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Baker Hughes Announces Second Quarter Results

                Baker Hughes Announces Second Quarter Results

PR Newswire

HOUSTON, July 19, 2013

HOUSTON, July 19,2013 /PRNewswire/ -- Baker Hughes Incorporated (NYSE: BHI)
announced today net income on a GAAP basis for the second quarter of 2013 of
$240 million or $0.54 per diluted share. This includes after-tax charges of
$20 million ($0.05 per diluted share) for bad debt provisions in Latin America
and $7 million ($0.02 per diluted share) for an inventory charge related to
certain proppants used in pressure pumping in North America. These results
compare to net income of $0.60 per diluted share for the first quarter of
2013, and $1.00 per diluted share for the second quarter of 2012.

Revenue for the second quarter of 2013 was $5.49billion, up 5% compared to
$5.23billion for the first quarter of 2013 and up 3% compared to
$5.33billion for the second quarter of 2012.

"Our second quarter results reflect mixed performance across our international
operating segments," said Martin Craighead, Baker Hughes' Chairman and Chief
Executive Officer. "Activity levels continued to rise across the Eastern
Hemisphere based on strong demand in deepwater markets, particularly in Europe
and Africa, as well as seasonal improvements in Russia. However, our gains in
the East were more than offset by a sharp decline in Latin America resulting
from reduced activity and demobilization costs in Brazil and Mexico. In
response to these conditions, during the second quarter we began taking
actions to reduce costs in our Latin America operations. This process should
be substantially complete in the third quarter leading to increased
profitability in the second half of the year."

Craighead added, "Our U.S. Pressure Pumping business continues to improve as
recent share gains and operational improvements are increasing fleet
utilization and profitability. Combined with record performance from our Gulf
of Mexico operations, revenue in North America grew 3% sequentially, despite
Canadian seasonality reaching its lowest level in four years. Now that Canada
is returning to normal activity levels, we foresee a strong rebound in
operating margins in the third quarter for North America."

Cash increased $22 million to $1.12 billion as of June30, 2013, compared to
$1.10 billion at March31, 2013. Debt decreased by $183 million to
$4.91billion compared to the first quarter of 2013.

Capital expenditures were $551million, depreciation and amortization expense
was $424million and dividend payments were $66million in the second quarter
of 2013.

EBITDA in the second quarter of 2013 was $860million, a decrease of $10
million compared to the first quarter of 2013.



Consolidated Condensed Statements of Income
(Unaudited)
                                                 Three Months Ended
                                                 June 30,            March 31,
(Inmillions, except per share amounts)          2013      2012      2013
Revenue                                          $ 5,487   $ 5,326   $  5,230
Costs and expenses:
Cost of revenue                                  4,591     4,254     4,326
Research and engineering                         131       128       127
Marketing, general and administrative            329       305       322
 Total costs and expenses                      5,051     4,687     4,775
Operating income                                 436       639       455
Interest expense, net                            (60)      (50)      (55)
Income before income taxes                       376       589       400
Income taxes                                     (131)     (151)     (132)
Net income                                       245       438       268
Net (income) loss attributable to noncontrolling (5)       1         (1)
interests
Net income attributable to Baker Hughes          $ 240     $ 439     $  267
Basic earnings per share attributable to Baker   $ 0.54    $ 1.00    $  0.60
Hughes
Diluted earnings per share attributable to Baker $ 0.54    $ 1.00    $  0.60
Hughes
Weighted average shares outstanding, basic       443       439       443
Weighted average shares outstanding, diluted     444       440       444
Depreciation and amortization expense            $ 424     $ 380     $  415
Capital expenditures                             $ 551     $ 771     $  490



