Baker Hughes, a GE company Announces Fourth Quarter and Total Year 2017 Results

• Orders of $5.8 billion for the quarter, up 1% sequentially and down
  2% year-over-year on a combined business basis*
• Revenue of $5.8 billion for the quarter, up 7% sequentially and
  down 3% year-over-year on a combined business basis
• GAAP operating loss of $92 million for the quarter, decreased 25%
  sequentially and increased unfavorably year-over-year on a combined
  business basis
• Adjusted operating income (a non-GAAP measure) of $303 million for
  the quarter, up 26% sequentially and down 16% year-over-year on a
  combined business basis
• GAAP net loss per share of $(0.07) for the quarter, which included
  $0.22 per share of adjusting items. Adjusted earnings per share (a
  non-GAAP measure) were $0.15
• Cash flows used in operating activities were $(215) million for the
  quarter. Free cash flow (a non-GAAP measure) for the quarter was
  $(367) million. Included in free cash flow is a $(1.2) billion cash
  usage relating to ending the receivables monetization program

*On July 3, 2017, we closed our previously announced
transaction to combine the Oil & Gas business of General Electric
Company ("GE Oil & Gas") and Baker Hughes Incorporated ("Baker Hughes").
The Company presents its financial results in accordance with GAAP which
includes the results of Baker Hughes and GE Oil & Gas from the
transaction closing date of July 3, 2017. However, management believes
that using additional non-GAAP measures on a "Combined Business Basis"
will enhance the evaluation of the profitability of the Company and its
ongoing operations. Combined business results combine the results of GE
Oil & Gas with Baker Hughes as if the closing date had occurred on the
first day of all periods presented. The business combination impacts
only the Oilfield Services and Digital Solutions segments. Accordingly,
no reconciliation is presented for our other segments, Oilfield
Equipment and Turbomachinery & Process Solutions. All combined business
results presented in this News Release are unaudited. Such combined
business results are not prepared in accordance with Article 11 of
Regulation S-X. See Exhibit 99.2 in our Current Report on Form 8-K filed
with the Securities and Exchange Commission on January 24, 2018, which
includes a reconciliation of the combined business information contained
herein from financial results prepared in accordance with GAAP.

LONDON & HOUSTON–(BUSINESS WIRE)–Baker Hughes, a GE company (NYSE:BHGE) ("BHGE" or the "Company")
announced results today for the fourth quarter of 2017 and the total
year ended December 31, 2017.

“In the first 180 days as BHGE, we have made strong progress on our
integration efforts and aligning our team to the priorities of growing
market share, improving margins and generating more cash. We secured
important customer wins in a market environment that continues to be
uncertain. Our team continues to execute on critical integration steps
as planned, delivering approximately $80 million of synergies in the
quarter,” said Lorenzo Simonelli, BHGE chairman and chief executive
officer.

“For the fourth quarter, we delivered $5.8 billion in orders and $5.8
billion in revenues. We saw growth in our shorter-cycle businesses and
declines in our longer-cycle businesses. Total year 2017 orders were $22
billion on a combined business basis. Orders in Turbomachinery & Process
Solutions were up slightly versus 2016 despite the continued low demand
for new LNG projects, while the Digital Solutions and Oilfield Equipment
businesses grew orders substantially. For the total year 2017, we
delivered revenues of $21.9 billion on a combined business basis.

“In our Oilfield Services segment, we achieved solid growth driven by
our well construction product lines in North America, the Middle East
and Latin America. All product lines grew in North America, despite the
rig count being down versus the third quarter. International activity
remains muted with some pockets of healthy activity. Asia Pacific rig
count saw an increase in the fourth quarter after having been flat much
of the year, while Latin America increased steadily through the quarter.
The Middle East held stable for the year as rig count growth in Iraq and
the UAE offset declines in other markets.

"In our Oilfield Equipment segment, the subsea market remains
challenging with low activity levels and pricing challenges. We expect
tree awards to continue to grow in 2018, though at a slower rate than in
2017 and with totals still more than 50% below prior cycle peaks. We
continue to expect offshore activity to be muted in the short term.

"In our Turbomachinery & Process Solutions segment, on- and offshore
production driven demand is improving, however new LNG activity is muted
as the market remains oversupplied. Downstream application driven demand
continues to grow as refinery utilization increases and petrochemical
demand rises.

