adjusted EBITDA $4,306 $2,620
=============== ====== ======
(1) EBIT, EBITDA and Adjusted EBITDA (as defined in the calculations above) are non-GAAP measurements. Management is providing these measures 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.
(4) Charge of $315 million before-tax ($220 million after-tax), the majority of which relates to the noncash impairment associated with the decision to minimize the use of the BJ Services trade name as part of our overall branding strategy for Baker Hughes.
(5) Loss of $40 million before-tax ($26 million after-tax) related to the early extinguishment of $500 million notes due 2013.
(6) Includes results of BJ Services starting from April 28, 2010.
(7) Expenses of $70 million (before and after-tax) associated with increasing the allowance for doubtful accounts and reserves for inventory and certain other assets in the second quarter 2011 as a result of civil unrest in Libya.
Table 3a: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin(1)
Three Months Ended
------------------
December 31, September 30,
------------ -------------
(In millions) 2011 2010 2011
------------ ---- ---- ----
Segment Revenue
North America $2,821 $2,210 $2,716
Latin America 600 482 568
Europe/Africa/Russia Caspian 898 793 850
Middle East/Asia Pacific 752 657 708
Industrial Services and Other 316 281 336
----------------------------- --- --- ---
Total Operations $5,387 $4,423 $5,178
================ ====== ====== ======
Profit Before Tax(2)
North America $422 $478 $607
Latin America 22 43 71
Europe/Africa/Russia Caspian 99 64 105
Middle East/Asia Pacific 70 68 84
Industrial Services and Other (23) 28 28
----------------------------- --- --- ---
Total Operations 590 681 895
---------------- --- --- ---
Corporate and Other Profit Before Tax
Acquisition-related costs - (56) -
Interest expense, net (57) (48) (58)
Gain on investments - 6 -
Loss on early extinguishment of debt - - (40)
Corporate and other (64) (63) (78)
------------------- --- --- ---
Corporate, net interest and other (121) (161) (176)
--------------------------------- ---- ---- ----
Profit Before Tax $469 $520 $719
================= ==== ==== ====
Profit Before Tax Margin(1)
North America 15% 22% 22%
Latin America 4% 9% 13%
Europe/Africa/Russia Caspian 11% 8% 12%
Middle East/Asia Pacific 9% 10% 12%
Industrial Services and Other (7%) 10% 8%
----------------------------- --- --- ---
Total Operations 11% 15% 17%
================ === === ===
(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.
(2) Includes a charge of $315 million before-tax recorded in the fourth quarter of 2011 related to the impairment of certain trade names, the majority of which relates to the noncash impairment associated with the decision to minimize the use of the BJ Services trade name. See Table 4 for the presentation of the impairment charge by segment.
Table 3b: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin,(1)
Twelve Months
Ended
December 31,
(In millions) 2011 2010(4)
------------ ---- ------
Segment Revenue
North America $10,257 $6,621
Latin America 2,183 1,569
Europe/Africa/Russia Caspian 3,325 3,006
Middle East/Asia Pacific 2,820 2,247
Industrial Services and Other 1,246 971
----------------------------- ----- ---
Total Operations $19,831 $14,414
================ ======= =======
Profit Before Tax(2)
North America $1,929 $1,163
Latin America 227 74
Europe/Africa/Russia Caspian(3) 342 260
Middle East/Asia Pacific 321 177
Industrial Services and Other 53 99
----------------------------- --- ---
Total Operations 2,872 1,773
---------------- ----- -----
Corporate and Other Profit Before Tax
Acquisition-related costs - (134)
Gain on investments - 6
Interest expense, net (221) (141)
Loss on early extinguishment of debt (40) -
Corporate and other (272) (222)
------------------- ---- ----
Corporate, net interest and other (533) (491)
--------------------------------- ---- ----
Profit Before Tax $2,339 $1,282
================= ====== ======
Profit Before Tax Margin(1)
North America 19% 18%
Latin America 10% 5%
Europe/Africa/Russia Caspian 10% 9%
Middle East/Asia Pacific 11% 8%
Industrial Services and Other 4% 10%
----------------------------- --- ---
Total Operations 14% 12%
================ === ===
(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.
(2) Includes a charge of $315 million before-tax recorded in the fourth quarter of 2011 related to the impairment of certain trade names, the majority of which relates to the noncash impairment associated with the decision to minimize the use of the BJ Services trade name. See Table 4 for the presentation of the impairment charge by segment.
(3) Includes expenses of $70 million (before and after-tax) associated with increasing the allowance for doubtful accounts and reserves for inventory and certain other assets in the second quarter 2011 as a result of civil unrest in Libya.
