Baker Hughes restructures into two business segments to address energy trilemma
Taking into consideration the energy trilemma of energy security, sustainability and affordability, Baker Hughes, a U.S. oilfield services provider, has unveiled a simplified organisational structure and management team changes to enhance profitability and position the firm for further growth.
Baker Hughes revealed on Tuesday that it is restructuring and simplifying its four product companies to focus on two reporting business segments to accelerate its strategic transformation, simplify operations, bolster profitability, and drive growth, “meeting customer needs and producing solutions in the rapidly evolving energy and industrial markets.”
Commenting on this, Lorenzo Simonelli, chairman and CEO of Baker Hughes, remarked: “We have continuously looked to ensure Baker Hughes can operate in any environment and play a clear role in helping to address the energy trilemma – balancing energy security, sustainability, and affordability. Today, we are taking a deliberate next step in our strategic journey to transform and simplify our operations and position Baker Hughes for the future.”
From 1 October, Baker Hughes will be formally restructured into two reporting business segments: Oilfield Services & Equipment (OFSE), which integrates the current Oilfield Services (OFS) and Oilfield Equipment (OFE) product companies, and Industrial & Energy Technology (IET), integrating the current Turbomachinery & Process Solutions (TPS) and Digital Solutions (DS) product companies. Furthermore, the U.S. oilfield services provider outlined that it is streamlining its corporate structure, which is expected to deliver at least $150 million in cost savings and form the baseline for further margin improvement.
“Our updated structure will allow us to deliver the technologies that the energy transition will demand by further strengthening our existing customer relationships and allowing more operational flexibility, maintaining size and scale to maximise technology investments and capital returns to our shareholders,” added Simonelli.
Moreover, the firm elaborated that it has carefully evaluated all aspects of its long-term strategy, corporate performance, organisational structure, and the market outlook across its businesses after identifying OFSE and IET as the two broad business areas in 2021. Therefore, the company claims that this transformation is the next step in its journey to create “a pre-eminent energy technology company,” positioning for the changes unfolding across the energy landscape.
Reshaping management team
Baker Hughes also disclosed that it is making changes to its management team reporting to Lorenzo Simonelli, which will become effective on 1 October. This is part of the firm’s efforts to enhance operational execution and reshape the organisation while executing its strategic priorities, aiming to improve returns, generate strong free cash flow, and deliver value and returns to shareholders.
The oilfield services provider has appointed Maria Claudia Borras, EVP of OFS since 2017, as the executive vice president (EVP) of OFSE. On the other hand, Rod Christie, who served as EVP of TPS since 2017, is EVP of IET.
In addition, Baker Hughes has appointed Jim Apostolides, who served as SVP of enterprise excellence, as senior vice president (SVP) of enterprise operational excellence, a newly-created role to drive better coordination and alignment of key operational areas. Apostolides will oversee the firm’s consolidated supply chain centres of excellence; health, safety, environment, and quality (HSEQ); and environmental, social, and governance (ESG) functions.
“Three years ago we set out on a bold ambition to be an energy technology company and take energy forward. We could not have achieved our goals without the commitment and perseverance of our entire leadership team. I want to thank our departing leaders for their significant contributions towards delivering our strategy as they pursue new opportunities,” concluded Simonelli.
Regarding Baker Hughes’ most recent activities, it is worth noting that the U.S. oilfield player launched a new fast all-electric tiebacks solution in late August 2022.
According to the firm, this solution reduces capital expenditure costs by 15 per cent compared to traditional electro-hydraulic multiplexed systems.