GE builds fullstream energy business with Baker Hughes merger
November 9, 2016
GE is creating a 'fullstream' oil and gas services company that will have the company's industrial IoT platform Predix at its core, following the planned merger of its oil and gas businesses with oil and gas services company Baker Hughes.
The new company, which will be majority owned by GE, and run by GE executives but retain the Baker Hughes names, will be the second largest oil and gas services company in the world, and the first-ever fullstream company offering all three of the industry's 'streams': upstream exploration and production, midstream transportation and downstream refining.
The new company will have $32 billion in revenue, and will be 62.5 percent owned by GE.
The decision to merge the two businesses followed talks between GE and Baker Hughes about how to embed GE's industrial IoT platform Predix into Baker Hughes oil and gas services business.
In a statement, GE said that the new company will combine GE's "oil and gas technology, manufacturing and digital platform with Baker Hughes' oilfield services offerings and technologies".
The new company will compete directly with oil and gas services market leaders Halliburton and Schlumberger.
In a conference call with analysts, Baker Hughes chief executive Martin Craighead held out the prospect of GE's engines and turbines business creating new technologies and products to build new power infrastructure to support oil and gas programmes, so as to support the development of shale prospects in Oklahoma or North Dakota's Bakken formation.
However, it is GE's investment in industrial Internet of Things, and its Predix platform, that provides the core rationale for the synergies and integration that both companies' executives believe will propel the new company into the front ranks of oil and gas service providers, and allow it to provide an integrated fullstream service across all its area of operations.