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`2013 Year in Review
`
`Selected Financial Highlights ................................ 2
`Letter To Stockholders .............................................. 3
`
`Innovative Results
`North America ............................................................... 6
`Latin America............................................................... 10
`Europe / Africa / Russia Caspian ................... 14
`Middle East / Asia Pacifi c ................................... 18
`
`Sustainability ................................................................. 22
`Executive Leadership Team .................................. 24
`Form 10-K
`Corporate Information ........................Inside Back Cover
`
`SOURCES OF INNOVATION
`Innovation at Baker Hughes comes from many sources.
`It comes from listening to our customers and focusing
`intensely on understanding their challenges. It comes from
`imagination and vision that not only defi ne success, but also
`create a roadmap and a timeline to achieve it, distribute
`ownership, and foster alignment among everyone involved.
`
`Innovation comes from diversity—of culture, gender,
`age, point of view, academic background, discipline, and
`expertise. It is this diversity that creates the platform for
`challenging and questioning the past and the present.
`
`We foster the diversity that nurtures innovation through
`numerous practices and programs that range from university
`recruitment and a special employment program for people
`leaving the U.S. Military forces, to our global Women’s
`Resource Group and our annual Chad Deaton Diversity
`and Inclusion Award for helping to recruit, retain, and
`develop our talented and diverse workforce.
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`Total Revenue (in Millions)
`2011–2013, by Quarter
`
`Adjusted Net Income per Diluted Share (non-GAAP)
`2011–2013, by Quarter
`
`$6,000
`
`$5,000
`
`$4,000
`
`$3,000
`
`$2,000
`
`$1,000
`
`$1.40
`
`$1.20
`
`$1.00
`
`$0.80
`
`$0.60
`
`$0.40
`
`$0.20
`
`2011
`
`2012
`
`2013
`
`2011
`
`2012
`
`2013
`
`At Baker Hughes, our culture—that is, the behaviors and beliefs that defi ne
`us as a company—is one of innovation. It is the foundation upon which the
`company was built and is the driving force behind our continuing leadership
`in oilfi eld services. We are guided by transforming ideas and inventions into
`commercial products and services that help make energy safe and affordable
`while improving the return on investment for our customers and investors,
`and improving the lives of the people we touch.
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`2013 Global Highlights
`
`The fi rst Blue Wellbore
`in Canada is the result
`of a turnkey commercial
`agreement that integrates
`fi ve Baker Hughes product
`lines—Drilling Services, Drill
`Bits, Cementing, Wireline
`Services, and Completion
`Systems—and Baker Hughes
`fi eld-based supervision.
`
`Rhino™ Bifuel pump
`technology enabled a client
`in the Marcellus Shale to
`complete a large hydraulic
`fracturing operation using its
`own readily available fi eld
`gas, reducing emissions and
`costly fuel shipments.
`
`In the Norwegian North Sea,
`our SureTrak™ steerable
`drilling liner service—the
`industry’s fi rst—saved time
`and signifi cantly increased
`recovery in a complex 3D well
`by allowing Statoil to drill,
`evaluate, and place a liner to
`total depth in a single run.
`
`Our electrical submersible
`pumps were critical to
`enabling production from
`the world’s fi rst ice-resistant
`stationary platform in
`Arctic waters to enabling
`simultaneous oil production
`and water injection in the
`same wellbore in the
`Volga-Urals region.
`
`
`In Japan, we played
`a crucial role in the
`development of the
`world’s fi rst successful
`marine methane hydrate
`production test.
`
`The Gulf of Mexico’s fi rst
`high-pressure, intelligent
`well system saved millions
`of dollars for an operator
`working in 8,211 feet of
`water and established its
`value for future ultra-
`deepwater applications.
`
`The fi rst horizontal well
`drilled with the AutoTrak™
`Curve rotary-steerable
`system reduced drilling time
`from an average of four days
`for one well to less than
`one day.
`
`Our Dhahran Research and
`Technology Center in Saudi
`Arabia and the Reservoir
`Development Services Middle
`East Technology Center in Abu
`Dhabi will help Baker Hughes
`and our customers to better
`understand and more
`effi ciently develop shale and
`tight gas in the Middle East.
`
`Using a single Kymera™
`hybrid drill bit to replace
`six conventional diamond
`bits on a high-profi le land
`well resulted in a dramatic
`improvement in rate of
`penetration and saved
`16 days of rig time.