(4) Includes results of BJ Services starting from April 28, 2010
Table 4: Charges for Impairment of Trade Names and Expenses Related to Libya by Segment(1)
Three Months Ended Twelve Months Ended
(In millions) December 31, 2011 December 31, 2011
------------ ----------------- -----------------
Operating Profit Before Tax
North America $105 $105
Latin America 64 64
Europe/Africa/Russia Caspian 48 118
Middle East/Asia Pacific 47 47
Industrial Services and Other 51 51
----------------------------- --- ---
Total Operations $315 $385
================ ==== ====
(1) Charges associated with the impairment of certain trade names were $315 million before-tax in the fourth quarter 2011. Charges associated with increasing the allowance for doubtful accounts and reserves for inventory and certain other assets as a result of civil unrest in Libya were $70 million before-tax in the second quarter 2011. There were no identified items requiring adjustments for operating profit before tax for any quarter in 2010, or the first or third quarters of 2011.
Table 5a: Supplemental Financial Information Excluding Certain Identified Items
The following table contains non-GAAP measures of operating profit before tax and operating profit before tax margin excluding charges for the impairment of certain trade names and expenses related to Libya as a result of civil unrest (see Table 4). Management uses this measure to isolate the results of certain operations and believes that this information may be useful to investors.
Three Months Ended
------------------
December 31, September 30,
(In millions) 2011 2010 2011
Segment Revenue
North America $2,821 $2,210 $2,716
Latin America 600 482 568
Europe/Africa/Russia Caspian 898 793 850
Middle East/Asia Pacific 752 657 708
Industrial Services and Other 316 281 336
----------------------------- --- --- ---
Total Operations $5,387 $4,423 $5,178
================ ====== ====== ======
Operating Profit Before Tax(1)
North America $527 $478 $607
Latin America 86 43 71
Europe/Africa/Russia Caspian 147 64 105
Middle East/Asia Pacific 117 68 84
Industrial Services and Other 28 28 28
----------------------------- --- --- ---
Total Operations $905 $681 $895
================ ==== ==== ====
Operating Profit Before Tax Margin(1)
North America 19% 22% 22%
Latin America 14% 9% 13%
Europe/Africa/Russia Caspian 16% 8% 12%
Middle East/Asia Pacific 16% 10% 12%
Industrial Services and Other 9% 10% 8%
----------------------------- --- --- ---
Total Operations 17% 15% 17%
================ === === ===
(1) 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 each of these measures because it believes they are widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance and that these measurements may be used by investors to make informed investment decisions.
Table 5b: Supplemental Financial Information Excluding Certain Identified Items (Pro Forma Combined Basis)(1)
The following table contains non-GAAP measures of operating profit before tax and operating profit before tax margin excluding charges for the impairment of certain trade names and expenses related to Libya as a result of civil unrest (see Table 4). Management uses this measure to isolate the results of certain operations and believes that this information may be useful to investors.
Twelve Months
Ended
December 31,
(In millions) 2011 2010(1)
------------ ---- ------
Segment Revenue
North America $10,257 $7,585
Latin America 2,183 1,736
Europe/Africa/Russia Caspian 3,325 3,132
Middle East/Asia Pacific 2,820 2,396
Industrial Services and Other 1,246 1,054
----------------------------- ----- -----
Total Operations $19,831 $15,903
================ ======= =======
Operating Profit Before Tax(2)
North America $2,034 $1,217
Latin America 291 66
Europe/Africa/Russia Caspian 460 264
Middle East/Asia Pacific 368 191
Industrial Services and Other 104 102
----------------------------- --- ---
Total Operations $3,257 $1,840
================ ====== ======
Operating Profit Before Tax Margin(2)
North America 20% 16%
Latin America 13% 4%
Europe/Africa/Russia Caspian 14% 8%
Middle East/Asia Pacific 13% 8%
Industrial Services and Other 8% 10%
----------------------------- --- ---
Total Operations 16% 12%
================ === ===
(1) The pro forma supplemental financial information for 2010 includes the financial results for BJ Services as if the acquisition occurred as of January 1, 2010. This 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 January 1, 2010.
(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 each of these measures because it believes they are widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance and that these measurements may be used by investors to make informed investment decisions.
Operational Highlights
North America
Baker Hughes is the first integrated oilfield service company to receive full accreditation from the International Association of Drilling Contractors for our efforts around competency management.
In the Gulf of Mexico, oil production began from the world's deepest water depth sub-sea wells using an an innovative subsea separation and boosting system. This system includes five specially designed Centrilift XP enhanced run life ESPs embedded in the seafloor. The technology resulted from years of joint research with the client to design reliable seabed boosting systems capable of handling the production challenges in ultra-deepwater fields.
Baker Hughes also completed the installation of the world's first deepwater, fixed-fiber integration into the sand face completion. This will help to monitor the wellbore conditions to extend the life of the well.
In Canada, a customer reached final total depth two days quicker by using our Reservoir Navigation Service, AziTrak(TM) resistivity tool and AutoTrak(TM) rotary steerable system with a QD406FX(TM) bit. With the combination of these tools and real-time data with Baker Hughes' WellLink RT(TM), the customer was able to drill not only timely, but accurately within the desired zone.
