After the GE Oil & Gas Deal, Baker Hughes Became a GE Company



GE plus Baker Hughes?

On October 31, 2016, General Electric (GE) disclosed that it would combine its Oil & Gas business with Baker Hughes (BHI). The new partnership would turn Baker Hughes into a GE company.

In an investor meeting held on December 8, 2016, GE updated investors on the deal. The details of the deal can be read at Market Realist’s GE to Partner with BHI? The Changing Oilfield Services Landscape.

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How the deal with BHI will help GE

The combined GE-BHI entity is anticipated to witness opportunities in underdeveloped, resource-rich regions such as the African subcontinent, mainly West Africa. Upstream operators in West Africa could benefit from developing stranded natural gas and monetizing it during field development. The West African region also has ultra-deepwater wells.

Emerging nations such as Brazil also present opportunities for BHI. The company can scout for business in offshore projects located in Brazil. Energy generation involves complex, multiprospect discovery, including reservoir evaluation opportunities in Brazil. Production will depend on setting up an FPSO (floating production, storage, and offloading) unit.

Both GE and BHI have broad portfolios of subsea products and services required to facilitate offshore drilling activity. The GE Store is expected to add value to BHI on the digital and operational fronts. Through the use of the GE Store, GE plans to instill its manufacturing excellence into BHI’s manufacturing footprints.

ETF investment

General Electric makes up 0.74% of the portfolio holdings of the SPDR S&P 1500 Value Tilt ETF (VLU). Other big industrial holdings included in VLU are United Technologies (UTX), Caterpillar (CAT), and Schlumberger (SLB).


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