`
`Baker Hughes is using
`coiled tubing drilling and
`other innovative solutions
`to economically maximize
`ultimate recovery, improve
`revenue, and extend
`the life of mature fi elds
`in Malaysia.
`
`A customer saved
`an estimated USD
`10 million in rig
`days and operational
`effi ciencies by using
`our FASTrak™
`logging-while-
`drilling formation
`pressure testing and
`fl uid sampling service.
`
`This Annual Report to Stockholders, including the letter to stockholders from Martin S. Craighead, Chairman and Chief Executive Offi cer, contains forward-looking statements within the meaning of Section 27A of the Securities
`Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “estimate,” “project,” “foresee,” “forecasts,” “predict,”
`“outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,” “may,” “probable,” “likely,” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Baker Hughes’ expectations
`regarding these matters are only its forecasts. These forecasts may be substantially different from actual results, which are affected by many factors, including those listed in “Risk Factors” and “Management’s Discussion and
`Analysis of Financial Condition and Results of Operations” contained in Items 1A and 7 of the Annual Report on Form 10-K of Baker Hughes Incorporated for the year ended December 31, 2013. The use of “Baker Hughes,”
`“our,” “we” and other similar terms are not intended to describe or imply particular corporate organizations or relationships.
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`2013 Revenue by Segment
`
`Middle East / Asia Pacific
`18%
`
`Europe / Africa / Russia Caspian
`17%
`
`Latin America
`10%
`Industrial Services
`6%
`
`North America
`49%
`
`THE RESULTS
`The results of innovation at Baker Hughes are refl ected in
`game-changing products and services and in business
`processes that encourage effi ciency, collaboration, and future
`innovation. The latest results of our Culture of Innovation
`are highlighted in the following pages of this report and
`are already contributing to safer, more effi cient, and more
`cost-effective exploration and production operations. The
`results of our innovations can be seen in the advancements
`we have brought to the oil and gas industry for more than a
`century. Today, we continue to introduce new products
`and services that will populate tomorrow’s record books
`for enhancements in effi ciency, economy, safety, and
`productivity and continue to enable safe, affordable energy
`to improve people’s lives.
`
`ENABLING INNOVATION
`Innovation both creates and is enabled by a work
`environment that supports it. At Baker Hughes, we
`continually strive toward a work environment that
`motivates and empowers our employees, business partners,
`and customers to create new solutions and to evolve and
`perfect those that already exist. Our Dhahran Research
`and Technology Center in Saudi Arabia, our Artifi cial Lift
`Research and Technology Center in Oklahoma and our new
`Western Hemisphere Education Center in Houston are
`excellent examples of facilities as enablers. Here, leading-
`edge tools, testing facilities, and simulators enable ideas
`to be challenged and verifi ed in a protected laboratory
`environment and then fi ne-tuned so they can be rapidly
`commercialized with confi dence that they will perform
`as designed. Here, too, people from different disciplines,
`different geographies, and different companies can
`collaborate to achieve common objectives. And, it is
`here that engineers and scientists come together to
`learn from one another and from experts in all facets
`of oil and natural gas development.
