Baker Hughes Announces Fourth Quarter and Annual Results

           Baker Hughes Announces Fourth Quarter and Annual Results

-Record revenue of $5.9 billion for the quarter and $22.4 billion for the year

-Adjusted net income of $0.62 per diluted share for the quarter including
costs of $0.18 per diluted share related to Iraq

-Record free cash flow of $1.5 billion generated during 2013

-Repurchased $350 million of shares during the quarter

PR Newswire

HOUSTON, Jan. 21, 2014

HOUSTON, Jan. 21, 2014 /PRNewswire/ --Baker Hughes Incorporated (NYSE: BHI)
announced today results for the fourth quarter of 2013 are as follows:

                                                 Q4 2013   Q3 2013   Q4 2012
Revenue (millions)                               $ 5,860   $ 5,787   $ 5,325
Adjusted net income (non-GAAP, millions)         277       358       214
Net income (GAAP, millions)                      248       341       214
Adjusted net income per diluted share (non-GAAP) 0.62      0.81      0.49
Net income per diluted share (GAAP)              0.56      0.77      0.49

Adjusted net income for the fourth quarter of 2013 excludes after-tax
severance charges of $29 million ($0.06 per diluted share), but includes
after-tax losses of $79 million ($0.18 per diluted share) in Iraq. The losses
in Iraq are primarily related to the significant disruption of operations
previously announced during the quarter, expenses associated with personnel
movements and security measures, and other nonrecurring items. Adjusted net
income for the third quarter of 2013 and the fourth quarter of 2012 include
after-tax charges of $42 million ($0.09 per diluted share) and $63 million
($0.14 per diluted share), respectively, for bad debt provisions in Latin
America. Please see Table 1 for a reconciliation of GAAP to non-GAAP
Financial Measures.

Revenue for the year 2013 was a record $22.36 billion up 5% compared to $21.36
billion for the year 2012. Adjusted net income for the year 2013 was $1.17
billion ($2.62 per diluted share) compared to $1.35 billion ($3.07 per diluted
share) for the year 2012.

"In 2013, we posted record revenue driven largely by the Eastern Hemisphere
where our operations grew by 14% compared to 2012," said Martin Craighead,
Baker Hughes Chairman and Chief Executive Officer. "This success can largely
be attributed to meaningful share gains in high growth markets such as the
Middle East and Africa. In our Middle East/Asia Pacific segment, we grew
revenue 24% during the year, with solid improvement in profitability compared
to last year. In Latin America, we realigned our business to drive better
profitability ending the year with 12% operating profit margins. In the U.S.,
we achieved four consecutive quarters of improved profit margins in our
Pressure Pumping product line.

"During the year, we generated $1.5 billion of free cash flow, a record for
Baker Hughes. This was the result of our ongoing commitment to maintain
capital discipline, as well as solid progress on key initiatives to improve
working capital. Based on this and a positive outlook for our business, we
repurchased $350 million of Baker Hughes shares during the fourth quarter.

"Looking forward, we project increased activity in all of our operational
segments in 2014, led by 10% rig count growth in international markets and 5%
well count growth in the U.S. By increasing the pace of innovation, we are
delivering new products and unique solutions that are helping our customers
meet their drilling and production challenges."

Cash increased by $31 million to $1.40 billion as of December31, 2013,
compared to $1.37 billion at September30, 2013. Compared to December 31,
2012, cash increased by $384 million. Debt decreased by $194 million to $4.38
billion compared to September 30, 2013 and decreased by $535 million compared
to December 31, 2012.

Capital expenditures were $533 million, depreciation and amortization expense
was $436 million and dividend payments were $67 million in the fourth quarter
of 2013. For the year 2013, capital expenditures were $2.1 billion, which is
down $825 million or 28% compared to the year 2012. Depreciation and
amortization expense for the year 2013 was $1.70 billion, and dividend
payments were $267 million.

