Baker Hughes 2007 Annual Report Download - page 84

2007 Form 10-K 1
PART I
ITEM 1. BUSINESS
Baker Hughes Incorporated (“Baker Hughes,” “Company,”
“we,” “our” or “us”) is a Delaware corporation engaged in the
oilfield services industry. Baker Hughes is a major supplier of
products and technology services and systems to the worldwide
oil and natural gas industry, including products and services for
drilling, formation evaluation, completion and production of oil
and natural gas wells. We may conduct our operations through
subsidiaries, affiliates, ventures and alliances.
Baker Hughes was formed in April 1987 in connection
with the combination of Baker International Corporation and
Hughes Tool Company. We acquired Western Atlas Inc. in a
merger completed on August 10, 1998.
As used herein, “Baker Hughes,” “Company,” “we,” “our”
and “us” may refer to Baker Hughes Incorporated and/or its
subsidiaries. The use of these terms is not intended to connote
any particular corporate status or relationships.
Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), are made available free of charge on
our Internet website at www.bakerhughes.com as soon as
reasonably practicable after these reports have been electroni-
cally filed with, or furnished to, the Securities and Exchange
Commission (the “SEC”).
We have adopted a Business Code of Conduct to provide
guidance to our directors, officers and employees on matters
of business conduct and ethics, including compliance stan-
dards and procedures. We have also required our principal
executive officer, principal financial officer and principal
accounting officer to sign a Code of Ethical Conduct Certifi-
cation. Our Business Code of Conduct and Code of Ethical
Conduct Certifications are available on the Investor Relations
section of our website at www.bakerhughes.com. We will
disclose on a Current Report on Form 8-K or on our website
information about any amendment or waiver of these codes
for our executive officers and directors. Waiver information
disclosed on our website will remain on the website for at
least 12 months after the initial disclosure of a waiver. Our
Corporate Governance Guidelines and the charters of our
Audit/Ethics Committee, Compensation Committee, Executive
Committee, Finance Committee and Governance Committee
are also available on the Investor Relations section of our
website at www.bakerhughes.com. In addition, a copy of our
Business Code of Conduct, Code of Ethical Conduct Certifi-
cation, Corporate Governance Guidelines and the charters of
the committees referenced above are available in print at no
cost to any stockholder who requests them by writing or tele-
phoning us at the following address or telephone number:
Baker Hughes Incorporated
2929 Allen Parkway, Suite 2100
Houston, TX 77019-2118
Attention: Investor Relations
Telephone: [phone]
Information contained on or connected to our website
is not incorporated by reference into this annual report on
Form 10-K and should not be considered part of this report
or any other filing we make with the SEC.
We are a provider of drilling, formation evaluation, comple-
tion and production products and services to the worldwide oil
and natural gas industry. We report our results under two seg-
ments – the Drilling and Evaluation segment and the Comple-
tion and Production segment. We have aggregated the divisions
within each segment because they have similar economic char-
acteristics and because the long-term financial performance of
these divisions is affected by similar economic conditions. They
also operate in the same markets, which include all of the major
oil and natural gas producing regions of the world. We previ-
ously reported a third segment, WesternGeco, which consisted
of our 30% interest in WesternGeco, a seismic venture jointly
owned with Schlumberger Limited (“Schlumberger”); however,
on April 28, 2006, we sold our 30% interest in WesternGeco
to Schlumberger.
The results of our Drilling and Evaluation segment and our
Completion and Production segment are evaluated regularly
by our chief operating decision maker in deciding how to
allocate resources and in assessing performance.
•฀ The฀Drilling฀and฀Evaluation฀segment฀consists฀of฀the฀Baker฀
Hughes Drilling Fluids (drilling fluids), Hughes Christensen
(oilfield drill bits), INTEQ (drilling, measurement-while-drilling
and logging-while-drilling) and Baker Atlas (wireline forma-
tion evaluation and wireline completion services) divisions.
The Drilling and Evaluation segment provides products and
services used to drill and evaluate oil and natural gas wells.
•฀ The฀Completion฀and฀Production฀segment฀consists฀of฀the฀
Baker Oil Tools (workover, fishing and completion equip-
ment), Baker Petrolite (oilfield specialty chemicals) and
Centrilift (electrical submersible pumps and progressing
cavity pumps) divisions and the ProductionQuest (production
optimization and permanent monitoring) business unit. The
Completion and Production segment provides equipment
and services used from the completion phase through the
productive life of oil and natural gas wells.
For additional industry segment information for the three
years ended December 31, 2007, see Note 13 of the Notes to
Consolidated Financial Statements in Item 8 herein.
DRILLING AND EVALUATION SEGMENT
Baker Hughes Drilling Fluids
Baker Hughes Drilling Fluids is a major provider of drilling
fluids (also called “mud”), completion fluids (also called “brines”)
and fluids environmental services (also called “waste manage-
ment”). Drilling fluids are an important component of the drill-
ing process and are pumped from the surface through the drill
string, exiting nozzles in the drill bit and traveling back up the
wellbore where the fluids are recycled. This process cleans the
bottom of the well by transporting the cuttings to the surface
while also cooling and lubricating the bit and drill string. Drill-
ing fluids are typically manufactured by mixing oil, synthetic
fluids or water with barite to give them weight, which enables
the fluids to hold the wellbore open and stabilize it. Additionally,