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`Selected Financial Highlights
`
`
`
`Year Ended December 31
`
`(In millions, except per share amounts)
`
`2013
`
`2012
`
`2011
`
`2010(1)
`
`2009(1)
`
` As Reported:
` Revenue
` Operating income
` Net income
` Net income attributable to Baker Hughes
`
` Per share of common stock:
` Net income attributable to Baker Hughes:
`
` Basic
`
` Diluted
` Dividends
`
`$ 22,364
`1,949
`
`1,103
`
`1,096
`
`
`$ 21,361
`
`2,192
`
`1,317
`
`1,311
`
`$ 19,831
`
` 2,600
` 1,743
` 1,739
`
`$ 14,414
`
` 1,417
`
`819
`
`812
`
`$ 9,664
`
`732
`
`421
`
`421
`
`$
`
`
`
`2.47
`2.47
`0.60
`
`$
`
`
`
`2.98
`2.97
`0.60
`
`$
`
`
`
`3.99
`3.97
`0.60
`
`$ 2.06
`
` 2.06
`
` 0.60
`
`$
`
`
`
`1.36
`1.36
` 0.60
`
` Number of shares:
` Weighted average common shares diluted
`
` Reconciliation from As Reported to Adjusted Net Income:
` Net income attributable to Baker Hughes
`
`
`Impairment of trade names(2)
`
` Expenses related to Libya(3)
`
`
`Loss on early extinguishment of debt(4)
`
` Tax benefi t associated with reorganization(5)
`
`
`Information technology charges(6)
`
`
`Facility closure(7)
`
` Devaluation of Venezuelan currency(8)
`
` Severance charges(9)
`
`
`
` Adjusted net income(10)
`
`
`
`444
`
`
`
`441
`
`
`
` 438
`
`
`
`395
`
`
`
` 311
`
`$ 1,096
`–
`
`–
`
`–
`
`–
`
` –
`
`–
`
`23
`
`46
`
`
`$ 1,311
`
`–
`
`–
`
`–
`
`–
`
`28
`
`15
`
`–
`
`–
`
`$ 1,739
`
`220
`
` 70
`
`26
`
` (214)
`
` –
`
` –
`
` –
`
` –
`
`$ 1,165
`
`$ 1,354
`
`$ 1,841
`
`$
`
`
`
`
`
`
`
`
`
`$
`
`812
` –
`–
` –
` –
`–
`–
`–
`–
`
`812
`
`$
`
`
`
`
`
`
`
`
`
`$
`
`421
` –
` –
` –
` –
`–
` –
` –
` –
`
`421
`
` Per share of common stock:
` Adjusted net income(10):
`
` Basic
`
` Diluted
`
` Cash, cash equivalents, and short-term investments
` Working capital
` Total assets
` Total debt
` Equity
` Total debt/capitalization
`
`
`$
`
`
`
`2.62
`2.62
`
`$ 1,399
` 6,717
` 27,934
` 4,381
` 17,912
`20%
`
`
`
`$
`
`
`
`3.08
`3.07
`
`$ 1,015
`
`6,293
` 26,689
`
`4,916
` 17,268
`
`22%
`
`
`$
`
`
`4.22
`4.20
`
`$ 2.06
`
` 2.06
`
`$
`
`
`1.36
`1.36
`
` $ 1,050
` 6,295
` 24,847
` 4,069
` 15,964
`
`20%
`
`$ 1,706
`
` 5,568
` 22,986
`
` 3,885
` 14,286
`
`21%
`
` $ 1,595
` 4,612
` 11,439
`
` 1,800
`
` 7,284
`
`20%
`
` Number of employees (thousands)
`
`
`
`59.4
`
`
`
`58.8
`
`
`
`57.7
`
`
`
`53.1
`
`
`
` 34.4
`
` (1) We acquired BJ Services Company on April 28, 2010, and its fi nancial results from the date of acquisition are included in our results. 2010 and 2009 net income also include costs incurred by Baker Hughes
`related to the acquisition and integration of BJ Services.
` (2) Charge of $315 million before-tax ($220 million after-tax), the majority of which relates to the noncash impairment associated with the decision to minimize the use of the BJ Services trade name as part of
`our overall branding strategy for Baker Hughes.
` (3) Expenses of $70 million (before and after-tax) associated with increasing the allowance for doubtful accounts, and reserves for inventory and certain other assets as a result of civil unrest in Libya.
` (4) Loss of $40 million before-tax ($26 million after-tax) related to the early extinguishment in the third quarter of 2011 of $500 million notes due 2013.
` (5) Noncash tax benefi t of $214 million associated with the reorganization of certain foreign subsidiaries.
` (6) Expenses of $43 million before-tax ($28 million after-tax) related to internally developed software and other information technology assets.
` (7) Expenses of $20 million before-tax ($15 million after-tax) resulting from the closure of a chemical manufacturing facility in the United Kingdom.
` (8) Foreign exchange loss of $23 million before and after-tax due to the devaluation of Venezuela’s currency from the prior exchange rate of 4.3 Bolivars Fuertes per U.S. Dollar to 6.3 Bolivars Fuertes per
`U.S. Dollar, which applied to our local currency denominated balances.
` (9) Severance charges of $56 million before-tax ($46 million after-tax).
