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Speaker 1: We're joined now by Lorenzo Simonelli. He's chairman, president and

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Speaker 1: CEO of Baker Hughes. Lorenzo, it's so good to see you.

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Speaker 1: Thanks for joining us today.

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Speaker 2: Alex, good to be with you as always.

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Speaker 3: So listen. The stock is down three percent.

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Speaker 1: The commentary from analyst is your outlook isn't as rosy

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Speaker 1: as your peers like Halliburton and Slumberge.

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Speaker 3: What do you say to that?

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Speaker 4: I would say, first of all, we're coming off some

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Speaker 4: great results in twenty twenty three, and also we've laid

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Speaker 4: out a clear strategy as Baker Hughes over the coming years.

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Speaker 4: As you look at twenty twenty four, we've given a

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Speaker 4: guidance that is the balanced approach with all of the

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Speaker 4: geopolitical and also uncertainty that's happening around the globe. So

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Speaker 4: we stick to our guidance and we think that we're executing.

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Speaker 4: And as you look at the guidance, we've got considerable

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Speaker 4: growth in twenty twenty four and great performance as well.

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Speaker 3: So what's the biggest question mark?

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Speaker 1: I guess so if you're more conservative than your peers,

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Speaker 1: where is the question mark? Is it going to be

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Speaker 1: the new energy order? Is it going to be on

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Speaker 1: shore demand or is it going to be offshore? Is

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Speaker 1: it domestic or international? That has you thinking questioning the most.

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Speaker 4: You know, you look at what's happening around the world,

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Speaker 4: and you see the geopolitics, You see what's happening from

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Speaker 4: the OPEC cuts, you see what's happening from the consolidation

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Speaker 4: in North America, and that leads some uncertainty relative to

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Speaker 4: the activity levels within North America Land.

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Speaker 2: We still see.

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Speaker 4: That North America should be flatish, but US Land will

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Speaker 4: likely be negative for the year given some of the consolidation,

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Speaker 4: and also some of the activity international again will be

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Speaker 4: in the high single digits, So we still see that

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Speaker 4: being robust.

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Speaker 2: And I think again, as we look at giving.

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Speaker 4: Guidance, we're taking a balanced approach to what's taking place

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Speaker 4: around the world at this moment and also giving a

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Speaker 4: predictability to our investors on what can be achieved and

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Speaker 4: also confidence in what we can achieve.

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Speaker 5: Lorenzo, looking at your business here and I see that

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Speaker 5: about three quarters of your revenue has come from outside

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Speaker 5: of the United States, So obviously you are attuned as

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Speaker 5: much as anyone to the geopolitical risks around the world.

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Speaker 5: What are you telling your investors about what's happening in

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Speaker 5: Eastern Europe, what's happening in the Middle East, and how

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Speaker 5: that may impact your business.

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Speaker 4: We're telling them that we've taken every caution and also

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Speaker 4: we're managing the situation. We haven't seen any impact and

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Speaker 4: we don't anticipate a big impact, but we do think

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Speaker 4: some of the development plans may be delayed slightly over

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Speaker 4: the long term. No change in what the NOCs and

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Speaker 4: also large customers are laying out from a capital spin,

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Speaker 4: but there may be some I would say delays. Again,

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Speaker 4: as we look at the outlook internationally, we're still anticipating

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Speaker 4: high single digit growth and we think that internationally is

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Speaker 4: a key place for us to be and we look

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Speaker 4: to perform there over the coming years.

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Speaker 1: Flornzo, what's your take on the demand side? I guess

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Speaker 1: that would focus more on oil and it does also

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Speaker 1: hit on the red Sea issue. But what's the man

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Speaker 1: going to look like for twenty twenty four. I'm getting

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Speaker 1: notes about twenty twenty five, but I have no idea

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Speaker 1: what's going to happen this year?