Adjusted EBITDA (a non-GAAP measure) in the fourth quarter of 2013 was
$955million, a decrease of $63 million compared to the third quarter of
2013. For the year 2013, adjusted EBITDA was $3.73 billion. 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 Tables 5a and
5b. Free cash flow is defined as net cash flow from operating activities less
disbursements for capital expenditures plus proceeds from disposal of assets.

Consolidated Condensed Statements of Income
                                             Three Months Ended
                                             December 31,        September 30,
(Inmillions, except per share amounts)      2013      2012      2013
Revenue                                      $ 5,860   $ 5,325   $   5,787
Costs and expenses:
Cost of revenue                              4,886     4,441     4,750
Research and engineering                     156       127       142
Marketing, general and administrative        336       317       319
Total costs and expenses                     5,378     4,885     5,211
Operating income                             482       440       576
Interest expense, net                        (61)      (57)      (58)
Income before income taxes                   421       383       518
Income taxes                                 (171)     (168)     (178)
Net income                                   250       215       340
Net (income) loss attributable to            (2)       (1)       1
noncontrolling interests
Net income attributable to Baker Hughes      $ 248     $ 214     $   341
Basic earnings per share attributable to     $ 0.56    $ 0.49    $   0.77
Baker Hughes
Diluted earnings per share attributable to   $ 0.56    $ 0.49    $   0.77
Baker Hughes
Weighted average shares outstanding, basic   442       440       444
Weighted average shares outstanding, diluted 444       441       445
Depreciation and amortization expense        $ 436     $ 417     $   423
Capital expenditures                         $ 533     $ 727     $   511



Consolidated Condensed Statements of Income
                                                       Year Ended December 31,
(Inmillions, except per share amounts)                2013          2012
Revenue                                                $  22,364     $ 21,361
Costs and expenses:
Cost of revenue                                        18,553        17,356
Research and engineering                               556           497
Marketing, general and administrative                  1,306         1,316
Total costs and expenses                               20,415        19,169
Operating income                                       1,949         2,192
Interest expense, net                                  (234)         (210)
Income before income taxes                             1,715         1,982
Income taxes                                           (612)         (665)
Net income                                             1,103         1,317
Net income attributable to noncontrolling interests    (7)           (6)
Net income attributable to Baker Hughes                $  1,096      $ 1,311
Basic earnings per share attributable to Baker Hughes  $  2.47       $ 2.98
Diluted earnings per share attributable to Baker       $  2.47       $ 2.97
Hughes
Weighted average shares outstanding, basic             443           440
Weighted average shares outstanding, diluted           444           441
Depreciation and amortization expense                  $  1,698      $ 1,568
Capital expenditures                                   $  2,085      $ 2,910



Consolidated Condensed Balance Sheets
                                                    December 31,  December 31,
(In millions)                                       2013          2012
ASSETS
Current Assets:
Cash and cash equivalents                           $  1,399      $  1,015
Accounts receivable - less allowance for doubtful
accounts                                            5,138         4,815

(2013 - $238, 2012 - $308)
Inventories, net                                    3,884         3,781
Other current assets                                874           806
Total current assets                                11,295        10,417
Property, plant and equipment, net                  9,076         8,707
Goodwill                                            5,966         5,958
Intangible assets, net                              883           993
Other assets                                        714           614
Total assets                                        $  27,934     $  26,689
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable                                    $  2,574      $  1,737
Short-term debt and current portion of long-term    499           1,079
debt
Accrued employee compensation                       778           646
Other accrued liabilities                           727           662
Total current liabilities                           4,578         4,124
Long-term debt                                      3,882         3,837
Deferred income taxes and other tax liabilities     821           745
Long-term liabilities                               741           715
Equity                                              17,912        17,268
Total liabilities and equity                        $  27,934     $  26,689



