Baker Hughes Announces Third Quarter Results

                 Baker Hughes Announces Third Quarter Results

PR Newswire

HOUSTON, Oct. 19, 2012

HOUSTON, Oct. 19,2012 /PRNewswire/ --Baker Hughes Incorporated (NYSE: BHI)
announced today adjusted net income (a non-GAAP measure) for the third quarter
of 2012 of $322 million or $0.73 per diluted share. This compares to adjusted
net income of $1.18 per diluted share for the third quarter of 2011, and $1.00
per diluted share for the second quarter of 2012.

Adjusted net income for the third quarter of 2012 excludes an after-tax charge
of $28 million ($0.07 per diluted share) related to internally developed
software and other information technology assets. It also excludes an
after-tax charge of $15 million ($0.03 per diluted share) related to the
closure of a chemical manufacturing facility.

Adjusted net income for the third quarter of 2012 includes after-tax charges
of $27 million ($0.06 per diluted share) for bad debt provisions in Latin
America and Europe.

Net income attributable to Baker Hughes (a GAAP measure) for the third quarter
of 2012 was $279 million or $0.63 per diluted share compared to $1.61 per
diluted share for the third quarter of 2011, and $1.00 per diluted share for
the second quarter of 2012. Please see Table 1 for a reconciliation of GAAP
to non-GAAP Financial Measures.

Revenue for the third quarter of 2012 was $5.23billion, up 3% compared to
$5.06billion for the third quarter of 2011 and remained relatively flat
compared to $5.21billion for the second quarter of 2012.

"For the third quarter, Baker Hughes' revenue was flat, despite a drop in U.S.
and international rig counts," said Martin Craighead, Baker Hughes' President
and Chief Executive Officer. "However, our margins were impacted by the
well-known imbalance in the North American Pressure Pumping business.
Additionally, activity was less than planned in several key geomarkets for
Baker Hughes, resulting in an unfavorable mix. The clearest example is
Canada, where the seasonal return of activity was nearly 30 percent less than
this time last year. Internationally, the collective rig count in Brazil,
Colombia, and Norway was down 17 percent compared to the last quarter, and
these are all meaningful markets for Baker Hughes. In the fourth quarter,
activity levels in our International segments are projected to rebound."

Craighead added, "Looking ahead, we are well positioned in growing and
emerging markets. Our share in the Gulf of Mexico - the fastest growing
deepwater market in the world - has taken a significant step forward through a
series of wins this quarter with several major clients. In the North Sea, we
are mobilizing to provide integrated drilling services for a very large
contract. In the Middle East, we continue to strengthen our Integrated
Operations capabilities, and also have been assigned work in the emerging
Saudi Arabian unconventional market."

Craighead continued, "We will continue investing in technologies, product
lines and regions that strengthen the core of our business and supply chain.
At the same time, we remain focused on increasing returns through a
disciplined approach to capital investment."

The Company recently made the decision to sell its Process and Pipeline
Services ("PPS") business. As a result, the Company has reclassified in all
prior periods the revenue, expenses, cash flows, assets and liabilities of PPS
to discontinued operations. PPS previously was a component of the Industrial
Services segment, which now primarily consists of the Company's downstream
chemicals and specialty polymers businesses.

The Company was cash flow positive in the third quarter of 2012, as cash
increased by $215million to $1.01 billion compared to the second quarter of
2012. Debt increased by $113million to $5.15billion compared to the second
quarter of 2012.

Capital expenditures were $732million, depreciation and amortization expense
was $399million, and dividend payments were $66million in the third quarter
of 2012.

Adjusted EBITDA (a non-GAAP measure) in the third quarter of 2012 was
$924million, down $66 million compared to the second quarter of 2012. A
reconciliation of net income attributable to Baker Hughes to Adjusted EBITDA
is provided in Table 2. Supplemental financial information for revenue and
adjusted operating profit before tax (a non-GAAP measure) is provided in Table
5.

