1 00:00:02,520 --> 00:00:07,080 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:07,320 --> 00:00:09,920 Speaker 2: It's head down to Houston, Texas right now to our 3 00:00:10,039 --> 00:00:12,119 Speaker 2: very own Alex Steele. She's going to be speaking with 4 00:00:12,160 --> 00:00:16,040 Speaker 2: Baker Hughes CEO Lorenzo Seminelli. Alex, what do you have 5 00:00:16,040 --> 00:00:16,640 Speaker 2: for us? 6 00:00:16,920 --> 00:00:17,240 Speaker 1: All right? 7 00:00:17,280 --> 00:00:19,800 Speaker 3: Thank you so much. Polit's right. Lorenzo Simonelli is chairman 8 00:00:20,360 --> 00:00:23,560 Speaker 3: and also president and CEO of Baker Hughes. Lorenzo, it's 9 00:00:23,600 --> 00:00:24,079 Speaker 3: good to see you. 10 00:00:24,079 --> 00:00:26,200 Speaker 1: Thanks for joining, Alex. Great to see as well. 11 00:00:26,239 --> 00:00:29,680 Speaker 3: You are the premiere oil services providers in the entire world. 12 00:00:29,800 --> 00:00:32,560 Speaker 3: Everyone is worried about a recession today. Are you seeing 13 00:00:32,640 --> 00:00:33,879 Speaker 3: any signs of slowdown? 14 00:00:35,200 --> 00:00:38,120 Speaker 4: There's clearly a lot of volatility happening in the marketplace, 15 00:00:38,240 --> 00:00:41,159 Speaker 4: and we've seen that last week and also today. At 16 00:00:41,200 --> 00:00:44,480 Speaker 4: this moment in time, if you look at the macro trends, 17 00:00:44,560 --> 00:00:48,800 Speaker 4: there are still tailwinds that point to no recession. The 18 00:00:48,840 --> 00:00:52,400 Speaker 4: consumer's resilient and from an activity level, as we said 19 00:00:52,400 --> 00:00:54,480 Speaker 4: at the beginning of the year, we continued to see 20 00:00:54,480 --> 00:00:58,320 Speaker 4: a positive outlook for Baker Hughes as an energy technology 21 00:00:58,360 --> 00:00:59,120 Speaker 4: company and that. 22 00:00:59,120 --> 00:01:00,520 Speaker 3: Has not changed in the last two months. 23 00:01:00,680 --> 00:01:03,800 Speaker 4: It has not changed, and again we monitor the situation 24 00:01:03,880 --> 00:01:06,760 Speaker 4: on a daily basis. I think again, you've got the 25 00:01:06,800 --> 00:01:09,759 Speaker 4: macro aspects from an energy perspective that are clear. 26 00:01:10,440 --> 00:01:11,839 Speaker 1: Energy demand is increasing. 27 00:01:12,360 --> 00:01:15,480 Speaker 4: Also here in the United States, natural gas is a 28 00:01:15,560 --> 00:01:19,119 Speaker 4: huge opportunity, and we've got a huge opportunity from an 29 00:01:19,120 --> 00:01:22,240 Speaker 4: export perspective of LERG. So when you look at a 30 00:01:22,240 --> 00:01:25,600 Speaker 4: company like Baker Hughes, we see a lot of positive 31 00:01:25,640 --> 00:01:28,920 Speaker 4: trends that go beyond just twenty twenty five and you'll 32 00:01:28,920 --> 00:01:32,520 Speaker 4: always have volatility, but again, nothing that we're worried about 33 00:01:32,560 --> 00:01:33,119 Speaker 4: at this stage. 34 00:01:33,160 --> 00:01:34,840 Speaker 3: And there are lots of sections. As you mentioned right, 35 00:01:34,840 --> 00:01:38,280 Speaker 3: there's the oil services demand side. You also make energy 36 00:01:38,319 --> 00:01:40,800 Speaker 3: export facilities, so there you have a lot of different 37 00:01:41,120 --> 00:01:42,920 Speaker 3: hands and a lot of different things. So there's that 38 00:01:42,959 --> 00:01:43,399 Speaker 3: part of it. 39 00:01:43,360 --> 00:01:45,240 Speaker 1: Too, correct well, less cyclical for sure. 40 00:01:45,400 --> 00:01:47,400 Speaker 3: The issue though, is the tariff situation, which it would 41 00:01:47,400 --> 00:01:49,440 Speaker 3: seem like you're very exposed to. If we get aluminum, 42 00:01:49,480 --> 00:01:51,920 Speaker 3: steel and copper tariffs, if we get them on Wednesday 43 00:01:51,960 --> 00:01:54,240 Speaker 3: twenty five percent, does that affect the pipe you're. 44 00:01:54,080 --> 00:01:54,919 Speaker 1: Going to put in the ground. 