Consolidated Condensed Statements of Cash Flows
                                                       Year Ended December 31,
(In millions)                                          2013          2012
Cash flows from operating activities:
Net income                                             $  1,103      $  1,317
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization                          1,698         1,568
Other, primarily working capital                       360           (1,050)
Net cash flows provided by operating activities        3,161         1,835
Cash flows from investing activities:
Expenditures for capital assets                        (2,085)       (2,910)
Proceeds from disposal of assets                       455           389
Other                                                  (33)          —
Net cash flows used in investing activities            (1,663)       (2,521)
Cash flows from financing activities:
Net (repayments) proceeds from issuance of debt        (571)         847
Repurchase of common stock                             (350)         —
Dividends                                              (267)         (263)
Other                                                  85            62
Net cash flows (used in) provided by financing         (1,103)       646
activities
Effect of foreign exchange rate changes on cash and    (11)          5
cash equivalents
Increase (decrease) in cash and cash equivalents       384           (35)
Cash and cash equivalents, beginning of period         1,015         1,050
Cash and cash equivalents, end of period               $  1,399      $  1,015



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 and fourth quarters of 2013. There were no identified items
requiring adjustment for the fourth quarter of 2012.

                                        Three Months Ended  Three Months Ended
                                        December 31, 2013   September 30, 2013
                                        Net      Diluted    Net      Diluted
(Inmillions, except per share amounts) Income   Earnings            Earnings
                                                 PerShare  Income   PerShare
Net income attributable to Baker Hughes $  248   $  0.56    $  341   $  0.77
(GAAP)
Identified item:
Severance charges^5                     29       0.06       17       0.04
Adjusted net income (non-GAAP)^1        $  277   $  0.62    $  358   $  0.81



                                      Year Ended           Year Ended
                                      December 31, 2013    December 31, 2012
(Inmillions, except per share        Net       Diluted    Net       Diluted
amounts)                              Income    Earnings             Earnings
                                                PerShare  Income    PerShare
Net income attributable to Baker      $ 1,096   $  2.47    $ 1,311   $  2.97
Hughes (GAAP)
Identified items:
Information technology charges^2      —         —          28        0.07
Facility closure^3                    —         —          15        0.03
Devaluation of Venezuelan currency^4  23        0.05       —         —
Severance charges^5                   46        0.10       —         —
Adjusted net income (non-GAAP)^1      $ 1,165   $  2.62    $ 1,354   $  3.07

    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.
    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
^3  the closure of a chemical manufacturing facility in the United Kingdom in
    the third quarter of 2012.
    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
^4  Bolivars Fuertes per U.S. Dollar to 6.3 Bolivars Fuertes per U.S. Dollar,
    which applied to our local currency denominated balances in the first
    quarter of 2013.
    Severance charges of $37 million before-tax ($29 million after-tax) were
^5  incurred during the fourth quarter of 2013 and $19 million before-tax ($17
    million after-tax) during the third quarter of 2013.



Table 2: Calculation of EBIT, EBITDA, and Adjusted EBITDA (non-GAAP
measures)^1
                                                 Three Months Ended
                                                 December 31,    September 30,
(In millions)                                    2013    2012    2013
Net income attributable to Baker Hughes          $ 248   $ 214   $   341
Net income (loss) attributable to noncontrolling 2       1       (1)
interests
Income taxes                                     171     168     178
Income before income taxes                       421     383     518
Interest expense, net                            61      57      58
Earnings before interest and taxes (EBIT)        482     440     576
Depreciation and amortization expense            436     417     423
Earnings before interest, taxes, depreciation
and                                              918     857     999

amortization (EBITDA)
Adjustments to EBITDA:
Severance charges^2                              37      —       19
Adjusted EBITDA                                  $ 955   $ 857   $   1,018



                                                       Year Ended December 31,
(In millions)                                          2013          2012
Net income attributable to Baker Hughes                $  1,096      $  1,311
Net income attributable to noncontrolling interests    7             6
Income taxes                                           612           665
Income before income taxes                             1,715         1,982
Interest expense, net                                  234           210
Earnings before interest and taxes (EBIT)              1,949         2,192
Depreciation and amortization expense                  1,698         1,568
Earnings before interest, taxes, depreciation and      3,647         3,760
amortization(EBITDA)
Adjustments to EBITDA:
Severance charges^2                                    56            —
Devaluation of Venezuelan currency^3                   23            —
Information technology charges^4                       —             43
Facility closure^5                                     —             20
Adjusted EBITDA                                        $  3,726      $  3,823