Consolidated Condensed Statements of Income
(Unaudited)
                                                  Three Months Ended
                                                  September 30,       June 30,
(Inmillions, except per share amounts)           2012      2011      2012
Revenue                                           $ 5,228   $ 5,064   $ 5,212
Costs and Expenses:
Cost of revenue                                   4,305     3,843     4,168
Research and engineering                          117       115       126
Marketing, general and administrative             344       301       298
Total costs and expenses                          4,766     4,259     4,592
Operating income                                  462       805       620
Interest expense, net                             (49)      (58)      (50)
Loss on early extinguishment of debt              —         (40)      —
Income from continuing operations before income   413       707       570
taxes
Income taxes                                      (143)     (9)       (144)
Income from continuing operations                 270       698       426
Income from discontinued operations, net of tax   14        8         12
Net income                                        284       706       438
Net (income) loss attributable to noncontrolling  (5)       —         1
interests
Net income attributable to Baker Hughes           $  279   $  706   $  439
Amounts attributable to Baker Hughes:
Income from continuing operations                 $  265   $  698   $  427
Income from discontinued operations               14        8         12
Net income attributable to Baker Hughes           $  279   $  706   $  439
Basic earnings per share:
Income from continuing operations                 $  0.60  $  1.60  $  0.97
Income from discontinued operations               0.03      0.02      0.03
Basic earnings per share attributable to Baker    $  0.63  $  1.62  $  1.00
Hughes
Diluted earnings per share:
Income from continuing operations                 $  0.60  $  1.59  $  0.97
Income from discontinued operations               0.03      0.02      0.03
Diluted earnings per share attributable to Baker  $  0.63  $  1.61  $  1.00
Hughes
Weighted average shares outstanding, basic        440       437       439
Weighted average shares outstanding, diluted      441       439       440
Depreciation and amortization expense             $  399  $  322  $  370
Capital expenditures                              $  732  $  627  $  764

Consolidated Condensed Statements of Income
(Unaudited)
                                               Nine Months Ended September 30,
(Inmillions, except per share amounts)        2012              2011
Revenue                                        $ 15,708          $ 14,136
Costs and Expenses:
Cost of revenue                                12,660            10,900
Research and engineering                       366               331
Marketing, general and administrative          975               862
Total costs and expenses                       14,001            12,093
Operating income                               1,707             2,043
Interest expense, net                          (153)             (164)
Loss on early extinguishment of debt           —                 (40)
Income from continuing operations before       1,554             1,839
income taxes
Income taxes                                   (479)             (434)
Income from continuing operations              1,075             1,405
Income from discontinued operations, net of    27                20
tax
Net income                                     1,102             1,425
Net (income) attributable to noncontrolling    (5)               —
interests
Net income attributable to Baker Hughes        $ 1,097          $ 1,425
Amounts attributable to Baker Hughes:
Income from continuing operations              $ 1,070          $ 1,405
Income from discontinued operations            27                20
Net income attributable to Baker Hughes        $ 1,097          $ 1,425
Basic earnings per share:
Income from continuing operations              $  2.43          $  3.22
Income from discontinued operations            0.06              0.05
Basic earnings per share attributable to Baker $  2.49          $  3.27
Hughes
Diluted earnings per share:
Income from continuing operations              $  2.43          $  3.21
Income from discontinued operations            0.06              0.04
Diluted earnings per share attributable to     $  2.49          $  3.25
Baker Hughes
Weighted average shares outstanding, basic     440               436
Weighted average shares outstanding, diluted   441               438
Depreciation and amortization expense          $ 1,122          $  951
Capital expenditures                           $ 2,160          $ 1,624

Consolidated Condensed Balance Sheets
(Unaudited)
                                                   September 30,  December 31,
(In millions)                                      2012           2011
ASSETS
Current Assets:
Cash and cash equivalents                          $ 1,007       $ 1,050
Accounts receivable - less allowance for doubtful
accounts                                           5,003          4,794

 (2012 - $255, 2011 - $226)
Inventories, net                                   3,879          3,211
Other current assets                               684            644
Assets of discontinued operations                  707            646
Total current assets                               11,280         10,345
Property, plant and equipment, net                 8,225          7,245
Goodwill                                           5,612          5,637
Intangible assets, net                             989            1,086
Other assets                                       650            534
Total assets                                       $ 26,756       $ 24,847
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable                                   $ 1,829       $ 1,774
Short-term debt and current portion of long-term   1,306          224
debt
Accrued employee compensation                      661            695
Other accrued liabilities                          681            752
Liabilities of discontinued operations             55             56
Total current liabilities                          4,532          3,501
Long-term debt                                     3,839          3,845
Deferred income taxes and other tax liabilities    602            810
Long-term liabilities                              712            727
Equity                                             17,071         15,964
Total liabilities and equity                       $ 26,756       $ 24,847