"In our Digital Solutions segment, we see continued growth both for our
measurement and controls business lines as well as our Digital
offerings. Customers are eager to explore the opportunity to unlock
value through better connectivity and we’re making great progress in
using existing active projects to showcase our value proposition.

“Overall, we continue to see improvement in activity as early
indications of customer capital spending in 2018 are encouraging,
particularly for our shorter cycle businesses. International activity is
stabilizing, and we are seeing signs of activity increase both in the
volume and size of tenders for new work as customers feel more confident
about their operating costs and commodity price stability. The subsea
market continues to be challenging and activity remains low, with prices
continuing to be pressured. We expect activity in the LNG space to
increase as customers position to make new capacity available in 2022
and beyond.

“Our strategy is well suited to market conditions and customer needs.
Reducing product and service cost, integrating equipment and service
modules, and a focus on outcomes are all aligned with the goal of
creating value for customers and for BHGE.”

Quarter Highlights

Customer Contract Wins Across BHGE

BHGE was named as the exclusive supplier to support the appraisal and
early production phases of the development of the Cambo field, northwest
of the Shetland Islands in the UK. The agreement leverages BHGE’s
integrated portfolio of solutions for the oilfield services segment,
including a full suite of well services solutions. The Company’s
integrated scope of fullstream offshore oil and gas capabilities played
a major role in the award.

BHGE’s Oilfield Services segment secured a three-year, multimillion
dollar well construction contract in the Middle East. BHGE will provide
underbalanced and coiled tubing drilling bottom hole assemblies,
drilling fluids, pumping equipment, intervention services, and heavy
equipment support for operations and moving requirements – for workover
gas wells in the region. This award underpins BHGE’s leadership position
in the market.

BHGE’s Turbomachinery & Process Solutions segment continued
its success in the Middle East. BHGE secured the largest-ever
turbomachinery and process solutions agreement with PetroChina for the
provision of its proven turbine generators for the Halfaya oilfield in
Iraq. The agreement strengthens BHGE’s presence in Iraq and demonstrates
the Company’s dedication to the region. Saudi Aramco also awarded a
multimillion dollar contract to BHGE to drive enhanced production at the
Haradh and Hawiyah gas fields.

BHGE also secured a contract with Maersk Oil to provide an integrated
scope of turbomachinery equipment for the Tyra field redevelopment
project in the Danish sector of the North Sea. BHGE was selected for the
project based on its ability to provide advanced, oil-free
turbomachinery technology which will help the sustainable redevelopment
of the field.

In the Oilfield Equipment segment, BHGE and SONATRACH formed a new
company to satisfy the demand for manufacturing capabilities that meet
the highest international standards. The project draws on the extensive
experience of BHGE in oilfield equipment manufacturing and leverages the
Company’s global and local scale to provide production solutions.

In BHGE’s Digital Solutions segment, the measurement and sensing
business secured multiple long-term contracts including a critical deal
in the Middle East for ultrasonic flow meters. With close customer
collaboration, this deal ensures highest levels of availability for BHGE
ultrasonic flow meters across a significant installed base to improve
operators’ upstream production.

In addition, BHGE secured a significant condition monitoring and
software contract, including System 1, the Bently Nevada 3500 system and
Enterprise Impact, for the largest gas gathering center for an NOC in
the Middle East. This contract connects, monitors and analyzes more than
120 non-BHGE rotating equipment assets, including pumps, compressors and
steam turbines.

Technology and Innovation

BHGE’s completions business is focused on rolling out technologies that
will help customers achieve longer laterals, frac more stages at once,
and produce larger fractures without compromising the well’s integrity.
The new BLITZ™ Coiled Tubing Frac Sleeve System performs fast, effective
fractures with unmatched precision and speed in multistage fracturing
operations, with more than 1,000 runs to date.

BHGE’s new Stim-HOOK™ multilateral multistage fracturing system was
developed to enhance production in unconventional plays while lowering
breakeven costs. As part of a multimillion dollar, multiyear exclusive
collaboration agreement for a field development program with one of the
largest operators in the Permian Basin, BHGE constructed six wells for
future installations. BHGE believes this approach will serve as a
platform for accelerating implementation of multilateral technology for
unconventional resource development on a global scale.