    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.
    Severance charges of $37 million before-tax ($29 million after-tax) were
^2  incurred during the fourth quarter of 2013 and $19 million before-tax ($17
    million after-tax) during the third quarter of 2013.
    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
^3  Bolivars Fuertes per U.S. Dollar to 6.3 Bolivars Fuertes per U.S. Dollar,
    which applied to our local currency denominated balances in the first
    quarter of 2013.
    Charge of $43 million before-tax ($28 million after-tax) related to
^4  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
^5  the closure of a chemical manufacturing facility in the United Kingdom in
    the third quarter of 2012.



Table 3a: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin^1
                                       Three Months Ended
                                       December 31,            September 30,
(In millions)                          2013         2012       2013
Segment Revenue
North America                          $  2,744     $ 2,559    $   2,854
Latin America                          603          639        557
Europe/Africa/Russia Caspian           1,046        950        984
Middle East/Asia Pacific               1,121        882        1,064
Industrial Services                    346          295        328
Total Operations                       $  5,860     $ 5,325    $   5,787
Profit Before Tax
North America                          $  227       $ 222      $   295
Latin America                          58           8          (23)
Europe/Africa/Russia Caspian           156          173        170
Middle East/Asia Pacific               91           81         156
Industrial Services                    34           27         38
Total Operations                       $  566       $ 511      $   636
Corporate and Other Profit Before Tax
Corporate and other                    (84)         (71)       (60)
Interest expense, net                  (61)         (57)       (58)
Corporate, net interest and other      (145)        (128)      (118)
Profit Before Tax                      $  421       $ 383      $   518
Profit Before Tax Margin^1
North America                          8         %  9       %  10         %
Latin America                          10        %  1       %  (4%)
Europe/Africa/Russia Caspian           15        %  18      %  17         %
Middle East/Asia Pacific               8         %  9       %  15         %
Industrial Services                    10        %  9       %  12         %
Total Operations                       10        %  10      %  11         %

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



Table 3b: Segment Revenue, Profit Before Tax, and Profit Before Tax Margin^1
                                        Year Ended December 31,
(In millions)                           2013                 2012
Segment Revenue
North America                           $    10,878          $   10,836
Latin America                           2,307                2,399
Europe/Africa/Russia Caspian            3,850                3,634
Middle East/Asia Pacific                4,050                3,275
Industrial Services                     1,279                1,217
Total Operations                        $    22,364          $   21,361
Profit Before Tax
North America                           $    968             $   1,268
Latin America                           66                   197
Europe/Africa/Russia Caspian            570                  586
Middle East/Asia Pacific                478                  313
Industrial Services                     135                  131
Total Operations                        $    2,217           $   2,495
Corporate and Other Profit Before Tax
Corporate and other                     (268)                (303)
Interest expense, net                   (234)                (210)
Corporate, net interest and other       (502)                (513)
Profit Before Tax                       $    1,715           $   1,982
Profit Before Tax Margin^1
North America                           9             %      12           %
Latin America                           3             %      8            %
Europe/Africa/Russia Caspian            15            %      16           %
Middle East/Asia Pacific                12            %      10           %
Industrial Services                     11            %      11           %
Total Operations                        10            %      12           %

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



Table 4: Adjustments to Operating Profit Before Tax^1
(In millions)                        Three Months Ended   Three Months Ended
                                     December 31, 2013^2  September 30, 2013^2
Adjustments to Operating Profit
Before Tax
North America                        $      14            $      —
Latin America                        13                   19
Europe/Africa/Russia Caspian         6                    —
Middle East/Asia Pacific             3                    —
Industrial Services                  1                    —
Total Operations                     $      37            $      19



(In millions)                         Year Ended           Year Ended
                                      December 31, 2013^3  December 31, 2012^4
Adjustments to Operating Profit
Before Tax
North America                         $      14            $      33
Latin America                         55                   7
Europe/Africa/Russia Caspian          6                    11
Middle East/Asia Pacific              3                    10
Industrial Services                   1                    2
Total Operations                      $      79            $      63