Consolidated Condensed Statements of Cash Flows
(Unaudited)
                                               Nine Months Ended September 30,
(In millions)                                  2012              2011
Cash flows from operating activities:
Income from continuing operations              $ 1,075          $ 1,405
Adjustments to reconcile income from
continuing operations to

net cash flows from operating activities:
Depreciation and amortization                  1,122             951
Other, primarily working capital               (1,250)           (1,674)
Net cash flows from operating activities       947               682
Cash flows from investing activities:
Expenditures for capital assets                (2,160)           (1,624)
Other                                          264               447
Net cash flows from investing activities       (1,896)           (1,177)
Cash flows from financing activities:
Net proceeds (payments) of debt                1,075             (112)
Dividends                                      (197)             (195)
Other                                          24                143
Net cash flows from financing activities       902               (164)
Effect of foreign exchange rate changes on     4                 6
cash
Decrease in cash and cash equivalents          (43)              (653)
Cash and cash equivalents, beginning of period 1,050             1,456
Cash and cash equivalents, end of period       $ 1,007          $  803



Table 1: Reconciliation of GAAP and Non-GAAP Financial Measures
The following table reconciles net income attributable to Baker Hughes, which
is the directly comparable financial result determined in accordance with
Generally Accepted Accounting Principles (GAAP), to adjusted net income ^1 (a
non-GAAP financial measure). This excludes identified items with respect to
the third quarter of 2012 and 2011. There were no identified items requiring
adjustment for the second quarter of 2012.

                                         Three Months Ended September 30, 2012
                                                               Diluted
(Unaudited)                              Net
                                                               Earnings
(Inmillions, except per share amounts)  Income
                                                               PerShare
Net income attributable to Baker Hughes  $  279              $  0.63
(GAAP)
Identified Items:
Information technology charges ^2        28                    0.07
Facility closure ^3                      15                    0.03
Adjusted net income (non-GAAP) ^1        $  322              $  0.73
                                         Three Months Ended September 30, 2011
                                                               Diluted
(Unaudited)                              Net
                                                               Earnings
(Inmillions, except per share amounts)  Income
                                                               PerShare
Net income attributable to Baker Hughes  $  706              $  1.61
(GAAP)
Identified Item:
Tax benefit associated with              (214)                 (0.49)
reorganization ^ 4
Loss on early extinguishment of debt ^   26                    0.06
5
Adjusted net income (non-GAAP) ^1        $  518              $  1.18

   Adjusted net income is a non-GAAP measure comprised of net income
   attributable to Baker Hughes excluding the impact of certain identified
   items. The Company believes that adjusted net income is useful to
   investors because it is a consistent measure of the underlying results of
1  the Company's business. Furthermore, management uses adjusted net income
   as a measure of the performance of the Company's operations.
   Reconciliation of net income attributable to Baker Hughes, a GAAP measure,
   to adjusted net income for historical periods can be found in the
   Supplemental Financial Information on the Company's website at:
   www.bakerhughes.com/investor.
   Charge of $43 million before-tax ($28 million after-tax) related to
2  internally developed software and other information technology assets in
   the third quarter of 2012.
   Charge of $20 million before-tax ($15 million after-tax) resulting from the
3  closure of a chemical manufacturing facility in the United Kingdom in the
   third quarter of 2012.
4  Noncash tax benefit of $214 million associated with the reorganization of
   certain foreign subsidiaries in the third quarter of 2011.
5  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.



Table 2: Calculation of EBIT, EBITDA and Adjusted EBITDA (non-GAAP measures)
^1
                                                   Three Months Ended
                                                   September 30,      June 30,
(In millions)                                      2012     2011      2012
Net income attributable to Baker Hughes            $  279  $  706   $  439
Net income attributable to noncontrolling          5        —         (1)
interests
Income from discontinued operations, net of tax    (14)     (8)       (12)
Income taxes                                       143      9         144
Income from continuing operations before income    413      707       570
taxes
Interest expense, net                              49       58        50
Earnings before interest and taxes (EBIT)          462      765       620
Depreciation and amortization expense              399      322       370
Earnings before interest, taxes, depreciation and
                                                   861      1,087     990
amortization (EBITDA)
Adjustments to EBITDA:
Information technology charges ^2                  43
Facility closure ^3                                20
Loss on early extinguishment of debt ^ 4                    40
Adjusted EBITDA                                    $  924  $ 1,127  $  990

