Baker Hughes

A united front

Baker Hughes has been operating continuously in Europe for over 40 years.

It operates bases across 29 countries in the region, and is present in all exploration and development markets, delivering measureable value for customers. The company’s service offering comprises a range of drilling, reservoir, and completion/production products and services. In 2009 Baker Hughes restructured its global operations. Dispensing with previous divisions, Baker Hughes assigned a managing director and vice president to each of its 23 geomarkets, which are located within nine regions around the world. The company now organises itself around product lines rather than divisions, all of which are under the general management of Baker Hughes.

Zvonimir Djerfi, vice president of Baker Hughes Norway, describes how the recent restructure has improved the Norwegian business, helping safeguard it against the recession: “We have seen a little decline in activity in 2009 in comparison with 2008, which we know was a result of the global economics crisis. Whilst this decline was visible it was much smaller than what was experienced in other parts of the world – in other areas that decline was between 30 and 50 per cent year on year, whereas in Norway we experienced a downturn on around five to ten per cent in 2009.

“We were fortunate, and this is largely because of the reorganisation in the Baker Hughes business, which has definitely helped us to strengthen our position in the downturn by looking at the synergies across the product lines. We actually have a few product lines, which have been very strong in Norway on the completion, drilling and evaluation side and we have managed to leverage on the strengths of those product lines to basically drive synergies towards gaining market share. This is based on the strong performance of those product lines, which have pulled in some new opportunities and allowed us to increase our market share in this business.”

The reorganisation was formulated with some set goals in mind across the nine regions. Zvonimir explains that one of the primary targets in Norway was to improve customer relations: “Building and maintaining a strong partnership with our clients has always been hugely important, but we saw this as an opportunity to increase focus on this crucial area of the business. Since the rebranding we have been able to look at opportunities more from the customer’s perspective. That gave us a view on the business from a different angle and definitely provided us with a more focused approach to the customer’s solutions.

“One such example is the new technology that was developed in co-operation with Statoil – the steerable drilling liner that has been publicised by Statoil as one of the possible game changers in drilling depleted, troublesome zones. We have completed two successful tests for Statoil. This has been a completely joint approach between Baker Hughes and Statoil, and that is viewed as a new opportunity for many other companies. In other projects we managed to combine the knowledge of directional drilling and well bore intervention as an introduction of the Sentio services. This involves combining a number of measurements during drilling and well bore intervention jobs. This was carried out for ConocoPhillips and, combined with some new cutter technology that we have introduced, we have applied the experts from our directional drilling sites to offer this job across the product lines. We have achieved some tremendous results in terms of time saving and efficiency, which has not been seen before.”

In terms of long-term profitable growth, Baker Hughes is focusing on optimising its product portfolio, by improving and extending it, as well as undertaking strategic mergers. Zvonimir comments: “We already offered a huge range of services, but we were missing pressure pumping and coil-tubing. In autumn 2009, we announced our merger with BJ Services, which is part of our strategic portfolio optimisation. BJ Services has a number of product lines and services that we didn’t have, and so this merger has allowed us to extend our offering, enabling us to compete better with our big competitors.

“We also see more drive for integrated operations from our customers, and so we have been undertaking many of those integrated operations and projects jointly with BJ Services. Now we are very pleased that the merger has gone through and we believe that welcoming BJ Services to our organisation will definitely benefit us and our customers as we move forwards.”

The future of Baker Hughes is positive, with a clear business plan emerging from the reorganisation. Zvonimir outlines the plans for the Norwegian part of the business: “In order to see ourselves in the future we have established global road maps for expansion. We have looked at our short-term goal for 2010 and so for the time being we’re looking at the next couple of years. For 2012, our goal is to outperform the market, meaning that we will focus on strengthening our products and services leadership. Until now we have really concentrated on the technology development in the North Sea, and we have introduced a lot of new technologies in that time. We will continue to invest in R&D, on which Baker Hughes has historically spent a significant portion of its total revenue. We have not reduced this proportion in the last two years and so that will continue.

“Finally, we will continually improve on our customer relations, and with regards to that we have assigned executive account managers for all key accounts in Norway. Their sole job and focus is to understand customer needs and then drive the knowledge and understanding that they gain through our organisation. We’ll look continuously at different routes for our business and we believe that now with the addition of BJ Services, we will have a tremendous opportunity to explore those alternative routes for the benefit of customers and eventually for us as well.”

Baker Hughes
Services: Drilling and completion