Baker Hughes Dynamic in Russia - Analyst Blog

One of the largest oilfield service companies in the world, Baker Hughes Inc. (BHI), is gaining momentum in Russia. The oilfield services giant acquired Oilpump Services (“OPS"), an electrical submersible pumping (ESP) system service company based in Western Siberia.

Though the financials associated with the transaction were not disclosed, Baker Hughes claimed that it will allow the company to expand its operations and cover the full spectrum of the Russian ESP market.

Following the acquisition, Baker Hughes will have four full-cycle bases in Russia and four remote field service bases, with the capacity to service more than 10,000 ESP systems. The company had just one base in the country before the deal.

Baker Hughes has been dynamic in plugging holes in its product line-up through bolt-on acquisitions. Among the diversified oilfield service players, Baker Hughes is one of the best positioned, with a significant improvement in activity levels in both North America and the international regions.

The company has recently completed the BJ Services acquisition, which was announced last August. This will give Baker Hughes access to more efficient oilfield services by integrating BJ’s pressure pumping product lines.  

The onshore U.S. market is still tentative due to its natural gas-centric orientation, but Baker Hughes has the least exposure to this market. Importantly, the OPS acquisition has strengthened the company’s position in Russia's onshore play.

Despite all these, we are unchanged with our Neutral recommendation for Baker Hughes shares as we are still not fully convinced that any significant upside movement in margins would ensue this year, though we are not expecting any near-term price deterioration either.