45 00:01:56,160 --> 00:02:01,760 Speaker 4: It really varies, and the tariffs are complicated and you 46 00:02:01,840 --> 00:02:04,480 Speaker 4: need to go into the full supply chain and also 47 00:02:04,680 --> 00:02:07,800 Speaker 4: end use perspective. We have Baker Hughes have a very 48 00:02:07,840 --> 00:02:11,960 Speaker 4: diversified supply chain. We're not the original maker of the 49 00:02:12,000 --> 00:02:16,160 Speaker 4: aluminium or the steel. What we're providing is equipment and services, 50 00:02:16,200 --> 00:02:19,560 Speaker 4: and we're also providing modules, and we have a versatile 51 00:02:19,600 --> 00:02:23,320 Speaker 4: supply chain that enables us to both from the US 52 00:02:23,360 --> 00:02:26,000 Speaker 4: as well as from internationally and from an export an 53 00:02:26,040 --> 00:02:30,280 Speaker 4: import perspective, be able to be diversified and move things around. 54 00:02:30,400 --> 00:02:33,680 Speaker 4: So as we look at it today, we anticipate that 55 00:02:33,760 --> 00:02:37,760 Speaker 4: the tariffs will have a negligible impact on Baker Hughes 56 00:02:37,919 --> 00:02:40,520 Speaker 4: and we're continuing to assess it on a daily basis. 57 00:02:40,600 --> 00:02:43,960 Speaker 3: So basically, the supplier might increase prices if they need to, 58 00:02:44,080 --> 00:02:45,720 Speaker 3: but you can manage it or pass it on. 59 00:02:46,280 --> 00:02:49,000 Speaker 4: We can manage it because also we can change supplier. 60 00:02:49,280 --> 00:02:53,079 Speaker 4: Also we can work with the end customer with regards 61 00:02:53,120 --> 00:02:57,120 Speaker 4: to efficiencies and changes, and so through a number of 62 00:02:57,160 --> 00:03:01,160 Speaker 4: different scenarios, we look to manage that and work collaboratively 63 00:03:01,280 --> 00:03:02,480 Speaker 4: with the end customer. 64 00:03:02,720 --> 00:03:06,200 Speaker 3: The other big macro tailwind actually is drill baby drill 65 00:03:06,280 --> 00:03:08,200 Speaker 3: that has been a quarter zone of the Trump administration. 66 00:03:08,760 --> 00:03:11,840 Speaker 3: Where you sit our producer's drill baby drilling. 67 00:03:12,360 --> 00:03:15,560 Speaker 4: What you're seeing from this administration is clearly an energy 68 00:03:15,600 --> 00:03:19,160 Speaker 4: renaissance in the United States, and when you look at 69 00:03:19,960 --> 00:03:24,320 Speaker 4: the opportunity ahead, it is for increased production, both on 70 00:03:24,360 --> 00:03:26,400 Speaker 4: the oil side the natural gas side. 71 00:03:26,600 --> 00:03:29,160 Speaker 1: When you look at the aspect of the. 72 00:03:29,040 --> 00:03:32,280 Speaker 4: Operators, they're going to continue to be that capital discipline. 73 00:03:32,480 --> 00:03:35,080 Speaker 4: They're going to look at the financial returns, and we 74 00:03:35,160 --> 00:03:38,200 Speaker 4: haven't seen any changes today in the outlook of that. 75 00:03:38,640 --> 00:03:42,160 Speaker 4: We do think US production will go up, driven predominantly 76 00:03:42,160 --> 00:03:46,400 Speaker 4: by efficiencies and technology enhancements that we're providing to the sector. 