Baker Hughes NASDAQ: BKR Chairman and Chief Executive Officer Lorenzo Simonelli said the company has become “very different” from the traditional oilfield services business it was a decade ago, emphasizing a broader strategy focused on industrial energy solutions, natural gas, power generation and lower-emissions technologies.
Speaking at Bernstein’s 42nd Annual Strategic Decisions Conference in a fireside chat with Bob Brackett, co-head of Energy and Transition and Global Metals and Mining at Bernstein, Simonelli said Baker Hughes has spent recent years reshaping its portfolio and reducing exposure to the volatility of upstream oil and gas cycles.
Simonelli said the company’s 2022 strategic plan was built around a “three-horizon” framework. He described the first phase, from 2022 to 2025, as focused on improving profitability, streamlining processes and cleaning up the portfolio. By the end of that period, he said Baker Hughes had increased margins by more than 300 basis points and nearly doubled EBITDA.
The company has now moved into what Simonelli called “Horizon Two,” centered on expanding Baker Hughes as an “industrialized energy solutions company.” He said the strategy includes not only oil and gas extraction and production, but also technologies tied to nitrogen, oxygen, liquefied natural gas, geothermal energy, carbon capture, utilization and storage, and other industrial applications.
Portfolio Shift Away From Traditional Oilfield Services
Simonelli said Baker Hughes still has an Oilfield Services & Equipment segment, but he argued that it differs from traditional peers because it is 75% international, 50% offshore and more focused on production-related activities such as chemicals and artificial lift. Those businesses are tied more closely to ongoing operating expenditures than to cyclical upstream capital spending, he said.
The other major segment, Industrial & Energy Technology, includes turbines, pumps, valves, compressors, condition monitoring and digital applications. Simonelli said the segment is used in power generation, LNG, geothermal, carbon capture, hydrogen, midstream and downstream markets, as well as off-grid data center power applications.
“Baker Hughes today is not your typical Oilfield Services & Equipment company,” Simonelli said, adding that the July announcement of the Chart Industries acquisition further moves the company into industrial markets and lowers exposure to oil and gas volatility.
When asked what Baker Hughes will not do strategically, Simonelli said the company does not intend to become an exploration and production company, compete with its customers, operate assets or move into areas such as wind turbines, solar panels or nuclear reactors. He said Baker Hughes will remain focused on areas where it has technical relevance, particularly in extracting, moving and monetizing molecules for customers.
Strait of Hormuz Risks and Energy Security
Simonelli also addressed geopolitical risks around the Strait of Hormuz, saying Baker Hughes has “considerable employees” in the region and that employee safety and business continuity are the company’s priorities. He said activity is ongoing and that the company is working with customers to maintain operations.
He said a prolonged closure of the Strait of Hormuz would burden the global economy by constraining oil barrels and affecting downstream products, including fertilizers and helium. “I can just hope, like everybody, that the Straits of Hormuz open quickly,” Simonelli said.
Looking beyond the immediate disruption, Simonelli said the aftermath is likely to lead to increased investment in upstream production and energy infrastructure. He pointed to activity in Libya, Nigeria, other parts of Africa and Alaska, and said he does not believe the U.S. oil market is “finished” because technology continues to advance.
He also said energy security will drive investment in pipelines, including Middle East infrastructure that could bypass the Strait of Hormuz, and in additional LNG plants located across a broader set of geographies.
LNG and Data Centers Drive Industrial Technology Demand
Simonelli reiterated Baker Hughes’ positive view on LNG, calling natural gas and LNG “clear winners” in providing energy security. He said Baker Hughes continues to expect the world will need 800 million tons per annum of installed LNG capacity by 2030 and 950 million tons by 2035.
He said LNG development is becoming more geographically diversified, citing Argentina, Algeria, the U.S. Gulf Coast and Mozambique as areas with potential or ongoing activity. He also said QatarEnergy continues to move forward with expansion plans, though he noted that supply chains can be constrained when facilities require immediate repairs.
In the Industrial & Energy Technology segment, Simonelli said LNG represented less than 15% of order intake in 2025 and the first quarter, meaning 85% of the segment’s orders came from outside LNG. He said power generation and data centers are becoming increasingly important. In the first quarter, Baker Hughes booked $1.4 billion in power systems orders, including $1 billion tied to data centers, he said. In 2025, the company booked $1 billion in data center orders.
Baker Hughes had previously set a target of $3 billion in data center orders between 2025 and 2027, but Simonelli said the company plans to revise that target upward because intake has been significant.
Simonelli said Baker Hughes’ turbines and generators fit a “sweet spot” for off-grid immediate power in the 150-megawatt to 300-megawatt range, including the NovaLT16, Frame 5 and BRUSH generator. He said the demand for data center power is not a one-year event, but a multi-year opportunity as grid infrastructure and alternative power solutions take time to develop.
New Energy, Services and Chart Acquisition
Simonelli said Baker Hughes’ new energy offerings include carbon capture, geothermal, emissions management, de-flaring, hydrogen and clean integrated power solutions. He said the company generated more than $2 billion in new energy revenue last year and expects $2.4 billion to $2.6 billion this year, compared with an initial base of only a few hundred million in 2022.
He also emphasized the importance of the service and aftermarket business tied to installed equipment. Baker Hughes has more than 9,000 installed units that require maintenance and servicing over 20- to 30-year lifespans, he said. Simonelli described the model as part of the company’s effort to shift from volatility toward predictability and consistency.
On the pending all-cash acquisition of Chart Industries, Simonelli said Chart’s cryogenics and cold-box capabilities are complementary to Baker Hughes’ existing portfolio and support its strategy of linking energy sources to industrial outcomes. He acknowledged that the transaction will increase debt-to-EBITDA at the outset, but said Baker Hughes intends to bring leverage down while protecting dividends and capital investment.
Simonelli said Baker Hughes has continued to evaluate its portfolio and pointed to the planned disposition of Waygate Technologies as part of its effort to maintain a strong balance sheet.
Asked for the value proposition of owning Baker Hughes stock, Simonelli said the company is positioned for a “decade-long growth trajectory” tied to rising energy demand, data centers, infrastructure, power generation, carbon capture and continued oil and gas production. He said Baker Hughes is targeting a 20% EBITDA margin profile by 2028 as a combined company with Chart.
About Baker Hughes NASDAQ: BKR
Baker Hughes is an energy technology company that provides a broad portfolio of products, services and digital solutions for the oil and gas and industrial markets. Its offerings span oilfield services and equipment — including drilling, evaluation, completion and production technologies — as well as turbomachinery, compressors and related process equipment used in midstream and downstream operations. The company also supplies aftermarket services, field support and integrated solutions designed to improve asset performance and uptime across the energy value chain.
The firm's roots trace back to the merger of Baker International and Hughes Tool Company, and more recently it combined with GE's oil and gas business in 2017 to form Baker Hughes, a GE company (BHGE); subsequent changes in ownership restored Baker Hughes as an independent publicly traded company.
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