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Speaker 4: Well, Alex, it's always difficult to predict some of these elements,

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Speaker 4: just like it is oil price and you know this

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Speaker 4: space well, I think demand continues to be robust. A

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Speaker 4: lot of it's going to depend on the economic situation

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Speaker 4: as you look at some of the events unfolding also globally,

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Speaker 4: and we anticipate that again demand will increase this year

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Speaker 4: and continue to be strong, especially in the developing world.

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Speaker 5: What are your customers telling you here, I know obviously

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Speaker 5: close contact with them. What are they telling you about

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Speaker 5: their spending plans over the next couple of years.

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Speaker 2: Again, it varies.

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Speaker 4: You've seen in North America obviously some consolidation, so people

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Speaker 4: are going through that consolidation and they'll be looking to

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Speaker 4: adjust some of their spending plans in the short term,

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Speaker 4: but again continuing to be robust on the long term

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Speaker 4: as you continue to see the demand be there. On

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Speaker 4: the international side, these NOCs have multi year projects that

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Speaker 4: they're executing. There'll be some variation in the timing of those,

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Speaker 4: but again the long term continues to be solid. And

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Speaker 4: as you look at our guidance, again we're anticipating that

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Speaker 4: maybe there's some tempered view on some of the pace

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Speaker 4: of the development, but the developments are going to happen.

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Speaker 1: NC Paul, just you know, national oil companies just follow

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Speaker 1: up with the oil jargon there, Lorenzo, you mentioned the

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Speaker 1: M and A situation, and I find that so interesting

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Speaker 1: because that was one of my questions to all these

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Speaker 1: CEOs when they announce these big mergers, is are you

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Speaker 1: actually going to be slowing your oil production growth over time?

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Speaker 1: And they're all like, no, no, no, no, no, it's going

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Speaker 1: to be really good. It's going to keep growing. What

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Speaker 1: do you think that timeline actually looks like? In the

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Speaker 1: beginning their synergies, they get more out of the ground,

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Speaker 1: but then that tapers off.

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Speaker 3: What do you notice.

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Speaker 4: So as you look at the normal evolution of consolidation

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Speaker 4: we've seen this cycle before, you are going to continue

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Speaker 4: to see production increases, but you're also going to see

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Speaker 4: synergies between the consolidation and as they go through their

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Speaker 4: integration activities, I think you'll likely see some temperate measures

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Speaker 4: relative to some of their procurement, but again production, they're

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Speaker 4: going to seize the opportunity to continue to increase production

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Speaker 4: as the demand is there.

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Speaker 2: Yeah.

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Speaker 5: I mean, you know, I'm not an expert in this

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Speaker 5: unlike Alex, but a term you see here a lot

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Speaker 5: and I don't hear it that much anymore. Is peak oil?

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Speaker 5: When are we going to be at peak oil? Are

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Speaker 5: we at peak? I don't hear that discussion anymore. So

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Speaker 5: when you're talking to investors, how do you talk to

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Speaker 5: them about the long term kind of demand for oil.

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Speaker 4: You've got to look at it from a standpoint of

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Speaker 4: the energy transition is going to be multi decades and

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Speaker 4: it's going to require an energy mix that is abundant

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Speaker 4: of providing as clean as possible fuel sources to the public.

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Speaker 2: And that means oil is going to have a role

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Speaker 2: to play.

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Speaker 4: And we see oil and gas in particular having a strong,

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Speaker 4: robust outlook as we go forward. And the question on

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Speaker 4: pea coil has been asked many times. There will be

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Speaker 4: a time when pea coil comes. I think it's not

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Speaker 4: at this stage. And we continue to focus very much

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Speaker 4: on gas and also LNG.

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Speaker 1: Well, and speaking of so, ler G Paul is huge

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Speaker 1: for Baker Hughes. So they helped to build the export

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Speaker 1: terminals that you get and that has been a humongous

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Speaker 1: driver here in the US. And just to focus on

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Speaker 1: that for a second, they booked about one hundred and

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Speaker 1: sixty nine million dollars worth of new energy orders in

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Speaker 1: the quarter and overall for the year seven hundred and

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Speaker 1: fifty million. Like that's growing at a very rapid clip, Lorenzo. Somehow,

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Speaker 1: restricting energy exports in the US is becoming something people

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Speaker 1: are talking about. The permit process has gotten a lot slower.