                                               Nine Months Ended September 30,
(In millions)                                  2012              2011
Net income attributable to Baker Hughes        $ 1,097          $ 1,425
Net income attributable to noncontrolling      5                 —
interests
Income from discontinued operations, net of    (27)              (20)
tax
Income taxes                                   479               434
Income from continuing operations before       1,554             1,839
income taxes
Interest expense, net                          153               164
Earnings before interest and taxes (EBIT)      1,707             2,003
Depreciation and amortization expense          1,122             951
Earnings before interest, taxes, depreciation  2,829             2,954
and amortization (EBITDA)
Adjustments to EBITDA:
Information technology charges ^2              43
Facility closure ^3                            20
Expenses related to Libya ^5                                     70
Loss on early extinguishment of debt ^ 4                         40
Adjusted EBITDA                                $ 2,892          $ 3,064

   EBIT, EBITDA and Adjusted EBITDA (as defined in the calculations above) are
   non-GAAP measures. Management is providing these measures because it
1  believes that such measures are widely accepted financial indicators used
   by investors and analysts to analyze and compare companies on the basis of
   operating performance.
   Charge of $43 million before-tax ($28 million after-tax) related to
2  internally developed software and other information technology assets in
   the third quarter of 2012.
   Charge of $20 million before-tax ($15 million after-tax) resulting from the
3  closure of a chemical manufacturing facility in the United Kingdom in the
   third quarter of 2012.
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.
   Expenses of $70 million (before and after-tax) associated with increasing
5  the allowance for doubtful accounts and reserves for inventory and certain
   other assets in the second quarter of 2011 as a result of civil unrest in
   Libya.



Table 3: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin ^1
                                         Three Months Ended
                                         September 30,             June 30,
(In millions)                            2012           2011^2     2012
Segment Revenue
North America                            $  2,742      $  2,721  $  2,672
Latin America                            583            570        604
Europe/Africa/Russia Caspian             866            863        925
Middle East/Asia Pacific                 844            711        804
Industrial Services ^3                   193            199        207
Total Operations                         $  5,228      $  5,064  $  5,212
Profit Before Tax
North America                            $  288       $  602   $  357
Latin America ^4                         45             71         77
Europe/Africa/Russia Caspian ^4          104            103        156
Middle East/Asia Pacific                 71             75         87
Industrial Services ^3                   13             32         25
Total Operations                         $  521       $  883   $  702
Corporate and Other Profit Before Tax
Interest expense, net                    (49)           (58)       (50)
Loss on early extinguishment of debt     —              (40)       —
Corporate and other                      (59)           (78)       (82)
Corporate, net interest and other        (108)          (176)      (132)
Profit Before Tax                        $  413       $  707   $  570
Profit Before Tax Margin ^1
North America                            11%            22%        13%
Latin America ^4                         8%             12%        13%
Europe/Africa/Russia Caspian ^4          12%            12%        17%
Middle East/Asia Pacific                 8%             11%        11%
Industrial Services ^3                   7%             16%        12%
Total Operations                         10%            17%        13%

   Profit before tax margin is a non-GAAP measure defined as profit before tax
   ("income from continuing operations before income taxes") divided by
1  revenue. Management uses the profit before tax margin because it believes
   it is a widely accepted financial indicator used by investors and analysts
   to analyze and compare companies on the basis of operating performance.
   The revenue and profit before tax of Reservoir Development Services was
   reclassified from the Industrial Services segment into the geographic
2  operating segments at the beginning of 2012. Quarterly segment revenue and
   profit before tax for the two years ended December 31, 2011 have been
   reclassified to reflect this change and are available online at:
   www.bakerhughes.com/investor in the financial information section.
   Quarterly revenue and profit before tax for the Industrial Services segment
   have been reclassified for all prior periods to exclude the discontinued
3  operations of the Process and Pipeline Services business and are available
   online at: www.bakerhughes.com/investor in the financial information
   section.
   Profit before tax and profit before tax margin include bad debt provisions
4  of $22 million in Latin America and $7 million in Europe/Africa/Russia
   Caspian in the third quarter of 2012.



