Baker Hughes, the newly merged oil field services company, begins trading in New York today. And analysts see growth for the firm on the horizon — though perhaps not as much as Baker Hughes sees.
The Houston investment bank Tudor Pickering Holt likes the company’s access to cash, thanks to its merger with the oil and gas division of industrial conglomerate General Electric. But with 70 percent of the new firm’s business outside of the U.S., analysts at TPH worry it will grow slowly. And they imagine the two companies can’t help but have some trouble integrating.
Others agree. “In my personal opinion, the Baker Hughes shareholders received a stupendous deal,” Bill Herbert, an analyst at Minneapolis investment bank Piper Jaffray & Co., said last month. “I’m not sure what GE is getting, other than it is getting bigger.”
After all of the promises, Herbert said, “It’s time to execute.”
Still, the new firm, “Baker Hughes, a GE company,” is poised to take advantage of new oil field needs.
The consulting firm Deloitte recently studied the survival of oil field service companies after the crash in crude prices. The firms did well when they had operations across the globe, deep technological capabilities and business in various sectors — both onshore and offshore, for instance.
The newest trend in the oil field is using digital technology and analytics to streamline production. “We’re in the early stage of that,” said Andrew Slaughter, executive director of Deloitte’s Center for Energy Solutions and one of the study’s authors. “And I think a lot of the E&P companies are looking for service providers to play a part.”
Slaughter couldn’t speak directly to the GE-Baker Hughes merger.
But the strengths outlined in the Deloitte report are those emphasized in the companies’ combination.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more click here.
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