General Electric (GE) has signed an agreement to combine its oil and gas business with Baker Hughes to create a new oilfield technology company with more than $32bn in revenue.
The ‘new’ Baker Hughes company, which will have dual headquarters in Houston, Texas, and London, UK, will be an oil and gas equipment, technology and services provider and have operations in more than 120 countries.
The new company will combine GE’s oil and gas manufacturing and technology solutions covering subsea and drilling, rotating equipment, imaging and sensing, and Baker Hughes’ portfolio in drilling and evaluation and completion and production.
GE will own 62.5% of the new company, while Baker Hughes will own 37.5%.
GE chairman and CEO Jeff Immelt said: “As we built the GE Oil & Gas business, I have always been impressed by the respect our customers have for Baker Hughes. GE Oil & Gas is a key GE business, one that fully leverages the GE Store.
“As we go forward, this transaction accelerates our capability to extend the digital framework to the oil and gas industry.”
The new company will combine the digital solutions, manufacturing expertise and technology from the GE Store and the track record Baker Hughes has in the oilfield services sector.
Baker Hughes chairman and CEO Martin Craighead said: “This compelling combination brings together best-in-class oilfield equipment manufacturing and services, and digital technology offerings for the benefit of all customers and stakeholders.
“The combination of our complementary assets will create a platform capable of seamless integration while we enhance our ability to deliver optimised and integrated solutions and increase touch points with our customers."
The product portfolio of GE Oil & Gas and Baker Hughes in drilling, completions, production and midstream / downstream equipment and services will create the second largest player in the oilfield equipment and services industry.
Both GE and Baker Hughes expect to generate total runrate synergies of $1.6bn by 2020.
Image: America Tower in the American General Center in Houston, houses the headquarters of Baker Hughes. Photo: courtesy of WhisperToMe.