Table 4: Charges Associated with Information Technology and Facility Closure
^1
                                               Three Months Ended
(In millions)                                  September, 2012
Adjustments to Operating Profit Before Tax
North America                                  $   33
Latin America                                  7
Europe/Africa/Russia Caspian                   11
Middle East/Asia Pacific                       10
Industrial Services                            2
Total Operations                               $   63

   Charges of $43 million before-tax ($28 million after-tax) related to
   internally developed software and other information technology assets in
   the third quarter of 2012. Charges associated with the closure of a
   chemical manufacturing facility in the United Kingdom were $20 million
1  before-tax ($15 million after-tax) in the third quarter of 2012. The
   information technology assets and manufacturing facility supported our
   global operations. Therefore, these costs have been allocated to all
   segments. There were no identified items requiring adjustments for
   operating profit before tax for the second quarter of 2012 or the third
   quarter of 2011.



Table 5: Supplemental Financial Information Excluding Certain Identified
Items
The following table contains non-GAAP measures of operating profit before tax
and operating profit before tax margin, excluding charges related to
information technology, as well as the closure of a chemical manufacturing
facility recorded in the third quarter of 2012 (see Table 4). There were no
items requiring adjustment for the second quarter of 2012 or the third quarter
of 2011.

                                       Three Months Ended
                                       September 30,       June 30,
(In millions)                          2012      2011^2    2012
Segment Revenue
North America                          $ 2,742  $ 2,721  $ 2,672
Latin America                          583       570       604
Europe/Africa/Russia Caspian           866       863       925
Middle East/Asia Pacific               844       711       804
Industrial Services ^3                 193       199       207
Total Operations                       $ 5,228  $ 5,064  $ 5,212
Operating Profit Before Tax ^1
North America                          $  321   $  602   $  357
Latin America ^4                       52        71        77
Europe/Africa/Russia Caspian ^4        115       103       156
Middle East/Asia Pacific               81        75        87
Industrial Services ^3                 14        32        25
Total Operations                       $  583   $  883   $  702
Operating Profit Before Tax Margin ^1
North America                          12%       22%       13%
Latin America ^4                       9%        12%       13%
Europe/Africa/Russia Caspian ^4        13%       12%       17%
Middle East/Asia Pacific               10%       11%       11%
Industrial Services ^3                 7%        16%       12%
Total Operations                       11%       17%       13%

   Operating profit before tax is a non-GAAP measure defined as profit before
   tax ("income from continuing operations before income taxes") less certain
   identified costs. Operating profit before tax margin is a non-GAAP measure
1  defined as operating profit before tax divided by revenue. Management uses
   each of these measures because it believes they are widely accepted
   financial indicators used by investors and analysts to analyze and compare
   companies on the basis of operating performance and that these measures may
   be used by investors to make informed investment decisions.
   The revenue and profit before tax of Reservoir Development Services was
   reclassified from the Industrial Services segment into the geographic
2  operating segments at the beginning of 2012. Quarterly segment revenue and
   operating profit before tax for the two years ended December 31, 2011, have
   been reclassified to reflect this change and are available online at:
   www.bakerhughes.com/investor in the financial information section.
   Quarterly revenue and profit before tax for the Industrial Services segment
   have been reclassified for all prior periods to exclude the discontinued
3  operations of the Process and Pipeline Services business and are available
   online at: www.bakerhughes.com/investor in the financial information
   section.
   Operating profit before tax and operating profit before tax margin include
4  bad debt provisions of $22 million in Latin America and $7 million in
   Europe/Africa/Russia Caspian in the third quarter of 2012.

Baker Hughes Operational Highlights

Recent contract awards have made Baker Hughes the leading provider of drilling
services in the Gulf of Mexico, both in shallow and deep waters. This
reflects Baker Hughes' track record of delivery excellence, having drilled
through over 130 miles of salt in the Gulf of Mexico, and advanced technology
offering, including OnTrak^TM and TesTrak^TM measurement-while-drilling
services. In addition, Baker Hughes successfully ran new wireline formation
evaluation technologies, significantly improving data quality and reducing
deepwater rig time for multiple clients using GeoExplorer™ high resolution
formation imager, our award winning MaxCOR™ rotary sidewall coring tool, and a
new service for focused fluid sampling.