Consolidated Condensed Statements of Income
(Unaudited)
                                                     Six Months Ended June 30,
(Inmillions, except per share amounts)              2013           2012
Revenue                                              $  10,717      $  10,681
Costs and expenses:
Cost of revenue                                      8,917          8,519
Research and engineering                             258            252
Marketing, general and administrative                651            644
 Total costs and expenses                          9,826          9,415
Operating income                                     891            1,266
Interest expense, net                                (115)          (104)
Income before income taxes                           776            1,162
Income taxes                                         (263)          (344)
Net income                                           513            818
Net income attributable to noncontrolling interests  (6)            —
Net income attributable to Baker Hughes              $  507         $  818
Basic earnings per share attributable to Baker       $  1.14        $  1.86
Hughes
Diluted earnings per share attributable to Baker     $  1.14        $  1.86
Hughes
Weighted average shares outstanding, basic           443            439
Weighted average shares outstanding, diluted         444            440
Depreciation and amortization expense                $  839         $  743
Capital expenditures                                 $  1,041       $  1,442



Consolidated Condensed Balance Sheets
(Unaudited)
                                                       June 30,   December 31,
(In millions)                                          2013       2012
ASSETS
Current Assets:
Cash and cash equivalents                              $ 1,123    $  1,015
Accounts receivable - less allowance for doubtful
accounts                                               5,197      4,815

(2013 - $274, 2012 - $308)
Inventories, net                                       3,838      3,781
Other current assets                                   772        806
 Total current assets                                10,930     10,417
Property, plant and equipment, net                     8,855      8,707
Goodwill                                               5,954      5,958
Intangible assets, net                                 934        993
Other assets                                           677        614
Total assets                                           $ 27,350   $  26,689
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable                                       $ 2,211    $  1,737
Short-term debt and current portion of long-term debt  1,068      1,079
Accrued employee compensation                          568        646
Other accrued liabilities                              661        662
 Total current liabilities                           4,508      4,124
Long-term debt                                         3,841      3,837
Deferred income taxes and other tax liabilities        674        745
Long-term liabilities                                  700        715
Equity                                                 17,627     17,268
Total liabilities and equity                           $ 27,350   $  26,689



Consolidated Condensed Statements of Cash Flows
(Unaudited)
                                                     Six Months Ended June 30,
(In millions)                                        2013          2012
Cash flows from operating activities:
Net income                                           $  513        $  818
Adjustments to reconcile net income to net cash
flows from operating activities:
 Depreciation and amortization                     839           743
 Other, primarily working capital                  (274)         (1,437)
Net cash flows provided by operating activities      1,078         124
Cash flows from investing activities:
 Expenditures for capital assets                   (1,041)       (1,442)
 Other                                             179           203
Net cash flows used in investing activities          (862)         (1,239)
Cash flows from financing activities:
 Net proceeds from issuance of debt                —             962
 Dividends                                         (132)         (131)
 Other                                             29            24
Net cash flows (used in) provided by financing       (103)         855
activities
Effect of foreign exchange rate changes on cash      (5)           2
Increase (decrease) in cash and cash equivalents     108           (258)
Cash and cash equivalents, beginning of period       1,015         $  1,050
Cash and cash equivalents, end of period             $  1,123      $  792



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 first quarter of 2013. There were no identified items requiring
adjustment for the second quarters of 2013 or 2012.

                                             Three Months Ended March 31, 2013
                                                               Diluted
(Unaudited)                                  Net
                                                               Earnings
(Inmillions, except per share amounts)      Income
                                                               PerShare
Net income attributable to Baker Hughes      $    267          $    0.60
(GAAP)
Identified Item:
Devaluation of Venezuelan currency^2         23                0.05
Adjusted net income (non-GAAP)^1             $    290          $    0.65

   Adjusted net income is a non-GAAP measure comprised of net income
   attributable to Baker Hughes excluding the impact of certain identified
1  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.
   Foreign exchange loss of $23 million before and after-tax due to the
2  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.



