GE to Merge its Oil & Gas Business with Baker Hughes

Merger of GE Oil & Gas with Baker Hughes will create world’s second-largest oil field services provider

USA: GE will combine its oil-and-gas business with Baker Hughes in a deal that structures the new publicly traded entity as a partnership jointly owned by each company's shareholders. GE and Baker Hughes said the new company would have USD32 billion in annual revenue and employ about 70,000 people. The companies expect to achieve USD1.6 billion in annual synergies by 2020. GE shareholders will own 62.5% of new merged entity called "the new Baker Hughes." Current shareholders of Baker Hughes will be apportioned 37.5% of the new entity. The new company, to be listed on the New York Stock Exchange, will have dual headquarters in Houston and London.

TechSci Research depicts that GE's oil and gas division includes equipment for enhanced oil recovery while Baker Hughes’s business includes drilling services, good construction, completion equipment and reservoir analysis. Over the last few years, global enhanced oil recovery market has been growing due to rise in demand of global energy. Growing number of mature oil wells and high productivity levels achievable by using EOR techniques, are some of the major factors because which the global market for EOR is expected to grow during 2015 – 2020.

According to TechSci Research report “Global Enhanced Oil Recovery Market Forecast & Opportunities, 2020”, the global enhanced oil recovery market is projected to witness growth of around 8% through 2020. With a share of over 30% in 2014, North America is forecast to continue its dominance in the global enhanced oil recovery market during 2015 - 2020. Over the next five years, onshore crude oil reserves are expected to witness higher crude oil production through enhanced oil recovery methods compared to off-shore oil reserves. Gaseous enhanced oil recovery methods are expected to lead the global enhanced oil recovery market, with the most favorable substance used for this method being carbon dioxide.