Statoil recently awarded Baker Hughes a $500 million two-year contract to
provide integrated drilling services in offshore Norway. This contract will
cover the delivery of drill bits, directional drilling, measurement and
logging-while-drilling, mud-logging services, remote operations and integrated
services for 25 offshore fields in the North Sea, Norwegian Sea and the
Barents Sea.

The industry adoption of Baker Hughes' AutoTrak™ Curve rotary steerable system
is continuing to gain momentum as reflected in the drilling of over one
million feet in the United States during the last four months. At the end of
the third quarter, the cumulative footage drilled with this system since its
introduction in March 2011 has exceeded two million feet.

Only two years since the OilPump Service acquisition, Baker Hughes has
recently reached a significant milestone of 8,000 wells under well management
and leasing contracts in Russia. This demonstrates Baker Hughes' growing
position with key Russian customers in the largest electric submersible pump
market in the world.

Baker Hughes' high resolution StarTrak™ logging-while-drilling system recently
contributed to significantly improve a large U.S. independent operator's
return on investment for 12 wells in the Colorado Wattenberg Basin.
Eliminating the need for time consuming dedicated wireline runs represented
an operational efficiency improvement of 35 to 70 hours per well. The
acquired critical borehole data regarding natural fractures offered the
opportunity to significantly improve completion design and effectiveness.

Baker Hughes is expanding its presence in the growing East Africa petroleum
province. With estimates of over 100 Tcf of gas in place, this region holds
some of the largest global discoveries in recent years. By opening a new
facility in Mozambique and mobilizing directional drilling,
logging-while-drilling and wireline services, Baker Hughes is ideally
positioned to address this growing deepwater market.

Baker Hughes deployed new generation Bi-Fuel Pressure Pumping units operating
on both natural gas and diesel fuel in South Texas, leading to reduced fuel
costs and emissions. This initiative is currently generating a wide interest
from operators across the United States and expected to gain traction
throughout 2013.

Supplemental Financial Information

Supplemental financial information can be found on our website at:
www.bakerhughes.com/investor in the financial information section.

Conference Call

The Company has scheduled a conference call to discuss management's outlook
and the results reported in today's earnings announcement. The call will
begin at 8a.m. Eastern time, 7a.m. Central time on Friday, October 19, 2012,
the content of which is not part of this earnings release. A slide
presentation providing summary financial and statistical information that will
be discussed on the conference call will also be posted to the company's
website and available for real-time viewing. To access the call, please call
the conference call operator at: 800-374-2469 in the United States, or
706-634-7270 for international calls. Please call in 20 minutes prior to the
scheduled start time and ask for the "Baker Hughes Conference Call." A replay
of the call will be available through Friday, November2,2012. The number
for the replay is: 800-585-8367 in the United States, or 404-537-3406 for
international calls, and the access code is: 59811229. To access the
webcast, go to: http://www.bakerhughes.com/investor.

Forward-Looking Statements

This news release (and oral statements made regarding the subjects of this
release, including on the conference call announced herein) contain
forward-looking statements within the meaning of Section27A of the Securities
Act of 1933, as amended, and Section21E of the Securities Exchange Act of
1934, as amended, (each a "forward–looking statement"). The words
"anticipate," "believe," "ensure," "expect," "if," "intend," "estimate,"
"project," "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. There are many risks and uncertainties that could
cause actual results to differ materially from our forward-looking
statements. These forward-looking statements are also affected by the risk
factors described in the company's Annual Report on Form 10-K for the year
ended December31,2011; Baker Hughes' subsequent quarterly report on Form
10-Q for the quarterly periods ended March 31, 2012 and June 30, 2012; and
those set forth from time-to-time in other filings with the Securities and
Exchange Commission ("SEC"). The documents are available through the
company's website at: http://www.bakerhughes.com/investor or through the
SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at:
http://www.sec.gov. We undertake no obligation to publicly update or revise
any forward–looking statement.

Our expectations regarding our business outlook and business plans; the
business plans of our customers; oil and natural gas market conditions; cost
and availability of resources; economic, legal and regulatory conditions and
other matters are only our forecasts regarding these matters.

These forward looking statements, including forecasts, may be substantially
different from actual results, which are affected by many risks including the
following risk factors and the timing of any of these risk factors:

Economic conditions – the impact of worldwide economic conditions and
sovereign debt crises in Europe; the effect that declines in credit
availability may have on worldwide economic growth and demand for
hydrocarbons; the ability of our customers to finance their exploration and
development plans; and foreign currency exchange fluctuations and changes in
the capital markets in locations where we operate.

