Baker Hughes 2009 Annual Report Download - page 76

2 Baker Hughes Incorporated
SEGMENTS
At this time, we continue to review product line financial
information as well as geographic information in deciding how
to allocate resources and in assessing performance. Accord-
ingly, we report our results under two segments: the Drilling
and Evaluation segment and the Completion and Production
segment. Collectively, we refer to the results of these two seg-
ments as Oilfield Operations. We have aggregated our product
lines within each segment by aligning our product lines based
upon the types of products and services provided to our cus-
tomers and upon the business characteristics of the product
lines during business cycles. The product lines have similar eco-
nomic characteristics and the long-term financial performance
of these product lines are affected by similar economic condi-
tions. They also operate in the same markets, which include all
of the major oil and natural gas producing regions of the world.
• The Drilling and Evaluation segment consists of the follow-
ing product lines: drilling fluids, drill bits, directional drilling,
drilling evaluation services, wireline formation evaluation,
wireline completion and production services and reservoir
technology and consulting. The Drilling and Evaluation seg-
ment provides products and services used to drill and evalu-
ate oil and natural gas wells as well as consulting services
used in the analysis of oil and gas reservoirs.
• The Completion and Production segment consists of the fol-
lowing product lines: wellbore construction and completion,
specialty chemicals, artificial lift systems, permanent monitor-
ing systems, chemical injection systems, integrated operations
and project management. 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, 2009, see Note 13 of the Notes to
Consolidated Financial Statements in Item 8 herein.
Drilling and Evaluation Segment
Our Drilling and Evaluation segment is a leading provider
of products and services used in the drilling and evaluation of
oil and natural gas wells. We provide drilling and completion
fluids and fluids environmental services, Tricone® roller cone
bits and fixed-cutter polycrystalline diamond compact (“PDC”)
bits , directional drilling services, measurement-while-drilling
(“MWD”) and logging-while-drilling (“LWD”) services, wireline
formation evaluation and completion and production services,
and reservoir technology and consulting services.
The primary drivers of our customer’s buying decisions for
drilling and evaluation products and services include reducing
capital expenditures through drilling efficiency (total cost per
foot or meter); reduction of non-productive time; product
and service quality and reliability; and performance which can
impact the productivity of the reservoir (wellbore placement
and wellbore quality).
Drilling Fluids
Drilling fluids (also called “Mud”) are an important compo-
nent of the drilling process and are pumped from the surface
through the drill string, exiting nozzles in the drill bit and trav-
eling back up the wellbore where the fluids are recycled. This
process cleans the bottom of the well by transporting the cut-
tings to the surface while also cooling and lubricating the bit
and drill string. Drilling 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, the fluids control downhole pres-
sure and seal porous sections of the wellbore. To ensure maxi-
mum efficiency and wellbore stability, chemical additives are
blended by the wellsite engineer with drilling fluids to achieve
particular physical or chemical characteristics. For drilling
through the reservoir itself, drill-in or completion fluids (also
called “brines”) possess properties that minimize formation
damage. Fluids environmental services (also called “waste
management”) is the process of separating the drill cuttings
from the drilling fluids and re-injecting the processed cuttings
into specially prepared wells, or transporting and disposing of
the cuttings by other means.
Drill Bits
We are a leading supplier of tri-cone and diamond drill
bits. The primary objective of a drill bit is to drill a high quality
wellbore as efficiently as possible. There are two primary types
of drill bits:
Tricone® Bits. Tricone® drill bits employ either hardened
steel teeth or tungsten carbide insert cutting structures mounted
on three rotating cones. These bits work by crushing and
shearing the formation rock as they are turned. Tricone® drill
bits have a wide application range.
PDC Bits. PDC (also known as “Diamond”) bits use fixed
position cutters that shear the formation rock with a milling
action as they are turned. In many softer and less variable
applications, PDC bits offer higher penetration rates and a
longer life than Tricone® drill bits. Advances in PDC technology
have expanded the application of PDC bits into harder, more
abrasive formations. A rental market has developed for PDC
bits as improvements in bit life and bit repairs allow a bit to
be used to drill multiple wells.
Directional Drilling and Drilling Evaluation Services
We are a leading supplier of drilling and evaluation services,
which include directional drilling, MWD and LWD services.
Directional Drilling. Directional drilling services are used
to guide a drill string along a predetermined path to drill a
wellbore to optimally recover hydrocarbons from the reservoir.
These services are used to accurately drill vertical wells, devi-
ated or directional wells (which deviate from vertical by a
planned angle and direction), horizontal wells (which are sec-
tions of wells drilled perpendicular or nearly perpendicular to
vertical) and extended reach wells (which are wells of signifi-
cant lateral reach or depth). We provide both conventional
(using a steerable motor assembly and mud motor) and rotary
based directional drilling systems.