^1  There were no items identified requiring adjustment in the fourth quarter
    of 2012.
    Severance charges of $37 million before-tax were incurred during the
^2  fourth quarter of 2013, as well as, severance charges of $19 million
    before-tax related to restructuring in Latin America during the third
    quarter of 2013.
    Includes severance charges incurred in the third and fourth quarters of
    2013 (see note 2 above) and foreign exchange loss of $23 million
^3  before-tax incurred in the first quarter of 2013 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.
    Charges of $43 million before-tax related to internally developed software
    and other information technology assets in the third quarter of 2012.
    Charges of $20 million before-tax associated with the closure of a
^4  chemical manufacturing facility in the United Kingdom 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.



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 severance charges in the
third and fourth quarter of 2013 (see Table 4). There were no items requiring
adjustment for the fourth quarter of 2012.

                                     Three Months Ended
                                     December 31,          September 30,
(In millions)                        2013       2012       2013
Segment Revenue
North America                        $ 2,744    $ 2,559    $   2,854
Latin America                        603        639        557
Europe/Africa/Russia Caspian         1,046      950        984
Middle East/Asia Pacific             1,121      882        1,064
Industrial Services                  346        295        328
Total Operations                     $ 5,860    $ 5,325    $   5,787
Operating Profit Before Tax^1
North America                        $ 241      $ 222      $   295
Latin America^2                      71         8          (4)
Europe/Africa/Russia Caspian         162        173        170
Middle East/Asia Pacific^3           94         81         156
Industrial Services                  35         27         38
Total Operations                     $ 603      $ 511      $   655
Operating Profit Before Tax Margin^1
North America                        9       %  9       %  10         %
Latin America^2                      12      %  1       %  (1%)
Europe/Africa/Russia Caspian         15      %  18      %  17         %
Middle East/Asia Pacific^3           8       %  9       %  15         %
Industrial Services                  10      %  9       %  12         %
Total Operations                     10      %  10      %  11         %

    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.
    Latin America operating profit before tax and operating profit before tax
^2  margin include before-tax bad debt provisions of $42 million and $63
    million in the third quarter of 2013 and fourth quarter of 2012,
    respectively.
    Middle East/Asia Pacific operating profit before tax and operating profit
^3  before tax margin include costs of $79 million in Iraq related to the
    significant disruption of operations, expenses associated with personnel
    movements and security measures, and other nonrecurring items.



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 severance charges recorded
in the third and fourth quarter of 2013, the charge for the devaluation of the
Venezuelan currency recorded in the first quarter of 2013, and charges related
to information technology and the closure of a chemical manufacturing facility
recorded in the third quarter of 2012 (see Table 4).

                                     Year Ended December 31,
(In millions)                        2013         2012
Segment Revenue
North America                        $  10,878    $ 10,836
Latin America                        2,307        2,399
Europe/Africa/Russia Caspian         3,850        3,634
Middle East/Asia Pacific             4,050        3,275
Industrial Services                  1,279        1,217
Total Operations                     $  22,364    $ 21,361
Operating Profit Before Tax^1
North America                        $  982       $ 1,301
Latin America^2                      121          204
Europe/Africa/Russia Caspian         576          597
Middle East/Asia Pacific^3           481          323
Industrial Services                  136          133
Total Operations                     $  2,296     $ 2,558
Operating Profit Before Tax Margin^1
North America                        9         %  12       %
Latin America^2                      5         %  9        %
Europe/Africa/Russia Caspian         15        %  16       %
Middle East/Asia Pacific^3           12        %  10       %
Industrial Services                  11        %  11       %
Total Operations                     10        %  12       %

    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.
    Latin America operating profit before tax and operating profit before tax
    margin include before-tax bad debt provisions of $62 million in 2013 ($20
^2  million in the second quarter and $42 million in the third quarter) and
    $85 million in 2012 ($22 million in the third quarter and $63 million in
    the fourth quarter).
    Middle East/Asia Pacific operating profit before tax and operating profit
    before tax margin include costs of $79 million in Iraq during the fourth
^3  quarter related to the significant disruption of operations, expenses
    associated with personnel movements and security measures, and other
    nonrecurring items.

