Baker Hughes 2014 Annual Report Download - page 53

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Kenya. The rig count increased 5% in the Middle East due to higher activity in Iraq, Abu Dhabi and Pakistan offset
by a reduction in Egypt due to political unrest.
Baker Hughes Well Count
Baker Hughes began providing U.S. well count data to the oil and natural gas industry in July 2013. The Baker
Hughes Well Count is an extension of the Baker Hughes Rig Count, and provides a quarterly census of the number
of new onshore oil and natural gas wells where drilling began, or spud, in the U.S. The Baker Hughes Well Count
includes wells that are identified to be significant consumers of oilfield services and supplies, and excludes wells
categorized as workover, plugged and abandoned or completed. Well count trends are governed by oil company
exploration and development spending in the U.S., which in turn is influenced by the current and expected price of
oil and natural gas. Well counts therefore may reflect the strength and stability of energy prices. However, there
are many other factors that can influence the well count, including new technologies, pad drilling, weather, seasonal
spending and changes to local regulations. We believe the counting process and resulting data is reliable; however,
it is subject to our ability to obtain accurate and timely information.
During 2014, 37,508 wells were spud on land in the U.S. This compares to 35,676 wells spud in 2013, or an
increase of 5%.
RESULTS OF OPERATIONS
The discussions below relating to significant line items from our consolidated statements of income are based
on available information and represent our analysis of significant changes or events that impact the comparability of
reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or
trends and, where reasonably practicable, have quantified the impact of such items. In addition, the discussions
below for revenue and cost of revenue are on a total basis as the business drivers for product sales and services
are similar. All dollar amounts in tabulations in this section are in millions of dollars, unless otherwise stated.
Revenue and Profit Before Tax
Revenue and profit before tax for each of our five operating segments is provided below. The performance of
our segments is evaluated based on profit before tax, which is defined as income before income taxes and before
the following: net interest expense, corporate expenses, and certain gains and losses not allocated to the
segments. During 2014, certain North African entities previously reported in our Middle East/Asia Pacific segment
were realigned and are now reported within our Europe/Africa/Russia Caspian segment to reflect how we manage
the business. Accordingly, all prior segment disclosures have been recast to reflect this realignment.
2014 Compared to 2013
Year Ended December 31,
2014 2013 $ Change % Change
Revenue:
North America $ 12,078 $ 10,878 $ 1,200 11 %
Latin America 2,236 2,307 (71) (3)%
Europe/Africa/Russia Caspian 4,417 4,041 376 9 %
Middle East/Asia Pacific 4,456 3,859 597 15 %
Industrial Services 1,364 1,279 85 7 %
Total Revenue $ 24,551 $ 22,364 $ 2,187 10 %