Chairman, President & Chief Executive Officer, Baker Hughes Co
Baker Hughes Say Recent Mergers Present Opportunities
Oilfield service provider Baker Hughes Chairman and CEO Lorenzo Simonelli says recent mergers in the oil sector create opportunities for his company. He says there have been no disruptions due to the war in Israel, but they are monitoring the situation. The company reported third quarter earnings that beat estimates. Simonelli speaks on "Bloomberg Markets."
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About Lorenzo Simonelli
During Baker Hughes' fourth quarter and full year 2025 earnings call on January 26, 2026, Lorenzo Simonelli discussed the company's outlook and strategic positioning. He stated that industry estimates suggest AI infrastructure spending totaled more than $500 billion in 2025 and is expected to approach a trillion dollars annually in the late 2020s, creating an opportunity for Baker Hughes as data center build-out increases demand for behind-the-meter power solutions. Simonelli said the company now expects to book approximately $3 billion of data center-related orders between 2025 and 2027. He also expressed a belief that global power demand is entering a multi-year cycle, with demand expected to double to approximately 60,000 terawatt hours by 2040, and that gas-fired power generation will play a significant role in this expansion. Simonelli commented on the oil field services sector, stating that a further reduction in idle OPEC+ supply, alongside more constructive oil supply and demand balances, is required before a broader inflection in activity emerges, which he described as likely a 2027 catalyst. He noted that the company's portfolio actions are positioning Baker Hughes to evolve into a stronger, more industrialized energy solutions company, underpinned by an increasingly opex-levered business mix and a differentiated life cycle portfolio.
Transcript (16 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:00
Lorenzo, thank you for your patience. Thank you so much for being here. Very strong numbers, growth strong on both sections. Let's just take one at a time. Let's go to oil field services for a moment. The overhang is M&A; everyone seems to be getting together. Does that mean more or less business for you?
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Lorenzo Simonelli0:19
Alex, good to be with you. And yes, coming off some very strong third quarter results. Really, as we said at the beginning of the year, we're seeing tailwinds across both of our business segments, and we think that's a multi-year tailwind. To your question around consolidation, obviously the Exxon announcement, the Chevron announcement. As we look at prior consolidations, we think it's an opportunity for Baker Hughes. Again, we're one of the large players in oil field services and equipment, and we have extensive relationships and partnerships with these large companies. So as we look to the future, we think there'll be growing opportunities on the oilfield service side, and consolidation is an opportunity as we go forward.
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Interviewer1:05
Lorenzo, good morning. It's Guy. What sort of oil fields are you going to be servicing? One of the big takeaways of the deals we've seen over the last few days is that offshore seems to be back in a big way. Is that the direction of travel, and are you going to make more money off that move necessarily versus what we're seeing in the oil patch in the shale patch?
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Lorenzo Simonelli1:24
Yeah, it's going to be a mixture of both onshore and offshore. And really, international activity is where we see the growing opportunity. As we look at next year, coming off this year where international has grown mid-teens, we see double-digit growth for next year as well. And we see that ongoing as you look at the national oil companies as well as the large international companies. The Middle East, what you're seeing in Guyana, what you're seeing in Brazil, but then also in Africa with new opportunities. So we're more present on the international side, so we're keenly focused there. And we're also more on the production side, so we think that's more stable as we go forward.
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Interviewer2:11
So Lorenzo, I'm asking about cost and your pricing power in those areas right now.
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Lorenzo Simonelli2:16
Look, we see it as a constructive environment. And again, we make sure that we work closely with our customers and we make sure that we're delivering value on the components and the services that we provide. It's constructive, and we see that continuing as we go forward.
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Interviewer2:35
Are you worried? You talk about the international story, you mentioned the Middle East. How are you thinking about the geopolitical situation as it develops there? What are you doing with your people, what contingency are you putting in place? Do you think that could end up being a material impact in terms of the next set of numbers we see from you?
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Lorenzo Simonelli2:52
Clearly the situation is tragic. And first and foremost, we look to the safety of our employees, and also we condemn any violence of any kind. And really, our heart goes out to everybody that's impacted at the moment. Again, from an activity level, we haven't seen major disruption, and we're monitoring the situation. I think everybody hopes that there won't be further escalation, and we're monitoring the situation as we go forward.
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Interviewer3:25
Let's move to the other part of the business, which is more exposed to sort of longer-term trends: industrial and energy technologies. Lorenzo, the numbers you're putting up for this are humongous. I mean, you're looking at booking about 80 million tons per year of LNG orders just this year. You're boosting your order and your backlog. I mean, these are huge numbers. Is this purely an LNG export story?
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Lorenzo Simonelli3:51
Really, it's the story that we've been saying for some time: that natural gas is a key element to the energy transition and going to be a key aspect of providing energy, not just as a transition but a destination. And LNG plays an important role. We came out previously saying that we anticipated there needs to be 800 MTPA of capacity installed by 2030, and we're seeing that come to fruition. Again, you mentioned the ATP that we're taking inbound of orders this year. We still see 65 MTPA of FIDs for 2024, and as we go into '25 and '26, 30 to 60 MTPA. And we are obviously a key player in the liquefaction area, providing the turbines, the compressors, and we continue to feel that it's an opportunity going forward.
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Interviewer4:53
Lorenzo, maybe an unfair question, but is this all Venture Global? So Venture Global is building out LNG export facilities with super low cash cost, in part because of your ability to build out modular facilities in Florence and then ship them to the US. Is this a pure Venture Global thing?
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Lorenzo Simonelli5:07
No, I wouldn't say it's a pure Venture Global. Clearly, Venture Global is a large contributor to what is being done in the United States, but you also have other players such as Cheniere, you also have NextDecade, you have a number of projects. As you look at also Port Arthur, it's across the board in the United States and an opportunity to provide LNG to the world. And there's a number of opportunities still to come also internationally. You may have seen in the third quarter we booked the Adnoc Gas Ruwais LNG, and that's again with a new electric motor and one of the first LNGs that's fully electrified.
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Interviewer5:50
Lorenzo, I'm looking at a lot of kit being built very fast. Is there a danger that the market may get to the point fairly soon, maybe 2025, that we are oversupplied in the LNG space? What happens then if that's the case?
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Lorenzo Simonelli6:04
Yeah, we don't think so. And the reason is, as you look at the opportunity to continue to displace coal, you look at where the energy demand is, and China, India. LNG is a natural substitution. And as you look at the United States and Europe, one of the key ways in which they've lowered their greenhouse gas emissions has been by transitioning from coal to gas. And we see that same opportunity as we go forward for other developing countries and better the consumption of energy.
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Interviewer6:38
Lorenzo, just to jump in, we are seeing Europe really struggling with the energy transition. You look at what is happening today with Siemens Energy going to the government for support to support its business, to be able to do deals not only in wind turbines but across its business range. Do you think that the energy transition is going to take longer, and does that mean that gas sticks around for longer?
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Lorenzo Simonelli7:01
We actually mentioned it in our announcement today that we do think there's a realization on the complexity of the energy transition. The end destination is the same. It is going to take longer, but it's also going to take all fuel sources. And that means you're going to have renewables, you're going to have the continued use of natural gas, you're going to continue to use oil. And it's going to require all of the fuel sources. And the important element here is how do you make the fuel sources lower carbon content and move towards a lower carbon economy.