77 00:03:46,760 --> 00:03:49,080 Speaker 4: And then we see a big opportunity with natural gas, 78 00:03:49,120 --> 00:03:52,320 Speaker 4: and also as you look at natural gas pricing remaining 79 00:03:52,360 --> 00:03:55,920 Speaker 4: to be resilient with the opportunity of the LNG exports 80 00:03:55,920 --> 00:03:56,640 Speaker 4: coming online. 81 00:03:56,720 --> 00:03:58,320 Speaker 3: But you don't see the world where we have one 82 00:03:58,360 --> 00:04:01,160 Speaker 3: million barrels of growth year like we saw in twenty 83 00:04:01,200 --> 00:04:03,640 Speaker 3: twenty three. Do you see a more muted a growth 84 00:04:03,680 --> 00:04:04,920 Speaker 3: profile for oil in the US. 85 00:04:05,360 --> 00:04:08,360 Speaker 4: It's going to go down to the fundamentals of the 86 00:04:08,480 --> 00:04:13,280 Speaker 4: demand and supply and also the returns from a shareholder perspective, 87 00:04:13,640 --> 00:04:16,880 Speaker 4: and I think companies have worked on their capital discipline, 88 00:04:17,040 --> 00:04:18,720 Speaker 4: so they're going to make sure that that is all 89 00:04:18,760 --> 00:04:22,080 Speaker 4: in balance as well as meeting the needs from. 90 00:04:21,880 --> 00:04:23,240 Speaker 1: A societal perspective. 91 00:04:23,320 --> 00:04:25,360 Speaker 4: So I think it's going to be more muted than 92 00:04:25,600 --> 00:04:28,440 Speaker 4: a million barrels. You are going to those see continued 93 00:04:28,680 --> 00:04:32,800 Speaker 4: production enhancements and efficiencies and people will look at the 94 00:04:32,839 --> 00:04:35,520 Speaker 4: price of oil on a regular basis and then decide 95 00:04:35,560 --> 00:04:37,479 Speaker 4: accordingly what's best for their shareholder. 96 00:04:37,600 --> 00:04:39,560 Speaker 3: Yeah, and a tough tape for oil price today, to 97 00:04:39,640 --> 00:04:42,040 Speaker 3: be sure. So let's get to the other potential tailman, 98 00:04:42,080 --> 00:04:44,240 Speaker 3: and that is AI and data center build out. How 99 00:04:44,240 --> 00:04:45,720 Speaker 3: can Baker Hughes play in that space. 100 00:04:46,320 --> 00:04:49,120 Speaker 4: Well, it's a great opportunity for Baker Hues And when 101 00:04:49,120 --> 00:04:53,680 Speaker 4: we think about the grid instability and also the huge 102 00:04:53,720 --> 00:04:58,239 Speaker 4: increase in demand for power generation, it really fits into 103 00:04:58,560 --> 00:05:03,360 Speaker 4: off grid application where we can provide our industrial gas turbans, 104 00:05:03,839 --> 00:05:08,320 Speaker 4: we can provide our geofermal technology, we can provide a 105 00:05:08,560 --> 00:05:12,680 Speaker 4: number of factors to enable the hyperscalers to go and 106 00:05:12,720 --> 00:05:16,120 Speaker 4: produce the data centers immediately. We've already seen an increase 107 00:05:16,160 --> 00:05:19,320 Speaker 4: in activity. You have seen an announcement we made last 108 00:05:19,320 --> 00:05:24,240 Speaker 4: week with Fronterra with regards to data centers exclusive of ccs. 109 00:05:24,440 --> 00:05:27,200 Speaker 4: And it's not just a phenomena within the United States 110 00:05:27,240 --> 00:05:31,040 Speaker 4: clearly here it's spoken about every day, but also globally, 111 00:05:31,279 --> 00:05:35,120 Speaker 4: we're seeing increased activity within other areas such as Middle East, 112 00:05:35,200 --> 00:05:39,440 Speaker 4: such as Asia relative to data center demand and generative AI. 113 00:05:39,880 --> 00:05:43,680 Speaker 4: We know has a huge energy consumption and that's what 114 00:05:43,720 --> 00:05:44,760 Speaker 4: we're servicing, and. 115 00:05:44,720 --> 00:05:47,400 Speaker 3: That also comes from your industrial and energy technology business. 