Table 2: Calculation of EBIT, EBITDA and Adjusted EBITDA (non-GAAP measures)^1
                                                   Three Months Ended
                                                   June 30,          March 31,
(In millions)                                      2013    2012      2013
Net income attributable to Baker Hughes            $ 240   $ 439     $  267
Net income (loss) attributable to noncontrolling   5       (1)       1
interests
Income taxes                                       131     151       132
Income before income taxes                         376     589       400
Interest expense, net                              60      50        55
Earnings before interest and taxes (EBIT)          436     639       455
Depreciation and amortization expense              424     380       415
Earnings before interest, taxes, depreciation and
                                                   860     1,019     870
amortization (EBITDA)
Adjustments to EBITDA:
Devaluation of Venezuelan currency^2               —       —         23
Adjusted EBITDA                                    $ 860   $ 1,019   $  893

                                                    Six Months Ended June 30,
(In millions)                                       2013          2012
Net income attributable to Baker Hughes             $  507        $  818
Net income attributable to noncontrolling interests 6             —
Income taxes                                        263           344
Income before income taxes                          776           1,162
Interest expense, net                               115           104
Earnings before interest and taxes (EBIT)           891           1,266
Depreciation and amortization expense               839           743
Earnings before interest, taxes, depreciation and
                                                    1,730         2,009
amortization (EBITDA)
Adjustments to EBITDA:
Devaluation of Venezuelan currency^2                23            —
Adjusted EBITDA                                     $  1,753      $  2,009

   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.
   Foreign exchange loss of $23 million before and after-tax due to the
2  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.



Table 3a: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin^1
                                       Three Months Ended
                                       June 30,                    March 31,
(In millions)                          2013           2012         2013
Segment Revenue
North America                          $  2,677       $  2,672     $ 2,603
Latin America                          557            604          590
Europe/Africa/Russia Caspian           966            925          854
Middle East/Asia Pacific               971            804          894
Industrial Services and Other          316            321          289
Total Operations                       $  5,487       $  5,326     $ 5,230
Profit Before Tax
North America                          $  211         $  357       $ 235
Latin America                          (18)           77           49
Europe/Africa/Russia Caspian           151            156          93
Middle East/Asia Pacific               115            87           116
Industrial Services and Other          39             44           24
Total Operations                       $  498         $  721       $ 517
Corporate and Other Profit Before Tax
Interest expense, net                  (60)           (50)         (55)
Corporate and other                    (62)           (82)         (62)
Corporate, net interest and other      (122)          (132)        (117)
Profit Before Tax                      $  376         $  589       $ 400
Profit Before Tax Margin^1
North America                          8         %    13        %  9       %
Latin America                          (3)       %    13        %  8       %
Europe/Africa/Russia Caspian           16        %    17        %  11      %
Middle East/Asia Pacific               12        %    11        %  13      %
Industrial Services and Other          12        %    14        %  8       %
Total Operations                       9         %    14        %  10      %

   Profit before tax margin is a non-GAAP measure defined as profit before tax
   ("income before income taxes") divided by revenue. Management uses the
1  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.



Table 3b: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin^1
                                        Six Months Ended June 30,
(In millions)                           2013                   2012
Segment Revenue
North America                           $    5,280             $  5,535
Latin America                           1,147                  1,177
Europe/Africa/Russia Caspian            1,820                  1,818
Middle East/Asia Pacific                1,865                  1,549
Industrial Services and Other           605                    602
Total Operations                        $    10,717            $  10,681
Profit Before Tax
North America                           $    446               $  758
Latin America                           31                     144
Europe/Africa/Russia Caspian            244                    309
Middle East/Asia Pacific                231                    162
Industrial Services and Other           63                     66
Total Operations                        $    1,015             $  1,439
Corporate and Other Profit Before Tax
Interest expense, net                   (115)                  (104)
Corporate and other                     (124)                  (173)
Corporate, net interest and other       (239)                  (277)
Profit Before Tax                       $    776               $  1,162
Profit Before Tax Margin^1
North America                           8              %       14         %
Latin America                           3              %       12         %
Europe/Africa/Russia Caspian            13             %       17         %
Middle East/Asia Pacific                12             %       10         %
Industrial Services and Other           10             %       11         %
Total Operations                        9              %       13         %

   Profit before tax margin is a non-GAAP measure defined as profit before tax
   ("income before income taxes") divided by revenue. Management uses the
1  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.