Oil and gas market conditions – the level of petroleum industry exploration,
development and production expenditures; the price of, volatility in pricing
of, and the demand for crude oil and natural gas; drilling activity; drilling
permits for and regulation of the shelf and the deepwater drilling; excess
productive capacity; crude and product inventories; LNG supply and demand;
seasonal and other adverse weather conditions that affect the demand for
energy; severe weather conditions, such as tornadoes and hurricanes, that
affect exploration and production activities; Organization of Petroleum
Exporting Countries ("OPEC") policy and the adherence by OPEC nations to their
OPEC production quotas.

Terrorism and geopolitical risks – war, military action, terrorist activities
or extended periods of international conflict, particularly involving any
petroleum–producing or consuming regions; labor disruptions, civil unrest or
security conditions where we operate; expropriation of assets by governmental
action; cybersecurity risks and cyber incidents or attacks.

Price, market share, contract terms, and customer payments – our ability to
obtain market prices for our products and services; the ability of our
competitors to capture market share; our ability to retain or increase our
market share; changes in our strategic direction; the effect of industry
capacity relative to demand for the markets in which we participate; our
ability to negotiate acceptable terms and conditions with our customers,
especially national oil companies, to successfully execute these contracts,
and receive payment in accordance with the terms of our contracts with our
customers; our ability to manage warranty claims and improve performance and
quality; our ability to effectively manage our commercial agents.

Costs and availability of resources – our ability to manage the costs,
availability, distribution and delivery of sufficient raw materials and
components (especially steel alloys, chromium, copper, carbide, lead, nickel,
titanium, beryllium, barite, synthetic and natural diamonds, sand, gel,
chemicals, and electronic components); our ability to manage energy-related
costs; our ability to manage compliance-related costs; our ability to recruit,
train and retain the skilled and diverse workforce necessary to meet our
business needs and manage the associated costs; the effect of manufacturing
and subcontracting performance and capacity; the availability of essential
electronic components used in our products; the effect of competition,
particularly our ability to introduce new technology on a forecasted schedule
and at forecasted costs; potential impairment of long-lived assets;
unanticipated changes in the levels of our capital expenditures; the need to
replace any unanticipated losses in capital assets; labor-related actions,
including strikes, slowdowns and facility occupations; our ability to maintain
information security.

Litigation and changes in laws or regulatory conditions – the potential for
unexpected litigation or proceedings and our ability to obtain adequate
insurance on commercially reasonable terms; the legislative, regulatory and
business environment in the U.S. and other countries in which we operate;
outcome of government and legal proceedings, as well as costs arising from
compliance and ongoing or additional investigations in any of the countries
where the company does business; new laws, regulations and policies that could
have a significant impact on the future operations and conduct of all
businesses; laws, regulations or restrictions on hydraulic fracturing; any
restrictions on new or ongoing offshore drilling or permit and operational
delays or program reductions as a result of the regulations in the Gulf of
Mexico and other areas of the world; changes in export control laws or
exchange control laws; the discovery of new environmental remediation sites;
changes in environmental regulations; the discharge of hazardous materials or
hydrocarbons into the environment; restrictions on doing business in countries
subject to sanctions; customs clearance procedures; changes in accounting
standards; changes in tax laws or tax rates in the jurisdictions in which we
operate; resolution of tax assessments or audits by various tax authorities;
and the ability to fully utilize our tax loss carry forwards and tax credits.

Baker Hughes is a leading supplier of oilfield services, products, technology
and systems to the worldwide oil and natural gas industry. The company's
58,000-plus employees today work in more than 80 countries helping customers
find, evaluate, drill, produce, transport and process hydrocarbon resources.
For more information on Baker Hughes' century-long history, visit:
www.bakerhughes.com.

Investor Contact:
Trey Clark, +1.713.439.8039, trey.clark@bakerhughes.com
Eric Holcomb, +1.713.439.8822, eric.s.holcomb@bakerhughes.com
Media Contact:
Teresa Wong, +1.713.439.8110, teresa.wong@bakerhughes.com
Pam Easton, +1.281.209.7050, pamela.easton@bakerhughes.com 

SOURCE Baker Hughes Incorporated

Website: http://www.bakerhughes.com