`(10) Adjusted net income is a non-GAAP measure comprised of net income attributable to Baker Hughes excluding the impact of certain identifi ed items. The Company believes that adjusted net income is useful
`to investors because it is a consistent measure of the underlying results of the Company’s business. Furthermore, management uses adjusted net income as a measure of the performance of the Company’s
`operations.
`
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`Letter to Stockholders
`
`Baker Hughes delivered 2013 record revenue of $22.4 billion
`
`along with the highest free cash fl ow levels in the history of
`the company—a strong performance that was due to collab-
`oration with our customers and a commitment to improving
`our business. We were awarded signifi cant contracts in our inter-
`national markets, particularly in the North Sea, and undertook fi eld
`development projects in both hemispheres. We witnessed a growing
`appetite for our new technology from customers in the Middle East
`and Asia Pacifi c, and continued to transition to a service-based business model in Russia Caspian. And the
`initiatives we undertook to transform our U.S. Pressure Pumping business and to stabilize a volatile Latin
`America region showed steady progress.
`
`Martin Craighead
`Chairman and Chief Executive Offi cer
`
`At the heart of our 2013 performance was Baker Hughes technology. Throughout the year, we launched
`129 products, combined products and services to create greater value for customers, and expanded our port-
`folio through a key alliance—continuing the innovation that is fundamental to the company’s legacy
`and is the mainstay of our culture.
`
`Twenty thirteen was a year of building momentum for Baker Hughes. The most prominent shift in our results
`came from a 24 percent growth in the Middle East/Asia Pacifi c region, which became our fastest-growing
`area and largest international segment. The Russia Caspian area refl ected a strong demand for our reliable
`well construction solutions, and we continued to build critical mass in this market. In Latin America, the steps
`we took in the second half of the year to improve profi ts and reduce risk with a more stable business mix led
`to new contract wins in Colombia and Mexico. Our North America business continued to evolve, with our
`strategy to realign our Pressure Pumping business gaining traction. Although this business is improving, I was
`disappointed with the pace of its recovery, and I remain personally committed to correcting this performance
`during 2014.
`
`Our Drill Bits, Drilling Services, Upstream Chemicals, Artifi cial Lift, and Completions Services product lines all
`performed exceptionally well in 2013, leveraging innovative new products to enhance shale production and
`unlock new and stranded reserves offshore.
`
`While we exceeded several of our health, safety, and environment metrics during the year, our success was
`overshadowed by the loss of six employees in workplace incidents. These fatalities strengthened our resolve
`to be the undisputed leader in safety, sustainability, and compliance, and we continued to invest in the
`infrastructure to support safe and environmentally responsible operations. We broke ground for our Western
`Hemisphere Training Center near Houston, with an expected opening date of early 2014, and opened key
`new fl uids and chemicals laboratories for the Gulf of Mexico.
`
`Our $556-million investment in research and technology funded incremental developments, as well as
`game-changing ideas based on nontraditional oilfi eld science such as advanced materials and nanotechnology.
`And at the end of the year, our Oklahoma-based Artifi cial Lift Research and Technology Center—built to
`deliver state-of-the-art testing capabilities for production technology—was near completion.
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`” Increasingly, operators will seek technology solutions
`that not only improve effi ciencies, but also help improve
`estimated ultimate recovery per well—and that will
`require a much deeper knowledge of the subsurface.”
`
`The investments we made in technology innovation were split generally among the market segments in which
`we have invested heavily for the past several years.
`
`The deepwater segment, now expanding beyond its traditional boundaries into locations such as East Africa
`and the Red Sea, continued to exhibit low recovery rates—sometimes as little as 7 percent. One of the goals
`of the Lower Tertiary integrated project team we established in 2012 is to learn more about how to develop
`and produce these complex reservoirs so that we can design technology to boost production. In 2013, this
`team’s work resulted in the world’s fi rst intelligent well system with a modifi ed multizone, single-trip comple-
`tion. Located in over 8,000 feet of water in the Cascade fi eld, the well also featured the fi rst high-pressure
`intelligent well system in the Gulf of Mexico.
`
`In the challenging North Sea market, there is a demand for technology that economically captures remaining
`reserves. We collaborated with a major North Sea operator, whose chief challenge in mature assets was to
`recover stranded reserves in low-pressure zones, to develop the SureTrak™ steerable drilling liner service—the
`fi rst technology of its kind, designed to drill and evaluate complex wells while simultaneously installing a liner.
