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EXHIBIT 99.1
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BAKER HUGHES AND SCHLUMBERGER SIGN MOU FOR CREATION OF SEISMIC VENTURE
BAKER HUGHES' WESTERN GEOPHYSICAL AND SCHLUMBERGER'S GECO-PRAKLA TO BE COMBINED
IN VENTURE TO BE CALLED WESTERN GECO
HOUSTON--(BUSINESS WIRE)--May 31, 2000--Baker Hughes Incorporated (NYSE:BHI -
news; PCX:BHI)(EBS:BHI) announced today the signing of a Memorandum of
Understanding (MOU) with Schlumberger Limited for the purpose of creating a
seismic venture to be called Western GECO. The transaction is expected to be
completed before the end of the year and is subject to signing a definitive
agreement and to regulatory and board approvals.
Under the terms of the MOU, Baker Hughes will negotiate a transaction with
Schlumberger whereby they would create a venture that would own the seismic
acquisition assets, data processing assets, multi-client seismic libraries, and
other assets of Western Geophysical and Geco-Prakla, respectively. In addition,
Baker Hughes would receive from Schlumberger approximately $500 million in cash.
The transaction would also allow Baker Hughes to make certain working capital
reductions valued at approximately $100 million. Baker Hughes and Schlumberger
would respectively own 30% and 70% of the venture, which would operate under the
name Western GECO.
The Western GECO venture would have had pro forma 1999 revenue of approximately
$1.5 billion. Gary E. Jones, president of Western Geophysical would be president
of the venture.
"The Western GECO venture is expected to result in improved efficiencies in data
processing and land and marine data acquisition that can benefit our customers,"
Baker Hughes chairman, CEO and president Joe B. Foster said. "The new venture
would have strong R&D funding, an excellent workforce and superior seismic
acquisition and data processing technology. It would reflect a combination of
Western Geophysical's strengths in execution of acquisition surveys,
particularly on land, and data processing, and Geco-Prakla's marine acquisition
capabilities, R&D, engineering and manufacturing strengths. In addition, upon
completion of the venture, our customers would have access to an expanded,
world-class, multi-client seismic data library."
Mr. Foster continued, "The venture announced today is an important strategic
milestone for Baker Hughes. The creation of the venture assures that Baker
Hughes would have fair and equal access to seismic technology for use in all our
oilfield businesses while simultaneously improving Baker Hughes' overall
performance. It allows us to focus on Baker Hughes' traditionally strong service
and product oriented business units."
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Baker Hughes plans to use the proceeds from the transaction to reduce debt. The
venture is expected to generate substantial cost savings, which would result in
an improvement in operating costs exceeding what the two businesses could have
achieved separately, and which would support the venture's continued investment
in seismic technology.
Baker Hughes and Schlumberger intend to make their filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as
other requisite regulatory filings, including foreign filings, in connection
with the transaction.
Conference Call
Baker Hughes will host a conference call on Wednesday, May 31, 2000 at 10:00 am
Eastern daylight time (9:00 am Central daylight time) to discuss this
announcement. The dial-in number for the call is 312-470-0131 (ask for the
"Baker Hughes conference call"). A replay of the call also will be available at
402-280-1671 until Wednesday, June 7, 2000 at 6:00 pm Eastern daylight time. The
call also will be webcast with a replay until June 7, 2000 at
www.bakerhughes.com/investor.
Forward Looking Statements
This press release and any oral statements made in connection with this release
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words "improve," "continue," "expect," "plans",
"would," "projected" and "expected" and similar expressions are intended to
identify forward-looking statements.
Baker Hughes' expectations regarding the final terms of the venture and their
impact on Baker Hughes, including the impact on its estimated working capital
reductions, are only its forecasts regarding these matters. This press release
describes Baker Hughes' understanding of a transaction that it will negotiate
with Schlumberger. During negotiation of a definitive agreement, it is possible
that the terms of the transaction could change. As completion of the formation
of the venture is not expected to occur until a definitive agreement is reached
and all requisite regulatory approvals are obtained, it is possible that there
will be adjustments to the parties' contributions to reflect changes in the
parties relative asset values contributed to the venture during the intervening
period. Additionally, the parties expect that they will agree on their
respective contributions to the net working capital of the venture in proportion
to their interest. The level of these contributions has not yet been agreed
upon. This factor, as well as changes in working capital at Western Geophysical
during the period prior to completion of the transaction, could affect Baker
Hughes' estimates of its net working capital reduction resulting from the
transaction.
Baker Hughes' expectations regarding debt reduction arising from the transaction
are only its forecasts regarding this matter. Baker Hughes' plans to reduce debt
and will be affected by the actual amount of proceeds that Baker Hughes receives
in the transaction, the amount of its net working capital contribution to the
venture and the outlook for its business at the time the transaction is
completed.
Baker Hughes' expectations regarding the venture's expected cost savings and
improvements in operating costs are only its forecasts regarding these matters.
These forecasts are dependent on the venture's execution of a cost reduction
plan and the outlook for its business and the oil and gas industry in general.
Baker Hughes' outlook for its business, the venture's business and the oil and
gas industry are only its forecasts regarding these matters. These forecasts may
be substantially different from actual results, which are affected by the
following factors: the effect of competition; the level of petroleum industry
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exploration and production expenditures; world economic conditions, including
(without limitations) the ability of Asian countries to grow their respective
economies; price of, and the demand for, crude oil and natural gas; drilling
activity; weather; the legislative environment in the United States and other
countries; OPEC policy; conflict in the Middle East and other major
petroleum-producing or consuming regions, the development of technology that
lowers overall finding and development costs and the condition of the capital
and equity markets.
Baker Hughes is a leading supplier of reservoir-centered products, services and
systems to the worldwide oil and gas industry.
NOT INTENDED FOR BENEFICIAL HOLDERS
Contact:
Baker Hughes Incorporated, Houston
Gary R. Flaharty, 713/439-8039
[email protected]
