Baker Hughes CEO says remaining one company still makes sense

Baker Hughes Co.’s stock outperformed its biggest oilfield services rivals last week after raising the question of splitting itself up, but its CEO says it still makes sense to keep it as one company.

The world’s No. 2 oilfield contractor by market value is focusing on a second major source of business which it calls industrial energy technology, Chief Executive Officer Lorenzo Simonelli said Sept. 8 on an investor webcast for a Barclays Plc virtual conference. The new business is being driven by liquefied natural gas, energy transition work and industrial asset management.

The company sees its bread and butter oilfield services and equipment businesses likely maturing over the medium to long term, while growth prospects for industrial energy technology look increasingly attractive over the near and long term horizon, Simonelli said.

“With this evolution, you may ask whether it makes sense to keep the company together; we believe the answer today is ‘yes,’” Simonelli said. “However, the energy markets are clearly moving quickly and we will continue to evaluate the best corporate structure for Baker Hughes as we execute on our strategy.”

Potentially splitting up the company was a key driver in the company’s stock performance last week, Paul Sankey, a veteran oil-industry analyst and founder of Sankey Research LLC, said Sunday in a note to investors. After the presentation, Baker Hughes shares closed out the week more than three per cent higher, while its biggest peers Schlumberger and Halliburton Co. both fell.

© 2021 Bloomberg L.P.

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