WEBVTT - Baker Hughes CEO Lorenzo Simonelli Talks Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Baker hue shares in focus after the company top to

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<v Speaker 2>earnings expectations. Despite a sluggish environment, the energy services giant

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<v Speaker 2>remains a key player as a sector navigates shifting market

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<v Speaker 2>and geopolitical dynamics. CEO Lorenzo Seminelli joins us. Now, Lorenzo,

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<v Speaker 2>thank you so much for joining us this morning and

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<v Speaker 2>the strength I mean we call you an energy services company.

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<v Speaker 2>Maybe we should be talking more about data centers, announcing

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<v Speaker 2>your three year data center order target is three billion dollars.

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<v Speaker 2>Should we be thinking of Baker Hughes more focused on

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<v Speaker 2>the industrial and energy technology segment than the more traditional

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<v Speaker 2>meat and potatoes of energy services around oil and gas.

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<v Speaker 3>Well, Danny, great to be with you, and yes, very

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<v Speaker 3>pleased with the results of twenty twenty five and also.

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<v Speaker 1>The fourth quarter.

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<v Speaker 3>And you should be thinking of Baker Hughes as really

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<v Speaker 3>an energy technology company that intersects the industrial world of

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<v Speaker 3>data centers electrification with also that of energy sources and

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<v Speaker 3>understanding the molecule itself. And we are benefiting from a

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<v Speaker 3>portfolio that allows us to play in both. And you've

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<v Speaker 3>seen the increase in power generation behind the meta off

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<v Speaker 3>grid applications, data centers.

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<v Speaker 1>You've mentioned it. We've taken up our target.

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<v Speaker 3>With regards to three billion during the course of twenty

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<v Speaker 3>five to twenty seven, doubling our previous estimate, and feel

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<v Speaker 3>very good about the overall outlook for power generation, electricity

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<v Speaker 3>consumption and it doubling over the course of now to

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<v Speaker 3>twenty forty.

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<v Speaker 4>What's your outlook on the oil price here, Lorenzo, because

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<v Speaker 4>it seems to me we're all jockeying.

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<v Speaker 1>For more power.

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<v Speaker 4>Everybody's paying up for electricity, but oil, as much as

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<v Speaker 4>I drive, continues to hang out in the duldrums. Right

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<v Speaker 4>New York crud here sixty dollars and fifty seven cents.

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<v Speaker 4>With all the geopolitical tensions, how long does crude stay

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<v Speaker 4>this low?

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<v Speaker 3>You know, you look at us in energy and we've

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<v Speaker 3>always said don't try and predict the oil price because

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<v Speaker 3>it is emotional and it's going to be range bound.

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<v Speaker 3>As you look at the supply and demand aspects in

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<v Speaker 3>twenty twenty six, again we see an improvement in the

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<v Speaker 3>back half of the year. There's enough supply out there

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<v Speaker 3>at the moment, but as you look at beyond twenty six,

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<v Speaker 3>demand continues to increase. Oil is always going to be important,

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<v Speaker 3>it's going to be core for certain end markets, and

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<v Speaker 3>so we think it will be range bound and twenty

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<v Speaker 3>twenty six again being relatively soft.

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<v Speaker 2>Lorenzo, there's been a lot of optimism over the past

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<v Speaker 2>couple of weeks in you and your peers about the

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<v Speaker 2>opportunity in Venezuela. By some measures, you're one of the largest,

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<v Speaker 2>if not the largest, having the largest base of some

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<v Speaker 2>of the machinery in the rear in itself. You've talked

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<v Speaker 2>to our Bloomberg News colleagues before about optimism in Venezuela.

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<v Speaker 2>Have you started yet to ramp up production or are

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<v Speaker 2>those plans in place to help with the infrastructure build out.

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<v Speaker 3>Venezuela is a clear opportunity for Bakers Hughes, and again,

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<v Speaker 3>we have a long history just as a reference point,

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<v Speaker 3>back in twenty twelve across our oil field services and

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<v Speaker 3>also our industrial energy technology segments, we were revenues of

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<v Speaker 3>five hundred million. We've got a very large installed base

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<v Speaker 3>of existing compressors, engines or production, and we see that

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<v Speaker 3>opportunity being there going forward as well as you look

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<v Speaker 3>to ramp up production. We have been operating within Venezuela

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<v Speaker 3>under the license that's available and helping the operators with

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<v Speaker 3>the license.

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<v Speaker 1>And we're obviously working.

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<v Speaker 3>Closely with the administration and understanding how we go in

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<v Speaker 3>with the broader portfolio as the legal framework becomes understood,

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<v Speaker 3>and also as we surely understand the safety of our

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<v Speaker 3>operations and our employees.

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<v Speaker 4>At the same time, five hundred million dollars seems like

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<v Speaker 4>small potatoes for a big company like Baker Hughes, and

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<v Speaker 4>certainly for the opportunity.

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<v Speaker 1>That exists in.

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<v Speaker 4>Venezuela with the largest oil reserves of any country in

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<v Speaker 4>the world. How high do you think it could go

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<v Speaker 4>there in terms of revenue for you? And what kind

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<v Speaker 4>of guarantees security guarantees do you need to see before

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<v Speaker 4>investing more into that economy.

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<v Speaker 3>If you look at it from a twenty twelve perspective,

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<v Speaker 3>that was an annual number and you think what's happened

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<v Speaker 3>to the production since then? It's been declining, and the

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<v Speaker 3>infrastructure obviously.

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<v Speaker 1>Needs repair, it needs OA hole.

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<v Speaker 3>So there's a significant opportunity not just from a opex

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<v Speaker 3>perspective of annual activity, but really the infrastructure improvement going forward.

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<v Speaker 1>I wouldn't state a number right now.

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<v Speaker 3>But clearly it's an opportunity that we see given the

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<v Speaker 3>reserves that Venezuela has and also the backdrop of experience

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<v Speaker 3>that we have there with regards to safety again, employee

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<v Speaker 3>safety and just making sure that the right framework is

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<v Speaker 3>there is important. It was there before, so again working

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<v Speaker 3>with the authorities to make sure it's in place. And

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<v Speaker 3>we have good experience of navigating different environments as many

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<v Speaker 3>other companies do as well. So we are optimistic about

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<v Speaker 3>Venezuela and we are watching it closely.

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<v Speaker 2>Have you had conversations with administration? How easy and how

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<v Speaker 2>seamless are they going to make it in terms of

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<v Speaker 2>things like getting any additional licenses you might need, any

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<v Speaker 2>support from this administration, what are they willing to back up?

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<v Speaker 3>Again, those discussions are ongoing. I think you've seen some

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<v Speaker 3>of those dialogues and also what's been said by the administration.

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<v Speaker 3>Clearly there's a dialogue around incremental licenses, how to invest,

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<v Speaker 3>how to think about the aspect of also payments, etc.

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<v Speaker 3>And all of that is being worked on. You've got

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<v Speaker 3>Department of Energy, you've got the National Energy Dominance Council,

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<v Speaker 3>you've got the secretaries involved, and so there's a large

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<v Speaker 3>team that's actively working this.

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<v Speaker 4>All right, Lorenzo, thanks so much for joining us. Lorenzo

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<v Speaker 4>Simonelli there the CEO of Baker Hughes, talking about their

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<v Speaker 4>foray into AI data centers, as well as investment in Venezuela.