Baker Hughes 2015 Annual Report Download - page 39

30
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 $ 24,551 $ 22,364 $ 2,187 10 %
Year Ended December 31,
2014 2013 $ Change % Change
Profit Before Tax:
North America $ 1,466 $ 968 $ 498 51 %
Latin America 290 66 224 339 %
Europe/Africa/Russia Caspian 621 591 30 5 %
Middle East/Asia Pacific 675 457 218 48 %
Industrial Services 119 135 (16) (12)%
Total Operations 3,171 2,217 954 43 %
Corporate and other (544) (502) (42) 8 %
Total $ 2,627 $ 1,715 $ 912 53 %
North America
North America revenue in 2014 increased $1.2 billion or 11% compared to 2013, with rig counts increasing 6%
from the prior year average. The increase in revenue was driven almost entirely by our U.S. onshore operations,
where higher activity levels, improved utilization and market conditions in pressure pumping, along with increased
demand for new technologies in the unconventional plays contributed to solid growth across all our districts and
product lines. The largest contributor to the revenue growth was our pressure pumping operations, where market
conditions gradually improved during the year, reversing the over supply of hydraulic fracturing equipment; which,
when combined with our multi-year improvement initiative for this product line, resulted in improved utilization and
increased efficiencies. Our artificial lift, drilling services and drill bit product lines also delivered exceptionally strong
growth, as demand increased for our new technologies specifically designed for the unconventional plays.
Revenue in Canada declined in 2014 as compared to 2013, in part due to a 6% decline in the oil-directed rig count,
which is a significant driver of our operations in the country. Revenue in the Gulf of Mexico declined slightly despite
a relatively flat rig count in 2014 compared to 2013. The revenue decline is attributable to activity delays, primarily
in drilling and stimulation, that resulted from unusually strong ocean currents in the second half of 2014.
North America profit before tax was $1,466 million in 2014, an increase of $498 million or 51% compared to
2013. In addition to the strong activity levels in U.S. onshore, increased profitability was driven by improved
contractual terms and utilization in our pressure pumping operations, as well as other efficiency gains and cost
savings recognized as part of our pressure pumping profit improvement plan. The growing demand for new
technologies, which command a higher premium, also contributed to the improvement. In the Gulf of Mexico,
profitability improved, despite the decline in revenue, as a result of a more favorable mix of revenue with an
increase in deepwater completion systems. In Canada, profitability decreased in line with the revenue decline, as
costs savings achieved in pressure pumping were offset by the foreign exchange impact of the weakening
Canadian dollar. Profitability in 2014 was negatively impacted by $29 million of severance costs and $13 million of
costs associated with a technology royalty agreement.