Baker Hughes 2007 Annual Report Download - page 7

have a consistent approach in each market
across our product lines and to place decision-
making authority closer to our customers. This
organization, in combination with our signifi-
cant investments in infrastructure, equipment
and people, resulted in significant growth in
our targeted markets.
Latin America
Revenues in the Latin America region,
which includes Mexico, Central and South
America, increased 20% in 2007 to $990 mil-
lion from $827 million in 2006.
Increased business in Brazil, where reve-
nues were up 65% for the year, was the most
important factor in the region’s growth during
the year. A significant project to provide high-
end directional drilling and logging-while-
drilling services to Petrobras in its Marlim
Sul and Roncador deepwater fields started
up during the year. To support this activity,
Baker Hughes built a new, larger facility at
the Macaé service base, invested in field
equipment and hired and trained 134 local
engineers and technicians.
Also in Brazil, Centrilift has applied its
advanced ESP subsea booster system tech-
nology to help Petrobras produce efficiently
from its Jubarte, Espadarte and Golfinho
deepwater fields.
Baker Hughes also gained business in
Colombia through increased industry activity
and Mexico through increased market share.
Revenue in Venezuela was up slightly during
the year even though international oil com-
panies were re-evaluating their positions
in the country in light of contract revisions
imposed by the government and the national
oil company.
Europe, Africa, Russia, Caspian
Revenue in the Europe, Africa, Russia,
Caspian (EARC) region was $3,066 million
for 2007, up 24% from $2,473 million
in 2006. While the North Sea and other Euro-
pean markets still accounted for about 50%
of the region’s revenues during the year, a
major contributor in the region’s growth dur-
ing the year was an 80% increase in revenue
in Russia.
In late 2006, Baker Hughes placed all its
operations in Russia under the leadership of
a senior Baker Hughes executive in the role
of President, Baker Hughes Russia. Though it
was a departure from the Baker Hughes divi-
sional business model, the country manage-
ment structure was considered the most
effective way for us to operate in the Russian
market. To support the new organization,
Baker Hughes increased its investment in facil-
ities, equipment and people in Russia. Subse-
quently, Baker Hughes has provided services
for all the major Russian production asso-
ciations and national companies, including
Gazprom and Rosneft, as well as interna-
tional companies operating in the country.
During the year, Baker Hughes gained
integrated project management business,
serving a national oil company on nine rigs
with sidetracking services using drill bits,
directional drilling and measurement-while-
drilling technology, as well as casing exit
and completion equipment and services.
Our Russian operations also received orders
for INTEQ directional drilling services, sand
control completions, and Centrilift ESP sys-
tems for horizontal wells in the newly devel-
oped Vankor field in Eastern Siberia. Our
production optimization experts from Baker
Oil Tools and ProductionQuest installed two
Intelligent Well Systems in the Valdelp field in
Western Siberia. Hughes Christensen began
servicing a drill bit management program for
TNK-BP’s Orenburg, Nyagan and Samotlor
business units. The Russian wireline logging
and perforating business grew rapidly in
Western Siberia and from Sakhalin Island,
with services conducted both by Baker Atlas
and our ONGF subsidiary. In addition, Baker
Petrolite gained production chemical business
in Siberia and in the Arctic region.
In Astrakhan in southern Siberia, Baker
Hughes Russia helped Gazprom and its
drilling subsidiary Burgas drill a well below
13,000 feet, through difficult formations
where vertical drilling is extremely challeng-
ing. Baker Hughes provided integrated opera-
tions on the project, which included INTEQ’s
VertiTrak™ vertical drilling system, Baker
Hughes Drilling Fluids PERFORMAX™ and
This Annual Report to Stockholders, including the letter
to stockholders from Chairman Chad C. Deaton, contains
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. The
words “will,” “expect,” “should,” “scheduled,” “plan,” “aim,”
“ensure,” “believe,” “promise,” “anticipate,” “could” and
similar expressions are intended to identify forward-looking
statements. Baker Hughes’ expectations regarding these
matters are only its forecasts. These forecasts may be sub-
stantially different from actual results, which are affected
by many factors, including those listed in ”Risk Factors“ and
“Management’s Discussion and Analysis of Financial Condi-
tion and Results of Operations” contained in Items 1A and 7
of the Annual Report on Form 10-K of Baker Hughes Incor-
porated for its year ended December 31, 2007. The use
of “Baker Hughes,” “our,” “we” and similar terms are
not intended to describe or imply particular corporate
organizations or relationships.
Baker Hughes achieved record revenues, exceeding $10 billion for the
first time, while also earning its highest annual operating profit. We
are pleased with the progress we have made in growing our business
in key geographic markets, which contributed $879 million in incre-
mental revenue during the year.
2007 Annual Report 3