Baker Hughes 2007 Annual Report Download - page 13

In 2007, Baker Hughes continued to implement our strategy of increas-
ing our presence and growing our business in key countries where the
long-term growth potential is the highest. Our regional organization
and our investments in infrastructure, equipment and people resulted
in significant growth in our targeted markets.
2005 2006 2007
Middle East, Asia Pacific Revenues
2005–2007, by Quarter
(In millions)
$600
$500
$400
$300
$200
$100
$0
2007 Annual Report 9
with major customers, including Shell, BP,
StatoilHydro, Chevron, Eni and Saudi Aramco.
Of our total capital expenditures of
$1.127 billion in 2007, $443 million was
devoted to field equipment to upgrade and
expand our ability to serve our customers.
For example, we added new small-diameter
rotary steerable systems for slimhole horizon-
tal wells, advanced formation imaging and
logging-while-drilling systems, new wireline
logging systems and modular pumping units
for gravel pack completions.
We continue to seek acquisitions to
expand our technology portfolio, especially
in the areas of reservoir analysis and produc-
tion management.
Investing in People
Baker Hughes‘ workforce grew rapidly in
2006, adding 5,500 employees in an effort to
take advantage of new market opportunities.
In 2007, the company continued to recruit
and hire employees, but at a slower pace, so
that we added 1,200 employees to the com-
pany by year end.
In 2006 and 2007, we have made a con-
siderable investment in training and develop-
ing these new employees. In addition to
expanded classroom and online training for
virtually every technical discipline, we invested
in programs to identify and develop young
leaders. Our Engineering Development Pro-
gram, a two-week program for newly hired
engineers, had conducted 34 sessions by
year end, instructing 680 graduates from
42 countries about the oil and gas industry
and Baker Hughes. Of the total, 13% were
female engineers; we are working to increase
the number of women in our technical work
force. Our Cornerstone programs for supervi-
sors and managers have involved more than
1,600 employees in leadership and manage-
ment training during 2007.
Baker Hughes also has established a
technical career ladder for engineers and
scientists who want to pursue careers as
individual contributors in their fields. This
program is designed to develop and retain
creative minds whose contributions are
critical to the company’s future.
In 2007, we also implemented a consis-
tent, web-enabled performance management
system across the enterprise to provide a for-
mal approach to creating and maintaining a
high performance culture.
Our succession planning process, estab-
lished in 2004, proved effective at filling key
positions during the year, including a group
president and three division presidents. We
also named 10 operations and marketing
vice presidents at the divisions, including
two women.
Settlement with DOJ and SEC
In April 2007, Baker Hughes reached
parallel settlements with the United States
Department of Justice (DOJ) and the Securities
and Exchange Commission (SEC) to resolve
the investigations, disclosed in 2002 and
2003, into Baker Hughes’ operations in
Angola, Kazakhstan and Nigeria. The total
payments to settle these investigations
were $44.1 million, for which the company
recorded a reserve in the fourth quarter
of 2006.
The company entered into a Consent
Judgment with the SEC and a Deferred Prose-
cution Agreement with the DOJ, under which
the government will not further prosecute the
company for these activities if the company
meets the condition of the agreement for two
years. The company has hired an independent
monitor to oversee its compliance activities
for a three-year period.
Since the commencement of these investi-
gations in 2002, Baker Hughes has cooper-
ated fully with the SEC and DOJ. We con-
ducted our own rigorous investigation and
we have openly shared our findings with
these agencies. The acts which resulted in
these enforcement actions were contrary to
our Core Values, our policies and our expecta-
tions for ethical behavior. The company has
terminated employees and commercial agents
that it believes were directly involved. In addi-
tion, we have further strengthened the com-
pliance culture within the company by making
extensive improvements and enhancements to
our compliance program.