116 00:05:47,480 --> 00:05:49,800 Speaker 3: Hence the diversified part we were talking about earlier, making 117 00:05:49,800 --> 00:05:52,240 Speaker 3: a little less cyclical in terms of that, can you 118 00:05:52,279 --> 00:05:56,159 Speaker 3: also become a services helper for power demand, like not 119 00:05:56,240 --> 00:05:57,840 Speaker 3: just here's my gas turbine, but I'm also going to 120 00:05:57,880 --> 00:06:00,360 Speaker 3: be a services provider for this data center In terms 121 00:06:00,360 --> 00:06:00,840 Speaker 3: of power. 122 00:06:01,440 --> 00:06:05,479 Speaker 4: We're looking at different commercial models and actually working in consortiums, 123 00:06:05,520 --> 00:06:07,960 Speaker 4: and I think there's going to be different models that 124 00:06:08,040 --> 00:06:10,120 Speaker 4: different end users require. 125 00:06:10,520 --> 00:06:13,000 Speaker 1: In some cases we will be with. 126 00:06:13,040 --> 00:06:17,320 Speaker 4: A developer, we will be with a financier and it 127 00:06:17,360 --> 00:06:20,960 Speaker 4: will be a tan key solution that's provided to a 128 00:06:21,440 --> 00:06:25,000 Speaker 4: data center operator. In other cases, they'll just want the 129 00:06:25,080 --> 00:06:27,440 Speaker 4: equipment and they'll want to have the power turned on. 130 00:06:27,680 --> 00:06:31,800 Speaker 4: So we are, like in LNG, able to have the 131 00:06:31,839 --> 00:06:35,400 Speaker 4: different model that's required for the end user, and that's 132 00:06:35,440 --> 00:06:38,279 Speaker 4: something at Baker Hughes we think is very important we've 133 00:06:38,279 --> 00:06:40,839 Speaker 4: got to be able to meet the different requirements with 134 00:06:40,880 --> 00:06:44,040 Speaker 4: the capabilities we have, So we're looking at a variety 135 00:06:44,080 --> 00:06:44,960 Speaker 4: of options right now. 136 00:06:45,000 --> 00:06:47,240 Speaker 3: I'm glad you brought up ELL and G again. Do 137 00:06:47,320 --> 00:06:49,480 Speaker 3: you expect if there is an end of the war 138 00:06:49,480 --> 00:06:52,360 Speaker 3: in Ukraine, are you guys at the table thinking about 139 00:06:52,680 --> 00:06:54,640 Speaker 3: a lot more Russian gas coming into Europe and then 140 00:06:54,680 --> 00:06:56,920 Speaker 3: displacing flows that we see elsewhere. 141 00:06:57,680 --> 00:07:02,120 Speaker 4: I think we're confident that flows have redirected themselves already. 142 00:07:02,279 --> 00:07:04,400 Speaker 1: And count for Russian gas well. 143 00:07:04,360 --> 00:07:07,640 Speaker 4: Yes, because the Russian gas has been flowing elsewhere as well. 144 00:07:07,720 --> 00:07:11,680 Speaker 4: So there's an aspect of a demand. It's increasing, and 145 00:07:11,760 --> 00:07:15,320 Speaker 4: there's going to be a requirement for incremental natural gas 146 00:07:15,560 --> 00:07:18,760 Speaker 4: and LNG as we look out to twenty thirty. We've 147 00:07:18,800 --> 00:07:22,400 Speaker 4: always said there needs to be an installed base capacity 148 00:07:22,440 --> 00:07:25,040 Speaker 4: of eight hundred million tons per annum. 149 00:07:25,200 --> 00:07:28,240 Speaker 1: That is very much taking place, and we see the. 150 00:07:28,160 --> 00:07:31,600 Speaker 4: Incremental build now happening in twenty five, twenty six, and 151 00:07:31,680 --> 00:07:34,720 Speaker 4: twenty seven with the pores being lifted in the United States. 