Baker Hughes Operational Highlights

In the fourth quarter, Statoil awarded Baker Hughes a major, multiyear
contract for the provision of completions services in Norway, including
cased-hole and intelligent well systems. The award coversthe majority of
Statoil's fields and represents a significant increase for our completions
business in Norway, solidifying our position as the market leader for
completions systems in the North Sea.

During the fourth quarter, Baker Hughes was awarded a three-year contract in
the Colombian foothills region to provide drilling and completions services
for a development project, expanding our share in that market. The project
will occur in a highly challenging drilling and completions environment where
Baker Hughes' technology and operational capabilities will be key to success.

The AutoTrak™ Curve rotary steerable system continues to reduce drilling time
and is expanding geographically. The system allows the operator to drill the
vertical, curve, and lateral sections of the wellbore in one smooth, fast
run. Leveraging the remarkable success achieved with this system since its
commercial launch in 2011, Baker Hughes recently deployed the system in the
Utica Shale on an 11-well, horizontal drilling program, saving an operator 1.5
to 2 days per well of rig time. Additionally, in Egypt, the first horizontal
well drilled using the AutoTrak Curve system was successful, reducing drilling
times from an average of 4 days to less than 1 day.

The Baker Hughes FASTrak™ LWD fluid analysis sampling and testing service
continues to gain share in deepwater markets around the world. This service
provides key petrophysical information in real time during the drilling
operation to help predict and optimize reservoir behavior during production.
Throughout the year, the system has gained acceptance in offshore markets in
Norway, the UK, Gulf of Mexico, Nigeria, and East Africa. During the fourth
quarter, it expanded into new deepwater markets with successful deployments in
Mexico, Vietnam, and the UAE.

During the fourth quarter, Baker Hughes set a record for the longest lateral
section drilled in the Permian Basin with its AutoTrak™ X-treme™ drilling
system. The lateral section was drilled in a single run to a target length of
more than 12,000 feet, 2,250 feet longer than the previous record lateral,
reducing drilling time from the planned 18 to 11 days.

During the fourth quarter, Baker Hughes successfully introduced the FracPoint™
multistage fracturing system in the Vaca Muerta field of Argentina. The
system incorporated IN-Tallic™ disintegrating frac balls to eliminate the need
for post-stimulation well intervention. Completion of the well was executed
flawlessly, and a new efficiency record was set by fracturing four of the
seven stages in a single day. Due to the success of this operation, the same
client recently awarded Baker Hughes two additional FracPoint completions.

Baker Hughes successfully tripled daily oil production, reaching record
cumulative oil production in a section of Mexico's Corralillo field as part of
a three and a half year field lab project. Baker Hughes managed the drilling
and completion of 30 wells and deployed a total of 19 new and innovative
technologies to achieve record production. Building on the success of the
Corralillo project, Baker Hughes recently started the transition period to a
new 35-year production and exploration contract in the Soledad field,
representing Baker Hughes' first long-term field management project in Mexico.

Supplemental Financial Information

Supplemental financial information can be found on the Company's website at:
www.bakerhughes.com/investorin 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 Tuesday, January 21, 2014, 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 Tuesday, February 4, 2014. The number for the
replay is: 888-843-7419 in the U.S., or 630-652-3042 for international calls,
and the access code is: 36234681. 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 periods ended March 31, June 30, 2013, and September
30, 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/investoror 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 and political 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; foreign currency exchange fluctuations and changes in the
capital markets in locations where we operate; and the impact of government
disruptions such as a U.S. government shutdown. In addition, market
conditions, such as the trading prices for our stock, as well as the terms of
any stock purchase plans may impact stock repurchases. At our discretion, we
may engage in or discontinue stock repurchases at any time.

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 about Baker Hughes, 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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