In the US, Baker Hughes was awarded a number of significant multi-service contracts, including one in the Eagleford for multiple Baker Hughes product lines. Another award was a multi-year contract of significant value in the Wattenberg field in the Niobrara basin, putting us in one of the largest finds in the basin to date.
Latin America
Throughout Latin America, new customers are relying on Baker Hughes to provide Artificial Lift solutions and maximize well performance. Baker Hughes has received multiple contract extensions in Brazil, Chile, Argentina, Ecuador and Colombia.
In Brazil, Baker Hughes began drilling the first horizontal well in the pre-salt. The base of the salt section has been reached, and performance targets are proceeding as planned. Baker Hughes also successfully performed the longest horizontal open hole gravel pack in Brazil. Additionally, Baker Hughes was able to help a key Brazilian customer map and measure a reservoir that could not be viewed by traditional seismic equipment, using our DeepTrak(TM) deep-reading resistivity logging-while-drilling tool.
Baker Hughes' work in the Corralillo field labs continues in Mexico and the company was instrumental in helping PEMEX accomplish a substantial production increase.
Middle East/Asia Pacific
Our Reservoir Development Services group is active throughout the Middle East region, with an array of geomechanics consultancy contract wins in Oman, Saudi Arabia, Kuwait and Abu Dhabi.
In Asia Pacific, we completed the first Integrated Operations bundled-services project for an independent on two exploration wells in Malaysia.
In China, the first bundled shale-oil horizontal well service project was completed for a National Oil Company utilizing drill bits, rotary steerable directional drilling and completion tools.
Europe/Africa/Russia Caspian
In Norway, the Kymera(TM) hybrid drill-bit technology combined with the AutoTrak(TM) rotary steerable system drilled three times further and more than 2.5 times faster than a conventional PDC in a hard formation. The operator saved more than 40 drilling hours.
Baker Hughes was awarded a long-term contract with a super-major to provide Coiled Tubing and stimulation work in the Netherlands and UK.
In Africa, Baker Hughes was awarded a group of contracts in South Africa covering Drilling, Fluids, Completions and Cementing for an offshore development program.
Baker Hughes was awarded two multi-service contracts on two rigs for Maersk Oil offshore Angola. The award includes Drilling Systems, Wireline, Cementing, Liner Hangers, Drill Bits and Coring Services. In addition, Baker Hughes provided all Drilling Systems, Wireline, Liner Hanger, Coring and Drill Bits for the appraisal and development wells in block 16.
Supplemental Financial Information
Supplemental financial information for the first quarter 2008 through the fourth quarter 2011 can be found on our website at www.bakerhughes.com/investor in the Financial Information section.
Conference Call
The company has scheduled a conference call to discuss the results reported in today's earnings announcement. The call will begin at 8:30 a.m. Eastern time, 7:30 a.m. Central time, on Tuesday January 24, 2012, 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 company's website and available for real-time viewing. To access the call, please call the conference call operator at 800-374-2469, or 706-634-7270 for international calls, 20 minutes prior to the scheduled start time and ask for the "Baker Hughes Conference Call." A replay of the call will be available through Tuesday, February 7, 2012. The number for the replay is 855-859-2056 in the United States, or 404-537-3406 for international calls, and the access code is 29422162. To access the webcast, go to http://investor.shareholder.com/bhi/events.cfm.
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 "forward-looking 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 forward-looking 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 company's Annual Report on Form 10-K/A 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 company's website at http://www.bakerhughes.com/investor or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement.
Our expectations regarding our business outlook and business plans; the business plans of our customers; 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:
Economic conditions - the impact of worldwide economic conditions and sovereign debt crises in Europe; 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 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 petroleum-producing or consuming regions; labor disruptions, civil unrest or security conditions where we operate; expropriation of assets by governmental action; cybersecurity risks and cyber incidents or attacks.
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, gel, 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; 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 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; laws, regulations or restrictions on hydraulic fracturing; any restrictions on new or ongoing offshore drilling or permit and operational delays or program reductions as a result of the new regulations in the Gulf of Mexico and other areas of the world; changes in export control laws or exchange control laws; the discovery of new environmental remediation sites; changes in environmental regulations; the discharge of hazardous materials or hydrocarbons into the environment; 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.
Baker Hughes is a leading supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. The company's 57,000-plus employees today work in more than 80 countries helping customers find, evaluate, drill, produce, transport and process hydrocarbon resources. For more information on Baker Hughes' century-long history, visit www.bakerhughes.com.
Investor Contact:
Adam B. Anderson, +1.713.439.8039, adam.anderson@bakerhughes.com
Media Contact:
Teresa Wong, +1.713.439.8110, teresa.wong@bakerhughes.com
SOURCE Baker Hughes Incorporated