`Unconventional operations also continued to expand outside North America, with Saudi Arabia and China
`being just two of several areas increasing their focus on shale. Certainly, we will apply our rich experience in
`North America to these emerging regions—but unconventional plays themselves have presented some other
`interesting new challenges.
`
`The traditional focus on effi ciency gains will soon not be enough to maintain the economics of unconven-
`tional wells. Increasingly, operators will seek technology solutions that help them improve estimated ultimate
`recovery per well—and that will require a much deeper knowledge of the subsurface than many operators
`have available. In 2013, we formed an alliance with CGG, a leading geophysical company, to integrate our
`near-wellbore data with the seismic data provided by CGG. This integration will enable full characterization of
`the reservoir throughout the life cycle of an unconventional well.
`
`Pad drilling, an innovation that has driven effi ciencies in unconventional plays, has redefi ned the way we look
`at drilling activity. For the last 70 years, the Baker Hughes Rig Count has been the industry’s leading barom-
`eter of drilling activity. Today, because any number of wells can be drilled from one pad with one rig, a more
`accurate refl ection of drilling activity is the number of wells, rather than the number of rigs. In the second
`quarter, we launched the Baker Hughes Well Count—a unique index that augments the Baker Hughes Rig
`Count to help the industry track and forecast U.S. activity in a more informed and comprehensive way.
`
`In mature fi elds, Baker Hughes reservoir experts took innovative steps to help operators recover the estimated
`65 percent of reserves that can potentially remain stranded in these assets. In Malaysia, the team conducted
`a two and a half-year fi eld study focused on understanding a new block in a mature reservoir more intimately,
`so that previously bypassed reserves could be located and developed successfully. This study resulted in a multi-
`year mature fi eld redevelopment project with Petronas Carigali in the offshore Greater D18 fi eld. In Mexico,
`we won a multiyear contract with Pemex to optimize production and operational effi ciency in the declining
`Soledad fi eld. This project leverages our success in the neighboring Corralillo fi eld, where we applied new
`technologies to triple production in less than four years.
`
`All of these illustrations highlight the important role that Baker Hughes plays as a service provider—but I
`believe we have another, equally important, role as innovators. For Baker Hughes, innovation is both our
`heritage and the foundation for our future. It is the way we look at possibilities and determine how to make
`them realities. It is our differentiator.
`
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`“ For Baker Hughes, innovation is both our heritage
`and the foundation for our future. It is the way
`we look at possibilities and determine how to
`make them realities.”
`
`Innovation without commercialization, however, is simply a science experiment. Several of our young tech-
`nologies gained traction throughout 2013, demonstrating our ability to rapidly develop and commercialize
`technologies that signifi cantly impact the market.
`
`
`
`
`
`
`
`• The ground-breaking ProductionWave™ solution, delivered in a matter of months, improves reserve
`recovery in unconventional oil plays by combining the superior drawdown of our electrical submersible
`pumping (ESP) systems with products and services from our Completions Services and Upstream Chemi-
`cals product lines. Based on our FLEXPump™ series ESP technology, the ProductionWave solution offers
`a range of commercial models to meet the customer’s unique business objectives.
`
`• The SHADOW™ series frac plugs with disintegrating frac balls, also developed for the unconventionals
`market, extends the commercial application of our research in nanotechnology. SHADOW frac plugs
`eliminate the milling process in plug-and-perf completions. This technology was fi eld-tested in 2013 and
`brought to market a year ahead of schedule.
`
`• The AutoTrak™ Curve rotary steerable system, brought to market in 18 months, enables operators to
`improve drilling effi ciencies in unconventional wells by drilling the vertical, curve, and horizontal sections
`in one run. The system enjoyed rapid customer adoption and quickly gained market share based on con-
`sistently reliable performance. In 2013, the system was on the precipice of drilling more than 10 million
`feet—less than two years after its launch.
`
`Outlook
`We are optimistic about the opportunities ahead for Baker Hughes. Indications are that 2014 will continue
`the positive trends that began in 2013. North America spending growth is expected to accelerate, and solid
`growth should continue in several international markets, particularly the Middle East, Africa, and Russia.
`Sustained strong oil prices, sanctioning of major projects, and delivery of a large number of offshore rigs are
`expected to drive spending increases among our customers.