BHGE continues to focus on the development of its NovaLT family of
equipment. In the fourth quarter, the Company achieved another milestone
and sold the first-ever offshore NovaLT16 gas turbine driven compressor
solution for a project in Vietnam. BHGE’s NovaLT16 gas turbine driven
centrifugal compressor train provides a highly efficient solution with a
strong emphasis on high availability and reliability, while reducing
operating costs. The NovaLT16 package will be combined with the offshore
platform’s existing gas engine driven reciprocating compressors to
expand gas compression capacity at Block 09-1.

Executing for Customers

BHGE’s AutoTrak™ Curve rotary steerable system achieved record drilling
performance for major customers across the Permian Basin, including
drilling a curve and lateral in only four days – half the time as a
standard system – and setting numerous 24-hour footage records. The
drill bits product line increased activity significantly in the basin,
fueled by its new Dynamus™ extended-life drill bit, which enables longer
drilling life in harsh formations, resulting in extended run times,
higher rates of penetration and increased drilling efficiency.

BHGE’s TransCoil™ rigless-deployed electrical submersible pump (ESP)
system extended the economic life of a mature deepwater field in
Malaysia. BHGE installed a TransCoil system in a mature well offshore
Malaysia, leading to stabilized production at 2,300 barrels of fluid per
day (BFPD) vs. 1,663 BFPD previously. The installation was less than
half the cost of the quote for a traditional rig deployment in the
field. A second system also was installed in one of the most challenging
formations in the Middle East, bringing 6,000 BFPD back online in a well
that had been shut in since August.

BHGE successfully completed the first field installation of
IntelliStream™ with a North-America based customer. Deployment for an
additional three IntelliStream™ contracts is currently under way.
IntelliStream, BHGE’s upstream Production Optimization enterprise
software solution, provides analytic-driven insights and continuous
learning to optimize production and reduce non-productive time in a
single system.

Consolidated Orders by Reporting Segment*

Consolidated Orders by Reporting Segment

Orders for the quarter were $5,757 million, up 1% sequentially and down
2% year-over-year. This sequential increase was driven by service
orders, which were up 2%, and partially offset by equipment orders,
which were down 1%. The 2% year-over-year decline was mainly driven by a
5% decrease in service orders partially offset by a 3% increase in
equipment orders.

The Company's total book-to-bill ratio in the fourth quarter was 1.0;
equipment book-to-bill ratio in the fourth quarter was 0.9.

Backlog grew in the fourth quarter, which ended at $21.0 billion, an
increase of $0.1 billion or 1% from the third quarter of 2017. Equipment
backlog was $5.4 billion, down $0.3 billion, or 6%, sequentially.
Services backlog was $15.7 billion, up $0.5 billion, or 3%, sequentially.

Consolidated Revenues by Reporting Segment

Revenue for the quarter was $5,763 million, an increase of $388 million,
or 7%, sequentially. Compared to the same quarter last year, revenue was
down 3%. All segments grew revenue sequentially despite a declining rig
count within the quarter. Year-over-year, the shorter cycle businesses
grew, as Oilfield Services was up 10% and Digital Solutions was up 4%.
The growth in the shorter cycle businesses was offset by a decrease in
the longer cycle businesses as Oilfield Equipment declined 21% and
Turbomachinery & Process Solutions declined 14% year-over-year.

*Certain columns and rows may not sum up due to the use of rounded
numbers.

Consolidated Operating Income (Loss) by Reporting Segment

On a GAAP basis, operating loss for the fourth quarter of 2017 was $92
million, which includes additional property, plant and equipment
depreciation as a result of purchase accounting for pre-merger Baker
Hughes. Operating loss decreased 25% sequentially and increased
unfavorably year-over-year. Total segment operating income was $395
million for the fourth quarter of 2017, up $66 million, or 20%,
sequentially, and down $147 million, or 27%, year-over-year.

Adjusted operating income (a non-GAAP measure) for the fourth quarter of
2017 was $303 million and excludes adjustments totaling $395 million
before tax, mainly related to restructuring charges, merger and related
costs, as well as inventory write downs due to product and supply chain
rationalization. A complete list of the adjusting items and associated
reconciliation has been provided in Table 1a in the section entitled
“Charges and Credits” for a reconciliation from GAAP. Adjusted operating
income for the fourth quarter was up $63 million, or 26%, sequentially
mainly driven by growth in Oilfield Services and improvement within
Oilfield Equipment. Adjusted operating income was down $58 million, or
16%, year-over-year driven by Oilfield Equipment and Turbomachinery &
Process Solutions, partially offset by growth in Oilfield Services.

