Baker Hughes' Strategy Amid Changing Market Conditions

Response to Market Volatility

Baker Hughes views market volatility as an opportunity for accelerated demand creation, particularly in LNG. They continuously review liquidity and capital resources to mitigate impacts from geopolitical events, pandemics, or significant price declines, ensuring resilience amid changing market conditions.

"While there could be periods of price volatility driven by temporary dislocations in supply and demand over this time period, we see these as opportunities for accelerated demand creation. LNG consumers who tend to be very price" --- (BKR, earning call, 2024/Q1)

"of price volatility driven by temporary dislocations in supply and demand over this time period, we see these as opportunities for accelerated demand creation." --- (BKR, earning call, 2024/Q1)

"Turning to the macro view on Slide 5. On the back of softer global demand and continued economic uncertainty, oil prices experienced some volatility during the second quarter." --- (BKR, earning call, 2024/Q2)

"We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the uncertainty created by geopolitical events, a global pandemic or a significant decline in oil and gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted." --- (BKR, sec filing, 2024/Q2)

Technological Advancements and Innovation

Baker Hughes leverages its century-long experience and global presence to drive energy technology innovation, focusing on making energy safer, cleaner, and more efficient. This commitment to advanced technologies and operational transformation is reflected in their sustainable uplift in OFSC margins and recognition on the Fortune 500 list.

"Built on a century of experience and conducting business in over 120 countries, our innovative technologies and services are taking energy forward – making it safer, cleaner and more efficient for people and the planet." --- (BKR, press release, 2024/04/23)

"We're proud to share that we've once again been named on the @Fortune 500 list- a testament our employees' efforts to fuel energy technology innovation, the vision of our leadership to transform our operations, and the actions we take every day to energize change across industry. https://t.co/1z5nHZSvOI" --- (BKR, Twitter post, 2024/06/04)

"Built on a century of experience and conducting business in over 120 countries, our innovative technologies and services are taking energy forward - making it safer, cleaner and more efficient for people and the planet." --- (BKR, press release, 2024/07/25)

"Combined with our leading technologies and solutions, we are now demonstrating a sustainable uplift in our OFSC margins." --- (BKR, earning call, 2024/Q2)

"Built on a century of experience and conducting business in over 120 countries, our innovative technologies and services are taking energy forward." --- (BKR, press release, 2024/06/10)

Sustainability and Green Energy Initiatives

Baker Hughes is addressing the challenge of providing sustainable energy by focusing on LNG growth, reducing emissions, and advancing new energy solutions. They report significant progress, including a 28.3% reduction in Scope 1 and 2 emissions and strong new energy orders, underscoring their commitment to sustainability.

"Energy providers face the multifaceted challenge of providing secure, sustainable and affordable energy against the backdrop of increasing energy demand." --- (BKR, earning call, 2024/Q1)

"We are confident that, strong underlying natural gas demand will lead to robust and sustainable growth in LNG." --- (BKR, earning call, 2024/Q2)

"As detailed in our Corporate Sustainability Report published in May, we remain on-track to achieve these goals, and we continue to provide products and services that help our customers reduce their emissions intensity." --- (BKR, earning call, 2024/Q2)

"It's the gas infrastructure and also coupled with the new energy. And as you look at the guidance that we've given of new energy orders between $800 million to $1 billion and stable growth in services and Industrial Tech, so very confident in the $11.5 billion to $13.5 billion orders range and a strong pipeline of activity." --- (BKR, earning call, 2024/Q1)

"We continue to make progress on emissions reductions, and reported in our 2023 Corporate Sustainability Report a 28.3% reduction in our Scope 1 and 2 carbon dioxide equivalent emissions as compared to our 2019 base year." --- (BKR, sec filing, 2024/Q2)

Diversification and New Market Entry

Baker Hughes is targeting a $60-70 billion addressable market in new energy by 2030, reflecting its diversification and new market entry strategy. This aligns with industry trends of significant investments across various regions, as seen with competitors like Schlumberger.

