ValueAct discloses an activist position in Baker Hughes
ValueAct Capital disclosed a 5.1% activist stake in Baker Hughes (BHI) in its 13D filing on January 15. This part of the series will present an overview of Baker Hughes.
Baker Hughes is a leading supplier of oilfield services, products, technology, and systems to the worldwide oil and natural gas industry. The company also provides industrial products and services to the downstream chemicals and midstream energy companies.
About Baker Hughes
Baker Hughes has operations in more than 80 countries. The company operates in the following segments:
- North America
- Middle East/Asia Pacific
- Latin America
- Europe/Africa/Russia Caspian
- Industrial Services
Based on the oil and natural gas well construction phases, BHI’s operations fall into one of two categories:
- Drilling and evaluation: This category includes products and services like drill bits, drilling services, wireline services, and drilling and completion fluids.
- Completion and production: This category includes completion systems, wellbore intervention, intelligent product systems, artificial lift, upstream chemicals, and pressure pumping.
North America contributed almost 50% to total revenue for Baker Hughes. Recently, the fall in crude oil prices has hit the oilfield service industry hard. Baker Hughes noted that in the last three downturns in the 1990’s, North America rig counts fell by 40% to 60% within 12 months. Baker Hughes expects the current downturn cycle to be similar.
Baker Hughes and its peers
The current downturn in oil prices will negatively affect Baker Hughes and its counterparts in the oil industry like Halliburton (HAL), Schlumberger (SLB), National Oilwell Varco (NOV), and Weatherford International (WFT).
In the next part of the series, we’ll discuss Halliburton’s deal to acquire Baker Hughes in more detail.