Depreciation and amortization for the fourth quarter of 2017 was $425
million. The sequential increase of $45 million was primarily driven by
increased depreciation from purchase accounting.

Corporate costs were $92 million in the fourth quarter of 2017, compared
to $89 million in the prior quarter and $181 million in the fourth
quarter of 2016.

Other Financial Items

Income tax was a $51 million credit for the fourth quarter. Included in
tax expense is a $132 million benefit related to recent United States
tax reform. The tax expense excluding the impact from US tax reform was
due primarily to the geographical mix of earnings and losses, which
resulted in taxes in certain jurisdictions that exceeded the tax benefit
from the losses in other jurisdictions, that could not be realized
within the quarter due to valuation allowances provided. Over time, the
Company expects the tax rate to normalize as its earnings and losses
profile shifts amongst the US and international jurisdictions.

GAAP loss per share was $(0.07). Adjusted earnings per share were $0.15.
Excluded from adjusted earnings per share were all items listed in Table
1a in the section entitled "Charges and Credits", as well as the "other
adjustments (non-operating)" found in Table 1b. The other adjustments
(non-operating) were primarily driven by the $132 million benefit from
US tax reform.

Cash flows used by operating activities were $(215) million for the
fourth quarter of 2017. Free cash flow (a non-GAAP measure) for the
quarter was $(367) million. Free cash flow included a $(1.2) billion
impact from the decision to end the receivables monetization program. In
addition, free cash flow included approximately $100 million of merger
and restructuring related cash payments. A reconciliation from GAAP has
been provided in Table 1c in the section entitled "Charges and Credits."

Capital expenditures, net of proceeds from disposal of assets, were $152
million for the fourth quarter of 2017.

During the three months ended December 31, 2017, we repurchased $501
million of the Company’s common stock, consisting of approximately $187
million of Class A common stock and approximately $314 million of Class
B common stock including the paired units in BHGE LLC from GE. The
buyback was completed on a pro rata basis and did not result in a change
of GE’s approximately 62.5% interest in BHGE LLC.

Results by Reporting Segment

The following segment discussions and variance explanations are
intended to reflect management's view of the relevant comparisons of
financial results on a sequential or year-over-year basis, depending on
the business dynamics of the reporting segments.

Oilfield Services

Oilfield Services (OFS) revenue of $2,774 million for the quarter
increased by $139 million, or 5%, sequentially. The sequential increase
in revenue was driven by increased volume in North America, the Middle
East and Latin America partially offset by decreased activity in Europe.

North America revenue was $1,090 million, an increase of 4%
sequentially, as a result of increased volume across completions,
artificial lift and drilling services. International revenue was $1,685
million, an increase of 6% sequentially, primarily driven by increased
activity in the Middle East, Latin America and Asia and partially offset
by weaker volume in Europe and Sub-Saharan Africa. From a product line
perspective, the sequential growth of 5% in OFS was driven primarily by
completions, artificial lift and drilling services. This growth was
partially offset by lower volume in the wireline business.

Segment operating income before tax for the quarter was $113 million,
which included increased property plant and equipment depreciation from
the purchase accounting valuation. Operating income for the fourth
quarter of 2017 was up $38 million, or 49%, sequentially, primarily
driven by increased volume, synergy realization and cost productivity.

Oilfield Equipment

Oilfield Equipment (OFE) orders were down 27% year-over-year, with
equipment orders down 42%, mainly driven by timing of orders within the
flexible production systems business, and lower rig drilling systems
orders. Services orders increased by 21% year-over-year driven by the
pressure control business and long term service agreements in the rig
drilling systems business.

OFE revenues of $672 million for the quarter decreased $182 million, or
21%, year-over-year. The decrease was driven by lower opening backlog in
the subsea production systems business, as well as lower transactional
services activity mainly in the North Sea and Sub-Saharan Africa.

Segment operating income before tax for the quarter was $29 million,
down 78% year-over-year. The decrease was primarily driven by lower
volume and negative cost productivity.

Turbomachinery & Process Solutions

Contacts

Baker Hughes
Investors:
Philipp Mueller, +1 281-809-9088
[email protected]
or
Media:
Stephanie
Cathcart, +1 202-637-4108
[email protected]
or
Melanie
Kania, +1 713-439-8303
[email protected]

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