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Speaker 4: What is going on, alex It has gotten slower, And

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Speaker 4: again we're monitoring the situation, and I'm disappointed because as

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Speaker 4: you look at the benefits of USLNG, not only for

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Speaker 4: the US, but also for the world, and also what's

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Speaker 4: been achieved with the geopolitical uncertainty and also providing to Europe,

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Speaker 4: there's been commitments that have been made and we should

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Speaker 4: continue the USLNG exports and also the permitting of these projects.

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Speaker 4: That being said, international projects are continuing to move forward,

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Speaker 4: and we have an expectation that again in twenty twenty

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Speaker 4: four there'll be sixty five mtpa FIDD, and we're again

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Speaker 4: seeing about thirty to sixty mtpa FIDD in twenty five

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Speaker 4: and twenty six, and by twenty thirty there'll be a

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Speaker 4: global capacity in place of eight hundred mtpa. So you know,

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Speaker 4: we'll monitor the US situation. It's disappointing. I think it

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Speaker 4: will sort itself out. There's been a lot of commitments

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Speaker 4: that have been made to international partners.

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Speaker 5: Because you know, again, Lorenzo, I've learned so much just

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Speaker 5: from talking to Alex about the energy business, and now

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Speaker 5: that we're the US is a net energy exporter, it

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Speaker 5: just seems like the natural guess, part of the liquified

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Speaker 5: natural guess, part of it has to grow. I you know,

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Speaker 5: so I guess My question is if I wanted to

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Speaker 5: go down to Corpus Christi and Hi, are you guys

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Speaker 5: to build me a LNG facility? Could you do it?

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Speaker 3: Yeah, you have to wait a while. Their backlogs really deep, Lorenzo.

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Speaker 4: We have a very good backlog and we continue to

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Speaker 4: grow our backlog in LNG, and yes, we can build.

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Speaker 2: We have the most versatile portfolio of solutions around LNG

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Speaker 2: small scale, large scale.

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Speaker 4: Stick modular, onshore, offshore floating. So you're coming to the

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Speaker 4: right place, Baker Hughes for LNG and.

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Speaker 1: I should put out MTPA million tons per annum. So

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Speaker 1: it just basically means the capacity, like how much you

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Speaker 1: can actually process an export because you've got a cool

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Speaker 1: natural gas down before you export. Lorenzo, I am going

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Speaker 1: to see you next week for the annual meeting. In

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Speaker 1: your annual meeting in.

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Speaker 3: Florence, the talk will definitely be Italy. Really, I know

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Speaker 3: you want me right.

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Speaker 5: Not Florence, South Carolina, Florence, Italy. They hate Lorenza nice and.

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Speaker 1: The talk is definitely going to be revolving a lot

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Speaker 1: around that LNG story For investors, just looking at the

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Speaker 1: numbers today, the stock doown three percent.

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Speaker 3: What's your main message before we get to the broader

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Speaker 3: outlook next week?

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Speaker 4: The main message is we're coming off a terrific twenty

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Speaker 4: twenty three where we posted some record results. Strategy is

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Speaker 4: very clear. We set out guidance that continues to grow.

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Speaker 4: The business continues to post improvements.

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Speaker 2: In our embat homogen rates.

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Speaker 4: We're expecting Ofsese to be at twenty percent to twenty

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Speaker 4: twenty five, it to be a twenty percent by twenty

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Speaker 4: twenty six. We're not changing those expectations and we're taking

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Speaker 4: a balanced approach to twenty twenty four. But when you

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Speaker 4: look at the guidance, it continues to move the company

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Speaker 4: forward and also posts very good results.

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Speaker 1: Lorenzo, I really appreciate that, Uh, the conservative approach and

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Speaker 1: then sort of moving a lot faster in the next

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Speaker 1: couple of years.

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Speaker 3: Thanks a lot