152 00:07:34,720 --> 00:07:38,520 Speaker 4: So we don't see the aspect of Russian gas coming 153 00:07:38,600 --> 00:07:43,240 Speaker 4: back as differing the outlook that we had previously, because 154 00:07:43,400 --> 00:07:46,400 Speaker 4: it's been there. It's just been elsewhere and the flows 155 00:07:46,440 --> 00:07:49,320 Speaker 4: will always change according to what's available. 156 00:07:49,560 --> 00:07:52,560 Speaker 3: Would Russia, they'll become an opportunity, a business opportunity for you. 157 00:07:53,600 --> 00:07:54,440 Speaker 1: Let's wait and see. 158 00:07:55,080 --> 00:07:59,480 Speaker 4: You know, we'll monitor the situation relative to global sanctions 159 00:07:59,680 --> 00:08:02,640 Speaker 4: or so the rule of law, and also from a 160 00:08:02,680 --> 00:08:07,120 Speaker 4: society perspective and values within Baker Hughes, so we'll monitor 161 00:08:07,160 --> 00:08:07,760 Speaker 4: the situation. 162 00:08:08,120 --> 00:08:10,520 Speaker 3: One last question oil price weakness. 163 00:08:10,920 --> 00:08:11,720 Speaker 1: Does it persist? 164 00:08:11,840 --> 00:08:13,080 Speaker 3: And what do you think is actually behind that? 165 00:08:13,200 --> 00:08:13,600 Speaker 1: Right now? 166 00:08:15,040 --> 00:08:18,040 Speaker 4: We live in a world where on a daily basis 167 00:08:18,280 --> 00:08:21,400 Speaker 4: there's a lot of different news and so there is 168 00:08:21,520 --> 00:08:23,080 Speaker 4: volatility in the marketplace. 169 00:08:23,520 --> 00:08:26,080 Speaker 1: I think give it some time. We've got to look 170 00:08:26,080 --> 00:08:26,960 Speaker 1: at the next. 171 00:08:26,920 --> 00:08:29,600 Speaker 4: Sixty eight weeks and I think that's when you start 172 00:08:29,640 --> 00:08:32,040 Speaker 4: to really assess are. 173 00:08:31,960 --> 00:08:33,840 Speaker 1: There going to be changes going forward? 174 00:08:34,559 --> 00:08:38,440 Speaker 4: Right now, demand is strong, we know that the outlook 175 00:08:38,440 --> 00:08:41,000 Speaker 4: for demand is strong, and I think we're just going 176 00:08:41,000 --> 00:08:44,080 Speaker 4: through some volatile times. And at Baker Hugh's I can 177 00:08:44,120 --> 00:08:45,920 Speaker 4: tell you I don't look at the oil price daily. 178 00:08:46,960 --> 00:08:49,920 Speaker 4: It's really not a consideration relative to the investments we 179 00:08:50,000 --> 00:08:52,200 Speaker 4: make longer term and also the way in which we 180 00:08:52,280 --> 00:08:55,080 Speaker 4: run the business so that we can safeguard to supply 181 00:08:55,640 --> 00:08:57,280 Speaker 4: and the end product for our customers. 182 00:08:57,360 --> 00:08:59,520 Speaker 3: They always say that I never look at the oil price. 183 00:08:59,520 --> 00:09:02,320 Speaker 3: All right, Lorenza, thanks a lot. I really appreciate Lorenzo Seminelli. 184 00:09:02,520 --> 00:09:05,280 Speaker 3: I'm chairman, president and CEO of Baker Hughes Paul. 185 00:09:05,360 --> 00:09:07,040 Speaker 2: Back to you, all right, Alex, thank you so much. 186 00:09:07,080 --> 00:09:10,560 Speaker 2: We appreciate that. That's Alex Steel speaking with Baker Hugh 187 00:09:10,720 --> 00:09:14,400 Speaker 2: CEO Lorenzo Simonelli at Sarah Week. That is where all 188 00:09:14,440 --> 00:09:18,640 Speaker 2: the energy hanchos globally get together in Houston. It's their 189 00:09:18,640 --> 00:09:19,800 Speaker 2: big conference every year.