Table 4: Adjustments to Operating Profit Before Tax^1
                                          Three Months Ended  Six Months Ended
(In millions)
                                          March 31, 2013      June 30, 2013
Adjustments to Operating Profit Before
Tax
North America                             $      —            $     —
Latin America^2                           23                  23
Europe/Africa/Russia Caspian              —                   —
Middle East/Asia Pacific                  —                   —
Industrial Services and Other             —                   —
Total Operations                          $      23           $     23

1  There were no items identified requiring adjustment in the second quarters
   of 2013 or 2012, nor in the first six months of 2012.
   Foreign exchange loss of $23 million before-tax due to the devaluation of
2  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.



Table 5a: 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 the $23 million charge for
the devaluation of the Venezuelan currency recorded in the first quarter of
2013 (see Table 4). There were no items requiring adjustment for the second
quarters of 2013 or 2012.

                                     Three Months Ended
                                     June 30,              March 31,
(In millions)                        2013       2012       2013
Segment Revenue
North America                        $ 2,677    $ 2,672    $ 2,603
Latin America                        557        604        590
Europe/Africa/Russia Caspian         966        925        854
Middle East/Asia Pacific             971        804        894
Industrial Services and Other        316        321        289
Total Operations                     $ 5,487    $ 5,326    $ 5,230
Operating Profit Before Tax^1
North America^2                      $ 211      $ 357      $ 235
Latin America^3                      (18)       77         72
Europe/Africa/Russia Caspian         151        156        93
Middle East/Asia Pacific             115        87         116
Industrial Services and Other        39         44         24
Total Operations                     $ 498      $ 721      $ 540
Operating Profit Before Tax Margin^1
North America^2                      8       %  13      %  9       %
Latin America^3                      (3)     %  13      %  12      %
Europe/Africa/Russia Caspian         16      %  17      %  11      %
Middle East/Asia Pacific             12      %  11      %  13      %
Industrial Services and Other        12      %  14      %  8       %
Total Operations                     9       %  14      %  10      %

   Operating profit before tax is a non-GAAP measure defined as profit before
   tax ("income before income taxes") less certain identified costs.
   Operating profit before tax margin is a non-GAAP measure defined as
1  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.
   Operating profit before tax and operating profit before tax margin include
2  an inventory charge of $11 million (before-tax) related to certain
   proppants used in pressure pumping in North America in the second quarter
   2013.
   Operating profit before tax and operating profit before tax margin include
3  bad debt provisions of $20 million (before and after-tax) in Latin America
   in the second quarter of 2013.



Table 5b: 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 the $23 million charge for
the devaluation of the Venezuelan currency recorded in the first six months of
2013 (see Table 4). There were no items requiring adjustment for the first
six months of 2012.

                                     Six Months Ended June 30,
(In millions)                        2013           2012
Segment Revenue
North America                        $  5,280       $ 5,535
Latin America                        1,147          1,177
Europe/Africa/Russia Caspian         1,820          1,818
Middle East/Asia Pacific             1,865          1,549
Industrial Services and Other        605            602
Total Operations                     $  10,717      $ 10,681
Operating Profit Before Tax^1
North America^2                      $  446         $ 758
Latin America^3                      54             144
Europe/Africa/Russia Caspian         244            309
Middle East/Asia Pacific             231            162
Industrial Services and Other        63             66
Total Operations                     $  1,038       $ 1,439
Operating Profit Before Tax Margin^1
North America^2                      8          %   14       %
Latin America^3                      5          %   12       %
Europe/Africa/Russia Caspian         13         %   17       %
Middle East/Asia Pacific             12         %   10       %
Industrial Services and Other        10         %   11       %
Total Operations                     10         %   13       %

See footnotes from Table 5a.

Baker Hughes Operational Highlights

The Baker Hughes FASTrak™ logging while drilling (LWD) fluid analysis and
sampling system launched in the second quarter 2013. Since its introduction,
Baker Hughes has successfully deployed FASTrak on wells for a customer in
Australia. The fluid sampling and formation pressure testing capabilities of
the LWD assembly allowed the customer to acquire 25 formation fluid samples
and a range of pressure tests in challenging, near horizontal wellbores.
Obtaining this high number and quality of formation fluid samples allowed the
customer to make strategic field development decisions, saved millions of
dollars in necessary retrofit costs, and substantially reduced the number of
rig days.

