Baker Hughes, a GE Company Baker Hughes, a GE Company October 31, 2016
A compelling, transformational combination The best partner to Oil & Gas customers offering solutions based on complementary equipment & services technology across the full spectrum of the oil and gas value chain More innovative…
Impact for Baker Hughes shareholders Ongoing ownership in a stronger, more competitive business Cash dividend of 17.50 per share equal to 30%+ of undisturbed share price Participation in substantial value creation through…
Deal overview 1 Merge GE Oil & Gas with Baker Hughes GE owns 62.5%, new Baker Hughes owns 37.5% + Create new, publicly traded company with separate investor base + GE to contribute 7.4B to fund cash dividend to Baker Hughes shareholders…
Transaction overview the new Baker Hughes Merge GE Oil & Gas with Baker Hughes GE owns 62.5%, new Baker Hughes owns Shareholders 37.5% through partnership structure 17.50/sh Publicly traded company with separate dividend 100%…
Right time in cycle strong long-term fundamentals Factors driving industry Customer expectations Oil Gas (MBOE/D) (BCM/Y) 1 Increasing requirements Demand Demand for solutions offering 102+ MBOE/D 4.0+ BCM/Y 1% CAGR 2% CAGR 102…
Creating a productivity leader in Oil & Gas 70,000 employees 34B revenue 20F + The most advanced The leader in service technology O&G technology company equipment Integrated digitally-enabled offerings 9 to set new standards…
The GE Store in GE, every business can share & access the same POWER Combustion science technology, markets, and services, structure & intellect. installed base governed by culture & AVIATION ENERGY CONNECTIONS Electrification, controls…
Creating an industry leader
Baker Hughes, a GE company 2020F outlook A stronger company (Proforma financials, in billions) 1 Complete fullstream portfolio 34 23% 2 Complementary technology EBITDA with opportunity to margin leverage GE Store 8 3…
1 Strong complementary portfolio ability to go fullstream GE Oil & Gas Baker Hughes Market Market Business segments (% 15 revenue) position Business segments (% 15 revenue) position Surface (13%) Advanced Drilling Services (24%)…
Strong competitive scope and value proposition across the industry XB Industry spend 15 % Newco presence 600B 100B 100B UPSTREAM MIDSTREAM DOWNSTREAM FIND AND PRODUCE HYDROCARBONS 60% TRANSPORT HYDROCARBONS30% PROCESS AND MARKET…
Combined portfolio matches oil field service leaders ( in billions) 2016 Segment Size + Exploration / Early Stages Geophysical Equipment Services 7 Drill Bits Downhole Drilling Tools Solids Control & Waste Mgmt.…
2 Complementary capabilities Common Technology DNA Services capabilities Balanced portfolio Established global infrastructure Largest O&G equipment provider Complete upstream offering Full value chain exposure…
Baker Hughes + GE Store future of drilling AutoTrakTM: 100MM+ ft. drilled record 13,574 ft. in one run in 3Q 16 in NAM Technology injection for drilling Benefits + Battery technology Downhole Increased rate of penetration batteries…
3 Integrated solutions across the value chain Offshore completion & production Onshore completion & production Subsea infrastructure: x- Surface wellheads trees, manifolds, processing Artificial lift Well access & control…
Great customers across all segments Top GE Oil & Gas Top Baker Hughes customers customers Opportunity + End-to-end integrated customer solutions + Broad portfolio offering + Reliable long-term partner + Digitize assets &…
4 Robust synergy opportunity Drivers MM 26B 1 Sourcing/procurement 400 4.5% improvements cost out - Material deflation through combined buy 2 Manufacturing & service footprint 200 1.2B rationalization - Consolidate properties…
Cost synergy examples Structural savings Product cost out Manufacturing & service optimization Legacy of manufacturing excellence: acquisition example 50% reduction in rod- 1 Facilities rationalization lift unit cost BHI GE BCC…
Petro-economies looking for integrated capabilities + Reservoirs in harsher environments & Examples more remote locations Africa subcontinental onshore - Remote area + Project size and complexity is - Limited infrastructure…
5 Winning in Digital GE Store Digital capabilities Oil & Gas applications Oil & Gas Ecosystem MACHINE & Digital Thread EQUIPMENT Securely High Data-Rich HEALTH Connect Probability Actionable Equipment of Detection Insights Physics…
Financial outlook ( in billions) Proforma financials Value creation for investors Revenue + Creating an unparalleled fullstream digital 24-a) 34 industrial service company for the industry 28 14 + Brings together two leading…
Impact for GE
Deal valuation and funding ( in billions) Valuation GE cash outlay BHI/GE partnership 7.4B GE contributes 100% of GE Oil & Gas 62.5% 7.4B of cash Debt-funded Baker Hughes contributes 7.4B borrowing from GE 100% of Baker Hughes…
GE earnings impact & valuation GE EPS impact Deal valuation .08 IRR 15% .04 CFRR 10% Yr. 5 (.02) NPV of synergies 13.7B EBITDA multiple-a) 11.0x 17F 18F 20F Synergized multiple-b) 6.7x Expect mid-year 2017 close 2017 minimal…
Capital allocation Plan to sell GE Water + Running process with potential buyers targeting mid-2017 close + Industry leader in technology, products, and services + Gain will fund restructuring & integration costs for BHI deal up to…
Baker Hughes, a GE company + Creating an unparalleled fullstream digital industrial service company for the industry + Brings together two leading industry players with deep history of technical innovation + Capability to provide…
GE is uniquely positioned Leading today + Tomorrow Premium Industrial businesses Leadership in analytics New levels of + Essential builds, powers, & SW for assets productivity for GE, moves, cures our customers & the world +…
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