"market, our addressable market that we see by 2,030 of $60,000,000,000 to $70,000,000,000 of new energy hasn't really changed." --- (BKR, conference, 2024/06/18)

"projects with this intervention recovery-focused production on the existing declining assets that exist here in all markets across the region, and we get the recipe for a significant investment and a steady investment in every country from Indonesia to Malaysia, to Thailand, China offshore and onshore, India, Bangladesh, as I said, a new country." --- (SLB, earning call, 2024/Q1)

Financial Performance and Strategic Impact

Baker Hughes demonstrated significant financial improvement in Q2 2024, with revenue growth, margin expansion, and strong operational performance. The company reported $33.5 billion in remaining performance obligations, indicating robust future revenue potential. Strategic initiatives, including cost-out measures and increased R&D spending, further bolstered their financial performance.

"EXECUTIVE SUMMARY Market Conditions In the second quarter of 2024, we saw strong momentum across the Company with meaningful improvement in our financial results over the second quarter of 2023, including key commercial successes, growth in revenue and expansion of operating margins." --- (BKR, sec filing, 2024/Q2)

"Remaining Performance Obligations ("RPO"): As of June 30, 2024, the aggregate amount of the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $33.5 billion." --- (BKR, sec filing, 2024/Q2)

"Today we announced first quarter 2024 earnings results. We are very pleased with our performance, noting strong orders of $6.5B, as we continue to build on the momentum from last year and execute our strategy." --- (BKR, twitter, 2024/04/23)

"The operating income performance in the first quarter of 2024 was driven by higher volume, price and cost-out initiatives, partially offset by unfavorable business mix, inflationary pressure, and higher research and development spend." --- (BKR, sec filing, 2024/Q1)

"We delivered outstanding second quarter results, highlighted by strong operational performance across the company." --- (BKR, earning call, 2024/Q2)

Competitive Positioning and Market Differentiation

Baker Hughes leverages the versatility and differentiation of its IET portfolio and focuses on cost competitiveness and service delivery improvements to maintain a strong competitive position. This strategy enables profitable growth and market differentiation, setting it apart from competitors like Halliburton and Schlumberger.

"The versatility and differentiation of the IET portfolio across Industrial and Energy segments remains a significant competitive advantage for Baker Hughes, allowing us to profitably grow with new customers and applications." --- (BKR, earning call, 2024/Q2)

"Our electric submersible pump portfolio proved to be a market leader in the competitive North America market, and we expect to deliver similar results over time in the international markets." --- (HAL, earning call, 2024/Q1)

"You have Bangladesh, you have many, many spots that are being discovered and being explored with fresh data sets and the opportunity to indeed boost and support our participation to this market going forward." --- (SLB, earning call, 2024/Q2)

"On OFSC, again, it's cost competitiveness. It's continuing to drive as you saw in the fall of '23, announcing a restructuring with taking out duplication, announcing execution, service delivery improvements, a focus on best cost country sourcing and really profitable growth as we go forward." --- (BKR, earning call, 2024/Q2)

"Does it move it more quickly so that we get to market more quickly? But we see significant organic growth in the businesses that we're in." --- (HAL, earning call, 2024/Q1)

Customer Focus and Market Needs

Baker Hughes is enhancing customer focus by securing significant agreements, such as a multimillion-dollar deal with bp for digital asset health solutions. The company is also responding to market needs driven by energy demand forecasts and regulatory impacts, while experiencing substantial market growth and increased customer interest.

"IET saw increased customer traction with its digital portfolio, securing a multimillion-dollar Global Frame Agreement to provide bp with an enterprise subscription for Cordant™ Asset Health, which is expected to enable the customer to deliver reliable, efficient condition monitoring" --- (BKR, press release, 2024/07/25)

"This spending is driven by a number of factors, including our customers' forecasts of future energy demand and supply, their access to resources to develop and produce oil and natural gas, their ability to fund their capital programs, the impact of new government regulations, and their expectations for oil and natural gas prices as a key driver of their cash flows." --- (BKR, sec filing, 2024/Q1)

"And we're seeing this marketplace really starting to grow significantly and a lot of interest from our customer base. A quick follow-up. GE" --- (BKR, conference, 2024/06/18)