`
`The year ahead also promises new prospects for our Chemical and Industrial Services business, with opportu-
`nities in deep water for Upstream Chemicals and a growing interest in industrial water treatment and petro-
`chemical processing for Downstream Chemicals. We are particularly enthusiastic about the traction gained in
`the midstream market by the Process and Pipeline Services product line during 2013.
`
`We are dedicated to meeting tomorrow’s energy needs through innovations which simply do not exist today.
`We are committed to escalating technology development that meets the evolving challenges of our custom-
`ers. Whether we are developing unconventional reservoirs, boosting production in mature fi elds, or navigating
`complex well geometries in ultra-deepwater fi elds, Baker Hughes will play a leading role in developing new
`ways to address these challenges.
`
`You can be confi dent that Baker Hughes has the right capabilities, competencies, courage, and people to
`convert innovation into shareholder value.
`
`Martin Craighead
`Chairman and Chief Executive Offi cer
`
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`Innovative Results
`
`North America
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`The Ultra-Deepwater Frontier
`
`Conquering the Gulf of Mexico’s ultra-deepwater frontier is dependent upon
`continuing the commitment to innovation, collaboration, and safety that has
`made—and continues to make—North America the world leader in oil and gas
`exploration and development.
`Baker Hughes is a leader in the development and application of technologies and
`methodologies that continually extend the limits of what is safely, technically, and
`economically feasible in water depths of 4,000 feet (1219 meters) and greater.
`
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`Innovative Results
`North America
`
`Our work in the Cascade and Chinook
`fi elds in the Gulf of Mexico’s Lower
`Tertiary trend is an excellent example
`of our ultra-deepwater leadership.
`
`We have been closely involved in the development
`of both fi elds since their inception, providing a wide
`range of directional drilling, evaluation, completions,
`and intervention services. In late 2013, we set a
`record in the Cascade fi eld by installing the world’s
`fi rst intelligent well system (IWS) with a modifi ed
`multizone, single-trip (MST) completion system in a
`water depth of 8,211 feet (2503 meters). The system
`was also the fi rst high-pressure IWS in the Gulf of
`Mexico. It saved the operator millions of dollars,
`proving its value, not only for the remainder of
`the Chinook / Cascade project, but also as a key
`enabler of operating effi ciencies and savings in
`future ultra-deepwater and high-pressure/high-
`temperature applications.
`
`Extreme pressure and temperature combinations
`present an extreme challenge to ultra-deepwater
`operations. Baker Hughes and a major international
`oil company entered into a long-term research and
`development collaboration agreement in 2013 to
`develop completion technologies that will withstand
`temperatures approaching 500˚F (260˚C) and
`pressures of 30,000 psi (207 MPa) for very long
`periods of time. The fi rst phase of the project
`involves identifying product designs, metallurgies,
`and sealing technologies that will withstand these
`conditions throughout a projected life span of
`30 years.
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`” We set a record in the Cascade fi eld by installing
`the world’s fi rst intelligent well system with a
`modifi ed multizone, single-trip completion
`system in a water depth of 8,211 feet (2503 meters).“
`
`The Blue Dolphin is
`the most capable
`offshore stimulation
`vessel in the Baker
`Hughes Gulf of Mexi-
`co fl eet and the fi rst in
`the industry to provide
`20,000-psi (138 MPa)
`pressure pumping
`capability. The vessel
`recently completed
`an ultra-deepwater
`multizone fracturing
`completion in a single
`trip using the largest
`volume of proppant
`ever pumped into a
`gulf well.
`
`Baker Hughes is
`a leader in bifuel
`hydraulic fracturing
`technology with its
`Rhino™ Bifuel pump
`fl eets. The dual-fuel
`pumps reduce the use
`of diesel fuel by up to
`70 percent and can
`operate twice as long
`as engines running
`solely on diesel.
`Safety is improved by
`eliminating refueling
`during pumping.
`
`Reinforcing Performance, Compliance, and Consistency
`Anticipating more stringent regulatory and contrac-
`tual requirements governing safety, performance,
`and competency in the oilfi eld, Baker Hughes further
`expanded its International Association of Drilling Con-
`tractors- (IADC) accredited Competence Management
`Program (CMP) in 2013. The CMP provides a platform
`for human capital development across the enterprise
`and is supported by the Baker Hughes Operating
`System (BHOS), a digital document management
`system that enables global consistency of policies,
`processes, and procedures throughout the company.