The Baker Hughes AutoTrak X-treme™ rotary steerable system has delivered
excellent results across multiple regions including Latin America, Africa and
U.S. Land. The growing Marine region of Mexico experienced a drilling rate of
penetration (ROP) of 200 ft/hr using the AutoTrak X-treme system as well as
the Baker Hughes Quantec Force™ bit, which surpassed the previous ROP record
for offset wells in this field by more than 45%. The Quantec Force bit has
seen successes this quarter in Brazil and Ghana, both of which showed
substantial increases in penetration rate, allowing customers to reach their
targets more quickly and efficiently.

Baker Hughes continues its success with the Drill Bits product line,
particularly with the Kymera™ hybrid bit. The rolling torque management with
dual action cutting structures has allowed customers in Latin America, Asia
Pacific, Africa, Middle East and Gulf of Mexico to experience increases in ROP
and superior directional control. The Kymera bit was deployed for the first
time in China this quarter, and also had exceptional success onshore in
Mauritania, allowing a 12¼-in. section to be drilled in one run, eliminating
the expected extra day of rig time to run multiple bits. In addition, we
deployed a 26-in. Kymera bit was deployed for the first time in the Gulf of
Mexico during the quarter and displayed excellent ROP and rig time savings.

Baker Hughes is gaining share in the Gulf of Mexico through the introduction
of new technologies. During the quarter, Baker Hughes successfully completed
wireline logging operations on an ultradeepwater, high-temperature appraisal
project at a total depth of 26,340 ft in the Gulf of Mexico. The Baker Hughes
RCX™ Sentinel obtained fluid samples for safer, cleaner, and faster sampling.

In the Gulf of Mexico, Baker Hughes performed six individual fracpacks on a
well with a single vessel, in a single trip. The Blue Dolphin™ stimulation
vessel remained on location for the duration of the project without having to
travel back to the dock to resupply. Traditionally, a project of this size
would have been required two vessels. However, the capability of the Blue
Dolphin allowed for the largest volume of proppant ever to be pumped into a
single well in the Gulf of Mexico.

The demand for Rhino™ Bifuel continues to grow. Baker Hughes stimulated
multiple wells in Canada and the U.S. this quarter with Rhino Bifuel.
Replacing up to 70% of diesel with natural gas not only reduces emissions of
the pumping units, but the potential for using field gas negates the
requirement for large quantities of fuel to be transported. This transport
savings can dramatically reduce an operator's environmental footprint. Baker
Hughes Rhino Bifuel pumping fleets have completed more than 400 stages to
date. With increasing demand for Rhino Bifuel, Baker Hughes plans to double
its Rhino Bifuel capacity by converting additional fleets this year.

Supplemental Financial Information

Supplemental financial information can be found on the Company's website at:
www.bakerhughes.com/investor in the Financial Information section under
Quarterly Results.

Conference Call and Webcast

The Company has scheduled a conference call and webcast 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, July 19, 2013, 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 at
www.bakerhughes.com/investor. To access the conference call, please call the
conference call operator at: 800-446-1671 in the U.S., or 847-413-3362 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, August 2, 2013. The number for the replay
is: 888-843-7419 in the United States, or 630-652-3042 for international
calls, and the access code is: 34835209. To access the webcast, go to our
Events and Presentations page on the Company's website at:
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," "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. 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 December31,2012, Baker Hughes' subsequent quarterly report on Form
10-Q for the quarterly period ended March 31, 2013; 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:
www.bakerhughes.com/investor or through the SEC's Electronic Data Gathering
and Analysis Retrieval System ("EDGAR") at: 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
59,000-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 Contacts:
Trey Clark, +1.713.439.8039, trey.clark@bakerhughes.com
Eric Holcomb, +1.713.439.8822, eric.s.holcomb@bakerhughes.com

Media Contact:
Christine Mathers, +1.713.439.8738, christine.mathers@bakerhughes.com

SOURCE Baker Hughes Incorporated

Website: http://www.bakerhughes.com
 
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