Tristone Capital Energie '08 Conference. May 14, 2008

Transcription

1 Tristone Capital Energie '08 Conference May 14,

2 Forward-Looking Statements Some of the things we will discuss today relative to our views on future company performance and results, and other statements not dealing with historical facts, will be forward-looking statements within the meaning of U.S. securities laws. The company cautions that actual results may differ materially from those discussed in these forward-looking statements. You should refer to the additional information contained in our filings with the SEC about the risks and uncertainties that could cause actual results to be different than those contemplated in this discussion. The company s SEC filings can be viewed at Reconciliation of non GAAP measures referenced in today s presentation can be found on our website in the Investor Relations section. 2

3 Agenda Baker Hughes at a Glance Long-Term Strategy People Technology Infrastructure Strategy in Action Dubai Campus Center for Technology and Innovation Expanding Reservoir Capability Technologies Supporting Growth Success in Key Markets Russia Saudi Arabia Brazil Why Baker Hughes? 3

4 Revenue Growth $12 $10 Revenue (billions) 2007 Revenue 9% 5% 10% $8 6% 9% 36% $6 $4 $2 $0 '05 '06 $10.428B $10.428B in in Int l Int l up up low-to-mid low-to-mid teens teens in in 08/ 07 08/ 07 '07 '08 15% 10% Canada United States Latin America Europe Africa CIS Middle East Asia Pacific * Guidance as of 22 April Please see Earnings News Release for discussion of applicable risk factors Countries Countries 2 2 nd nd highest highest non-na non-na in in OFS OFS Baker Hughes at a Glance 4

5 Profit Growth Operating EPS 25% Oilfield Operating Margins $5.00 $4.00 $4.10 $ % 23% 24.2% 24.1% $ % $ % 20% $ % $ % '05 '06 '07 '08 '05 '06 '07 '08 Baker Hughes at a Glance 5

6 Best-in-Class Drilling and Evaluation Segment Drill Bits Hughes Christensen 1 4 Drilling & Evaluation INTEQ Drilling Fluids BH Drilling Fluids 3 1** 2 Wireline & Testing Baker Atlas Completion and Production Segment Completions Baker Oil Tools ESPs Centrilift Oilfield Chemicals Baker Petrolite 1 Source: BHI estimates, Spears & Associates ** SII/SLB joint venture in MI Baker Hughes at a Glance 6

7 Long-Term Strategy - People Added 1,200 employees in 2007 (5,600 in 2006) Continued growth to support international activity Significant focus on training and career path Developing our local workforce Positioned for global leadership Employees (thousands) 0 '02 '03 '04 '05 '06 '07 '08 Long-Term Strategy 7

8 Long-Term Strategy - Technology Leading technologies and market share Strong new product pipeline Disciplined product development & commercialization methodology R&E focused on new product development / reduced sustaining engineering spend $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Research & Engineering (millions) '02 '03 '04 '05 '06 '07 '08 * Guidance as of January Please see Earnings News Release for discussion of applicable risk factors. Long-Term Strategy 8

9 Long-Term Strategy - Infrastructure Planned capital spending of approximately $1.3 B Approximately $300 million for infrastructure in 2008 vs. $130 million in 2007 Continued build out of rental fleet and advanced technology tools Matching spending level to market conditions $1,400 $1,200 $1,000 $800 $600 $400 $200 CapEx & DD&A (millions) $0 '02 '03 '04 '05 '06 '07 '08 * Guidance as of January Please see Earnings News Release for discussion of applicable risk factors. Long-Term Strategy 9

10 Long-Term Strategy - Infrastructure BHI infrastructure Growth Non-North America North America Square Feet (Thousands) Long-Term Strategy 10

11 Dubai Campus Operations Region HQ BOT Mfg BOT Mfg Training Center Strategy in Action 11

12 Dubai - Training Facility Strategy in Action 12

13 Center for Technology Innovation Strategy in Action 13

14 Expanding Our Capabilities CTI: Pushing the Envelope Diablo - Eastern Gulf BP - NAX (60-80 wells) Chevron - Jack Chevron - St. Malo BP - Kaskida Strategy in Action

15 Reservoir Technology and Consulting Gaffney, Cline and Associates Broad reservoir management capabilities Integrated technical and reservoir management advice Exploration support EOR and field development Operations management consulting GeoMechanics International Impacts many BHI services Leading rock mechanics experts Enhance Baker Hughes services GMI insights can help BHI develop new technologies and services Strategy in Action 15

16 U.S. Rig Activity 1,900 Total Rig Count Horizontal Rig Count 1,800 1,700 1,600 1, Up 39% Y/Y 515 1, ,400 1,300 1,200 1,100 Up 5% Y/Y , /04 7/04 1/05 7/05 1/06 7/06 1/07 7/07 1/08 1/04 1/05 1/06 1/07 1/08 Technologies Supporting Growth 16

17 Key US Plays Horizontal Drilling Directional Horizontal Vertical Bakken Marcellus Woodford Fayetteville Barnett Technologies Supporting Growth 17