`
`Improving Shale Sustainability
`North American shale reservoirs are abundant, often
`over large areas, but they are not homogeneous.
`Characteristics can vary considerably between reser-
`voirs, wells, and even zones within wells. Compre-
`hensive understanding of reservoir attributes, geome-
`chanics, and stress regimes is necessary to effectively
`exploit the “sweet spots” in the reservoir. As the only
`service company with geoscience, hydraulic fractur-
`ing, artifi cial lift services, and production chemicals
`in its portfolio, Baker Hughes addresses shale play
`challenges from a uniquely sustainable perspective.
`
`Baker Hughes is leading the shift to natural gas
`versus diesel fuel in hydraulic fracturing operations.
`In 2013, Cabot Oil & Gas Corporation employed
`our Rhino™ Bifuel pumps to hydraulically fracture
`10 wells using a mixture of readily available fi eld
`gas and diesel. Demonstrating peak effi ciency,
`Baker Hughes completed all 10 wells in 28 days
`while replacing 110,000 gallons of costly diesel fuel
`with cleaner-burning natural gas from Cabot’s nearby
`wells. The bifuel pumps also signifi cantly lowered air
`emissions and related health, safety, and environ-
`mental (HSE) impact due to reduced truck traffi c.
`
`Using Baker Hughes SmartCare™ environmentally
`responsible chemical components further enhanced
`environmental protection.
`
`Establishing New Benchmarks in Canada
`For Canadian operators seeking to unlock heavy oil
`reserves, Baker Hughes electrical submersible pumps
`(ESP) are setting new benchmarks for reliability and
`performance in steam-assisted gravity drainage
`(SAGD) operations. These CENtigradeTM ESP systems
`have exceeded customer run life targets, and should
`generate millions of dollars going forward by
`avoiding intervention costs and deferred production.
`
`ProductionWaveTM Solution Forges New Pathways
`
`Unconventional oil wells typically have a steep
`decline curve and require artifi cial lift to maxi-
`mize recovery. Rod-lift pumps are the traditional
`method of boosting production in low-fl ow-rate
`wells. Developed specifi cally for unconventional
`wells, the new Baker Hughes ProductionWave
`solution integrates artifi cial lift, production
`chemicals, sand screens, and remote real-time
`monitoring technologies. With this solution,
`operators will be able to increase production
`rates, even in low-fl ow-rate wells.
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`Innovative Results
`
`Latin America
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`Field Management
`
`Slowing or reversing declining production from Latin America’s mature fi elds
`requires creative application of leading-edge technology and innovative
`business models that change traditional working relationships between
`operators and service providers, to the mutual benefi t of both.
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`Innovative Results
`Latin America
`
`Operators in Mexico are beginning to
`award full-fi eld management contracts
`for mature fi elds to qualifi ed service
`providers such as Baker Hughes, who can
`provide resources and know-how to help
`accelerate production, add to the reserve
`base, and generate more revenues.
`
`The Soledad project represents our fi rst long-term,
`full-fi eld management project in Mexico. The Soledad
`fi eld management program will include optimizing
`production from existing oil-producing horizons as
`well as exploring for new production opportunities.
`For service companies like Baker Hughes, which
`historically have been contracted to construct and
`produce wells, managing an entire fi eld—including
`facilities and environmental and community steward-
`ship—presents exciting new opportunities, but also
`requires the skills and courage to take on responsibil-
`ities previously reserved for asset owners.
`
`Collaborating to Innovate in the Andean Foothills
`The Andean foothills in Colombia contain some of
`the world’s most diffi cult onshore wells, with depths,
`deviations, and formation complexities that can push
`the boundaries of equipment, consume rig time, and
`elevate project costs. In 2013, Baker Hughes was
`awarded multiple contracts to provide well construc-
`tion services for a major development campaign in
`the region.
`
`Traditional well operations typically follow a sequential
`pattern in which the drilling team focuses on getting
`the well to total depth as fast as possible before
`handing it off to the completion and production
`team. Baker Hughes and the operator are addressing
`the interlinked challenges in the Andean foothills
`wells with a holistic approach in which all disciplines
`
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`are collaborating to meet each other’s technical
`needs and challenges. Following this approach,
`the int