18 Horizontal Drilling on Land Optimized Drilling Efficiency Challenge: Deliver Optimized Drilling Efficiency on Land-Rigs Solution AutoTrax express Benefits Reduction in NPT using INTEQ s RSS technology Reduction in directional drilling difficulties Provides single BHA runs per hole section Reduces number of personnel at rig side Reduces risk for casing runs String Stabilizer NM Drill Collar MWD String Stabilizer AutoTrak Steering Unit Technologies Supporting Growth 18

19 Unconventional Gas Multi-Stage Fracs Location Arkansas (Fayetteville Shale) Challenge Frac 8 intervals in 1,800-ft open hole horizontal section Isolate each fracture without perforating, plugs or cement Achieve gas production targets / Accelerate reservoir drainage Solution Frac-Point open-hole fracture completion system Results Completed 8-stage frac treatment with 100% zonal isolation Pumped 1.2 million lb sand at 80+ bbl/min with minimal erosion Initial production rate was 171% higher than best vertical fractured offset well Saved four days of completion time Technologies Supporting Growth 19

20 New Builds 73 Deepwater Rigs Drillship Semi Q3 11 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q411 Other MEAP EARC LA NA Technologies Supporting Growth

21 Equivalent Rigs Canada N Sea Europe Land US Offshore Saudi Arabia Egypt Qatar Saudi Arabia Land Other Middle East land Asia Asia Pacific Pacific Offshore Land LA Land LA Brazil Trinidad West Africa Africa Land Technologies Supporting Growth 21

22 AutoTrak RCLS Success Troll Field Offshore Norway 0 True Vertical Depth (m) inch 18 5/8 inch 13 3/8 inch 9 5/8 inch East (m) North (m) Multi-lateral exposing 44,400 ft of reservoir from a single slot through five horizontal legs Seven leg multi-lateral Troll Field, Norway Technologies Supporting Growth 22

23 AutoTrak RCLS Success Troll Field Offshore Norway 2000 Est. Recovery 1.9 Bln bbls Sub-sea Increased Startup pilot well densi Original Troll C Additional recovery PDO injection wells wells estimate 40%PDO Troll C PDO multilaterals Recovery estimate 70% Startup Troll B PDO horizontal well gas province 500 PDO Troll B long-term test gas province Over 1 billion barrels produced to date million barrels 810,000 m drilled Single lateral to 7-branch well Long term collaboration Technologies Supporting Growth 23

24 Troll Field Horizontal Wells Technologies Supporting Growth 24

25 Success in Key Markets, $700 $600 $500 $603 $518 $481 $429 $400 $300 $200 $100 $0 U.K Norway Saudi Arabia Russia Brazil $ Success in Key Markets

26 Success in Key Markets - Russia Drilling and Completion Spending in Millions $ $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Russia Spending BHI Revenue $428 $ Success in Key Markets 26

27 Extended Reach Drilling NEW WORLD RECORD! Z-4 ZG-2 ZG-1 Wytch Farm Z-7 Z-26 Z-1 Feet (Thousands) Z-2 Cullen Norte Wytch Farm Z-11 Z-12 Z-12 38,100 feet Success in Key Markets 27

28 Success in Key Markets Saudi Arabia $18 Drilling and Completion Spending in Billions $ $16 $14 $12 $10 $8 $6 $4 $2 $0 $74 Saudi Arabia Spending Rigs BHI Revenue $391 $ Success in Key Markets 28

29 AutoTrak X-treme & CoPilot >2X RATE of PENETRATION Competitor's Best AT ExTrreme Introduction MRJN True Vertical Depth (ft) Location Offshore Saudi Arabia Problem / Objective Increase ROP Minimize drilling vibration Horizontal w/ 77 turn Solution 4¾" AutoTrak X-treme system; CoPilot ; LithoTrak; HCC bit Results Drilled in 1 run; saved 48.5 hrs; high quality well wellbore and high quality image logs inch /8 inch East (ft) North (ft) Marjan-179 wellpath 0 29 Success in Key Markets

30 Saudi Aramco BHI Joint Development Advanced Nuclear Magnetic Resonance (NMR) Logging-While While- Drilling (LWD) Tool for Small Holes in both Horizontal and Deviated Wells Success in Key Markets 30

31 Success in Key Markets - Brazil Drilling and Completion Spending in Millions $ $14 $12 $10 $8 $6 $4 $2 $0 Brazil Spending BHI Revenue Rigs $219 $ Success in Key Markets 31

32 Competitive Performance Efficiency MTBF (hrs) Operative Days BHI Competitor A Competitor B Lost Days Lost Days / Operative Days Failures / Operative Days Lost Days / Failure 0% 20% Petrobras Data for 2007 YTD through September % 60% 80% 100% 120% 140% 160% 180% Success in Key Markets 32

33 Why Baker Hughes? A World of Opportunities Committed to Our Long Term Strategy Driving growth through our investment in Infrastructure, People, and Technology Portfolio of Best-in-Class Technologies Market and Technology Leadership Focus on Reliability Meeting with Success in Key Markets National Oil Companies Petrobras, Saudi Aramco Eastern Hemisphere Middle East, Russia / CIS, West Africa Why Baker Hughes? 33

34